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<br />6 <br />THE LEASED PROPERTY <br />Lease Payments will be made by the City under the Lease for the use and occupancy of <br />the Leased Property, which is described in greater detail below. <br />Description <br />The Leased Property consists of the City’s main library building, including both land and <br />improvements. The library is a two–floor, approximately 44,000 square foot building located at <br />300 Estudillo Avenue in the downtown area of the City. The building was built in 1960 and <br />remodeled and expanded in 2001. The City also completed seismic retrofit work on the library <br />building as part of the remodeling in 2001. The City, based on comparable properties, <br />insurance appraisal and other records it maintains, estimates the current fair rental value of the <br />Leased Property to be not less than the amount of the Lease Payments, and reports that the <br />Leased Property has an insured value of approximately $32.7 million. <br />The City may amend the Lease, among other reasons, to obligate the City to pay <br />additional amounts of rental for the use and occupancy of the Leased Property in connection <br />with the issuance of additional bonds or other obligations. See "SECURITY FOR THE BONDS <br />– Additional Bonds." <br /> <br />Modifications of Leased Property <br />Under the Lease, the City will have the right during the term of the Lease to make <br />additions, modifications and improvements to the Leased Property or any portion thereof. Such <br />additions, modifications and improvements may not in any way damage the Leased Property, or <br />cause the Leased Property to be used for purposes other than those authorized under the <br />provisions of state and federal law; and the Leased Property, upon completion of any additions, <br />modifications and improvements, must be of a value which is not substantially less than the <br />value thereof immediately prior to the making of such additions, modifications and <br />improvements. <br />Assignment and Subleasing <br />The City may assign the Lease or sublease the Leased Property, or any portion thereof, <br />without limitation, provided that the Lease and the obligation of the City to make Lease <br />Payments remain obligations of the City and the City provides the notices, legal opinions and <br />assurances required by the Lease. See APPENDIX B – SUMMARY OF PRINCIPAL LEGAL <br />DOCUMENTS. <br />Substitution <br />Under the Lease, the City has the option at any time and from time to time, to substitute <br />other real property (the “Substitute Property”) for the Leased Property or any portion thereof (the <br />“Former Property”), upon satisfaction of all of the requirements set forth in the Lease, which <br />includes (among others) the following: <br />• No Event of Default under the Lease has occurred and is continuing. <br />• The City has obtained a CLTA or ALTA policy of title insurance insuring the City’s <br />leasehold estate under the Lease in the Substitute Property, subject only to