Loading...
Resolution No. 382427 J RESOLUTION NO. 3824 A RESOLUTION OF THE CITY COUNCIL OF CITY OF CYPRESS APPROVING AN OWNER PARTICIPATION AGREEMENT WITH CYPRESS HOMES, INC. AND THE REDEVELOPMENT AGENCY OF THE CITY OF CYPRESS (CIVIC CENTER REDEVELOPMENT PROJECT AREA) WHEREAS, the Redevelopment Plan for a redevelopment project known as the "Civic Center Redevelopment Project Area" (the "Project Area ") was approved and adopted by the City Council of the City of Cypress (the "City ") by Ordinance No. 692 on July 19, 1982, and was thereafter amended by Ordinance No. 813, adopted on April 10, 1989 (the "Amended Redevelopment Plan ", and all requirements of law for and precedent to the adoption and approval of the Amended Redevelopment Plan have been duly complied with; and WHEREAS, for the purpose of providing for the redevelopment of certain property within the Project Area in accordance with the Amended Redevelopment Plan, the City proposes to enter into that certain owner participation agreement with Cypress Homes, Inc. ( "Cypress Homes ") and the Redevelopment Agency of the City of Cypress ( "Agency ") attached hereto as Exhibit A and incorporated herein by this reference (the "Owner Participation Agreement "); and WHEREAS, Cypress Homes qualifies as and is an owner - participant pursuant to the Agency's Owner Participation Rules; and WHEREAS, on September 12, 1988, the City Council of the City adopted Resolution No. 3446 approving Specific Plan No. 88 -2 (the "Specific Plan ") for the property owned by Cypress Homes with in the Project Area (the "Site "). On May 22, 1989, the City Council adopted Ordinance No. 815 approving a development agreement by and between the City and Owner, dated May 22, 1989, pursuant to the provisions of Article 2.5 (commencing with Section 65864) of Chapter 4 of Division 1 of Title 7 of the Government Code with respect to the permitted uses of the Site, and the height and size of proposed buildings pursuant to the provisions of the Specific Plan. Said development agreement was recorded in the Official Records of Orange County on June 30, 1989, as Instrument No. 89- 350070; and WHEREAS, the Owner Participation Agreement provides that Cypress Homes will design and construct certain public facilities, including (i) a portion of a regional storm drain system and pump station within or directly benefitting the Project Area and (ii) perimeter streets and certain improvements related thereto adjacent to the Site, namely, a portion of Orange Avenue, Moody Street, Ball Road and Denni Street, (collectively referred to as "Redevelopment Facilities ") as more particularly described therein, which Redevelopment Facilities benefit the development of the Site and the Project Area, and in consideration of Cypress Homes constructing and conveying the Redevelopment Facilities to the Agency or its designee, the Agency proposes to issue a tax allocation note payable from a portion of tax increment revenues attributable to the Project Area; and WHEREAS, after completion, it has been determined that the regional storm drain system and pump station will be owned by either the County of Orange Flood Control District (the "Flood Control District ") or the City and the remaining Redevelopment Facilities will be owned by the City; and NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CYPRESS DOES HEREBY, RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The above recitals are true and correct. Section 2. The form of the Owner Participation Agreement presented to this meeting and attached hereto as Exhibit A is hereby approved and the Mayor and the City Clerk are hereby authorized and directed to execute and deliver the Owner Participation Agreement, for and on behalf of and as the act and deed of the City, in substantially the forms hereby approved, with such additions thereto and changes therein as recommended or approved by the City Manager and counsel to the City and the officers executing the same, with such approval to be conclusively evidenced by the execution and delivery of the Owner Participation Agreement. Section 3. The Mayor, City Manager and other officers, employees and agents of the City are authorized and directed to execute, attest and authenticate such certificates, agreements and other closing documents and to do and cause from time to time any and all acts and things necessary to consummate the transactions contemplated by this Resolution. Section 4. This Resolution shall take effect and be in full force from and after its adoption by the City. PASSED AND ADOPTED by the City Council of the City of Cypress at a regular meeting held on 10th day of September, 1990. ATTEST: CITY CLERK OF (Mayor Pro Tem) MAYOR 0 HE CITY OF YPRESS CITY OF CYPRESS STATE OF CALIFORNIA 28_ ss. COUNTY OF ORANGE I, DARRELL ESSEX, City Clerk of the City of Cypress, DO HEREBY CERTIFY that the foregoing Resolution was duly adopted at a regular meeting of the said City Council held on the 10th day of September, 1990, by the following roll call vote: AYES: 4 COUNCIL MEMBERS: Arnold, Bowman, Kanel and Kerry NOES: 0 COUNCIL MEMBERS: None ABSENT: 1 COUNCIL MEMBERS: Age ABSTAINED: 0 COUNCIL MEMBERS: None CITY `cLERK F THE TY OF CYPRESS 282 EXHIBIT A OWNER PARTICIPATION AGREEMENT By and Among REDEVELOPMENT AGENCY OF THE CITY OF CYPRESS, CITY OF CYPRESS and CYPRESS HOMES, INC., a California corporation Dated September , 1990 CIVIC CENTER REDEVELOPMENT PROJECT AREA OWNER PARTICIPATION AGREEMENT THIS AGREEMENT is entered into and dated as of September , 1990, by and among the REDEVELOPMENT AGENCY OF THE CITY OF CYPRESS (the "Agency "), the CITY OF CYPRESS (the "City ") and CYPRESS HOMES, INC., a California corporation (the "Owner "). The Agency and the Owner agree as follows: SECTION I. SUBJECT OF AGREEMENT A. purpose of the Agreement The purpose of Amended Redevelopment Redevelopment Project for the redevelopment described, located in the Plan. this Agreement is to effectuate the Plan (the "Plan ") for the Civic Center Area (the "Project Area ") by providing of certain property, hereafter the Project Area, in accordance with B. The Redevelopment Plan The Plan was approved and adopted by the City Council of the City of Cypress by Ordinance No. 692 on July 19, 1982, and was thereafter amended by Ordinance No. 813, adopted on April 10, 1989. The Plan, as amended, is incorporated herein by this reference. Any future amendments to the Redevelopment Plan which limit or restrict the uses or development permitted on the Site, or otherwise change the restrictions or controls that apply to the Site, or otherwise affect the Owner's obligations or rights with respect to the Site, shall require the written consent of the Owner. Amendments to the Redevelopment Plan applying to other property in the Project Area shall not require the consent of the Owner. C. The Project Area The "Project Area" is located in the City of Cypress, California (the "City "), the exact boundaries of which are specifically described in City of Cypress Ordinances 692 and 813;'which instrument is incorporated herein by this reference. OPA12755 -1- D. The Site The "Site" consists of the real properties shown on the Site Map, which is attached hereto as Exhibit No. 1, and described in the "Legal Description ", which is attached hereto as Exhibit No. 2. E. Parties to the Agreement 1. The Agency The Agency is a public body, corporate and politic, exercising governmental functions and powers, and organized and existing under the Community Redevelopment Law of the State of California (Section 33000, et seq., Health and Safety Code; hereafter "Act "). The principal office of the Agency is located at 5275 Orange Avenue, Cypress, California 90630. 2. The City The City is a charter city and municipal corporation existing under and by virtue of the laws of the State of California. The principal office of the City is located at 5275 Orange Avenue, Cypress, California 90630. 3. The Owner Owner is a corporation organized and existing under • the laws of the State of California. Owner is the owner and holder of record title of the Site. The Site is located within the corporate limits of the City and consists of a total of approximately 144 acres. Owner qualifies as and is an owner - participant pursuant to the Agency's Owner Participation Rules. The mailing address of Owner for purposes of this Agreement is: Cypress Homes, Inc., 14 Corporate Plaza, Newport Beach, California 92660, Attention: Sorrento Project Manager. F. The Specific Plan and Development Aareement On September 12, 1988, the City Council of the City adopted Resolution No. 3446 approving Specific Plan No. 88 -2 (the "Specific Plan ") for the Site. On May 22, 1989, the City`Council adopted Ordinance No. 815 approving a development agreement by and between the City and Owner, dated May 22, 1989, pursuant to the provisions of Article 2.5 (commencing with Section 65864) of Chapter 4 of Division 1 of Title 7 of the Government Code with respect to the permitted uses of the Site, and the height and size of OPA12755 -2- proposed buildings pursuant to the provisions of the Specific Plan. Said development agreement was recorded in the Official Records of Orange County on June 30, 1989, as Instrument No. 89- 350070. G. Construction of Redevelopment Facilities Owner has requested that the Agency and the City enter into this Agreement whereby Owner will design and construct certain public facilities, including (i) a portion of a regional storm drain system and pump station within or directly benefitting the Project Area and (ii) perimeter streets and certain improvements related thereto adjacent to the Site, namely, a portion of Orange Avenue, Moody Street, Ball Road and Denni Street, (collectively referred to as "Redevelopment Facilities ") as more particularly described in the Scope of Development attached to this Agreement as Exhibit No. 3 and incorporated herein by this reference, which Redevelopment Facilities benefit the development of the Site and the Project Area. H. Conveyance of Redevelopment Facilities In consideration of the Owner constructing and conveying the Redevelopment Facilities to the Agency or its designee, and in exercise of the Agency's borrowing power, the Agency anticipates issuing its Note (as defined herein) to the Owner payable from a portion of Tax Revenues (as defined herein) attributable to the Site. Owner desires to • construct the Redevelopment Facilities in accordance with the terms of this Agreement at the earliest practicable date. After completion, the Agency anticipates the regional storm drain system and pump station will be owned by either the County of Orange Flood Control District (the "Flood Control District ") or the City and anticipates the remaining Redevelopment Facilities will be owned by the City. City and Agency acknowledge that the Redevelopment Facilities are not being acquired under threat of condemnation. I. Prohibition Aaainst Change in Ownership or Owner The qualifications and identity of the Owner is of particular concern to the City and the Agency. It is becalfse of those qualifications and identity that the Agency and City have entered into this Agreement with the Owner. Therefore, no voluntary or involuntary successor in interest of Owner shall acquire any rights or powers under this Agreement except as expressly set forth herein. OPA12755 -3- 283 28b The Owner shall not assign all or any part of this Agreement without the prior written approval of the Agency and the City given at the Agency's and City's sole discretion. The Agency and City hereby consent to the hypothecation by Owner of its rights to receive principal and interest under the Note of the Agency to Security Pacific National Bank and Union Bank in connection with the private financing of the construction of the Redevelopment Facilities. All of the terms, covenants and conditions of this Agreement shall be binding upon and shall inure to the benefit of the Owner and the permitted successors and assigns of the Owner. Whenever the term "Owner" is used herein, such term shall include any other lawful successors in interest of Owner. J. Contract Documents The Contract Documents which are part of this Agreement, and each of which is incorporated herein by this reference, are as follows: Exhibit No. 1 Site Map Exhibit No. 2 Legal Description of Site Exhibit No. 3 Scope of Work Exhibit No. 4 Form of Note II. THE REDEVELOPMENT FACILITIES A. Scope of Work The Redevelopment Facilities shall be constructed within the general controls established in the "Scope of Work" attached to this Agreement as Exhibit No. 3, the approvals of the Agency and the Flood Control District as described herein and of the City as required by the Cypress Municipal Code, and related laws governing municipal planning, zoning, and subdivision. B. City and Flood Control District Approval of Plans. Drawings. and Related Documents The Owner shall prepare and submit construction, engineering and architectural drawings, plans and specifications in preliminary and final stages for the construction of the Redevelopment Facilities to the City, OPA12755 -4- and, if applicable, the Flood Control District, for review and written approval. The City and, if applicable, the Flood Control District, shall have the right of review of all plans and specifications, including any changes therein. The City shall use due diligence in its processing of construction, engineering and architectural actual working drawings, plans and specifications. Any drawings, plans and specifications so submitted and approved shall not be subject to subsequent disapproval. If any revisions or corrections shall be required by the City Department of Public Works or any other department or bureau of the City or Agency having jurisdiction, or the Flood Control District or any other department or bureau of the County of Orange having jurisdiction, the Owner and the City shall cooperate in efforts to develop a mutually acceptable alternative. If no such alternative is developed, the City shall be bound by such revisions or corrections if they are not inconsistent with approved construction and drawings, specifications and related documents. The Agency and City hereby designates as its representative the Director of Public Works, or his designee (the "Representative "). Any disapproval shall state in writing the reasons for disapproval. The Owner, upon receipt of a disapproval based upon powers reserved by the City hereunder, shall cooperate with the City in developing a mutually acceptable solution and resubmit to the City as soon as possible. C. Cost of Construction The cost of constructing all Redevelopment Facilities shall be borne by the Owner, except as provided herein. The costs of the Redevelopment Facilities shall include all reasonable costs of engineering, design and construction of the Redevelopment Facilities, reasonable fees and costs of obtaining permits, licenses and other governmental approval, rights -of -way or easements and inspection fees. The amount of the reasonable costs of the Redevelopment Facilities shall be determined by the Representative within thirty (30) days of receipt of all contracts, receipts or invoices reasonably necessary to determine such costs. The Agency hereby finds the reasonable and approved cost of the box culvert to be $1,275,160.85. OPA12755 -5- 287 28S D. Public Works and Prevail.in_a Waae Reauirements All contracts for the construction of any and all of the Redevelopment Facilities shall be let and administered as public work projects, including competitive bidding requirements. The Agency and the City shall reserve the right to review the process by which bids are solicited and awarded to insure compliance with the California Public Contracts Code Section 20150 et seq. The Redevelopment Facilities shall be constructed by a contractor or contractors licensed appropriately by the State of California. Pursuant to the Policies and Procedures for the Payment of Prevailing Wages by Private Redevelopers and /or Owner - Participants adopted by the Agency with the passage of Resolution No. CRA -39 on February 27, 1989 (the "Prevailing Wage Policy "), the Owner shall agree to pay or cause to be paid to all workers employed in connection with the construction of the Redevelopment Facilities, not less than the prevailing rates of wages, as provided in the statutes applicable to Agency public works contracts, including without limitation, Sections 33423 -33426 of the California Health & Safety Code and Sections 1770 -1780 of the California Labor Code. This Agreement hereby incorporates the Prevailing Wage Policy by reference. All obligations and duties under the Prevailing Wage Policy shall be performed by the Owner and the Agency, as applicable. Agency staff shall provide a copy of the Prevailing Wage . Policy to Owner. E. Indemnity and Insurance 1. The Owner shall defend, indemnify, assume all responsibility for and hold the Agency, the City and the Flood Control District, and their respective elected and appointed officers and employees, harmless from all costs (including attorneys' fees and costs), claims, demands or judgments for injury or damage to property and injuries to persons, including death, provided that, and only to the extent that, the foregoing is caused by or arose out of in whole or in part any negligent act or omission, or willful misconduct of Owner or anyone directly or indirectly employed by or contracted with Owner in the design, engineering, construction, operation and maintenance of the Redevelopment Facilities under this Agreement, whether such damage shall accrue or be discovered before or after termination of this Agreement. OPA12755 2. Not in derogation of the indemnity -6- provisions of subsection (1) of this Section, the Owner shall take out and maintain during the life of this Agreement a Broad Comprehensive General Liability policy in the amount of at least One Million Dollars ($1,000,000) for any person, Two Million Dollars ($2,000,000) for any occurrence, and One Million Dollars ($1,000,000) property damage. 3. The Owner shall furnish a certificate of insurance signed by an authorized agent of the insurance carrier who is admitted in the State of California and with a Best's Rating of no less than A:VII. The general provisions of the insurance coverage should set be forth in the certificate of insurance. This certificate of insurance shall name the City, Agency and the Flood Control District, and their respective officers, agents and employees as additional insureds under the policy. The certificate of insurance shall contain a statement of obligation on the part of the carrier to notify the Agency by certified mail of any modification, cancellation or termination of the coverage at least thirty (30) days in advance of the effective date of any such modification, cancellation or termination. Coverage provided hereunder by the Owner shall be primary insurance and not contributing with any insurance maintained by the Agency or City, and the policy shall contain such an endorsement. The required certificate shall be filed with the Agency prior to commencement of construction. 4. The Owner shall also furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that any contractor with whom it has contracted for the performance of work on the Site or otherwise pursuant to this Agreement carries worker's compensation insurance as required by law and employer's liability limits of One Million Dollars ($1,000,000) per accident. 5. The insurance obligations set forth in this Section shall remain in effect only until a final Certificate of Completion has been furnished for all of the Facilities and the Agency has acquired the Redevelopment Facilities as hereafter provided in this Agreement. F. City and Other Governmental Agency Permits 1. Before commencement of construction or development of any Redevelopment Facility the Owner shall, at its own expense, secure or cause to be secured any and all permits which may be required by the City and any other governmental agency having jurisdiction as to such OPA12755 -7- '189 250 construction, development or work. The Agency and the City shall provide all proper assistance to the Owner in securing these permits. 2. The Owner assumes all responsibility for taking all actions necessary to comply with the Subdivision Map Act (Government Code S 66410, et seq.) and local subdivision enactments related thereto in order to comply with the Scope of Development. G. Rights of Access Representatives of the Agency, the City and the Flood Control District shall have the right of access to the Site and the Redevelopment Facilities, without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including, but not limited to, the inspection of the work being performed in constructing the Redevelopment Facilities, so long as such representatives comply with all safety rules. H. Local. State and Federal Laws The Owner shall carry out the provisions of this Agreement in conformity with all applicable local, state and federal laws and regulations. I. Antidiscrimination During Construction The Owner, for itself and its successors and assigns, agrees that in the construction of the Redevelopment Facilities provided for in this Agreement, the Owner shall not discriminate against any employee or applicant for employment because of race, color, creed, religion, age, sex, marital status, handicap, national origin or ancestry. J. Taxes. Assessments. Encumbrances and Liens Prior to issuance of a Certificate of Completion and the acquisition of the Redevelopment Facilities pursuant to this Agreement, the Owner shall not place or allow to be placed on the Redevelopment Facilities or any part thereof any mortgage, trust deed, encumbrance or lien other than as expressly allowed by this Agreement. The Owner shall remove or have removed any levy or attachment made on any of the Redevelopment Facilities, or any part thereof, or assure the satisfaction thereof within a reasonable time but in any event prior to the acceptance of the Redevelopment Facilities by the Agency. Nothing herein contained shall be deemed to prohibit the Owner from contesting the validity or OPA12755 -8- amounts of any tax assessment, encumbrance or lien, nor to limit the remedies available to the Owner in respect thereto. K. Certificate of Completion 1. Within forty (40) days of recordation of a Notice of Completion of the construction of any or all of the Redevelopment Facilities by the Owner, the Agency shall furnish the Owner with a Certificate of Completion. The Agency shall not unreasonably withhold any such certificate. The Agency shall acquire, or cause its designee to acquire, ownership of such Redevelopment Facilities upon the delivery by the Agency to the Owner of such Certificate of Completion. Concurrently with Agency's approval of this Agreement, Agency shall issue a Certificate of Completion for the box culvert as described in Exhibit 3. 2. A Certificate of Completion of construction for any or all of the Redevelopment Facilities shall be the standard form generally utilized by the Agency with such amendments as deemed appropriate by the Agency and shall be recorded in the Recorder's Office of Orange County. Certificates of Completion of construction for less than any completed Redevelopment Facility shall not be recorded except by mutual written Agreement. 3. If the Agency refuses or fails to furnish a Certificate of Completion for the Redevelopment Facilities, or part thereof, in a timely manner, the Agency shall, within thirty (30) days of written request from the Owner, provide the Owner with a written statement of the reasons the Agency refused or failed to furnish a Certificate of Completion. The statement shall also contain Agency's opinion of the actions the Owner must take to obtain a Certificate of Completion. If the reason for such refusal is confined to the immediate availability of specific items of materials for landscaping, the Agency shall issue its Certificate of Completion upon the posting of a bond by the Owner with the Agency in an amount representing a fair value of the work not yet completed. If the Agency shall have failed to provide such written statement within said thirty (30) day period, the Owner shall be deemed entitled to the Certificate of Completion. 4. Such Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Owner to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance the Redevelopment Facilities or any part thereof. Such OPA12755 -9- "9', Certificate of Completion is not a notice of completion as referred to in California Civil Code, Section 3093. 5. Owner shall cause a parcel map and /or grant deed to be prepared as necessary to convey title of the site of the pump station from the City or Agency to the Flood Control District to facilitate the Flood Control District's acceptance of the pump station. III. FINANCING A. Financing In consideration of the conveyance of the Redevelopment Facilities from the Owner, the Agency shall issue its note pursuant to the terms and conditions of this Agreement, up to a principal amount equal to FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000) (the "Note "). The Note shall be non - negotiable. The Note will not be registered under the Securities Act of 1933, as amended, or any state securities law and may not be transferred without the written permission of the Agency and unless in the opinion of counsel acceptable to the Agency, such transaction is validly registered under the Securities Act of 1933, as amended, and applicable state securities laws, or such transfer is exempt from the registration requirements of the Securities Act of 1933, as amended, and any applicable state securities laws. B. Definitions -- Financing For the purposes of this Part, the following terms shall apply: 1. "Aggregate Assessed Value" is defined as the assessed value as utilized by the Orange County Assessor of Taxes in preparation of tax bills for fiscal year 1997 -1998 (as determined on March 1, 1997) for land, buildings, and improvements which are in place on the Site. 2. "Debt Service Payment" means any and each of the payments required to be made by the Agency under the terms of this Agreement in repayment of the principal and interest of the Note. 3. "Final Redevelopment Facility" means the last of the Secondary Redevelopment Facilities to be completed; provided that if the County of Orange has not approved the pump station design or has determined that the pump station is no longer required as a condition of development of the OPA12755 -10- 4 '9S Site within nine (9) months after the issuance of the Certificate of Completion for the last of the other Secondary Redevelopment Facilities, and such lack of approval or determination is in no way attributed to the actions or omissions of the Owner, then the "Final Redevelopment Facility" shall mean the last of the Secondary Redevelopment Facilities for which a Certificate of Completion had been issued. In the event the County of Orange thereafter approves the pump station, then the Final Redevelopment Facility for the purposes of this Agreement shall mean the pump station. 4. "Initial Redevelopment Facilities" mean the box culvert and the perimeter street improvements, as described in Exhibit 3. 5. "Note Date" means the first day of the month in which the Certificate of Completion is issued by the Agency for the last of the Initial Redevelopment Facilities in accordance with the terms of this Agreement. 6. "Payment Date" means the February 1 or August 1 first occurring thirty (30) months after the issuance by the Agency of the Certificate of Completion for the Final Redevelopment Facility; and thereafter, each succeeding February 1 and August 1. 7. "Secondary Redevelopment Facilities" mean the storm drain, pump station and force main improvements, as • described in Exhibit 3. 8. "Tax Increment Revenues" are defined as fifty percent (50 %) of an amount equal to Tax Revenues, net of housing set aside requirements pursuant to Health and Safety Code Section 33334.2, above and beyond $1,000,000, starting in fiscal year 1992/1993, in an aggregate sum of not to exceed $4,500,000 plus stated interest. 9. "Tax Revenues" are defined as those revenues which are actually paid to Agency (net of any amounts paid to other agencies pursuant to pass through agreements) under the provisions of Health and Safety Code section 33670(b), based upon the assessed value of the Site as utilized by the Orange County Assessor of Taxes, with any adjustments caused by the equalization process which culminates in the equalized assessment roll adopted on the following August 20. 10. "Treasurer" means the officer who is then performing the functions of Treasurer of the Agency. OPA12755 • • w9`3 C. Agency's Note: Terms The Note shall be in substantially the form attached hereto as Exhibit 4. The Chairman and Secretary are authorized to sign the Note and any amendments thereof for such amounts as are required or authorized by this Agreement. The Note shall be a special obligation of the Agency and shall be secured by an irrevocable pledge of, and be payable as to principal and interest, from Tax Increment Revenues and other funds as herein provided and to the extent provided herein. The Note and any interest thereon shall not be a debt of the City of Cypress, the State of California or any of its political subdivisions and neither the City, the State nor any of its political subdivisions shall be liable on it, nor in any event shall the Note or interest be payable out of any funds or properties other than those of the Agency as provided in this Agreement. The Note shall not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restrictions. Neither the members of the Agency nor any persons executing the Note shall be liable personally on the Note by reason of the execution of this Agreement. The Note shall be secured by an irrevocable pledge of Tax Increment Revenues as herein provided. Repayment of the principal amount of the Note and interest accrued thereon shall be made in payments to the Owner (the "Debt Service Payments "); each such Debt Service Payment to be made on each respective Payment Date, as herein defined, from the Special Fund created and authorized by this Agreement. 1. Principal Amount of Note. The Note shall be issued in a principal amount not exceeding $4,500,000 and shall be designated TAX ALLOCATION NOTE, Civic Center Redevelopment Project. The principal amount of the Note shall be determined in two phases. Upon the Agency's issuance of Certificates of Completion for all of the Initial Redevelopment Facilities, the principal amount of the Note shall equal the reasonable and approved cost of the Initial Redevelopment Facilities as determined pursuant to Section II.0 hereof. Upon the Agency's issuance of Certificate of Completion for the Final Redevelopment Facility, the principal amount of the Note shall be amended to equal the combined reasonable and approved cost of the Initial Redevelopment Facilities and the Secondary Redevelopment Facilities as determined pursuant to Section II.0 hereof, but in any event not in excess of $4,500,000. OPA12755 4 -12- 2. 95 2. Interest. The Note shall bear interest at the rate of EIGHT PERCENT (8 %) per annum simple and shall so state on the face of the Note. The accrual of interest on the Note shall commence on the Note Date. It is the intent of the Agency that the interest on the Note be exempt from state or federal income taxation. The Agency agrees to take appropriate actions to qualify such interest as not includable in the gross income of the holder under federal and State of California income tax laws, which actions may include, without limitation, amendment of the terms of this Agreement and the Note; provided that such actions do not alter the material terms of this Agreement or the Note and that, if such actions require additional expenditures in the part of the Agency or the City, Owner shall fully reimburse the Agency or the City for such expenditures. 3. Special Fund. There shall be created and authorized, with the Treasurer of the Agency, a special trust fund designated TAX ALLOCATION NOTE, CIVIC CENTER REDEVELOPMENT PROJECT, SPECIAL FUND (the "Special Fund "). The Treasurer shall deposit all Tax Increment Revenues, as herein defined, into the Special Fund. The Treasurer shall thereafter apply such funds to the Debt Service Payment as required by this Agreement. 4. Term of Note. The term of the Note shall be nine and one -half (9 ) years from the first Payment Date or the earlier date when any and all principal and accrued interest due hereunder is paid in accordance thereunder. 5. Negotiability and Assignment. The Note is non- negotiable and shall not be assigned, transferred or otherwise pledged or conveyed, either in whole or in part, by the Owner, without the express written consent of the Agency and subject to an opinion of counsel to the Agency as to compliance with all applicable federal and state securities laws. 6. Prepayment. Agency shall have the right to pay the outstanding balance of the Note in full without any penalty or additional fee. If Agency issues notes or bonds with a term or maturity in excess of twelve (12) years, the Agency agrees to use the proceeds of such notes or bonds to prepay the outstanding balance of the Note in full upon receipt of such proceeds. 7. Other Proiect Revenues. Nothing herein shall be construed to restrict or encumber the City or Agency's use of Tax Revenues generated from the Project Area other than "Tax Increment Revenues" as defined herein. OPA12755 -13- D. Debt Service Payments. Notwithstanding any other provision of this Agreement, Agency will annually pledge available Tax Increment Revenues generated by the Site and fully retire all outstanding principal and interest on the Note prior to the expiration of the term of this Note. E. Note Principal Reduction Owner understands and acknowledges that Agency will be using a portion of the Tax Revenues attributable to the Site to repay all Agency expenditures required under this Agreement and has declined other significant redevelopment projects for the Site. In the event the Aggregate Assessed Value of the Site is less than $350,000,000 on March 1, 1997, then any shortfall in such Aggregate Assessed Value shall reduce the Agency's principal obligation of the Note retroactive to the Note Date. Such reduction shall be calculated by multiplying the principal amounts of the Note by the difference of one (1) minus the ratio of the actual Aggregate Assessed Value on March 1, 1997 divided by $350,000,000. Any reduction in the principal amount of the Note shall also be interpreted to mean a corresponding reduction in the accrued interest due on the Note. The reduction amount of the principal and interest determined pursuant to this Section shall be applied against the current Note balance on this date. The provisions of this Section have been agreed to upon the assumption that the method of ad valorem taxation of real and personal property presently in effect as of the execution date of this Agreement will be in effect throughout the term of the Note. Any change in the method of ad valorem taxation mandated by state law or regulation which results in a decreased tax rate and /or corresponding decrease in Tax Revenues available to the Agency shall proportionately reduce the principal amount of the Note only if and to the extent that such change does not provide an exception for, or otherwise grandfather, prior indebtedness or other financial obligations of the Agency. IV. USE OF THE SITE A. Uses The Owner covenants and agrees for itself, its successors, its assigns and every successor in interest to OPA12755 -14- the Site or any part thereof, that during the construction and thereafter the Owner, such successors and such assignees shall devote the Site to use as residential purposes and uses incidental thereto, and development of the Redevelop- ment Facilities, and shall comply with all applicable City ordinances, subject to the terms of the Development Agreement. B. Maintenance of Site The Owner shall maintain the Redevelopment Facilities prior to conveyance in accordance with the provisions of this Section and the Scope of Work (Exhibit No. 3). Owner shall also keep the Site in a good, clean and safe condition and state of repair, free from any accumulation of debris, trash or other waste materials. If, at any time, the Owner fails to keep the Redevelopment Facilities free from any accumulation of debris or waste materials and said condition is not corrected within thirty (30) days of written notice from the Agency, either the City or the Agency shall have the right, but not the duty, to perform, at the cost of the Owner, the necessary clean -up or maintenance and, promptly upon receipt by Owner of an itemized statement of said costs, the Owner shall pay any costs reasonably incurred for such clean -up or maintenance, but such payments to be reduced by any amounts remaining unpaid to Owner by Agency under this Agreement. Agency and City shall not be liable for any loss, claim or damage occurring while Agency or City is on the Site or the site of the Redevelopment Facilities to perform any actions under this Section provided such loss, claim or damage is not a result of Agency's or City's negligence. Issuance of a Certificate of Completion by the Agency shall not affect Owner's obligations to maintain the Redevelopment Facilities in accordance with this Section after the Certificate of Completion is issued. Owner shall be responsible for all maintenance and satisfactory operation, or shall be responsible for all of City's and /or Agency's costs of maintenance and satisfactory operation, as applicable, of the regional storm drain system and pump station constructed as the Redevelopment Facilities as follows: 1. From the time a Certificate of Completion is issued on the concrete box structure in Sorrento Drive until close of escrow on the initial sale of the last home on the Site, Owner will perform OPA12755 -15- 4 nn., J i� 99S inspection, maintenance and necessary cleaning of said structure. 2. From the time a Certificate of Completion is issued on the pump station building enclosure and Phase I tract -only related pumping equipment, until the earlier of either the construction of the Phase II regional pumping equipment and diversion structures by the Flood Control District or three (3) years after the issuance of a Certificate of Completion for the pump station building enclosure and Phase I tract -only related pumping equipment, Owner shall reimburse the City and /or the Agency for the City's and /or the Agency's costs of operation and maintenance of the pump station and appurtenances. 3. From the time a Certificate of Completion is issued on the force main(s) connecting the pump station to the Carbon Creek Channel until the earlier of either the date said force main(s) is (a) accepted by the Flood Control District, and (b) proves to function as designed under at least one storm flow condition or three (3) years after the issuance of a Certificate of Completion for the force main(s) connecting the pump station to the Carbon Creek Channel, Owner shall be responsible for the the City's and /or the Agency's costs of maintenance and adequate operation of the force main(s). Owner shall post good and adequate bonds for each of the above conditions 1, 2 and 3, in form and amount satisfactory to the City and /or the Agency. In the case of the condition (3) above, the bond amount shall not be less than one hundred percent (100 %) of the replacement cost of said force main. C. Obligation to Refrain from Discrimination The Owner covenants and agrees for itself, its successors, its assigns and every successor in interest to the Site or any part thereof, there shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, national origin, sex, marital status, handicap, religion or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site nor shall the Owner itself or any person claiming under or through it establish or OPA12755 -16- permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, leases, subtenants, sublessees, or vendees of the Site. D. Form of Nondiscrimination and Nonseareaation Clauses The Owner shall refrain from restricting the rental, sale or lease of the Site on the basis of race, color, creed, ancestry, national origin, sex, marital status, handicap, or religion of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 1. 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, national origin, sex, religion, marital status, handicap, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself 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." OPA12755 • 2. 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 or her, 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, national origin, sex, marital status, handicap, religion, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, -17- 29 JQtJ 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, sublessees, subtenants or vendees in the premises herein leased." 3. In contracts: "There shall be no discrimina- tion against or segregation of, any person, or group of persons on account of race, color, creed, national origin, sex, religion, marital status, handicap, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself 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 premises." E. Zffect and Duration of Covenants The covenants established in this Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, the City and any successor in interest to the Site or any part thereof. The covenants contained in this Agreement relating to construction of the Redevelopment Facilities shall expire upon the issuance by Agency of a Certificate of Completion or Certificates of Completion for all of the Redevelopment Facilities. The covenants contained in this Agreement relating to the use and maintenance of the Site and the Redevelopment Facilities thereon shall expire upon completion of the buildout of the Site or as otherwise set forth in Section IV.B of this Agreement. The covenants contained in this Agreement against discrimination shall remain in perpetuity. Owner shall execute and record a Declaration of Covenants and Restrictions including all covenants and restrictions contained herein. V. DEFAULTS, REMEDIES AND TERMINATIONS A. Defaults -- General 1. Subject to the extensions of time set forth in Section VI.A., failure or delay by either party to perform OPA12755 -18- any term or provision of this default under this Agreement. (claimant) shall give written party, specifying the default Agreement constitutes a A party claiming a default notice of default to the other complained of. 2. The claimant shall not institute proceedings against the other party and shall not be entitled to damages if the other party within fourteen (14) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy within thirty (30) days from the date of receipt of such notice or if such cure, correction or remedy by its nature cannot be affected within such sixty (60) days, such cure, correction or remedy is diligently and continuously prosecuted until completion thereof. Such cure, correction or remedy shall include payment of any costs or damages incurred by the nondefaulting party during the period of default. H. Effect of Violation of the Terms and Provisions, of this Agreement After Completion of Construction The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, both for and in its 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. The 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 or interest therein in the Site or 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. C. Institution of Legal Actions In addition to any other rights or remedies, either party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. D. Venue of Legal Actions OPA12755 -19- 30.1 30 Any legal actions brought pursuant to this Agreement must be instituted in the Superior Court of the County of Orange, State of California, in any other appropriate court in that County, or in the Federal District Court in the Central District of California. E. Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this Agreement. F. }acceptance of Service of Process In the event that any legal action is commenced by the Owner against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director of the Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by the Agency against the Owner, service of process on the Owner shall be made by personal service or in such other manner as may be provided by law. G. Riahts and Remedies are Cumulative Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise of it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. H. Inaction Not a Waiver of Default Any failures or delays by either party 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, or deprive either party 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. I. Damages If a default is not fully cured by the defaulting party as provided herein, the defaulting party shall be liable to the other party for any damages caused by such default., and the nondefaulting party may thereafter (but not OPA12755 -20- before) commence an action for damages against the defaulting party with respect to such default. J. Specific Performance If a default under this Agreement is not fully cured by the defaulting party, the nondefaulting party at its option may thereafter (but not before) commence an action for specific performance of the terms of this Agreement. K. Termination by the Aaencv, 1. The Agency may terminate this Agreement in the event that prior to the filing of the Certificate of Completion for the Final Redevelopment Facility and in violation of this Agreement: (a) The Owner (or any successor in interest) assigns or attempts to assign the Agreement or any rights therein, or in the Redevelopment Facilities except as provided in Section I.I, or (b) The Owner does not submit construction plans, drawings, specifications and related documents as required by the Agreement, in satisfactory form and in the manner provided in this Agreement therefor; or (c) If any default is not cured as provided in Section VI.A. Such termination shall be without prejudice to the rights of the Agency against Owner for breach of the Agreement and any such termination shall not constitute a breach or default on the part of the Agency. L. procedure for Termination In order to terminate this Agreement for any of the reasons set forth herein, the Agency shall deliver written notice of its intent to do so at least fifteen (15) days prior to the proposed date of termination and stating the reasons for the termination. The Agency may withdraw the proposed termination or extend the effective date at any time prior to the effective date of the termination. OPA12755 -21- 304 VI. GENERAL PROVISIONS A. Enforced Delay: Extensions of Times of performance In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, and all performance or other dates specified in this Agreement shall be extended, where party seeking the extension has acted diligently and delays or defaults are due to events beyond the reasonable control of the party such as but not limited to: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; acts or omissions of another party; or any other causes beyond the control of or without the fault of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and the Owner. B. Nonliability of Aaency Officials and Employees No member, official, contractor or employee of the Agency or the City shall be personally liable to the Owner, or any successor in interest, for any default or breach by the Agency (or the City) or for any amount which may become due to the Owner or successor or on any obligations under the terms of this Agreement. C. Inspection of Books and Records, Each party has the right to inspect, at reasonable times, the books and records of the other pertaining to the Site as pertinent to the purposes of this Agreement. D. Conflicts of Interest The Owner warrants that it has not paid or given and will not pay or give any officer, employee or agent of the City or Agency any money or other consideration for OPA12755 -22- obtaining this Agreement. E. Notices. Demands and Communications Amona the, Parties Written notices, demands and communications among the Agency and Owner shall be sufficiently given by personal service or dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Agency and Developer described in Section I.E.. 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 as provided in this Section. Notwithstanding anything to the contrary contained herein, notice personally served shall be deemed to have been received as of the date of such services. VII. ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS A. originals, Agreement through 4, agreement 3O3 This Agreement shall be executed in four duplicate.- each of which is deemed to be an original. This includes pages 1 through 26, and Exhibits 1 which constitutes the entire understanding and of the parties. fy 4 { B. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. C. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the Agency or the Owner, and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and the Owner. D. In any circumstance where under this Agreement either party is required to approve or disapprove any matter, approval shall not be unreasonably withheld. E. The parties hereto acknowledge that they were represented by counsel in the negotiation and preparation of this Agreement, and such counsel have participated in the drafting of this Agreement. F. This Agreement, when executed by the Agency and delivered to the Owner, must be authorized, executed, and delivered by the Owner within ninety (90) days after the date of signature by the Agency or this Agreement shall be voidable by notice in writing to the Owner. OPA12755 -23- IN WITNESS WHEREOF, the Agency, the City and the Owners have signed this Agreement. DATED: REDEVELOPMENT AGENCY OF THE CITY OF CYPRESS ATTEST: Secretary APPROVED AS TO FORM: JERRY PATTERSON Counsel to the Agency OPA12755 -24- Chairman DATED: ATTEST: City Clerk APPROVED AS TO FORM: JERRY PATTERSON City Attorney CITY OF CYPRESS By Mayor DATED: CYPRESS HOMES, INC. a California corporation ATTEST: Secretary OPA12755 -25- By President 307 ;U STATE OF CALIFORNIA COUNTY OF ORANGE ) ss. ) On , 19 , before me, the undersigned, a Notary Public in and for said state, personally appeared and , known to me to the the persons who executed the within instrument as Chairman and Secretary, respectively, of the CYPRESS REDEVELOPMENT AGENCY, a public body, corporate and politic, of the State of California, the public agency therein named, and acknowledged to me that such Agency executed the within instrument pursuant to its bylaws or a resolution of its members. WITNESS my hand and official seal. Name (typed or printed) STATE OF CALIFORNIA ) ) COUNTY OF ) On , 19 , before me, the under- signed, a Notary Public in and for said State, personally appeared JERRY PATTERSON, personally known to me to be the person whose name is subscribed to the within instrument, and acknowledged to me that she executed the same. WITNESS my hand and official seal. (SEAL) OPA12755 Notary Public in and for said State -26- STATE OF CALIFORNIA ss. COUNTY OF ORANGE On ,, 19 , before me, the undersigned, a Notary Public. in and for said state, personally appeared and , known to me to the the persons who executed the within instrument as Mayor and City Clerk respectively,, of the CITY OF CYPRESS, a charter city and municipal corporation, organized and existing under the laws of the State of California, the public agency therein named, and acknowledged to ma that such city executed the within instrument pursuant "to its bylaws or a resolution of its members. WITNESS my hand and official seal. Name (typed or printed) STATE OF CALIFORNIA ss. COUNTY OF On , 19 , before me, the under- signed, a Notary Public in and for said State, personally appeared JERRY PATTERSON, personally known to me to be the person whose name is subscribed to the within instrument, and acknowledged to me that she executed the same. WITNESS my hand and official seal. (SEAL) OPA12755 Notary Public in and for said State -27- 309 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On this day of , 19 , before me, the undersigned Notary Public in and for said state, duly personally appeared , known to me to be the President, and , known to me to be the Secretary, of the corporation that executed the within instrument on behalf of CYPRESS HOMES, INC. the corporation therein named, and acknowledged to me that such corporation executed the within instrument pursuant to its bylaws or a resolution of its board of directors. WITNESS my hand and official seal. (SEAL) . OPA12755 Name (typed or printed) -28- EXHIBIT "1" SITE MAP ORANGE AVENUE 21: 700 700 m 2 EXHIBIT "2" LEGAL DESCRIPTION OF SITE A parcel of land containing 143.9 gross acres, more or less, described as follows: The southeast quarter of Section 17, Township 4 South, Range 11 West in the Rancho Los Coyotes, as shown on a map recorded in Book 51, page 11 of Miscellaneous Maps, records of Orange County, California. Excepting therefrom the West 20.00 acres of the Northwest quarter of the Southeast quarter of said Section 17. Also excepting therefrom the public rights of way dedicated for Orange Avenue, Moody Street, 'all Road and Denni Street as shown per Vesting Tentative Tract Map No. 13228. Signed and Sealed by a Surveyor or Qualified Engineer 313 EXHIBIT "3" SCOPE OF WORK FACILITY INITIAL REDEVELOPMENT FACILITIES 1. Box Culvert (12' x 12' R.C. box as underground retarding system) ZSTIMATED APPROVE Q, In/ COST / $1,275,160.85 $1,275,160.85 2. Perimeter street improvements (Ball Rd., Orange Ave., Denni St. and Moody St. improvements consisting of curb and gutter, sidewalk, access ramps, asphalt concrete pavement, aggregate base, street signs and undergrounding overhead utility lines) SECONDARY REDEVELOPMENT FACILITIES 3. Pump station 4. Force main and structures 5. Retention basin N/A N/A N/A N/A J/ Costs include the cost of engineering and design of each facility, obtaining all governmental approvals required for construction of the facility, and constructing the facility, including those fees incidental to the engineering, design, approval and construction of the facility. a,/ Based upon current, preliminary estimates only, with actual reasonable costs to be determined at a later date. 31L EXHIBIT "4" FORM OF NOTE This Note has not been registered under the Securities Act of 1933, as amended, or any state securities law and this Note may not be transferred without the written permission of the Agency and unless in the opinion of counsel acceptable to the Agency, such transaction is validly registered under the Securities Act of 1933, as amended, and applicable state securities laws, or such transfer is exempt from the registration requirements of the Securities Act of 1933, as amended, and any applicable state securities laws. Language consistent with these restrictions appears in the provisions of the Agreement. United States of America State of California County of Orange REDEVELOPMENT AGENCY OF THE CITY OF CYPRESS CIVIC CENTER REDEVELOPMENT PROJECT AREA TAX ALLOCATION NOTE THE REDEVELOPMENT AGENCY OF THE CITY OF CYPRESS (the "Agency "), a public body, corporate and politic, duly organized and existing under the laws of the State of California, for value received, hereby promises to pay (but solely from the funds hereafter mentioned) to CYPRESS HOMES, INC. (the "Owner ") the principal amount of $ or such other amount, but in any event not in excess of FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000), as evidenced by Appendix A -1 and any sequential Appendix, (the "Principal Amount "), and interest on the Principal Amount, in lawful money of the United States of America, pursuant to the terms of that certain Owner Participation Agreement dated as of September , 1990, by and between the Agency, the City of Cypress (the "City ") and the Owner (the "Agreement "). This Note shall bear interest from (the "Note Date ") at the rate of EIGHT PERCENT (8.00 %) per annum simple on the outstanding Principal Amount. Capitalized terms in this Note, unless otherwise herein defined, shall have the same meaning as set out in the Agreement. This Note is authorized by and issued pursuant to the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California), Resolution No. adopted by the Agency on September 10, 1990 and the Agreement for the purposes set forth in the Agreement. This Note is secured by an irrevocable pledge of Tax Increment Revenues and matures on the last day of 114th month following the first Payment Date. Debt Service Payments, constituting repayment of the Principal Amount of the Note and interest accrued thereon, will be made on Payment Dates from the Special Fund created by the Agreement. At the option of the Agency this Note may be prepaid in whole or in part without penalty or additional fee. Reference is hereby made to the Agreement for a specific description of the security for the principal and interest on this Note and the repayment of this Note. By the acceptance of this Note, the Owner hereby consents to all the terms, conditions and provisions of the Agreement. This Note and the interest hereon are not a debt of the City, the State of California (the "State ") or any political subdivision thereof, and neither the City, the State nor any political subdivision thereof is liable hereon, nor in any event will this Note or said interest be payable out of any funds or properties other than the funds of the Agency as set forth in the Agreement. This Note does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the members of the Agency nor any persons executing this Note are liable personally on this Note by reason of its issuance. This Note will not be entitled to any benefit under the Agreement, or become valid or obligatory for any purpose, until this Note has been manually signed and attested to by the Chairman and Secretary of the Agency, respectively. 2 IN WITNESS WHEREOF, the Agency has caused this Note to be signed on its behalf by the manual signature of its Chairman and the manual signature of its Secretary and the seal of the Agency to be impressed hereon. REDEVELOPMENT AGENCY OF THE CITY OF CYPRESS (SEAL) ATTEST: Secretary LEGAL OPINION Chairman I hereby certify that the following Appendix B is a full and correct copy of the signed legal opinion of Burke, Williams, Sorensen & Gaar, Los Angeles, California, Bond Counsel, on file in my office, which opinion is dated the Note Date. REDEVELOPMENT AGENCY OF THE CITY OF CYPRESS Secretary APPENDIX A - REDEVELOPMENT AGENCY OF TEE CITY OP CYPRESS CIVIC CENTER REDEVELOPMENT PROJECT AREA TAX ALLOCATION NOTE DATE CURRENT AMQUNT OF NOTE IN WITNESS WHEREOF, pursuant to the Owner Participa- tion Agreement dated as of September , 1990, by and between the Redevelopment Agency of the City of Cypress (the "Agency "), the City of Cypress (the "City ") and Cypress Homes, Inc. (the "Owner "), the Agency and the Owner have caused this Appendix A - to be executed and delivered this day of REDEVELOPMENT AGENCY OF THE CITY OF CYPRESS Chairman CYPRESS HOMES, INC., a California corporation By: Its: 317 APPENDIX B TO NOTE LEGAL OPINION , 19 Redevelopment Agency of the City of Cypress Cypress, California Re: Redevelopment Agency of the City of Cypress, Civic Center Redevelopment Project Area, Tax Allocation Note, in the principal amount not in excess of $4,500,000. We have acted as Bond Counsel in connection with the issuance by the Redevelopment Agency of the City of Cypress (the "Agency "), of not to exceed $4,500,000 principal amount of its Civic Center Redevelopment Project Area, Tax Allocation Note (the "Note "). The Note has been authorized and issued pursuant to the Community Redevelopment Law (Part 1 of Division 24, commencing with Section 33000, of the Health and Safety Code of the State of California) (the "Law "), Resolution No. adopted by the Agency on September 10, 1990 and that certain Owner Participation Agreement dated as of September , 1990 (the "Agreement ") by and between the Agency, the City of Cypress and Cypress Homes, Inc. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement. The Note is issuable as a single instrument dated 19 (the "Note Date "). The Note matures on the last day of 114th month following the first Payment Date and will bear interest at the annual rate of 8.00% payable as set out in the Agreement. The Note may be prepaid in whole or in part without penalty or additional fee at the option of the Agency. The principal and interest on the Note is payable in lawful money of the United States of America. As to questions of facts material to our opinion we have relied upon the representations of the Agency and the ?f9 Owner contained in the Agreement, the certified proceedings and other certifications of public officials furnished to us, and certifications by officials and representatives of the Agency and the Owner (including certifications as to the value received in exchange for the Note respecting capital improvements which are material to paragraph 4 herein), without undertaking to verify the same by independent investigation. We have examined a certified transcript of proceedings relating to the authorization and issuance of the Note. We have also examined the Constitution and statutes of the State of California, insofar as the same relate to the authorization and issuance of the Note, and the form of the Note of the issue so authorized. Based upon such examination, we are of the opinion, as of the date hereof, as follows: 1. The Note is in proper form and has been duly authorized and issued in accordance with the Constitution and the statutes of the State of California, including specifically, the Law. 2. The Note is a special obligation of the Agency payable solely from and secured by, to the extent provided in the Agreement, a pledge of Tax Increment Revenues. The Note is not a debt of the City of Cypress, the State of California or any political subdivision thereof, nor does not it constitute an indebtedness within the meaning of any constitutional or statutory provision, limitation or restriction. 3. The Agreement and the Note have been duly authorized and constitute valid and binding obligations of the Agency enforceable in accordance with their terms and provisions. 4. Under existing law, the interest on the Note (a) is exempt from present State of California personal income taxes, (b) is excludable from gross income for federal income tax purposes and (c) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted with respect to corporations (as defined for federal income tax purposes), such interest is required to be taken into account in determining adjusted current earnings. The opinions set forth in clause (b) above are subject to the condition that the Agency comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance and delivery of the ?U Note in order that interest thereon remains excludable from gross income for federal tax purposes. Failure to comply with certain of such requirements could cause the interest on the Notes to be includable in gross income retroactive to the date of issuance and delivery of the Note. The Agency has covenanted to comply with all such requirements. The rights of the Note holder and the enforceability of the Note and the Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. 3