HomeMy WebLinkAbout01B. CDC DDA Resolution VerizonAPPROVED BY
EXEC. DIRECTOR
TO:
FROM:
SUBJECT:
RECOMMENDATION
AGENDA MEMO
That the Downey Community Development Commission ado
A RESOLUTION OF THE COMMUNITY DEVELOPM
OF THE CITY OF DOWNEY APPROVING A DISPOS
DEVELOPMENT AGREEMENT BETWEEN THE DO
COMMUNITY DEVELOPMENT COMMISSION AND
COMMUNITY RENAISSANCE OF CALIFORNIA AN
THE CONVEYANCE OF CERTAIN REAL PROPERT
PARCEL NO. 6254 - 020 -914) AND MAKING CERTAIN.
REQUIRED BY LAW
BACKGROUND /DISCUSSION
development in Downtown Downey using redevelopment hoL
the catalyst. After a proposal evaluation process that includes
from other agencies, and a consultant, National Community F
( "National Core ") was recommended to be the developer for
Theater properties. On April 14, 2009, the CDC approved an
Agreement ( "ENA ") with National Core for the Verizon and A
2009, staff members decided to focus on approval and financ
the Verizon Site, and postpone, due to housing resource issu
the Avenue Theater until 2011. Staff recently completed envi
Avenue property and intends to focus on redevelopment of th
CITY OF DOWNEY, CALIFORNIA
:SATE: November 9, 2010
Chairperson and Members of the Community D 'velopment Commission
Office of the Executive Director
By: Brian Saeki, Director or Community Devela_ment
CONSIDERATION OF A DISPOSITION AND LVELOPMENT
AGREEMENT AND ADOPTION OF A 33433 SOLUTION FOR THE VIEW
HOUSING PROJECT LOCATED AT 8314 2 " ;: TREET IN DOWNTOWN
DOWNEY
t the following resolution:
NT COMMISSION
ION AND
NEY
ATIONAL
APPROVING
(ASSESSOR'S
FINDINGS
Acquisition and Request for Proposal Processes
In June of 2008, the Downey Community Development Conn
the former Verizon facility located at 8314 2 Street ( "Verizo
Downey (refer to Attachment A: Location Map). At approxim
CDC also acquired the former Avenue Theater, located at 11
These acquisitions were carried out pursuant to direction fro
redevelopment housing set -aside funds to acquire both prop &ties. Shortly after these
acquisitions and pursuant to further CDC direction, staff conducted a Request for
Proposal ( "RFP ") process to locate a developer and developrent concept for these
properties. The objective of the RFP was to facilitate high- qu -lity new residential
ission ( "CDC ") acquired
Site ") in Downtown
:ely the same time, the
22 Downey Avenue.
the CDC. Staff used
sing set -aside funds as
CDC staff members, staff
enaissance of California
�e Verizon and Avenue
Exclusive Negotiating
nue properties. In late
ng of a housing project at
s, the redevelopment of
nmental work for the
s property next year.
PAGE 2— DDA FOR THE VIEW —11/9110
Since approval of the ENA, staff members have been workin
National Core to develop a feasible development program, c
activities, and draft a Disposition and Development Agreeme
Attachment B) for a new housing project ("The View"), at the
includes numerous associated documents and attachments
project obtains all necessary financing and is ready for cony
National Core. The associated agreements and attachments
250 pages, and because of this, only the signed DDA is atta
On October 20, 2010, the Downey Planning Commission ap
The View project and recommended that the Downey City C
bonus application for the project. The density bonus appiicati
hearing and this item is on the Downey City Council agenda
November 9, 2010. It should be noted that the Downey Plan
approved two development options for The View project. Aft
consultation, staff and National Core have decided to pursue
option for the project and this scenario is discussed in the se
and negotiating with
rry out predevelopment
t ("DDA", refer to
erizon Site. The DDA
at will executed when the
ance from CDC to
o the DDA total more than
ied to this agenda memo.
However, the entire DDA, including all associated agreement and attachments, has
been available for public review since October 21 Additionqly, the 33433 Summary
Report, discussed later in this report, has also been availablufor public inspection since
October 21.
The View Project implements one part of a strategy aimed at making Downtown
Downey a more interesting and active place. Staff members elieve that most
successful downtown areas contain a residential component. recent adoption of the
Downtown Downey Specific Plan was a significant first step t , ward facilitating new
residential development in Downtown. The View project begiiis to implement the
residential development strategy further by actually building 1 housing units.
As The View project went from acquisition to feasible project,', CDC staff members have
coordinated the project's evolution with the Downtown Subco nmittee. This coordination
included project design and funding sources.
oved a site plan review of
ncil approve a density
n is subject to a public
r consideration on
mg Commission also
r further review and
nly one development
ion below.
Project Description 1
The View project will demolish the existing commercial buildiro at the Verizon Site and
construct a six-story, 50-unit multifamily residential project. - 11_, View building is a
79,947 square-foot structure to be built on 22,540 square fee of land. National Core
will develop The View using sustainable development principl s and will seek
certification, or the equivalence of certification, by the United tates Green Building
Council's Leadership in Energy and Environment Design ("LF D"). Staff members have
worked diligently with National Core's design team to assure _ at The View is designed
using high standards for architecture and materials. The View.will be a contemporary
building that is influenced by the precedent of midcentury modern architecture in
Downey. The project architect has designed an attractive buiring by incorporating a
I generous amount of articulation, using a variety of building m terials, providing
PAGE 3 — DDA FOR THE VIEW — 11/9/10
prominent horizontal and vertical elements, and applying an xtensive color palette that
will clearly define the building's numerous planes. Please re' r to Attachment C for
renderings of The View project.
The View offers 35 two-bedroom units ranging from 795 to 8 3 square feet, and 15
i
three-bedroom units each measuring 1,002 square feet. Th i first floor of The View
includes the 2 Street entrance and lobby, a 1,500 square-fcct community room, and
parking. The 2 3 and 41h floors each contain 11 units, whie the 5 and 6 floors will
contain nine and eight units, respectively. The View provides'11,370 square feet of
open space, including a podium/second-level courtyard, a ro ftop garden, and a private
patio for each dwelling unit. The View has 100 parking spac to be located on the
surface level and the subterranean level of the project; acce to the first and second
levels of parking is from 2 Street. The Downtown Downey pecific Plan requires the
project to have 75 parking spaces, and The View will utilize 4 25 additional parking
spaces as guest parking.
The residential units at The View will generally be rented to f
sizes of four to six people. The bulk of the units (37) at The
households making between $40,000 and $60,000 per year.
property manager, will carry out the leasing process for The
background checks and certification of household incomes,
required to re-certify all residents on an annual basis. CDC s
work together, to the extent allowable by law, to make units
Downey residents.
high-quality residential projects. National Core uses its own
management division to manage its properties, and will alwa
manager for The View. Further, National Core does not sell i
the firm builds and operates its projects for the long term. Na
operates more than 10,000 residential units, located mostly i
units in Arkansas and Texas.
properly assigned and used by tenants, and that household
current California law. In addition to National Core's commit
a regulatory agreement between the CDC and National Core
The View provides several landscape amenities including railed planters and plant-
covered exterior walls that will be featured along the building ground level. Raised
planters will edge all four sides of the building and a green will system will be applied to
the first story's elevations in eight-foot high sections. 1
The Developer
National Core was selected to develop The View because ofts strength in completing
ployees from its property
maintain an onsite
developments; instead
onal Core owns and
California, with some
National Core has an excellent track record for locating and --curing financing from a
variety of funding sources. Staff is confident that The View wil be a very high quality
building, but equally important, National Core will manage an maintain The View using
the highest standard for property management. National Cor 2 will assure that parking is
milies having household
ew will be rented to
ational Core, in its role as
iew; this process includes
ational Core is also
ff and National Core will
The View available first to
es are consistent with
nt to good management,
ill ensure both active and
PAGE 4— DDA FOR THE VIEW — 11/9/10
professional property management. Further, the focus on pr erly leasing, managing,
and maintaining The View is reinforced by several other fund ng agencies and private
investors that have regulatory agreements and a vested inte st in The View. Each
funding agency, including the CDC, also requires that the pr ect's operating and
replacement reserves are always adequately funded so that The View does not defer
maintenance or otherwise cut corners to save costs.
Project Financing
The View is a $21,891,777 project that will be financed by a lariety of sources. These
funds are listed and discussed below. The CDC will contributp land, redevelopment
housing funds, and federal HOME funds for a total of $4,450 p00 or $89,000 per unit.
National Core will also pursue funding from the Los Angeles County Industry Housing
Program for $676,278. Low income Housing Tax Credits, whh are awarded via a
competitive process, will provide the project with $1O,950,00(
also obtain a conventional mortgage for $1,990,000. Nationa
in developer fees and there is an additional $550,000 in equi
property; both of these sources of funds will be used for the
of $2,877,700 in funding necessary to make the project 'teas'
State of California Infill and Infrastructure Program.
33433 Summary Report
CDC staff members retained the Rosenow Spevacek Group
financial structure of the View Project and to draft a summar;
pursuant to Section 33433 of the California Health and Safet
this review is to assure that the project is consistent with stat
and best practices for affordable housing projects in Californi
project is consistent with the aforementioned considerations
Report is contained in Attachment D. The 33433 resolution r
approve The View project is provided as Attachment E to thi
FISCAL IMPACT
ATTACHMENT A:
ATTACHMENT B:
ATTACHMENT C:
ATTACHMENT D:
ATTACHMENT E:
Approval of this item will lessen the CDC Housing Set Aside udget by $3,000,000 and
will lessen the HOME budget by $450,000.
LOCATION MAP
PROJECT RENDERINGS
DISPOSITION AND DEVELOPMENT AGREEMONT
33433 SUMMARY REPORT
33433 RESOLUTION
IRSG) to review the
report for the project
Code. The objective of
law, market conditions,
. RSG's found that the
nd the 33433 Summary
uired to be adopted to
agenda memo.
The View Project will
Core will defer $397,799
in the CDC-owned
oject. Finally, the balance
le will be provided by the
L
ATTACHMENT A - LOCATION M
It
w
ATTACHMENT B - PROJECT RENDE1INGS
1
1
a)
0
N
a) S
Cl)
O
c
x
-Er-'
E E
>.x.2 E
c 0
> To'
c
0 .
o '15
~=
-
'
`
.
`
`
�
'
,
ATTACHMENT C — DISPOSITION AND DEVELOPMENT IkGREEMENT
Note regarding exhibits: The signed disposition and development greement is attached
t
without all exhibits. Exhibits to the agreement can be reviewed a . the Downey City
Clerks Office or at the City of Downey Community Development epartment.
I
1
65012.0020712785768.12
by and between the
and
I
DISPOSITION AND DEVELOPMENT AGR EMENT
(The View Housing Project)
COMMUNITY DEVELOPMENT COMMISSION OF THj CITY OF DOWNEY
a California public body, corporate and olitic
1
NATIONAL COMMUNITY RENAISSANCE OF ALIFORNIA,
a California non-profit public benefit cor ration
I [Dated as of November 9, 2010, for reference pi rposes only]
1
1
1
NOW, THEREFORE, FOR GOOD AND VALUABLE
PROMISES AND COVENANTS OF COMMISSION AND D
THIS AGREEMENT, COMMISSION AND DEVELOPER AG
1. DEFINITIONS
TE S AND CONDITIONS
1.1 Definitions. The following words, terms and phr
with the following meanings, unless the particular context or us
requires another interpretation:
1.1.1 Actual Project Costs. The actual aggreg
categories of expenses for the Project set forth in the Project Budg
the Project that are incurred by Developer as of the date of iss
Occupancy for the entire Project by the City.
1.1.2 Affiliate. Any other Person, directly y indirectly, Controlling or
Controlled by or under common Control with the specified Person
1.1.3 Agreement. This Disposition and Dev pment Agreement (Verizon
Building) by and between Commission and Developer, including„al of the exhibits attached to
this Agreement. 11
1.1.4 AHP Funds. Defined in Section 9.13.
1.1.5 Application. Any agreement, applicat' n, certificate, document or
submission (or amendment of any of the foregoing): (a) necessary, r appropriate for the Project,
including any application for any building permit, Certificate or ccupancy, utility service or
hookup, easement, covenant, condition, restriction, subdivision ;rr such other instrument as
Developer may reasonably request for the Project; or (b) to e :: ble Developer to seek any
Approval or to use and operate the Project in accordance with thi greement or the Regulatory
Agreement.
1.1.6 Approval. Any license, permit, approv
variance, authorization, conditional use permit, or amendment to
necessary or appropriate under any Law to commence, perform o
the Project on the Project Site.
1.1.7 Automobile Liability Insurance. Insur• e coverage against claims of
personal injury (including bodily injury and death) and propert damage covering all owned,
leased, hired and non -owned vehicles used by Developer regard the Project, with minimum
limits for bodily injury and property damage of TWO MILLION 1F ►`LLARS ($2,000,000). Such
insurance shall be provided by a business or commercial vehicl olicy and may be provided
through a combination of primary and excess or umbrella policie' all of which shall be subject
to pre- approval by Commission, which approval shall not be unre.' wnably withheld.
65012.00207\2785768.12 2
NSIDERATION AND THE
ELOPER SET FORTH IN
, AS FOLLOWS:
s are used in this Agreement
e of a word, term or phrase
e cost amount in each of the
and all other costs related to
ce of a final Certificate of
consent, certificate, ruling,
of the foregoing, as shall be
complete the construction of
i
1.1.8 Auxiliary Parking Parcel. That certain c ndominium air space parcel
to be created above the Auxiliary Parking Site for construction of t 1 -; above-ground parking deck
contemplated in Design Option 2 by Developer to be used solel ) for parking of vehicles for
residents, guests or on-site employees of the Project.
1.1.9 Auxiliary Parking Parcel Deed. A ! quitclaim deed conveying
Commission's interest in the Auxiliary Parking Parcel from commission to Developer,
substantially in the form of Exhibit "0" attached to this Agreemenf-
1.1.10 Auxiliary Parking Parcel Map. A condinninium map regarding the
Auxiliary Parking Site creating the Auxiliary Parking Parcel as ; separate and distinct legal
parcel above the surface of the Auxiliary Parking Site, reasonably alowing for use of the surface
of the Auxiliary Parking Site for ingress, egress and parking of motji= vehicles.
1.1.11 Auxiliary Parking Site. That certain real property specifically
described in Exhibit "J" attached to this Agreement.
1.1.12 Bankruptcy Law. Title 11, United Stals Code, and any other or
successor State or Federal statute relating to assignment for the ben fit of creditors, appointment
of a receiver or trustee, bankruptcy, composition, insolvency, mqratorium, reorganization, or
similar matters.
1.1.13 Bankruptcy Proceeding. Any proceeng, whether voluntary or
involuntary, under any Bankruptcy Law.
1.1.14 Builder. Developer or another Person w14 is a State licensed general
contractor experienced in the construction and installation of impro ements similar to the Project
and which has a net worth of at least the amount of the Total Projec Costs.
1.1.15 Builder's Risk Insurance. Builder's rigi: or course of construction
insurance covering all risks of loss, less policy exclusions, on a coOpleted value (non-reporting)
basis, in an amount sufficient to prevent coinsurance, but in any ev Int not less than one hundred
percent (100%) of the completed value of the subject construct n, including cost of debris
removal, but excluding foundation and excavations. Such ins
permission to occupy; and (b) cover, for replacement cost, all mat
storage location intended for use in, or in connection with, the Proj
Date.
1.1.16 Building. The existing building located on e Property on the Effective
1.1.17 Business Day. Any weekday on which ihe City is open to conduct
regular municipal functions with City personnel.
1.1.18 CEQA. The California Environmental Q' ity Act, Public Resources
Code Section 21000, et seq.
1.1.19 CEQA Documents. Any exemption
Declaration (mitigated or otherwise) or any Environmental
6501200207\2785768.12 3
• ce shall also: (a) grant
rials on or about any offsite
t Site.
termination, any Negative
act Report (including any
1
t .
addendum or amendment to, or subsequent or supplemental EIironmental Impact Report)
required or permitted by any Government, pursuant to CEQ to issue any discretionary
Approval required to approve this Agreement.
1.1.20 Certificate of Occupancy. A Certificate Occupancy as defined in the
Uniform Building Code, 2007 Edition, published by the Internat nal Conference of Building
Officials, as may be amended from time to time, as adopted by the ity.
corporation.
1.1.22 Claim. Any claim, loss, cost, damage, e ense, liability, lien, action,
cause of action (whether in tort, contract, under statute, at law, in quity or otherwise), charge,
award, assessment, fine or penalty of any kind (including coriultant and expert fees and
expenses and investigation costs of whatever kind or nature, andlf an Indemnitor improperly
fails to provide a defense for an Indemnitee, then Legal Costs) and Illy judgment.
1.1.25 Commission Deed of Trust. A deed oft
Exhibit "F" attached to this Agreement securing Develope
Commission Loan pursuant to the terms of the Developer Note rec
elected officials, employees, agents and attorneys.
65012.00207\2785768.12 4
1.1.21 City. The City of Downey, Califorla, a California municipal
1.1.23 Close of Escrow. The first date on which e Escrow Agent has filed all
of the documents set forth in Section 6.9.1 with the County for re rding in the official records
of the County in accordance with Section 6.9.1.
1.1.24 Commission. The Community Developm t Commission of the City of
Downey, a California public body corporate and politic, and any aignee of or successor to the
rights, powers or responsibilities of the Community Development Commission of the City of
Downey.
1
: 1
1.1.26 Commission Loan. A loan from Co ission to Developer in an
amount not to exceed [TO BE DETE ' NED BASED ON 0 ] ONE OR OPTION
TWOJ evidenced by the Developer Note and secured by the Comm-ision Deed of Trust.
1.1.28 Commission Party. Individually, Co ssion, its governing body,
elected officials, employees, agents or attorneys.
1.1.27 Commission Parties. Collectively, Co ission, its governing body,
1.1.29 Commission Title Policy. An ALTA leni policy of title insurance
issued by the Title Company, with coverage in the maximum on! al principal amount of the
Commission Loan showing title to the Project Site vested in Devel - ,er and insuring the priority
of the Commission Deed of Trust with respect to the Project Site d, if the Project proceeds
pursuant to Design Option 2, then also the Auxiliary Parking Par 1) as only subordinate to a
Permitted Security Instrument securing repayment of the Const Financing and liens
imposed by law.
in substantially the form of
obligation to repay the
ed against the Project Site.
1.1.30 Completion Certificate. Commissicn's written certification
acknowledging that the Project is complete in accordance with the L erms and conditions of this
i Agreement, substantially in the form of Exhibit "C" attached to thi Agreement.
1.1.31 Completion Guaranty. A guaranty from tie Guarantor substantially in
the form of Exhibit "B" attached to this Agreement guaranteeing tc- the completion
of construction of the Project in accordance with this Agreement.
1.1.32 Construction Contract. A current agree ent between Developer and
Builder for construction of the entirety of the Project for a fixed o guaranteed maximum price
expressly set forth in such contract and in accordance with all of th tenns and conditions of this
Agreement, conditioned only upon: (a) the Close of Escrow; (lj Developer's receipt of all
Approvals; (c) closing of the Construction Financing; and (d) other commercially reasonable
conditions.
1.1.33 Construction Drawings. The final ,onstruction drawings and
specifications and finish grading and landscape plans for the Project prepared by or for
Developer.
1.1.34 Construction Financing. One or more loaf that Developer shall obtain
from one or more Institutional Lenders, in an amount consiste it with the Financing Plan
approved by Commission pursuant to Section 6.5.11, the proceeds; which are to be used and
applied solely to pay the reasonable costs of obtaining such loan(s)and either: (a) the excess of
the Total Project Costs over the sum of the amount of the Co ssion Loan to be disbursed
during Project construction, the amount of the Industry Funds san to be disbursed during
Project construction (if any), the amount of the IIG Loan to e disbursed during Project
construction (if any) and the amount of the Tax Credit Equity to be disbursed during Project
construction pursuant to the Financing Plan and the Developer P. ership Agreement; or (b) to
refinance only the outstanding amount owed under a prior loan ob . ed by Developer to finance
the amount described in clause "(a)" of this Section 1.1.34 (withotrt any other amounts). Such
loan(s) shall provide for normal and customary disbursement conti.-.)1s for the payment of Total
Project Costs and normal and customary fees and expenses for :loan(s) of similar size and
purpose.
1.1.35 Construction Financing Documents. Tine various documents and
instruments made by and between Developer and one or more Instit Lenders that evidence
or rerfect the Construction Financing or the security for repwment of the Construction
Financing, including any associated Security Instrument.
1.1.36 Control. Possession, directly or indirectl i , of the power to direct or
cause the direction of the management and policies of a Person, wh ther by ownership of Equity
Interests, by contract or otherwise.
in function.
1.1.37 Cost Reduction. Defined in Section 9.13. 1
1.1.38 CTCAC. The California Tax Credit Alloc ; ion Committee or successor
It
65012.00207\2785768.12 5
1
1.1.39 CTCAC Regulatory Agreement. The i,gulatory agreement required
by CTCAC to be recorded against the Project Site to obtain the Tai Credits.
1.1.40 County. The County of Los Angeles, Cali-brnia.
1.1.41 County CDC. The Community Development Commission of the
County of Los Angeles, a public body corporate and politic.
1.1.42 Default. The failure of a Party to periorm any action or covenant
required to be performed by such Party pursuant to this Agreenent within the time period
provided for such performance in this Agreement. 1
1.1.43 Default Interest. Interest at an annual re equal to the lesser of: (a)
eight percent (8%) per annum; or (b) the Usury Limit.
1.1.44 Deferred Developer Fee. Defined in Sect bn 9.5.
1.1.45 Design Option 1. The Project design sho
this Agreement that provides for all parking for the Project on the
total development cost set forth in the Design Option 1 Budget.
1.1.46 Design Option 2. That certain Project d
attached to this Agreement providing for a portion of the Project
Auxiliary Parking Parcel at approximately the total developmen
Option 2 Budget.
Partnership and any voluntary successors or assigns to which a Tr
to the provisions of this Agreement; provided, however, Orig
obligated under this Agreement to apply for and obtain the IIG G
Developer.
65012.00207\2785768.12 6
11
1.1.47 Design Option 1 Budget. That certain b dget estimate for the Project
developed pursuant to Design Option 1 attached as Exhibit "M" atiiched to this Agreement.
1.1.48 Design Option 2 Budget. That ceitain estimated budget for
construction of the Project developed pursuant to Design Option 2 set forth in Exhibit "N"
attached to this Agreement.
1.1.49 Developer. The Original Developer, uatil the Original Developer
Transfers all of its rights and obligations under this Agreement to the Developer Partnership, in
accordance with Section 4, then from the date of such Tran='er forward, the Developer
1.1.50 Developer Entity Documents. The Deve iper Partnership Agreement,
including all amendments, and all associated agreements (i.e., gu.' . ties, notes, deeds of trust,
etc.), all of which Developer shall certify as accurate as of the date i f the Close of Escrow, and a
Certificate of Good Standing from the Secretary of State of tae State certifying that the
Developer Partnership is authorized to conduct business in the State
in Exhibit "K" attached to
roperty at approximately the
ign set forth in Exhibit "L"
arking to be provided on the
cost set forth in the Design
fer may be made pursuant
al Developer shall remain
t and make the IIG Loan to
1.1.51 Developer Fee. An aggregate amount no to exceed One Million Four
Hundred Thousand Dollars ($1,400,000), inclusive of the Deferred eveloper Fee.
1.1.52 Developer Note. A promissory note in sub tantially the form of Exhibit
"E" attached to this Agreement evidencing Developer's obligati n to repay the Commission
Loan pursuant to the terms of such note.
1.1.53 Developer Official Action. The officlal action of the directors,
managers, partners or other Persons in Control of Developer in sub the form attached to
this Agreement as Exhibit "H" authorizing Developer to enter into -ind perform this Agreement.
1.1.54 Developer Parties. Collectively, Develop* a and the directors, officers,
employees, agents, shareholders, members, managers and partners 4 Developer.
1.1.55 Developer Partnership. A Californial limited partnership entity
comprised of a general partner and the Tax Credit Investor, as the ole limited partner, with the
identities and qualifications of all of the general and limited p4tners being subject to prior
written approval of the Commission. The Developer Partnershil general partner shall be or
include a non-profit, public benefit corporation affordable housing 4onsor.
employees or agents, shareholders, members, managers or partners
1.1.56 Developer Partnership Agreement. iT agreement of limited
partnership organizing and establishing the Developer Partnership ts a legal entity, as approved
by the Commission pursuant to Section 4 or Section 6.5.11.
1.1.57 Developer Party. Individually, Develop - or the directors, officers,
1.1.58 Developer Specific Default. Any Defau that: (a) is not reasonably
susceptible of cure by the holder of a Permitted Security Instrwn=-nt, such as (to the extent, if
any, that it actually constitutes a Default under this Agreement) :Irty Default resulting from a
Bankruptcy Proceeding affecting Developer; any prohibited change of management of
t
Developer; failure to deliver required financial information within eveloper's control; (b) by its
nature relates only to, or can reasonably be performed only by, De toper or its Affiliates; or (c)
consists of Developer's failure to satisfy or discharge any lien, E.harge, or encumbrance that
satisfies all of the following: (i) attaches to the Project Site; -,ii) is junior to the specific
Permitted Security Instrument; and (iii) this Agreement prohibits. 1
1"
1.1.59 Developer Title Policy. A standard C TA owners' policy of title
insurance issued by the Title Company, with coverage in the ount of the Purchase Price,
showing title to the Project Site vested in Developer.
1.1.60 Disbursement Agreement. A disburse nt agreement to be entered
into by and among the Senior Institutional Lender providing he Construction Financing,
Developer and Commission, effective at the Close of Escrow, p viding for such Institutional
Lender to hold and disburse the proceeds of all sources of financi g described in the Financing
Plan to be disbursed during Project construction, subject to the erms and conditions of this
Agreement, the Regulatory Agreement, the Note and the Commission Deed of Trust.
65012.00207\2785768.12 7
f Developer.
1
i
II
1.1.61 Due Diligence Completion Notice. A vaitten notice from Developer
delivered to both Commission and Escrow Agent, prior to the encliof the Due Diligence Period,
indicating Developer's unconditional acceptance of the condition of the Project Site or indicating
Developer's rejection of the condition of the Project Site and refu -al to accept a conveyance of
title to the Project Site, describing in reasonable detail the actio-_s that Developer reasonably
believes are indicated to allow Developer to unconditionally accept the condition of the Project
Site.
1.1.62 Due Diligence Investigations. Developer 'j due diligence investigations
of the Project Site to determine the suitability of the Project Site Fr development and operation
of the Project, including investigation of the environmental and 4eotechnical suitability of the
Project Site, as deemed appropriate in the reasonable discretion of )eveloper, all at the sole cost
and expense of Developer. 1
II
1.1.63 Due Diligence Period. The time period a thirty (30) continuous days
commencing on the day immediately following the Escrow Openin - Date.
1.1.64 Dwelling Unit. Any one of the fifty (50) a 'artment units in the Project.
1.1.65 Effective Date. Defined in Section 2.
1.1.66 Environmental Claim. Any and all cla'
liabilities, obligations, penalties, fines, actions, causes of action, j
costs, disbursements and expenses, including Legal Costs and fe
consultants and other experts, and all foreseeable and unforesee .
kind or of any nature whatsoever, directly or indirectly, relating to
alleged violation of any Environmental Law or Hazardous Substan a
1.1.67 Environmental Laws. All Federal, Sta
rules, orders, regulations, statutes, ordinances, codes, decree
government authority regulating, relating to, or imposing liabi'
any later time be in effect, including without limitation, the C
Response, Compensation and Liability Act of 1980 ( "CERCLA ") [
the Resource Conservation and Recovery Act of 1976 ( "RCRA ") [
the Clean Water Act, also known as the Federal Water Pollution
USC Section 1251 et seq.]; the Toxic Substances Control Act ("T
et seq.]; the Hazardous Materials Transportation Act ( "HMTA ") [
Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901
65012.00207\2785768.12 8
1
demands, damages, losses,
dgments, suits, proceedings,
and costs of environmental
le damages or costs of any
r arising from any actual or
Discharge.
local, or municipal laws,
or requirements of any
ty of standards of conduct
concerning any Hazardous Substance (as later defined), or pertai ng to occupational health or
industrial hygiene (and only to the extent that the occupational hea =h or industrial hygiene laws,
ordinances, or regulations relate to hazardous substances on, and 77, or about the Project Site),
occupational or environmental conditions on, under, or about the F oject Site, as now or may at
mprehensive Environmental
►` USC Section 9601 et seq.];
USC Section 6901 et seq.];
ontrol Act ( "FWPCA ") [33
A ") [15 USC Section 2601
USC Section 1801 et seq.];
seq.] the Clean Air Act [42
USC Section 7401 et seq.]; the Safe Drinking Water Act [42 USC lction 300f et seq.]; the Solid
Waste Disposal Act [42 USC Section 6901 et seq.]; the Surface Miz_ng Control and Reclamation
Act [30 USC Section 101 et seq.] the Emergency Planning and Ccnmunity Right to Know Act
[42 USC Section 11001 et seq.]; the Occupational Safety and Hea -h Act [29 USC Section 655
and 657]; the California Underground Storage of Hazardous Sublinces Act [California Health
& Safety Code Section 25288 et seq.]; the California Hazard Ciis Substances Account Act
[California Health & Safety Code Section 25300 et seq.]; the Califo!nia Safe Drinking Water and
Toxic Enforcement Act [California Health & Safety Code Section 24249.5 et seq.] the Porter-
Cologne Water Quality Act [California Water Code Section 1300 et seq.] together with any
amendments of or regulations promulgated under the statutes cited , 7 - ibove and any other Federal,
i
State, or local law, statute, ordinance, or regulation now in effect o later enacted that pertains to
occupational health or industrial hygiene, and only to the exte the occupational health or
industrial hygiene laws, ordinances, or regulations relate to Hazar . us Substances on, under, or
about the Project Site, or the regulation or protection of the enviro ment, including ambient air,
soil, soil vapor, groundwater, surface water, or land use.
1.1.68 Equity Interest. All or any part of any direct equity or ownership
interest(s) (whether stock, partnership interest, beneficial interest hi a trust, membership interest
in a limited liability company, or other interest of an ownership or ..elluity nature) in any entity, at
any tier of ownership, that directly owns or holds any ownership or tquity interest in a Person.
1.1.69 Escrow. An escrow, as defined in Ci7i1 Code Section 1057 and
Financial Code Section 17003(a), that is conducted by the Escrow i_gent with respect to the sale
of the Project Site from Commission to Developer pursuant to this /-
1.1.70 Escrow Agent. Fidelity National Title Instance Company, a California
corporation, or such other Person mutually as -ed upon in writi g by both Commission and
Developer.
1.1.71 Escrow Closing Date. The earlier of: (a- on or before the fifth (5th)
Business Day following the Escrow Agent's receipt of writkn confirmation from both
Commission and Developer of the satisfaction or waiver of all conditions precedent to the Close
of Escrow; (b) the date that is one hundred forty-five (145) calend4 days following Developer's
receipt of written confirmation from CTCAC of the reservatiorj of the Tax Credits for the
Project; or (c) another date mutually agreed upon in writing betweli the Parties for the Close of
Escrow.
1.1.72 Escrow Closing Statement. A statement epared by the Escrow Agent
indicating among other things, the Escrow Agent's estimate of z11 funds to be deposited or
received by Commission or Developer, respectively and all charges o be paid by Commission or
Developer, respectively, through the Escrow.
1.1.73 Escrow Default. The unexcused failure Jto submit any document or
funds to the Escrow Agent as reasonably necessary to close the l4crow, pursuant to the terms
and conditions of this Agreement, after all other conditions preeed t to the Close of Escrow for
the benefit of such Party are satisfied or waived by such Party.
1.1.74 Escrow Opening Date. The first date on jiich a fully executed copy of
this Agreement is deposited with the Escrow Agent, as provided in lection 6.1.
1.1.75 Event of Default. The occurrence of any o e or more of the following:
65012.00207\2785768.12 9
(a) Monetary Default. A Monetary Det fult that continues for fifteen
(15) calendar days after Notice from the non - defaulting Party, spec in reasonable detail the
amount of money not paid and the nature and calculation of each sti:h payment;
(b) Escrow Closing Default. An Escr- Default that continues for
seven (7) calendar days after Notice from the non - defaulting P y, specifying in reasonable
1
detail the document or funds not submitted;
1
(c) Bankruptcy or Insolvency. Develop o admits in writing that it is
unable to pay its debts as they become due or becomes subject t any Bankruptcy Proceeding
(except an involuntary Bankruptcy Proceeding dismissed wi 'iin ninety (90) days after
commencement), or a custodian or trustee is appointed to take po :session of, or an attachment,
execution or other judicial seizure is made with respect to, substanally all of Developer's assets
or Developer's interest in this Agreement or the Project (unless s :ch appointment, attachment,
execution, or other seizure was involuntary, and is contested with diligence and continuity and
vacated and discharged within ninety (90) days);
(d) Transfer. The occurrence of a Transfer, whether voluntarily or
involuntarily or by operation of Law, in violation of the terms and = onditions of this Agreement;
or
(e) Non - Monetary Default. Any Non - 1`
those specifically addressed in Section 1.1.75(c) or Section 1.1.7
sixty (60) days after Notice to the Party alleged to be in Default
Default in reasonable detail, or, in the case of a Non - Moneta
reasonable diligence be cured within sixty (60) days after the effect
Party alleged to be in Default does not do all of the following: (a
Notice of such Non - Monetary Default, advise the other Party of the
1.1.76 Executive Director. The Executive Dire
her designee or successor in function.
65012.00207\2785768.12
1.1.77 Federal. The federal government of the U
10
to be in Default to take all reasonable steps to cure such Non Monetary Default; (b) duly
commence such cure within such period; and (c) diligently prosehute such cure to completion
within a reasonable time under the circumstances. 1
eveloper setting forth all of
11 of the Total Project Costs
of the following documents
by any Institutional Lender
any and all loan documents
r between the Institutional
1.1.78 Financing Plan. A plan prepared by the
the sources of money that the Developer proposes to use to finance
(whether paid, incurred, accrued or anticipated), and including all
and information: (a) each loan commitment made to the Develope
for any portion of the Construction Financing for the Project; (b)
(including Security Instruments) to be made or entered into by
Lender providing the Construction Financing or Developer ( incluing any related Affiliate or
Third Person guaranty) regarding the Construction Financing forjthe Project; (c) the written
commitment of the County CDC to provide the Industry Fw`s Loan to Developer for
construction of the Project and all documents to be made or entered into by or between the
r
•
onetary Default, other than
(d) that is not cured within
escribing the Non - Monetary
y Default that cannot with
ve date of such Notice, if the
within sixty (60) days after
Intention of the Party alleged
or of Commission or his or
ted States of America.
County CDC and Developer (including any related Affiliate or Thii Person guaranty) regarding
such loan; (d) if the Project is proceeding pursuant to Design Opti 1, the written commitment
t
of HCD to provide the IIG Grant to the Original Developer for con . ction of the Project and all
documents proposed to be made or entered into by or between :)riginal Developer or HCD
(including any related Affiliate or Third Person guaranty) reading such grant and the
associated agreement of the Original Developer to make the IG Loan to Developer for
construction of the Project and all documents proposed to be made J entered into by or between
Original Developer and Developer (including any related Affiliat7:: or Third Person guaranty)
regarding such loan; (e) a written forward loan commitment fro an Institutional Lender to
Developer for such Institutional Lender to provide the Permanen Loan to Developer; (f) the
amount, source(s) and distribution timing of the Tax Credit Equity 'Ind all documents (including
Security Instruments) to be made or entered into by or between peve1oper or the Tax Credit
Investor (including any related Affiliate or Third Person guarant=i) regarding the Tax Credit
Equity, including the Developer Partnership Agreement or any ai endments, modifications or
restatements of the Developer Partnership Agreement; (g) any . ;# eements requested by any
financing source identified in such financing plan to which the Co ssion is proposed to be a
party as a condition precedent to such financing source providi . its financing; and (h) the
construction budget for the Project that has been approved by oth the Senior Institutional
Lender providing the Construction Financing and the Tax Credit In stor.
1.1.79 FIRPTA Certificate. A certification that
person" within the meaning of such term under Section 1445
Revenue Code and sufficient to exempt Developer from the obli
from Commission pursuant to Section 1445 of the United States Int
ommission is not a "foreign
the United States Internal
tion to withhold any funds
al Revenue Code.
1.1.80 Form 593. A California Franchise Tax Bo. d Form 593-C.
1.1.81 Government. Any and all courts, boa_zds, agencies, commissions,
offices, or authorities of any nature whatsoever for any goverr_ nental unit (Federal, State,
County, district, municipal, City or otherwise) whether now or later i n existence.
1.1.82 Guarantor. National Community Re -,aissance of California, a
California non-profit public benefit corporation.
11
1.1.83 Hazardous Substance. Any flamma substances, explosives,
radioactive materials, asbestos, asbestos-containing materials, polychlorinated biphenyls,
chemicals known to cause cancer or reproductive toxicity, pollutaots, contaminants, ha ,Ardous
wastes, medical wastes, toxic substances or related materials, expl,sives, petroleum, petroleum
products and any "hazardous" or "toxic" material, substance or waie that is defined by those or
similar terms or is regulated as such under any Law, including any material, substance or waste
that is: (a) defined as a "hazardous substance" under Section 311 of the Water Pollution Control
Act (33 U.S.C. § 1317), as amended; (b) substances designate as "hazardous substances"
pursuant to 33 U.S.C. § 1321; (c) defined as a "hazardous waste under Section 1004 of the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6f01, et seq., as amended; (d)
defined as a "hamrdous substance" or "hazardous waste" Inder Section 101 of the
Comprehensive Environmental Response, Compensation and Liabi ty Act of 1980, as amended
by the Superfund Reauthorization Act of 1986, 42 U.S.C. § 96 1, et seq., or any so-called
65012.00207\2785768.12
11
"superfund" or "superlien" law; (e) defined as a "pollutant" or "c taminant" under 42 U.S.C. §
9601(33); (f) defined as "hazardous waste" under 40 C.F.R. Part 2; (g) defined as a "hazardous
chemical" under 29 C.F.R. Part 1910; (h) any matter within Ile definition of "hazardous
substance" set forth in 15 U.S.C. § 1262; (i) any matter, waste or bstance regulated under the
Toxic Substances Control Act ("TSCA") [15 U.S.C. Sections 2601}t seq.]; (j) any matter, waste
or substance regulated under the Hazardous Materials Transpo on Act, 49 U.S.C. Sections
partment of Transportation
s designated by the EPA, or
2]; (m) any matter, waste or
alifornia Health and Safety
Code; (n) any substance defined as a "hazardous substance" in StAtion 25316 of the California
Health and Safety Code; (o) any matter, waste, or substance thaklis subject to any other Law
regulating, relating to or imposing obligations, liability or stanOrds of conduct concerning
protection of human health, plant life, animal life, natural resourcel„property or the enjoyment of
life or property free from the presence in the environment of any lid, liquid, gas, odor or any
form of energy from whatever source; or (p) other substances, malrials, and wastes that are, or
become, regulated or classified as hazardous or toxic under Law: ir in the regulations adopted
pursuant to said Law, including manure, asbestos, polychlo ated biphenyl, flammable
explosives and radioactive material.
1801, et seq.; (k) those substances listed in the United States
(DOT)Table [49 C.F.R. 172.101]; (1) any matter, waste or substan
any successor authority, as a hazardous substance [40 C.F.R. Part
substances defined as "hazardous waste" in Section 25117 of th
1.1.84 Hazardous Substance Discharge. Any
release, or spill of a Hazardous Substance that occurs at on, under,
or during transportation of any Hazardous Substance to or from th
any time from the construction, installation, use or operation o
conducted at on, under or from the Project Site, whether or not cau
1.1.85 HCD. The State Department of Housing
a public agency of the State.
1.1.86 HG Grant. A grant to Original Devel
HCD's Infill Infrastructure Grant Program in an amount consistent
from such source set forth in the Financing Plan approved by Co
6.5.11 to finance a portion of the Total Project Costs.
1.1.87 HG Loan. A loan of the IIG Grant proce
Developer pursuant to a written loan agreement and promissory
applicable Law and the regulations of HCD, without security in th
the Project site for such loan is required by the Tax Credit Investo
Site in a subordinate lien position to the Permitted Security Ins
Financing, the Commission Deed of Trust and any Permitted
repayment of the Industry Funds Loan.
65012.00207\2785768.12
12
1.1.88 IIG Regulatory Agreement. The regul
HCD to be recorded against the Project Site to obtain the IIG Grant.:
! I
1.1.89 Indemnify. Where this Agreement state
"indemnify" any Indemnitee from, against, or for a particular CI
osit, discharge, generation,
nto or from the Project Site,
Project Site, or that arises at
he Project or any activities
by a Party.
Community Development,
er from HCD pursuant to
'th the amount of financing
ission pursuant to Section
s by Original Developer to
ote, in compliance with all
oject Site or, if security in
then secured by the Project
t securing the Construction
curity Instrument securing
ry agreement required by
that any Indemnitor shall
, that the Indernnitor shall
indemnify the Indemnitee and defend and hold the Indemnitee ha=nless from and against such
Claim (alleged or otherwise). "Indemnified" shall have the correlajive meaning.
1.1.90 Indemnitee. Any Person entitled to be Inlemnified under the terms of
this Agreement.
1.1.91 Indemnitor. A Party that agrees to Inde
the terms of this Agreement.
1.1.92 Industry Funds Loan. City of Indust
Industry Urban Development Agency Low and Moderate Incon
aside pursuant to Health and Safety Code Section 33334.2) tra
pursuant to Government Code Section 65584.3, loaned to Devel
with the amount of financing from such source set forth in the
Commission pursuant to Section 6.5.11 to finance a portion of the
1.1.93 Institutional Lender. Any of the foll+
Federal), trust company (in its individual or trust capacity), ins
savings bank (State or Federal), pension, welfare or retirement
investment trust (or an umbrella partnership or other entity of whic
is the majority owner), Federal or State agency regularly maki
loans, investment bank or a Fortune 500 company; or (b) any Perso
combination of any one or more of the Persons described in "(a)" o
any development, use, maintenance, taxation, oper
environmental conditions affecting the Project Site or the Project
otherwise relating to this Agreement or any Party's rights, oblige
Agreement, or any Transfer of any of the foregoing, whether in f
passed, enacted, modified, amended or imposed at some later time,
to any applicable waiver, variance, or exemption.
assigns.
65012.00207\2785768.12 13
fy any other Person under
Redevelopment Agency or
Housing Fund money (set
ferred to the County CDC
er in an amount consistent
inancing Plan approved by
otal Project Costs and to be
repaid from "Residual Receipts" (as defined in the Developer Note), with subordination of any
associated Permitted Security Instrument to both the Permitted !ecurity Instrument securing
repayment of the Construction Financing and the Commission Dee€ of Trust.
ng: (a) a bank (State or
ce company, credit union,
fund or system, real estate
a real estate investment trust
or guaranteeing mortgage
that is an Affiliate of or is a
this Section 1.1.93.
1.1.94 Insurance Documents. Copies of insuran e policies and endorsements
evidencing all insurance coverage required to be obtained by Developer pursuant to Section 8.
1.1.95 Law. Every law, ordinance, requirement, cder, proclamation, directive,
rule, and regulation of any Government applicable to the Project S =e or the Project, in any way,
Lion, or occupancy of, or
or relating to any taxes, or
lions or remedies under this
rce on the Effective Date or
Dubject in all cases, however,
1.1.96 Legal Costs. In reference to any Pers , all reasonable costs and
expenses such Person incurs in any legal proceeding (or other m er for which such Person is
entitled to be reimbursed for its Legal Costs), including reasonab attorneys' fees, court costs
and expenses and consultant and expert witness fees and expenses. -
1
1.1.97 Lender. The holder of any Security Instrument and its successors and
1
•
J
1.1.98 Liability Insurance. Commercial gen - 1 liability insurance against
clki
claims for bodily injury, personal injury, death, or property dama occurring upon, in, or about
the Project Site, the Project or adjoining streets or passageways, t least as broad as Insurance
Services Office Occurrence Form CG0001, with a minimum liability limit of [TO BE
DETERMINED] for any one occurrence and which may be provided through a combination of
primary and excess or umbrella insurance policies. If commercial general liability insurance or
other form with a general aggregate limit is used, either the geneF1 aggregate limit shall apply
separately to the Project Site or the general aggregate limit shall b: the required minimum
liability limit for any one occurrence.
1.1.99 Liquidated Damages Amount. The amo of One Hundred Thousand
Dollars ($100,000).
1.1.100 Monetary Default. Any failure by either
and as this Agreement requires, any amount of money, any bond
insurance coverage required to be provided under this Agreement,
Third Person.
1.1.101 Non-Monetary Default. The occurrence
to the extent constituting a Monetary Default or an Escrow Defaul
perform any of its obligations under this Agreement; (b) any fail
any material restriction or prohibition in this Agreement; or (c) an,
that, with passage of time or giving of Notice, or both, or neither,
this Agreement by a Party.
65012.00207\2785768.12
arty to pay or deposit, when
or surety or evidence of any
hether to or with a Party or a
any of the following, except
(a) any failure of a Party to
re of a Party to comply with
other event or circumstance
would constitute a breach of
1.1.102 Negotiation Agreement. Defined in Reci C to this Agreement.
1.1.103 Normal Business Hours. Any weekd , Monday through Friday,
excluding Federal or State recognized holidays, between the hour of 9:00 a.m. and 5:00 p.m.
Pacific Standard Time. 1
4
1.1.104 Notice. Any consent, demand, designatio , election, notice, or request
relating to this Agreement, including any Notice of Default. All N . ces must be in writing.
1.1.105 Notice of Affordability Restrictions. A n ce in substantially the form
of Exhibit "G" attached to this Agreement to be recorded against tL'. Project Site.
1.1.106 Notice of Default. Any Notice claiming or Notice of a Default or
alleged Default. •
1.1.107 Notify. To give a Notice.
1.1.108 Original Developer. National Community ' Renaissance of California, a
California non-profit public benefit corporation.
1.1.109 Parking Deck Easement. An easement to eveloper over the surface of
l
the Auxiliary Parking Site for construction, maintenance, repair, peration and restoration by
Developer of the above-ground parking deck contemplated in Desi Option 2 on the Auxiliary
14
Parking Site to be used solely for parking of vehicles for residents ; guests or on-site employees
of the Project, in substantially the form of Exhibit "P" attached to ti!is Agreement.
1.1.110 Parties. Collectively, Commission and De
1.1.111 Party. Individually, either Commission or 'Developer, as applicable.
1.1.112 Permanent Loan. A loan from an Institutilmal Lender to the Developer
that will be used solely in combination with proceeds of the Tax redit Equity not previously
advanced to completely pay-off the Construction Financing, incliding the reasonable costs of
obtaining the loan and any reasonable and customary fees or char es relating to pay-off of the
Construction Financing.
1.1.113 Permitted Encumbrance. Any Permit4d Security Instrument, the
CTCAC Regulatory Agreement, the Regulatory Agreement, the ommission Deed of Trust,
utility easements directly related to the Project, a Permitted jcurity Instrument securing
repayment of the Permanent Loan and any other document requir1 or expressly allowed to be
recorded against the Project Site by the express terms of this Agreer== ent.
Deed of Trust; (h) any Permitted Security Instrument; (i) the CTC
any existing improvements on the Project Site, if any, following sa
forth in Sections 6.4.9 and 6.5.20; (k) any encumbrance recorded
Developer's consent or as a result of the activities of Developer;
encumbrance expressly required or allowed to be recorded against
under the terms of this Agreement.
65012.00207\2785768.12
15
1.1.114 Permitted Exception. All of the followiniz: (a) all items shown in the
applicable Preliminary Report, as exceptions to coverage under tae proposed Developer Title
Policy, that are approved by Developer pursuant to Section 5.2; (bz any lien for non-delinquent
property taxes or assessments; (c) any Laws applicable to the Project Site; (d) the
Redevelopment Plan; (e) this Agreement; (f) the Regulatory Agr ement; (g) the Commission
1.1.116 Permitted Security Instrument. Any S curity Instrument: (a) that
encumbers only the Project Site or any interest in the Project Site; ) a copy of which (recorded
or unrecorded) is promptly after execution delivered to Commissi* , with a certification by the
Lender that the copy is accurate and stating the Lender's name and otice address; (c) that is held
by a Lender that is an Institutional Lender, subject to the jurisdictinn of the courts of the State,
not immune from suit and cannot elect to be immune from suit; -and (d) only secures: (i) the
repayment of money used to pay or reimburse the Total Project C sts; (ii) a delivery assurance
fee regarding a Permanent Loan that is refundable to Developer L-; the close of the Permanent
Loan; or (v) any Refinancing permitted under the terms and conditi s of this Agreement.
•
1.1.115 Permitted Lender. The holder of any Pe i itted Security Instrument.
1.1.117 Person. Any association, corporation, go ernmental entity or agency,
individual, joint venture, joint-stock company, limited liability ompany, partnership, trust,
unincorporated organization, or other entity of any kind.
Regulatory Agreement; (j)
faction of the conditions set
gainst the Project Site with
d (1) any other document or
e Project Site or the Project
1.1.118 Placed In Service Information. All information required to be
1
provided by Developer to CTCAC pursuant to Title 4 California_Code of Regulations Section
10322(i)(2), except such items that are not customarily provided Et completion of construction,
including the executed CTCAC Regulatory Agreement.
•
1.1.119 Pre-Development Loan Note. That cerhin promissory note made by
Developer to the order of Commission, dated as of January 8, 201 , pursuant to the Negotiation
Agreement, and evidencing a loan from the Commission to the J4veloper for pre-development
costs related to the Project in an amount not to exceed Seventy-Fiv Thousand Dollars ($75,000).
1.1.120 Preliminary Report. A preliminary repo issued by the Title Company
in contemplation of the issuance of a policy of title insurance, acccnpanied by the best available
copies of all documents listed in Schedule B of the report as exc ptions to coverage under the
proposed policy of title insurance.
65012.00207\2785768.12
16
1.1.121 Prevailing Wage Action. Any of the fol wing: (a) any determination
by the State Department of Industrial Relations that prevailing wag:. rates should have been paid,
but were not; (b) any determination by the State Department of Irdustrial Relations that higher
prevailing wage rates than those paid should have been paid; (ci any administrative or legal
action or proceeding arising from any failure to comply with a y of California Labor Code
Sections 1720 through 1781, as amended from time to time, 04 any Federal law regarding
prevailing wages, including maintaining certified payroll records lursuant to California Labor
Code Section 1776; or (d) any administrative or legal action or Iproceeding to recover wage
amounts at law or in equity, including pursuant to California labor Code Section 1781 or
applicable Federal Law.
1.1.122 Prohibited Encumbrance. Any Security Instrument, mechanic's lien,
easement or other encumbrance recorded or asserted against the Pr 'ect Site or the Project that is
not a Permitted Encumbrance.
1.1.123 Project. The fifty (50) Dwelling Unit iffordab1e residential rental
project specifically described in either Design Option 1 or De---7gn Option 2, as applicable
pursuant to Section 5.5. The Project shall include all required or 4sociated on-site and off-site
improvements, hardscape improvements, parking areas and carports, and landscaping
improvements to the Project Site, in accordance with plans and s cifications approved by the
City, any conditions imposed by the City in issuing developmeri entitlements related to the
Project and applicable Law.
1.1.124 Project Area. Defined in Recital A to this kgreement.
1.1.125 Project Budget. If the Project is proceeding pursuant to Design Option
1, then the Design Option 1 Budget, and if the Project is proceeding, lursuant to Design Option 2,
then the Design Option 2 Budget.
t
1.1.126 Project Commencement Date. The dat that is one hundred eighty
(180) days after the date Developer first receives written notice fr CTCAC of reservation of
the Tax Credits for the Project. •
1
1.1.127 Project Completion Date. The date that 1s Five Hundred Forty (540)
calendar days following the date of the Close of Escrow.
1.1.128 Project Deficit. Defined in Section 9.13.
1.1.129 Project Map. A condominium map for the- roject approved by the City
consistent with Design Option 1 or Design Option 2, as applicable rsuant to Section 5.5.
1.1.130 Project Site. The Property and, if the !roject proceeds pursuant to
Design Option 2, the Auxiliary Parking Parcel (provided that Corr-mission owns fee title to the
Auxiliary Parking Site) and related rights, interests or easements. '
1.1.131 Project Surplus. Defined in Section 9.13.
1.1.132 Property. That certain real property l and improvements legally
described in Exhibit "A" attached to this Agreement.
1.1.133 Property Deed. A quitclaim deed conveyi ug the Commission's interest
in the Property from Commission to Developer, at the Close of Esc =ow, substantially in the form
of Exhibit "I" attached to this Agreement.
1.1.134 Property Insurance. Insurance providing .overage for the Project Site
and all improvements on or to the Project Site against loss, dama e, or destruction by fire and
other hazards encompassed under the broadest form of prope insurance coverage then
customarily used for like properties in the County, in an amount qual to one hundred percent
(100 %) of the replacement value (without deduction for depre ation) of all improvements
comprising the Project (excluding excavations and foundations) aid in any event sufficient to
avoid co- insurance and with no co- insurance penalty provisio , with "ordinance or law"
coverage. To the extent customary for like properties in the Coun at the time, such insurance
shall include coverage for explosion of steam and pressure boilers , d similar apparatus located
on the Project Site; an "increased cost of construction" endor ment; and an endorsement
covering demolition and cost of debris removal.
1.1.135 Punchlist Work. Construction of an i ;bstantial nature that, if not
completed, will not delay issuance of a final Certificate of Occup -- cy (or equivalent approval)
for the Project by the City or materially interfere with use of the Prc_i ect.
1.1.136 Purchase Price. If the Project proceeds 1ursuant to Design Option 1,
then $1,644,275 or, alternatively, if the Project proceeds pursuas tt to Design Option 2, then
$1,481,775.
1.1.137 Redevelopment Plan. Defined in Recital , to this Agreement.
1.1.138 Refinancing. Any loan secured by a Perm:tted Security Instrument that
Developer obtains from an Institutional Lender subsequent to recoration of a Permitted Security
Instrument securing repayment of the Permanent Loan for any of t, -%e following purposes: (1) to
pay off all or a portion of an existing loan secured by a Permitted Security Instrument where the
Lender providing the new loan will disburse loan proceeds toj or on behalf of Developer
65012.00207\2785768.12
17
i
1
exceeding the amount of principal and interest under the existing loan being paid plus the
amount of any reasonable and customary fees and costs associated ;with obtaining such new loan
that are actually paid by Developer and not rebated or refundeci to Developer, the aggregate
amount of such fees and costs not to exceed three percent (3%) ollthe original principal amount
of the new loan; (2) disbursing funds to or on behalf of Deve_ver without paying off any
existing loan secured by a Permitted Security Instrument; or (3) an loan extension, modification
or equivalent regarding an existing loan to Developer secured by a Permitted Security Instrument
that results in the Lender of the existing loan disbursing additiona 'loan proceeds to or on behalf
of Developer in excess of the original principal amount of the loan.
1.1.139 Regulatory Agreement. That certain
Conditions, Covenants and Restrictions Restricting Use of Pro
(Verizon Building)" to be entered into by and between Commissi
Escrow, substantially in the form of Exhibit "D" attached to thi
the Project Site.
1.1.140 Security Instrument. Any security ins
deed, contract for deed, deed to secure debt, or other volun
leasehold) security instrument(s) or agreement(s) intended to
65012.00207\2785768.12
18
'Regulatory Agreement and
rty for Affordable Housing
n and Developer at Close of
Agreement recorded against
ent, deed of trust, security
ry real property (including
ant real property (including
leasehold) security for any obligation (including a purchase-mo y or other promissory note)
encumbering the Project Site, as entered into, renewed, modi Z ed, consolidated, increased,
decreased, amended, extended, restated, assigned (wholly or partiflly), collaterally assitited, or
supplemented from time to time, unless and until paid, satisfied, an discharged of record. If two
or more such security instruments are consolidated or restated as a single lien or held by the
same Lender (as applicable), then all such security instruments so ;consolidated or restated shall
constitute a single Security Instrument. A participation interest: in a security instrument (or
partial assignment of the secured loan) does not itself constitute a Security Instrument.
1
1.1.141 Senior. Referring to multiple Securit; Instruments, the Security
Instrument that is most senior in lien of the same type. Where S lior is used as a comparative
term as against any specified Security Instrument, such term refers 1
o any Security Instrument of
the same type that is senior in lien to such specified Security Inst4ument. If only one Security
Instrument of a particular type exists, then it shall be deemed the ienior Security Instrument of
such type.
1.1.142 State. The State of California.
1.1.143 Tax Credit Equity. The amount to be pd by the Tax Credit Investor
to acquire 99.99% ownership of the Developer Partnership, as the ole limited partner, pursuant
to the Developer Partnership Agreement.
1.1.144 Tax Credit Investor. The Person that prvides the Tax Credit Equity.
The Tax Credit Investor shall be subject to the reasonable approvaof Commission. In no event
may the Tax Credit Investor be an Affiliate of Developer.
1.1.145 Tax Credits. An allocation from CTCAq•of nine percent (9%) Federal
low income housing tax credits in an amount consistent with the Financing Plan approved by
Commission pursuant to Section 6.5.11 to finance a portion of t
accordance with Section 42 of the Internal Revenue Code of 198
Internal Revenue Service regulations, State law and all associated
1.1.146 Third Person. Any Person that is not a P
an elected official, officer, director, manager, shareholder, membe
or agent of a Party.
1.1.147 Title Company. Fidelity National Tle Insurance Company, a
California corporation, or such other Person mutually agreeci upon in writing by both
Commission and Developer.
1.1.148 Title Notice. A written notice from . Developer to Commission
indicating Developer's acceptance of the state of the title to the Project Site, as described in the
Preliminary Report for the Developer Title Policy, or Developer's c-sapproval of specific matters
shown in Schedule B of such Preliminary Report as exceptions to :overage under the proposed
Developer Title Policy for the Project Site, describing in sui b1e detail the actions that
Developer reasonably believes are indicated to obtain Developer' 7 approval of the state of the
title to the Project Site. 1
1.1.149 Title Notice Response. The written resporte of Commission to the Title
Notice, in which Commission either elects to: (i) cause the remova from the Preliminary Report
for the Developer Title Policy of any matters disapproved; (ii) ob in title or other insurance or
endorsement in a form reasonably satisfactory to Developer ibsuring against any matters
disapproved in the Title Notice; or (iii) not take either action described in clause "(i)" or "(ii)" of
this Section 1.1.149.
1.1.150 Title Notice Waiver. A written notice frfn Developer to Commission
waiving Developer's previous disapproval in the Title Notice cJf specific matters shown in
Schedule B of the Preliminary Report for the Developer Title Poll:) as exceptions to coverage
under the proposed Developer Title Policy.
1.1.152 Transfer. Regarding any property, right
following, whether by operation of law or otherwise, whether
whether direct or indirect: (a) any assignment, conveyance, gr
65012.00207\2785768.12
19
Total Project Costs, all in
as amended, all associated
CAC regulations.
ty, an Affiliate of a Party or
principal, partner, employee
1.1.151 Total Project Costs. All of the costs set fmh in the Project Budget.
obligation means any of the
luntary or involuntary, and
t, hypothecation, mortgage,
pledge, sale, or other transfer, whether direct or indirect, of all or aly part of such property, right
or obligation, or of any legal, beneficial, or equitable interest or esate in such property, right or
obligation or any part of it (including the grant of any easement, or other encumbrance); (b)
any conversion, exchange, issuance, modification, reallocation, *Ile, or other transfer of any
Equity Interest(s) in the owner of such property, right or obligation y the holders of such Equity
Interest(s); or (c) any transaction that is in substance equivalent to any of the foregoing. A
transaction affecting Equity Interests, as referred to in clauses " ()" and "(c)" of this Section
1.1.152, shall be deemed a Transfer by Developer even though Diveloper is not technically the
transferor. A "Transfer" shall not, however, include any of the foll.-wing (provided that the other
Party has received Notice of such occurrence) relating to the Paiject Site and/or any Equity
Interest: (i) a mere change in form of ownership with no material ange in beneficial ownership
and constitutes a tax -free transaction under Federal income tax aw and the State real estate
transfer tax; (ii) a conveyance only to member(s) of the i ediate family(ies) of the
transferor(s) or trusts for their benefit; (iii) a conveyance only any Person that, as of the
Effective Date, holds an Equity Interest in the entity whose Equity Interest is being transferred;
(iv) the original sale of limited partnership Equity Interests in :developer for the purpose of
syndicating the Tax Credit Equity; (v) a conveyance to an Afiliate of Developer; (vi) a
conveyance to an Affiliate of the Tax Credit Investor pursuant t
Investor under the Developer Partnership Agreement; (vii) a cc
Interests in the Developer Partnership to the Institutional Lend
(3) counterpart originals of this Agreement signed by the au
Developer; (b) Commission has received a certified copy of th
executed by the authorized representative(s) of Developer; (c) thi
Commission's governing body; (d) this Agreement is signed by th
of Commission; and (e) one (1) original of this Agreement
representative(s) of Commission has been delivered by Commission
Date of this Agreement is , 20
3. TE _ _ ATION OF NEGOTIATION AGREE I ;NT.
Effective Date, the Parties intend and agree that the Negotiation i
65012.00207\2785768.12
20
Financing for the Project; or (viii) a collateral pledge by the Tax1Credit Investor of its Equity
Interests in the Developer Partnership to an Institutional Lender th ;-t is making a loan to the Tax
Credit Investor to finance the Tax Credit Investor's acquisition o - such Equity Interests in the
Developer Partnership.
1.1.153 Unavoidable Delay. A delay in either Pay performing any obligation
under this Agreement, except payment or deposit of money, arising from or on account of any
cause whatsoever beyond the Party's reasonable control, including _trikes, labor troubles or other
union activities, casualty, war, acts of terrorism, riots, litigation, go'- ernmental action or inaction,
regional natural disasters, or inability to obtain required materials. ,'Unavoidable Delay shall not
include delay caused by a Party's financial condition, illiquidity, or nsolvency.
1.1.154 Usury Limit. The highest rate of interest, If any, that Law allows under
the circumstances.
1.1.155 Waiver of Subrogation. A provision n, or endorsement to, any
insurance policy, by which the carrier agrees to waive rights of re very by way of subrogation
against either Party to this Agreement for any loss such policy cove =s.
1.1.156 Workers Compensation Insurance. Wo;•cers compensation insurance
complying with the provisions of State law and an employer's ;iability insurance policy or
endorsement to a liability insurance policy, with a minimum 10bility limit of One Million
Dollars ($1,000,000) per accident for bodily injury or disease.' covering all employees of
Developer.
2. EFFECTIVE DATE. This Agreement shall not becom effective until the date on
which all of the following have occurred: ( "Effective Date "): (a) C- tmmission has received three
the rights of the Tax Credit
lateral pledge of the Equity
providing the Construction
7orized representative(s) of
Developer Official Action
Agreement is approved by
authorized representative(s)
signed by the authorized
to Developer. The Effective
Upon the occurrence of the
eement, as it relates to the
Property shall expire, terminate and be of no further force or fect regarding the Property,
without any effect on the obligations of Developer under the Pre- evelopment Loan Note. The
Negotiating Agreement shall remain in full force and effect relaed to property that does not
include the Property.
4. T ' • SFER TO DEVELOPER PARTNERSHIP. Wi ; sixty (60) calendar days
following the date of issuance by CTCAC of a letter to Original, Developer reserving the Tax
Credits for the Project, the Original Developer shall Transfer alt of its rights and obligations
under this Agreement to the Developer Partnership through a writ4i assignment and assumption
agreement approved by the Commission prior to the effecllve date of such Transfer.
Notwithstanding any other provision of this Agreement to the col
of the Developer Partnership Agreement shall have been approve
the effective date of such Transfer, including the then current ide
general partner and all of the limited partners of the Developer Par
the identities or qualifications of the general partner or any or all
Developer Partnership or any amendment, modification or r tatement of the Developer the Partnership Agreement, shall be subject to e prior written a royal of Commission, until
issuance of a Completion Certificate for the Project. If the Orig ;tat Developer fails to timely
Transfer all of its rights and obligations under this Agreement to =the Developer Partnership in
accordance with this Section 4, the Commission shall have the deg': to terminate this Agreement
by Notice to the Original Developer.
5. PURC SE AND SALE OF PROJECT SITE
65012.00207\2785768.12
5.1 Escrow. Commission shall sell the Project Site to Leveloper and Developer shall
purchase the Project Site from Commission, subject to the Permi_:ed Exceptions and the terms
and conditions of this Agreement. For the purposes of exchanking funds and documents to
complete the sale of the Project Site from Commission to DeveMper and the purchase of the
Project Site by Developer from Commission, pursuant to the rms and conditions of this
Agreement, Commission and Developer agree to open the Escro 1 with the Escrow Agent. The
provisions of Section 6 of this Agreement are the joint escrow in ctions of the Parties to the
Escrow Agent for conducting the Escrow.
5.2 Developer's Approval of Title to Project Site.
5.2.1 Title Notice. Within fifteen (15) days a
Commission shall request the Preliminary Report for the Develo
Company and that the Title Company deliver a copy of such Pre
Within thirty (30) days following Developer's receipt of the
Developer Title Policy, Developer shall send the Title Notice to
Agent.
21
•
5.2.2 Failure to Deliver Title Notice. If De
Notice to Commission and Escrow Agent within the time peri
Developer will be deemed to disapprove the status of title to the P
conveyance of the Project Site and both Developer and Comm:
11
1
rary, the form and substance
by the Commission prior to
ties and qualifications of the
nership. Any later change in
f the limited partners of the
r the Escrow Opening Date,
r Title Policy from the Title
inary Report to Developer.
Preliminary Report for the
th Commission and Escrow
loper fails to send the Title
provided in Section 5.2.1,
ject Site and refuse to accept
:sion shall have the right to
cancel the Escrow and terminate this Agreement upon seven (7) cltys Notice, in their respective
sole and absolute discretion.
5.2.3 Title Notice Response. Within fiteen (15) days following
Commission's receipt of the Title Notice (if any), Commissiow shall send the Title Notice
Response to both Developer and Escrow Agent. If the Title Mtice does not disapprove or
conditionally approve any matter in the Preliminary Report for =le Developer Title Policy or
Developer fails to deliver the Title Notice, Commission shall no' be required to send the Title
Notice Response. If Commission does not send the Title Notice
the time period provided in this Section 5.2.3, Commission shall
any action in reference to the Title Notice. If Commission elects i
take any action in reference to the Title Notice, Commission shall -omplete such action, prior to
the Escrow Closing Date or as otherwise specified in the Title Notice Response.
5.2.4 Title Notice Waiver. If Commission e1eci or is deemed to have elected
not to address one or more matters set forth in the Title Noti
satisfaction, then within ten (10) days after the earlier of: (i
Commission's Title Notice Response; or (ii) the date for Commis
Response pursuant to Section 5.2.3, Developer shall either: (a) re
conveyance of the Project Site, or (b) waive its disapproval or co
matters set forth in the Title Notice by sending the Title Notice W
Escrow Agent. Failure by Developer to timely send the Title N
Notice Response or Commission's failure to deliver the Title
Commission's election not to address one or more matters set
their respective sole and absolute discretion.
5.3 Due Diligence Investigations.
65012.00207\2785768.12 22
Developer's reasonable satisfaction, will be deemed Developer's cntinued refusal to accept the
title to and conveyance of the Project Site, in which case both DeNvloper and Commission shall
have the right to cancel the Escrow and terminate this Agreement ipon seven (7) days Notice, in
1
5.2.5 Disapproval of Encumbrances Securini Commission Obligations.
Notwithstanding any other provision of this Agreement, Developer disapproves any and all
encumbrances against the Project Site securing monetary (other Than non-delinquent property
taxes) or performance obligations of Commission. All such encimbrances shall be removed
from the Project Site by Commission prior to the Close of Escro at Commission's sole cost
and expense.
1
1
5.2.6 No Termination Liability. Any termint4ion of this Agreement and
cancellation of the Escrow pursuant to this Section 5.2 shall be with-Jut liability to the other Party
or any other Person. Termination shall be accomplished by delivy of a Notice of termination
to both the other Party and the Escrow Agent at least seven (7) day to the termination date.
Following issuance of a Notice of termination of this Agreement pursuant to a right provided
under this Agreement, the Parties and the Escrow Agent shall proc,Led pursuant to. Section 6.13.
Once a Notice of termination is given pursuant to this Section 5.2,1delivery of a Title Notice or
Title Notice Waiver shall have no force or effect and this Mreement shall terminate in
accordance with the Notice of termination.
1
esponse, if necessary, within
e deemed to elect not to take
the Title Notice Response to
e to Developer's reasonable
Developer's receipt of the
ion to deliver its Title Notice
use to accept the title to and
ditional approval of all such
iver to both Commission and
tice Waiver, where the Title
Notice Response results in
forth in the Title Notice to
5.3.1 Time and Expense. Developer shall com4lete all of its Due Diligence
Investigations within the Due Diligence Period and shall condilt all of its Due Diligence
Investigations at its sole cost and expense.
5.3.2 Right to Enter. Commission licenses D
Site for the sole purpose of conducting the Due Diligence Investi
terms and conditions of this Agreement. The license given in thi
with the termination of this Agreement. Any Due Diligence Inve
not unreasonably disrupt any then existing use or occupancy of ti
exercise of the license provided in this Section 5.3 shall not extend
5.3.3 Limitations. Developer shall not conduc
testing of any portion of the Project Site, other than low vc
Commission's prior written consent. Developer shall pay all
surveyors, consultants or agents engaged in any inspection or testin
no mechanics liens or similar liens for work performed are imposec
such Persons. Following the conduct of any Due Diligence Inve
Developer shall restore the Project Site to substantially its conditio - prior to the conduct of such
Due Diligence Investigations. Under no circumstances shall DeveLper be required to remediate
or otherwise respond to Hazardous Substances existing on the Proct Site prior to Developer's
entry onto the Project Site, except to the extent Developer exacerbatis an existing condition.
5.3.4 Indemnification of Commission. The aitivities of Developer or its
agents directly or indirectly related to the Due Diligence Inves gations shall be subject to
Developer's indemnity, defense and hold harmless obligations pursuant to Section 12.6.
Developer shall provide Commission with evidence of Liability Iisurance in compliance with
Section 8 prior to the commencement of any Due Diligence Investi tions on the Project Site.
5.3.5 Due Diligence Completion Notice. De eloper shall deliver a Due
Diligence Completion Notice to Commission and Escrow Agent rior to the end of the Due
Diligence Period. If Developer does not unconditionally accept th . condition of the Project Site
by delivery of its Due Diligence Completion Notice indicating such acceptance, prior to the end
of the Due Diligence Period, Developer shall be deemed to have ejected the condition of the
Project Site and refused to accept conveyance of title to the Projec Site. If the condition of the
Project Site is rejected or deemed rejected by Developer, then both Commission and Developer
shall have the right to cancel the Escrow and terminate this Agree ent, in their respective sole
and absolute discretion, without liability to the other Party or any er Person, by delivery of a
Notice of termination to the other Party and Escrow Agent, in whic case the Parties and Escrow
Agent shall proceed pursuant to Section 6.13.
5.4 "AS-IS" Acquisition. Except to the extent of an
warranties of Commission specifically set forth in this Agreement .
shall evidence Developer's unconditional and irrevocable accep
Project Site's AS IS, WHERE IS, SUBJECT TO ALL FAULT
CLOSE OF ESCROW, WITHOUT WARRANTY as to ch
condition, title, physical condition, soil conditions, the presence or 4sence of fill, ocean or tidal
impacts, shoring or bluff stability or support, subsurface support, Toning, land use restrictions,
65012.0020712785768.12
23
eloper to enter the Project
ations, subject to all of the
Section 5.3 shall terminate
igations by Developer shall
Project Site. Developer's
e Due Diligence Period.
any intrusive or destructive
ume soil samples, without
of its vendors, inspectors,
of the Project Site, such that
upon the Project Site by any
igations on the Project Site,
express representations and
if any) the Close of Escrow
e of the Project Site in the
CONDITION AS OF THE
_.cter, quality, performance,
f
the availability or location of utilities or services, the location of ay public infrastructure on or
off of the Project Site (active, inactive or abandoned), the suitability of the Project Site for the
Substances and with full
of Commission's interest in
and any and all conditions,
ting to the Project Site. The
arranty to Commission that:
to the Project Site and the
duct on the Project Site in
real estate development; (c)
d its own inspection of the
Project Site; (d) Developer
t Developer's own expertise
Project or other use or the existence or absence of Hazardo
knowledge of the physical condition of the Project Site, the natur
and use of the Project Site, all laws applicable to the Project Sit
covenants, restrictions, encumbrances and all matters of record rel
Close of Escrow shall constitute Developer's representation and
(a) Developer has had ample opportunity to inspect and evalu
feasibility of the uses and activities Developer is entitled to
accordance with this Agreement; (b) Developer is experienced i
Developer is relying entirely on Developer's experience, expertise
Project Site in its current state in proceeding with acquisition of t
accepts the Project Site in its present condition; (e) to the extent
with respect to any matter regarding the Project Site is insufficient:to enable Developer to reach
an informed conclusion regarding such matter, Developer has enpged the services of Persons
qualified to advise Developer with respect to such matters; (f) Devdoper has received assurances
acceptable to Developer by means independent of Commission o
truth of all facts material to Developer's acquisition of the F
Agreement; and (g) that the Project Site is being acquired b
Developer's own knowledge, inspection and investigation of the P
of any representation made by Commission or Commission's age
the Project Site, unless such statement or representation is express
this Agreement. Except to the extent of any express repre
Commission specifically set forth in this Agreement (if any), Coral
specifically disclaims any express or implied warranties regarding tj
5.5 Designation of Design Option.
5.5.1 Design Option 1. Commission and Devi
agree that the preferred design for the Project is Design Option 1.
each further acknowledge and agree that development of the Proj
Option 1 is dependent on Developer receiving both the IIG Loan
If HCD has not published a "Notice of Funding Availability" for th
30, 2011, then the Project shall proceed pursuant to Design Optio.
Grant or the Industry Funds Loan, respectively, previously set fort l
or the County CDC expressly rejects, denies, declines, turns down
the respective applications of Original Developer or Developer for
65012.00207\2785768.12
24
Commission's agents of the
roject Site pursuant to this
Developer as a result of
oject Site and not as a result
s relating to the condition of
and specifically set forth in
ntations and warranties of
nission hereby expressly and
e Project Site.
oper each acknowledge and
Commission and Developer
t in accordance with Design
nd the Industry Funds Loan.
IIG Grant on or before June
2. If HCD has published a
Notice of Funding Availability for the IIG Grant on or before _une 30, 2011, but Original
Developer has not received a written commitment from HCD b provide the IIG Grant to
Original Developer on or before September 30, 2011, then Developer shall immediately send
Notice to Commission that Original Developer did not receive the -IG Grant AND THE Project
shall proceed pursuant to Design Option 2. Further, if Develop does not receive a written
commitment from the County CDC on or before April 30, 2012, tt provide the Industry Funds
Loan to Developer, then Developer shall immediately send notice to Commission that
Developer has not received the Industry Funds Loan and Commiy;ion or Developer shall have
the right to terminate this Agreement pursuant to Section 5.5.3. Ilotwithstanding the deadlines
for Original Developer or Developer, respectively, to obtain writ commitments for the IIG
in this Section 5.5.1, if HCD
r takes any action regarding
s uch funding that reasonably
indicates that Original Developer or Developer, respectively, will Notice to Commission of such
action by HCD or the County CDC and the Parties shall proceed athough such funding was not
received by the deadline for receipt of such funding set forth in GIs Section 5.5.1. If Original
Developer does not receive a written commitment from HCD to provide the IIG Grant to
Original Developer within the time period required by this Si-,ction 5.5.1 to obtain such
commitment, but Developer receives a written commitment from t1 County CDC to provide the
Industry Funds Loan to Developer within the time period required ly this Section 5.5.1 to obtain
such commitment, then the Project shall proceed pursuant to Desig - Option 2.
5.5.2 Design Option 2. Commission and Dev
agree that development of the Project in accordance with Desi
Commission acquiring fee title to the Auxiliary Parking Site, De
Funds Loan and the City approving the Auxiliary Parking Parcel
obtained fee title to the Auxiliary Parking Site on or before Apri
shall immediately send Notice to Developer that Commission
Auxiliary Parking Site and Commission or Developer shall ha
Agreement pursuant to Section 5.5.3. If Developer does not recei
the County CDC to provide the Industry Funds Loan to Develope
then Developer shall immediately send Notice to Commission that
Industry Funds Loan and Commission or Developer shall hav
Agreement pursuant to Section 5.5.3. Notwithstanding the deadi
written commitment from the County CDC to provide the Indus
previously set forth in this Section 5.5.2, if the County CDC expr
turns down or takes any action reasonably indicating that Develop
Funds Loan as a result of Developer's then current application for - uch funding, Developer shall
immediately send Notice to Commission of such action by the County CDC and Commission or
Developer shall have the right to terminate this Agreement pursuar to Section 5.5.3. If the City
1
has not approved the Auxiliary Parking Parcel Map on or fore April 30, 2012, then
Commission shall immediately send Notice to Developer that th City has not approved such
map and Commission or Developer shall have the right to termina — this Agreement pursuant to
Section 5.5.3. •
5.5.3 Termination of Agreement. Should any c =ntingency to development of
the Project pursuant to Design Option 2 described in Section 5 5.2 fail to occur within the
applicable time period set forth in Section 5.5.2, then either Comm sion or Developer shall have
the right to terminate this Agreement on fifteen (15) calendar day advance Notice to the other
Party, without liability to the other Party or any other Person.
5.5.4 No Commission Commitment to Acqu-e Auxiliary Parking Site.
Nothing in this Agreement is intended to be a commitment by Con_- to acquire fee title to
or any other estate or interest in the Auxiliary Parking Site (inclu,Tive of the Auxiliary Parking
Parcel). Nothing in this Agreement is intended to be a commitmeit by Commission to adopt a
resolution of necessity to acquire any property pursuant to any p wer of eminent domain that
Commission may have. Developer acknowledges and agr4 that Commission retains
Commission's sole and absolute discretion regarding whether or ot to acquire any property,
whether by exercise of any power of eminent domain or othervise. Further, Commission's
65012.00207\2785768.12
25
1
41
•
oper each acknowledge and
Option 2 is dependent upon
• loper receiving the Industry
ap. If Commission has not
30, 2012, then Commission
es not own fee title to the
the right to terminate this
a written commitment from
on or before April 30, 2012,
eveloper did not receive the
the right to terminate this
e for Developer to obtain a
Funds Loan to Developer
sly rejects, denies, declines,
will not receive the Industry
commitment to provide financing for development of the Projey
does not include the cost of acquisition of the Auxiliary Parking S
and Commission does not intend to be bound to provide any fin:
Project in excess of the maximum amount of the Commission Loam
5.6 Developer to Obtain all Approvals for the Project.
Developer shall exercise reasonable efforts to obtain all disc
construction of the Project on the Project Site from each Gove
following the Effective Date. Prior to commencement of any p
Project, Developer shall obtain all Approvals from each G
construction of the Project. The City's zoning, building and 1
co. ed in ordinances, the City's municipal code, conditions of
be�icable to the construction of the Project by Developer.
6. JOINT ESCROW INSTRUCTIONS
65012.00207\2785768.12
26
5.6.1 Permit Ready Project. At least fifteen '' 5) calendar days before the
Escrow Closing Date, Developer shall obtain final City approval [' f the Construction Drawings
for the Project such that Developer is in a position to obtain Cit t uilding and grading permits
for the Project by paying applicable fees that are conditions prec ent to City issuance of such
permits.
5.6.2 Submission of Development Application. Subject to Section 5.6.1,
Developer shall exercise reasonable efforts to prepare and submit all required Applications, .
documents, fees, charges or other items (including, without limitation, deposits, funds or sureties
in the ordinary course) required for the construction of the Project, pursuant to all applicable
Laws and Approvals, to each necessary Government for review and approval. Further,
5.6.3 Reservations. The approval of this
Commission shall not be binding on the City Council, Commissio
or any other commission, committee, board or body of the City
Approvals of the Project required by such bodies. No action by
reference to this Agreement or any related documents shall be dee
waiver of any required City or Commission Approval regarding tl Project Site, the Project or
Developer. The Parties acknowledge and agree that this AL eement is not a statutory
development agreement pursuant to Government Code Sections 6554, et seq.
6.1 Opening of Escrow; Escrow Instructions. The pur hase and sale of the Project
Site shall take place through the Escrow to be administered by Es ow Agent. Developer shall
cause the Escrow to be opened within five (5) days following .veloper's receipt of written
confirmation from CTCAC of the reservation of the Tax Credits fc_ the Project. Escrow Agent
shall promptly confirm the Escrow Opening Date in writing to each f the Parties.
6.2 Escrow Instructions. This Section 6 constitutes the joint escrow instructions of
the Parties to Escrow Agent for conduct of the Escrow for the pui$-hase and sale of the Project
Site, as contemplated by this Agreement. Developer and Commiss n shall execute such further
escrow instructions consistent with the provisions of this Agreement as may be reasonably
1
i1
pursuant to this Agreement
or Auxiliary Parking Parcel
cing for development of the
-tionary Approvals for the
ent, within ninety (90) days
of the construction of the
vernment required for the
d use regulations (whether
pproval or elsewhere), shall
greement by the City or
Design Review Committee,
Commission regarding any
e City or Commission with
ed to constitute issuance or
requested by Escrow Agent. In the event of any conflict bet l,een the provisions of this
Agreement and any further escrow instructions requested by Escrow Agent, the provisions of this
Agreement shall control.
6.3 Escrow Aaent Authority. Commission and Develop authorize Escrow Agent to:
6.3.1 Charges. Pay and charge Commissio and Developer for their
respective shares of the applicable fees, taxes, charges and costs p yable by either Commission
or Developer regarding the Escrow;
6.3.2 Settlement /Closing Statements. Release ach Party's Escrow Closing
Statement to the other Party;
6.3.3 Document Recording. File any docum is delivered for recording
through the Escrow with the office of the Recorder of the County for recordation in the official
records of the County, pursuant to the joint instructions of the Parti -; and
6.3.4 Counterpart Documents. Utilize docume_ts signed by Commission or
Developer in counterparts, including attaching separate signature Pages to one version of the
same document. 1
6.4 Developer's Conditions Precedent to Close of Escr
of any such condition to be satisfied is not due to a Default under t
Developer's obligation to purchase the Project Site from Comm.
Date shall be conditioned upon the satisfaction or waiver (waivers
by Developer) of each of the following conditions precedent on
Date:
65012.00207\2785768.12
27
1
6.4.1 Title Policy. Title Company is committe to issue the Title Policy to
Developer upon payment of Title Company's premium for such pol y;
v. Provided that the failure
is Agreement by Developer,
ion on the Escrow Closing
ust be in writing and signed
before the Escrow Closing
6.4.2 Approvals. Final issuance of all discretior ary Approvals required from
any Government for the construction of the Project on the Project Site on terms and conditions
reasonably satisfactory to Developer;
6.4.3 CEQA Documents. Final adoption, appr=oval or certification of the
CEQA Documents by each applicable Government;
6.4.4 Tax Credits. Developer has received writtn notice from CTCAC of the
reservation of the Tax Credits for the Project;
6.4.5 Construction Financing. Developer has r eived a written commitment
from an Institutional Lender to provide the Construction Fin cing on terms reasonably
acceptable to Developer;
6.4.6 Permanent Loan. Developer has receivtid a written forward loan
commitment from an Institutional Lender for such Institutional Lerder to provide the Permanent
Loan on terms and conditions reasonably acceptable to Developer;
1
6.4.7 Industry Funds Loan. Developer has rel�eived a written commitment
from the County CDC to provide the Industry Funds Loan to De' toper for construction of the
Project; 1
6.4.8 IIG Grant. If the Project is proceeding I tiursuant to Design Option 1,
then Original Developer has received a written commitment from 11:CD to provide the IIG Grant
to Original Developer for construction of the Project;
6.4.9 Completion of Demolition. Commission °has completed demolition of
the Building, removed all resulting debris and placed the Propertyiin a rough graded condition;
provided, however, that failure of Commission to satisfy this co_dition shall not constitute a
Default under this Agreement by Commission; '
6.4.10 Commission Escrow Deposits. Commis' on deposits all of the items
into Escrow required by Section 6.8;
6.4.11 Settlement /Closing Statement. Devel
per approves the Escrow
Closing Statement and
6.4.12 Commission Pre - Closing Obligations. C :mmission performs all of its
material obligations required to be performed by Commission pur._uant to this Agreement prior
to the Close of Escrow.
6.5 Commission's Conditions Precedent to Close of Esc w. Provided that the failure
of any such condition to be satisfied is not due to a Defaul under this Agreement by
Commission, Commission's obligation to sell the Project Site t Developer on the Escrow
Closing Date shall be conditioned upon the satisfaction or waiver, (waivers must be in writing
and signed by Commission) of each of the following conditions precedent prior to the Escrow
Closing Date:
6.5.1 Completion Guaranty. Commission -►as received the original
J
Completion Guaranty signed by the authorized representative(s) of uarantor;
6.5.2 Construction Financing. A Permitted urity Instrument securing
repayment of the Construction Financing has been signed by Devoper and deposited into the
Escrow for recording against the Project Site at the Close of Escrow, all conditions precedent to
funding of the Construction Financing (other than progress of con:= ruction of the Project) have
been satisfied and all subordination or intercreditor eements quired by the Institutional
Lender providing the Construction Financing to be entered into by.Commission are reasonably
acceptable to Commission. Commission shall not be obligated to dose the Escrow, either with
transfer of title to the Property or the Auxiliary Parking Parcel to developer or funding of the
Commission Loan, unless the Construction Financing closes (withlfunding consistent with the
Financing Plan approved by Commission) concurrent with the Close1of Escrow;
6.5.3 Tax Credit Equity Funding. All amounts : of the Tax Credit Equity to
be funded at the Close of Escrow, pursuant to the Financing Plan_ and Developer Partnership
Agreement approved by the Commission pursuant to Section 6. .11, are deposited into the
Escrow by the Tax Credit Investor;
65012.00207\2785768.12
28
6.5.4 Permanent Loan. Developer has recei ed a written forward loan
commitment from an Institutional Lender for such Institutional Len er to provide the Permanent
Loan on terms and conditions reasonably satisfactory to Commissio ;
6.5.5 Industry Funds Loan. Developer has beeij awarded the Industry Funds
Loan for construction of the Project and the full amount of the Indu try Funds Loan to be funded
at the Close of Escrow in accordance with the Financing Plan appro red by Commission pursuant
to Section 6.5.11 and a Permitted Security Instrument securing rep,7yment of the Industry Funds
Loan are deposited into the Escrow;
6.5.6 HG Grant and HG Loan. If the Project is proceeding pursuant to
Design Option 1, Original Developer has received a written commitment from HCD to provide
the IIG Grant to Original Developer for construction of the Project Lc_id the full amount of the IIG
Loan to be funded at the Close of Escrow in accordance with the a of funding from such
source set forth in the Financing Plan approved by Commission ,7ursuant to Section 6.5.11 is
deposited into the Escrow. Original Developer shall be obligqed under this Agreement,
notwithstanding any Transfer of any or all of Original Developer': rights or obligations under
this Agreement, to apply for the IIG Grant and, if Original Develowz receives the IIG Grant, to
make the IIG Loan to Developer;
0
6.5.7 Project Permit Ready. Developer has objained final City approval of
the Construction Drawings for the Project such that Developer is :in a position to obtain City
building and grading permits for the Project by paying applicagae fees that are conditions
precedent to City issuance of such permits, all in accordance with S. 5.6.1;
6.5.8 Design Option 2 Conditions. If the Projc.-,t is proceeding pursuant to
Design Option 2, then each of the following:
(a) Acquisition of Auxiliary Parking Sit a Commission has acquired
fee title to the Auxiliary Parking Site; and
(b) Auxiliary Parking Parcel Map. The Auxiliary Parking Parcel Map
has been approved by the City and is in a condition to be recorded against the Auxiliary Parking
Site at the Close of Escrow;
6.5.9 Acquisition of Entirety of Property. Co
to all of the Property; and
6.5.10 Project Map Deposit. Developer has depo
Escrow for recordation against the Property at the Close of Escrow;1
ission has acquired fee title
ited the Project Map into the
6.5.11 Document Approval. Commission has r ceived from Developer and
approved all of the following described items in Commission's easonable discretion, unless
another provision of this Agreement provides for approval of such document in Commission's
sole and absolute discretion, in which case Commission shall haw: approved the document in
Commission's sole and absolute discretion. Except as otherwis expressly provided in this
Agreement, Developer shall deliver to Commission each and ev Try one of the drafts of the
documents (or amendments or revisions to such documents) listed in this Section 6.5.11, within
650120020712785768.12 29
for the Project;
Escrow.
65012.00207\2785768.12
(a) The Developer Entity Documents;
(b) The Financing Plan;
All Insurance Documents;
A copy of the Construction Financin
(i) All documents to be made or ent
County CDC or Developer (including each related Affiliate or Thi
the Industry Funds Loan from the County CDC to Developer for co
(1) The Project Map to be recorded ag
6.5.12 Title. Developer accepts the state of the
accordance with Section 5.2.
30
two (2) Business Days following Developer's receipt of each Juch draft. Developer shall
provide substantially final versions of each document listed in this;lection 6.5.11 to Commission
at least five (5) Business Days before the Close of Escrow. Furth1, Developer shall have all of
the following described documents completed and signed by all o 4the Persons required to make
such documents operative and shall have delivered true, accurate ,id legible copies or originals
of all such documents (as specified in this Agreement) to Commion, at least one (1) Business
Day before the Close of Escrow:
1
1
(c) A site plan, elevations, color scheme(including material samples)
(d) A copy of the Construction Contract;l
(e)
(f)
(g) All documents to be made or entere ' into by or between the Tax
Credit Investor or Developer (including each related Affiliat or Third Person guaranty)
regarding the Tax Credit Equity investment (other than the Dveloper Entity Documents
delivered under subsection "(a)" of this Section 6.5.11);
(h) A written forward loan commitment om an Institutional Lender
to Developer for such Institutional Lender to provide the Permanen k s an to Developer;
r'r
ocuments;
d into by or between the
Person guaranty) regarding
truction of the Project;
(j) If the Project is proceeding pursuit to Design Option 1, all
documents to be made or entered into by or between HCD or Origirl Developer (including each
related Affiliate or Third Person guaranty) regarding the IIG: t from HCD to Original
Developer for construction of the Project, including the IIG Regulat Agreement;
(k) If the Project is proceeding pursu to Design Option 1, all
documents to be made or entered into by or between Original Deve_ >er or Developer (including
each related Affiliate or Third Person guaranty) regarding the IIG from Original Developer
to Developer for construction of the Project;
the Property at the Close of
itle of the Project Site, in
6.5.13 Due Diligence. Developer timely delivers
Notice to both Commission and Escrow Agent stating Developer
the condition of the Project Site, in accordance with Section 5.3.
6.5.14 Title Policy. Title Company is committed
Policy to Commission upon payment of Title Company's premium
6.5.15 Approvals. Final issuance of all discretio v Approvals required from
any Government for the construction of the Project on the Project mite on terms and conditions
reasonably satisfactory to Commission.
6.5.16 Developer Note. The Developer Note signed by the authorized
representative(s) of Developer has been received by Commission; •
6.5.17 CEQA Documents. Final adoption, app or certification of the
CEQA Documents by each applicable Government;
6.5.18 Construction Drawings. City has appijved the final Construction
Drawings pursuant to Section 5.6.1;
6.5.19 Lender Agreements. All subordination, idercreditor, disbursement and
other agreements requested by Commission, the Institutional Lend ;r providing the Construction
Financing, the County CDC (if any), HCD (if any), CTCAC or ° herwise for signature by the
authorized representative(s) of Commission shall be reasonably acceptable to Commission,
signed by the authorized representatives of Commission and the au orized representatives of the
other parties to such agreements, to be delivered and effective only 4t the Close of Escrow;
6.5.20 Completion of Demolition. Commission as completed demolition of
the Building, removed all resulting debris and placed the Propertyn a rough graded condition;
provided, however, that failure of Commission to satisfy this co dition shall not constitute a
Default under this Agreement by Commission;
6.5.23 Settlement/Closing Statement.
Closing Statement; and
65012.00207\2785768.12
31
6.5.21 Developer Escrow Deposits. Developer eposits all of the items into
Escrow required by Section 6.7;
6.5.22 Transfer to Partnership. All of Develdper's rights and obligations
under this Agreement have been transferred from the Original Developer to the Developer
Partnership, in accordance with Section 4;
1
sion approves the Escrow
s Due Diligence Completion
unconditional acceptance of
issue the Commission Title
r such policy.
6.5.24 Developer Pre-Closing Obligations. D veloper performs all of its
material obligations required to be performed by Developer pursu t to this Agreement prior to
Close of Escrow.
6.6 Failure of Conditions Not Default. Notwiths ing any provision of this
Agreement to the contrary, the Developer's failure to satisfy any f the conditions set forth in
•
1
1
1
1
Sections 6.4.4, 6.4.5, 6.4.6, 6.4.7 or 6.4.8 (and correspondingly, 6.1 2, 6.5.3, 6.5.4, 6.5.5 or 6.5.6)
shall not constitute an Escrow Default (or any other type of Default or Event of Default) by the
Developer under this Agreement, unless the Developer fails to eNz.rcise Developer Reasonable
Efforts to satisfy the conditions. The Commission's failure to sat -;fy any of the conditions set
forth in Sections 6.4.9 (and correspondingly, 6.5.20), 6.5.8, 6.5.9, - .5.11, 6.5.17 or 6.5.19 shall
not constitute an Escrow Default (or any other type of Default r Event of Default) by the
Commission under this Agreement.
6.7 Developer's Escrow Deposits. Developer shall de sit the following items into
Escrow and, concurrently, provide a copy of each documen submitted into Escrow to
Commission, at least one (1) business day prior to the Escrow Clos g Date:
6.7.1 Closing Funds. All amounts required to ` e deposited into Escrow by
Developer under the terms of this Agreement to close the Escrow,: ncluding the Purchase Price,
all in immediately available funds;
6.7.2 Regulatory Agreement. The Regulator Agreement signed by the
authorized representative(s) of Developer in recordable form;
6.7.3 Commission Deed of Trust. The Commis ;ion Deed of Trust signed by
the authorized representative(s) of Developer in recordable form;
6.7.4 Certificate of Property Deed Accept -nce. The Certificate of
Acceptance attached to the Property Deed signed by the au iorized representative(s) of
Developer in recordable form; 1
6.7.5 HG Regulatory Agreement. If the Project is proceeding pursuant to
Design Option 1, then the IIG Regulatory Agreement signed by th authorized representative(s)
of Developer and HCD, in recordable form; 1
6.7.6 Design Option 2 Deposits. If the Proje 7t is proceeding pursuant to
Design Option 2, then each of the following:
(a) Certificate of Auxiliary Parking Pa 'el Deed Acceptance. The
Certificate of Acceptance attached to the Auxiliary Parking Parcel I signed by the authorized
representative(s) of Developer in recordable form; and
(b) Parking Deck Easement. The Parkii Deck Easement signed by
the authorized representative(s) of Developer in recordable form;
6.7.7 Project Map. The Project Map in a condign to be recorded against the
Property at the Close of Escrow;
6.7.8 Escrow Closing Statement. The Escrow dosing Statement signed by
the authorized representative(s) of Developer;
00207\2785768.12
32
5
6.7.9 Tax Credit Equity. The full amount of ! he Tax Credit Equity to be
funded at the Close of Escrow pursuant to the Financing Plan aid the Developer Partnership
Agreement, in immediately available funds;
6.7.10 Construction Financing. The full Jaunt of the Construction
Financing to be funded at the Close of Escrow pursuant to the Fi ancing Plan, in immediately
available funds, and a Permitted Security Instrument securing re*ayment of the Construction
Financing, signed by the authorized representative(s) of Develop in recordable form, to be
recorded against the Project Site at the Close of Escrow;
6.7.11 Industry Funds Loan. The full amount
be funded at the Close of Escrow pursuant to the Financing Plan, i
and a Permitted Security Instrument securing repayment of the In
the authorized representative(s) of Developer in recordable fo
Project Site at the Close of Escrow;
6.7.12 IIG Loan. If the Project is proceeding
then the full amount of the IIG Loan to be funded at the Clos
Financing Plan, in immediately available funds;
the Industry Funds Loan to
immediately available funds,
try Funds Loan, signed by
to be recorded against the
suant to Design Option 1,
of Escrow pursuant to the
6.7.13 Other Reasonable Items. Any other doeinents, instruments or funds
0
required to be delivered by Developer under the terms of this Agreement or as otherwise
reasonably requested by Escrow Agent or Title Company in order close the Escrow that have
not previously been delivered by Developer.
6.8 Commission's Escrow Deposits. Commission !hall deposit the following
documents into Escrow and, concurrently, provide a copy of ei:.:11 document deposited into
Escrow to Developer, at least one (1) business day prior to the Escpow Closing Date:
6.8.1 Property Deed. The Property Deed = signed by the authorized
representative(s) of Commission in recordable form;
authorized representative(s) of Commission in recordable form;
65012,00207\2785768.12
33
al principal amount of the
the Construction Financing
onstruction of the Project in
ement between Commission
6.8.2 Commission Loan Proceeds. The orig
Commission Loan for delivery to the Institutional Lender providi
for disbursement by such Institutional Lender during the course of
accordance with the Developer Note and a written disbursement ag
and such Institutional Lender;
•
6.8.3 Pre-Development Loan Note. The P Loan Note
marked "paid in full;"
6.8.4 Escrow Closing Statement. The Escrow losing Statement signed by
the authorized representative(s) of Commission;
6.8.5 Regulatory Agreement. The Regulato Agreement signed by the
•
6.8.6 Notice of Affordability Restrictions on :ransfer of Property. The
Notice of Affordability Restrictions on Transfer of Property signed by the authorized
representative(s) of Commission in recordable form;
6.8.7 Design Option 2 Deposits. If the Proje74 is proceeding pursuant to
Design Option 2, then each of the following:
(a) Auxiliary Parking Parcel Deed. lie Auxiliary Parking Parcel
Deed signed by the authorized representative(s) of Commission in Acordable form;
(b) Parking Deck Easement. The Parki = g Deck Easement signed by
the authorized representative(s) of Commission in recordable form; ;Ind
(c) Auxiliary Parking Parcel Map. The _tkuxiliary Parking Parcel Map
in a condition to be recorded against the Auxiliary Parking Site at tfp Close of Escrow;
6.8.8 FIRPTA Affidavit. A FIRPTA affidalt signed by the authorized
representative(s) of Commission, in the customary form provided b the Escrow Agent;
6.8.9 Form 593. A Form 593 signed by the a=thorized representative(s) of
Commission; and
6.8.10 Other Reasonable Items. Any other docuilents, instruments, funds and
records required to be delivered by Commission under the te is of this Agreement or as
otherwise reasonably requested by Escrow Agent or Title Compan in order to close the Escrow
that have not been previously delivered by Commission.
1
iI
6.9 Closing Procedure. When each of Developer's Es row deposits, as set forth in
Section 6.7, and each of Commission's Escrow deposits, as set fortl in Section 6.8, are deposited
into Escrow, Escrow Agent shall request confirmation in writinl from both Commission and
Developer that each of their respective conditions precedent to the lose of Escrow, as set forth
in Sections 6.5 and 6.4, respectively, are satisfied or waived. Up n Escrow Agent's receipt of
written confirmation from both Commission and Developer tliat each of their respective
conditions precedent to the Close of Escrow are satisfied or waiv ld, Escrow Agent shall close
the Escrow by doing all of the following:
6.9.1 Recordation and Distribution of Documents. Escrow Agent shall
cause the following documents to be filed with the Recorder of th County for recording in the
official records of the Recorder of the County regarding the Prop&ty in the following order of
priority at Close of Escrow: (i) the Project Map; (ii) the Prope Deed; (iii) the Regulatory
Agreement; (iv) the Notice of Affordability Restrictions; (v) the rmitted Security Instrument
securing the Construction Financing; (vi) the Commission Dee of Trust; (vii) the Security
Instrument securing the Industry Funds Loan; (viii) if the Proje t is proceeding pursuant to
Design Option 1, the IIG Regulatory Agreement; and (ix) any ot r documents to be recorded
regarding the Property through Escrow upon the joint instructions the Parties. If the Project is
proceeding pursuant to Design Option 2, then Escrow Agent s 11 also cause the following
documents to be filed with the Recorder of the County for recordin in the official records of the
Recorder of the County regarding the Auxiliary Parking Site in the ollowing order of priority at
65012.00207\2785768.12 34
1
Close of Escrow: (a) the Auxiliary Parking Parcel Map; (b) the A
(c) the Regulatory Agreement; (d) the Notice of Affordability R
Security Instrument securing the Construction Financing; (f) the C
the Security Instrument securing the Industry Funds Loan; (h) the
(j) any other documents to be recorded through Escrow regardin
upon the joint instructions of the Parties. At Close of Escrow, Escrow Agent shall deliver
conformed copies of all documents filed for recording in the 0f Records of the County
through the Escrow to Commission, Developer and any other Per A:in desiviated in the written
joint escrow instructions of the Parties to receive an original or cAnformed copy of each such
document. Each copy of a document filed for recording shall shc7w all recording information.
The Parties intend and agree that this Section 6.9.1 shall establish the relative priorities of the
documents to be recorded in the Official Records of the Couty through the Escrow, by
providing for recordation of senior interests prior in time to junior ioterests, in the order provided
in this Section 6.9.1;
6.9.2 Distribution of Other Docurnents. Escry Agent shall deliver copies
of all documents to be delivered through the Escrow that are not fi1d for recording to the Parties
and any other Person designated in the written joint escrow instrucions of the Parties to receive
an original or copy of each such document.
6.9.3 Funds. Distribute all funds held by the
Escrow Closing Statement approved in writing by both Commissio
the Commission Loan that are not disbursed to pay the Purchase P
anticipated to be distributed to the Institutional Lender providing t
disbursement in accordance with the Disbursement Agreement. 1 herwise, such funds will be
disbursed by Commission during the course of Project constructi pursuant to the terms and
conditions of this Agreement, the Regulatory Agreement, Developer Note and the
Commission Deed of Trust.
6.9.4 F
Internal Revenue Service;
and
6.9.6 Title Policies. Obtain and deliver to D
Policy issued by the Title Company and obtain and deliver to Co
Policy issued by the Title Company.
65012.00207\2785768.12
Or
TA Affidavit. File the FIRPTA
35
11
V
6.9.5 Form 593. File the Form 593 with the Calfornia Franchise Tax Board;
1
6.10 Close of Escrow. The Close of Escrow shall occ..ir on or before the Escrow
Closing Date. The Parties may mutually agree to change the E'crow Closing Date by joint
written instruction to Escrow Agent. The Executive Director is 4ithorized to agree to one or
more extensions of the Escrow Closing Date on behalf of Conuni sion up to a maximum time
period extension of four (4) months in the aggregate, in the Eteeutive Director's sole and
absolute discretion. If for any reason (other than a Default or Event,of Default by such Party) the
Close of Escrow has not occurred on or before the Escrow Closing )ate, then any Party not then
in Default under this Agreement may cancel the Escrow and termitate this Agreement, without
xiliary Parking Parcel Deed;
strictions; (e) the Permitted
mmission Deed of Trust; (g)
arking Deck Easement; and
the Auxiliary Parking Site
crow Agent pursuant to the
and Developer. Proceeds of
e at the Close of Escrow are
Construction Financing for
davit with the United States
eloper the Developer Title
ission the Commission Title
liability to the other Party or any other Person for such can
delivering Notice of termination to both the other Party and Escro'
Notice of termination of this Agreement and cancellation of the E
Agent shall proceed pursuant to Section 6.13. Without limiting th
the Escrow and terminate this Agreement, pursuant to the first se
the Escrow does not close on or before the Escrow Closing Date
its contractual right to cancel the Escrow and terminate this Agre
before the first date on which Escrow Agent Notifies both Parties
close, then the Escrow shall close as soon as reasonably possib.
which Escrow Agent Notifies both Parties that Escrow is in a p
with the terms and conditions of this Agreement.
the Title Company for the Commission Title Policy, exclusive
supplements to the coverage of the Commission Title Policy
Commission and that are not requested by the Institutional Lend
Financing for its lender's policy of title insurance. Developer sha
costs as the Escrow Agent may charge for the conduct of th
documentary transfer taxes and any and all other charges, fees and
relative to the conveyance of the Project Site through the
endorsements or supplements to the coverage of the Title Policy re
6.12 Escrow Cancellation CharRes. If the Escrow fails
Default under this Agreement, Commission shall pay all ordin
title order cancellation charges charged by Escrow Agent or Title
Escrow fails to close due to Developer's Default under this Agree
ordinary and reasonable Escrow and title order cancellation charge
6.13 Escrow Cancellation. If this Agreement is termin
right granted to a Party in this Agreement to terminate this Agr
Event of Default by the other Party), the Parties shall do all of the f
65012.00207\2785768.12
36
6.11 Escrow Costs. Escrow Agent shall notify Develope and Commission of the costs
to be borne by each of them at the Close of Escrow by delivering ; Escrow Closing Statement
to both Commission and Developer at least four (4) business day_ prior to the Escrow Closing
Date. Commission shall pay the premium charged by the Title CorAlpany for the Developer Title
Policy, exclusive of any endorsements or other supplements to tl.,z coverage of the Developer
Title Policy that may be requested by Developer. Developer shall pay the premium charged by
llation and termination, by
Agent. Following any such
row, the Parties and Escrow
right of either Party to cancel
tence of this Section 6.10, if
d neither Party has exercised
ent under this Section 6.10
at Escrow is in a position to
following the first date on
ition to close in accordance
any endorsements or other
that may be requested by
providing the Construction
pay all of the fees and other
Escrow, all recording fees,
es levied by a Government
crow and the cost of any
ests by Developer.
close due to Commission's
and reasonable Escrow and
ompany, respectively. If the
ent, Developer shall pay all
charged by Escrow Agent or
Title Company, respectively. If the Escrow fails to close for any re son other than the Default of
either Developer or Commission, Developer and Commission stud each pay one-half (1/2) of
any ordinary and reasonable Escrow and title order cancellation:charges charged by Escrow
Agent or Title Company, respectively.
ed pursuant to a contractual
ment (other than due to an
Hawing:
6.13.1 Cancellation Instructions. The Parties s111, within three (3) Business
Days following Escrow Agent's written request, execute any re onable Escrow cancellation
instructions requested by Escrow Agent;
I I
6.13.2 Return of Funds and Documents. Wi hin ten (10) Business Days
following receipt by the Parties of a settlement statement of Escror and title order cancellation
charges from Escrow Agent (if any) or within twenty (20) days folk wing Notice of Termination,
whichever is earlier: (i) Developer or Escrow Agent shall return t Commission all documents
previously delivered by Commission to Developer or Escrow Ag t regarding the Escrow; (ii)
Commission or Escrow Agent shall return to Developer all docurffmts previously delivered by
Developer to Commission or Escrow Agent regarding the Escrow; (iii) Escrow Agent shall,
unless otherwise provided for in this Agreement, return to Devcoper all funds deposited in
Escrow, less Developer's share of customary and reasonable Escro I
and title order cancellation
charges (if any) in accordance with Section 6.12; (iv) Escrow ent shall, unless otherwise
provided in this Agreement, return to Commission all funds. deposited in Escrow, less
Commission's share of customary and reasonable Escrow and title .rder cancellation charges (if
any) in accordance with Section 6.12.
6.14 Report to IRS. After the Close of Escrow and prior i the last date on which such
report is required to be filed with the Internal Revenue Service un.-er applicable Federal law, if
such report is required pursuant to Internal Revenue Code Sec 6045(e) of the Internal
Revenue Code, Escrow Agent shall report the gross proceeds of :he purchase and sale of the
Project Site to the Internal Revenue Service on Form 1099-B, W-9 -)r such other form(s) as may
be specified by the Internal Revenue Service pursuant to Internal R enue Code Section 6045(e).
Concurrently with the filing of such reporting form with Intern 1 Revenue Service, Escrow
Agent shall deliver a copy of the filed form to both Commission an Developer.
6.15 Condemnation. If any portion of the Project Site or iny interest in any portion of
the Project Site becomes the subject of any eminent domain procee&ng prior to Close of Escrow,
other than such a proceeding by the City or Commission, including the filing of any notice of
intended condemnation or proceedings in the nature of eminent ilomain commenced by any
Government, Commission shall immediately give Developer Notic, of such occurrence and this
Agreement shall terminate on the giving of such Notice. 1
1
6.16 Maintenance of Property. Except as otherwise r - uired to perform the work
described in Sections 6.4.9 and 6.5.20, Commission agrees, prio to the Close of Escrow, to
I
continue to maintain the Property in substantially the same c dition as the Commission
maintained the Property on the Effective Date. Also, Commissiom agrees not to enter into any
contracts with respect to the Property that will survive the Close of 3scrow, without Developer's
prior written consent. •
7. PROJECT DEVELOPMENT
7.1 Developer's Covenant to Develop the Project. Deve;pper covenants to and for the
exclusive benefit of Commission that Developer shall commen, pursue and complete the
development of the Project in accordance with the deadlines an? other requirements of this
Agreement. Developer covenants and agrees for itself, its successo-Ss and assigns that the Project
Site shall be improved and developed with the Project, in coriormity with the terms and
conditions of this Agreement and all applicable Laws and conditions of each Government. The
covenants of this Section 7.1 shall run with the Project Site, until the earlier of: (1) the date of
issuance of a Completion Certificate for the Project; or (2) the twen = eth (20th) anniversary of the
date of the Close of Escrow.
65012.00207\2785768.12
37
7.2 Changes to Project Plans and Specifications During Course of Construction.
Developer shall have the right, during the course of construction of the Project, to make "minor
field changes," without seeking the approval of Commission, if such changes do not affect the
type of use to be conducted within all or any portion of a structur "Minor field changes" shall
be defined as those changes from the Approvals for the Project th. 'have no substantial effect on
the Project and are made in order to expedite the work of co • ruction in response to field
conditions. Nothing contained in this Section 7.2 shall be deem: to constitute a waiver of or
change in any Approvals governing any such "minor field chant s" or any Approvals by any
Government otherwise required for any such "minor field changes.
65012.00207\2785768.12
7.3 Construction Start and Completion of Project.
7.3.1 Commencement. Developer shall co ence construction of the
Project no later than the Project Commencement Date. Therea , Developer shall diligently
proceed to pursue and complete the construction of the Project in a good and workmanlike
manner, in accordance with this Agreement, all applicable La v.4 and all Approvals for the
Project issued by each Government.
7.3.2 Completion. On or before the Project Coroletion Date, Developer shall
do all of the following:
(a) Record a Notice of Completion, ii 'accordance with California
Civil Code Section 3093, for the entirety of the Project; 11
(b) Request each applicable Governme$ to inspect the Project, as
required by the applicable Approvals or Laws;
(c) Correct any defects and deficiencies
(d) Request each applicable Govenunen o issue all final Certificates
of Occupancy or other Approvals necessary for the occupancy anJ operation of the completed
Project and take such other actions reasonably required to ob n all such Certificates of
Occupancy or other Approvals; and
inspection conducted pursuant to Section 7.3.2(b);
(e) Deliver the Placed In Service Inform.—.n to Commission.
7.3.3 Time Extensions. The Executive Dire
absolute discretion, may extend the Project Completion Date for u
days, in the aggregate.
7.4 Compliance with Laws. All work performed in con
of the Project shall comply with all7plicable Laws and Approvals.
7.5 Developer Attendance at Commission Meetings. De
more of its employees or consultants who are knowledgeable reg
construction of the Project, such that such Person(s) can meanin
governing body or Commission staff questions regarding the pr
38
at may be disclosed by any
r, in his or her sole and
to an additional ninety (90)
ction with the construction
loper agrees to have one or
mg this Agreement and the
ly respond to Commission
ss of the Project, attend
meetings with Commission staff or meetings of the Commisson governing body, when
requested to do so by Commission staff, with reasonable advance Notice to Developer, but no
more frequently than once a month. ,
1
7.6 Commission Rieht to Insnect Proiect and Proiect Sii=t. Developer agrees that the
Commission shall have the right of reasonable access to the ProjectSite, without the payment of
charges or fees, during normal construction hours, during the p =riod of construction of the
Project. Any and all Commission representatives who enter the Priect Site shall at all times be
accompanied by a representative of Developer, while on the Projec_ Site. Developer shall make
a representative of Developer available for this purpose at all time during normal construction
hours, upon reasonable advance Notice from Commission. C=ommission shall Indemnify
Developer regarding Claims arising out of the exercise by Commiion of the right of access to
the Project Site provided in this Section 7.6, except to the extent th i any such Claim arises from
the negligence or willful misconduct of Developer or Developer's representatives. If in
Commission's reasonable judgment it is necessary, Developer agree' that Commission shall have
the further right, from time to time, at its own cost, to retain a consu or consultants to inspect
the Project and verify compliance by Developer with the prcisions of this Agreement.
Developer acknowledges and agrees that any such Commission nspections are for the sole
purpose of protecting Commission's rights under this Agree>ent, are made solely for
Commission's benefit, Commission's inspections may be superficial and general in nature, are
for the purposes of informing Commission of the progress of the firoject and the conformity of
the Project with the terms and conditions of this Agreement, and Developer shall not be entitled
to rely on any such inspection(s) as constituting Commission s approval, satisfaction or
acceptance of any materials, workmanship, conformity of the PrQ ect with this Agreement or
otherwise. Developer agrees to make its own regular inspections 6 the work of construction of
the Project to determine that the progress and quality of the Project !rid all other requirements of
the work of construction of the Project are being performed 11 a manner satisfactory to
Developer.
7.7 PREVAILING WAGES.
7.7.1 RESPONSIBILITY. DEVELOPER AG ES WITH COMMISSION
THAT DEVELOPER SHALL PAY AND CAUSE AL CONTRACTORS AND
SUBCONTRACTORS OF DEVELOPER TO PAY PREVAI ING WAGE RATES TO
LABORERS PROVIDING LABOR REG • ' I ING CONS'FRUC _ON OF THE PROJECT IN
ACCORDANCE WITH APPLICABLE STATE AND FEDERAL LAW. DEVELOPER
FURTHER AGREES WITH COMMISSION THAT DEVELOPER SHALL ASSUME ANY
AND ALL RESPONSIBILITY AND BE SOLELY RESPONS> 3LE FOR DETERMINING
APPLICABLE STATE OR FEDERAL WAGE LAW.
it
7.7.2 WAIVERS AND RELEASES. DEVELOPER, ON BEHALF OF
ITSELF, ITS SUCCESSORS, AND ASSIGNS, WANES AND tELEASES COMMISSION
FROM ANY RIGHT OF ACTION THAT MAY BE AVAILfBLE TO ANY OF THEM
PURSUANT TO STATE LABOR CODE SECTION 1781 OIL APPLICABLE FEDERAL
LAW. RELATIVE TO THE WAIVERS AND RELEASES CON" -AINED IN THIS SECTION
7.7.2, DEVELOPER ACKNOWLEDGES THE PROTECTIONS DF CIVIL CODE SECTION
1542, WHICH READS AS FOLLOWS:
65012.00207\2785768.12 39
i
A GENERAL RELEASE DOES NOT EXTEND h TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW CR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT Tf' TIME OF
EXECUTING THE RELEASE, WHICH IF KNO -dN BY HIM
OR HER MUST HAVE MATERIALLY AFFEC' ' D HIS OR
HER SE ITLEMENT WITH THE DEBTOR.
7.7.3 INITIALS. BY INITIALING BELOW, VELOPER KNOWINGLY
AND VOLUNTARILY WAIVES THE PROVISIONS OF SE TION 1542 SOLELY IN
CONNECTION WITH THE WAIVERS AND RELEASES OF SE TION 7.7.2:
Initials of Authorized
Developer Representative
1
7.7.4 INDEMNITY. ADDITIONALLY, ; DEVELOPER SHALL
INDEMNIFY COMMISSION, PURSUANT TO SECTION 12.6 AGAINST ANY CLAIMS
PURSUANT TO STATE LABOR CODE SECTION 1781 OR ; ANY OTHER STATE OR
FEDERAL LAW REQUIRING PAYMENT OF MINIMUM DR PREVAILING WAGE
AMOUNTS ARISING FROM THIS AGREEMENT OR THE CO -ISTRUCTION OF ALL OR
ANY PORTION OF THE PROJECT.
65012.00207\2785768.12
7.8 Project Completion Certificate.
7.8.1 Issuance. Following the issuance of a final =Certificate of Occupancy for
the Project by the City, excluding any Punchlist Work to be comp Ned by Developer, approval
of the Placed In Service Information by Commission, completion o - Commission's final audit of
pre - construction and construction expenditures for the Project and currence of the "Occupancy
Date" under the Regulatory Agreement, Developer may request at Commission inspect the
completed Project and issue a Completion Certificate for the Proje t. Following Commission's
receipt of a written request from Developer for a Completion rtificate, Commission shall
promptly inspect the Project to determine whether or not the Pr °ect has been completed in
compliance with this Agreement. If Commission determines t =at the Project is complete
(excluding any outstanding Punchlist Work) and in complizace with this Agreement,
Commission shall issue a Completion Certificate for the Project to Developer. If Commission
determines that the Project is not complete or not in compince with this Agreement,
Commission shall send Notice to Developer describing with specficity each non - conformity,
within fifteen (15) calendar days following Commission's receipt o.- Developer's written request
for a Completion Certificate or within three (3) calendar days aftel the next regular meeting of
the Commission governing body, whichever date occurs later. T Notice shall also contain
Commission's opinion of the action(s) Developer must take to ob , ° a Completion Certificate
from Commission. If the reason for Developer's failure to complete the Project is confined to
the immediate unavailability of specific items or materials for con truction or landscaping at a
price reasonably acceptable to Developer or Punchlist Work, Commission may, in its sole and
absolute discretion, issue a Completion Certificate upon the i delivery by Developer to
Commission of a bond or irrevocable standby letter of credit or ether security acceptable to
Commission, in Commission's sole and absolute discretion, in an amount representing the fair
40
value of the work on the Project remaining to be completed, .:s reasonably determined by
Commission. If Commission fails to send the Notice required byrthis Section 7.8.1 within the
I
time period specified in this Section 7.8.1 for sending of sucl- Notice, Developer shall be
deemed, conclusively and without further action of Commi ion, to have satisfied the
requirements of this Agreement with respect to the construction of - e Project, as if a Completion
Certificate had been issued by Commission pursuant to this A freement, and a Completion
Certificate shall irrevocably be deemed to have been issued as of uch date for all purposes of
1
this Agreement.
7.8.2 Effect. A Completion Certificate s all only be evidence of
Commission's conclusive determination of satisfactory completi4i of the construction of the
Project in accordance with the terms of this Agreement. A Co pletion Certificate shall not
constitute a Notice of Completion under California Civil Code Se tion 3093, nor shall it act to
terminate the continuing reservations, covenants, restrictions or i conditions contained in the
Property Deed, the Regulatory Agreement or any other instrument f recorded against the Project
Site or set forth in this Agreement or otherwise. A Completion Certificate is not evidence of the
compliance of the Project with any Laws or Approvals. A Cowletion Certificate shall not
evidence the satisfaction of any obligation of Developer to Cornmiion under this Agreement or
otherwise, other than Developer's obligation to construct the 1 on the Project Site in
compliance with the terms and conditions of this Agreement. After the recordation of a
Completion Certificate for the Project, any Person then owning or ihereafter purchasing, leasing
or otherwise acquiring any interest in the Project Site or the Projeit shall not (because of such
ownership, purchase, lease or acquisition) incur any obligation or ability under this Agreement
regarding construction of the Project, but such Person shall be bocid by any other reservations,
covenants, conditions, restrictions and interests affecting the P Site pursuant to this
Agreement or otherwise.
8. INSURANCE
8.1 Develoner. Developer shall maintain, to protect th Commission Parties against
all insurable Claims resulting from the actions of Developer in coiLection with this Agreement,
the Project Site and the Project, at the sole cost and expense of II.eveloper, until issuance of a
Completion Certificate for the Project, the following insurance (oi.its then reasonably available
equivalent): (a) Liability Insurance; (b) Automobile Liability Ins . ce; (c) Property Insurance;
(d) Builder's Risk Insurance; and (e) Workers Compensation Lnsur. ce.
8.2 Nature of Insurance. All Liability Insurance, Prope Insurance and Automobile
Liability Insurance policies this Agreement requires shall be issuee by carriers that: (a) are listed
in the then current "Best's Key Rating Guide—Property/Casualt---United States & Canada"
publication (or its equivalent, if such publication ceases to be - 3ublished) with a minimum
financial strength rating of "A-" and a minimum financial size catetory of "VII" (exception may
be made for the State Compensation Insurance Fund when not s cifically rated); and (b) are
authorized to do business in the State. Developer may provide ant insurance under a "blanket"
or "umbrella" insurance policy, provided that: (i) such policy or a frtificate of such policy shall
specify the amount(s) of the total insurance allocated to the Proje t Site and the Project, which
amount(s) shall equal or exceed the amount(s) required by this A eement; and (ii) such policy
otherwise complies with this Agreement.
65012.00207\2785768.12
41
65012.00207\2785768.12
42
8.3 Policy Requirements and Endorsements. All insurance policies required by this
Agreement shall contain (by endorsement or otherwise) the followi ' g provisions:
8.3.1 Insured. Liability Insurance and Automobile Liability Insurance
policies shall name the Commission Parties as "additional insur =-d." Property Insurance and
Builder's Risk Insurance policies shall name Commission as a - `loss payee." The coverage
afforded to the Commission Parties shall be at least as broad that afforded to Developer
regarding the Project Site and the Project and may not contain any erms, conditions, exclusions,
or limitations applicable to the Commission Parties that do not app to Developer.
8.3.2 Primary Coverage. Any insurance or sel - insurance maintained by the
Commission Parties shall be excess of all insurance required unde this Agreement and shall not
contribute with any insurance required under this Agreement.
8.3.3 Contractual Liability. Liability Insu nce policies shall contain
contractual liability coverage, for Developer's indemnity obligions under this Agreement.
Developer's obtaining or failure to obtain such contractual liabil -y coverage shall not relieve
Developer from nor satisfy any indemnity obligation of Developer =rider this Agreement.
8.3.4 Deliveries to Commission. Developer hall deliver to Commission
evidence of Liability Insurance prior to the commencement of any due Diligence Investigations.
Evidence of Developer's maintenance of all insurance policies req =tired by this Agreement shall
be delivered to Commission prior to the Close of Escrow. Builder's Risk Insurance shall incept
at the time of Builder mobilization for the Project. No later thin three (3) days before any
insurance required by this Agreement expires, is cancelled or its _ability limits are reduced or
exhausted, Developer shall deliver to Commission evidence of suh Party's maintenance of all
insurance this Agreement requires. Each insurance policy requir i by this Agreement shall be
endorsed to state that coverage shall not be cancelled, suspended, v- sided, reduced in coverage or
in limits, except after thirty (30) calendar days' advance written r_ otice of such action has been
given to Commission by certified mail, return receipt requested; provided; however, that only ten
(10) days' advance written notice shall be required for any such action arising from non - payment
of the premium for the insurance. Phrases such as "endeavor to" -Ind "but failure to mail such
Notice shall impose no obligation or liability of any kind upon the company" shall not be
included in the cancellation wording of any certificates or policies - f insurance applicable to the
Commission Parties pursuant to this Agreement.
8.3.5 Waiver of Certain Claims. Developer, shall cause each insurance
carrier providing any Liability Insurance, Builder's Risk Insurace, Worker's Compensation
Insurance, Automobile Liability Insurance or Property Insurance overage under this Agreement
to endorse their applicable policy(ies) with a Waiver of Subrogation with respect to the
Commission Parties, if not already in the policy. To the extent tha - Developer obtains insurance
with a Waiver of Subrogation, the Parties release each other, ar their respectiye authorized
representatives, from any Claims for damage to any Person or prop•rty to the extent such Claims
are paid by such insurance policies obtained pursuant to and in sa - sfaction of the provisions of
this Agreement.
111
8.3.6 No Representation. No Party makes any - epresentation that the limits,
scope, or forms of insurance coverage this Agreement requires are adequate or sufficient.
8.3.7 No Claims Made Coverage. None of the insurance coverage required
under this Agreement may be written on a claims -made basis.
65012.00207\2785768.12
43
8.3.8 Fully Paid and Non - Assessable. All ins ce obtained and maintained
by Developer in satisfaction of the requirements of this Agreement shall be fully paid for and
non - assessable. However, Developer's policies may be subject to i surer audits.
8.3.9 Commission Option to Obtain Coveragq During the continuance of
an Event of Default arising from the failure of Developer to carry .any insurance required by this
Agreement, Commission may, at its sole option, purchase any suc' required insurance coverage
and Commission shall be entitled to immediate payment from De eloper of any premiums and
associated reasonable costs paid by Commission for such insur ce coverage. Any amount
becoming due and payable to Commission under this Section 8.3.9 hat is not paid within fifteen
(15) calendar days after written demand from Commission for pament of such amount, within
an explanation of the amounts demanded, will bear interest from ►e date of the demand at the
rate of eight percent (8 %) per annum or the Usury Limit, whichyer is less. Any election by
Commission to purchase or not to purchase insurance otherwise required by the terms of this
Agreement to be carried by Developer shall not relieve the Defau -ing Party of its obligation to
obtain and maintain any insurance coverage required by this Agreement.
8.3.10 Separation of Insured. All Liability j Insurance and Automobile
Liability Insurance shall provide for separation of insured for Developer and the Commission
Parties. Insurance policies obtained in satisfaction of or in accord =nce with the requirements of
this Agreement may provide a cross -suits exclusion for suits betwe n named insured Persons, but
shall not exclude suits between named insured Persons and additiol insured Persons.
8.3.11 Deductibles and Self - Insured Retentio ;:. Any deductibles or self -
insured retentions under insurance policies required by this Agre ent shall be declared to and
approved by Commission. Developer shall pay all such deduct `, les or self - insured retentions
regarding the Commission Parties or, alternatively, the insurer un+ ° r each such insurance policy
shall eliminate such deductibles or self - insured retentions with respect to the Commission
Parties.
8.3.12 No Separate Insurance. Developer !hall not carry separate or
additional insurance concurrent in form or contributing in the ev ant of loss with that required
under this Agreement, unless Commission is made an additional isured thereon, as required by
this Agreement.
8.3.13 Insurance Independent of Indemn ication. The insurance
requirements of this Agreement are independent of the Partie-:' indemnification and other
obligations under this Agreement and shall not be construed or int_=rpreted in any way to satisfy,
restrict, limit, or modify the Parties' indemnification or other obli- ations or to limit the Parties'
liability under this Agreement, whether within, outside, or in lcess of such coverage, and
regardless of solvency or insolvency of the insurer that issuel the coverage; nor shall the
1
provision of such insurance preclude Commission from taking suck other actions as are available
to it under any other provision of this Agreement or otherwise at lam' or in equity.
9.1 Construction Financing. Developer shall obtain thcConstruction Financing such
that when the available proceeds of the Construction Financing are - ombined with the amount of
the Tax Credit Equity to be funded during Project construction (pjrsuant to the Financing Plan
and the Developer Partnership Agreement), the amount of the pr =ceeds of the Industry Funds
Loan to be funded during Project construction (if any), the amount of the proceeds of the IIG
Loan to be funded during Project construction (if any) and the amount of the proceeds of the
Commission Loan to be funded during Project construction, the veloper will have sufficient
funds to pay all of the Total Project Costs. The proceeds of the C struction Financing shall be
used solely to pay Total Project Costs.
9. FINANCING OF PROJECT
9.2.1 CTCAC Applications. Developer shall ar ly for the Tax Credits in the
first round of the 2011 CTCAC application cycle for the Tax Cr dits. If Developer does not
receive a reservation of the Tax Credits for the Project as a rest _-t of such initial application,
Developer shall re -apply for the second round of the 2011 CTCAC application for the Tax
Credits. If Developer does not receive a reservation of the Tax Creits for the Project as a result
of such second application, Developer shall again re -apply for the first round of the 2012
CTCAC application cycle for the Tax Credits. If Developer does n -t receive a reservation of the
Tax Credits for the Project as a result of such third application, D= .veloper shall again re -apply
for the second round of the 2012 CTCAC application cycle for t1- Tax Credits. If Developer
does not receive a reservation of the Tax Credits for the Project after making these four (4)
applications to CTCAC, then either Commission or Developer r
upon fifteen (15) days Notice to the other Party. If Developer f°
CTCAC application cycles for the Tax Credits in accordance with
shall have the right to terminate this Agreement upon fifteen (15) d
9.2.2 Tax Credit Equity Funding. Developer
three (3) investors for becoming the Tax Credit Investor and presen
for review and approval within thirty (30) calendar days follo
CTCAC of a letter to Developer reserving the Tax Credits for
Developer shall negotiate in good -faith for a period of fifteen (15)
of the investor bids for the Project. If Commission and Developer,agree on one of the investor
bids for the Project, Developer shall negotiate in good -faith ith the applicable investor
regarding entry into the Developer Partnership Agreement to becon the Tax Credit Investor. If
Commission and Developer do not agree on one of the investor bi _s for the Project, Developer
shall have an additional thirty (30) calendar days to obtain an acilitional investor bid for the
Project that is mutually acceptable to both Commission and Devel -,per. If Developer does not
obtain an additional investor bid for the Project that is mutually aca= ptable to both Commission
and Developer within such thirty (30) calendar day period, either Commission or Developer may
terminate this Agreement by Notice to the other Party. The Deve per Partnership Agreement
and all general, limited or other partners under such agreement shal be subject to the review and
65012.00207\2785768.12
9.2 Tax Credit Equity.
44
�
y terminate this Agreement
s to apply for any round of
1is Section 9.2, Commission
s Notice to Developer.
all obtain bids from at least
all such bids to Commission
g the date of issuance by
Project. Commission and
siness Days to agree on one
approval of Commission prior to the Close of Escrow. Nothing in his Section 9.2.2 shall extend
or delay the Escrow Closing Date.
9.3 Industry Funds Loan. Developer shall apply for t Industry Funds Loan on or
before November 15, 2010. If Developer does not receive the In ustry Funds Loan from such
application, then Developer shall make a second application for the Industry Funds Loan on or
before December 31, 2011. If Developer does not receive the In ustry Funds Loan from such
second application, then Developer shall immediately send Notic.7 of such fact to Commission
pursuant to Section 5.5.1 and the Parties shall proceed pursuant to Section 5.5.1.
9.4 IIG Grant. If HCD publishes a "Notice of Funding f.,vailability" for the IIG Grant
on or before June 30, 2011, Original Developer shall apply for the Grant on or before the last
date to apply for such grant stated in such "Notice of Fundiii Availability." If Original
Developer does not receive a written commitment from HCD o provide the IIG Grant to
Original Developer as a result of such application, then Developer iall immediately send Notice
of such fact to Commission pursuant to Section 5.5.1and the P. es shall proceed pursuant to
Section 5.5.1.
9.5 Developer Fee. The Original Developer shall be en
Fee for its services related to development of the Project. The De
the Original Developer any sooner than provided in the followi
(10%) of the Developer Fee at Close of Escrow; (b) an additio
Developer Fee at completion of twenty-five percent (25%) of the
determined by the Institutional Lender providing the ConstructioniFinancing); (c) an additional
thirty percent (30%) of the Developer Fee at completion of .fifty percent (50%) of the
construction of the Project (as determined by the Institutional Lenc.tr providing the Construction
Financing); (d) an additional forty percent (40%) of the Developer fee at issuance of Certificate
of Occupancy for all dwelling units in the Project by the City; and 5e) the remaining ten percent
(10%) of the Developer Fee at filing of Form 8609 for the Project with the Internal Revenue
Service. Any portion of the Developer Fee not paid at or before filing of Form 8609 for the
Project with the Internal Revenue Service shall be paid from net operating income from the
completed Project (except as otherwise specifically provided in Section 9.13) prior to repayment
of the Commission Loan ("Deferred Developer Fee"). Notwithstanding the preceding
provisions of this Section 9.5, to the extent that the Institutional Lender providing the
Construction Financing for the Project or the Tax Credit Investor have more restrictive
requirements regarding the amount or timing of payment of all or any portion of the Developer
Fee than those set forth in the preceding provisions of this Section 9.5, the Executive Director is
authorized to a ti -e to any such more restrictive payment provisions, in the Executive Director's
sole and absolute discretion. To the extent that the aggregate financing sources available to
Developer for development of the Project exceed the aggregate financing sources set forth in the
Project Budget, the amount of the Deferred Developer Fee is intended by the Parties to be
reduced by the amount of such additional aggregate financing sources. To the extent that the
aggregate financing sources available to Developer for development of the Project are less than
the aggregate financing sources set forth in the Project Budget,lthe amount of the Deferred
Developer Fee is intended by the Parties to be increased by the tmount of such reduction in
aggregate financing sources.
65012.00207\2785768.12
45
tled to receive the Developer
loper Fee may not be paid to
g schedule: (a) ten percent
al ten percent (10%) of the
nstruction of the Project (as
9.8 Disbursement of Commission Loan.
65012.00207\2785768.12
46
1
9.6 Commission Loan. Subject to the terms and c= nditions of this Agreement,
Commission shall disburse to or for the benefit of Developer -n amount not to exceed the
original principal amount of the Commission Loan. All advances f funds made by Commission
under the Pre - Development Loan Note shall, at the Close of Escrow, be considered advances
under the Commission Loan and shall be repaid by Developer to Commission in accordance with
all of the provisions of the Developer Note, including accrual of interest. Inclusion of advances
of funds made by Commission under the Pre - Development Loan Note shall not increase the
maximum principal amount of the Commission Loan. As an inducement to Commission to
make the Commission Loan, Developer has agreed to enter into this Agreement and has agreed
to the performance of the terms and conditions set forth in this Agreement. Developer shall use
the Commission Loan first to pay the entirety of the Purchase Price for the Project Site and then
any remainder of the Commission Loan principal shall be used by Developer solely to pay a
portion of the Total Project Costs. Developer shall not be entitled to use any portion of the
Commission Loan to reimburse itself for any internal management, administrative or overhead
expenses or for any purpose other than paying the Purchase Price and a portion of the Total
Project Costs. Further, Developer acknowledges and agrees that one source of funds for the
Commission Loan is "Home Investment Partnership Act" funds received by Commission from
the Federal government (directly or indirectly) and that these funds will not be used to fund the
construction of more than eleven (11) Dwelling Units of the Project, consistent with Section
1.1.55 of the Regulatory Agreement.
�+
9.7 Repayment of Commission Loan. Developer shall 'repay the Commission Loan
pursuant to the terms and conditions of the Developer Note. `)Mlle Developer Note shall be
secured by the Commission Deed of Trust. The Commission 'deed of Trust shall only be
subordinate in lien priority regarding the Project Site to statutory iliens, the Permitted Security
Instrument securing the Construction Financing and, upon the icomplete repayment of the
Construction Financing, a Permitted Security Instrument securing tide Permanent Loan.
9.8.1 Pre - Development Cost Disbursements. etween the Effective Date
and the Close of Escrow, if Developer signs and delivers to Co ission the Developer Note,
Commission will disburse an amount not to exceed Seven Hun±red Twenty -Five Thousand
Dollars ($725,000) of the proceeds of the Commission Loan to reimburse Developer for pre -
development costs identified in the Project Budget actually paid by' eveloper prior to the Close
of Escrow. Disbursements of the Commission Loan pursuant t this Section 9.8.1 shall be
subject to all of the provisions of this Agreement regarding dish ement of the Commission
Loan, exclusive of the requirements of Section 9.8.4(a) or (c), t 4 requirement under Section
9.8.4 that such proceeds will only be disbursed for work in pia= e, and the requirements of
Section 9.8.7(a), (b), (c), (d), (e), (f) or (k).
9.8.2 Closing Disbursement. At the Close of Escrow, an amount of
Commission Loan proceeds not to exceed the Purchase Price shallE be disbursed and applied to
pay the Purchase Price for Developer's acquisition of fee title to tlf Project Site, subject to the
Commission Deed of Trust (Commission will not actually tr sfer any funds under the
Commission Loan to Developer or any other Person on the Clos of Escrow pursuant to this
Section 9.8.2, as the Developer's completely offsetting obligationjto pay the Purchase Price to
Commission results in an accounting transaction only.
9.8.3 Construction Disbursements. The remaining principal balance of the
Commission Loan (less the amount of the Commission Loan disbi!rsed to pay pre-development
costs pursuant to Section 9.8.1 and less the amount of the Commi Loan applied to pay the
Purchase Price at the Close of Escrow pursuant to Section 9.8.2) is _inticipated to be deposited in
the project account established pursuant to the Disbursement Agre
Project construction to pay a portion of the Total Project Costs, s
precedent to disbursement under this Agreement and the
Notwithstanding any provision of this Agreement or the Dis
contrary, Commission shall have no obligation to consent to a req
disbursement of Commission Loan proceeds that does not comply
of this Agreement or the Disbursement Agreement.
9.8.4 Disbursement Requests. The Commission Loan proceeds shall be
disbursed from time to time to or for the account of Developer !pray in accordance with this
Agreement, the Disbursement Agreement and the Developer Ncte. The Commission Loan
proceeds shall be disbursed on a line-item by line-item basis in
Budget, subject to Section 9.13. In no event shall Commission ha
any disbursement on account of any line item, if the amount to be
line item, when taken in the aggregate with all amounts previousl
line item, exceeds the amount allocated to such line item in the Pr
shall be made only upon Developer's written request in a fo
Commission showing all costs that Developer intends to fund wit
in such detail as Commission may reasonably require, accompanie_ in each case by: (a) written
certifications by the Builder and architect that construction to Lie date of the disbursement
request is in accordance with the Construction Drawings for the Prc.lect approved by the City; (b)
copies of all invoices for all items, equipment or materials purchas:d and all contracted labor or
services provided and lien releases satisfactory to Commission exftuted by each contractor or
subcontractor or material or equipment supplier that has recei ved any payment for work
performed or materials provided; (c) CLTA 122 endorsements to the Title Policy in form and
substance satisfactory to Commission; (d) a written certification frcin Developer to Commission
that all costs and expenses that are the subject of the disbursemenr,Tequest were incurred in the
normal course of construction of the Project and that none of th , 7 costs or expenses were the
subject of a prior disbursement request; (e) a written certification from Developer to Commission
that sufficient funds are projected to be available to complete the P in accordance with the
Financing Plan and that the amount of Tax Credit Equity will not L reduced nor any of the Tax
Credits recaptured; and (f) all other documents and information reasonably required by
Commission. Disbursement requests shall be submitted to Conmtission no less than ten (10)
Business Days prior to the date of the requested disbursement, and shall not be submitted more
often than once monthly. Funds will only be disbursed for wort in place. In no event will
Commission be required to consent to disbursements for materiAs not incorporated into the
Project; provided, however, that Commission, in Conunission's o 1 e and absolute discretion,
may consent to disbursements for materials stored securely on-site, gf such materials are insured,
are available for inspection and will be incorporated into the Proj =ct within a reasonable time.
Disbursements will be subject to withholding for stop notice claim pursuant to California Civil
65012.00207\2785768.12
47
•
•
1
ent for disbursement during
bject to all of the conditions
Disbursement Agreement.
sement Agreement to the
sted application, advance or
th the teims and conditions
accordance with the Project
any obligation to consent to
disbursed on account of that
disbursed on account of that
ject Budget. Disbursements
i provided or approved by
such disbursement, itemized
Code Section 3162 and mechanic's lien claims. In no event shal any disbursements other than
the final disbursement pursuant to Section 9.8.8 be made afkr the date of issuance of a
Certificate of Completion for the Project.
9.8.5 Retainage. As to each "hard cost"
disbursements shall be made in the amount of ninety-five perce
item properly incurred and substantiated by Developer during th
retainage of five percent (5%) of the total cost of work then c
Each disbursement for the Builder's overhead and profit shall
percent (10%) until such time as the construction of the Project
judgment of the Commission, to be fifty-five percent (55%) co
from the Builder's overhead and profit shall be reduced to
disbursements from the Commission Loan. All amounts so re
satisfaction of all conditions to the final disbursement set forth in •
9.8.6 Contingency. Commission shall not hall= any obligation to consent to
any disbursement from funds allocated in the Project Budget to t17=2. "Contingency" line item, or
to consent to any reallocation to any other line item of funds allo'_ated in the Project Budget to
the "Contingency" line item; provided, however, Commission sh&1 not unreasonably withhold,
condition or delay its consent to any: (1) transfer of funds remaking in a Project Budget line
item when the work of that line item is fully completed and provi
required by Section 9.8.5; or (2) reallocation of fluids allocated to
the Project Budget so long as, immediately following such realloc
of the funds allocated to the "Contingency" line item is at least
costs" of the portion of the Project then remaining to be completed.
9.8.7 Conditions to Disbursement. Except as therwise expressly provided
in Section 9.8.1, the obligation of Commission to consent to an disbursement (excluding the
disbursement to be made at the Close of Escrow) is subject to the' atisfaction or written waiver
by Commission, as the case may be, of all of the following conditicLs precedent:
(a) The Close of Escrow has occurred;
(b) Developer has made payment to tie Builder for the amounts
covered by all prior disbursement requests;
(c) All prior disbursements of Cornmiss bn Loan proceeds have been
made in accordance with Sections 9.8.1 through 9.8.6; 1
(d) Commission has reasonably determini.d, based upon inspections or
other evidence satisfactory to Commission, that the Project is bei g constructed in a good and
workmanlike manner by appropriate means in accordance with ' he plans and specifications
approved by Commission and that all required inspections and ap ovals have been obtained as
and when necessary;
65012.00207\2785768.12
48
(e) The Title Company is prepared to ise a date down endorsement
to the Title Policy in the nature of a CLTA 122 endorsement isuring that the lien of the
Commission Deed of Trust is unchanged, securing all prey us disbursements and the
tem in the Project Budget,
(95%) of the costs for such
course of the Project, with a
pleted regarding such item.
e subject to retainage of ten
determined, in the reasonable
lete; thereafter, the retainage
rye percent (5%) in future
ned shall be disbursed upon
ction 9.8.8.
ion is made for the retainage
e "Contingency" line item in
tion, the undisbursed portion
e percent (5%) of the "hard
complete;
65012.00207\2785768.12
(i)
49
disbursement then being requested, and that nothing has interve ted to affect the validity or
priority of the Commission Deed of Trust;
(0 All sources of financing for constrwtion of the Project are "in
balance" in accordance with the Financing Plan and the Projec,- Budget and Developer can
complete the Project, without obtaining additional funds, all in the j dgment of Commission;
(g) Commission has received, in form r 1
ind substance acceptable to
Commission, all required supporting documentation, including wort progress certifications from
the Builder or architect and invoices and mechanic's lien claim waivers and releases;
(h) No Default shall remain uncured 41 no event has occurred or
condition exist that, with the giving of Notice or the passage of tin or both, would constitute a
Default, and Commission has received a certification to that effect fom Developer;
1
(i) No stop notice (whether bonded or 0 has been served upon or
otherwise delivered to Commission in connection with the Proje or otherwise in connection
with the Commission Loan, unless Developer has: (a) paid and di charged such stop notice; or
(b) effected the release of such stop notice by delivering to Commi ion a surety bond complying
with the requirements of applicable laws for such release;
No claim of lien, notice and claim of mechanic's lien or other
similar document or instrument has been recorded against the Project Site, unless Developer has:
(a) paid and discharged the same; (b) effected the release of such claim or lien by delivering to
Commission a surety bond complying with the requirements of apilicable laws for such release;
or (c) provided Commission with other security reasonably acceptzttille to Commission to protect
Commission's interests regarding the Project Site and the Project apinst such lien or notice; and
(k) All amounts then due and owing i t respect of the Tax Credit
Equity have been paid or otherwise provided for to the reasonable 43tisfaction of Commission in
the amounts and at the times set forth in the Developer Partnership 4greement.
9.8.8 Final Disbursement. Commission's obligation n to consent to the final
disbursement of that portion of the proceeds of the Commissicsi Loan retained pursuant to
Section 9.8.5 is subject to the satisfaction or written waiver by Cormission, as applicable, of all
of the following additional conditions precedent:
(a) Commission has issued or is deemedtto have issued a Completion
Certificate for the Project and Developer has completed all of th actions to be performed by
Developer pursuant to Section 7.3.2; 1
(b) Commission has received, in form ind substance acceptable to
Commission all of the following:
Evidence that Developer hts accepted the Project as
i
l
(ii) Evidence that all Total Projec Costs will, upon making the
final disbursement, together with any retainage then held by the P itted Lender providing the
Construction Financing, be paid in full; and ..
(iii) Evidence that the period IE3r filing mechanic's liens
e
regarding the Project has expired without the filing of any lien . .)r Commission has received
executed unconditional lien releases from the Builder and all subcontractors involved in
construction of the Project in form and substance reasonably s isfactory to Commission or
i
Commission has received other security reasonably acceptabl to Commission to protect
Commission's interests regarding the Project Site and the Project against all such liens or similar
Claims.
9.9 No Other Commission Financial Assistance. Co amission shall be under no
obligation to contribute any other financial assistance to the !acquisition, construction or
operation of the Project other than the Commission Loan, regardlessl of Actual Project Costs.
9.10 Permanent Loan. Following issuance of a Completin Certificate for the Project,
the Permanent Loan shall be obtained by Developer from the Insti lltional Lender providing the
forward loan commitment for the Permanent Loan approved by Comnission prior to the Close of
Escrow or from another Institutional Lender reasonably accepTable to Commission. The
proceeds of the Permanent Loan, together with a portion of the Ta... Credit Equity proceeds that
have not been previously disbursed to Developer, shall be used to cJ)mpletely and timely pay-off
the Construction Financing.
9.11 Limited Recourse of Pre-Development Loan Note. Lt for any reason other than an
Event of Default of Developer, the Close of Escrow does not occur and this Agreement is
terminated, all amounts due under the Pre-Development Loan N.-te and under the Developer
Note for Commission Loan proceeds disbursed pursuant to Sectii 9.8.1 for pre-development
costs shall be forgiven and completely discharged following perf rmance of the provisions of
Section 9.12 by Developer. Upon the termination of this Agre__ ent following an Event of
Default by the Developer, all amounts then outstanding under the 're-Development Loan Note
and under the Developer Note for Commission Loan proceeds disbursed pursuant to Section
9.8.1 for pre-development costs shall be immediately due an ' payable by Developer to
Commission. Any such amount that is not paid to the Commissio by Developer within seven
(7) calendar days following the date of termination of this At ement shall accrue Default
Interest from the date of such termination, until paid in full.
9.12 Information Deliverables. As a condition pre
forgiveness and discharge of all amounts due under the Pre-Devel
the Developer Note for Commission Loan proceed§ disbursed purs
development costs, Developer shall deliver to Commission all dra
records, surveys, documents, plans, entitlements and other m
ent to the Section 9.11
ment Loan Note and under
t to Section 9.8.1 for pre-
ngs, specifications, reports,
erials prepared by or for
Developer the costs of which were paid for, financed or reimburd in whole or in part from
advances under the Pre-Development Loan Note or the Developir Note pursuant to Section
9.8.1, without further charge to or payment by Commission, and assgn all rights of Developer in
and to such materials to Commission. Developer shall deliver al] such materials without any
warranty or guaranty as to the correctness, accuracy or completenes of any such materials or the
65012.0020'7\2785768.12
50
1
ability of Commission to use any such material without the c4 sent of the consultants or
professionals (other than Developer) that prepared any of the materials. Developer shall
Indemnify Commission against any amounts still owing to the corultants or professionals that
prepared any of the materials.
9.13 Cost Reductions Or Increases; Additional Finan
acknowledge and agree that the Commission Loan is intended to
"gap" of the Project (the amount needed to pay the excess of the
aggregate financing sources available to the Developer for acqui
construction of the Project), but in no event to provide funding (
financing sources available to the Developer for acquisition of the
the Project) in excess of the Actual Project Costs. If the Actual
Total Project Costs (the difference between the Actual Project Cos
being a "Cost Reduction"), then fifty percent (50%) of the amo
be applied to repay any outstanding amount of Deferred Develop
fifty percent (50%) of the amount of the Cost Reduction shall be
Funds Loan is Two Million Dollars ($2,000,000) and the orig
Commission Loan is Five Million Dollars ($5,000,000), then
Reduction amount payable to Commission to reduce or repay the
5,000,000 divided by 7,000,000, with the result multiplied by one
six percent (36%) of the Cost Reduction amount (correspondingly,
Cost Reduction amount would go to repayment of the Industry F
Project Budget to reduce or eliminate any amount that would
Deficit. If the Actual Project Costs are less than the sum of th
available to Developer for acquisition of the Project Site and co
difference being a "Project Surplus"), then fifty percent (50%)
Surplus shall be applied to repay any outstanding amount of Defe
the other fifty percent (50%) of the amount of the Project Surplu
repay the principal amount of the Conunission Loan and the Ind
proportion as a Cost Reduction is applied to reduce or repay
Commission Loan and the Industry Funds Loan pursuant to
however, that the amount of a Project Surplus attributable to a C
first applied as provided in this Section 9.13 for application
remaining amount of Project Surplus shall be applied as prov
application of a Project Surplus. The determination as to whet
65012.00207\2785768.12
51
2 Sources. The Parties
ially finance the financing
otal Project Costs over the
tion of the Project Site and
en combined with all other
roject Site or construction of
oject Costs are less than the
and the Total Project Costs
of the Cost Reduction shall
r Fee (if any) and the other
plied to reduce or repay the
principal amount of the Commission Loan and the Industry Funck Loan in the percentage that
the original principal amount of each such loan bears to the sum of =le original principal amounts
of such loans. For illustration purposes only, if the original prinkipal amount of the Industry
al principal amount of the
the percentage of the Cost
Commission Loan would be
ialf (.5), which equals thirty-
ourteen percent (14%) of the
nds Loan for a total of fifty
percent (50%) of the Cost Reduction amount applied to red teflon of repayment of the
Commission Loan and the Industry Funds Loan). If the Actual Pr. Costs exceed the sum of
all financing sources available to the Developer for acquisitimn of the Project Site and
construction of the Project (the difference being a "Project DeF—it"), the Developer shall be
solely responsible for paying the Project Deficit (including, in wh e or in part, from an increase
in the amount of the Deferred Developer Fee, pursuant to Sectiorr .5); provided, however, that
Commission agrees that Developer may transfer sums among Ire items within the Project
Budget that are unexpended at the substantial completion of the Lvork delineated in such line
item to the account and line item for contingencies or another accoint for another line item in the
•
herwise constitute a Project
aggregate financing sources
truction of the Project (the
f the amount of the Project
d Developer Fee (if any) and
shall be applied to reduce or
try Funds Loan in the same
he principal amount of the
his Section 9.13; provided,
t Reduction, if any, shall be
a Cost Reduction and any
ed in this Section 9.13 for
er or not a Cost Reduction,
65012.00207\2785768.12
Project Deficit or Project Surplus has occurred regarding the P: oject shall be made by the
Commission following Commission's receipt of a copy of the final f TCAC audit of the Project.
9.14 AHP Funds. Developer shall apply to the Feder-1 Home Loan Bank of San
Francisco for an award of Affordable Housing Program funds ( "AT Funds ") for the Project. If
Developer or the Project receives an award of AHP Funds, the AHP Funds shall first be
applied to pay any Project Deficit (if any). If no Project Deficit 'xists or any AHP Funds are
remaining after elimination of any Project Deficit (if any), then fity percent (50 %) of the AHP
Funds or remaining amount of AHP Funds shall be applied to repy any outstanding amount of
Deferred Developer Fee (if any) and the other fifty percent (50 %)
amount of AHP Funds shall be applied to reduce or repay t
Commission Loan and the Industry Funds Loan in the same prop
applied to reduce or repay the principal amount of the Commission
Loan pursuant to Section 9.13.
of AHP Funds or remaining
le principal amount of the
rtion as a Cost Reduction is
Loan and the Industry Funds
9.15 Developer Responsibility For Project Costs. The developer acknowledges that
the Actual Project Costs may exceed the Total Project Costs or t
sources available to the Developer for acquisition of the Project
Project. Developer additionally acknowledges that the financ
available to Developer for acquisition of the Project Site and cons
different in type or amount from those set forth in this Agreem
acknowledges and agrees that Developer shall be responsible for p
Costs, whether or not the Actual Project Costs exceed the finan ng or other funding sources
available to the Developer for acquisition of the Project Site and coi�truction of the Project.
9.16 Refinancing. Prior to issuance of a Completion Certificate for the Project,
Refinancing shall only be allowed with the prior written consent o Commission, which may be
given, withheld or conditioned in Commission's sole and absolute discretion.
1
9.17 Only Permitted Encumbrances. Developer shall notecord and shall not allow to
be recorded against the Project Site any Security Instrument, lien 1)r other encumbrance that is
not a Permitted Encumbrance. Developer shall remove or cause tajbe removed (or provide title
insurance in form and substance reasonably acceptable to Comn
insurance company reasonably acceptable to Commission, in
Agreement and the Deed of Trust securing the Commission Loan
financing or other funding
ite and construction of the
or other funding sources
ction of the Project may be
t. Accordingly, Developer
ng all of the Actual Project
fission and issued by a title
uring the priority of this
s superior to such lien, with
such title insurance being in the minimum amount of the outstanding; principal and interest under
the Commission Loan plus 125% of the amount of the lien claim r providing a statutory bond
resulting in removal of such lien) any Prohibited Encumbrance r ade or recorded against the
Project Site or shall assure the complete satisfaction of any such Pohibited Encumbrance to the
satisfaction of the Conunission, in the Commission's sole ani absolute discretion. The
covenants of Developer set forth in this Section 9.17 regarding theil placement of encumbrances
on the Project Site shall run with the land of the Project Site and End successive owners of the
Project Site, until issuance (or deemed issuance) of a Completion C,rtificate for the Project.
9.18 Commission Right to Discharge Prohibited Enc Thrances. After sixty (60)
calendar days Notice to Developer of a Prohibited Encumbrance d provided that Developer
has not caused such Prohibited Encumbrance to be removed ( eluding by providing title
52
insurance in form and substance reasonably acceptable to Commission and issued by a title
insurance company reasonably acceptable to Commission, inuring the priority of this
Agreement and the Deed of Trust securing the Commission Loan -s superior to such lien, with
such title insurance being in the minimum amount of the outstandin% principal and interest under
the Commission Loan plus 125% of the amount of the lien claim ...:r providing a statutory bond
resulting in removal of such lien) during such time period, the Commission shall have the right,
but not the obligation, to satisfy or remove any Prohibited Encumbrance against the Project Site
and receive reimbursement from Developer for any amounts paid or incurred in satisfying or
removing any such Prohibited Encumbrance, upon demand. A,y amount expended by the
Commission to discharge a Prohibited Encumbrance that is not reimbursed to the Commission
by Developer within thirty (30) calendar days following Notice t ' such amount is due shall
accrue Default Interest from the date of such Notice, until paid inu11. Nothing in this Section
9.18, though, shall require Developer to pay or make provisions for the payment of any tax,
assessment, lien or charge that Developer is in the process of contsting the validity or amount
thereof, in good faith, and so long as such contest shall not subj =ct all or any portion of the
Project Site to forfeiture or sale.
I
10. RIGHTS OF LENDERS AND CO SSION Res. =__'_ ) ING PERMITTED •
SEC TY INSTRUMENTS.
65012.00207\2785768.12 . 53
1
10.1 Notice of Liens. The Developer shall promptly Ntify the Commission of any
Security Instrument or lien asserted against or attached to all or an - portion of the Project or the
Project Site, prior to the date of issuance of a Completion Certifica for the Project, whether by
voluntary act of Developer or otherwise; provided, however, at no Notice of filing of
preliminary notices or mechanic's liens need be given by Develope to the Commission, prior to
suit being filed to foreclose any such mechanic's lien.
10.2 Notice of Default to Lenders. Whenever the Co `fission delivers any Notice of
Default to Developer under this Agreement, the Commission shall nd a copy of such Notice of
Default to the Tax Credit Investor and each Permitted Lender o which the Commission has
received Notice and a contact address for transmittal of such Notic:. Failure of Commission to
deliver any copies of Notices, as provided in the immediately preceing sentence, shall not affect
any Notice given to Developer or any cure period allowed to Developer or any other Person
under this Agreement. The Tax Credit Investor or a Permitted Le _=_:der receiving a copy of any
such Notice of Default shall have the right, but no obligation, to c mmence the cure or remedy
of any Default of Developer set forth in such Notice and to dilige 1y and continuously proceed
with the cure or remedy such Default, within the cure period allo° ed to Developer under this
Agreement. The Commission shall accept such performance by f e Tax Credit Investor or a
Permitted Lender with the same force and effect as if furnished b Developer. If such Default
can only be remedied or cured by the Permitted Lender upon obtai ng possession of the Project
Site, the Commission shall allow the Permitted Lender an oppo y to obtain possession of the
Project Site with diligence and continuity through exercise of remedies under such Permitted
Lender's Permitted Security Instrument and to remedy or cure sui Default within ninety (90)
days after obtaining possession of the Project Site. If the Default r'_ requires more than
ninety (90) days to cure, however, then the time available to a Permitted Lender to cure pursuant
to this Section 10 shall be the reasonable time required to compl =te such cure, as long as the
Permitted Lender has commenced the cure of the Default within sujh ninety (90) day period and
•
diligently pursues the cure to completion. As long as the Permitted Lender diligently
commences and pursues obtaining possession of the Project Sit including litigation or other
legal process necessary to obtain possession of the Project Site, thin a reasonable time, then
while the Permitted Lender is pursuing possession of the Project Site and no other lender to
Developer or related to the Project Site or the Project is exerLsing any remedies under its
agreement(s) with Developer or otherwise related to the Project S e or the Project, Commission
agrees that Commission will not terminate this Agreement 7 -- - )y reason of such Default.
Additionally, if the Tax Credit Investor can only cure the Defadt after replacing the general
partner of the Developer and assuming control of Developer Crough installation of a new
general partner (any Default that can be cured through the paymen of money shall be considered
and deemed capable of being cured by the Tax Credit Investor wit ut removing or replacing the
general partner), Commission will allow the Tax Credit Investor reasonable time to remove
such general partner of Developer, if the Tax Credit Invest delivers written notice to
Commission, within the time period allowed to Developer for cur of such Default, stating that
the Tax Credit Investor intends to remove such general partne pursuant to the Tax Credit
Investor's rights under the Developer Partnership Agreement. The ax Credit Investor shall cure
all Defaults that are curable by the Tax Credit Investor within si (60) days after removal of
the general partner of Developer (any Default that can be cured though the payment of money
shall be considered and deemed capable of being cured by the fax Credit Investor) or such
longer time period reasonably required to complete such cur, as long as such cure is
commenced by the Tax Credit Investor within such sixty (60) da = period. As long as the Tax
Credit Investor diligently commences and pursues removal of such
(including litigation or other legal process necessary to complete t
partner) within a reasonable time, then while the Tax Credit Invest
general partner and no other lender to Developer or related to the
eneral partner to completion
removal of the such general
is pursuing removal of such
roject Site or the Project is
exercising any remedies under its agreement(s) with Developer' or otherwise related to the
Project Site or the Project, Commission agrees that Commission will not terminate this
Agreement by reason of such Default. All Developer Specific DQaults shall be deemed cured
upon transfer of Developer's interest in the entire Project Site to a ffermitted Lender, its assignee
or nominee, pursuant to exercise of remedies under such PermitteciLender's Permitted Security
Instrument. In addition, any Permitted Lender properly completing the Project with the consent
of Commission shall be entitled, upon written request made to
Certificate from Commission. Nothing contained in this Agreeme
authorize or require any Permitted Lender to undertake or cont
portion of the Project (beyond the extent necessary to conserve
construction already made) prior to or after acquiring title to or p
Site, without expressly assuming Developer's obligations under
agreement reasonably satisfactory to Commission, in which the
complete the Project in the manner provided in this Agreement. A
to complete the Project must provide the Commission with eviden
Commission that the Permitted Lender has the qualifications (
licensed contractor(s) or consultant(s) with such qualification
necessary to perform such obligations.
10.3 No Termination of Permitted Security Instrument
Default by Developer under this Agreement shall not defeat or r
Permitted Security Instrument made in good faith and for value as t
6501200207\2785768.12
54
mmission, to a Completion
t shall be deemed to permit,
ue the construction of any
r protect improvements or
session of the entire Project
this Agreement by written
Permitted Lender agrees to
y Permitted Lender desiring
e reasonably satisfactory to
will engage one or more
) and financial capability
by Default. An Event of
der invalid the lien of any
all or any part of the Project
Site, whether or not the Lender is subordinated to this Agreement;
in this Agreement, this Agreement shall be binding and effecti
Project Site, whose title to the Project Site is acquired pursuant to
Permitted Security Instrument or from a Person exercising any suc1
10.4 Lender Rights on Termination or Modification. No
shall be binding upon a Lender unless the termination occurs aft
such Lender's failure to cure all then existing Defaults under
Developer Specific Defaults), pursuant to this Section 10, or wit
consent. No modification of this Agreement that materially affec
be binding upon the Lender without its prior written consent.
10.5 Commission Right to Purchase Obligation. In any
Notice of Default of Developer under this Agreement, an affected
option provided in Section 10.2 to construct the Project, or has ex _cised the option, but has not
proceeded diligently with such construction, Commission shall hav,7 the option, in Commission's
sole and absolute discretion, to purchase the rights of such Lencm against or in reference to
Developer, the Project Site or the Project secured by any Permitte Security Instrument held by
such Lender by payment to the Lender of the amount of the unpai obligations secured by such
Permitted Security Instrument and, if the ownership of the Project Site has vested in such
Lender, Commission, at its option, but not its obligation, shall be cutitled to a conveyance from
such Lender of any title or interest in the Project Site vested in st__-.11 Lender to Commission or
Commission's designee. After forty-five (45) days following expir - tion of the time period for an
affected Lender to cure a Default of Developer under this Agreer_ent, an affected Lender may
demand by Notice, that Commission act to exercise or forego the:right granted in this Section
10.5 by Notice to the Lender. If Commission fails to exercise thcoright granted in this Section
10.5 by Notice to the Lender within forty-five (45) calendar daijs following the date of the
Commission's receipt of such written demand from the Leder, Commission shall be
conclusively deemed to have waived its rights under this Section p 0.5. If Commission timely
exercises its rights under this Section 10.5, the purchase transactio - shall close within sixty (60)
days after the date of such Lender's receipt of the Commission's N ice exercising such rights.
10.6 No Construction Obligation of Lender. A Lender s : 1 in no way be obligated by
the provisions of this Agreement to construct or complete the de opment of the Project or to
guaranty such construction or completion, but may do so pursuant • and in accordance with this
Section 10. Nothing in this Agreement shall be deemed or constru d to permit, or authorize any
Lender to devote all or any portion of the Project Site to uses, or to construct any
a
improvements on the Project Site, other than those uses or the Proj ct provided for or authorized
by this Agreement.
ut unless otherwise provided
e against any owner of the
xercise of remedies under a
remedies.
rmination of this Agreement
Notice to such Lender and
his Agreement (except any
such Lender's prior written
the rights of a Lender shall
ase where, after delivery of
ender has not exercised the
10.7 Conunission Right to Cure. In the event of a brjtch or default by Developer
under any Permitted Security Instrument, prior to the date 01 issuance of a Completion
Certificate for the Project, Commission may cure the breach or djfault of Developer under the
applicable Permitted Security Instrument, but is wider no obligatioL to do so, prior to completion
of any sale or foreclosure of all or any portion of the Project Site urder the applicable Permitted
Security Instrument. Commission shall be entitled to reimbursemet from Developer of all costs
and reasonable expenses incurred by Commission in curing any b..--ach or default of Developer
65012.00207\2785768.12
55
under any Permitted Security Instrument, upon demand. amount expended by the
Commission to cure a breach or default of Developer under any ermitted Security Instrument
that is not reimbursed to Commission by Developer within thirty (0) calendar days after Notice
of such amount to Developer shall accrue Default Interest from tie date of such Notice, until
paid in full.
i
10.8 Foreclosure of Permitted Security Instrument. rifeclosure of any Permitted
Security Instrument, whether by judicial proceedings or by power If sale, or any conveyance by
deed in lieu of foreclosure, shall not require the consent of Comm sion nor constitute a Default
under this Agreement. Following any foreclosure of a Perm itted Security Instrument or
conveyance of the Project Site to the holder of Permitted Security instrument by deed in lieu of
foreclosure, Commission shall recognize as "Developer" under thi:ii Agreement any purchaser or
1
other transferee of the entire Project Site that assumes all of the o ligations of Developer under
this Agreement pursuant to a written assumption agreemen reasonably satisfactory to
Commission. If any Lender or its nominee or assignee acquires , Developer's title to the entire
Project Site as a result of a foreclosure of a Permitted Security Insirument or conveyance of the
Project Site to the holder of a Permitted Security Instrument by deal in lieu of foreclosure, such
Lender shall thereafter have the right to assign or transfer D
Agreement to an assignee upon obtaining Commission's prior
assignee, which consent shall not be unreasonably withheld or del
of the entire Project Site by a Lender, or the assignee or nominee
from a Lender or such assignee or nominee, each with the prior
Commission shall enter into an amendment to this Agreement with
request of such Person given not later than one hundred twenty (
acquisition of the entire Project Site. Such amended Agreement s
in form and content as this Agreement, except as to the parties,
elimination of any requirements that have been fulfilled prior to th_clate of such amendment and
shall have priority equal to the priority of this Agreement.
10.9 Ancillary Aareements. Following written requesi from a Permitted Lender,
Commission will enter into such ancillary agreements reasonably equested by such Permitted
Lender to make the rights and obligations set forth in this Section A) direct . eements between
Commission and such Permitted Lender. Developer shall cause eh Permitted Lender to enter
into such ancillary agreements reasonably requested by Commiion to make the rights of
Commission under this Section 10 direct agreements between Coramission and each Permitted
Lender.
11. PROPERTY TAXES AND ASSESS NTS. Develc shall pay prior to the
delinquency all real property taxes and assessments assessed and le ited on or against the Project
Site. Nothing in this Agreement shall be deemed to prohibit Do/eloper from contesting the
validity or amounts of any tax assessment, encumbrance or lien, nor to limit the remedies
available to Developer in respect thereto, or for claiming exemli.tions available under State
Revenue and Taxation Code Section 214(g).
65012.00207\2785768.12
56
eloper's interest under this
tten consent regarding such
yed. Upon such acquisition
f a Lender, or the purchaser
tten consent of Commission,
uch Person, upon the written
0) days after such Person's
all be substantially the same
and the acknowledgment or
12. REMEDIES AND INDEMNITY
12.1 PRE - CLOSING LIQUIDATED DAMAGES TO O7MMISSION. UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT BY DE JELOPER UNDER THIS
AGREEMENT PRIOR TO THE CLOSE OF ESCROW, COMMISSION MAY CANCEL THE
ESCROW AND TERMINATE THIS AGREEMENT. UPON -'ANCELLATION OF THE
ESCROW AND TERMINATION OF THIS AGREEMENT,
RELIEVED OF ALL OBLIGATIONS OF COMMISSION L'
INCLUDING THE OBLIGATION TO SELL OR CONVEY
DEVELOPER. ANY SUCH ESCROW CANCELLATION AN
AGREEMENT SHALL BE WITHOUT ANY LIABILIT`
DEVELOPER OR ANY OTHER PERSON ARISING
COMMISSION AND DEVELOPER ACKNOWLEDGE T
AND IMPRACTICAL TO ASCERTAIN THE AM#
WOULD BE SUFFERED BY COMMISSION, IN THE EVENT )F A CANCELLATION OF
THE ESCROW AND 'TERMINATION OF THIS AGR1TMENT DUE TO THE
OCCURRENCE OF AN EVENT OF DEFAULT BY DEVELOPER UNDER THIS
AGREEMENT, PRIOR TO THE CLOSE OF ESCROW. HAV! I IG MADE DILIGENT BUT
UNSUCCESSFUL A 11 EMPTS TO ASCERTAIN THE ACTUA_' 11 AMAGES COMMISSION
WOULD SUFFER, IN THE EVENT OF A CANCELLATIO'`'_ OF THE ESCROW AND
TERMINATION OF THIS AGREEMENT DUE TO THE OCCUFRENCE OF AN EVENT OF
DEFAULT BY DEVELOPER UNDER THIS AGREEMENT P FOR TO THE CLOSE OF
ESCROW, COMMISSION AND DEVELOPER AGREE WHAT A REASONABLE
ESTIMATE OF COMMISSION'S DAMAGES IN SUCH EV
DAMAGES AMOUNT (AS DEFINED IN THIS AGREEMENT).
CANCELLATION OF THE ESCROW AND TERMINATION
COMMISSION DUE TO THE OCCURRENCE OF AN E
DEVELOPER UNDER THIS AGREEMENT, PRIOR TO THE
ESCROW AGENT SHALL IMMEDIATELY CANCEL THE ES
AND ESCROW AGENT SHALL PROCEED IN ACCORDAN
AND 6.13.2. ALSO, DEVELOPER SHALL PAY THE LIQUID
(AS DEFINED IN THIS AGREEMENT) TO COMMISSION,
FOLLOWING ESCROW CANCELLATION. RECEIPT OF TH
AMOUNT (AS DEFINED IN THIS AGREEMENT) SHALL BE
EXCLUSIVE REMEDY UPON THE CANCELLATION CF THE ESCROW AND
TE'' INATION OF THIS AGREEMENT DUE TO THE OCCURRENCE OF AN EVENT OF
DEFAULT BY DEVELOPER UNDER THIS AGREEMENT, I UOR TO THE CLOSE OF
ESCROW.
65012.00207\2785768.12
57
OMMISSION SHALL BE
ER THIS AGREEMENT,
THE PROJECT SITE TO
C TERMINATION OF THIS
OF COMMISSION TO
ROM SUCH ACTION.
T IT IS EXTREMELY
-TNT OF DAMAGES THAT
1
Initials. of Authorized Initials of Authorid
Commission Representative Developer Represaltative
T IS THE LIQUIDATED
THEREFORE, UPON THE
=F THIS AGREEMENT BY
"ENT OF DEFAULT BY
-'LOSE OF ESCROW, THE
'ROW AND THE PARTIES
WITH SECTIONS 6.13.1
ED DAMAGES AMOUNT
WITHIN FIVE (5) DAYS
LIQUIDATED DAMAGES
MMISSION'S SOLE AND
65012.0020712785768.12
58
12.2 DEVELOPER'S RIGHT TO SPECIFIC PERFORA ?E AND LIMITATION
ON RECOVERY OF DAMAGES PRIOR TO CLOSE OF ESCROW.
12.2.1 ELECTION OF REMEDIES;I THE CONTINUANCE OF
AN EVENT OF DEFAULT BY COMMISSION UNDER THIS AGREEMENT, DEVELOPER
SHALL BE LIMITED TO EITHER OF THE FOLLOWING RiMEDIES: (1) AN ACTION
AGAINST COMMISSION FOR SPECIFIC PERFORMANCE C` THIS AGREEMENT; OR
(2) TERMINATION OF THIS AGREEMENT AND AN ACTICcV TO RECOVER UP TO A
MAXIMUM AMOUNT OF ONE HUNDRED THOUSAND .DOLLARS ($100,000) OF
AMOUNTS ACTUALLY PAID BY DEVELOPER PRIOR TO TEE DATE OF SUCH EVENT
OF DEFAULT TO THIRD PERSONS DIRECTLY RELATED IO OBTAINING PROJECT
APPROVALS FROM THE CITY, BUT EXCLUSIVE Or AMOUNTS PAID OR
ALLOCATED DIRECTLY OR INDIRECTLY TO INTERNAL C DSTS OF DEVELOPER OR
DEVELOPER'S EMPLOYEES, MEMBERS, SHAREHOLDERS PARTNERS, AFFILIATES
OR EMPLOYEES OR AGENTS OF ANY OF THEM. UNDER NO CIRCUMSTANCES
SHALL COMMISSION BE LIABLE TO DEVELOPER UNDE* THIS AGREEMENT FOR
ANY SPECULATIVE, CONSEQUENTIAL, COLLATERAL, !SPECIAL, PUNITIVE OR
INDIRECT DAMAGES OR FOR ANY LOSS OF PROFITS SUFFERED OR CLAIMED TO
HAVE BEEN SUFFERED BY DEVELOPER.
12.2.2 WAIVER OF RIGHTS. COMMISSION AND DEVELOPER EACH
ACKNOWLEDGE AND AGREE THAT COMMISSION WOULD NOT HAVE ENTERED
INTO THIS AGREEMENT, IF IT WERE TO BE LIABLE T �) DEVELOPER FOR ANY
MONETARY DAMAGES, MONETARY RECOVERY OR AN -' REMEDY DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT UNDER_: THIS AGREEMENT BY
COMMISSION PRIOR TO THE CLOSE OF ESCROW, )THER THAN SPECIFIC
PERFORMANCE OF THIS AGREEMENT OR TERMINATIGI OF THIS AGREEMENT
AND PAYMENT OF THE AMOUNTS SPECIFIED IN SECTIO 1 12.2.1. ACCORDINGLY,
COMMISSION AND DEVELOPER AGREE THAT THE REMEDIES SPECIFICALLY
PROVIDED FOR IN SECTION 12.2.1 ARE REASON BLE AND SHALL BE
DEVELOPER'S SOLE AND EXCLUSIVE RIGHTS AND MEDIES DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT UNDER1 THIS AGREEMENT BY
COMMISSION. DEVELOPER WAIVES ANY RIGHT TO P1 RSUE ANY REMEDY OR
DAMAGES OTHER THAN THOSE SPECIFICALLY PROVIDELi IN SECTION 12.2.1.
1
12.2.3 CIVIL CODE SECTION 1542 °RIVER. DEVELOPER
ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SE TION 1542 RELATIVE TO
THE WAIVERS AND RELEASES CONTAINED IN THIS SE TION 12.2, WHICH CIVIL
CODE SECTION READS AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW R SUSPECT
TO EXIST IN HIS OR HER FAVOR AT T TIME OF
EXECUTING THE RELEASE, WHICH IF KNO. BY HIM
OR HER MUST HAVE MATERIALLY AFFEC ED HIS OR
HER SETTLEMENT WITH THE DEBTOR.
12.2.5 STATEMENT OF INTENT. CALIFOR]
1542 NOTWITHSTANDING, IT IS THE INTENTION OF DEVE
THE LIMITATION ON DAMAGES AND REMEDIES SET FOR
AND DEVELOPER HEREBY RELEASES ANY AND
COMMISSION FOR MONETARY DAMAGES, MONETARY
LEGAL OR EQUITABLE RELIEF RELATED TO ANY EVEI
65012.00207\2785768.12
Initials of Authorized
Developer Representative
59
12.2.4 ACKNOWLEDGMENT. BY INITIALI'G BELOW, DEVELOPER
KNOWINGLY AND VOLUNTARILY WAIVES THE PROVI:r1ONS OF SECTION 1542
AND ALL OTHER STATUTES AND JUDICIAL DECISIONt (WHETHER STATE OR
FEDERAL) OF SIMILAR EFFECT SOLELY IN CONNECTION WITH THE WAIVERS AND
RELEASES CONTAINED IN THIS SECTION 12.2.
1
II
1
12.3 Commission Power of Termination ReQardine Proiec= Site.
lA CIVIL CODE SECTION
OPER TO BE BOUND BY
H IN THIS SECTION 12.2,
LL CLAIMS AGAINST
RECOVERY OR OTHER
T OF DEFAULT UNDER
THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW, E >CEPT AS SPECIFICALLY
PROVIDED IN THIS SECTION 12.2, WHETHER OR NOT: ANY SUCH RELEASED
CLAIMS WERE KNOWN OR UNKNOWN TO DEVELOPER -AS OF THE EFFECTIVE
DATE OF THIS AGREEMENT.
12.3.1 Reservation. The Commission hereby res =:rves a power of termination
pursuant to Civil Code Sections 885.010, et seq., exercisable by the Commission, in its sole and
absolute discretion, upon thirty (30) calendar days Notice to Deveper referencing this Section
12.3, to terminate the fee interest of Developer in the Project Sit _or any improvements to the
Project Site and revest such fee title in the Commission and take pcsession of all or any portion
of such real property and improvements, without compensation to Developer, upon the
occurrence of an Event of Default by Developer following the Clo=_e of Escrow and prior to the
issuance of a Completion Certificate for the Project. The Commission shall not exercise such
power of termination if Developer cures the Event of Default within the thirty (30) day Notice
period set forth in this Section 12.3.1. The power of termination `eserved in this Section 12.3
shall terminate on the date of issuance or deemed issuance of a Completion Certificate for the
Project.
12.3.2 Process. The rights of the Commission unt`er this Section 12.3 shall not
defeat, render invalid or limit:
(a) Any Permitted Security Instrument; o
(b) Any leases, declarations of covenan I conditions and restrictions,
easement agreements (except the Parking Deck Easement, which 1 be terminate on exercise of
the power) or other recorded documents or interests applicable to Project Site and specifically
authorized by this Agreement or consented to in writing by the Co 'ssion; or
(c) Upon the Commission's exercise +' its power of termination
pursuant to this Section 12.3, Developer shall convey fee title to the Project Site and all
improvements on or to the Project Site to the Commission by g
Civil Code Section 1109, as such code section may hereafter be
or substituted. Such conveyance shall be duly acknowledged by I
in a manner suitable for recordation with County. The Comm
pursuant to this Section 12.3 by means of an injunctive relief or fe
any court of competent jurisdiction.
complete or operate the Project, or such other replacement de
Commission, in Commission's sole and absolute discretion. Upc
portion of the Project Site, the proceeds received by the Commi
applied, as follows:
(i) First, to pay all amounts re
Permitted Security Instruments recorded against the Project Site;
(ii) Second, to reimburse the Co
on behalf of the City for all actual internal and Third Person costs
Commission or the City related to the Project Site, the Project
customary and reasonable fees or salaries to Third Person consul
(iii) Third, to the extent that any
thereafter, available, to reimburse Developer, the amount of the
incurred and paid by Developer regarding the construction of t
carry, taxes, and other items as set forth in a cost certification to
Commission, prior to any such reimbursement and, which certifi
Commission's reasonable approval; provided, however, that Dev
reimbursement for any expenses relating to any loans, liens or oth
by the Commission pursuant to the provisions of sub-sections
12.3.2(d); and
(iv) Fourth, any portion of the pr
Project Site remaining after the foregoing applications shall be re
its sole and exclusive property.
65012.00207\2785768.12
60
•
II I
• '
1
•
•
11
,
!I
t deed, in accordance with
nded, renumbered, replaced
veloper and a notary public
ion may enforce its rights
eiture of title action filed in
(d) Upon the revesting in the Commissi!lqi of title to the Project Site,
whether by grant deed or court decree, the Commission shall exerise its reasonable good faith
efforts to resell the Project Site at the Project Site's then fair reulii value, as soon and in such
manner as the Commission shall, in its sole discretion, find feaAble and consistent with the
objectives of the Redevelopment Plan, to a qualified and respollible Person or Persons (as
reasonably determined by the Commission) who will assume Devper's obligations to begin or
lopment acceptable to the
any such resale of all or a
on from such sale shall be
red to release/reconvey all
ission on its own behalf or
d expenses incurred by the
this Agreement, including
(including Legal Costs) in
connection with the recapture, management or resale of all or any trtion of the Project Site; all
taxes, assessments and utility charges paid by the City or the Commission with respect to all or
any portion of the Project Site; any payment made or necessary4o be made to discharge or
prevent from attaching or being made any subsequent enctunbranc_*s or liens due to obligations
incurred by Developer with respect to the Project Site or the coi4ruction of the Project; and
amounts otherwise owing to the Commission by Developer p ..uant to the terms of this
Agreement, the Regulatory Agreement, the Developer Note or th , ommission Deed of Trust;
and
ceeds from such resale are,
hird Person costs actually
Project, including costs of
made by Developer to the
tion shall be subject to the
per shall not be entitled to
encumbrances that are paid
" or "(ii)" of this Section
eds from the resale of the
ed by the Commission, as
12.3.3 RIGHT OF RE- ENTRY. IMMEDIAELY FOLLOWING THE
THIRTY (30) DAY NOTICE PERIOD SPECIFIED IN SECTION 12.3.1, COMMISSION, ITS
EMPLOYEES AND AGENTS SHALL HAVE THE RIGHT 110 REENTER AND TAKE
POSSESSION OF ALL OR ANY PORTION OF THE PIOJECT SITE AND ANY
IMPROVEMENTS ON OR TO THE PROJECT SITE, WITHOI T FURTHER NOTICE OR
COMPENSATION TO DEVELOPER. BY INITIALING BELO V, DEVELOPER HEREBY
EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLO - /ED BY LAW, ANY AND
ALL RIGHTS THAT DEVELOPER MAY HAVE UNDER CALIFORNIA CIVIL CODE
SECTION 791 AND CALIFORNIA CODE OF CIVIL PROCE=)URE SECTION 1162, AS
THOSE STATUTES MAY BE AMENDED, REPLACL, RENUMBERED OR
SUBSTITUTED, OR UNDER ANY OTHER STATUTES OR C •- MON LAW PRINCIPLES
OF SIMILAR EFFECT.
Initials of Authorized
Developer Representative
12.3.4 DEVELOPER ACKNOWLEDGME
ACKNOWLEDGES AND AGREES THAT COMMISSION'S E
TERMINATION AND RIGHT OF REENTRY PURSUANT TO
WORK A FORFEITURE OF THE ESTATE IN THE PROJE
DEVELOPER THROUGH THE QUITCLAIM DEED. DEVELO
WAIVES, TO THE MAXIMUM EXTENT ALLOWED B
EQUITABLE AND LEGAL DEFENSES THAT DEVELOPE
TS. DEVELOPER
RCISE OF ITS POWER OF
HIS SECTION 12.3 MAY
T SITE CONVEYED TO
ER HEREBY EXPRESSLY
LAW, ANY AND ALL
MAY HAVE TO SUCH
FORFEITURE, INCLUDING, BUT NOT LIMI l'F;D TO, THE'.DEFENSES OF LACHES,
WAIVER, ESTOPPEL, SUBSTANTIAL PERFORMANCE OR C( I' ENSABLE DAMAGES.
DEVELOPER FURTHER EXPRESSLY WAIVES, TO TfE MAXIMUM EXTENT
ALLOWED BY LAW, ANY AND ALL RIGHTS AND DEFE 1SES THAT DEVELOPER
MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTIO 3275 OR ANY OTHER
STATUTE OR COMMON LAW PRINCIPLE OF SIMIL '`« EFFECT. DEVELOPER
ACKNOWLEDGES THAT THE TERMS AND CONDITION OF THIS AGREEMENT
REFLECT THE POSSIBILITY OF FORFEITURE BY VIRTU' OF THE EXERCISE OF
COMMISSION`S POWER OF ' 1ERMINATION PROVIDED IN THIS SECTION 12.3.
DEVELOPER FURTHER ACKNOWLEDGES THAT DEV OPER HAS RECEIVED
INDEPENDENT AND ADEQUATE CONSIDERATION FOR. DEVELOPER'S WAIVER
AND RELINQUISHMENT OF RIGHTS AND REMEDIES PURSUANT TO THIS SECTION
12.3. I
Initials of Authorized
Developer Representative
12.4 Legal Actions. Either Party may institute legal action, at law or in equity, to
enforce or interpret the rights or obligations of the Parties undeE this Agreement or recover
ages, subject to the provisions of Section 12.1, 12.2 and 12.3. 1
65012.002 0712785768.12
61
1
12.6 Indemnification.
12.5 Rights and Remedies are Cumulative. Except as otkerwise expressly stated in this
Agreement, the rights and remedies of the Parties set forth in this .greement are cumulative and
the exercise by either Party of one or more of such rights or r4iedies shall not preclude the
exercise by such Party, at the same or different times, of any ot er rights or remedies for the
same Default or the same rights or remedies for any other Default 1y the other Party.
65012.00207\2785768.12 62
12.6.1 Commission Indemnity Obligations. Cc.-nrnission shall Indemnify the
Developer Parties against any Claim to the extent such Claim arises from any wrongful
intentional act or negligence of the Commission Parties, but only ) the extent that Commission
may be held liable under applicable law for such wrongful inte_ tional act or negligence and
exclusive of any violation of law (including the State Constituti In) relating to Commission's
approval, entry into or performance of this Agreement. Nothing i this Agreement is intended
nor shall be interpreted to waive any limitation on Commission's =liability, any exemption from
liability in favor of Commission, any claim presentment requirament for bringing an action
regarding any liability of Commission or any limitations peri ,d applicable to liability of
Commission, all as set forth in Government Code Sections 800, et' eq., Sections 900, et seq., or
in any other law, or require Commission to Indemnify any Perso beyond such limitations on
Commission's liability.
12.6.2 Developer Indemnity Obligations. De shall Indemnify the
Commission Parties against any Claim to the extent such Clain arises from any wrongful
intentional act or negligence of the Developer Parties. Developer shall also Indemnify the
Commission Parties against any and all of the following: (a) an Application made by or at
Developer's request; (b) any agreements that Developer (or anvne claiming by or through
Developer) makes with a Third Person regarding the Project Site oi the Project; (c) any workers
compensation claim or determination relating to any employee of tie Developer Parties or their
contractors; (d) any Prevailing Wage Action relating to this Agrement or the Project; and (e)
any Environmental Claim attributable to any action or failure to act !y the Developer Parties.
12.6.3 Independent of Insurance Obligations. eveloper's indemnification
obligations under this Agreement shall not be construed or interpred as in any way restricting,
limiting, or modifying Developer's insurance or other obligat imis under this Agreement.
Developer's obligation to Indemnify the Commission Partie.,= under this Agreement is
independent of Developer's insurance and other obligations under -- Agreement. Developer's
compliance with its insurance obligations and other obligations und r this Agreement shall not in
any way restrict, limit, or modify Developer's indemnification obli ations under this Agreement
and are independent of Developer's indemnification and other oblig,tions under this Agreement.
12.6.4 Survival of Indemnification and Defense - The indemnity
and defense obligations of the Parties under this Agreement shall survive the expiration or earlier
termination of this Agreement, until any and all actual or pros]) ctive Claims regarding any
matter subject to an indemnity obligation under this Agreement arejfully, fmally, absolutely and
completely barred by applicable statutes of limitations.
13. GENE
6501100207\2785768.12
,
PROVISIONS
13.11 Delivery. Any and all Notices submitted
pursuant to or as required by this Agreement shall be proper, if
messenger for immediate personal delivery, nationally recognized
courier (i.e., United Parcel Service, Federal Express, etc.) or by
63
12.6.5 Indemnification Procedures. Wherever =his Agreement requires any
Indemnitor to Indemnify any Indemnitee:
11
(a) Prompt Notice. The Indemnitee ! shall promptly Notify the
Indemnitor of any Claim.
(b) Selection of Counsel. The Indemnitor shall select counsel
reasonably acceptable to the Indemnitee. Counsel to Indemnitu's insurance carrier that is
providing coverage for a Claim shall be deemed reasonably satisfa ory, except in the event of a
potential or actual conflict of interest for such counsel regardint, such representation or such
counsel proves to be incompetent regarding such representation. yen though the Indemnitor
shall defend the Claim, Indemnitee may, at its option and its o expense, engage separate
counsel to advise it regarding the Claim and its defense. The Inde i tee's separate counsel may
attend all proceedings and meetings. The Indemnitor's counsel s all actively consult with the
Indernnitee's separate counsel.
(c) Cooperation. The Indemnitee shall r asonably cooperate with the
Indemnitor's defense of the Indemnitee.
(d) Settlement. The Indemnitor may y settle a Claim with the
consent of the Indemnitee. Any settlement shall procure a releas of the Indemnitee from the
subject Claims, shall not require the Indemnitee to make any payn.knt to the claimant and shall
provide that neither the Indemnitee nor the Indemnitor on beha r of Indemnitee admits any
liability. 1-
(1
13.1 Incorporation of Recitals. The Recitals of fact set f h preceding this Agreement
are true and correct and are incorporated into this Agreement in thei entirety by this reference.
13.2 City Not a Party. The City is not a Party to this Agmment.
13.3 Notices. Demands and Communications Between th Parties.
any Party to another Party
writing and dispatched by
vernight (one business day)
gistered or certified United
States mail, postage prepaid, return receipt requested, to the addrs,ss of the recipient Party, as
designated in Section 13.3.2. Notices may be sent in the same manner to such other addresses as
either Party may from time to time desi tu ate by Notice in acconiance with this Section 13.3.
Notice shall be deemed received by the addressee, regardless of !whether or when any return
receipt is received by the sender or the date set forth on such retur receipt, on the day that it is
dispatched by messenger for immediate personal delivery, one bt-iness day after deliver to a
nationally recognized overnight carrier or two (2) calendar days aier it is placed in the United
States mail as heretofore provided. Any attorney representing a Nirty may give any Notice on
behalf of such Party.
13.3.2 Addresses. The Notice
Date, are as follows:
To Developer:
9065 Haven Avenue, Suite 100
Rancho Cucamonga, CA 91730
Attention: Richard J. Whittingham,
CFO
To Commission:
Downey CDC
Downey City Hall
11111 Brookshire Avenue
Downey, CA 90241
Attention: Executive Director
With Copy to:
Edward A. Hopsctt, Esq.
655A North Mountain Avenue
Upland, CA 9178
With Copy to:
Downey CDC
Downey City Hal
11111 Brookshir
Downey, CA 902
Attention: Comm
13.4 Relationship of Parties. The Parties each intend an agree that Commission and
Developer are independent contracting entities and do not intend b };;this Agreement to create any
partnership, joint venture, or similar business arrangement, relatic aship or association between
them.
13.5 Warranty Against Payment of Consideration f =-r Agreement. Developer
represents and warrants to the Commission that: (a) Developer has =tot employed or retained any
Person to solicit or secure this Agreement upon an agreem nt or understanding for a
commission, percentage, brokerage, or contingent fee, excepti -g bona fide employees of
Developer and Third Persons to whom fees are paid for profession services related to planning,
design or construction of the Project or documentation of this Agr ement; and (b) no gratuities,
in the form of entertainment, gifts or otherwise have been or will given by Developer or any
of Developer's agents, employees or representatives to any elej_ed or appointed official or
employee of either the City or the Commission in an attempt b secure this Agreement or
favorable terms or conditions for this Agreement. Breach of the re_resentations or warranties of
this Section 13.5 shall entitle the Commission to terminate this A •eement upon seven (7) days
Notice to Developer and Escrow Agent. Upon any such to
Developer shall immediately refund any payments made to or on b
or the Commission pursuant to this Agreement or otherwise rel
Approval, any CEQA Document, or the Project, prior to the date of
addresses for the Parties, as of the Effective
•
Avenue
1
sion Counsel
ination of this Agreement,
alf of Developer by the City
ted to the Project Site, any
y such termination.
13.6 No Discrimination or Segregation. Developer cove, ants by and for itself and all
Persons claiming under or through it that this Agreement is made :d accepted upon and subject
to the following conditions:
13.6.1 Standards. That there shall be no discri ation against or segregation
of any Person or group of Persons, on account of any basis liste in subdivision (a) or (d) of
Section 12955 of the Government Code, as those bases are defines_ in Sections 12926, 12926.1,
65012.00207\2785768.12
64
subdivision (m) and paragraph (1) of subdivision (p) of Section 1 55, and Section 12955.2 of
the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or
enjoyment of the Project Site nor shall Developer or any Perso claiming under or through
Developer establish or permit any such practice or practices of 'scriniination or segregation
with reference to the selection, location, number, use, or occ pancy, of tenants, lessees,
sublessees, subtenants, or vendees in the Project Site.
111
13.6.2 Interpretation. Notwithstanding Section 1' ..6.1, with respect to familial
status, Section 13.6.1 shall not be construed to apply to housing fo- older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing in Section
13.6.1 shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 1.11, and 799.5 of the Civil
Code, relating to housing for senior citizens. Subdivision (d) of S tion 51 and Section 1360 of
the Civil Code and subdivisions (n), (o), and (p) of Section 12955 the Government Code shall
apply to Section 13.6.1.
13.7 Non - liability of Commission Officials and Employes. No member, official or
employee of Commission shall be personally liable to Developer, ci any successor in interest to
Developer, in the event of any Default by Commission under this Agreement or for any amount
that may become due to Developer or to Developer's successor, orl any obligations under the
terms of this Agreement, except to the extent resulting from the gross negligence or willful act of
such member, officer or employee.
65012.00207\2785768.12
65
13.8 Inspection of Books and Records. Commission shall have the right at all
reasonable times, at Commission's cost and expense, to inspec the books and records of
Developer pertaining to the Project Site or the Project. Coicilrnission shall not disclose
proprietary information of Developer to Third Persons, unless rquired by law or otherwise
resulting from or related to the pursuit of any remedies by or t1 assertion of any rights of
Commission under this Agreement.
13.9 Calculation of Time Periods. Unless otherwise sp4ified, all references to time
periods in this Agreement measured in days shall be to consecutivccalendar days, all references
to time periods in this Agreement measured in months shall be to • :onsecutive calendar months
and all references to time periods in this Agreement measured in ;ears shall be to consecutive
calendar years. Any reference to Business Days in this Agreers-ent shall mean consecutive
Business Days.
13.10 Principles of Interpretation. No inference in favor o 1 or against any Party shall be
drawn from the fact that such Party has drafted any part of this hgreement. The Parties have
both participated substantially in the negotiation, drafting, and revlion of this Agreement, with
advice from legal and other counsel and advisers of their own seleolion. A word, term or phrase
defined in the singular in this Agreement may be used in theilural, and vice versa, all in
accordance with ordinary principles of English grammar, which shill govern all language in this
Agreement. The words "include" and "including" in this Agreement shall be construed to be
followed by the words: "without limitation." Each collective non i in this Agreement shall be
interpreted as if followed by the words "(or any part of it)," exccpt where the context clearly
requires otherwise. Every reference to any document, including ti is Agreement, refers to such
document, as modified from time to time (excepting any mcfication that violates this
1
Agreement), and includes all exhibits, schedules, addenda and rders to such document. The
word "or" in this Agreement includes the word "and." Every' reference to a law, statute,
regulation, order, form or similar governmental requirement refer.- to each such requirement as
amended, modified, renumbered, superseded or succeeded, from time to time.
13.11 Governing Law. The procedural and substantive 1 i ws of the State shall govern
the interpretation and enforcement of this Agreement, without arlication of conflicts of laws
principles. The Parties acknowledge and agree that this Agreemer is entered into, is to be fully
performed in and relates to real property located in the Counly of Los Angeles, State of
California. All legal actions arising from this Agreement shall be tied in the Superior Court of
the State in and for the County or in the United States District ourt with jurisdiction in the
County.
13.12 Unavoidable Delay; Extension of Time of Performace.
13.12.1 Notice. Subject to any specific provisions DI' this Agreement stating that
they are not subject to Unavoidable Delay or otherwise limiting c restricting the effects of an
Unavoidable Delay, performance by either Party under this Agre&Tient shall not be deemed or
considered to be in Default, where any such Default is due to the , ccurrence of an Unavoidable
Delay. Any Party claiming an Unavoidable Delay shall Notify the ther Party: (a) within twenty
(20) days after such Party knows of any such Unavoidable Delay; and (b) within five (5) days
after such Unavoidable Delay ceases to exist. To be effective, af y Notice of an Unavoidable
Delay must describe the Unavoidable Delay in reasonable detiil. The Party claiming an
extension of time to perform due to an Unavoidable Delay shell exercise its commercially
reasonable best efforts to cure the condition causing the Unavoidalde Delay, within a reasonable
time.
13.12.2 Assumption of Economic Risks. E H PARTY EXPRESSLY
AGREES THAT ADVERSE CHANGES IN ECONOMIC CONDI IONS, OF EITHER PARTY
SPECIFICALLY OR THE ECONOMY GENERALLY, OR !CHANGES IN MARKET
CONDITIONS OR DEMAND OR CHANGES IN THE ECONOMIC ASSUMPTIONS OF
EITHER PARTY THAT MAY HAVE PROVIDED A BASIS Boa ENTERING INTO THIS
AGREEMENT SHALL NOT OPERATE TO EXCUSE OR DE
OF EACH AND EVERY ONE OF EACH PARTY'S OBLIGA
ARISING UNDER THIS AGREEMENT. ANYTHING IN T
CONTRARY NOTWITHSTANDING, THE PARTIES EXPRESS
UNFORESEEABLE CHANGES IN ECONOMIC CIRC
DEMAND OR CONDITIONS AND WAIVE, TO THE GREATE
LAW, ANY DEFENSE, CLAIM, OR CAUSE OF ACTION BAS
ON ECONOMIC NECESSITY, IMPRACTICABILITY,
CIRCUMSTANCES, FRUSTRATION OF PURPOSE, OR SI
PARTIES AGREE THAT ADVERSE CHANGES IN ECONO
OF THE PARTY SPECIFICALLY OR THE ECONOMY GENE
MARKET CONDITIONS OR DEMANDS, SHALL NOT 0
DELAY THE STRICT OBSERVANCE OF EACH AND
OBLIGATIONS, COVENANTS, CONDITIONS AND RE
AGREEMENT. THE PARTIES EXPRESSLY ASSUME THE
65012.00207\2785768.12 66
AY THE PERFORMANCE
IONS AND COVENANTS
S AGREEMENT TO THE
Y ASSUME THE RISK OF
TANCES OR MARKET
EXTENT ALLOWED BY
IN WHOLE OR IN PART
CHANGED ECONOMIC
ILAR THEORIES. THE
C CONDITIONS, EITHER
LLY, OR CHANGES IN
RATE TO EXCUSE OR
EVERY ONE OF THE
UIREMENTS OF THIS
SK OF SUCH ADVERSE
ECONOMIC OR MARKET CHANGES, WHETHER OR NOT 1---)RESEEABLE AS OF THE
EFFECTIVE DATE.
Initials of Authorized Initials of Authorized
Representative(s) of Commission Representative t3) of Developer
1
13.13 Tax Conseauences. Developer acknowledges an agrees that Developer shall
bear any and all responsibility, liability, costs, and expenses conn ted in any way with any tax
consequences experienced by Developer related to this Agreement.
13.14 Real Estate Commissions. Each Party: (a) represen t, and warrants that it did not
engage or deal with any broker or finder in connection with this Agreement and no Person is
entitled to any commission or finder's fee regarding this Agreemenon account of any agreement
or arrangement made by such Party; and (b) shall Indemnify the oiher Party against any breach
of the representation and warranty set forth in clause "(a)" of this S'.,stion 13.14.
13.15 No Third-Party Beneficiaries. Nothing in this Agr ment, express or implied, is
intended to confer any rights or remedies under or by reason of t
other than the Parties and their respective permitted successors
this Agreement intended to relieve or discharge any obligation of
or give any Third Person any right of subrogation or action over or
13.16 Developer Assumption of Risks of Legal Challenge
of delays and damages that may result to Developer from any Thi
to Commission's approval of this Agreement or any associated Ap
an error, omission or abuse of discretion by Commission is dete
Third Person files a legal action regarding Commission's appro
associated Approval (exclusive of legal actions alleging violation
1090 by elected officials of Commission), Developer shall have t
Escrow and terminate this Agreement, in which case the Parties
proceed in accordance with Section 6.13; or (2) Indemnify Co
Person legal action, including all Legal Costs, monetary awards, s
expert witness and consulting fees, and the expenses of any and
obligations resulting from the disposition of the legal action; p
"(1)" under this Section 13.16 shall only be available to Develope
Should Developer fail to Notify Commission of Developer's ele
13.16 at least fifteen (15) days before response to the legal actio
Developer shall be deemed to have elected to terminate this Agre
65012.00207\2785768.12
67
t •
1
s Agreement on any Person
assigns, nor is anything in
y Third Person to any Party
gainst any Party.
Developer assumes the risk
Person legal actions related
royals, even in the event that
ined to have occurred. If a
of this Agreement or any
f Government Code Section
option to either: (1) cancel
and the Escrow Agent shall
ission against such Third
ctions, attorney fee awards,
all financial or performance
vided, however, that option
prior to the Close of Escrow.
ion pursuant to this Section
is required by Commission,
ent pursuant to this Section
13.16. Commission shall reasonably cooperate with Developer in tefense of the Commission in
any legal action subject to this Section 13.16, subject to Develt per performing Developer's
indemnity obligations for such legal action. Nothing contained in Ihis Section 13.16 is intended
to be nor shall be deemed or construed to be an express or implieT admission that Commission
may be liable to Developer or any other Person for damages or otOr relief regarding any alleged
or established failure of Commission to comply with any Law. An legal action that is subject to
this Section 13.16 (including any appeal periods and the peniency of any appeals) shall
constitute an Unavoidable Delay and the time periods for performance by either Party under this
•
Agreement may be extended pursuant to the provisions of this Agr4ment regarding Unavoidable
Delay.
13.17 Effect. This Agreement shall be binding upon aril inure to the benefit of the
Parties and their respective heirs, executors, administrators, legal rpresentatives, successors and
assigns.
13.18 Further Assurances. The Parties agree to reason ly consider such additional
ila
actions or the execution of such other documents as may be reaso ably necessary or convenient
to the financing, development, and operation of the Project, althlugh nothing in this Section
13.18 shall be deemed a representation, guarantee or commitmelf by either Party to take any
action or execute any document.
13.19 Time Declared to be of the Essence. As to the pirformance of any obligation
under this Agreement of which time is a component, the performatace of such obligation within
the time specified is of the essence.
14. ENTIRE AGREEMENT, WAIVERS AND AMENDMENT
14.1 Entire Agreement. This Agreement integrates all lof the terms and conditions
mentioned in this Agreement or incidental to this Agreement, and lupersedes all negotiations or
previous agreements between the Parties with respect to all or any Iortion of the Project Site and
the development of the Project.
14.2 Waivers and Amendments. All waivers of the prosjsions of this Agreement and
all a Kndments to this Agreement must be in writing and signed b ,.the appropriate authorities of
Commission and Developer.
14.3 Prohibition Against Changes in Ownership, Manage ; lent or Control of Developer
or Assignment.
14.3.1 Developer Identity. Developer acknowledges and agrees that the
qualifications and identity of Developer are of particular
Commission. Developer further acknowledges and agrees that
relying on the specific qualifications and identity of Developer an
have entered into this Agreement but for the specific qualificatio
As a consequence, Transfers by Developer are only permitted bef
Certificate with the prior written consent of Commission, in Co
discretion. Developer represents and warrants to Commission thag it has not made and agrees
that it will not create or permit to be made or created any Transf except in accordance with
this Section 14.3, either voluntarily, involuntarily or by operation oi law. Any Transfer made in
contravention of this Section 14.3 shall be voidable at the electionlof Commission. Developer
acknowledges and agrees that the restrictions on Transfers set fefth in this Section 14.3 are
reasonable.
•
portance and concern to
rnmission has relied and is
that Commission would not
and identity of Developer.
e issuance of a Completion
mission's sole and absolute
14.3.2 Delivery of Transfer Documents. All instruments and other legal
documents proposed to effect any proposed Transfer shall be smitted to Commission for
review, at least thirty-five (35) calendar days prior to the proposed =fate of the Transfer, and the
65012.00207\2785768.12 68
1
written approval, disapproval or conditions of Commission regardir - the proposed Transfer shall
be provided to Developer, within thirty (30) calendar days followin� Commission's receipt of all
proposed Transfer documents. Developer agrees to reimburse mmission for all costs and
expenses incurred by Commission in connection with Commissic is review of each proposed
Transfer, including all Legal Costs and other Third Person consultait fees and expenses.
1
14.4 Exhibit List. All of the exhibits attached to this Agr .ment are as follows:
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
Exhibit I
Exhibit J
Exhibit K
Exhibit L
Exhibit M
Exhibit N
Exhibit O
Exhibit P
65012.00207\2785768.12 69
Property Legal Description
Form of. Completion Guaranty
Form of Completion Certificate
Form of Regulatory Agreement
Form of Developer Note
Form of Commission Deed of Trust
Form of Notice of Affordability Restr=ctions
Form of Developer Official Action
Form of Property Deed
Auxiliary Parking Site Map
Design Option 1
Design Option 2
Design Option 1 Budget
Design Option 2 Budget
Form of Auxiliary Parking Parcel Det
Form of Parking Deck Easement
1
14.5 No Waiver. Failure to insist on any one occasion u n strict compliance with any
term, covenant, condition, restriction or agreement contained in 's Agreement shall not be
deemed a waiver of such term, covenant, condition, restriction r agreement, nor shall any
waiver or relinquishment of any rights or powers under this Agree ! ent, at any one time or more
times, be deemed a waiver or relinquishment of such right or power 'at any other time or times.
14.6 Executive Director Implementation. Commis ion shall implement this
Agreement through its Executive Director. The Executive Dire =tor is hereby authorized by
Commission to enter into agreements referenced in this Agreem
implement this Agreement on behalf of Commission, issue approv
and enter into certain amendments to this Agreement on behalf of
any such action(s) does /do not materially or substantially chang
monetary obligations of Commission by more than Fifty Thous
aggregate. All other actions shall require the consideration and
governing body, unless expressly provided otherwise by action
body. Nothing in this Section 14.6 shall restrict the submission
body of any matter within the Executive Director's authority
Executive Director's sole and absolute discretion, to obtain the
express and specific authorization on such matter. The specific i
authorize certain actions on behalf of Commission by the Executi Director, but not to require
that such actions be taken by the Executive Director, without consideration by the Commission
governing body.
t or reasonably required to
is, interpretations or waivers
+mmission, to the extent that
the Project or increase the
d Dollars ($50,000) in the
pproval of the Commission
the Commission governing
the Commission governing
r er this Section 14.6, in the
mmission governing body's
ent of this Section 14.6 is to
14.7 Survival of Agreement. All of the provisions
applicable to any dispute between the Parties arising from this A
following expiration or termination of this Agreement, until an
completely resolved between the Parties, either by written settlem
judgment or expiration of all applicable statutory limitations perio
of this Agreement relating to dispute resolution and limitations
survive any expiration or termination of this Agreement.
14.8 Counterparts. This Agreement shall be signed in t
of which is deemed to be an original. This Agreement include
sixteen (16) exhibits (each exhibit is incorporated into this
constitute the entire understanding and Agreement of the Parties r
this Agreement.
14.9 Facsimile Signatures. Signatures delivered by f
originals upon the Party so signing and delivering; provided, how
of each Party shall be required for each document to be recorded.
65012.00207\2785768.12
[Signatures On Following Page]
70
11
• ,.1*
11
11
f this Agreement shall be
eement, whether prior to or
such dispute is finally and
t, entry of a non-appealable
and all terms and conditions
damages or remedies shall
(3) triplicate originals each
eventy-one (71) pages and
eement by reference) that
arding the subject matter of
imile shall be binding as
r, that original signature(s)
I
1
i
1
1
1
I I
I I
1
IN WITNESS WHEREOF, the Parties have signed this Agi.E..ement by and through the
signatures of their respective authorized representative(s) as follow: I
COMMISSION:
COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF
DOWNEY, a California public body, corporate
and politic
By:
Name:
Title:
ATTEST:
By:
Commission Secretary
APPROVED AS TO FORM:
Commission Counsel
SIGNATURE PAGE
TO
DISPOSITION AND DEVELOPMENT AGRE MENT
(Verizon Building)
65012.00207\2785768.12 71
DEVELOPER:
By:
Name:
Title:
1
1
1
1
1
NATIONAL COM.--31UNITY RENAISSANCE
OF CALIFORNIA, California non-profit
public benefit corporation
1
Richard J. Whittinaham. CPA
Chi F;lancial Officer
Note Regarding Exhibits: Exhibits to the agreement can be reviewed at the Downey
City Clerks Office or at the City of Downey Community Developitent Department.
1
ATTACHMENT D - 33433 SUMMARY REP'' �)RT
J
THE VIEW HOUSING PROJECT
DOWNEY, CALIFORNIA
October 22, 2010
•
SUMMARY REPORT CONCERNING THE DISPOZOTION
OF CERTAIN COMMISSION -OWNED PROPERTY VI ITHIN THE
FIRESTONE REDEVELOPMENT PROJECT AREA
1
(California Community Redevelopment Law)
Section 33433 1
PURSUANT TO A PROPOSED
DISPOSITION, DEVELOPMENT AND LOAN AGR EMENT
BETWEEN
THE DOWNEY COMMUNITY DEVELOPMENT CO MISSION
AND
NATIONAL COMMUNITY RENAISSANCE OF CA FORNIA
Downey Community Development Commis!ion
TABLE OF CONTENTS
Page
I. Introduction 1
II. Cost of the Agreement to the Commission • 2
III. Estimated Value of the Interests to be Conveyed at thei Highest & Best Use
Permitted Under The Redevelopment Plan
Attachment: RSG, Inc., October 18, 2010 Reuse Valuation Merrrandum Report
1
3
IV. Estimated Value of the Interests to be Conveyed Determined at the Use and with
the Conditions, Covenants and Development Cost Required ; the Agreement.. 3
1
V. Explanation of Why the Sale of the Property will Assist with tie Elimination of Blight
5
VI. Conformance with the Five Year Implementation Plan 6
I. INTRODUCTION
The Community Development Commission ("Commission") C City of Downey
("City") is considering the sale of a point five two (0.52) aoree_=niho ("Site") located in
the Firestone Redeveopment Project Area (Project ject Area" T:e Site is comprised of
two parcels of land, which includes a 16,919 square fed Commission-owned
property located at 8314 2nd Street (APN 6254 020 914), Old an adjacent 5,621
square feet parcel to be purchased by the Commission fn»n the City of Downey
(APN 6254 020 SO2). together with an air rights emnetient ("Parking Deck
Easement") above the zero point four eight (0.48) acres surfa parking lot ('Surface
Parcel") located across 2nd Street (APN 6254 019 800 & '901). This Summary
Report sets forth certain details of the proposed Dispouitibn and Development
Agreement ("Agreement") between the Commission and i National Community
Renaissance of California ("Developer").
�
The Agreement requires the Developer to use the subject "~tm for the design and
construction of a 50-unit affordable family apartment p ject. ! ihe Agreement allows
for two design opUone, one of which may be implemented dog ndent on whether: 1.)
the Deve|operrenek/es both a Infrastructure Improvement Gr
the State and an LA County/Industry Funds Loan on or befo
or 2.) the Developer receives only LA County/Industry Fu
provides for development of the Site with a subterranean par
residential units, while Design Option 2 provides onsite andi
residential tenants at the Parking Deck Site on the air rights
located above the Surface Parcel. Accordingly, under
Commission would convey the air rights the construction of
parking improvements on the Parking Deck Easement locofid above the Surface
Parcel, which is attendant to the construction of the Auxiiary Parking Oite, as
identified in the Parking Deck Easement Agreement.
The Commission-owned property consists of the fee interest i' the land together with
an existing 31.020 square foot buj>ding, which was acquire in June, 2008 using
Commission tax increment moneys. The adjacent City pmrue| consists of the fee
interest in the land currently improved for surface porking nwhioh would also be
acquired by th Commission usi tax increment moneys. Ile the Surface Parcel
owned by the City of Downey was acquired without C ks tax increment funds,
the Commission would purchase the Parking Deck Easement rom theQb/viam|oan
using tax increment dollars.
This Summary Report together with the attached Reuse |uadion Memorandum
Report prepared by the City's economic consultant, RSG, incorporated herein
by reference, is based on information contained within 1heAmm�ennent. and has been
prepared in compliance with Section 33433 of the ii;o(ifornim Community
Redevelopment Law (Health and Safety Code Section 33 OO et sea.). Section
33433 provides in part: "Before any property of the agency cquired in whote or in
part, directly or indirectly, with tax increment moneys sold or leased for
development pursuant to the redevelopment plan, such sal or lease shall first be
approved by the legislative body by resolution after public he ring." As contained in
the Code, the information in the Report shall include a summ which describes and
specifies all of the following:
1
1
nt ('IIG") funding from
November 30 2012;
s. Design Option 1
g structure below the
offsite parking for the
rking Deck Easement
-De i n Option 2 the
U
• The cost of the agreement to the Commission, ind!ding land acquisition
onshs, clearance costs, relocation ooshs, the costs of a y improvements to be
provided by the Connnnission, plus the expected int est on any loans or
bonds to finance the agreements;
• The estimated value of the interest to be conveyed nrmeased, determined at
the highest and best uses permitted under the F/ ^ tone Redevelopment
• The estimated value of the interests to be conveyed oheased, determined at
the use and with the conditions, covenants, and deve pment costs required
by the sale or lease, including an explanation of the reasons for any
difference if the sale price or total lease amount is le than the fair market
value of the interest to be conveyed; and
• An explanation of why the sale or lease of the pro erty will assist in the
elimination of blight.
U. COST OF THE AGREEMENT TO THE COMMISSION
1
The cost of the proposed Agreement to the Commission can bw either an actual onnt,
when expenditures exceed reoaipts, or a net gmin, when 'revenues created by
implementation of the Agreement exceed expenditures. The kiommisaion purchased
one property and will purchase an adjacent parcel for the 0urpnoe of developing
affordable housing. The Commission is } expected to inc costs to demolish the
existing stnuctuoo, clear the site, and pay certain p nt and miscellaneous
disposition costs. In addition, the Commission will pnov/dzi a loan to assist the
Developer in the construction of the Project.
The total cost of the Agreement to th� {Commission, ms vveU *s the net cost of the
project after consideration of the project revenues is detailed L..?.|ow.
Property Acquisition $1,481,775
Demolition
Pre- Development & Disposition Costs
Commission Cash Assistance
Total Project Cost (1)
Less:
Present Value of Commission Revenues (2)
NET COST TO COMMISSION
$661,034
$175,000
$3,450,000
( Source: Downey Community DevekupmontCommimd
(2) Estimated Net Present Value based on RSG discourM:d cash flow of payments
and repayment of Commission Loan over 55-year period.,
$709,000
$5,058,809
Notwithstanding the actions identified above, the Comnniision shall have no
responsibilities for the finenning, oonstrucdon, or opeodions the improvements
other those arising from its: (a) carrying out routine gnvermnnenta| functions; (b)
performing conventional activities of a lender; and (c) innpno)nt statutorily authorized
or required conditions accepted by the developer. Anyvreviaw or inspection
undertaken by the Commission with reference to the Oeve|usment is solely for the
purpose of determining whether the Developer is properly dio oqJing its obligations
to the Commission. �
III. ESTIMATED VALUE OF THE INTERE
AND BEST USE PERMITTED LINDER THE REDEVELOPME
Highest and Best Use
Highest and best use is defined by the appraisal industry | ao� |
• That reasonable and probable use that will auppnrtUhd
as of the effective date of the appraisal.
• Alternatively, that use, from among reasonably probab- and legal alternative
uaeo, found to be physically pnaoib|e, appropriately oupportad, financially
haao\b|e, and which results in the highest land value. 1
The highest and best use is generally determined through n*moideration of physical
characteristics of the oite, including size and shape, location including surrounding
uses freeway access economic considerations, and legal con Eid erat ions such as city
zoning. In this case, the Site is comprised of two parcels inc ding a 16,919 square
foot Commission Property with approximately 31.020 square i:cet of improvements in
fair to poor condition reflecting a significant amount ofdefenesl maintenonne, and an
adjacent 5,621 square foot City Parcel with surface parking iliprovements. The Site
is subject to zoning in the Downtown Specific Plan. The inter t to be conveyed also
includes the air rights easement located above the 21,00 square feet Surface
Parcel. The key factors for consideration in determining high t and best use are: 1)
the Site's zoning designation; 2) the adjoining land uses; nd, 3) current market
conditions. While, as an alternative, it may be legally per issible and physically
possible to develop the Site with affordable housing, it is no economically feasible
without pubic subsidy. Based these considerations, it w determined that the
highest and best use of the Site, as vacant, is for commercial, se, or for the property
as improved, for renovation of the existing improvements. For he Surface Parcel, the
highest and best use is commercial use.
Estimated Fair Market Value
AT THE HIGHEST
T PLAN
highest present value
Of the three generally accepted approaches used to eobab|i h the market value of
real esbaba, the market or comparison approach is favored 4:hen there is sufficient
data available since it is based on recent market sales ofeinniQzr properties. Analysis
of both highest and best land uses indicates a fairly close rsnge of market values.
Based on the highest and best use and comparable mark' o sale prices of similar
u
3
)
sites, the independent summary appraisal report prepared tw Russell Ni McCoy,
MAI, dated as of September 10, 2007,' identified the estimate6as-is market value for
the Commission Property at $1.550.000. This reflected the !estimated fair market
value of the Site at $136.87 per square foot in 2007, the y r before the property
was acquired by the Commission, which generally reflected c nditions at a height in
the Los Angeles area real estate market,
The current 2010 nnerket, however, indicates a substantial rosion of commercial
property values due to the economic downturn and oonatnaked financing markets
experienced both nationally and regionally. The economic do5inturn during the past
three-year period has seen unemployment rise from about a 96 level to over 12%,
while office vacancy levels have increased from 6.4% to over '4.6% in the mid-cities
submarket area of LA County. At the same time the financin
dramatically in terms of interest rates and debt cover ratio
rates for commercial properties have increased from a 5.5Y
while debt cover ratios have increased for about 1.1% to 1.2
factors have put substantial downward pressure on values fo
common to see properties that have experienced declines
from their former highs in 2007. which would suggest a curr
about $1.102.500 for the Commission Property based on it
condition. The Commission actually acquired the Commis
$1.0OO.00Oin June of2OO8.
Based on the highest and best use and comparable market
the current estimated market value for the City Parcel, as
identified to be about $140,525 or $25 per square foot of land
4
markets have moved
quirements. Interest
level to over 7.75%,
plus. The foregoing
office properties. It is
values of over 25%
�t fair market value of
limited use and as-is
ion-owned parcel for
rices for similar sites,
October 18, 3010. is
rea.
The fair market value for the air rights Parking Deck Eas
contemplated utility of the land as if it were clear an
improvements to its highest and best use. Based on marke
similar site the market value for the fee interest in the subjec
$25 per square foot. Air rights inha,eob;, however, generally- to constrain the
development of the underlying fee site. Thus the value ofthe air rights may be
reflected by the likely reduction in the value of the underlying fee interest based on
the potential impediment to developing the site to its h)gha t and best use. The
potential impact may range from between 42% to 80% Base the intensity
likely uses at the subject site an impact of 65% is assum which results in an
entinnotodvalue of$1O.25 per square foot o/mb�a/o[$341.2�O for the Parking Deck
EaoennenL 1
nent is based on the
vmnard, suitable for
comparable prices for
site is estimated to be
Based on the foregoing analysis the fair market value of the iterest to be conveyed
under Design Option 1, is estimated to be $1,481,775, and -13r Design Option 2, is
estimated to be about $1,644,275.
IV. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEY D DETERMINED AT
THE USE AND WITH THE CONDITIONS, COVENANTS, AN DEVELOPMENT
COSTS REQUIRED BY THE AGREEMENT �
The interests to be conveyed are the bundle of rights i with the proposed
sale or lease of the Site. The fair reuse value of the inter ts to be conveyed is
directly a function of the economics for the specific devel ment required to be
constructed under the terms and conditions of the Agreerrint, including but not
limited to the 55-year rent restrictions for lower income housriholds. The fair reuse
value can be determined through estimating the residual value of the interest to be
conveyed after deducting the costs associated with constucting the proposed
Project improvements.
The Commission has determined that the provision of afford
as provided in the Agreement offers an immediate opportu
supply of affordable housing in the community, while
deteriorating building in the Downtown Specific Plan area
Area of the Firestone Redevelopment Project Area. The proj
the near-term and it will maximize the site's ability to prov
moderate -income housing in the community. While the es ti
of the total consideration to be received by the Commis
$708.000 is Jess than the estimated highest and best use f
interest to be conveyed, it is not less than the estimated fair
use and with the oovenantn, conditions and development�
Agreement.
V. EXPLANATION OF WHY THE SALE OF THE PROPERTY
THE ELIMINATION OF BLIGHT
5
The developer's pro forma financial analysis, dated October 2010. presented a
financial analysis of the Project's economics, h)nh was revived and corroborated
by RSG, Inc., the Commission's independent economic consuiant, The Developer's
financial analysis is reflected in the Project Budget — Exhibit 1 t the Agreement. A
reuse valuation analysis was prepared by RSG, Inc., which cicIuded that given the
terms and conditions, including but not limited to, the inco and rent restrictions
by the Agreennen1and Lease, the interests to be has a negative
value of 44,999.999. This is reflected by the unfun��d balance of the total
development cost less amounts paid from: (a) the two Euot deed permanent
financings; (b) the tax credit proceeds; (c) the State UG'Gnant and/or the LA
County/Industry Loan; and (d) the deferred developer fee. The residual amount
serves to identify the estimated reuse value of the Site as -$4, 99.999. The negative
value is rounded to zero for purposes of the determining the air reuse value of the
interest to be conveyed.
I
Consideration Received and Comparison with the Established_diqhest and Best Use
•
The Implementation Plan for the Firestone Redevelopment �rue��. adopted by the
Commission in 2010, in accordance with Section 33490 ofths CRL, contains goals
and objectives and the p jectoondexpenditureoppopooedt e|in)inmtebUghtwdhin
the Project Area. These blighting factors include:
• The age, obsolescence, deterioration, mixed charac r, or shifting uses of
existing buildings;
1 n
��hami�apa�mens.
ity for expanding the
-UnninmUng a vacant
d within the Original
twiU be developed in
me additional low and
mh*d net present value
on in the amount of
ir market value of the
use value of $0 at the
osts required by the
LL ASSIST WITH
�
• The nubd��ingand sale of lots ofinegu|er form and enape. and inadequate
size, for proper usefulness and development;
• A prevalence of depreciated values and impaired i nts; and
• The defective design in character or physical condition buildings.
The Commission's redevelopment efforts have helped to alrviate many blighting
conditions in the Project Area. While not all of these cbnddiono are present
throughout the Firestone Redevelopment Project Aneo, i 1p|ementodon of the
Agreement can be expected to assist in alleviating blighting ionditions through the
following: 1
• Consolidation of smaller and irregular parcels into site appropriate for
development;
• Encourage new and continuing private investment in t
• Improve public facilities, open space, and utilities; and
Project Area;
• Expansion of the supply of affordable housing units forjJowney's very low-
income houneho|da.
VI. CONFORMANCE WITH THE FIVE YEAR IMPLEMENTATIO PLAN
The proposed Agreement is consistent with the Five-Year Implentation Plan in
meeting the objectves and goals in the folJowing ways:
•
lncrease the number of housing units for families at variou affordability levels
needed by the community;
• Revitalize formerly blighted area that consisted ofdi|opidod structures on
underutilized |cts
�
�
• W1ointainhigh quo(�vresidendo|dexelopnoontstandards `c-enaunathe
establishment of livable neighborhoods with lasting safety 'And aesthetic value;
and
• Assure that housing opportunities are available to all pers s without regard to
race, color, ancestry or national origin, religion, or marital atus.
6
GENT COMMUNITY DEVELOPMENT
Date: October 18, 2010
I. Summary Findings
]
ROSENOW SPEV EK P INC.
309 EET
SAO ORNIA
927
1,
1
TO: Mr. John Perfitt, Director
City of Downey Community Development C mission
FROM: R(}SENOVV8PEVACEK GROUP INC. NN
SUBJECT: REUSE VALUATION MEMORANDUM RE RT —
VIEW HOUSING PROJECT NN
�
�
~ Y
" °
Salient findings of RSG's valuation analysis are summarized as fcgows:
• The e�ma�dcumo��irmo��value of�ein��s�hoU�co at its
highest and best use value io$1.481.775 for Design Optima1. and 81.844.275
for Design Option 2. �|
_..^a
�m'*°��.
,� �
, `,
•
I -13•(
m a�`�'p`
~,^•
Rosenow Spevacek Group, Inc. (^RSG") was hired to review Mh�mproposed ("Agreement") between the apowney Community
and Development Agreement Development Commission ("Commission") and National Comrainity Renaissance of
California ("Developer") for the development of fifty (50) afford -- e family apartments,
and to prepare a reuse valuation for the proposed sale of Commi on-owned property in
accordance with the requirements of Section 33433 of the alifornia Community
Redevelopment Law (("CRL")(Health and Safety Code Section 33L- 0 et seq.)).
The purpose of this Reuse Valuation Memorandum Report is to �.afonn the Commission
the public about the proposed transaction under the Aonenn»nt and assist in
hu0Uingthe requinennentounde CRL Section 33433, which i inpa�: "Before any
property of the agency acquired in whole or in part, directly indirectly, with tax
increment moneys is sold or leased for development pursuant the redevelopment p|an.suchsm|eor|eoneohaUUrx*beapprovedhy(he/egisloUve'-dybvn*so|utionmfter
public hearing." This Repo�aunnnnnrizes: theppoposedtnansecb� .mndenoribedintha
draft Agreement; Agn*emnnt; identifies the estimated current fair market val of the Site together
with an air rights easennent. which collectively reflect the intenae��to be conveyed; and
provides an economic analysis of the Aopemnnen1 terms and itions is presented in
order tojdenUfv the estimated fair reuse value of the interests to*'conveyed.
Kr, John Perfitt
DOWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 2
• The estimated fair reuse value of the interests to be conve d at the use and
with the covenants and conditions and development costs uthorized by the
Agreement is -$4,999.999, which is rounded to $0 for pu of identifying the
Site's Fair Reuse Value.
• The estimated total net present value of the total con
the Commission is $709,000, which while ower than the f market value, is not
less than the fair reuse value of the site.
11. Summary of the Agreement
The proposed Agreement between the Commission and Deve|oparconoenns the sale of
Commission-owned pnoperty, together with an air rights easemext for the development
and operation of an affordable housing p jent.
The Agreement requires the Developer to use the subject Sib for the design and
construction of a 50-unit affordable bamily apartment pmec Th Agreement allows 8or
two design options, one of which may be implemented depend t on whether: 1.) the
Developer receives both a Infrastructure Improvement Grant ( IG") funding from the
State and funds form the LA County/Industry Housing Program or before November
30, 2012; or 2.) the Developer receives only LA County/Indust HAP Funds. Design
Option 1 provides for development of the Site with a subterra lean parking structure
below the residential units, while Design Option 2 provides ffsite parking for the
residential tenants at the Parking Deck Site on the air rights P;rhing Deck Easement
located above the Surface Parcel. Accordingly, under Design (]a\on 2 the Commission
would convey the air rights easement to allow the construction o parking improvements
on the Parking Deck Site located above the Surface Parcel. �
The Site
The subject property consists of ap imately zero point fivi two (0.52) acres or
approximately 22,540 square feet of land located at 8314 2nq Street in the City of
Downey, Los Angeles County, California (the "Site"). The Ghi= is comprised of two
parcels of land, which includes an approximately 16,919 square fuiot property (APN 6254
020 914) acquired by the Commission in June, 2008 /~Cummis& Pvopedy^\, and an
adjacent 5.621 square foot parcel (APN 6254 020 002) tc.:-.= be acquired by the
Commission from the City of Downey ("City Parcel"). The Comnnims)on Property includes
an existing 31,020 square foot vacant commercial building that quires demolition and
clearance, while the City Parcel is improved as a surface public arking lot. In addition,
pursuant to Design Option 2, an approximately 21,000 square f et air rights easement
located above the Surface Parcel (APN 6254 019 005 & 006) wo Id be conveyed by the
Commission to the Developer for construction offsite parking f the project's tenants
and visitors.
Mr, John Perfitt
DOWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 3
A complete legal description and map of the Site are attached to the Agreement as
Exhibits A and B Respectively.
The Agreement requires the Developer to construct and operati a fifty unit affordable
family rental housing project ("Project'). As described in \heAgre�nnent. the Project will
consist of thirty-five (35) two-bedroom units and fifteen (15)threw~bedroonn units. The
Agreement requires the P jeottobesubiecthzthefo|\owingaffoqebi|dvondocoupenny
restrictons as defined by current Californian RedevelnpnnentLovv:8
N
• Two (2) two-bedroom units and three (3) three-bedroom unitsi the Project shall be
made available to and occupied by extremely low-income hn,oeho|dovvith incomes
at or below thirty percent (30%) of the area median income; |
• Eight (8) two-bedroom units in the Project shall be made ev mb/etoandocnupied
by lower-income households with incomes at or below 501 of the area median
income.
• Twenty five (25) two-bedroom units and eleven (11) thnaeybedroonn units in the
Project shall be made available to and occupied by modansht income with incomes
at or below one hundred ten percent(110%) ofthe area medii income;
• One (1) three-bedroom unit will be available for designation s the manager's unit,
the manager's unit will not be subject to affordability restrictio
All public improvements necessary for the development of the P ject, such as on- and
off-site improvements including sdreehs, nurbo, aidevvo/ks, storm rains, gutter, uti|itieo,
etc. will be included. The Developer is required to complete he Project within the
timeframe established in the Agreement.
Proiect Financing
The assumptions contained herein were reviewed and correDorated by RSG, the
Commission's independent economic consultant.
The Project is contingent on the Developer's plans to obtain nine ercent (9%) tax credit
equity financing and capital contributions from limited partners t be admitted into a tax
credit limited partnership. The Developer must allow secure a onventional mortgage
loan to provide permanent financing for the Project. Tax credit uity financing is to be
used solely to finance the development of affordable housin, units. The Developer
expeoSthotMhesomOftaxnreddswjUprovideapproximat8|y81O
be expended on construction of the Project.
The Developer is to obtain a conventional permanent financing fir..t deed of trust loan for
$1.980.000. which has been determined to be the available det.iomount based on the
net operating income produced by the development with tfe fifty-five year rent
restrictions in place. The Commission and Developer expect n further leverage the
Mr, John Perfitt
DOWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 4
Commission's financing assistance with an approximately $2,87 grant from State
of California Infrastructure Improvement Grant (^||G^) program In addition, the
Developer is required to apply for an Affordable Housing Program oan from the Federal
Home Loan Bank of San Francisco. �
The Commission will convey the Site to the Developer for the amunt of$1/481.775mnd
an amount not to exceed $3,450,000 in cash to assist in the conitruction of the p jmoL
The total Commission Loan not to exceed $5.094.275 is to be fu d using $450,000 in
City HOME Funds, $3.000.000 in Low and Moderate Income Housing Funds, and
$1.844.275 reflecting the land value for the Site.
The Commission Loan will be provided through a Promissory ote (Exhibit G to the
Agreement) secured by a Deed of T (Exhibit H to the Ag will
make payments on the Commission Loan equal about h percent (3696) of the
Residual Reoei[ts, if any, on an annual basis for each of the fifb/ ive years following the
Certificate of Occupancy for the Project. All accrued interest mrtd the unpaid principal
amount of the Note will be due after the 55th year.
The estimated total p ject financing sources is detailed in the foll wing:
First Trust Deed Loan $1.88O.000
Tax Credit Investor Equity $10.850.000
Commission Loan Proceeds $ 3,450,000
LA County/Industry Loan $ 676,278
Commission Land $1.550.000
State IIG Funds $ 2,877,700
Deferred Developer Fee $ 387.788
TOTAL DEVELOPMENT COST $21
Land Conveyance and Escrow
m
The Agreement obligates the Commission to convey the fee inteirest for the Site to the
Developer together with an air rights easement over the Pmrkir0 Parcel (the "Parking
Deck Easement") subject to certain specified terms and conditior.. The Developer shall
pay the cost of title ineunance, transfer hyx, title company pooumen1 pnaporation,
recordation fees and the escrow fees of the title company, if y, and any additional
costs todose the escrow, �
Mr. John Perfitt
DDWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 5
Condition of the Site
The Commission makes no representation or warranty to De
condition or suitability of the Site or Parking Deck Easement f
development by Developer. Without limiting the foregoing, C
representations or warranties as to whether the Site and air rig
complies with environmental laws or whether the site co
oubstanno, except required by law. Developer shall have the h
make such investigations, as Developer deems necessary.
r any information regarding the physical conddionof the
Easement known by the Commission to exist in its files within t
within the Agreement. Developer shall rely solely and exclusivel
own due diligence investigations of the Site and Parking Deck Eainem*nt with regard to
any physical condition or state of the Site.
Use Covenants
The Developer oovenants to operate the Project as affordable r
income tenanto, pursuant to California Redevelopment Law, for
The Developer is permitted to reserve one (1) unit for a naa\den1
not be income restricted. Thirteen (13) units will be restricted to
households, and thirty six (36) units wiII be restricted to moderate
Maintenance Covenants
The Agreement requires that the Developer maintain the Project
from any accumulation of debris or waste material. The |
accordance with the scope of dexe|opmnnt, shall be mainto)
healthy and good condition.
Prohibition Against Transfer
The Agreement prohibits any voluntary or involuntary oucce
Developer from acquiring any rights or powers under the A
issuance of the Certificate of Completion for the Project, without
Commission. The Agreement may be terminated by Cornnnissic
escrow if there is any material change, whether voluntary or invo
ownership, management or control of the generat partner of Dev€
approved by Commission prior to such change.
Obligation to Refrain from Discrimination
"
The Developer covenants that there shall be no discrimination al..ainst or segregation of
any person or group of persons on account of race, color, cre , religion, sex, marital
loper relating to the
any intended use or
mmission makes no
s easement presently
ains any hazardous
ht, at its sole cost, to
mmission shall give
ite and Parking Deck
e timeframe specified
.upon the results of its
ntal housing for lower
ot less than 55 years.
manager; this unit will
wer income or below
come households.
a good condition free
dncaping, planted in
d in a neat, nndndy,
sor-in-interest to the
noenn*nt, prior to the
writb*n approval of the
� prior to the close of
�ntary' in membership,
per that has not been
Mr. John Perfitt
DOWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 6
atatuu, national origin or ancestry in the sale, keoae, subleose, tra
tenure or enjoyment of the Site. The anti-discrimination covenant
and remain in effect in perpetuity.
Insurance
Developer is required to maintain public indemnity and general I ility insurance in the
amount of $2 million combined single limit, naming Commis and the City as
additional insureds. In addition, Developer shall provide to Com sion adequate proof
of comprehensive automobile liability insurance covering nwned'llnn-owned and hired
xehic|ea, combined single limit in the amount of $2 mi||ion. Oeve|mer is also required to
maintain Worker's Compensation insurance as required by Califorma law.
Fees and Permits
The Developer is responsible to pay the cost of all fees and per
or any other governmental agency or entity having jurisdiction o
Project. All necessary permits must be secured prior to cornnnen.
Project.
Indemnity
The Agreement requires that the Developer deN»nd, indemnify d hold harmless the
Commission and the City against any liability, loss, damage • expenae, other than
Iiabilities caused by actions of the City and Commission.
Applicable Law: Prevailing Wages
Developer shall construct the Project and the public improvemen
applicable laws, including all applicable State of California
requirements. It is the responsibility of Developer to obtain a
Developer's sole cost and expense, as to whether prevailing
during the construction of the Project on the Property. In the ev
pay prevailing wuagea. Developer agrees to keep all necess
accordance with State of California law. Developer agrees to pa
wage requirements to any and all subcontractors hired by
applicable. Developer indemnifies the Commission and City fro
of or related to Developer's failure to comply with any and all ap
requirements or to require its subcontractors to comply with
prevailing wage requirements.
a �
n
fe[ use, occupancy,
will run with the land
required the
r construction of the
goonatnucUonofthe
�cnnfonn�vvvhhall
labor standards and
gal determination, at
ea must be paid for
that Developer must
related records in
through aUprevailing
eloper if and when
� ny liability arising out
able prevailing wage
y and all applicable
Mr. John Perfitt
OOWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 7
Commission Responsibilities
Notwithstanding the actions identified ebove, the Commi ion shall have no
responsibilities for the financjn0, oonotruction, or operations ofU�� improvements other
those arising from its: (a) carrying out routine governmental fuwationu; (b) performing
conventional activities of a lender; and (c) imposing statutorily ;uthorized or required
conditions accepted by the developer. Any review or inspect undertaken by the
Commission with reharennm to the ��v�|opmant iu mo|o|y for the urpose of determining
whether the Developer is properly discharging its ob/igmUonstoth�Commission.
Developer Responsibilities
III. Cost of the Agreement to the Commission
Property Acauisition
Relocation Assistance
The Commission has incurred no relocaton costs for the Site.
•
In addition to the Developer's responsibilities identified above, ��e Developer shall be
responsible for obtaining all Project entitlements and approvals
to construct the Project and be responsible for satisfying all con itions of approval and
mitigation measures at its sole cost and expense. Develo - is responsible for
coordinating and scheduling the work to be performed so that t14 commencement and
completion of construction will take place in accordance with the Azireennend.
This section identifies the total cost of the Agreement to the Conrnineion, as well as the
net cost of the project after consideration of the project revenue The net cost can be
either an actual oom1, when expenditures exceed neneipts, or a net, gmin, when revenues
created by implementation of the Agreement exceed expenddur). The total estimated
costs to the Commission include the following: •
The Commission's cost for acquiring the Site through the aoquJdon of the 0.39 acre
parcel in June, 2008 was $1,000,000. The Commission expecti to purchase the 0.13
acre City Parcel for an amount of $140,525 to complete the /a:1 assemblage for the
Site. |n addition, pursuant tu Design Option 2 the Commission nna� purchase the Parking
Deck Easement for on amount of$341.25U. All of the property in rest acquired or to be
acquired by the Commission will be funded with Low- and K8 rate-Income Housing
Fund (LMIHF") moneys set-aside exclusively for the developmen of affordable housing.
Mr. John Perfitt
DDVVNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 8
Demolition
The Commission expects to spend about $801.034 for den� |hb and site clearance related expenditures on the Site to be paid from a portion the City's Federal
Neighborhood Stabilization Program (^N.S.P.^)funds. TheConnuNissinn is not required
to perform any additional site work,
Public Improvements
The Commission is not required to construct any public innpnovelienbs required for the
Miscellaneous Pre-Development and DisDosition Costs
�
The Commission will spend about $175.000 for costs oesooiohs�= U wi{h pre-development
costs for the Project and related costs for the Site's disposition.
Commission Loan
The Agreement obligates the Commission to convey the fee intirest to the Site 10 the
Developer and provide a cash amount not to exceed Three Mill 2n Four Hundred Fifty
Thousand Dollars ($3.450.000). The fee interest to the Site t Aedher with the cash
amount will be provided as a Commission Loan in the amount no!to exceed Five Million
and Ninety Thousand Two Hundred Seventy Five $ 02 ) t 3% simple interest;
under the terms of a promissory note secured by a leasehold decd of trust. The loan is
to be repaid from residual receipts from the operation of the Pr j t commencing on the
fimtMay 1st occurring after the improvements are completed.
Bond Financing and Interest Costs
The Commission did not expend any proceeds in acquiring the Site.
therefore, the Commission has not accrued any interest expense.
Total Cost to Commission
The total cos to the Commission is detailed below:
Property Acquisition Amount $1
Site Demolition $ 661,
Pre Development & Disposition Costs $175,
Commission Cash Loan Amount $3.450.
Total Cost $5,767,
5
4
0
0
Mr. John Perftt
DOWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW F-IOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 9
Revenues to the Commission
Net Cost to the Commission
Highest and Best Use
The highest and best use is generally determined through co
characteristics of the 8ihe, including size and shape, location inch
freeway access economic considerations, and legal ounsideodio
In this Gase, the Site is zoned DP (Downtown Plan), which allows
acre parcel. In determining the highest and best use the key f
are 1) the Site's zoning designation, 2) the adjoining land uses,
Fair Market Value
The Agreement provides revenues from the P ject's residual reclipts payments for the
repayment of principal and acGrued interest for the Commission L'-an during the
(55) year term of the affordability restrictions. While the repaynvant of the Commission
Loan may be accelerated by participation in future sale and nafimanoing of the Project
during the term of the Commission Loan, is it difficult to project 1,-hen such events may
occur. The present value of the residual receipts loan payme s to the Commission
during the 55-year term at the end of the term are estimated $709.000. which
reflects the total estimated net consideration to be paid to t Commission. It is
expected that the P �aotw\||beex�mptfrompnope�y�oxeo.�hed� fore no tax innnennont
� ^ Q
rex�nu�ispnU*otedtooccur.
The present value of the Commission's aggregate cost is estirmAted to be $5,767,809,
while the present value of Commission residual receipts reven l es and the reversion
value of the property at the end of the fifty-five (55) year per d is estimated to be
$709,000. As a result, the net cost to the Commission is estimate to be $5,058,809.
IV. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEY D
sideration of physical
ing surrounding uses
s such as city zoning.
ffice use for the 0.26-
tors for consideration
and 3) current market
conditions. VVhik*, as an altenncdive, it may be legally pernvuaibka and physically
possible to develop the Site with affordable houaing, it onnioally feasible
without pubic subsidy, as is corroborated by the re-use analysis 'a|ow. Based on these
considerations, it was determined that the highest and best mam of the Site is for
continued commercial uses on the 16,919 square-foot parcel norisiotentwith the zoning.
For the Parking ParGeI, the highest and best use is also commerGiI use.
,
Of the three generally accepted approaches used to establish t market value of real
estate, the Market or Comparison Approach is favored when iIan* is sufficient data
available since it is based on recent market sales of similar pnop*rtieu. Analysis of both
highest and best land uses indiGates a fairly Giose range of marke values. Based on the
highest and best use and comparable market sale prices of similar sitno, the
independent market valuation prepared by Russell dated as of
Septennber0. 2007, identified the estimated market value Property in its as-is
condition at $1.550.000. This reflected the estimated fair marke value of the 0.26-acre
Mr. John Perfitt
DOWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 10
Site at $136.87 per square foot in 2007, one year before the pr
the Commission, which generally reflected conditions at the hei
area real estate market.
The current 2010 marhet, hovvever, indicates a substantial
property values due to the economic downturn and constra
experienced both nationally and regionally. The economic dov
three-year period has seen unemployment rise from about a 6% I el to over 12%, while
office vacancy levels have increased from 6.4% to over 14 in the mid-cities
submarket area of LA County. At the same time the finanoingUnnarketn have moved
dramatically in terms of interest rates and debt cover ratio requim*ment. Interest rates
have increased from a 5.5% level to over 7.75%, while debt cove ratios have increased
for about 1.196 to 1.2% plus. The foregoing factors have put downward
pressure on values for office properties. It is common to se
experienced declines in values of over 25% from their former high'
suggest a current fair market value of $1,162,500 based on its li
as if vacant. The Commission actually purchased the C
$1,000,000. And the current market value for the City Parcel is
($25 per square foot) based on market comparables for similar pr
The fair market value for the air rights Parking Deck Ease rd is based on the
contemplated utility of the land as if it were clear and vacand, nui@ab|e for improvements
to its highest and best use. Based on market comparable pricis for similar nde, the
market value for the fee interest in the subject site is estimated to be $25 per square
foot. Air rights, hnweve/. generally serve to constrain the develoirnent of the underlying
fee interest of the site. Thus the value of the air rights may belreflected by the likely
reduction in the value of the underlying fee interest based on the r 6otential impediment to
developing the site to its highest and best use. The potential i�
between 42% to 80%. Based on the low intensity of likely use
impact of 65% is assumed, which results in an estimated value of
orm total of$341.250 for the Parking Deck Easement.
Based on the foregoing analysis the fair market value of the irerest to be conveyed
under Design Option 1, is estimated to be $1,481,775 and undwr Design Option 2, is
estimated to be about $1,644,275.
Fair Reuse Value
Under the CRL, a primary goo|(andrequi of the Commis
development of affordable housing units within the community.
Site is directly a function of the development economics for th .
required to be constructed under the terms and conditions of th
but not limited to, the 55-year rent restrictions for very |ow-,
income households. The reuse value of the Site can be determi
the residual value of the Site after deducting the costs on000iate
improvements from the available funding amounts.
l
�
erty was acquired by
t of the Los Angeles
osion of commercial
ed financing market
turn during the past
properties that have
in 2007. which would
ted use and condition
nmission Parcel for
stimated at $140,525
erties.
pact may range from
at the subject site an
16.25 per square foot
)n is to provide for the
he reuse value of the
specific development
Agreement including,
nwer-, and mod*rob*
edthpoughentinnating
with constructing the
Mr. John Perfitt
DOWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 11
The developer's pro forma analysis, dated October 20, 2010, prceenbedafinancial pro
forma of the Project's econnnnioa, which was reviewed and onrr borated by RSG, the
Commission's independent economic consultant. The financial p«`forma is provided in
the Project Budget, Exhibit | to the Agreement. The pro forma ocsc|uded that given the
terms and conditions inu/uding, but not limited hu, the inoonnE-.=_-- and rent restrictions
required by the Agreement, the Project Site has a -$54,999,999 r0adve residual value.
This is reflected in the reuse valuation analysis below by the upnunded balance of the
total development cost less amounts paid from: (a) the trust deed inancin8 loans; (b) the
tax credit proceeds; (c) the LA County/Industry funding the deferred
developer fee. Thenegabvevalueof'$4.889.888vvasuoedtod ermine thaomountof
the Commission Loan, which was sized to close the gap between e negative value and
the total development costs. N
V. Reuse Valuation Analysis
.
���
The following reuse valuation analysis was prepared "a"�~ on the economic
assumptions presented by the developer and corroborated by RSc.
Land 1,481.775
Direct Costs 18.171.0941
Architectural and Permits & Fees 1.515.000
Indirect Costs/Legal 280.7501
Financing & Other Soft Costs 847.363\
Reserve Funds 188.1851
Developer Fee 1.400.0001
Total Project Cost 821.891.776
/
Estimated Operating Income
Potential annual rents reflect the sub-market rents required 9hnder the Agreement
together with other miscellaneous income (laundry, etc.). While = can be expected that |-
the actual occupancy of the project will be fairly high, the tax cpe0it program and lender
requirements will require a 95% occupancy factor to be opp|iet! before deducting for
operating expenses. The developer's estimated operating expenes are $5,496 per unit
(including reserves for nap|acament), which are deemed to be i « n industry standards.
The estimated revenues and operating expenses are sunnmohzeuan follows:
Estimated Proiec Costs
The following identifies the total estimated project costs.
Gross Potential Income
Less: 5% Vacancy
Adjusted Gross Income
503.283
25,164
478.119
1
Mr. John Perfitt
DOWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSING PROJECT REUSE VALUATION
October 18, 2010
Page 12
Less: Est, Operating Expenses
Replacement Reserves
Net Operating Income (NOl)
Estimated First Trust Deed Financing Loan
The maximum first trust deed conventional 30-year permanent fi
calculated on the basis of a 1.2 debt cover ratio applied to
determine the amount available to fund the permanent loan fin4
1.2 = $108.405) Using the available funds to calculate the maxir
7.65% interest, 30-year amortized loan the estimated permanent
is approximately $1.88D.00O
Estimated Countv/Industrv Housing Program Loan
The County of Los Angeles/Industry Housing Program funding ill generate additional
conventional financing for the Project. Under Design Option 1, th County/Industry HAP
loan is estimated to be $676,278, while under Design Option 2, he Industry funds are
estimated to be $2,000,000. The higher amount available under ption 2 is attributed to
the absence of the State IIG program funding.
Estimated Tax Credit Investor Funding
257.333
17.5UUi
$203.280
N
N
amcin0 loan amount is
he estimated NO/ to
icing (i.e., $203,286 /
um loan amount for a
inonuin8 loan amount
The developer expects to seek and receive federal 9% low-i housing tax credits
('LIHTC") to assist in funding the affordable housing units. Th tax credit program is
administered by the California Tax Credit Allocation Cnnonnitee (^TCAC^), which
prepares applicable regulations and criteria for awarding the cRedits. Based on the
current regulatory ohteria, the proposed project is eligible for n�d may be awarded a
maximum of about $14,601,678 in federal tax credits. The tax (edits are expected to
yield about $0 .75 in proceeds from �ex credit which which r1ts in approximately
$10.850.000 in tax credit funding available for the project.
Estimated Residual Value of Project
As identified previously, the residual value of the project is reVcted by the unfunded
balance of total development cost less amounts paid hnmz (a) the permanent
financing(s); (b) the tax credit proceeds; and (c) the deferred dmvw|operfee and/or other
funding nenounoes, if any. The following summarizes the mntinno1 residual value of the
improvements.
Estimated Total Project Cost
Less:
First Trust Deed Loan
21,891,77E
1.88O.00Gi
Mr. John Perfitt
DOWNEY COMMUNITY DEVELOPMENT COMMISSION
VIEW HOUSNG PROJECT REUSE VALUATION
October 18, 2010
Page 13
Estimated Fair Reuse Value
Tax Credit Investor Proceeds
LA County/Industry Assistance
State IIG Grant Funds
Deferred Developer Fee
Unfunded Balance
10,950,00
676,27
2,877,70
397,79
$4,999,99
The unfunded balance reflects the locally funded public financi assistance needed to
make the affordable housing project financially feasibl i h ovenants, nnnditions.
and development cost of the proposed Project under the Agreemt.
The estimated unfunded balance reflects the funding gap amou
project innprovemenbs, or a negative residual value of -$4,999,9
��
to identify the estimated fair reuse value of the interest to w
Aon*ement, as reflected by the total value of the funding resour
total cost of developing the Project (i.e. $16,960,000 - $21.891.7
negative value is rounded to zero for purposes of the fair reuo-
be conveyed.
VI. Comparison of Consideration Received with the EetabU
Use
The Commission has determined that the provision of affordabl
provided in the Agreement offers an immediate opportunity for
affordable housing in the community. The project vvU/ be develo
it will maximize the site's ability to provide additional affordable
net present value of the consideration to be received by the Co
of $709,000 is less than the highest and best use fair nnorket
exceeds the reuse value of the site asidenUOedabove.
1 1
J
=
g6
U
1
u
needed to finance the
. This announdoemes
conveyed under the
s available minus the
= -$4,999,999). The
alue of the interest to
ed Highest and Best
family apartments, as
panding the supply of
• in the near term and
using. While the total
mission in the amount
lue of the Property, it
ATTACHMENT E - 33433 RESOLUTIO
11
II
1
I
•
•
J
1
A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF DOWNEY APPROVING A DISPOSITION /IND DEVELOPMENT
AGREEMENT BE EEN THE DOWNEY COMMUNI - Y DEVELOPMENT
COMMISSION AND NATIONAL COMMUNITY LENAISSANCE OF
CALIFORNIA AND APPROVING THE CONVEYANCE DF CERTAIN REAL
PROPERTY (ASSESSOR'S PARCEL NO. 6254-020- 14) AND MAKING
CERTAIN FINDINGS REQUIRED BY LAW 1
RESOLUTION NO.
WHEREAS, pursuant to the provisions of the California Cc,41munity Redevelopment Law
T
(California Health and Safety Code Section 33000 et seq.) (" L"), the City Council ("City
Council") of the City of Downey ("City") approved and adopted th Redevelopment Plan for the
Firestone Redevelopment Project Area ("Redevelopment Plan"), -, ich is applicable to a certain
geographic area within the City ("Project Area"); and 1
WHEREAS, the Community Development Commissiai of the City of Downey
("Commission") is engaged in activities necessary to e)cute and implement the
Redevelopment Plan; and
I
WHEREAS, the Commission owns a parcel of real propert within the City that is located
within the Project Area, consisting of approximately .39 acres o 16,919 square feet with the
street address of 8314 2nd Street, and identified as Assessor arcel Number 6254-020-914
("Commission Property"); and 1
WHEREAS, the Commission and National Communibl Renaissance of California
("Developer") have negotiated the terms of an agreement entitled isposition and Development
Agreement ("Agreement") providing for, among other things, the tjansfer by the Commission of
the Commission Property to Developer and Developer's redev lopment of the Commission
Property as forty-nine (49) affordable workforce residential rentarunits and one (1) manager's
unit in a six-story building with subterranean parking ("Project"); arq
WHEREAS, the Commission has determined that implem of the Agreement: (1)
is in the best interests of the City and the Commission and the he Ah, safety and welfare of the
City's taxpayers and residents and is in accordance with the pudlic purposes set forth in the
Redevelopment Plan and CRL; (2) strengthens the City's land us and social structure; and (3)
will assist in eliminating physical blight in the City; and
WHEREAS, the Commission desires to assist in the d
providing financial assistance in the form of a subordinate financ
exceed Four Million Four Hundred Fifty Thousand Dollars ($4,450,
upon value of the Property in the amount of One Million Dollars (
Four Hundred Fifty Thousand Dollars ($3,450,000) cash, for ce
development expenses associated with the Project ("Commission
WHEREAS, the Commission's participation in the Project iis limited to: (1) carrying out
routine government functions; (2) performing conventional ac' vities of a lender; and (3)
imposing statutorily authorized conditions of assistance accepted t the Developer; and
WHEREAS, the Developer's construction and operation of he Project are not financially
feasible without the Commission's assistance. In order to assi t in the construction of the
development on the Commission Property, Commission desires b the Agreement to provide
elopment of the Project by
g loan in the amount not to
)00), consisting of the agreed
1,000,000) plus Three Million
ain property acquisition and
oan"); and
RESOLUTION NO.
PAGE 0
for: (1) the transfer of the Commission Property to Developer; (7) the Commission Loan from
Commission to Developer; (3) a restrictive covenant to run with time land for fifty-five (55) years
providing that at forty nine (49) of the housing units shall be availaile to Qualified Households at
an affordable rent, as further defined in the Agreement. The am t unt of the Commission Loan
provided pursuant to this Agreement does not exceed the 41 ount of the Commission's
assistance necessary to make the Developer's acquisition of the 'roperty and the construction
and operation of the Project, as restricted by the Agreement, finanfially feasible; and
WHEREAS, the Commission intends to apply the ho sing units to be developed
pursuant to this Agreement towards satisfaction of the statutorily mandated affordable housing
production requirements for the Project Area under CRL Section r413 (b)(2); and
WHEREAS, pursuant to CRL Section 33433 the City Col cil of the City (acting as the
Commission's legislative body) must, following a public hearin , make certain findings and
determinations in connection with Commission's sale of the C(immission Property that was
acquired with Commission tax increment revenue; and
WHEREAS, pursuant to CRL Section 33433, the Commi;sion has prepared, and the
City Council has reviewed and considered, a Real Property Disposition Summary Report
("Summary Report") setting forth: (1) the cost of the Agreeme
estimated value of the interest in the Commission Property to be
and best use and with the covenants, conditions, and requirem
explanation of how the conveyance of the Commission Property
blight within the Project Area and provision of workforce housing
(4) a copy of the Agreement. The Commission has made the
public inspection in accordance with CRL Section 33433; and
•
•
to the Commission; (2) the
onveyed, both at its highest
ts of the Agreement; (3) an
ill assist in the elimination of
r lower income persons; and
ummary Report available for
WHEREAS, pursuant to the California Environmental O ality Act, Public Resources
Code Sections 21000 et seq. ("CEQA"), and the State's CEQA uidelines (Title14 California
Code of Regulations Sections 15000, et. seq.), the City is the i lead Agency concerning the
Project and has filed a Notice of Exemption for the Project becc it is categorically exempt
from CEQA, pursuant to CEQA Guidelines Section 15194, Affordable Housing Exemption; and
i
WHEREAS, pursuant to Government Code Section 65402 the City has determined that
the location, purpose, extent and development of the Project on t Commission Property are in
conformance with the City's General Plan; and
WHEREAS, pursuant to CRL Sections 33431 and 33433,•on October 21 and 28, 2010
the Commission caused notice of the a joint public hearing of the City Council and the
Commission's Governing Board to be published in a newspaper o I general circulation within the
City; and
WHEREAS, pursuant to CRL Sections 33431 and 33433, n November 9, 2010 the City
Council and the Commission's Governing Board held a duly :noticed joint public hearing
regarding the proposed Agreement; and
WHEREAS, all other legal prerequisites to the adopt bn of this Resolution have
occurred.
RESOLUTION NO.
PAGE THREE
THE BOARD OF THE COMMUNITY DEVELOPMENT CCI1MISSION OF THE CITY OF
DOWNEY HEREBY RESOLVE AS FOLLOWS:
Section 1. The recitals of facts set forth above are true and correct and are incorporated into
this Resolution by this reference.
Section 2.
The Commission finds and determines, based on tie information made available
in the Summary Report, the staff report accompai..lying this Resolution, the oral
presentation of staff, and the other written and o I evidence presented to the
I
Commission at or prior to the public hearing re arding the Agreement, that,
pursuant to CRL Section 33433: .
(i)
The conveyance of the Commission Propety by the Commission to the
Developer will assist in the elimination el blight by removing the old
structure on the Commission Property aril providing affordable rental
workforce housing for lower income person and
(ii) The disposition of the Commission Pro erty is consistent with the
Implementation Plan adopted by the Comjnission for the Project Area;
and
(iii) The consideration to the Commission for at transfer of the Commission
Property to the Developer is not less thai the fair reuse value of the
Commission Property with the covenants,l,conditions and development
costs authorized by the sale.
Section 3. There have been no changes in the Project follow g the City's filing a Notice of
Exemption that would require any additional enviro mental review under CEQA.
Section 4. The Commission approves of entering into the jjreement in substantially the
form presented to the Commission and attached o the Summary Report, with
such changes and amendments as may be apprcied by both the Commission
Executive Director and Commission Counsel. pecifically, the Commission
approves of selling the Commission Property to t e Developer pursuant to the
terms and conditions of the Agreement.
Section 5. This Resolution shall take effect immediately upon is adoption.
ATTEST:
APPROVED AND ADOPTED this day of , 2010.
1
ANNE M. BAY R, Mayor
r
KATHLEEN L. MIDSTOKKE, City Clerk
RESOLUTION NO.
PAGE FOUR
AYES: Council Members:
NOES: Council Member:
ABSENT: Council Member:
ABSTAIN: Council Member:
I HEREBY CERTIFY that the foregoing Resolution was ad pted by the City Council of
the City of Downey at a regular meeting held on the day of , 2010, by the
following vote, to wit:
KATHLEEN L MIDSTOKKE, City Clerk
1