cmb v. city of victorville

1 Bradley D. Ross (State Bar No.1 01293) John P. Godsil (State Bar No. 174356)

2 FREEMAN, FREEMAN & SMILEY, LLP 3415 Sepulveda Boulevard, Suite 1200

3 Los Angeles, California 90034-6060 Telephone: (310) 255-6100

4 Facsimile: (310) 391-4042

CONFORMED COP OF OlUGINAL FILED Y

Los Ang@l'$ Superior Court

5 Attorneys for Plaintiffs CMB EXPORT LLC and CMB INFRASTRUCTURE INVESTMENT GROUP I, L.P.

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Jehu A. CI!llki$fe()llvc OffiQcr/C!§rk

BYMAl\Y o~ Deputy

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

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11 CMB EXPORT LLC, a California 12 limited liability company;

CMB INFRASTRUCTURE INVESTMENT 13 GROUP I, L.P., a California limited

partnership,

14 Plaintiffs,

15 vs.

16 CITY OF VICTORVILLE; VICTORVILLE 17 REDEVELOPMENT AGENCY; SOUTHERN

CALIFORNIA LOGISTICS AIRPORT 18 AUTHORITY; and DOES 1 through 25,

inclusive,

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Defendants.

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BC403987 CASE NO.

COMPLAINT FOR DAMAGES AND EQUITABLE RELIEF BASED UPON CLAIMS OF:

(I) BREACH OF WRITTEN CONTRACT;

(2)

(3)

BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING;

FRAUD - INTENTIONAL MISREPRESENTATION;

(4) FRAUD - PROMISE MADE WITHOUT THE INTENT TO PERFORM;

(5)' FRAUD - CONCEALMENT;

(6) NEGLIGENT MISREPRESENTATION;

(7) UNFAIR COMPETITION;

(8) INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE; AND,

(9) NEGLIGENT INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE

898771.1 COMPLAINT

1 Plaintiffs CMB Export LLC and CMB Infrastructure Investment Group I, L.P. allege as

2 follows:

3 1. CMB Export LLC ("CMB") is a California limited liability company that IS

4 authorized to conduct business in the State of California.

5 2. CMB Infrastructure Investment Group I, L.P. ("CMBIIG") is a California limited

6 partnership that is authorized to conduct business in the State of California.

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CMB and CMBIIG are sometimes jointly referred to herein as "Plaintiffs."

On information and belief, Defendant City of Victorville ("City") is a municipality

9 located in the State of California.

10 5. On information and belief, Defendant Victorville Redevelopment Agency ("VRA")

11 is a redevelopment agency formed under the laws of the State of California that operates within the

12 City.

13 6. On information and belief, Defendant Southern California Logistics Airport Authority

14 ("SCLAA") is a joint exercise of powers authority comprised of the City and the VRA.

15 7. The true names and capacities, whether individual, corporate, associate, or otherwise,

16 of Defendants DOES 1 through 25, inclusive, are unknown to Plaintiffs, who, therefore, sue said

17 Defendants by such fictitious names. Plaintiffs will ask leave of Court to amend this Complaint to

18 show the true names and capacities of such fictitiously-named Defendants when such information

19 is ascertained. Plaintiffs are informed and believe, and based upon such information and belief

20 allege, that each Defendant designated as a DOE is responsible under law in some manner,

21 negligently, contractually or otherwise, for the events and happenings referred to herein, and

22 proximately thereby caused the damages and injuries to Plaintiffs as herein alleged. The City, VRA,

23 SCLAA and DOES 1 through 25 are referred to herein collectively as "Defendants."

24 8. Plaintiffs are informed and believe, and on this basis allege, that at all times herein

25 mentioned, Defendants, and each of them, were the agents, servants, employees and/or co-

26 conspirators of the other Defendants, and each of them, and, in doing the things herein described,

27 were acting in the course and scope of such agency, employment and/or conspiracy, and with the

28 permission and consent of each of the other Defendants. In the alternative, Plaintiffs are informed

-2-898771.1 COMPLAINT

I and believe, and on this basis allege, that at all times herein mentioned, each of the Defendants was

2 the alter ego of each of the other Defendants, with such a unity of interest and ownership between

3 them that the individuality, or separateness, of each Defendant has ceased, and the adherence to the

4 fiction of their separate existence would sanction fraud and/or promote injustice.

5 9. Jurisdiction and venue are appropriate in this Court because the written agreement

6 at issue in this dispute which was executed by Plaintiffs on the one hand, and the City, VRA and

7 SCLAA on the other hand (which written agreement is further described below) provides, in part:

8 "This Letter shall be governed by and construed in accordance with the internal, substantive laws

9 of the State of California, and the state and federal courts of Los Angeles County, California shall

10 have exclusive jurisdiction and venue over equitable disputes arising herefrom."

11 10. Patrick Hogan ("Hogan") is the president of CMB, and William Hurley ("Hurley")

12 is its Executive Director. In 1997, the United States Department of Justice, Immigration &

13 Naturalization Service granted CMB a federal designation as a "Regional Center." Such federal

14 designation authorizes CMB to offer investment opportunities to alien immigrant investors who are

15 interested in obtaining permanent resident status in the United States in accordance with the EB-5

16 Visa Pilot Program (the "EB-5 Program"). CMB's federal designation was reaffirmed in April 2007

17 by the Department of Homeland Security, United States Citizenship and Immigration Service

18 ("CIS").

19 11. To gain lawful permanent residency in the United States under the EB-5 Program, an

20 alien immigrant must invest either $500,000 or $1,000,000 (depending, in part, on the strength of

21 the local economy of the geographic area to which a Regional Center designation applies) with a

22 Regional Center enterprise that leads to the creation of ten new jobs. In general, CMB' s function

23 is to raise and pool capital from alien immigrant investors and invest such funds within the

24 geographic area of CMB's Regional Center, and work to ensure that the requisite jobs are created.

25 12. As part of the foregoing program and CMB's designation as a Regional Center, the

26 federal government granted CMB a geographic area to which CMB Regional Center applies. Such

27 area includes the former George Air Force Base, now known as the Southern California Logistics

28 Airport ("SCLA"). SCLA is presently located in the City. The reuse and redevelopment of the


I SCLA is currently under the authority and control of City officials through two agencies - the VRA

2 and the SCLAA.

3 13. Since 1997, CMB has been the only federal Regional Center with authority to operate

4 in the area that includes the SCLA. CMB's business model involves developing investment

5 programs for alien immigrant investors that qualifY each such investor for permanent resident status

6 under the EB-5 Program. CMB sets up qualified investment programs within a designated territory

7 (such as SCLA) and markets the programs overseas to potential investors. In this regard, CMB

8 works with a network oflicensed foreign immigration consulting firms, and maintains relationships

9 with at least a dozen such firms. The primary markets for the visa offered under the EB-5 Program

10 (the "EB-5 Visa") are China and South Korea, two countries that CMB has focused upon. In

II connection with CMB's investment program that has the objective to raise capital to invest within

12 the area that includes SCLA, CMB created a California limited partnership known as CMIIG to

13 facilitate the investments made by alien immigrant investors and the contemplated activities of the

14 Regional Center.

15 14. At all relevant times, Terry Caldwell ("Caldwell") was the mayor of the City, and

16 also served as the chairperson of both the VRA and SCLAA. At all relevant times, Jon Roberts

17 ("Roberts") was the city manager and the "chief executive officer" of the City, the VRA and

18 SCLAA.

19 15. On or about January 16, 2008, CMB was contacted by Mike Gilmore oflnland

20 Energy, a company which had built a power plant in the City, and which has a long-standing and

21 close relationship with City officials.' Ultimately CMB was invited to meet with City officials to

22 discuss the EB-5 Program. This significant meeting occurred on or about January 25, 2008, and was

23 attended by numerous individuals, including (a) representatives of the City, namely, Caldwell,

24 Roberts, three members of the City council, the City's finance director, and City attorney Andre de

25 Bortnowsky, (b) representatives or persons associated with Inland Energy, namely, Buck Johns,

26 Tom Barnett, Mike Gilmore, Tony Pena, Keith Metzler, Dick Cole, and Yasuhiro Fujita, and, (c)

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28 The President of Inland Energy, Inc. is William "Buck" Johns, and Tom Barnett is a Vice President at the company.


I representatives ofCMB, namely, Hogan and Hurley. During the meeting, which was presided over

2 by Caldwell, the following transpired:

3 • The City asked CMB to raise $200 million from investors in the CMB

4 Regional Center to be invested with the City in a public works project (the "Project").

5 • Roberts displayed charts and graphs pertaining to the City's sources of

6 revenue and its overall financial strength.

7 • Roberts assured CMB that repayment of the $200 million investment would

8 not be an issue because the City would see to it that CMB' s investors would be timely repaid.

9 • The attendees agreed that the City and CMB would seek to schedule a joint

10 meeting with the CIS in an effort to enhance the probability of success of the contemplated

II undertaking.

12 • The City, CMB and Buck Johns discussed traveling together to Asia to

13 participate in ajoint marketing campaign and seek investment dollars for CMB's Regional Center

14 at SCLA.

15 16. By the conclusion of the meeting, CMB and the City agreed to proceed with efforts

16 to raise $100 million for the Project. In particular, it was contemplated by the City and CMB that

17 CMB would seek to raise $100 million from alien immigrant investors, which funds would be

18 invested in CMBIIG, CMBIIG would then lend such funds to the City, the VRA, and the SCLAA

19 for use in connection with the Project, and the City, the VRA, and the SCLAA would then ultimately

20 repay the funds lent by CMBIIG. Thereafter, the parties continued in their joint efforts to promote

21 the Project, and several meetings occurred between the City and CMB. In February 2008 (as a result

22 of the prior meetings) CMB received an authorization letter from the City to raise $100 million for,

23 among other things, certain defined projects at SCLA. A copy of the authorization letter is attached

24 to this Complaint as Exhibit A, and incorporated by this reference.

25 17. In addition, and as part of the continued attempt of the parties to raise funds for the

26 Project, a meeting was scheduled for February 13, 2008 between the City and CMB. Although

27 Hogan understood that the meeting would occur at City Hall, upon his arrival, he was directed

28 instead to an offsite location - specifically, to a bar/restaurant known as "Grumpy's." At that initial


1 Grumpy's meeting, among other things, the parties agreed that they would jointly travel to

2 Washington, D.C. to meet Morrie Berez ("Berez"), an official of the CIS who is primarily

3 responsible for the EB-5 Program.

4 18. Thereafter, and on or about March 4, 2008, certain City officials and SCLAA staff

5 provided CMB with a tour of the SCLA. The tour was also attended by various immigration

6 consultants, including CMB' s strategic partner in Asia, Daniel Lee. During the SCLA tour, Roberts:

7 (a) discussed the credit worthiness of the City, and the sources of the City'S revenue for repayment

8 of any investments; (b) displayed charts reflecting the City'S revenue sources and its sales tax

9 revenue; and, (c) represented that the City had the ability to increase various user fees and water and

10 utility charges of its residents if necessary to meet the City's debt obligations.

II 19. The parties continued their efforts to promote the Project. However, on about March

12 27,2008, Hogan learned (from Berez) that Roberts had unilaterally scheduled a meeting for March

13 30, 2008 between only the City and Berez (despite the prior agreement that such a meeting would

14 also involve CMB). When confronted with this information, Buck lohns (who had acted as a point

15 person for the City on several issues relating to CMB) assured Hogan that there was nothing at all

16 to be concerned about regarding this development since this was merely a "government-to-

17 government" meeting that was only arranged because Roberts had other business in Washington,

18 D.C. In fact, in an effort to convince Hogan that Roberts would jointly represent the City and CMB

19 at the CIS meeting, Buck lohns requested that CMB furnish various CMB materials for Roberts to

20 use at the meeting. CMB, believing that the City was acting in good faith and continuing to promote

21 CMB's Regional Center, complied with these requests and provided Buck lohns, Caldwell and

22 Roberts with: (a) pro forma support letters for certain congressional representatives to sign; (b) a

23 pro-forma letter regarding the Project that Roberts would ask Berez to sign; (c) a list of talking

24 points for the CIS meeting; and, (d) an in-depth email from Hogan describing, among other things,

25 CMB's know-how, business strategy, and key information regarding how the Regional Center

26 business functions.

27 20. The foregoing materials were provided to the City by CMB in an effort to educate

28 Roberts in advance of the CIS meeting.


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21. Subsequent to the March 30, 2008 CIS meeting, CMB began to question whether the

City remained committed to CMB' s Regional Center. In response to such concerns, however, CMB

was repeatedly assured that the City intended to proceed as previously discussed - that is, in

promoting CMB' s Regional Center for purposes of raising funds to be loaned to the Defendants for

the Project. For example, Buck Johns assured Hogan that the March 30th CIS meeting occurred so

that the City, as part of its due diligence, could learn more about CMB, and he further assured

Hogan, that the notion of the City seeking to set up its own regional center was not discussed at the

8 CIS meeting.

9 22. Despite the foregoing assurances, on April 15,2008, Buck Johns (in reply to an e-

10 mail transmitted by Caldwell) sent an e-mail to Caldwell, Roberts, and others, which was

11 inadvertently copied to CMB' s outside legal counsel. Buck Johns' April 15, 2008 e-mail provides:

12 "CMB advises their 'Regional Center' encompasses other 'closed

13 military bases' .... hence the need to 'include' others in their 'loan

14 program.' The best solution is to from [sic] our own 'Regional

15 Center' ... which we explored when we meet [sic] with EB-5 head,

16 Morrie Berez. He advised it would take in the range of 6 months to

17 one year to get it fully 'street ready' .... and something we should

18 clearly explore. That done, we can 'de-couple' with any of the other

19 bases. Hopefully our 'time and resources' will generate a very

20 significant capital source .. .in the very near term!!"

21 23. As a result of this e-mail, and consistent with its prior requests to the City, CMB

22 insisted that the City, VRA and SCLAA confirm in a signed writing that each of the foregoing

23 entities would live up to their previously proclaimed intentions to work with CMB, and not seek to

24 obtain a regional center designation and thereby compete with ,CMB. 2

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27 2 That signed writing ultimately took the form of an April 16, 2008 letter agreement, commonly referred to by the parties as the "MOU," a copy of which is attached as Exhibit B and

28 incorporated herein by this reference. As set forth in Exhibit B, the MOU is a "legally binding and enforceable agreement."


I 24. On the same day as the foregoing e-mail, Buck Johns also insisted that Hurley travel

2 to the City and make a presentation (along with economist Dr. John Husing) to the City council

3 regarding CMB, the EB-5 Program and the Project. The presentation, CMB was informed, was

4 necessary so that Caldwell and Roberts could obtain the council's approval to travel to Asia and

5 participate in the planned joint marketing tour. At the April 15,2008 city council meeting, Hurley

6 relayed the following information based on the parties' prior dealings and discussions:

7 • The City had promised to: (a) ensure that CMB investors would be repaid,

8 (b) identifY sources of repayment; and, (c) utilize the money provided through the investments in a

9 manner that was consistent with both the February 2008 authorization letter (Exhibit A), and thejobs

10 report prepared by Dr. John Husing.

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12 (Exhibit A).

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• The City was expected to perform according to the earlier authorization letter

• The City would be the entity that actually put the money to use (e.g, with the

14 VV2 power plant), and would directly benefit from the funds.

15 25. In addition, on behalf of CMB, Hurley extended a special thanks to Buck Johns who

16 helped bring CMB and the City together, and played a role in coordinating the planning and the

17 activities among the parties. Finally, Hurley provided the City council with a description of Hogan's

18 contribution to the endeavor, including his extraordinary work with Berez to obtain approval of

19 CMB's Group A and Group B investors.

20 26. As part of the same meeting, Dr. John Husing also made a presentation to the City

21 council which included a power point entitled "CMB Bridge Loan Impact on the Economy."

22 27. Following the foregoing presentations, the City council unanimously approved

23 moving forward with CMB, including the planned joint marketing trip between CMB and the City,

24 and the travel plans of Caldwell and Roberts to Asia.

25 28. Caldwell, Roberts and Buck Johns traveled to South Korea and China, along with

26 Hogan, to jointly market the CMB Regional Center and investment program with the City. The

27 promotional tour occurred between April 18 and 26, 2008, and during that time span CMB

28 introduced the City officials and Buck Johns to CMB's contacts, immigration consultants, and


1 clients.3 The City officials also made numerous statements during the promotional tour assuring

2 potential investors that the City was in full support of CMB' s Regional Center and would repay any

3 investments made. For example, at one presentation Roberts (on behalf of the City, the VRA and

4 the SCLAA) declared:

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"If you choose to invest with Victorville, we will

continue our successful path and we will pay you back

your investment."

In yet another presentation during the promotional tour, Roberts (again, on behalf

9 ofthe City, the VRA and the SCLAA) exclaimed:

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"We have a very successful track record. If you

choose to invest in Victorville we will invest your

dollars into infrastructure, we will attract private

investment, we will create jobs. And the City of

Victorville will return to you your investment."

As previously promised, Caldwell executed the MOU (Exhibit B) on behalf of the

16 City, VRA and SCLAA at a public ceremony in Shanghai, China. The ceremony took place at the

17 office of one of CMB immigration consultants. During that gathering, the City officials again

18 assured the audience that the City was fully committed to CMB' s Regional Center.

19 31. As part of the binding provisions of the MOU (which is expressly characterized as

20 a "legally binding and enforceable agreement"), the City, VRA and SCLAA (collectively defined

21 in the MOU as the "Borrower"), on the one hand, and CMB and CMB Infrastructure Investment

22 Group I, L.P., on the other hand, agreed to the following:

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"Non-Disclosure. To the greatest extent permitted by applicable law,

for a period of two (2) years from the date of this Letter ... the

Borrower shall not disclose, directly or indirectly, the terms of or

27 These introductions were made only because Caldwell and Roberts assured CMB that the MOU would be executed at a public ceremony during the promotional tour. The terms of the

28 MOU had been agreed to by the parties prior to the commencement of the promotional tour, and was also previously executed by Hogan.


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898771.1

reveal the existence of this Letter ... to any person, firm or entity,

other than their respective attorneys, accountants, and representatives

who are required to be informed thereof in connection with their

approval of the proposed transactions or their representation of the

parties in connection with the transactions."

The MOU also provided:

"For a period of sixty (60) days from the date of this Letter, neither

the Borrower nor its officers, directors, representatives, employees,

consultants, or agents shall, directly or indirectly: (a) solicit or pursue

substantive negotiations or discussions with any person or entity,

other than CMB, with respect to the use of funds raised in connection

with the EB-5 Program; or (b) enter into a transaction with any person

or entity, other than CMB, concerning the use of funds raised in

connection with the EB-5 Program."

The MOU recited the following further critical agreement of the parties:

" Additionally, the Borrower (a) shall not take any action, directly or

indirectly, to circumvent and/or interfere with CMB's investment

program and the efforts ofCMB to raise capital for the Borrower, (b)

shall exclusively use CMB for raising capital by means of the EB-5

Program, and (c) shall not, directly or indirectly, seek designation as

a regional center."

The parties also agreed as follows in the MOU:

"For a period of two (2) years from the date of this Letter ... the

Borrower agrees that it shall not use, or permit the use of, any of the

information relating to CMB, CMB Lender or CMB's EB-5

investment program, including, without limitation, CMB's and/or

CMB Lender's business plans, CMB's and/or CMB Lender's

marketing plans, CMB's and/or CMB Lender's investor documents,

-10-COMPLAINT

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15 35.

names of investors, CMB's and/or CMB Lender's referral sources, and

names of consultants under contract with CMB, furnished to the

Borrower and/or its agents, consultants or representatives, in

connection with this Letter and the transactions contemplated herein

("Confidential Information"), except publicly available or freely

usable material as otherwise obtained from another source, in a

manner or for a purpose detrimental to CMB or CMB Lender or

otherwise than in connection with this Letter and the transactions

contemplated hereby. The Borrower shall not, and the Borrower shall

cause its directors, officers, employees, consultants, agents and

representatives not to, disclose, divulge, provide or make accessible

any of the Confidential Information to any person or entity, other than

their responsible officers, employees, advisors or attorneys or

otherwise as required by law or regulation."

From CMB's perspective, the joint promotional tour to Asia was a success. Among

16 other things, the City reaffirmed its commitment to CMB's program, the City, VRA and SCLAA

17 reaffirmed their respective obligations under the MOU, and the parties were moving forward with

18 finalizing the loan documents relating to the Project. However, that progress came to an end

19 following a May 15,2008 meeting between the parties and their respective legal counsel (which

20 meeting was once again conducted at Grumpy's). At that meeting the City, VRA and SCLAA

21 disclosed to Hogan that they did not intend to honor the MOU. Rather, the City relayed that despite

22 the MOU, and notwithstanding the multiple prior contrary representations (including those made

23 during the joint marketing trip to Asia), the City would not be a co-borrower on any loan made by

24 CMBIIG.

25 36. Following the May 15,2008 meeting, and throughoutthe balance of that month, CMB

26 attempted to keep the deal and Project alive by encouraging the City, VRA and SCLAA to perform

27 their obligations under the MOU, and to live up to the various representations made in Asia and

28 elsewhere. However, the City, VRA and SCLAA could not be convinced to do so as they


1 communicated their intention to establish their own Regional Center at the SCLA and surrounding

2. areas, and directly compete with CMB. Subsequently, on or about June 10,2008, CMB understands

3 that the City publically promoted its plan to set up its own Regional Center.

4 37. Based upon the totality of the circumstances, Plaintiffs are informed and believe that

5 the City, VRA and SCLAA never intended to abide by either the MOU, or their other representations

6 made to CMB, its consultants, and its clients. Instead, Plaintiffs are informed and believe that the

7 negotiation of the MOU, and its subsequent execution, were nothing more than a phase of the

8 ongoing and continuing fraudulent scheme, whereby the City, VRA and SCLAA sought to gain

9 access to CMB's business model, know-how, key contacts, and other confidential information - and

lOuse those assets and information to improperly and unfairly compete against Plaintiffs.

11 38. As a result of the conduct of the City, VRA, SCLAA, their principals, and those

12 acting in concert with them, CMB has been damaged. CMB has lost clients, its relationships with

13 several international marketers have been harmed or destroyed, and CMB' s reputation and brand in

14 the marketplace for the EB-5 Program have been severely marginalized.

15 39. On August 12, 2008, Plaintiffs submitted a formal written Claim ("Claim") to. the

16 City, VRA and SCLAA regarding the disputes described in this Complaint. A conformed copy of

17 the face-page ofthe Claim is attached hereto as Exhibit C, and incorporated by this reference.

18 40. The Claim was denied by City and VRA on September 16,2008, and notice of that

19 denial was transmitted by the City and the VRA on September 17,2008, as reflected by the letter that

20 is attached hereto as Exhibit D, and incorporated by this reference.

21 41. The Claim was subsequently denied by SCLAA on October 21, 2008, and notice of

22 that denial was purportedly transmitted by the SCLAA on October 22, 2008, as reflected by the letter

23 that is attached hereto as Exhibit E, and incorporated by this reference.4

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27 4 Although the proof of service affixed to the SCLAA notice is dated October 22, 2008,

28 for reasons unknown to Plaintiffs, the document was not received by CMB' s representatives until late November 2008.


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4 42.

FIRST CAUSE OF ACTION

(For Breach of Written Contract Against

the City, VRA and SCLAA, and Does 1 through 5)

Plaintiffs repeat and reallege each and every allegation set forth in Paragraphs I

5 through 41, inclusive, as though fully set forth herein.

6 43. On or about April 16, 2008, Plaintiffs entered into a written agreement ("the MOU")

7 with the City, VRA and SCLAA. As previously noted, a copy of the MOU is attached hereto as

8 Exhibit B, and incorporated herein by this reference.

9 44. As a direct and proximate result ofthe conduct described above, including the failure

10 of the City, VRA and SCLAA to fulfill their duties under the MOU, the City, VRA and SCLAA

11 breached the MOU. On information and belief, the City, VRA and SCLAA have also breached the

12 MOU, by, inter alia, (a) taking action to circumvent and/or interfere with CMB's investment

13 program and the efforts of CMB to raise capital for the City, VRA and SCLAA, (b) failing to

14 exclusively use CMB for raising capital by means of the EB-5 Program, and (c) directly or indirectly

15 seeking designation as a regional center within the same geographic area encompassed by CMB's

16 Regional Center.

17 45. Plaintiffs have fulfilled any and all of their obligations under the MOU, except as

18 prevented or excused by the City, VRA and SCLAA's conduct.

19 46. As a result of the City, VRA and SCLAA's breach of the MOU, Plaintiffs have been

20 damaged in an amount according to proof.

21 47. Unless restrained and enjoined, Defendants will continue to commit acts in breach

22 of the MOU, all to Plaintiffs' irreparable harm. It will be extremely difficult to ascertain the amount

23 of compensation which would afford Plaintiffs adequate relief for these wrongs. Accordingly, an

24 award of both preliminary and permanent injunctive relief is both necessary and appropriate,

25 including a preliminary and permanent injunction restraining and enjoining Defendants, their agents,

26 setvants, and employees and all person acting thereunder, in concert or conspiracy with, or on their

27 behalf, from (a) taking any action to circumvent and/or interfere with CMB 's investment program,

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1 (b) using someone other than CMB for raising capital by means of the EB-5 Program, and ( c)

2 directly or indirectly seeking designation as a regional center.

3 48. The MOU provides in part that: "Should any action be commenced between the

4 parties hereto or theirrepresentatives concerning the Binding Provisions of this Letter, the rights and

5 duties of any person or entity hereunder, solely as between the parties hereto, the party prevailing

6 in such proceedings will be entitled to the reasonable attorney's fees and expenses of counsel and

7 court costs incurred by reason of such actions." Plaintiffs have engaged counsel to prosecute this

8 action and have become obligated to pay attorneys fees and costs in connection therewith.

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12 49.

SECOND CAUSE OF ACTION

(For Breach of the Covenant of Good Faith and Fair Dealing

Against the City, VRA and SCLAA, and Does 1 through 5)

Plaintiffs repeat and reallege each and every allegation set forth in Paragraphs 1


14 50. In every contract, there is an implied covenant of good faith and fair dealing which

15 provides that neither party shall take any actions which deprive the other of the benefits of the

16 contract. Such a implied covenant existed in connection with the MOU.

17 51. As a result of the actions and inactions of the City, VRA and SCLAA, as alleged

18 above, the City, VRA and SCLAA have breached the implied covenant of good faith and fair

19 dealing.

20 52. As a direct and proximate result of the City, VRA and SCLAA's breach of the

21 implied covenant of good faith and fair dealing, Plaintiffs have been damaged in an amount

22 according to proof.

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26 53.

THIRD CAUSE OF ACTION

(For Fraud - Intentional Misrepresentation Against




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54. As noted above, on or about January 25, 2008, the City (through Roberts and/or

2 Caldwell) on behalf of itself, the VRA and the SCLAA, represented that: (I) it wanted CMB to r~ise

3 $200 million from investors in the CMB Regional Center to be invested with the City in the Proj ect;

4 (2) the funds would be repaid from the City's sources of revenue, as confirmed in part by the charts

5 and graphs displayed by Roberts pertaining to the City's sources of revenue and its overall financial

6 strength; (3) repayment of the $200 million investment would not be an issue because the City

7 would see to it that CMB's investors would be timely repaid; (4) the City and CMB would seek to

8 schedule a joint meeting with the CIS in an effort to enhance the probability of success of the

9 contemplated undertaking; and, (5) the City would participate in a joint overseas marketing

10 campaign and seek investment dollars for CMB's Regional Center at SCLA. Subsequently, on

II February 13, 2008, the City represented that: (6) the parties would jointly travel to Washington, D.C.

12 to meet Berez to promote CMB' s investment program as it pertained to the Project. As further noted

13 above, on or about March 4, 2008, during a tour of the SCLA, the City, VRA and SCLAA (through

14 Roberts): (7) discussed the credit worthiness of the City, and the sources of the City's revenue for

15 repayment of any investments made by alien immigrant investors; (8) once again displayed charts

16 reflecting the City's revenue sources and its sales tax revenue; and, (9) represented that the City had

17 the ability to increase various user fees and water and utility charges of its residents if necessary to

18 meet the City's debt obligations, including any debt obligations owed to CMBIIG. As further noted

19 above, after Hogan learned (from Berez) that Roberts had unilaterally scheduled a meeting for March

20 30, 2008, between only the City and Berez (despite the prior agreement that such a meeting would

21 also involve CMB), the City, VRA and SCLAA (through their authorized spokesperson, Buck Johns)

22 assured Hogan that there was nothing at all to be concerned about regarding the foregoing meeting.

23 In fact, on behalf of the City, VRA and SCLAA, Buck Johns requested that CMB furnish various

24 CMB materials for Roberts to use at the meeting for the purpose of promoting CMB's Regional

25 Center. As also noted above, subsequent to the March 30, 2008 CIS meeting, CMB was repeatedly

26 assured that the City intended to proceed as previously discussed - that is, in promoting CMB' s

27 Regional Center. For example, Buck Johns indicated to and assured Hogan that the March 30th CIS

28 meeting occurred so that the City, as part of its due diligence, could learn more about CMB, and, he


1 further assured Hogan that the notion of the City seeking to set up its own regional center was not

2 discussed at the CIS meeting. As also highlighted above, during the promotional tour that occurred

3 between April 18 and 26, 2008, City officials made numerous statements assuring potential investors

4 that the City was in full support ofCMB's Regional Center and would repay any investments made.

5 For example, at one presentation Roberts declared: "If you choose to invest with Victorville, we

6 will continue our successful path and we will pay you back your investment." In yet another

7 presentation during the promotional tour, Roberts exclaimed: "We have a very successful track

8 record. If you choose to invest in Victorville we will invest your dollars into infrastructure, we will

9 attract private investment, we will create jobs. And the City of Victorville will return to you your

10 investment."

11 55. The representations made by the Defendants were in fact false. The true facts were

12 that the City, VRA and SCLAA never intended to abide by either the MOU, or their other

13 representations to CMB, its consultants, and its clients. Instead, Plaintiffs are informed and believe

14 that the authorization letter, the negotiation of the MOU, and its subsequent execution, were nothing

15 more than a phase of the ongoing and continuing fraudulent scheme, whereby the City, VRA and

16 SCLAA sought to gain access (and have obtained such access) to CMB's business model, know-

17 how, key contacts, and other confidential information - and use those assets and information to

18 improperly and unfairly compete against Plaintiffs. On information and belief, despite Defendants'

19 contrary representations, the true facts were as follows: (1) the City did not want CMB to raise $200

20 million (or even the $100 million specified in the MOU) from investors in the CMB Regional

21 Center; (2) the City would not repay the funds raised by CMB with the City's sources of revenue,

22 and never intended to do so; (3) the City would not see to it that CMB's investors would be timely

23 repaid because the City never intended to be a co-borrower of the obligation that would be owed to

24 CMBIIG; (4) the City would not seek to schedule a joint meeting with CIS, and instead would

25 ultimately meet with CIS in an effort to proceed with a Regional Center investment that excluded

26 CMB; (5) the City utilized the joint overseas marketing effort as an event to promote itself - with

27 the intention of proceeding with obtaining investments for its own Regional Center, to the exclusion

28 ofCMB's Regional Center; (6) the City discussed setting up its own Regional Center at the March


1 30'h CIS meeting; (7) the City was not in full support ofCMB's Regional Center; and, (8) the City

2 would seek to directly compete with CMB and attempt to set up its own Regional Center.

3 56. When the Defendants made the representations noted above, they knew them to be

4 false and made these representations with the intention to deceive and defraud Plaintiffs and to

. 5 induce the Plaintiffs to act in reliance on these representations in the manner hereafter alleged, or

6 with the expectation that the Plaintiffs would so act.

7 57. Plaintiffs, at the time these representations were made by the Defendants and at the

8 time Plaintiffs took the actions herein alleged, were ignorant of the falsity of the Defendants'

9 representations and believed them to be true. In reliance on these representations, Plaintiffs were

10 induced to and did act as noted above. Had Plaintiffs known the actual facts, they would not have

1 I taken such action. Plaintiffs' reliance on the Defendants' representations was justified because of

12 Defendants' repeated assurances that they could be trusted.

I3 58. As a proximate result of the fraudulent conduct of Defendants as herein alleged,

14 Plaintiffs were damaged.

15 59. The aforementioned conduct of the Defendants was an intentional misrepresentation,

16 deceit, or concealment of a material fact known to the Defendants with the intention on the part of

17 the Defendants of thereby depriving Plaintiffs of property or legal rights or otherwise causing injury,

18 and was despicable conduct that subjected Plaintiffs to a cruel and unjust hardship in conscious

19 disregard of the Plaintiffs' rights, so as to justifY an award of exemplary and punitive damages.

20

21

22

23 60.

FOURTH CAUSE OF ACTION

(For Fraud - Promise Made Without Intent To Perfonn Against




25 61. As noted above, on or about January 25, 2008, the City (through Roberts andlor

26 Caldwell) promised that: (I) it wanted CMB to raise $200 million from investors in the CMB

27 Regional Center to be invested with the City in the Project; (2) the funds would be repaid from the

28 City's sources of revenue, as confinned in part by the charts and graphs displayed by Roberts


1 pertaining to the City's sources of revenue and its overall financial strength; (3) repayment of the

2 $200 million investment would not be an issue because the City would see to it that CMB' s investors

3 would be timely repaid; (4) the City and CMB would seek to schedule a joint meeting with the CIS

4 in an effort to enhance the probability of success of the contemplated undertaking; and, (5) the City

5 would participate in a joint overseas marketing campaign and seek investment dollars for CMB's

6 Regional Center at SCLA. Subsequently, on February 13,2008, the City represented that: (6) the

7 parties would jointly travel to Washington, D.C. to meet Berez to promote CMB's investment

8 program as it pertained to the Project. As further noted above, on or about March 4, 2008, during

9 a tour of the SCLA, the City, VRA and SCLAA (through Roberts): (7) discussed the credit

10 worthiness of the City, and the sources of the City's revenue for repayment of any investments made

11 by alien immigrant investors; (8) once again displayed charts reflecting the City's revenue sources

12 and its sales tax revenue; and, (9) represented that the City had the ability to increase various user

13 fees and water and utility charges of its residents if necessary to meet the City's debt obligations,

14 including any debt obligations owed to CMBIIG. As further noted above, after Hogan learned (from

15 Berez) that Roberts had unilaterally scheduled a meeting for March 30, 2008, between only the City

16 and Berez (despite the prior agreement that such a meeting would also involve CMB), the City, VRA

17 and SCLAA (through their authorized spokesperson, Buck Johns) assured Hogan that there was

18 nothing at all to be concerned about regarding the foregoing meeting. In fact, on behalf of the City,

19 VRA and SCLAA, Buck Johns requested that CMB furnish various CMB materials for Roberts to

20 use at the meeting for the purpose of promoting CMB' s Regional Center. As also noted above,

21 subsequent to the March 30, 2008 CIS meeting, CMB was repeatedly assured that the City intended

22 to proceed as previously discussed - that is, in promoting CMB's Regional Center. For example,

23 Buck Johns indicated to and assured Hogan that the March 30th CIS meeting occurred so that the

24 City, as part of its due diligence, could learn more about CMB, and he further assured Hogan that

25 the notion ofthe City seeking to set up its own regional center was not discussed at the CIS meeting.

26 As also highlighted above, during the promotional tour that occurred between April 18 and 26, 2008,

27 City officials made numerous statements assuring potential investors that the City was in full support

28 of CMB's Regional Center and would repay any investments made. For example, at one


1 presentation Roberts declared: "If you choose to invest with Victorville, we will continue our

2 successful path and we will pay you back your investment." In yet another presentation during the

3 promotional tour, Roberts exclaimed: "We have a very successful track record. If you choose to

4 invest in Victorville we will invest your dollars into infrastructure, we will attract private investment,

5 we will create jobs. And the City of Victorville will return to you your investment."

6 62. At the time Defendants made the promises to Plaintiffs, Defendants had no intention

7 of performing those promises.

8 63. The promises were made by Defendants with the intent to induce Plaintiffs to act in

9 the manner described above, including, inter alia, providing Defendants with access to Plaintiff s

10 confidential information, key contacts, know-how, clients and business model, and participating in

11 the joint promotional tour.

12 64. Plaintiffs, at the time these promises were made and at the time Plaintiffs took the

13 actions herein alleged, were ignorant of Defendants' secret intention not to perform and, Plaintiffs

14 could not, in the exercise of reasonable diligence, have discovered Defendants' secret intention. In

15 reliance on the promises of Defendants, Plaintiffs acted as noted above, including inter alia,

16 providing Defendants with access to Plaintiffs confidential information, key contacts, know-how

17 clients and business model, and participating in the joint promotional tour. If Plaintiffs had known

18 of the actual intention of Defendants, Plaintiffs would not have taken such action.

19 65. Defendants failed to abide by their promises. Plaintiffs are informed and believe that

20 the negotiation of the MOU, and its subsequent execution, were nothing more than a phase of the

21 ongoing and continuing fraudulent scheme, whereby the City, VRA and SCLAA sought to gain (and

22 eventually obtained) access to CMB's business model, key contacts, know-how, and other

23 confidential information - and use those assets and information to improperly and unfairly compete

24 against Plaintiffs.

25 66. As a proximate result of the fraudulent conduct of Defendants as herein alleged,





1 the Defendants ofthereby depriving Plaintiffs of property or legal rights or otherwise causing injury,



4

5

6

7 68.

FIFTH CAUSE OF ACTION

(For Fraud - Concealment/Suppression of Fact Against




9 69. As noted above, on information and belief, from January 2008 through May 2008,

10 the City, VRA and SCLAA (through the individuals identified above), and despite the

11 representations set out above, concealed from Plaintiffs the fact that the City, VRA and SCLAA

12 never intended to abide by either the MOU, or their other representations to CMB, its consultants,

13 and its clients. Instead, Plaintiffs are informed and believe that the City, VRA and SCLAA

14 concealed various facts in order to gain access to CMB's business model, key contacts, know-how,

15 and other confidential information - and use those assets and information to improperly and unfairly

16 compete against Plaintiffs. On information and belief, despite Defendants' contrary representations,

17 Defendants concealed and suppressed the following facts from Plaintiffs: (1) the City did not want

18 CMB to raise $200 million (or even $100 million as specified in the MOU) from investors in the

19 CMB Regional Center; (2) the City would not repay the funds raised by CMB with the City's

20 sources of revenue, and never intended to do so; (3) the City would not see to it that CMB's

21 investors would be timely repaid because the City never intended to be a co-borrower of the

22 obligation that would be owed to CMBIIG; (4) the City would not seek to schedule ajoint meeting

23 with the CIS, and would instead ultimately meet with CIS on its own in an effort to proceed with a

24 Regional Center investment that excluded CMB; (5) the City utilized the joint overseas marketing

25 effort as an event to promote itself-with the intention of proceeding with obtaining investments for

26 its own Regional Center, to the exclusion of CMB' s Regional Center; (6) the City discussed setting

27 up its own Regional Center at the March 30th CIS meeting; (7) the City was not in full support of

28 CMB's Regional Center; and, (8) the City would seek to directly compete with CMB and attempt


I to set up its own Regional Center. The concealment and suppression of these facts was likely to

2 mislead Plaintiffs and did in fact mislead Plaintiffs in the light of the other representations, include

3 those representations made by Defendants concerning Defendants' stated intentions to work joint

4 with CMB and promote CMB's Regional Center.

5 70. The representations and failures to disclose information and suppressions of

6 information herein alleged to have been made by the City, VRA and SCLAA were made with the

7 intent to induce Plaintiffs to act in the manner herein alleged in reliance thereon.

8 71. Plaintiffs, at the time these failures to disclose and suppressions of facts occurred, and

9 at the time Plaintiffs took the actions herein alleged, were ignorant of the existence ofthe facts that

10 Defendants suppressed and failed to disclose. If Plaintiffs had been aware of the existence of the

11 facts not disclosed by the Defendants, Plaintiffs would not have acted, as they did, and would not

12 have: (1) provided Defendants with Plaintiffs' confidential information, and know-how; (2)

13 provided Defendants with access to Plaintiffs' contacts and clients; (3) participated in the joint

14 promotional trip; and (4) otherwise assisted Defendants in gaining knowledge that Defendants would

15 use to compete with Plaintiffs. Plaintiffs reliance upon Defendants was justifiable in light of the

16 various assurances provided by Defendants regarding their trustworthiness.

17 72. As a proximate result of the fraudulent conduct of Defendants as herein alleged,




.21 the Defendants of thereby depriving Plaintiffs of property or legal rights or otherwise causing injury,



24

25

26

27 74.

SIXTH CAUSE OF ACTION

(For Negligent Misrepresentation Against

the City, VRA and SCLAA, and Does I through 10)




1 75. When Defendants made these representations identified in paragraph 54, above, they

2 had no reasonable ground for believing them to be true in that Defendants intended to act in a

3 contrary manner, and had no intention of acting as they represented they would act.

4 76. Defendants made the representations identified in paragraph 54, above, with the

5 intention of inducing Plaintiffs to act in reliance on these representations in the manner alleged, or

6 with the expectation that the plaintiff would so act.

7 77.

8 was damaged.

9

10

11 78.

As a proximate result of the Defendants' representations, as herein alleged, Plaintiff

SEVENTH CAUSE OF ACTION

(For Unfair Competition Against All Defendants)



13 79. By engaging in the wrongful conduct described herein, Defendants have engaged, and

14 continue to engage, in unfair competition against Plaintiffs.

15 80. As a direct and proximate result of these acts of unfair competition, Plaintiffs have

16 suffered damages, including without limitation damage to reputation, lost goodwill, disruption to

17 business, and lost profits, in an amount subject to proof.

18 81. In committing these acts of unfair competition, Defendants, or some of them, have

19 acted in bad faith, oppressively, fraudulently, and maliciously with the intent to harm Plaintiffs and

20 in willful and conscious disregard of Plaintiffs' rights. Plaintiffs therefore seeks an award of

21 punitive damages in an amount sufficient to punish Defendants' willful misconduct and deter future

22 misconduct.

23 82. Unless restrained and enjoined, Defendants will continue to commit acts of unfair

24 competition, all to Plaintiffs' irreparable harm. It will be extremely difficult to ascertain the amount

25 of compensation which would afford Plaintiffs adequate relief for these wrongs. Accordingly, an

26 award of both preliminary and permanent injunctive relief is both necessary and appropriate.

27

28

898771.1

-22-COMPLAINT

1

2

3

4 83.

EIGHTH CAUSE OF ACTION

(For Intentional Interference With Prospective

Economic Advantage Against All Defendants)



6 84. As a result of the City, VRA and SCLAA's relationship with Plaintiff as described

7 above, the City, VRA and SCLAA was and is aware of Plaintiffs' business relationships with a

8 number of third parties, which relationships had and have a probability of future economic benefit

9 to Plaintiffs. Among such business relationships which had and have a probability of future

10 economic benefit to Plaintiffs are the group of approximately 500 potential investors that attended

11 the presentations during the overseas joint marketing tour in April 2008 , the group of approximately

12 30 potential investors that toured the SCLA, Co-Invest Korea, Inc., Visas Consulting Group, Can

13 Achieve, Inc., and Well-Trend United Inc.

14 85. Plaintiffs are informed and believe that Defendants sought to disrupt Plaintiffs'

15 business relationships by seeking to directly compete with Plaintiffs, while unfairly and

16 inappropriately using Plaintiffs' business plans, business model and strategies.

17

18

86.

87.

Defendants' conduct described in paragraph 85 was intentional.

Plaintiffs are informed and believe that Defendants' conduct actually disrupted

19 Plaintiff s business relationships described above.

20 88. Defendants' conduct alleged as alleged herein above constitutes, among other things,

21 unfair competition and fraud, and also violates the MOU.

22 89. Defendants' conduct, including, but not limited to, their pursuit oftheirown Regional

23 Center to the exclusion of CMB' s Regional Center has made it impossible for Plaintiffs to follow-

24 through in their business relationships with the aforementioned entities, among others. Defendants'

25 conduct has injured Plaintiffs' ability to conduct business in an a advantageous and profitable

26 manner, causing Plaintiffs to be damaged in an amount according to proof. Further, Defendants' acts

27 alleged above were intentional, willful, wanton, malicious, and oppressive, were undertaken with

28


1 the intent to defraud, and justifY the awarding of exemplary and punitive damages according to

2 proof.

3 90. Defendants threatens to and unless restrained, will disrupt other business relationships

4 between Plaintiffs and Plaintiffs' key contacts and clients, to Plaintiffs' great and irreparable injury,

5 for which damages would not afford adequate relief, in that they would not.completely compensate

6 for the injury to Plaintiffs' business reputation and goodwill.

7

8

9

10 91.

NINTH CAUSE OF ACTION

(For Negligent Interference With Prospective

Economic Advantage Against All Defendants)



12 92. As a result of the City, VRA and SCLAA's relationship with Plaintiff as described

13 above, the City, VRA and SCLAA was and is aware of Plaintiffs' business relationships with a

14 number of third parties, which relationships had and have a probability of future economic benefit

15 to Plaintiffs. Defendants' performance of their obligations, promises and representations to Plaintiffs

16 would affect and impact Plaintiffs' business relationships with those third parties.

17 93. Plaintiffs are informed and believe that Defendants sought to disrupt Plaintiffs'

18 business relationships by seeking to directly compete with Plaintiffs, while unfairly and

19 inappropriately using Plaintiffs' business plans, business model and strategies.

20 94. Due in part to the relationship between Plaintiffs and Defendants, including their prior

21 dealings, the risk of harm to Plaintiffs' business relationships caused by Defendants' above-

22 referenced conduct was foreseeable.

23

24

95.

96.

Defendants nevertheless negligently failed to perform their obligations to Plaintiffs.

Defendants' conduct has injured Plaintiffs' ability to conduct business in an a

25 advantageous and profitable mauner, causing Plaintiffs to be damaged in an amount according to

26 proof.

27 97. Defendants threatens to and unless restrained, will disrupt other business relationships

28 between Plaintiffs and Plaintiffs' key contacts and clients, to Plaintiffs' great and irreparable injury,


•

1 for which damages would not afford adequate relief, in that they would not completely compensate

2 for the injury to Plaintiffs' business reputation and goodwill.

3 PRAYER FOR RELIEF

4 WHEREFORE, Plaintiffs pray judgment against Defendants, and each of them, as follows:

5

6

7

1.

2.

3.

For compensatory damages in an amount according to proof;

For punitive damages according to proof;

For a preliminary and permanent injunction restraining and enjoining Defendants,

8 their agents, servants, and employees and all person acting thereunder, in concert or conspiracy with,

9 or on their behalf, from (a) taking any action to circumvent and/or interfere with CMB' s investment

10 program, (b) using someone other than CMB for raising capital by means of the EB-5 Program, (c)

11 directly or indirectly seeking designation as a regional center; (d) unfairly competing with Plaintiffs;

12 and, (e) disrupting Plaintiffs' relationships with Plaintiffs' key contacts and clients;

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4.

5.

6.

7.

For attorneys fees in an amount according to proof;

For interest as allowed by law at the prevailing legal rate;

For costs of suit incurred herein;

For any other further and different relief as determined by the Court.

DATED: December 16, 2008 FREEMAN, FREEMAN & SMILEY, LLP

898771.1

~-

By: ·---JTo~TP~.~~si~I-------------------------

Attorneys for laintiffs CMB EXPORT LLC and CMB INFRASTRUCTURE INVESTMENT GROUP I, L.P.

-25-COMPLAINT

KEY CITY OF THE HIGH DESERT

TERRY E. CALDWELL MAYOR

JOANN ALMOND MAYOR PRO TEM

RUDY CABRIALES COUNCIlMEMBER

February 14, 2008

Mr. Patrick Hogan President CMB Ex~ort LLC 4507 49 Avenue Moline, Illinois 61265

HOME OF THE SAN BERNARDINO COUNTY FAIR

BOB HUNTER COUNCllMEMBER

MIKE ROTHSCHILD COUNCllMEMBER

JON B. ROBERTS CITY MANAGER

. RE: Authorization to Raise Capital- Public Improvement Projects at Southern California Logistics Airport

Mr. Hogan:

As a resull of our meeting on Friday, January 25, 2008, both the Victorville Redevelopment Agency and the Southem California Logistics Airport Authority (SCLAA) remain interested in working with your firm for the purpose of raising $100 million for needed public infrastructure proJects under the Federal EB-5 Visa program. As you are aware, SCLAA has been principally responsible since 1996 for redeveloping the former George Air Force Base. Since that time, .it has invested approximately $200 million of its own money to improve SCLAA so that it is capable of becoming a fully dedicated business and logistics park that is capable of integrating ground, rail and aviation transportation. To date, SCLA has successfully attracted businesses from logistics and aviation industries. Those businesses include Newell-Rubbermald, General Electric Aircraft Engines, Leading Edge, FedEx and Pratt & Whitney, to name a few. Altogether, SCLA has created an estimated 3,000 new jobs.

To further our efforts in creating additional employment opportunities, SCLA is undertaking or is in the process of undertaking the following public projects:

• SCLA Infrastructure Improvements - To support the proposed d,evelopment of phases 1A, 1B, and 1C for the Stirling Capital development, roadway, public utility Improvements and building demolition that are necessary to facilitate the build-out of 6.2 million square feet of industrial space by Stirling Capital.

To date, SCLA has spent $17.2 million to pay for demolition and the construction of public infrastructlJre to facilitate phase 1 A and may use CMB funds as to

CITY OF VICTORVILLE 14343 CIVIC DRIVE. P.O. BOX 5001 • VICTORVILLE, CALIFORNIA 92393·5001 • (760) 955·3854 • fAX (760) 269-0011

E·mail: [email protected]

EXHIBIT A

further "bridge financing" for those monies already spent. Phases 1 Band 1 C remain outstanding. To further the development of phases 1B and 1C, an additional $47 million is required by the Airport Authority. To assist with providing background for this transaction, In October of 2006 the Airport Authority approved a Disposition and Development Agreement with Stirling Capital which conveyed 34Q-acres of property from the Authority to Stirling Capital in exchange for the commitment by Stirling Capital to bulld-out or construct 6.2 million square feet of Industrial/manufacturing and warehouse space. That build-out is phased over three phases and each phase Is expected to build-out within 30-months of each other. Stirling has further established that Phase I could result in up to 14.7 million square feet of development depending upon market conditions. They further state Phase I completion In 2011 (see Stirling report). Currently, the result of phase 1 has caused the build-out of a 450,000 square foot warehouse being leased by Newell-Rubbermald. Additionally, Stirling Capital broke ground on two cross dock facilities last November totaling 500,000 square feet and an additional 1.000,000 square foot building is expected to break ground by March 1. 2008. As a result of the Stirling Capital transaction. the Authority is responsible for constructing public infrastructure to all of the sites. Upon completion of all three phases. the public infrastructure costs are expected to total approximately $64 million. This Is not Including Stirling development funds (see Stirling "Economic and Fiscal Impacts of the Southern California Logistics Airport").

• Municipal Utilities - The City of Victorville is currently pursuing a permit from the California Energy Commission for the purpose of developing a 550-megawatt combined cycle power plant with 50-megawatt renewable solar field. A large share of the funding for its eqllipment purchases are expected to come from construction financing. Amounts obtained from CMB will be repaid from permanent financing secured by the power plant upon completion. All of the power generated from Victorville 2 (as It is commonly referred) will be sold back into the California grid. Construction Is expected to start in summer of 2008 and be completed by summer of 2010. To assist In satisfying its short term financing requirements relating to equipment purchases, the City requires up to $170 million. Upon completion of the project, total. development costs for the W2 power plant construction are expected to total approximately $700 million. For more detailed Information, I have attached Information for your review.

• Rail Development with BNSF - The City is currently constructing the first phase of rail installation to Southern California Logistics Airport. The cost for phase 1 tunnels a rail spur under National Trails Highway. piping a major drainage course that would otherwise bisect the rail spur and constructs a rail bed necessary to facilitate the physical rail installation in subsequent phases. This first phase of the rail project Is a precursor to a much larger domestic Intermodal facility which (when combined with the cost to construct Phase 1) is expected to cost approximately $200 million. The design for the intermodal will permit 1.5 million container lifts a year and upon its completion. the estimated job creation by the rail project alone Is expected to be approximately 12.240 over 20 years. Adding to this, our economic study estimates a stimulus of $1.6 billion In private

investment in real estate development over 20 years with a total land development of 1,800 acres. The cumulative warehouse/Industrial space created In response to the building of the Intermodal facility Is estimated at 33 million square feet. For more information, I have attached Information for your review (see SNSF Economic Report).

• SCLA West End Industrial Wastewater Treatment Facility • Currently the Airport Authority and Redevelopment Agency are planning the construction of a wastewater treatment facility to deal specffically with the wastewater discharge reqUirements for industrial users that have a high strength discharge. The treatment plant Is Intended to pre-treat all wastewater discharge from Industrial users to the tertiary levels bringing the wastewater to Title -22 standards and making that water available for reuse as reclaimed water. This project is necessary to become competitive in attracting Industrial manufactUring users to SCLA and without the described wastewater treatment facility; SCLA will not be able to capitalize on attracting industrial manufacturers to its facility. Currently, this plant Is intended to Immediately serve a proposed Industrial user that has a discharge requirement of 1.2 million gallons of wastewater per day. The proposed project cost Is estimated at $30 million.

As you can see that our financing needs are fairly great. The total development costs for the agencies and private developers for the projects outlined above are estimated to be as much as $977 million. The SCLA and RDA are seeking $100 million from CMS to apply to the projects above. If CMS is able to raise more than $100 million, we are prepared to consider a second partnership. As It relates to repayment of CMS funds used for development at SCLA. with the exception of the funds used for the power plant, SCLA will use available tax increment revenue or bond proceeds· obtained from the pledge of tax increment to repay CMS funds. Finally, this letter shall serve as authorization to proceed in marketing this opportunity on our behalf and raise capital necessary to help finance these projects. To assist you In assessing the Authority, I have enclosed audited financial statements for the Authority, along with Its Official Statement for Its most recent bond Issue along with economic studies prepared for SCLA and the SCLA rail project.

Please feel free to contact me if you have any questions or comments.

Sincerely.

Terry E. Caldwell Mayor

City ( f Victorville 1434:· Civic Drive Victo",iIIe, California 92393-5001

Victorville Redevelopment Agency 1434:1 Civic Drive Victorville, California 92393-5001

CMB EXPORT, LLC 4507 49th Avenue

Moline, Illinois 61265

April 16, 2008

Soutt.em California Logistics Airport Authority 1434:1 Civic Drive . Victcrville, California 92393-500 I

Re: Loan to City of Victorville, Victorville Redevelopment Agency and Southern California Logistics Airport Authority

Ladi"s and Gentlemen:

1his leUer of understanding (this "Letler") sets forth certain tentlS and conditions upon whicl (a) CMS Infraslnlcture investment G1"oup I, L,P., a California limited partnership ("CMS Lender"), of which CMB Export, LLC, a California limited liability company ("CMB"), is the gene",1 partner, will agree to lend up to $100,000,000 to the City of Victorville (the "City"), the Victnrville Redevelopment Agency ("VRA") and the Southern California Logistics Airport Auttority (the "SCLAA"; and together with the City and the VRA, the "Borrower''), and (b) the Bornwcr will agree to borrow such funds from CMB Lender.

Background

CMS has been approved as a federally-designated "regional center" under applicable tede'al immigration statutes. The geographic area of CMB's "regional center" consists of the Cali 'omia counties of San Bernardino, Riverside and Sacramento (collectively, the "Regional Cen'er Area").· As a regional center, CMB is authorized, through eMB Lender, to raise capital fron. foreign investors who seek to obtain permanent residency in the United States in acccrdance with the ES-5 investor program of the Immigration and Nationality Act (the "EB-5 Prop1.m"). CMS's objective is to invest the capital invested in CMB Lender by such foreign investors so as to empower economic redevelopment agencies and businesses within the Reg.onal Center Area. CMB further intends that CMB Lender's investments, which may take the brm of a loan or loans, will stimulate job creation· and increase regional productivity within the Regional Center Area so that investors in CMB Lender will be able to seek permanent resi,lency in the United States in accordance with the EB-5 Program. In particular, under the E8-5 Program, each investor in eMB Lender will be required to invest $500,000, which invtstment must lead to the creation of ten (10) new jobs within the Regional Center Area. in

.'_.-._. . .. tT- .. EXHIBIT 12

•

City of Victorville Victolville Redevelopment Agency South=rn California Logistics Airport Authority April 16, 2008 Page:!

gener.ll, under CMB's investment program, an investor's investment of $500,000 is retained in an escrow account until the investor has filed an 1-526 Petition with the United States Citizenship and Immigration Services (the "USCIS"), and the USCIS has approved the Petition. At such time. :he investment is made available to CMB Lender for investment.

eMB is informed that the VRA is a public body corporate and politic, duly organized and exisli 19 pursuant to the Community Redevelopment Law of the State of California. CMB is furth. r informed that the SCLAA is a public body corporate and politic, duly organized by the City. CMB is also informed that since 1996, the SCLAA has been principally responsible for rcdev=loping the property site at which the Southern California Logistics Airport (also known as the Victorville Airport) (the "SCLA'') is located. This site was formerly used as aUnited States Air F:>rce Base known as George Air Force Base, which was closed in 1992. Since 1996, the SCLhA has invested a substailtial amount of funds to improve the SCLA with the objective of devebping a fully dedicated business and logistics business park that is capable of integrating grourd, rail and aviation transportation. As of the date hereof, CMB is informed that the SCLILA has attracted businesses from logistics and aviation industries to the SCLA, including, withcutlimitation, General Electric Aircraft Engines, Leading Edge, Federal Express and Pratt & Whitlley. To further its efforts in creating additional employment opportunities at the SCLA, the City, the VRA and the SCLAA ale each undertaking, or are in the process of undertaking, or are colle<:tiveiy undertaking, the public projects described in that certain letter, dated February 14, 2008 sent by the City to CMB, a true and correct copy of which is attached hereto as Exhibil "An (the "City Letter") and incorporated herein by this reference. Such 'public projects (coillctively, the "Development Projects") (a) consist of those projects specified in the City Lette', namely, Il)e infrastructure improvements by the SCLAA, the development of a SSO megawatt combined cycle power plant by the City (the "Power Plant"), railroad development by the City for rail installation to the SCLA, and the construction of a waste water treatment facility by tte VRA and the SCLAA, and (b) are further described in that certain report commonly refened to by the parties hereto as the "John Husing Report" (the "Husing Report"). The City, the 'i RA and the SCLAA are seeking to borrow up to $100,000,000 from CMB Lender to use in conno:ction with the Development Projects. and the City has authorized CMB to raise capital nece: sary to help finance the Development Projects.

Part One -Nonbinding Provision.

The following numbered paragraphs of this Letter (collectively, the "Nonbinding Prov sions") reflect Our mutual understanding of the mauers described in them. but each pany hereta acknowledges that neither the Nonbinding Provisions nor any prior or subsequent course of ccnduct or dealing between the panles are intended to create or constitute any legaUy binding oblieation between CMS and CMS Lender, on the one hand, and the City, the VRA and the SCL .... A, on the other hand, and none or the parties shall have any liability to the other parties with respect to the Nonbinding Provisions. Whether or not a fully integrated, definitive loan agref,ment, and other related documents (collectively, the "Definitive Loan Documents"). including a promissory note, are prepared, authorized, executed or delivered by the panies, no

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City cfVictorville Victolville Redevelopment Agency South.m California LoSistics Airport Authority April 16,2008 Page :1

party to this Letter shall have any liability to any other party to this Letter based upon, arising from, or relating to the hionbinding Provisions.

I. Loan Terms. This LeUer does not set forth all of the requirements of the loan contenplated hereunder. This leiter is an expression or the intent ofCMB Lender and outlines, in summary format, certain of the major points of understanding that will be the basis for the Definitive Loan Documents that will be drafted by CMB. The following are certain of the more basic terms and conditions of the proposed loan to be made by CMB Lender to the Borrower:

I . I Loan Amount. As set forth in the City LeUer, the Borrower has expressed a desire to borrow up to'Sloo,OOO,OOO from CMB. To that end, theamounl orthe loan that eMB Lend"r intends to make 10 the Borrower will be up to SIOO,OOO,OOO (the "Loanj; Provided, howe~er, that the Borrower understands thaI the amount of funds that CMB Lender can actually loan 10 the Borrower is dependent on the amounl of capital raised by CMB Lender from foreign inves :ors on or prior to March 19, 2009, and the Borrower agrees that CMB Lender does not guarantee that the entire amount of the Loan shall be available to Borrower. Borrower further undelslands that to maintain in compliance with the rules and regulations promulgated under the EB-5 Program, CMB Lender is required to lend funds to other borrowers within the Regional Cent.,r Area, and accordingly, the Borrower agrees that a portion of the funds raised by CMB Lend:r will be allocated to such borrowers. Subject to the preceding sentence, the Loan shall be fundld by eMB Lender in no more than two hundred (200) tranches, each in the minimum amomt of $500,000 (each, a "Tranch"), and each Tranch will be disbursed to the Borrower at such time as determined by CMB Lender, provided that CMB Lender anticipates that each Tran"h will be disbursed when an investor in CMB Lender has obtained approval of the inve!lor's 1-526 Petition from the USCIS. IfCMB Lender determines il is able to make a Tranch of $~OO,OOO 10 the Borrower, Borrower agrees that it will accept and borrow such funds. CMB Lender shall nOI be required to disburse any Tranch to the Borrower if (a) there has been a delln'!l by the Borrower under the Definitive Loan Documents or an adverse change in or 10 the condition, financial, operational or otherwise, of the Borrower, or (b) CMB Lender is unable 10 mise sufficient capital.

1.2 Commitment to Borrow Funds. The Borrower understands and agrees that it is ::MB Lender's intent to endeavor 10 raise up to $100,000,000 to meel the needs expressed by t.I: e Borrower to fund the Development Projects. Based on such expression of desire, as well as Ih: authorization set forth in the City LeUer, the Borrower further understands and agrees that eMil andlor CMB Lender will eKpCnd significant effort and funds in establishing and marketing eMil's investment program overseas to foreign investors. In consideration of such efforts and expenditure of funds, Ihe Borrower agrees thaI to the extent thaI eMB Lender raises capital to lend to the Borrower, Borrower shall borrow such funds from CMB Lender, up to $100,000,000. The Borrower further agrees that the Borrower (a) shall, to the greatest extent permitted by appr cable law, keep any and all information concerning CMB's investment program cont" dential, (b) shall not take any action, directly or indirectly, to circumvent andlor interfere with CMB's investment program and the efforts of eMB to raise capital for the Borrower, (c)

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City (f Victorville Victo-ville Redevelopment Agency Southern California Logistics Airport Authority April 16, 2008 Page·1

shall :xclusively use CMB for raising capital by means or the EB·5 Program, and (d) sball not, directly or indirectly, seek designation as a regional center.

1.3 Use of Loan Proceeds. Proceeds of the Loan shall be used by the Borre wer only for the 'Development Projects and for no other purposes, iooluding, without limit. tion, payment of existing debt andIor projects other than those specified in the City Lener.

1.4 J,.o!!" Term. The term of the Loan will be for seventy-two (72) months ("Lo.n Term"). The Loan Term will commence once the first Tranch Is advanced to the Borr! wer (the "Loan Commencement").

1.5 Interest Rate. The annual rate of interest applicable to the outstanding prine pal balance of the Loan will be five percent (5.0%). Interest shall be calculated on an actual days basis ofa year equal to 365/366 days.

1.6 Payments. Payment of the entire outstanding principal amount of the Loan shall be due upon the expiration of the Loan Term (the "Maturity Date"), and shall be paid in immediately available funds. The Borrower shall not be permitted to prepay the Loan, or any portilln thereof, at any time prior to the expiration of thirty-six (36) months following the Loan Com nencement (the "Prepayment Date"), without first obtaining the written consent of CMB Lender, which consent may be withheld in CMB Lender's sole and absolute discretion. Borruwer acknowledges that the EB-.5 Program requires, among other things, that the Loan rema.n outstanding at least until the Prepayment Date and that if the Borrower were to prepay the Loan, Or any portion thereof, prior to the Prepayment Date, such prepayment will jeopardize CMf·'s investment program and the ability of foreign investors to obtain the benefits underlbe EB·~ Program and will cause CMB and CMB Lender to suITer irreparable harm and damages. Afte. the expimtion of the Prepayment Date, Borrower will be permitted to pay, without any pena .ty, all or any portion of the Loan. Payments of accrued interest sball be paid quarterly throlghout the Loan Term on·eaeh January I, Aprill, July I, and October I of each calendar year.

l. 7 Source of Repayment. The Borrower intends that, among others, the soun:e of funds to repay the Loan may be from (a) the tax incremental revenue and bond proc' :eds generated by the Development Projects, (b) permanent fmancing secured by the City upor the completion of the Power Plant, and (c) other sources of funds that may available to Bornwer from time to time.

1.8 Default. A default by tbe Borrower under the Definitive Loan Documents will include, without limitation, the occurrence of one or mQre of Ihe following evenls: (a) the Borower's failure to payor perform any of ils obligations; (b) the breach or misrepresentation by II ,e BQrrower of any of ils representation and warranties: (c) the use of Loan prQceeds for any purp~se other than those expressly permined under the Definitive Loan Documenls; (c}the BorrDwer's insolvency or inability to meets ils obligations; or (d) the failure to commence ali of the Development Projects within two (2) years following the Loan Commencement.

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City of Victorville V ictOJ ville Redevelopment Agency South:rn California Logistics Airport Authority April 16. 2008 Page !;

1.9 Late Charges; Default Bate and Remedjes, A late charge of three percent (3.0%) of the amount dlle shall be paid by the Borrower with respect to each payment of interest not mlde withIn ten (10) calendar days after the same was due and payable (which ten (10) day perioe. is the "Ornce Period',) ("Delinquent Interest"). A late charge of three percent (3.0%) of the anount due shall be paid by the Borrower with respect to the payment of principal on the Matwity Date (or such earlier date, if applicable) if such payment of principal is nol made by the MatUlity Date (or such earlier due date, if applicable) ("DelInquent Principal"). In addition, each amou 1t of Delinquent Interest and Delinquent Principal plus the applicable late charge (together. a "Delinquent Payment") shall bear interest at a default rate equal to the lesser of ten percent (10.0'10) or the maximll/l1 rate permined by law, Upon a default by the Borrower, CMB Lender will hve the right to pursue any and all legal remedies AV8nable to eMB Lender. includIng the right to declare the entire amount of outstandIng principal and interest immediately due and payalle, and CMB Lender will be entitled to recoup any and all costs incurred, Including, without limitation, anorney' fees •

. 2. Definitive Agreement. CMB Lender, on the one hand, and the Borrower, on the other hand, agree to use reasonable diligence to commenoc good faith negotiations in order to exoct.te and deliver the Dcfmitive Loan Documents acceptable to the parties hereto. In addition 1(' Ih,' tenns set forth herein, the Definitive Loan Documents entered into by the parties will contain <aJ customary and usual representations, warranties, covenants, conditions and indennifications, including repres!lIItations by CMB Lender that its investment program comJ lies with federal and state securities laws and an indenmification by the Borrower and CMB Lender for the breach of their respective representations, and (b) the following covenants on the part 'If the Borrower: the Borrower will (i) agree to reasonably assist CMB in the marketing of its investment program by providing CMB with such information concerning the Developmelit Projects as may be requested by CMS; (ii) reasonably assist CMB in its relationships and interactions with governmental entities and agencies, including providing eMB with leners from CO\Ul:i1 members of the City indicating their support of the Development Projects and CMB's inve, tments; (iii) provide CMB with financial statements of the Bolt'Ower from time to time as requ"sted by CMB; (iv) designate a representative of the Borrower who is authorized to discuss ond I esolve issues concerning the Loan; (v) provide economic studies for the jobs created by the Borr·)wer's use of the Loan; (vi) reasonably cooperate with CMB so as to provide tours and information to investors of eMB Lender with regard to the vaiious Development Projects; (v) prov.de economic and statistical andlor other data as 'may be requested from time to time by the eMil Lender relating to the creation of new jobs; and (vi) provide evidence satisfaotory to CMB, upor request from time to time, that the loan proceeds have been used by the Borrower for the Dev"lopment Projects.

3. Costs. Each party will bear its own costs and expenses (including, without limilation, any attorneys' and accountants' fees) incurred in connection with the transaclioDS proposed by this Letter.

4. Access to Information. Upon execution hereof by the parties, the Borrower agre.s to furnish CMB access to all books, financial records and statements, III1d all other

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City cfVictorville Victo:'Ville Redevelopment Agency SouthiOl1l California Logistics Airport Authority April 16, 2008 Page oj

busin:ss and financial infonnation relating to the Development Projects, as CMB may reasonably request.

Part Two - Binding Provision.

In consideration of the significant costs to be borne by CMB in pursuing the proposed tranSl,ctions and further in consideration of the undertakings as to the maUers described herein, upon execution of this Letter by all parties, the following Dtmlbered paragraphs of this Letter (collectively, the "Binding Provisions") shall constitute the legally binding and enforceable agreement of the parties hereto.

I . Nonbinding Provisions Not Enforceable. The Nonbinding Provisions do not creal!: or constitute any legally binding obligations between the parties hereto, and, whether or not t1e Definitive Loan' Documents are prepared, authorized, executed or delivered by the parti' S. none of the parties shall have any liability to any other party to this Letter based upon, arisir g from, or relating to the N(mbinding Provisions. No prior or subsequent course of conduct or de.ling between the parties, oral communications or other actions not reduced to or reflected in a Nriting executed by all of the parties shall serve to modifY lhis paragraph in any way or caus, the Nonbinding Provisions or any provision covering the same subject matter to become in any sense legally binding and enforceable.

2. Non-Disclosure. To the greatest extent permitted by applicable law, for a period 01"1"0 (2) years from the date oflhis Letter, or thereafter if the parties have signed the Definitive Loan Documents, the Borrower shal\ not disclose, directly or indirectJy, the tenns of or reveal the e <istenee of this Letter or the Definitive Loan Documents to any person, fmn or entity, other than their respective attorneys, accountants, and representatives who are required to be informed thereof in connection with their approval of the proposed transactions or their representation of the 1 arties in connection with the transactions. The Borrower shall not make, and shall cause their respective officers, directors, representatives, employees, consultants, or agents not to make:, any press release or governmental notification, report or other filing relating to the prop )sed transactions contemplated herein without first obtaining the written approval by CMB of th! content thereof.

3. Negotiation with Others. For a period of sixty (60) days from the date of this Letkr, neither the Borrower nor its officers, directors, representatives, employees, consultants, or agents shall, directly or indirectly: (a) solicit or pursue substantive negotiations or discussions with any person or entity, other than CMB, with respect \0 the use of funds raised in connection with the EB-S Program; or (b) enter into a transaction with any person or entity, other than CMB, concerning the use of funds raised in connection with the EB-S Program. Additionally, the Borr)wer (a) shall not take any action, directly or indirectly, to circumvent andlor interfere with CMlI's investment program and the efforts of CMB to raise capital for the Borrower, (b) shall excl jsively use CMB for raising capital by means of the EB-S Program, and (c) shall not, diree:tly or indirectly, seek designation as II regional center.

City cf Victorville Victolville Redevelopment Agency South:m California Logistics Airport Authority April 16,2008 Page "

4. Confid<mtil}itv. For a period of two (2) years from the date of this leiter, or theredter if the panies have signed the Definitive Loan Documents, the Borrower agrees that it shall not use, or permit the use of, any of the information Rlating to CMB, CMB Lender or CMB's EB-S investment program. including, without limitation. CMB's andlor CMB Lender's bwlin-:ss plans, CMB's andlor CMB Lender's marketing plans. CMB's widlor CMB Lender's inveslor documents, names of investors, eMB's and/or CMB Lender's Rferral sources. and name I of consultants under contract with CMB, furnished to the Borrower andlor its agents, consultants or Rpresentatives, in connection with this leiter and the tranSaCtions contemplated hereill ("Confidential Information,,), except publicly available or freely usable material as olher"ise obtained from another source, in a manner or for a pwpose detrimental to CMB or eMB Lender Dr otherwise than in connection with this leiter and the transactions contemplated hereby. The Borrower shall not, and the Borrower shall cause its directors, officers, employees, const.ltants, agents and representatives not to, disclose, divulge, provide or malee accessible any of tho: Confidential Information to any person or entity, other than their responsible officers, empl',yees, advisors or attorneys or otherwise as required by law or Rgulation. The Borrower shall return all Confidential Information (including all copies thereof) to CMB upon request, from time to time, by CMB. Notwithstanding the foregoing, the parties agree that the Husing Report shall not be deemed to be Confidentiallnfonnation.

5. Non-Solicitation. As a material inducement for CMB to enter into this Leiter, the Bom.wer agrees nol to solicit or to hire or engage any current employee, consultant or agent of CME or any affiliate of CMB without the prior written consent orCMB.

6. Entire Agreement: Counterparts. The Binding Provisions contain the entire unde 'Standings of the panies with respect to the subject matter of each such provision and SUpel sede any prior agreement between the panies. This Letter may be executed in any number of ccunterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. Facsimile signatures to this Leiter agrelmenl shall be binding and enforceable to the same extent as original signatures.

7. Governing Law. This Leiter shall be governed by and construed in accordance with the internal, substantive Jaws of the State of California, and the state and federal courts of L.os Angeles County, California shall have exclusive jurisdiction and venue over equitable disputes arising herefrom.

8. Unenforceable Provisions. If any provision of this leiter violates or is unenforceable under any applicable law of any jurisdiction in which activities hereunder are perf<>nned, that provision shall be deemed void and the remaining provisions shall n:main in full forcl' and effect. In lieu of such void provision, there shall automatically be added a substitule valic provision as ncar to the intent and pwpose of the void prOVision as is possible.

9. Altomey Fees. Should any action be commenced between the parties hereto or their representatives concerning the Binding Provisions of this Leiter, the rights and duties of any pers·m Dr entity hereuntler, solely as between the parties hereto, the party prevailing in such

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City ( f Victorville Victo-ville Redevelopment Agency Soutbern California Logistics Airport Authority Apri I 16, 2008 Page l

proce~ings will be entitled to the reasonable attorney's fees and expenses of counsel and court costs incurred by reason of such actions.

10. Authorization. The individuals executing this Letter have been authorized to e<CCl Ie and deliver this Letter on behalf of their respective parties hereto.

[signature page follows]

•• * * ••••••

-,

c 'Y of Victorville V ""orville Redovclopmllllt Aatncy S.,uth ..... CaBfomia Lo~c. AiJpod Authority April 16. 2008 P'lIe 9

11' tbe provisions of this Letter an: ~.b1o as a basis from which to prepuc the t: efinl\ivc Loan ~CIIII, please sisn and return 11m encIoacd copy of lids LotIor 011 or beron: "prjJ J 7, 2008. W. CB/I then procccil with tIlJ1Ioer diseus$lons or detu1s to be Incorporated in the I·.finlrive Loan Oo<:\lIUCnls.

"~~~-~Zi.~ President ofC pons. • (JfI ifF. be~7 and in Its capacity II Oenenl Partnc.r of CMB InfrMtrllCtUrc JDVC$lmCDt Orwp I. L.P.

The undcrsi~ agreeS thai this LotIor sets forth tho ~ed'l UDdcntandiDg ofthc lropliscd U1IlSaCtioD and related maffet8, and the uademgnod agnes 10 be boWld to the Bhoding 'TO\'isions ofth's Letter.

II12'ltil,6

CITY OFVICTORVILLB

~~1F:r4;;~' Title: m "'YO If,

VICfORVlLLE REDEVIlLOPMENT AGENCY

~.:n:ffi;:;7·fl~£"L TitJe: 4+tt"' nqzA..r.l

SOU11iERN CALlFO\lNlA LoalSTIeS AIRPORT AU11iORlTY

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City 0 f Victorville VictOl ville Redevelopm~nt Agency Southo:m California Logistics Airport Authority April 16,2008 Page 10

EXlUBIT "A"

CITY LEITER

Isee attacbedl

R021,16J.tI

KEY CITY OF THE HIGH DESERT

TERRY E. CALDWELL MAiO.

JOANN .~LMOND MAYORPROTEH

RUDY CABRIALES COUNCILMEHB£l

February 14, 2008

Mr. Patrick Hogan Presldent GMS Ex~rt LLC ~ 507 49 Avenue Moline, illinois 61265

HOME Of THE SAIIIERNAADINO COUNTY fMR

BOB HUNTER COUNOLHEHBER

MIKE ROTHSCHILD COUNCILMEMBER

JON B. ROBERTS OlYHANAGEP..

HE: Authortzatlon to Raise Capltal- Public Improvement Projects at Southern (:allfomla logistics Airport .

Mr. Hogan:

/\5 a !BsuR of our meeting on Friday, January 25, 2008, both the Victorville I~edevelopment Agency and the Southem Califomla Loglstlcs Airport Authority (SCLAA) remain interested In working with your linn for the purpose of raising $100 million for needed public Infrastructure projects under the Federal EB-5 VIsa program. As you are aware, SCLAA hes been principally responsible since 1996 for redeveloping the fonner r3eorge Air Force Basa. Since thai time, It hes Invested approximately $200 million of Its own money to Improve SCLAA 80 that It Is capable of becoming a fully dedicated ')uslness and logistics park thai is capable of IntegraUng ground, raU and aviation nnsportatlon. To date, SCLA has succeilsfuUy attracted businesses from IoglsUcs and ·~vlaUon Industries. Those businesses Include Newell-Rubbermald, General Electric "Ircraft engines, Leading Edge, FedEx and Pratt & Whitney, to name a few. Altogether, SCLA has created an esUrnated 3,000 new jobs.

To further our efforts in creating additional employment opportunities, SCLA is undertaking or Is In the process of undertaking the following public projects:

• SeLA Infrastructure Improvements - To support the proposed development of phases 1A, 1B, and 1C for the Stirling Capital development, roadway, public utility Improvemenls and building demolition that are necessary to facilitate the build-out of 6.2 million square feet of Industrial space by Stirling Capital.

To date, SeLA hes spant $17.2 million to pay for demolition and the construcUon of public Infrastruct\lre to facilitate phase 1 A and may use CMB funds as to

CITY OF VICTORVILLE I ~)4:1 ':lVIC DRIVE. P.O. BOX 5001 • VICTORVME, CAlIFORNIA 92393·5001 • (760) 955·3854 • F"X 1760)269-0011

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further 'bridge financing" for those monies already spent. Phases 1 B and 1 C remain outstllndlng. To further the development of phases 16 and 1C, an additional $47 million Is required by the Airport Authority. To assist with providing background for this transaction, In October of 2006 the Airport Authority approved a [)lsposlUon and Development Agreemant with StIrling Capitlll which conveyad 34Q-acres of property from the Authority to Stirling Capital in excharige for the commitmenl by Stirling capitellO bulld-out or construct 6.2 million square feet of InduslrlaVmanufacturlng and warehouse space. That buikl-out Is phased over three phases and each phase Is expected to build-oul within 3O-monlhs of each other. Stlrflng has further established thel Phase I could result In up to 14.7 million square feet of development depending upon market condltfons.They further slate Phase I completion In 2011 (see Stirling report). Currently, Ihe result of phase 1 has caused the build-out of a 450,000 square foot warehouse being leased by Newell-Rubbermakj. Additionally, Stirling Capital broke ground on two cross dock facilities last November totaling 500,000 square feet and an addlUonal 1,000,000 square foot building Is expected to break ground by March 1, 2008. As a resuH of the Stirling Capital transaction, the Authority is responsible for constructing public Infrastructure to all of the sHes. Upon completion of all three phases, the public Infrastructure costs are expected to total approximately $64 million. This Is not Including Stirflng development funds (see Stirling -Economic and Fiscal Impacts of the Southern Califomla Logistics Airportj.

• Municipal Utilities - The CIIy of Victorville Is currently pursuing a permH from the California Energy Commission for the purpose 01 developing a 551l-megawatt combined cycle power plant with 50-megawatt renewable solar field. A large share of the funding for its equipment purchases are expected 10 come from construction financing. Amounts obtained from CMS will be repaid from permanent financing secured by the power plant upon complellon. All of the power generated from Victorville 2 (as It Is commonly referred) will be SOld back into the Califomla grid. Construction Is expected to start In summer of 2008 and be completed by summer 01 2010. To assist In satisfying Its shoritermJlnanelng requirements relating to equipment purchases, the CIIy requires up 10 $170 million. Upon completion of the projecl, lotal development costs for the W2 power plant construction are expecled to lotal approximately $700 million. For more detailed Informatlon, I have attached Information for your review.

• Rail Development with BNSF - The City is currently construcllng the first phase of rail installation to Southem Callfomla Logistics Airport. Tha cost for phase 1 tunnels a rail spur under National Trails Highway, piping a major drainage course thaI would otherwise bisect the reil spur and constructs a rail bed neoessary to faeililete the physical reilinstalialion In subsequent phases. This first phase of the rail project Is a precursor 10 a much targer domestic Intermodal facility which (when combined with the cost 10 construct Phase 1) Is expected to cost approximately $200 million. The design for the Intermodal will permH 1.5 million container lifts a year and upon lIs completion, the eSlimatad Job creation by the 1<111 project alone Is expected 10 be approximately 12,240 over 20 years. Adding to this, our economic study estimates a stimulus of $1.6 billion In plivate

Investment In real estate development over 20 years with a total land development of 1,800 acres. The cumulative warehouselindustl1al space created In response tl) the building of the Intermodal facility Is estimated at 33 mRlion square feel For more InformaUon. I hava attached Information for your review (see BNSF Economic Report).

• SCLA We.t End Industrial Wastewater Treatment Facility - Currently the Airport Authority and Redevelopment Agency are plaMlng the conslTVctlon of a wastewater treatment feclilty to deal specifically with the wastewater discharge requirements for industrial users that have a high strength discharge. The treatment plant Is Intanded to pre-treat all wastewater discharge from industrial users to the tertiary levels bringing the wastewater to Title 22 standards and making that water available for reuse as reclaimed water. ThIs project Is necessary to become competitive In attracting Industrial manufacturing users to SCtA and without the described wastewater treatment facility; SCtA will not be able to capitalize on attracting Industrial manufacturers to its facility. Currently. this plant Is Intended to Immediately serve a proposed Industrial user that has a discharge requirement of 1.2 million gallons of wastewater per day. The proposed project cost Is estimated at $30 million.

lIS you can see that our financing needs are fairly great. The total development costs br the agencies and private developers for the projects outlined above are estimated to he as much as $977 million. The SetA and RDA are seeking $100 mll"on from CMB to apply \0 the projects above. If CMB Is able to raise mere then $100 million. wa are llrepared to consider a second partnership. As H relates to repayment of CMB funds llsed for development at SCtA. with the exception of the funds used for the power plant. :,ClA will use available tax Increment revenue or bond proceeds obtained from the I>ledge of tax Increment to repay eMB funds. Finally. this leiter shall serve as .Iuthorlzation to proceed in marketing this opportunity on our behalf' and raise capital 19C9ssary to help finance these projects. To assist you In assessing the Authority. I 'lave enclosed audited financial statements fOr the Authority. along with Its Official Statement for Its most recent bond Issue along with economic studies prepared for seLA and the SCLA rail project. .

Please feel free to contact me If you have any questions or comments.

Sincerely.

Terry E. Caldwell Mayor

RECEIVED

AUG 122008

City Clerk's Office

CLAIM AGAINST THE CITY OF VICTORVILLE, VICTORVILLE REDEvELOPMENT AGENCY, AND SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY,

Received by ______________ _

via __ U.S. Mail __ Inter-office Mail __ Over the counler

Clerk's Date Stamp

A claim must be filed with tlie City Clerk of the City 01 Victorville within 6 months after which the incident or event occurred. Be s.ure your claim is against the City of Victorville, not another public entity, Where space is insufficient; please use additional paper and identity information by paragraph number. Completed claims must be mailed or delivered to the City Clerk, the City of Victcrvine, California

TO THE HONORABLE MAYOR AND CITY COUNCIL, The City of Victorville, California:

The undersigned respe,ctfully submits the following claim and informal'ion relative to damage to persons and/or personal property:

, CMll Export, LLC

NAME OF CLAIMANT 00 Infrastructure Investment Group I, L. P'.

01 ADDRESS OF CUlIMANT 4507 49th Avenue {STREEf)

Moline (CITYI

b) PHONE NO'-~,J.'IO",)~2.;>.5",5-,",6>Jl.IJO!UO ____ _ c) DATE OF BIRTH--NLA. ____ ~ ____ . __

d) SOCIAL SECURITY #·~N"I,-,A,--__

ej DRIVER'S LlCENSE#...!iLA"-________ _

Illinois 61265 (STATE & ZiP CODE)

2. Name, telephcn,e and post office address to which claimant desires notices to be sent, if other lhantheabove: c/o Freeman, Freeman & Smil-ey. LLP, 3415 S, Sepulveda Blvd.,

3

Suite 12QO.· 1;06 Angeles. CA 90034 (Attn: Bradley- D. Ross J Esq., I' John p. GodSi!, Esq.

Occurrence or event from which lIie claim arises:

a) DATE: See Attached (May 15, 2008) b) TIME __ S_e_e_A_t_t_a_c_h_e_d _____ _

cj PLACE (exact and specific location) See Attached.(Gt;Il!J)PY' ,,1

EXHIBITL

. .. 1 ,

I I I I ) I

CITY OF

VICTORVILLE

September 17, 2008

Freeman, Freeman & Smiley, LLP 3415 S. Sepulveda Blvd, Suite 1200 Los Angeles, CA 90034

760-955-5000 FAX 760-245-7243

email: [email protected]_ca.us

14343 Civic Drive P.O. Box 5001

Victorville. California 92393-5001

RE: REJECTION OF CLAIM AGAINST THE CITY OF VICTORVILLE. VICTORVILLE REDEVELOPMENT AGENCY AND SOUTHERN CALIFORNIA LOGISTICS RAIL AUTHORITY NO: 08-14 (CMS EXPORT,LLC/CMB INFRASTRUCTURE INVESTMENT GROUP 1, LP.)

Notice is hereby given that the above-captioned claim, which was presented to the City Council of the City of Victorville, Soard of Directors of the Victorville Redevelopment Agency and the Board of Directors of the Southern California Logistics Rail Authority on August 12, 2008, were rejected at their respective meetings held on September 16, 2008.

Subject to certain exceptions, you have only six (6) months from the date this notice was personally delivered or deposited in the United States mail to file a court action against the City in a Municipal or a Superior Court of the State of California on this claim. (See Govemment Code Section 945.6)

Sincerely,

Marcie Wolters Deputy City Clerk

Enclosure - Proof of Service

cc: Charles J_ Buquet, Risk Manager

EXHIBIT 0

•

CITY OF 760-955'5000 FAX 760-245-7243 VICTORVILLE

PROOF OF SERVICE BY MAIL

STATE OF CALIFORNIA ss

COUNTY OF SAN BERNARDINO

email: [email protected]


Victorville, California 92393-5001

lam employed in the county aforesaid, I am over the age of eighteen years; my business address is:

City of Victorville, 14343 Civic Drive, Victorville, CA 92392.

On September 17, 2008, I served the within REJECTION OF CLAIM AGAINST THE CITY OF VICTORVILLE, VICTORVILLE REDEVELOPMENT AGENCY AND SOUTHERN CALIFORNIA LOGISTICS RAIL AUTHORITY NO: 08-14 (CMB EXPORT,LLC/CMB INFRASTRUCTURE INVESTMENT GROUP I. L.P,) by placing the original thereof enclosed in a sealed envelope with postage thereon fully prepaid, in the United States mail at Victorville, California, addressed as follows:

Freeman, Freeman & Smiley, LLP 3415 S, Sepulveda Blvd, Suite 1200 Los Angeles, CA 90034

I declare under penalty of perjury that the foregoing is true and correct.

Executed on September 17, 2008, at Victorville, California,


.,' ,

CITY OF 760-955-5000 FAX 760-245-7243

email: [email protected] VICTORVILLE

October 22, 2008




RE: REJECTION OF CLAIM AGAINST THE SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY NO: 08-14 (CMB EXPORT,LLC/CMB INFRASTRUCTURE INVESTMENT GROUP I, L.P.)

Notice is hereby given that the above-captioned claim, which was presented to the Board of Directors of the Southern California Logistics Airport Authority on August 12, 2008 was rejected at their rneeting held on October 21, 2008.

Subject to certain exceptions, you have only six (6) rnonths from the date this notice was personally delivered or deposited in the United States mail to file a court action against the City in a Municipal or a Superior Court of the State of California on this claim. (See Government Code Section 945.6)

Sincerely,

~ C!A.t-' (AJ~ Marcie Wolters Deputy City Clerk

Enclosure - Proof of Service

cc: Charles J. Buquet, Risk Manager

EXHIBiT £. I I, f ,

CITY OF

VICTORVILLE

PROOF OF SERVICE BY MAIL

STATE OF CALIFORNIA ss

COUNTY OF SAN BERNARDINO

) ) )

760-955-5000 FAX 760-245-7243

email: [email protected]



I am employed in the county aforesaid, I am over the age of eighteen years; my business address is:

City of Victorville, 14343 Civic Drive, Victorville, CA 92392.

On October 22, 2008, I served the within REJECTION OF CLAIM AGAINST THE SOUTHERN CALIFORNIA LOGISTICS AIRPORT AUTHORITY NO: 08-14 (CMB EXPORT,LLC/CMB INFRASTRUCTURE INVESTMENT GROUP I. L.P.) by placing the original thereof enclosed in a sealed envelope with postage thereon fully prepaid, in the United States mail at Victorville, California, addressed as follows: .


. I declare under penalty of perjury that the foregoing is true and correct.

Executed on October 22, 2008, at Victorville, California.
