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C17-29ACQUISITION AND FACILITY FINANCING AGREEMENT Relating to: City of Beaumont Community Facilities District No. 2016-4 (Four Seasons) THIS ACQUISITION AND FACILITY FINANCING AGREEMENT (this "Agreement"), dated as of April 5, 2017, is by and among (i) the CITY OF BEAUMONT, a municipal corporation organized and existing under the laws and Constitution of the State of California (hereinafter referred to as "City"), (ii) the City of Beaumont Community Facilities District No. 2016-4 (Four Seasons) (hereinafter, the "CFD"), a Mello -Roos Community Facilities District formed in accordance with the Mello Roos Community Facilities Act of 1982, Section 53311 et seq. of the California Government Code (the "Act"), and (iii) K. HOVNANIAN'S FOUR SEASONS AT BEAUMONT, LLC, a California limited liability company (hereinafter referred to as the "Developer"). RECITALS A. The City has formed the CFD over property owned by the Developer (the "Property'). The Property is part of the development project being constructed by the Developer known as K. Hovnanian's Four Seasons at Beaumont (the "Project"). B. The CFD was formed to finance the following: (i) a portion of the costs of certain facilities constructed prior to the formation of the CFD;. (ii) the costs of certain new facilities to be constructed by the Developer; and (iii) the costs of facilities payable through capital improvement fees and payments. This Agreement sets forth the process for financing such facilities. NOW, THEREFORE, in consideration of the mutual promises and covenants set forth below, the parties hereto agree as follows: AGREEMENT 1. Recitals. The above recitals and each of them are true and correct and are incorporated herein and become a part of this Agreement. DEFINITIONS Capitalized terms used in this Agreement, in addition to those defined in the Preamble and Recitals to this Agreement, shall have the following meanings: "Accept," "Accepted," and "Acceptance" mean, with respect to a Facility or Land Interest, acceptance by resolution of the City Council of the City of Beaumont of the proffered Facility or Land Interest. "Act" is defined in the Preamble. "Actual Cost" means, with respect to a Facility, an amount equal to the sum of (a) the Developer's actual, reasonable cost of constructing such Facility, including labor, material and equipment costs, (b) the Developer's actual, reasonable cost of preparing the Plans for such Facility, (c) the Developer's actual, reasonable cost of environmental evaluations required in the City's reasonable determination specifically for such Facility, (d) the amount of the fees actually paid by the Developer to governmental agencies in order to obtain permits, licenses or other necessary governmental approvals for such Facility, (e) the Developer's actual, reasonable cost for professional services directly related to the construction of such Facility, including engineering, inspection, construction staking, materials testing and similar professional services, (f) the costs incurred by the Developer to a third -party for construction management and supervision, which cost shall not exceed 5% of the cost of constructing such Facility, as determined pursuant to clause (a) of this definition, (g) the Developer's actual, reasonable cost of any title insurance required hereby for such Facility, (h) the Developer's actual cost of any payment and performance bonds required to construct the Facility, (1) any construction management and program management fees charged by the City for the construction of a Facility, a) any administration and oversight charges paid to the City for the implementation of this Agreement, and (k) the Developer's actual, reasonable cost of any real property or interest therein acquired from a party other than the Developer, which real property or interest therein is either necessary for the construction of such Facility (e.g.; temporary construction easements, haul roads, etc.) or is required to be conveyed with such Facility in order to convey title thereto to the City; provided, however, that no item of cost relating to a Facility shall be included in more than one category of cost under this definition; and provided further, however, that each item of cost shall be chargeable to the capital account for the Facility under generally accepted accounting principles. "Agreed -Upon_ Allocation" has the meaning given such term in Section 7(c) herein. "Authorize" or "Authorization" means either of the following, as the context requires: (i) where payment of a requisition is to be made from Sources held and maintained by the Fiscal Agent, the terms mean that the City provides whatever documentation and written authorization under the Fiscal Agent Agreement as is necessary for the Fiscal Agent to make payment on the requisition from the applicable Sources; and (ii) where payment of a requisition is to be made from Sources held and maintained by the City, the terms mean that the City authorizes and pays the applicable amount to the Developer pursuant to the requisition. "Authorized Facility Payments means the capital improvement fees and facility payments described in Exhibit A attached hereto, including the Sewer Capacity Fee Prepayment. "Bonds" means special tax bonds and other debt (as defined in the Act) authorized and issued for and on behalf of the CFD. "City Engineer" means the City Engineer of the City or such other official of the City acting in such capacity, or the designee of such official. "Conditions of Aooroval" means any and all conditions of approvals and mitigation measures imposed in connection with the granting of the land use entitlements, permits and approvals for the development of the Project, including but not limited to any subdivision improvement agreement, owner participation agreement, development agreement, or other agreement with the City relating to the development of the Project or the installation of the Facilities. 2 449206830_v6 "DewsiY' has the meaning given such term in Section 8(f) herein. "Developer Allocation" has the meaning given such term in Section 7(c) herein. "Facilities" means, collectively, the Previously -Constructed Facilities and the New Facilities. "Facility ° means, individually, as the context requires, a Previously -Constructed Facility or a New Facility. "Fiscal Aoent" means the fiscal agent, trustee, or other paying agent under the Fiscal Agent Agreement. "Fiscal Agent Agreement' means the indenture, fiscal agent agreement, resolution or other agreement under which the Bonds are issued, as such Fiscal Agent Agreement may be supplemented from time to time to accommodate additional bond issuances or as it may be amended from time to time. "Imorovement Fund" has the meaning given such term in Section 3(b) herein. "Indemnified Parties" has the meaning given such term in Section 9 herein. "Land Interest" has the meaning given such term in Section 6(a) herein. "New Facilities" means the facilities described in Exhibit B attached hereto. "Plans" means the plans, specifications, schedules and related construction contracts for the Facilities approved by, and pursuant to the applicable standards of, the City. "Pre a ment Fund" has the meaning given such term in Section 3(a) herein. "Previously -Constructed Facilities" shall mean the facilities that were bid and constructed prior to the formation of the CFD but that have not been conveyed to the City as of the date of this Agreement, as described in Exhibit A attached hereto. "Principal Pavment Date" shall mean, with respect to Bonds issued with respect to the CFD, the semi-annual payment date on which principal or sinking fund payments on such Bonds are, in any year, payable. For example, if the principal amount of Bonds are payable on September 1, the Principal Payment Date shall be September 1, regardless of whether principal payments are actually due in any particular year. "Purchase Price" means the amount paid by the City for a Facility determined in accordance with this Agreement. "Rate and Method" means the rate and method of apportionment of the special tax for the CFD. "Remainder_ Taxes" shall mean, for the CFD, the facilities special taxes collected during the Remainder Taxes Period for the CFD, calculated and payable as follows: (i) if Bonds have been issued for the CFD, then in each year as of the day following the Principal Payment Date, 3 #49206830 v6 any facilities special taxes collected from property within the CFD in excess of. (a) debt service on such outstanding Bonds for the CFD due in the current calendar year, if any; (b) reasonable administrative costs for the CFD (including any priority administrative costs); and (c) amounts required to replenish the reserve fund as of the previous Principal Payment Date; and (ii) if Bonds have not been issued on behalf of the CFD, then as of March 1 and September 1 of each year, any facilities special taxes collected from property within the CFD during the prior six month period in excess of any reasonable administrative costs for the CFD payable in the preceding six month period. Services Special Taxes shall not be considered Remainder Taxes. "Remainder Taxes Fund" has the meaning given such term in Section 3(c)(10 herein. "Remainder Taxes Period" means the period of years commencing from the fiscal year in which the first levy of special taxes in the CFD may occur to the earlier of (i) the date that at least $3,500,000 in Facilities have been financed pursuant to this, Agreement from any combination of Sources or (ii) the date that the last series of Bonds are issued for the CFD where the average coverage ratio (i.e., the aggregate amount of the Assigned Annual Special Tax authorized to be collected pursuant to the Rate and Method assuming buildout less $30,000 in priority administrative costs divided by the debt service on the Bonds) for all bond years is no more than 112%. Provided, however, that the $3,500,000 amount referenced above shall not, in any way, limit the amount of the Bonds that may be issued or the amount of Facilities that may be financed with the combination of Remainder Taxes and other Sources, including Bond proceeds. "Services Soecial Taxes" means the special taxes that are authorized to be levied under the Rate and Method for the purpose of financing various services. "Sewer Capacity Fee Prepavment" means the Authorized Facility Payment for sewer capacity that is prepaid pursuant to Section 8(c) herein and that is described in Exhibit C attached hereto. "Sources" shall mean, individually or collectively as the context requires, (i) the proceeds of Bonds for the CFD, (ii) Remainder Taxes for the CFD, (iii) prepayments of special taxes under the Rate and Method prior to the issuance of the first series of Bonds for the CFD, and (iv) prepayments of special taxes under the Rate and Method after the issuance of the first series of Bonds in the CFD to the extent that such prepayments are allocated to the costs of Facilities and Authorized Facility Payments pursuant to the Rate and Method, all as further described in Section 3 herein. "Substantially Complete(d)" shall mean, with respect to a Facility, that such Facility is substantially complete in accordance with its Plans and is functional and available for use by the public for its intended purpose, notwithstanding any final "punch list" items or final completion items still required to be completed, unless such items are required for the safe operation of such Facility. For example, a final completion item that is not required for the safe operation of a street would be the final asphalt cap or final lift. 4 #49206830_v6 AGREEMENTS In consideration of the mutual promises and covenants set forth herein, and for other valuable consideration, the sufficiency of which is hereby acknowledged, the City, the CFD, and the Developer agree as follows: 1. Recitals, Applicability. a. Recitals. The City, CFD, and the Developer represent and warrant, each to the other, that the above recitals, as applicable to each, are true and correct. b. Applicability. This Agreement is applicable to the acquisition of the Facilities and the funding of the Authorized Facility Payments from the Sources generated from the CFD. 2. Sale of Bonds. a. City Proceedincls. The City intends to issue one or more series of Bonds with respect to the CFD to finance the Facilities and Authorized Facility Payments. The Bonds shall have a term of 30 years based on debt service coverage of 110% (based upon the aggregate amount of the Assigned Annual Special Tax authorized to be collected pursuant to the Rate and Method on all Property within the CFD at buildout) and funding up to $30,000 in priority administrative costs. Developer may submit written requests that City issue Bonds, specifying requested issuance dates, amounts, and main financing terms. Following Developer's request, Developer and City will meet with City's public financing consultants to determine reasonable and appropriate issuance dates, amounts, and main financing terms. b. Potential. Limits. The Developer acknowledges that the City is under SEC investigation and that the City's access to the public markets may be limited or conditioned due to sanctions imposed by the SEC or actual or perceived risk by the marketplace. The Developer further acknowledges that as a result of the foregoing, the timing, amount, and interest rate on the Bonds may be impacted, and that it is possible that Bonds may not be able to be issued at acceptable rates or at all. 3. Sources of Funds. a. Prepayments. To the extent authorized under the Rate and Method, any prepayments of special tax obligations with respect to the CFD before the issuance of the first series of Bonds for the CFD shall be placed in a special fund to be held by the City (the "Prepayment Fund"), separate and apart from the proceeds of the Bonds and Remainder Taxes. After the issuance of the first series of Bonds for the CFD, prepayments of special tax obligations with respect to the CFD shall be deposited in the Prepayment Fund only to the extent that portions of such prepayments are required by the. Rate and Method to be allocated to the costs of Facilities and Authorized Facility Payments. Moneys in the Prepayment Fund shall be a source for the payment of the costs of the acquisition of the Facilities and the payment of Authorized Facility Payments, and shall be applied in the same manner as the proceeds of Bonds and Remainder Taxes. b. Bond Proceeds. (i) The proceeds of each series of Bonds shall be deposited, held, invested, reinvested and disbursed as provided in the Fiscal Agent Agreement. The net proceeds 5 #49206830 v6 of the Bonds shall be set aside under the Fiscal Agent Agreement in a separate improvement fund (the `Improvement Fund"). Moneys in the Improvement Fund shall be withdrawn therefrom, in accordance with the provisions of the Fiscal Agent Agreement, for payment of all or a portion of the costs of acquisition of the Facilities and the payment of Authorized Facility Payments, all as herein provided. (ii) The Developer agrees that the City shall direct the investment of the funds on deposit in the funds and accounts established by or pursuant to the Fiscal Agent Agreement, including the Improvement Fund, and that the Developer has no right whatsoever to direct investments under the Fiscal Agent Agreement. (iii) The City shall have no responsibility whatsoever to the Developer with respect to any investment of funds under the Fiscal Agent Agreement, including any loss of all or a portion of the principal invested or any penalty for liquidation of an investment. Any such loss may diminish the amounts available in the Improvement Fund to pay the Purchase Price of Facilities and to pay Authorized Facility Payments. The Developer further acknowledges that the obligation of any owner of real property in the CFD, including the Developer to the extent it owns any real property in the CFD, to pay special taxes levied in the CFD is not in any way dependent on (i) the availability of amounts in the Improvement Fund to pay for all or any portion of the Facilities hereunder or to pay any Authorized Facility Payments, or (11) the alleged or actual misconduct of the City in the performance of its obligations under this Agreement, the Fiscal Agent Agreement, any subdivision agreement or amendment thereto or any other agreement to which the Developer and the City are signatories. c. Remainder Taxes. (i) The City and CFD shall levy the Facilities Special Tax on Developed Property at the Assigned Special Tax for Facilities (as each of the foregoing terms are defined in the Rate and Method) regardless of debt service (or the absence of debt service) on the Bonds in each year during the Remainder Taxes Period, and any Remainder Taxes so collected will be a Source of funds to finance the Facilities and the Authorized Facilities Payments. (ii) All Remainder Taxes shall be placed in a special fund to be held by the City (the "Remainder Taxes Fund"), separate and apart from the proceeds of the Bonds and prepayments of special taxes. Moneys in the Remainder Taxes Fund shall be a source for the payment of the costs of the acquisition of the Facilities and the payment of the Authorized Facility Payments and shall be applied in the same manner as the proceeds of Bonds and prepayments of special taxes. d. Limitation. The City shall not be obligated to pay the Purchase Price of the Facilities or the Authorized Facility Payments except from amounts on deposit in the Prepayment Fund, the Improvement Fund, and the Remainder Taxes Fund (however such funds are denominated). The City makes no warranty, express or implied, that amounts on deposit in the Prepayment Fund, the Improvement Fund, and the Remainder Taxes Fund will be sufficient for payment of the Purchase Price of the Facilities or the Authorized Facility Payments. The Developer acknowledges that any lack of availability of amounts in the Prepayment Fund, the Improvement Fund, and the Remainder Taxes Fund to pay the Purchase Price of Facilities and the Authorized Facility Payments shall in no way diminish any obligation of the Developer with respect to the construction of or contributions for public facilities or the #49206830_v6 payment of fees required by the Conditions of Approval to the extent that the Developer is so obligated. 4. Previously -Constructed Facilities. The City shall acquire from the Developer the Previously -Constructed Facilities in the manner set forth in this Section 4. a. Review Limited. The Developer represents that the Previously -Constructed Facilities were planned, bid, and constructed by the Developer prior to the formation of the CFD. Consequently, the City's review of the Previously -Constructed Facilities will be limited to the inspection and approval of the Previously -Constructed Facility and the substantiation of the Purchase Price therefore. The Developer shall have no requirement to provide any of the following as a condition for receipt of the Purchase Price of a Previously -Constructed Facility: (1) any bidding documentation, including bids, advertisements, bid results, or the bid award for any contract associated with a Previously -Constructed Facility; or (ii) certified payroll or any other evidence that prevailing wages were paid as part of the contracts for the Previously -Constructed Facilities. b. InsLjgg#on. No payment of the Purchase Price of a Previously -Constructed Facility hereunder shall be made by the City to the Developer until the Previously -Constructed Facility has been inspected and found to be completed in accordance with the approved Plans by the City and the City has determined that the Previously -Constructed Facility is Substantially Completed. The City shall make or cause to be made periodic site inspections of the Previously - Constructed Facilities. The reasonable costs incurred by the City in inspecting and approving the Previously -Constructed Facilities and all related permit and other similar fees of the City applicable to construction of such Previously -Constructed Facilities shall be part of the Actual Costs of the Previously -Constructed Facilities. c. Acceptance of Previously -Constructed Facilities Not Required. Developer hereby agrees to sell the Previously -Constructed Facilities to the City and the City hereby agrees to use the Sources to pay the Purchase Price thereof to the Developer, subject to the terms and conditions hereof. The parties acknowledge and agree that the City shall not Accept a Previously -Constructed Facility until the entire facility has been completed and certain warranty periods have expired. However, the parties further acknowledge and agree that a Previously - Constructed Facility does not have to be Accepted by the City as a condition precedent to the payment of the Purchase Price therefor when the Previously -Constructed Facility is determined to be Substantially Completed. In any event, the City shall not be obligated to pay the Purchase Price for any Previously -Constructed Facility except from the Sources. d. Payment Requests. Once a Previously -Constructed Facility has been determined to be Substantially Complete, the Developer shall deliver to the City Manager (i) a payment request for such Previously -Constructed Facility, together with all supporting documentation substantiating the Actual Costs of the Previously -Constructed Facility, (ii) if the property on which the Facility is located is not owned by the City at the time of the request, a copy of the recorded documents conveying to the City acceptable title to the real property on, in or over which such Previously -Constructed Facility is located, and (iii) a copy of the recorded notice of completion of such Previously -Constructed Facility (if applicable). Upon receipt of a payment request (including all accompanying supporting documentation substantiating the Actual Costs but subject to the limitations in Section 4(a) above), the City Manager shall conduct a review in order to confirm that such request is complete, that such Previously -Constructed Facility identified therein was constructed in 7 #49206830 v6 accordance with the Plans therefor, and to verify and approve the eligible costs of such Previously -Constructed Facility specified in such payment request. The City Manager shall also conduct such review as is required in his discretion to confirm the matters certified in the payment request, subject to the limitations in Section 4(a) above. The Developer agrees to cooperate with the City Manager in conducting each such review and to provide the City Manager with such additional information and documentation as is reasonably necessary for the City Manager to conclude each such review. Within ten (10) business days of receipt of any payment request, the City Manager shall state whether the payment request is nevertheless approved and complete. Upon approval of the payment request by the City Manager, the City Manager shall sign the payment request and forward the same to the Fiscal Agent or the City for payment to the extent of the Sources. Any approved payment request not paid due to an insufficiency of Sources at such time shall be paid promptly following the deposit of additional Sources. 5. Bidding Contracting. Construction and Payment Requirements for New Facilities. This Section 5 shall apply with respect to any New Facilities to be constructed by the Developer and acquired with the Sources. This Section 5 does not apply to Previously -Constructed Facilities. a. Plans and S cifications. The Developer represents that it has obtained or will obtain approval of the Plans for the New Facilities from all appropriate departments of the City and from any other public entity or public utility from which such approval must be obtained. The Developer further represents that the New Facilities will be constructed in full compliance with such Plans and any change orders thereto, as approved in the same manner. Copies of all Plans for New Facilities shall be provided by the Developer to the City Engineer. b. Biddinc and Contracting. Developer may proceed to solicit bids for the construction of a New Facility and award and administer such contract in accordance with the following requirements: (i) Developer shall solicit bids for the construction of the New Facility from at least three (3) qualified contractors, provided Developer determines at least three (3) qualified contractors are reasonably available. (ii) The bidding response time shall not be less than ten (10) working days. (iii) The City Manager shall be provided .a copy of the bid package, bid submittals and tabulation of bid results prior to award of the bid. (iv) The bid shall be awarded by the Developer to the lowest responsible bidder. (v) Developer may authorize changes to construction contracts awarded for the construction of a New Facility without the prior approval of the City where such changes are consistent with the approved Plans for the New Facility. (vi) The bid package shall require that the New Facilities be constructed at prevailing wage and provide for complete compliance with any applicable law or regulation for the payment of prevailing wages for such construction. 8 #49206830 v6 c. Performance and Payment Bonds. Developer agrees to comply with all applicable performance and payment bonding requirements of the City (and other applicable public entities and/or public utilities) with respect to the construction of the New Facilities to be constructed by Developer and acquired by City with the Sources. d. Inspection. No payment of the Purchase Price of a New Facility hereunder shall be made by the City to the Developer until the New Facility has been inspected and found to be completed in accordance with the approved Plans by the City and the City has determined that the New Facility is Substantially Completed. The City shall make or cause to be made periodic site inspections of the New Facilities. The reasonable costs incurred by the City in inspecting and approving the New Facilities and all related permit and other similar fees of the City applicable to construction of such New Facilities shall be part of the Actual Costs of the New Facilities. e. Acouisition of New Facilities. Upon completion of a New Facility to be constructed by Developer and acquired by City with the Sources, Developer hereby agrees to sell the New Facility to the City and the City hereby agrees to use the Sources to pay the Purchase Price thereof to the Developer, subject to the terms and conditions hereof. The parties acknowledge and agree that the City shall not Accept a New Facility until the entire facility has been completed and certain warranty periods have expired. However, the parties further acknowledge and agree that a New Facility does not have to be Accepted by the City as a condition precedent to the payment of the Purchase Price therefor when the New Facility is determined to be Substantially Completed. In any event, the City shall not be obligated to pay the Purchase Price for any New Facility except from the Sources. f. Payment Requests. Once a New Facility has been determined to be Substantially Complete, the Developer shall deliver to the City Manager (1) a payment request for such New Facility, together with all supporting documentation substantiating the Actual Costs of the New Facility, (ii) if the property on which the Facility is located is not owned by the City at the time of the request, a copy of the recorded documents conveying to the City (or other applicable public agency that will own the New Facility) acceptable title to the real property on, in or over which such New Facility is located, and (iii) a copy of the recorded notice of completion of such New Facility (if applicable). Upon receipt of a payment request (including all accompanying supporting documentation substantiating the Actual Costs), the City Manager shall conduct a review in order to confirm that such request is complete, that such New Facility identified therein was constructed in accordance with the Plans therefor, and to verify and approve the eligible costs of such New Facility specified in such payment request. The City Manager shall also conduct such review as is required in his discretion to confirm the matters certified in the payment request. The Developer agrees to cooperate with the City Manager in conducting each such review and to provide the City Manager with such additional information and documentation as is reasonably necessary for the City Manager to conclude each such review. Within ten (90) business days of receipt of any payment request, the City Manager shall state whether the payment request is nevertheless approved and complete. Upon approval of the payment request by the City Manager, the City Manager shall sign the payment request and forward the same to the Fiscal Agent or the City for payment to the extent of the Sources. Any approved payment request not paid due to an insufficiency of Sources at such time shall be paid promptly following the deposit of additional Sources. 9 #49206830_v6 g. Insurance Re_ uirements. The Developer shall, at all times prior to the final Acceptance of any New Facility to be constructed by Developer, acquired by City and funded out of the Sources, maintain and deliver to the City evidence of and keep in full force and effect, or cause the general contractor for such New Facility to maintain and deliver to the City evidence of and keep in full force and effect, not less than the following coverage and limits of insurance, which shall be maintained with insurers and under forms of policies satisfactory to the City: (i) Workers, Compensation and Employer's Liability - Workers' Compensation coverage as required by law; Employer's Liability - limits of at least $100,000.00 per occurrence; (ii) Comprehensive General Liability - Combined Single Limit - $1,000,000.00; and (iii) Automobile Liability - Combined Single Limit - $1,000,000.00. The automobile and general comprehensive liability policies shall be accompanied by an umbrella policy with a combined limit of $5,000,000.00. All of the Developer's insurance policies shall contain an endorsement providing that written notice shall be given to the City at least 30 calendar days prior to termination, cancellation, or reduction of coverage in the policy. The Bodily Injury and Property Damage Liability policies shall contain the following: (i) An endorsement extending coverage to the City and its agents as an insured, in the same manner as the named insured as respects liabilities arising out of the performance of any work related to the City Facilities to be constructed by Developer, acquired by City and funded out of the Sources. Such insurance shall be primary insurance as respects the interest of the City, and any other insurance maintained by the City shall be excess and not contributing insurance with the insurance required hereunder. (ii) Severability of interest clause. (iii) Provision or endorsement stating that such insurance,. subject to all of its other terms and conditions, applies to the liability assumed by the Developer under this Agreement. Before awarding a contract for the construction of a New Facility to be acquired with the Sources, the Developer shall deliver to the City certificates of insurance and endorsements as to such insurance, in a form acceptable to the City, and Developer shall upon each renewal of such insurance policy provide the City with new certificates of insurance with respect thereto. The Developer shall require and verify the same insurance on the part of its contractors and subcontractors. The foregoing requirements as to the types, limits and City approval of insurance coverage to be maintained by the Developer are not intended to and shall not in any manner limit or qualify the liabilities and obligations assumed by the Developer under this Agreement. Any policy or policies of insurance that the Developer or its contractors or subcontractors elect to carry as insurance (i) against loss or damage to their construction equipment and tools or other personal property used in fulfillment of this Agreement or a contract related to the New Facilities to be constructed by Developer and funded out of the Sources shall include a provision waiving the insurer's right of subrogation against the City, and (ii) in fulfillment of this Agreement involving a dual obligee bond may contain a clause to the effect that: "provided that Principal and Surety shall not be liable to the Obligees or any of them unless the Obligees or any of them have performed the obligations to the Principal in accordance with the terms of said 10 #49206830_x6 contract; and provided, further, that Principal and Surety shall not be liable to all Obligees in the aggregate in excess of the penal sum above stated." The Developer may effect such coverage under blanket insurance policies, provided, however, that (1) such policies are written on a per occurrence basis, (ii) such policies comply in all other respects with the provisions of this section, and (iii) the protection afforded the City under any such policy shall be no less than that which would be available under a separate policy relating only to this Agreement. All policies of insurance shall be with companies licensed or approved by the State of California Insurance Commissioner and rated (i) Al2 or better with respect to primary levels of coverage, and (ii) 13+12 or better with respect to excess levels of coverage, in the most recent edition of Bests Insurance Guide and shall be issued and delivered in accordance with State law and regulations. 6. Ownership and Transfer of the Facilities. For the Facilities, the following applies: a. Land. For purposes of this Agreement, the term "Land Interest" includes fee simple We or such lesser interests (including easement and/or rights of way) as are required and approved by the City and are included in the description of the Facilities to be acquired. The Developer agrees to cause the owners of real property required for the operation and maintenance of the New Facilities to execute and deliver to the City such documents as are required to complete the transfer, free and clear of all liens, taxes, assessments, easements, leases, or other encumbrances (whether recorded or not), except for those which the City Engineer determines in writing will not interfere with the intended use of the land or related Facilities, of all Land Interests necessary for the operation and maintenance of the Facilities. If any real property required for the operation and maintenance of the Facilities is within the boundaries of any existing community facilities district (including the CFD), an assessment district, or other financing district, then the lien of the special taxes or assessments shall be a permitted exception to the Land interests conveyed to the City or other public agency, so long as the City or other public agency is exempt from the special tax or assessments to be levied by the community facilities district, assessment district, or other financing district. Completion of the transfer of the Land Interests required under this Agreement shall be evidenced by recordation of the Acceptance thereof by the City Council or the legislative body of the other public agency (as applicable), or the designee thereof. b. Facilities Constructed on Private Lands. If any Facility to be acquired is located on privately -owned land, the owner thereof shall retain title to the land and the completed Facility until Acceptance of the Facility and all associated Land Interests under Subsection 6(a) above. Pending the completion of such transfer, the Developer shall be responsible for maintaining the land and any Facilities in good and safe condition. c. Facilities Constructed on Ciry Land. If the Facilities to be acquired are on land owned by the City, the City hereby grants to the Developer a license to enter upon such land for purposes related to the construction (and maintenance pending acquisition) of the Facilities. The provisions for inspection and Acceptance of such Facilities otherwise provided herein shall apply. 11 #49206830 v6 7. Cooperation and Limitation. a. Limitation of Liability. The Developer agrees that any and all obligations of the City arising out of or related to this Agreement are special and limited obligations of the City and the City's obligations to make any payments hereunder are restricted entirely to the Sources and from no other source. The Developer agrees to pay all costs of the Facilities in excess of the Sources available therefor from time to time. No City Council member, City staff member, employee or agent shall incur any liability hereunder to the Developer or any other party in their individual capacities by reason of their actions hereunder or execution hereof. If the construction and acquisition of all the Facilities has been completed and the Purchase Price with respect thereto has been paid, and all Authorized Facility Payments have been paid, and funds remain on deposit in the Improvement Fund or become available through the issuance of additional Bonds, the City and the Developer may designate in a supplement hereto, Facilities to be constructed and acquired with such remaining or additional funds to be selected from the list of Facilities authorized by the CFD; provided, however, the City shall determine the use of such funds consistent with the terms of the Fiscal Agent agreement. b. General Cooperation. In connection with processing any payment request under this Agreement, the City and the City Engineer will use good faith efforts to request any additional information required to process the request as soon as practicable following the submission of the original materials, and to make each additional information request comprehensive and thorough to minimize the number of requests delivered, and Developer will use its good faith efforts to provide a thorough, organized, and complete response to each request. Developer is authorized to communicate directly with the City, the City Engineer, and their designees, agents, and contractors to facilitate any additional information request, to facilitate the prompt resolution of any technical issues, and to minimize the amount of time it takes to resolve outstanding issues. In addition to the foregoing, and except as otherwise is provided for herein, the City agrees that if a payment request includes more than one Facility, it will not withhold payment Authorization on any Facility that has been approved and will withhold payment Authorization only on such Facilities that have not been approved. c. Allocation of Costs. If Developer incurs costs that (1) apply to more than one Facility (e.g., soft costs) or (2) apply to both Facilities and improvements other than the Facilities (e.g., grading), Developer shall allocate, or cause the contractor to reasonably allocate, such costs between the Facilities ('in the case of clause (1)) or between the Facilities and the improvements other than the Facilities (in the case of clause (2)) (the "Developer Allocation"), The Developer Allocation shall be presumed to be reasonable and shall be accepted for all purposes of this Agreement unless the City notifies Developer of its good -faith reasonable disapproval of the allocation as part of the City's written response to the applicable payment request hereunder. If the City has properly disapproved the Developer Allocation, then the City and Developer shall promptly allocate such costs, on a reasonable basis, between the Facilities (in the case of clause (1)) or between the Facilities and the improvements other than the Facilities (in the case of clause (2)) (the "Agreed -Upon Allocation"). Based on the Developer Allocation or the Agreed -Upon Allocation, as applicable, the City shall include the costs allocated to a specific Facility as part of the Actual Costs of such Facility when such Facility is subject to a payment request. d. Exbectations of the Parties. The City understands and agrees that (i) Developer may be constructing the New Facilities prior to the availability of Sources that will be used to pay for such New Facilities, (ii) the City may be inspecting Facilities and processing and completing 12 #49206830y6 payment requests for the payment on such Facilities with knowledge that there may be insufficient Sources available at such time, (Iii) the Facilities may be conveyed to and Accepted by the City when there are insufficient Sources to pay the Purchase Prices of such Facilities, and (iv) in any such case, the payment of any approved payment requests for the Purchase Prices of such Facilities will be defen•ed until there are sufficient Sources available to pay the Purchase Prices of such Facilities, at which time the City will make such payments in accordance with this Agreement. At all times, Developer will be constructing such Facilities with the expectation that the Purchase Prices for such Facilities willbe paid solely from the Sources. The conveyance of Facilities to the City or a local agency that will owri and operate such Facilities prior to receipt of the Purchase Prices for such Facilities shall not be construed as a dedication or gift, or a waiver of the payment of the Purchase Prices, or any part thereof, for such Facilities. e. Prepayment. All capitalized terms used in this subsection (e) shall have the meanings provided such terms in this Agreement or in the Rate and Method. The Developer shall provide a notice to every homebuyer that it has the right to prepay the Special Tax for Facilities, and such notice shall be signed by such homebuyer prior to the closing on the home. The Developer agrees to keep the signed notices for a period of at least seven (7) years following execution of such notices, and will provide copies of such notices to the City within twenty (20) days of a written request for such notices. Developer and City acknowledge that the Special Tax for Maintenance. Services and Special Tax for Public Services cannot be prepaid. 8. Payment of Authorized Facility Payments. a. Authorized Facility Payments. Authorized Facility Payments are capital improvement fees or payments required to be paid as a condition of development, and such amount shall, to the extent of the Sources available from time to time and subject to satisfaction of this Section 8, be financed by the Sources in the manner set forth in this Section 8. The Authorized Facility Payments are described in Exhibit C attached hereto. b. Methods of Financing Other than the Sewer Capacity Fee Prep-avment (described in subsection (c) below), Authorized Facility Payments other than the Sewer Capacity Fee Prepayment may be financed in one of the following two ways: (i) for an Authorized Facility Payment that the Developer has paid, the City through the CFD shall, from time to time as Sources become available, use available Sources to reimburse the Developer for the Authorized Facility Payment previously paid by the Developer; and (ii) for an Authorized Facility Payment that the Developer owes but has not yet paid, the City shall, from time to time as Sources become available, use available Sources to pay or prepay the Authorized Facility Payment on the Developer's behalf. c. Payment of Sewer Capacity Fee Prepayment. The Sewer Capacity fees that are otherwise due in connection with the issuance of a building permit shall be paid in the following manner: (i) The Sewer Capacity fee shall be payable with respect to any parcel at the time that a building permit is issued, except as set forth in subsection (ii) below. The City and the Developer acknowledge that the Developer has paid the Sewer Capacity 13 #49206830y6 fee for a number of parcels in the CFD prior to the date of this Agreement, and will likely make additional payments for additional parcels prior to July 1, 2017. (ii) On July 1, 2017, the Developer shall prepay a portion of the Sewer Capacity fee for the CFD as a whole, in the amount necessary to bring the total Sewer Capacity fees collected by the City, after accounting for previous payments of the Sewer Capacity fee by the Developer, to $541,459.28. After this payment is made, no further payments of the Sewer Capacity fee shall be made by the Developer or any other party except as set forth in subsection (iii) below. When the Developer seeks a building permit for property in the CFD subsequent to July 1, 2017, the City shall not require payment of the Sewer Capacity fee as a condition of receiving the building permit. (iii) On March 1, 2018, the Developer shall pay to the City the amount of $541,459.28, which, when combined with previous payments including the payment in subsection (ii) above, will result in the full prepayment of the Sewer Capacity fee for all of the property in the CFD. From and after this date, when the Developer seeks a building permit for property in the CFD, the City shall not require payment for the Sewer Capacity fee as a condition of receiving the building permit. d. Request for Payment of Authorized Facility Payments. The Developer may request payment of Authorized Facility Payments (including the full amount of the Sewer Capacity Fee Prepayment) from the Sources by executing and submitting to the City a request for payment in a form acceptable to the City and shall include such supporting documentation to substantiate such request as the City may require. Upon receipt of such payment request, the City shall pay, or cause to be paid, the Authorized Facility Payments requested in such payment request in accordance with this Agreement and to the extent of such Sources. e. General Cooperation. In connection with processing any payment request for Authorized Facility Payments under this Agreement, the City will use good faith efforts to request any additional information required to process the request as soon as practicable following the submission of the original materials, and to make each additional information request comprehensive and thorough to minimize the number of requests delivered, and Developer will use its good faith efforts to provide a thorough, organized, and complete response to each request. Developer is authorized to communicate directly with the City and their designees, agents, and contractors to facilitate any additional information request, to facilitate the prompt resolution of any technical issues, and to minimize the amount of time it takes to resolve outstanding issues. In addition to the foregoing, and except as otherwise is provided for herein, the City agrees that if a payment request includes more than one Authorized Facility Payment, it will not withhold payment Authorization on any Authorized Facility Payment that has been approved and will withhold payment Authorization only on such Authorized Facility Payment that has not been approved. f. Pavment of Authorized Facility Payments in Advance of Availability of Sources. The Developer may be required pursuant to the Project's conditions of approval or the fee ordinance to pay the Authorized Facility Payments prior to the availability of the Sources to pay such Authorized Facility Payments. In the event such Authorized Facility Payments are paid prior to the availability of such Sources, the amounts paid to the City shall be deemed to be deposits (each a "Deposit) that are subject to refund by the City to Developer in the manner set forth in this Agreement. Any Deposits made to the City shall be deposited in a separate capital facilities account(s) and may be expended by the City in the ordinary course of business. 14 #49206830_v6 The Developer acknowledges that the City may finance Authorized Facility Payments with proceeds of tax-exempt Bonds only if the City can meet certain requirements of federal tax law. g. Return of Deposits. If the Developer has made any Deposits, then following deposit of Sources with the City for the corresponding Authorized Facility Payments, the City shall return to the Developer from the capital account in which the Deposits were deposited an amount equal to the Deposits paid by the Developer or merchant builder, without interest or other earnings thereon. The City shall be so obligated to return an amount equal to such Deposits to the Developer only to the extent that an amount equivalent to the amount of the Deposits made by the Developer is deposited with the City from the Sources. h. Deposits Allocated_ First. Sources used to pay Authorized Facility Payments shall be allocated first for return of all Deposits prior to being allocated to the payment of Authorized Facility Payments not previously deposited by the Developer. For example, if the Developer has paid $10,000 in Deposits, and Sources become available in the amount of $15,000, the City shall apply the first $10,000 of the Sources to the payment of the Authorized Facility Payments that were paid by the Deposits (and, thereafter, return the Deposits to the Developer) and use the remaining $5,000 of the Sources to the payment of Authorized Facility Payments not previously paid by the Deposits and identified in the payment request. L Aoolication of Deposits. Any Deposits that have not been returned to the Developer at the time it is determined that there will be no further Sources available (now or in the future) shall be retained by the City and may be used (to the extent it has not already been so used) for the purposes for which the Authorized Facility Payment was required, and the unrefunded Deposits shall constitute full and final payment for such Authorized Facility Payments, without any increase of any kind. j. Expectations. The Developer may pay Authorized Facility Payments (as Deposits) prior to the availability of Sources to pay such Authorized Facility Payments. Any Authorized Facility Payments paid (as Deposits) by the Developer shall be made with the understanding that such Deposits will be returned from the Sources if, and when, such Sources become available and subject to federal tax law. The payment of Deposits prior to the availability of the Sources shall not be construed as a dedication or gift of the Authorized Facility Payments, or a waiver of the return of the Deposits, it being the intention that the Authorized Facility Payments be paid by the Sources to the extent of the Sources. 9. Indemnification. Except for damages caused by the negligence or willful misconduct of any other person or entity, the Developer shall assume the defense of, indemnify and save harmless, (i) the City, its officers, employees, and agents, and each and every one of them, and (ii) CFD (collectively, the parties in (i) -(ii) shall be referred to herein as the Indemnified Parties') from and against all actions, damages, claims, losses, or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, (A) the design, engineering, and construction of the Facilities, the payment of prevailing wages on the Facilities, and any claim by parties other than the Indemnified Parties that the acquisition of the Subject Facilities from Sources is not authorized by law, (B) the failure to provide notice of the special tax to be levied by the CFD pursuant to Section 53341.5 of the Act (but only if the Developer is required to provide such notice), and (C) any alleged misstatements of fact or alleged omission of a material fact made by the Developer in the sections of any official statement provided to owners of the Bonds that are certified to be accurate in a written certificate by such Developer in connection with the issuance of such Bonds; provided, however, that the Developer shall not be required to defend or indemnify any Indemnified Party 15 #49206830_v6 as to actions, damages, claims, losses, or expenses resulting from the negligence or willful misconduct of such Indemnified Party. 10. Attorneys' Fees. In the event of any action, suit or other proceeding to enforce this Agreement or arising out of the breach of any of its covenants, conditions, agreements or provisions, the prevailing party shall be entitled to have and recover of and from the other parry all of such party's reasonable cost and expense of suit, including attorney's fees, incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. 11. Audit. The City shall have the right, during normal business hours and upon the giving of ten days written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer in constructing any of the New Facilities and any bids taken or received for the construction thereof or materials therefor. 12. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or one week following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid, addressed as follows: Developer: K. Hovnanian's Four Seasons at Beaumont, LLC 400 Exchange, Suite 200 Imine, California 92602 Attention: Project Manager City or CFD: City of Beaumont 550 East Sixth Street Beaumont, CA 92223 Attn: City Manager Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party. 13. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. 14. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Agreement may be assigned in whole or in part by the Developer, subject to the prior written consent of the City, which shall not be unreasonably withheld. 15. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance _by the other party with the terms of this Agreement thereafter. 16 949206830v6 16. Merger. No other agreement, statement or promise made by any party or any employee, officer or agent of any party with respect to any matters covered hereby that is not in writing and signed by all the parties to this Agreement shall be binding. 17. Counters arts. This Agreement may be executed in counterparts, each of which shall be deemed an original. 18. Amendments. Amendments to this Agreement shall be made only by written instrument executed by each of the parties hereto. 19. Governing Law. The provisions of this Agreement shall be governed by the laws of the State of California applicable to contracts made and performed in the State of California_ [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 17 #49206830V6 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first -above written. CITWOFBEANBy: ATTEST: tity Clerk CITY OF BEAUMONT COMMUNITY FACILITIES DISTRICT NO. 93-1 By: May(/of t Ci _ of Beaumont, acting ex officio as the legislative body of Community Facilities District No. 93-1 ATTEST: i By: ,5,� City Clerk of the City ` B wont, acting ex officio as the legislative body of Community Facilities District No. 93-1 CITY OF BEAUMONT COMMUNITY FACILITIES DISTRICT NO. 2016-4 (FOUR SEASONS) By: _�f , of thVii,' f Beaumont, acting ex officio as the legislative body of Community Facilities District No. 20164 (Four Seasons) 18 #49206830_v6 ATTEST: By: City Clerk of the City o Be, -4 Ant, acting ex officio as the iegislative body of Community Facilities District No. 2016-4 (Four Seasons) K. HOVNANIAN'S FOUR SEASONS AT BEAUMONT, LLC, A Califorma irrii€ewtr7�1- U&I By: 14 Name: .{� Title: i V 1 i o K ,1' r` 2 S ice► 19 #49206830_v6 EXHIBIT A PREVIOUSLY -CONSTRUCTED FACILITIES Attached is a list of the Previously -Constructed Facilities that may be financed by the CFD under this Agreement: Highland Spring Ave Street Improvements $841,351 Asphalt, Curb & Gutter, Sidewalk, Storm Drainage, Street Lights, etc. (includes 5% of bond amount for Dry Utilities) Loop Road & Intract Sewer Improvements $524,732 (Contractor: BT Pipeline) * These are estimates only. Actual Costs will be financed, to the extent of the Sources from time to time. A-1 #49206830_v6 EXHIBIT B NEW FACILITIES Attached is a list of the New Facilities that may be financed'by the CFD under this Agreement: Intract Sewer Improvements (TR No. 33096- $593,272 13_) * These are estimates only. Actual Costs will be financed, to the extent of the Sources from time to time. B-1 #49206830_x6 EXHIBIT C AUTHORIZED FACILITY PAYMENTS Attached is a list of the Authorized Facility Payments eligible for financing under this Agreement: 1. Authorized Facility Payments: � .gthorized_ Facii' Payments: Estlmated� Costs* Traffic Signal r unit $180 Railroad Crossincgjper unit $204 Fire Station (per unit $632 Rqacled Water(per unit $787 Emergency Preparedness_(per unit $730 Regional Park(per unit $924 Beaumont Road & Bridge Fee(per unit $10,946 2. Sewer Capacity Fee Prepayment: Sewer Capacity Fee Prepayment (total amount] $1;082,919 * These are estimates only based on current City fees. These fee amounts may change over time, and the actual costs of such fees will be financed, to the extent of the Sources from time to time. The Authorized Facility Payments will be financed only to the extent the payment for such Authorized Facility Payments does not adversely impact interest paid on the Bonds issued to finance the Authorized Facility Payments under Section 103 of the Internal Revenue Code of 1986 C-1 #49206830v6