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<br />Guaranty Agreement to Provide Financial <br />Assistance for the Bowers Museum Expansion <br />February 6, 2006 <br />Page 2 <br /> <br />Bowers Museum Corporation has fundraised over <br />expansion, but needs additional monies to <br />construction. <br /> <br />$12 million <br />completely <br /> <br />toward <br />fund <br /> <br />the <br />the <br /> <br />As part of the project financing, East West Bank of San Marino, California <br />will issue a $4 million stand-by line of credit (LOC) to the Corporation <br />toward the construction. If the funds are accessed, the Corporation <br />intends to repay the obligation through continued fundraising. However, <br />the Bank requires credit enhancement as condition of funding the LOC. The <br />primary enhancement will come from Bowers Board Chairman Emeritas Donald <br />Kennedy in the form of a primary $3 million guaranty. The Agency's <br />assistance will be in the form of an additional $1 million guaranty. <br /> <br />The Agency's asset to secure the funds is the pledgable tax increment <br />generated by the Merged Redevelopment Project Area. The Agency's guaranty <br />is subordinate to Mr. Kennedy's guaranty and is necessary to ensure the <br />expansion and redevelopment of the Museum in that other funds for this <br />purpose are not reasonably available. <br /> <br />If funds are drawn under the Agency's guaranty, repayment by the <br />Corporation will be secured by the Corporation's receipts from the City of <br />Santa Ana under the 2001 Museum Operating Agreement. Up to twenty-five <br />percent of each year's allocated internal administrative expenses <br />reimbursed by the City under the operating agreement shall be paid to the <br />Agency until any guaranty payments are made. <br /> <br />FISCAL IMPACT <br /> <br />There is no immediate <br />however, the Agency may <br />payment at some point in <br />to exceed $1,000,000. <br /> <br />fiscal impact associated with <br />be required to identify funds <br />the future to East West Bank in <br /> <br />this action; <br />and to make <br />an amount not <br /> <br /> <br />etJ <br /> <br /> <br />APPROVED AS TO FUNDS AND ACCOUNTS: <br /> <br />patricia C. Whitaker <br />Executive Director <br />Community Development Agency <br /> <br />':\N\.\~s;.-. ~ , ,'1\ .~, <br />Francisco Gutierrez f~~ <br />Executive Director ~ <br />Finance and Management Services Agency <br /> <br />PCW/JF/JL/mlr <br /> <br />H:\ACTIONS\2006 CC\JT CC-CRA GuarAgreetoProvideFinancialAssistforBowersExpansion 2-6-06.doc <br /> <br />80A-2 <br />