Resolution No. 2014-005RESOLUTION NO. 2014-05
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION OF
DOCUMENTS RELATING TO THE FINANCING OF THE META
HOUSING CORPORATION HOUSING DEVELOPMENT
WHEREAS, the City Council of the City of Vernon has adopted
various good governance reform measures to enhance the accountability
and transparency of its government to better provide for the welfare of
its businesses and residents, including a commitment to at least double
the housing stock within the City in order to increase the population
of the City; and
WHEREAS, the City Council desires to provide for the
development of certain real property owned by the City, approximately
2.06 acres in size and located at 4675 52nd Drive in the City (the
"Site"); and
WHEREAS, the City and Meta Housing Corporation (the
"Developer.") have entered into a Disposition and Development Agreement
(the "DDA") which provides for the City to ground lease the Site (the
"Ground Lease") to an entity formed by and for the Developer to develop
a housing project (the "Housing Development") on the Site; and
WHEREAS, the Housing Development will generally consist of a
rental housing complex containing forty-five (45) units, with
associated parking, landscaping and community facilities, which is
intended to implement the City's goals and objectives to provide
decent, safe and sanitary housing for persons and families of low and
moderate income; and
WHEREAS, the DDA provides for the City and the Developer to
enter into a "Regulatory Agreement" which will set forth the
requirements for the operation of the Housing Development and the
rental of certain apartment units to persons and families of low and
moderate income at an affordable rent; and
WHEREAS, the City and the Developer have entered into a Loan
Agreement which provides for the City to make a loan to Developer to
assist in the development of the Housing Development on the Site(the
"City Loan"); and
WHEREAS, the Developer has obtained commitments for
construction and permanent financing for the Housing Development; and
WHEREAS, the construction and permanent lenders have
requested certain changes be made to the Ground Lease and Regulatory
Agreement, and have required that the City enter into a Subordination
Agreement to subordinate the City Loan and the Regulatory Agreement to
the lien of the construction and permanent loan for the Housing
Development; and
WHEREAS, the construction and permanent financing approved by
the City pursuant to the DDA will be senior in lien priority to the
City Loan; and
WHEREAS, the DDA provides that the City will subordinate the
affordable housing covenants to the construction and permanent
financing approved by the City pursuant to the DDA so long as certain
conditions are satisfied; and
WHEREAS, the DDA provides that the City will cooperate with
the Developer and sign any and all documents that may be reasonably
necessary, helpful or appropriate to carry out the purposes and intent
of the DDA, including releases or additional documents; and
WHEREAS, On February 19, 2013, the City Council adopted
Resolution No. 2013-31 approving a Mitigated Negative Declaration and a
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Mitigation Monitoring Reporting Program prepared for the Housing
Development, and specifically including the Housing Development in the
Project Description, which Mitigated Negative Declaration concludes
that the Housing Development will have no significant adverse impact on
the environment, provided that the mitigation measures set forth in the
Mitigation Monitoring Reporting Program are implemented; and
WHEREAS, the proposed Subordination Agreement and the changes
proposed to be made. to the Ground Lease and Regulatory Agreement make no
changes to the project analyzed in the Mitigated Negative Declaration;
and
WHEREAS, the City's agreement to enter into the proposed
Subordination Agreement and to make the changes proposed to the Ground
Lease and Regulatory Agreement will facilitate the financing of the
Housing Development and are in the vital and best interest of the City
and the health, safety, and welfare of its residents, and in accord
with the public purposes and provisions of applicable state and local
laws.
NOW; THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON:
SECTION 1: Recitals. The City Council of the City of Vernon
hereby finds and determines that the above recitals are true and
correct.
SECTION 2: Findings. In adopting this resolution, the City
Council of the City of Vernon makes the following findings:
a) A Mitigated Negative Declaration has been prepared in accordance
with the California Environmental Quality Act (CEQA) and the City
has approved the Mitigated Negative Declaration in accordance with
the requirements of CEQA.
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b) The proposed Subordination Agreement and the changes proposed to be
made to the Ground Lease and Regulatory Agreement make no changes to
the project analyzed in the Mitigated Negative Declaration, and
therefore it can be seen with certainty that there is no possibility
that the approval or implementation of the Loan Agreement will have
a significant effect on the environment. Accordingly, the approval
of the proposed Subordination Agreement and the changes proposed to
be made to the Ground Lease and Regulatory Agreement is not subject
to CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines.
c) An economically feasible method of financing for the construction
and operation of the Housing Development, wit
of the affordable housing covenants as may be
Ground Lease and regulatory Agreement, is not
The proposed Subordination Agreement contains
which are reasonably designed to protect the
the event of a default by the Developer.
SECTION 3: Action. The City Council
pout the subordination
set forth in the DDA,
reasonably available.
written covenants
City's investment in
of the City of Vernon
hereby approves the Subordination Agreement, Ground Lease and
Regulatory Agreement in substantially the forms presented to the City
Council, and attached hereto, with such further changes as may be
approved by the City Attorney or Deputy City Attorney. The Mayor or
Mayor Pro -Tern is hereby authorized and directed to execute the
Subordination Agreement, Ground Lease and Regulatory Agreement for and
on behalf of, the City of Vernon, and the City Clerk, or Deputy City
Clerk, shall attest thereto.
SECTION 4: Notice of Exemption. The City Clerk, or the
Deputy City Clerk, of the City of Vernon shall file a Notice of
Exemption from CEQA with the County Clerk of the County of Los Angeles.
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SECTION 5: Certification. The City Clerk, or Deputy City
Clerk, of the City of Vernon shall certify to the passage, approval and
adoption of this resolution, and the City Clerk, or Deputy City Clerk,
Of the City of Vernon shall cause this resolution and the City Clerk's,
or Deputy City Clerk's, certification to be entered in the File of
Resolutions of the Council of this City.
APPROVED AND ADOPTED this 4th day of March, 2014.
ATTEST:
i�
A Barci aa�
Deputy City Clerk
APPROVED AS TO FORM:
t E
Name: W. Michael McCormick
Title: Mayor ' ay-- �
r, Deputy City Attorney
Jon E Goef sq.
Kroni_k, Moskowitz, Tiedemann & Girard,
Special Counsel to City
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I Ana $arcia Cry-el-e�/Deputy City Clerk of the City of
Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. 2014-05, was duly passed, approved and adopted by the
City Council of the City of Vernon at a .regular meeting of the City
Council duly held on Tuesday, March 4, 2014, and thereafter was duly
signed by the Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this l° day of March, 2014, at Vernon, California.
(SEAL)
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Ana Bazai
Deputy City Clerk
ATTACHMENTS
Subordination Agreement
RECORDING REQUESTED BY
AND WI-IEN RECORDED RETURN TO:
Paul Hastings LLP
515 South Flower Street
Twenty -Fifth Floor
Los Angeles, CA 90071
Attn: Kenneth Krug, Esq.
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is entered into as of March
1, 2014 by and among (i) BANK OF AMERICA, N.A. (the "Senior Lender"), (ii) the CITY OF
VERNON, a California charter city and municipal corporation (the "Subordinate Lender"), and (iii)
52ND DRIVE APARTMENTS, L.P., a California limited partnership (the "Borrower").
Recitals
A. The Senior Lender has made or is making a loan (the "First Mortgage Loan") to the
Borrower in the original principal amount of $ . The First Mortgage Loan is or will be
secured by a first mortgage lien (the "First Mortgage") on a leasehold interest in the land (but not on
the fee interest in the land) and a fee interest in the improvements constituting a multifamily housing
project to be developed in Vernon, California (the "Property"). The Property is more fully
described in Exhibit A attached hereto. The Borrower's obligation to repay the First Mortgage
Loan is evidenced by a Note dated as of March 1, 2014 (the "First Mortgage Note").
B. Subordinate Lender and Meta Housing Corporation entered into a Disposition and
Development Agreement dated as of February 19, 2013 ("DDA') The interest of Meta Housing
Corporation has been assigned to Borrower. Pursuant to the DDA, Subordinate Lender and
Borrower have entered into (i) that certain Ground Lease dated as of March _ 2014 whereby
Subordinate Lender has leased the Property to Borrower (the "Ground Lease') and (ii) that certain
Regulatory Agreement dated as of March _, 2014 which subjects the Property to specified
restrictions (the "Subordinate Regulatory Agreement")
C. Pursuant to a Loan Agreement dated as of July 3, 2013, Subordinate Lender is
making a subordinate loan to Borrower in the amount of $1,500,000 (the "Subordinate Loan') and
is securing the Subordinate Loan by, among other things, placing a mortgage lien against the
Property-
D. The Subordinate Lender has agreed to specifically and unconditionally subordinate
the Subordinate Loan and the Subordinate Loan Documents to the liens and charges of the First
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LEGAL_US_W # 77767213.4 75506.00073
Mortgage Loan and First Mortgage Loan Documents and the foregoing shall at all times and in
all respects be wholly subordinate and inferior in claim and right to the First Mortgage Loan and
First Mortgage Loan Documents.
E. If Borrower satisfies the "Conversion Conditions" contained in that certain Loan
Purchase Agreement of even date herewith by and among Borrower, Senior Lender and
California Community Reinvestment Corporation, a California nonprofit public benefit
corporation ("CCRC"), CCRC will purchase a portion of the Loan, and the First Mortgage Loan
will convert to a term loan ("Conversion").
NOW, THEREFORE, in order to induce the Senior Lender to permit the Subordinate
Lender to make the Subordinate Loan to the Borrower and to place a subordinate mortgage lien
against the Property, and in consideration thereof, the Senior Lender, the Subordinate Lender and
the Borrower agree as follows:
1. Definitions.
In addition to the terms defined in the Recitals to this Agreement, for purposes of this
Agreement the following terms have the respective meanings set forth below:
"Affiliate" means, when used with respect to a Person, any corporation, partnership,
joint venture, limited liability company, limited liability partnership, trust or individual
controlled by, under common control with, or which controls such Person (the term
"control" for these purposes shall mean the ability, whether by the ownership of shares or
other equity interests, by contract or otherwise, to elect a majority of the directors of a
corporation, to make management decisions on behalf of, or independently to select the
managing partner of, a partnership, or otherwise to have the power independently to remove
and then select a majority of those individuals exercising managerial authority over an
entity, and control shall be conclusively presumed in the case of the ownership of 50% or
more of the equity interests).
"Borrower" means the Person named as such in the first paragraph of this
Agreement and any other Person (other than the Senior Lender) who acquires title to the
Property after the date of this Agreement.
"Business Day" means any day other than Saturday, Sunday or a day on which the
Senior Lender is not open for business.
"Default Notice" means: (a) a copy of the written notice from the Senior Lender to
the Borrower stating that a First Mortgage Loan Default has occurred under the First
Mortgage Loan; or (b) a copy of the written notice from the Subordinate Lender to the
Borrower stating that a Subordinate Loan Default has occurred under the Subordinate Loan,
Each Default Notice shall specify the default upon which such Default Notice is based.
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LEGAL_US_W # 77767213.4 75506.00073
"First Mortgage Loan" means the senior loan described in Recital A hereof, and
following Conversion, the Permanent Loan.
"First Mortgage Loan Default" means the occurrence of an "Event of Default" as
that term is defined in the First Mortgage Loan Documents.
"First Mortgage Loan Documents" means (i) the First Mortgage Note and all other
documents evidencing, securing or otherwise executed and delivered in connection with the
First Mortgage Loan; and (ii) following Conversion, the Permanent Loan Documents.
"Ground Lease" means that certain Ground Lease dated 2014 between
Subordinate Lender and Borrower covering the Property.
"Permanent Loan" means the First Mortgage Loan after Conversion.
"Permanent Loan Documents" means the Permanent Note, the First Mortgage and
all other documents evidencing, securing, purchased for, or otherwise executed and
delivered in connection with, the Permanent Loan.
"Permanent Note" means the First Mortgage Note, as it may be modified in
connection with Conversion.
"Person" means an individual, estate, trust, partnership, corporation, limited liability
company, limited liability partnership, governmental department or agency or any other
entity which has the legal capacity to own property.
"Senior Lender" means the Person named as such in the first paragraph on page 1 of
this Agreement. When any other Person becomes the legal holder of the First Mortgage
Note or of the Permanent Loan Documents, such other Person shall automatically become
the Senior Lender. Upon purchase of the First Mortgage at Conversion and Borrower's
satisfaction of the Conversion Conditions, CCRC shall become Senior Lender hereunder.
"Subordinate Lender" means the Person named as such in the first paragraph on
page 1 of this Agreement and any other Person who becomes the legal holder of the
Subordinate Note after the date of this Agreement.
"Subordinate Loan Default" means a default by the Borrower in performing or
observing any of the terms, covenants or conditions in the Subordinate Loan Documents to
be performed or observed by it, which continues beyond any applicable period provided in
the Subordinate Loan Documents for curing the default.
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LEGAL_US_W # 77767213.4 75506.00073
"Subordinate Loan Agreement" means that certain Loan Agreement dated as of July
3, 2013 between Subordinate Lender and Borrower's predecessor in interest.
"Subordinate Loan Documents" means the Subordinate Loan Agreement,
Subordinate Note, the Subordinate Mortgage, the Subordinate Regulatory Agreement, and
all other documents evidencing, securing or otherwise executed and delivered in connection
with the Subordinate Loan.
"Subordinate Mortgage" means that certain Leasehold Deed of Trust and Financing
Agreement dated as of executed by Borrower for the benefit of the Agency.
"Subordinate Note" means the Promissory Note dated as of issued by
Borrower to evidence the Subordinate Loan.
"Subordinate Regulatory Agreement" means that certain Regulatory Agreement
described in Recital B hereof.
2. Permission to Place Mortgage Lien Against Property.
The Senior Lender agrees, notwithstanding the prohibition against inferior liens on the
Property contained in the First Mortgage Loan Documents or the Permanent Loan Documents, and
subject to the provisions of this Agreement, to permit the Subordinate Lender to record or retain the
Subordinate Mortgage and other recordable Subordinate Loan Documents against the Property
(which shall be subordinate in all respects to the lien of the First Mortgage) to secure the Borrower's
obligation to repay the Subordinate Note and all other obligations, indebtedness and liabilities of the
Borrower to the Subordinate Lender under and in connection with the Subordinate Loan. Such
permission is subject to the condition that each of the representations and warranties made by the
Borrower and the Subordinate Lender in Section 3 is true and correct on the date of this Agreement.
If any of the representations and warranties made by the Borrower and the Subordinate Lender in
Section 3 is not true and correct on the date of this Agreement, the provisions of the First Mortgage
Loan Documents and/or the Permanent Loan Documents applicable to unpemritted liens on the
Property shall apply.
3. Borrower's and Subordinate Lender's Representations and Warranties.
The Borrower and the Subordinate Lender each makes the following representations and
warranties to the Senior Lender (except that subsection (d) consists of representations and
warranties made solely by Borrower):
(a) Relationship of Borrower to Subordinate Lender and Senior Lender.
The Subordinate Lender is not an Affiliate of the Borrower and is not in possession of any
facts which would lead it to believe that the Senior Lender is an Affiliate of the Borrower.
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LEGAL_US_W # 77767213.4 75506.00073
(b) Term. The term of the Subordinate Note does not end before the term of the
First Mortgage Note or the Permanent Note.
(c) Subordinate Loan Documents. The executed Subordinate Loan
Documents have been submitted to, and , to the actual knowledge of Subordinate Lender,
approved by, Senior Lender prior to the date of this Agreement.
(d) First Mortgage Loan Documents. The executed First Mortgage Loan
Documents will be substantially in the same fortes as those reviewed by Subordinate Lender
prior to the date of this Agreement. Upon execution and delivery of the First Mortgage
Loan Documents, Borrower shall deliver to Subordinate Lender an executed copy of each of
the First Mortgage Loan Documents, certified to be true, correct and complete.
(e) Concerning the Subordinate Loan Documents. Subordinate Lender for
the benefit of Borrower and the Senior Lender, agrees as follows
(i) The Subordinate Loan Documents are in full force and effect.
Borrower is the holder of all rights of "Owner", "Developer" or `Borrower" thereunder.
Subordinate Lender has not declared a default on the part of the other party to any
Subordinate Loan Document and knows of no basis for so declaring such a default.
(ii) Upon recording hereof, Subordinate Lender has approved all items in
the Subordinate Loan Documents that Subordinate Lender has the right or privilege to
approve as of the start of construction of improvements on the Property including, without
limitation, Conditions to Lease Commencement pursuant to Section 203 of the DDA,
Design Review pursuant to Section 203 of the DDA, the Construction Contract pursuant to
Section 305 of the DDA, insurance pursuant to Section 306 of the DDA, the evidence and
terms of the debt financing (including the First Mortgage Loan and the First Mortgage Loan
Documents) for the Property pursuant to Section 401 of the DDA and the identity of the tax
credit investor, the partnership agreement of Borrower and other terms of the equity
financing for the Property pursuant to Section 403 of the DDA.
(iii) Notwithstanding Section 605 of the DDA, Subordinate Lender's
right to terminate the Ground Lease shall be exclusively determined by the terms of the
Ground Lease.
(iv) Notwithstanding the provisions of Section 703 of the DDA or any
other provision of the Subordinate Loan Documents, the right of Subordinate Lender to
object to a "Transfer" shall be governed exclusively by the relevant provisions of the
Ground Lease.
(v) Notwithstanding any of the provisions of the Subordinate Loan
Documents, but subject to the terms hereof, the limited partners of Borrower and Senior
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LEGAL_US_W # 77767213.4 75506.00073
Lender shall have the same rights and time periods to cure defaults of Borrower under the
Subordinate Loan Documents as are granted to such parties under the Ground Lease with
respect to breach of the Ground Lease by Borrower.
(vi) All of the provisions of the DDA shall terminate upon the issuance of
a temporary or permanent certificate of occupancy for the improvements on the Property
and satisfaction of the conditions set forth in Section 25.15 of the Ground Lease.
4. Terms of Subordination.
(a) Agreement to Subordinate. The Senior Lender and the Subordinate
Lender agree that: (i) the indebtedness evidenced by the Subordinate Loan Documents is
and shall be subordinated in right of payment, to the extent and in the manner provided in
this Agreement to the prior payment in full of the indebtedness evidenced by the First
Mortgage Loan Documents, and (ii) the Subordinate Mortgage and the other Subordinate
Loan Documents are and shall be subject and subordinate in all respects to the liens, terms,
covenants and conditions of the First Mortgage and the other First Mortgage Loan
Documents and to all advances heretofore made or which may hereafter be made pursuant to
the First Mortgage and the other First Mortgage Loan Documents (including but not limited
to, all sums advanced for the purposes of (1) protecting or further securing the lien of the
First Mortgage, curing defaults by the Borrower under the First Mortgage Loan Documents
or for any other purpose expressly permitted by the First Mortgage, or (2) constructing,
renovating, repairing, furnishing, fixturing or equipping the Property). Subordinate
Lender's fee ownership of the land is not being pledged to Senior Lender and the DDA is
not being subordinated and shall remain prior and superior to the First Mortgage until it
temrinafes as set forth in Section 3(e)(iv) above.
(b) Subordination of Subrogation Rights. The Subordinate Lender agrees that
if, by reason of its payment of real estate taxes or other monetary obligations of the
Borrower, or by reason of its exercise of any other right or remedy under the Subordinate
Loan Documents, it acquires by right of subrogation or otherwise a lien on the Property
which (but for this subsection) would be senior to the lien of the First Mortgage, then, in that
event, such lien shall be subject and subordinate to the lien of the First Mortgage.
(c) Payments Before First Mortgage Loan Default. Until the Subordinate
Lender receives a Default Notice of a First Mortgage Loan Default from the Senior Lender,
the Subordinate Lender shall be entitled to retain for its own account all payments made
under or pursuant to the Subordinate Loan Documents.
(d) Payments After First Mortgage Loan Default. The Borrower agrees that,
after it receives notice (or otherwise acquires knowledge) of a First Mortgage Loan Default,
it will not make any payments under or pursuant to the Subordinate Loan Documents
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LEGAL_US_W # 77767213.4 75506.00073
(including but not limited to principal, interest, additional interest, late payment charges,
default interest, attorney's fees, or any other sums secured by the Subordinate Mortgage)
without the Senior Lender's prior written consent. The Subordinate Lender agrees that, after
it receives a Default Notice from the Senior Lender with written instructions directing the
Subordinate Lender not to accept payments from the Borrower on account of the
Subordinate Loan, it will not accept any payments under or pursuant to the Subordinate
Loan Documents (including but not limited to principal, interest, additional interest, late
payment charges, default interest, attorney's fees, or any other sums secured by the
Subordinate Mortgage) without the Senior Lender's prior written consent. If the
Subordinate Lender receives written notice from the Senior Lender that the First Mortgage
Loan Default which gave rise to the Subordinate Lender's obligation not to accept payments
has been cured, waived, or otherwise suspended by the Senior Lender, the restrictions on
payment to the Subordinate Lender in this Section 4 shall terminate, and the Senior Lender
shall have no right to any subsequent payments made to the Subordinate Lender by the
Borrower prior to the Subordinate Lender's receipt of a new Default Notice from the Senior
Lender in accordance with the provisions of this Section 4(d).
(e) Remitting Subordinate Loan Payments to Senior Lender. If, after the
Subordinate Lender receives a Default Notice from the Senior Lender in accordance with
subsection (d) above, the Subordinate Lender receives any payments under the Subordinate
Loan Documents, the Subordinate Lender agrees that such payment or other distribution
will be received and held in trust for the Senior Lender and unless the Senior Lender
otherwise notifies the Subordinate Lender in writing, will be promptly remitted, in kind to
the Senior Lender, properly endorsed to the Senior Lender, to be applied to the principal of,
interest on and other amounts due under the First Mortgage Loan Documents in accordance
with the provisions of the First Mortgage Loan Documents. By executing this Agreement,
the Borrower specifically authorizes the Subordinate Lender to endorse and remit any such
payments to the Senior Lender, and specifically waives any and all rights to have such
payments returned to the Borrower or credited against the Subordinate Loan. Borrower and
Senior Lender acknowledge and agree that payments received by the Subordinate Lender,
and remitted to the Senior Lender under this Section 4, shall not be applied or otherwise
credited against the Subordinate Loan, nor shall the tender of such payment to the Senior
Lender waive any Subordinate Loan Default which may arise from the inability of the
Subordinate Lender to retain such payment or apply such payment to the Subordinate Loan.
(1) Agreement Not to Commence Bankruptcy Proceeding. The Subordinate
Lender agrees that during the term of this Agreement it will not commence, or join with any
other creditor in commencing any bankruptcy reorganization, arrangement, insolvency or
liquidation proceedings with respect to the Borrower, as debtor, without the Senior Lender's
prior written consent.
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LEGAL_US_W # 77767213.4 75506.00073
5. Default Under Subordinate Loan Documents.
(a) Notice of Default and Cure Rights. The Subordinate Lender shall deliver
to the Senior Lender a Default Notice within five Business Days in each case where the
Subordinate Lender has given a Default Notice to the Borrower. Failure of the Subordinate
Lender to send a Default Notice to the Senior Lender shall not prevent the exercise of the
Subordinate Lender's rights and remedies under the Subordinate Loan Documents, subject
to the provisions of this Agreement. The Senior Lender shall have the right, but not the
obligation, to cure any Subordinate Loan Default within 60 days following the date of such
notice; provided, however that the Subordinate Lender shall be entitled, during such 60-day
period, to continue to pursue its rights and remedies under the Subordinate Loan Documents
to the extent permitted under Section 5(b). All amounts paid by the Senior Lender in
accordance with the First Mortgage Loan Documents to cure a Subordinate Loan Default
shall be deemed to have been advanced by the Senior Lender pursuant to, and shall be
secured by the lien of, the First Mortgage.
(b) Subordinate Lender's Agreement to Standstill. If a Subordinate Loan
Default occurs and is continuing, the Subordinate Lender agrees that it will not accelerate
the Subordinate Loan, commence foreclosure proceedings with respect to the Property,
collect rents, appoint (or seek the appointment of) a receiver or institute any other collection
or enforcement action without first giving at least ninety (90) days' notice of a default under
the Subordinate Loan and Subordinate Lender's intent to exercise one of the preceding
actions. Notwithstanding the foregoing, Subordinate Lender may take actions to specifically
enforce the affordability provisions in the Subordinate Regulatory Agreement without notice
to or the consent of Senior Lender.
(c) Cross Default. The Borrower and the Subordinate Lender agree that a
Subordinate Loan Default declared by Subordinate Lender shall constitute a First Mortgage
Loan Default under the First Mortgage Loan Documents and the Senior Lender shall have
the right to exercise all rights or remedies under the First Mortgage Loan Documents in the
same manner as in the case of any other First Mortgage Loan Default. If the Subordinate
Lender notifies the Senior Lender in writing that any Subordinate Loan Default of which the
Senior Lender has received a Default Notice has been cured or waived, as determined by the
Subordinate Lender in its sole discretion, then provided that Senior Lender has not
conducted a sale of the Property pursuant to its rights under the First Mortgage Loan
Documents, any First Mortgage Loan Default under the First Mortgage Loan Documents
arising solely from such Subordinate Loan Default shall be deemed cured, and the First
Mortgage Loan shall be reinstated, provided, however, that the Senior Lender shall not be
required to return or otherwise credit for the benefit of the Borrower any default rate interest
or other default related charges or payments received by the Senior Lender during such First
Mortgage Loan Default.
6. Default Under First Mortgage Loan Documents.
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LEGAL_US_W # 77767213.4 75506.00073
(a) Notice of Default and Cure Rights. The Senior Lender shall deliver to the
Subordinate Lender a Default Notice within five Business Days in each case where the
Senior Lender has given a Default Notice to the Borrower. Failure of the Senior Lender to
send a Default Notice to the Subordinate Lender shall not prevent the exercise of the Senior
Lender's rights and remedies under the First Mortgage Loan Documents, subject to the
provisions of this Agreement. The Subordinate Lender shall have the right, but not the
obligation, to cure any such First Mortgage Loan Default as provided below. Subordinate
Lender may have up to 30 days from the date of the delivery of the Default Notice to
Subordinate Lender to cure any monetary default under the First Mortgage Loan
Documents; provided, however, that the Senior Lender shall be entitled during such 30-day
period to continue to pursue its remedies with respect to the Property. Subordinate Lender
may have up to 60 days from the date of delivery of the Default Notice to cure a non -
monetary default if during such 60-day period Subordinate Lender keeps current all
payments required by the First Mortgage Loan Documents. hi the event that such a non -
monetary default creates an unacceptable level of risk relative to the Property, or Senior
Lender's secured position relative to the Property, as determined by Senior Lender in its sole
discretion, then Senior Lender may exercise during such 60-day period all available rights
and remedies to protect and preserve the Property and the rents, revenues and other proceeds
from the Property. All amounts paid by the Subordinate Lender to the Senior Lender to cure
a First Mortgage Loan Default shall be deemed to have been advanced by the Subordinate
Lender pursuant to, and shall be secured by the lien of, the Subordinate Mortgage.
(b) Cross Default. The Borrower and the Subordinate Lender agree that a First
Mortgage Loan Default recognized by Senior Lender shall constitute a Subordinate Loan
Default under the Subordinate Loan Documents and the Subordinate Lender shall have the
right to exercise all rights or remedies under the Subordinate Loan Documents in the same
manner as in the case of any other Subordinate Loan Default. If the Senior Lender notifies
the Subordinate Lender in writing that any First Mortgage Loan Default of which the
Subordinate Lender has received a Default Notice has been cured or waived, as determined
by the Senior Lender in its sole discretion, then provided that Subordinate Lender has not
conducted a sale of the Property pursuant to its rights under the Subordinate Loan
Documents, any Subordinate Mortgage Loan Default under the Subordinate Loan
Documents arising solely from such Fast Mortgage Loan Default shall be deemed cured,
and the Subordinate Mortgage shall be reinstated, provided, however, that the Subordinate
Lender shall not be required to return or otherwise credit for the benefit of the Borrower any
default rate interest or other default related charges or payments received by the Subordinate
Lender during such Subordinate Loan Default.
(c) Post Conversion Senior Loan Default. If a Senior Loan Default occurs
after Conversion, Senior Lender will deliver a copy of a Default Notice to Subordinate
Lender, and, while Senior Lender shall be entitled to exercise its rights and remedies under
the Senior Loan Documents, Senior Lender shall not be entitled to complete any foreclosure
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LEGAL US_W # 77767213.4 75506.00073
or deed in lieu thereof, or otherwise take title to the Property, until the expiration of sixty
(60) days following Senior Lender's delivery of such Default Notice to Subordinate Lender;
provided, however, if Subordinate Lender has commenced and is diligently proceeding to
cure such default upon the expiration of such sixty (60) day period, Senior Lender will
provide a further sixty (60) day extension of such period..
7. Conflict.
The Borrower, the Senior Lender and the Subordinate Lender each agrees that, in the event
of any conflict or inconsistency between the terms of the First Mortgage Loan Documents, the
Subordinate Loan Documents and the terms of this Agreement, the terms of this Agreement shall
govern and control solely as to the following: (a) the relative priority of the security interests of the
Senior Lender and the Subordinate Lender in the Property; (b) the timing of the exercise of
remedies by the Senior Lender and the Subordinate Lender under the First Mortgage and the
Subordinate Mortgage, respectively; and (c) solely as between the Senior Lender and the
Subordinate Lender, the notice requirements, cure rights, and the other rights and obligations which
the Senior Lender and the Subordinate Lender have agreed to as expressly provided in this
Agreement. Borrower acknowledges that the terms and provisions of this Agreement shall not, and
shall not be deemed to: extend Borrower's time to cure any First Mortgage Loan Default or
Subordinate Loan Default, as the case may be; give the Borrower the right to notice of any First
Mortgage Loan Default or Subordinate Loan Default, as the case may be other than that, if any,
provided, respectively under the First Mortgage Loan Documents or the Subordinate Loan
Documents; or create any other right or benefit for Borrower as against Senior Lender or
Subordinate Lender.
S. Rights and Obligations of the Subordinate Lender Under the Subordinate
Loan Documents and of the Senior Lender under the First Mortgage Loan Documents.
Subject to each of the other terms of this Agreement, all of the following provisions shall
supersede any provisions of the Subordinate Loan Documents covering the same subject matter:
(a) Protection of Security Interest. The Subordinate Lender shall not, without
the prior written consent of the Senior Lender in each instance, take any action which has
the effect of increasing the indebtedness outstanding under, or secured by, the Subordinate
Loan Documents, except that the Subordinate Lender shall have the right to advance funds
to cure First Mortgage Loan Defaults pursuant to Section 6(a) above and advance funds
pursuant to the Subordinate Mortgage for the purpose of paying real estate taxes and
insurance premiums, making necessary repairs to the Property and curing other defaults by
the Borrower under the Subordinate Loan Documents. The foregoing portion of this
subsection (a) shall not be construed to preclude activities by the Subordinate Lender to
enforce the Subordinate Loan Documents.
(Page-10)
LEGAL_US_W # 77767213.4 75506.00073
(b) Condemnation or Casualty. In the event of: a taking or threatened taking
by condemnation or other exercise of eminent domain of all or a portion of the Property
(collectively, a "Taking"); or the occurrence of a fire or other casualty resulting in damage
to all or a portion of the Property (collectively, a "Casualty"), at any time or times when the
First Mortgage remains a lien on the Property the following provisions shall apply:
(1) The Subordinate Lender hereby agrees that its rights (under the
Subordinate Loan Documents or otherwise) to participate in any proceeding or
action relating to a Taking and/or a Casualty, or to participate or join in any
settlement of, or to adjust, any claims resulting from a Taking or a Casualty shall be
and remain subordinate in all respects to the Senior Lender's rights under the First
Mortgage Loan Documents with respect thereto, and the Subordinate Lender shall
be bound by any settlement or adjustment of a claim resulting from a Taking or a
Casualty made by the Senior Lender; provided, however, this subsection and/or
anything contained in this Agreement shall not limit the rights of the Subordinate
Lender to file any pleadings, documents, claims or notices with the appropriate court
with jurisdiction over the proposed Taking and/or Casualty, provided the foregoing
shall not limit any rights of Subordinate Lender with respect to its fee interest in the
land component of the Property; and
(2) all proceeds received or to be received on account of a Taking or a
Casualty, or both, shall be applied (either to payment of the costs and expenses of
repair and restoration or to payment of the First Mortgage Loan) in the manner
determined by the Senior Lender in its sole discretion; provided, however, that if the
Senior Lender elects to apply such proceeds to payment of the principal of, interest
on and other amounts payable under the First Mortgage Loan, any proceeds
remaining after the satisfaction in full of the principal of, interest on and other
amounts payable under the First Mortgage Loan shall be paid to, and may be applied
by, the Subordinate Lender in accordance with the applicable provisions of the
Subordinate Loan Documents, provided however, the Senior Lender agrees to
consult with the Subordinate Lender in determining the application of Casualty
proceeds, provided further however that in the event of any disagreement between
the Senior Lender and the Subordinate Lender over the application of Casualty
proceeds, the decision of the Senior Lender, in its sole discretion, shall prevail.
Notwithstanding the foregoing, Subordinate Lender reserves its rights to receive
compensation for any Taking with respect to the fee interest of the Property, as set
forth in the Ground Lease.
(c) No Modification of Subordinate Loan Documents. The Borrower and the
Subordinate Lender each agrees that, until the principal of, interest on and all other amounts
payable under the First Mortgage Loan Documents have been paid in full, it will not,
without the prior written consent of the Senior Lender in each instance, increase the amount
of the Subordinate Loan, increase the required payments due under the Subordinate Loan,
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LEGAL_US_W # 77767213.4 75506.00073
decrease the term of the Subordinate Loan, increase the interest rate on the Subordinate
Loan, or otherwise amend the Subordinate Loan terms in a manner that creates an adverse
effect upon the Senior Lender under the First Mortgage Loan Documents. Any
unauthorized amendment of the Subordinate Loan Documents or assignment of the
Subordinate Lender's interest in the Subordinate Loan without the Senior Lender's consent
shall be void ab initio and of no effect whatsoever and Subordinate Lender agrees that it
shall not transfer or assign the Subordinate Loan or the Subordinate Loan Documents
without the prior written consent of the Senior Lender. Except with regard to the voluntary
transfer or assignment of the Subordinate Loan or the Subordinate Loan Documents by the
Subordinate Lender without the written consent of the Senior Lender, the foregoing portion
of this subsection (c) shall not be construed to preclude activities by the Subordinate Lender
to enforce the Subordinate Loan Documents.
9. Conversion, Modification or Refinancing of First Mortgage Loan.
The Subordinate Lender consents to any agreement or arrangement in which the Senior
Lender waives, postpones, extends, reduces or modifies any provisions of the First Mortgage Loan
Documents, including any provision requiring the payment of money. Subordinate Lender further
agrees that its agreement to subordinate hereunder shall extend to the Permanent Loan Documents,
as well as to any new mortgage debt which is for the purpose of refinancing all or any part of the
First Mortgage Loan (including reasonable and necessary costs associated with the closing and/or
the refinancing) and, in the event of new mortgage debt, Subordinate Lender shall execute and
deliver to Senior Lender a new subordination agreement on the same terms and conditions as this
Subordination Agreement. Following Conversion, all the terms and covenants of this Agreement
shall inure to the benefit of any holder of the Permanent Loan; and all references to the First
Mortgage Loan, the First Mortgage Note and the First Mortgage Loan Documents shall mean,
respectively, the Permanent Loan, the Permanent Note and the Permanent Loan Documents.
10. Default by the Subordinate Lender or Senior Lender.
If the Subordinate Lender or Senior Lender defaults in performing or observing any of the
terms, covenants or conditions to be performed or observed by it under this Agreement, the other,
non -defaulting lender shall have the right to all available legal and equitable relief.
11. Notices.
Each notice, request, demand, consent, approval or other communication (hereinafter in this
Section referred to collectively as "notices" and referred to singly as a `notice") which the Senior
Lender or the Subordinate Lender is required or permitted to give to the other party pursuant to this
Agreement shall be in writing and shall be deemed to have been duly and sufficiently given if:
(a) personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to
have been received at the time so delivered); or (b) sent by Federal Express (or other similar
national overnight courier) designating early morning delivery (any notice so delivered shall be
(Page-12)
LEGAL_US_W # 77767213.4 75506.00073
deemed to have been received on the next Business Day following receipt by the courier); or
(c) sent by United States registered or certified mail, return receipt requested, postage prepaid, at a
post office regularly maintained by the United States Postal Service (any notice so sent shall be
deemed to have been received two days after mailing in the United States), addressed to the
respective parties as follows:
SENIOR LENDER (Prior to Conversion):
Bank of America, N.A.
Community Development Banking
Mail Code #CAO-103-04-04
450 B Street, Suite 450
San Diego, CA 92101
Attention: Loan Administration Manager
SENIOR LENDER (After Conversion):
California Community Reinvestment Corp.
225 West Broadway, Suite 120
Glendale, California 91204
Attention: President
BORROWER:
52"d Drive Apartments, L.P.
c/o Meta Housing Corporation
1640 S. Sepulveda Blvd., Suite 425
Los Angeles, CA 90011
Attention: John Huskey
Facsimile: (310) 575-3563
with a copy to:
SUBORDINATE LENDER:
City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
(Page-13)
LEGAL_US_W # 77767213.4 75506.00073
With a copy to:
City Administrator
City Attorney
City Director of Community Services and Water
At the same address
A party may, by notice given pursuant to this Section, change the person or persons and/or address
or addresses, or designate an additional person or persons or an additional address or addresses for
its notices, but notice of a change of address shall only be effective upon receipt.
13. General.
(a) Assignment/Successors. This Agreement shall be binding upon the
Borrower, the Senior Lender and the Subordinate Lender and shall inure to the benefit of the
respective legal successors and assigns of the Senior Lender and the Subordinate Lender.
This Agreement supersedes and previous subordination instruments among Borrower,
Senior Lender and the Subordinate Lender.
(b) No Partnership or Joint Venture. The Senior Lender's permission for the
placement of the Subordinate Loan Documents does not constitute the Senior Lender as a
joint venturer or partner of the Subordinate Lender. Neither party hereto shall hold itself out
as a partner, agent or Affiliate of the other party hereto.
(c) Senior Lender's and Subordinate Lender's Consent. Wherever the
Senior Lender's consent or approval is required by any provision of this Agreement, such
consent or approval may be granted or denied by the Senior Lender in its sole and absolute
discretion, unless otherwise expressly provided in this Agreement. Wherever the
Subordinate Lender's consent or approval is required by any provision of this Agreement,
such consent or approval may be granted or denied by the Subordinate Lender in its sole and
absolute discretion, unless otherwise expressly provided in this Agreement.
(d) Further Assurances. The Subordinate Lender, the Senior Lender and the
Borrower each agree, at the Borrower's expense, to execute and deliver all additional
instruments and/or documents reasonably required by any other party to this Agreement in
order to evidence that the Subordinate Mortgage is subordinate to the lien, covenants and
conditions of the First Mortgage, or to further evidence the intent of this Agreement.
(e) Amendment. This Agreement shall not be amended except by written
instrument signed by all parties hereto.
(1) Governing Law. This Agreement shall be governed by the laws of the State
in which the Property is located.
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LEGAL_US_W # 77767213.4 75506.00073
(g) Severable Provisions. If any provision of this Agreement shall be invalid or
unenforceable to any extent, then the other provisions of this Agreement, shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
(h) Term. The term of this Agreement shall commence on the date hereof and
shall continue until the earliest to occur of the following events: (i) the payment of all of the
principal of, interest on and other amounts payable under the First Mortgage Loan
Documents; (ii) the payment of all of the principal of, interest on and other amounts payable
under the Subordinate Loan Documents, other than by reason of payments which the
Subordinate Lender is obligated to remit to the Senior Lender pursuant to Section 4 hereof;
(iii) the acquisition by the Senior Lender of title to the Property pursuant to a foreclosure or
a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the First
Mortgage; or (iv) the acquisition by the Subordinate Lender of title to the Property pursuant
to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale
contained in, the Subordinate Mortgage, but only if such acquisition of title does not violate
any of the terms of this Agreement.
(i) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original for all purposes; provided,
however, that all such counterparts shall together constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
(Page-15)
LEGAL -US W # 77767213.4 75506.00073
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first written above.
SENIOR LENDER:
BANK OF AMERICA, N.A.
L-5
Name:
(Signature Page-1)
LEGAL_US_W # 77767213.4 75506.00073
SUBORDINATE LENDER:
CITY OF VERNON
By:_
Name:
Title:
(Signature Page-2)
LEGAL -US W # 77767213.4 75506.00073
BORROWER:
52No DRIVE APARTMENTS, L.P.,
a California limited partnership
0
(Signature Page-3)
LEGAL_US_W # 77767213.4 75506.00073
EXHIBIT A
Legal Description
(Exhibit A)
LEGAL -US W # 77767213.4 75506.00073
Ground Lease
GROUND LEASE
By and Between
Formatted: Font: 14 of
IMIRTT7
And
Deleted: [WTA HOUSING
.52" DRIVE APARTMENTS, L.P., CORPORATION LIMITED
__._.._:' PARTNERSHIP],
LESSEE
1 1085816.4 12098-003
Formatted: Left
GROUND LEASE
This GROUND LEASE (the "Lease") is made as of:March _ _2014 (the "Commencement
_.--- Deleted: zol_
Date"), by and between the CITY OF VERNON, a California charter city and municipal
corporation (the "City' or "Lessor"), an452ND DRIVE, APARTMENTS. L.P.. aCalifornia limited
,--.--
Deleted: lMem Housing Corporation
partnership (the "Lessee").
Limited Partnmhipl,
1. SUBJECT OF LEASE.
The purpose of this Lease is the lease of the "Site" (as hereinafter defined) to Lessee for the
development and operation thereon of a forty-five unit multifamily apartment complex (the
"Housing Development"). This Lease is entered into pursuant to a Disposition and Development
Agreement between City and Lessee dated February 19, 2013 (the "DDA"), and a Regulatory
Deleted: 201_
Agreement between City and Lessee datedMarch . 2014 (the "Regulatory Agreement")_
: ''
2. LEASE OF THE SITE.
City, for and in consideration of the rents, covenants, and agreements hereinafter reserved
and contained on the part of Lessee to be paid, kept, performed and observed by Lessee, hereby
leases to Lessee, and Lessee hereby leases from City, that certain real property in the City of Vernon
(the "City") shown on the "Site Map" attached hereto as Exhibit "A" and incorporated herein by this
reference, and having the legal description in the "Site Description" attached hereto as Exhibit "B"
and incorporated herein by this reference (the "Site"). Except as expressly provided to the contrary
in this Lease, reference to the Site is to the described land, exclusive of any improvements now or
hereafter located on the land, notwithstanding that any such improvements may or shall be construed
as affixed to and as constituting part of the real property.
3. LEASE TERM.
Lessee shall lease the Site from City and City shall lease the Site to Lessee for a term
extending from the Commencement Date of this Lease (the date set forth in the first paragraph
hereof) until the sixty-fifth (65m) anniversary of the Commencement Date (the "Initial Term"),
unless sooner terminated as provided for herein. Provided that no Event ofDefault has occurred and
is continuing under this Lease as of the expiration of the Initial Term, Lessee shall, by delivery of
written notice to City no later than twelve (12) months and no earlier than twenty-four (24) months
prior to the expiration of the Initial Term, have the right to extend the term of this Lease for an
additional ten (10) year period (the "Extended Term") on the same terms and conditions contained in
this Lease, commencing on the expiration of the Initial Term. The Initial Term and the Extended
Term are collectively referred to herein as the "Term."
4. RENT.
4.1 Net Lease. It is the intent of the parties hereto that the rent provided herein shall be
absolutely net to City and that Lessee shall pay all costs, taxes, charges, and expenses of every kind
and nature against the Site and the Housing Development which may arise or become due during the
Term, and which, except for execution hereof, would or could have been payable by City.
4.2 Basic Rent. During the Initial Term and Extended Term, Lessee agrees to pay City
Deleted: I
1085816A 12098-003
/ ,
advance annual rent in the amount of One Dollar ($1.00) (the "Basic Rent"). The Basic Rent shall
be paid on the Commencement Date and each anniversary thereof. City acknowledges receipt of
Lessee's payment of the Basic Rent in advance for the Initial Term.
4.3 Additional Rent. The parties agree that upon the occurrence of certain events as set
forth below, if Lessee receives cash proceeds as a result of such events, City shall receive a portion
of such proceeds as "Additional Rent" For thesepurposes, receipt by Lessee of value in a form _ -- Deleted:.
-------- - - - - - ------
other than cash will be treated as receipt by Lessee ofthe cash equivalent of such value based on the
fair market value of what is received by Lessee.
(a) Determination of Fair Market Rent Upon Certain Events. Additional
Rent shall become due in the event of and upon the occurrence of any of the following: (1) the
refinancing of the Project Loan (as defined in Section 15 hereof), (2) Lessee's sale or assignment of
its interest in the Housing Development and this Lease, (3) the expiration of the Tax Credit
Regulatory Agreement (as defined in the DDA), (4) the commencement of the xtended Term of
this Lease,,and (W5 affirmation of the Ground Lease in a bankruptcy proceeding,_ In each -such -event,
Additional Rent shall be calculated as follows:
The Additional Rent shall be the fair market value ground lease rent for the Site
(including the land but excluding the improvements thereon) pursuant to the Ground Lease, taking
into consideration the restrictions recorded against the Site, to the extent such restrictions remain
applicable and enforceable (the "Applicable Recorded Restrictions"). The fair market rent shall be
determined by an independent appraisal performed by a qualified, independent appraiser who is
reasonably acceptable to City and Lessee. Such independent appraisal shall determine the fair
market value of the Site, at its highest and best use, but subject to the Applicable Recorded
Restrictions. The appraisal shall further determine the fair market value ground lease rent, subject to
the Applicable Recorded Restrictions, over thexemaining Terre ofthis Lease. with an objective that
the City cumulatively receive over the femaining Term of this Lease the fair market value ground
_________ _ _ _ _ _________________-__-_- _
lease rent under the Ground Lease, subject to the Applicable Recorded Restrictions.
Notwithstanding the foregoing, however, in no event shall the Additional Rent in any year (a) be a
negative number, or (b) exceed fifty percent (50%) of the Residual Receipts of the Housing
Development. For purposes hereof, "Residual Receipts" shall mean annual project revenue
(excluding loan proceeds, capital contributions and security deposits received) less the sum of (i)
operating expenses, (ii) debt service, (iii) reserve deposits, (iv) partnership management fees, (v)
deferred developer fees, and (vi) asset management fees, for each calendar year; provided, however,
that if such calculation results in a negative number, Residual Receipts shall be zero for that year.
Upon the occurrence of any of the above events triggering the obligation to pay Additional Rent, the
parties shall mutually agree upon procedures for reporting and determining Residual Receipts.
(b) Payment Upon Refinancing. If in accordance with Section 15 hereof Lessee
borrows money whose repayment is secured, directly or indirectly, by Lessee's leasehold interest
hereunder, in a transaction that does not involve an Assignment as described in paragraph (c) below,
Lessee shall pay City a sum equal to fifty percent (50%) of the Net Financing Proceeds (as defined
below) as Additional Rent;("City's Pro Rata Share of the Net Financing Proceeds") If there are
other Project Loans or Permitted Encumbrances which also require payment of a portion of Net
Financing Proceeds, Lessee shall use good faith efforts to reach an agreement with such other lender
or lenders as to an uitable distribution of Net Financin Proceed b tun h art
Deleted: Extension
Deleted: (5) completion of foreclosure
Deleted: 6
Deleted: entire
Deleted: (including the Extended
Term, as applicable),
Deleted: entire
Deleted: In such regard, if the total
amount of Rent paid to that date has
cumulatively amounted to less than a fair
marks value ground lease rent subject to
the Applicable Recorded Restrictions,
than the appraiser shall take that fact into
consideration when determining the
Additional Rest for the remainder of the
Tema (including the Extended Term, as
applicable). likewise, ifthe total amount
of Rest paid to that date has cumulatively
amounted to greeter than a foir market
value ground lease rent, subject to the
Applicable Recorded Restrictions, then
the appraiser shag lake that fact into
consideration when determining the
Additional Rent for the remainder of the
Tom (including the Extended room, as
Deleted:.
eq g s e een or among suc p les.
Deleted: I
1085816.4 12098-003 2` i
Such Additional Rent shall be due and payable immediately upon the funding of the loan, and shall
be payable in addition to any other sums payable by Lessee under this Lease. Lessee shall provide
City a complete accounting of the Net Financing Proceeds. No Additional Rent shall be payable
upon the closing of the initial construction loan and permanent loan conversion permitted pursuant to
Section 401 of the DDA. For purposes of this paragraph, "Net Financing Proceeds" shall mean the
initial principal sum of the new loan, less (i) all Amounts necessary to repay encumbrances to be
satisfied in connection therewith, if such encumbrances were approved or permitted in accordance
withpis Lease or otherwise expressly consented to by City in writing, (ii) actual and reasonable
-. _---------------_.-------"----------.------------------------------
costs
of refinancing, and (iiijan amount bywhich the refinancing lender requires Les seeto increase
- - - ----- - — --e ------- ease
Lessee's reserves for the Housing Development as a condition of such refinancing.
(c) Payment Upon Sale or Assignment. If Lessee sells or assigns its interest in
the Housing Development and this Lease, directly or indirectly, other than through a Permitted
Transfer (as defined in Section 14.2ahereo ,Lessee shall pay City a sum equal to fiftypercent (50%)
of the Net Sales Proceeds (as defined below) as Additional Rent ("City's Pro Rata Share of the Net
Sales Proceeds"). If there are other Project Loans or Permitted Encumbrances which also require
payment of a portion of Net Sales Proceeds, Lessee shall use good faith efforts to reach an
agreement with such other lender or lenders as to an equitable distribution of Net Sales Proceeds
between or among such parties. Such Additional Rent shall be due and payable immediately upon
the closing of the sale or assignment, and shall be payable in addition to any other sums payable by
Lessee under this Lease. Lessee shall provide City a complete accounting of the Net Sale Proceeds.
For purposes of the first sale or assignment, "Net Sales Proceeds" shall mean the total purchase price
of the Housing Development payable to Lessee, less ,(i) all amounts necessary to repay
permitted in accordance with this Lease or otherwise expressly consented to by City in writin (ii)
actual and reasonable costs of sale and NO any amount paid to the limited partner in Lessee (who
purchased such interest in order to benefit from the favorable tax treatment arising from the Housin@
Development) for any repurchase or redemption of such partner's limited partnership interest in
Lessee completed by Lessee in accordance with the terms ofthis Lease). For purposes of subsequent
sales or assignments, "Net Sales Proceeds" shall mean the total purchase price of the Housing
Development payable to Lessee, less the purchase price paid by Lessee.
(d) Payment of Additional Rent into Capital Account. City may elect, at its
sole discretion, for all or a portion of the Additional Rent to be deposited directly into a capital
account to be established by Lessee instead of being paid to City. In such event City and Lessee
shall mutually agree upon the permitted uses of the capital account, which may include such uses as
specified capital improvements to the Housing Development and social service programs for the
benefit of the residents of the Housing Development.
(e) Application of Additional Rent Payments to Repayment of City Loan.
Until the loan provided by City to Lessee pursuant to that certain Loan Agreement dated July 3
2013 (the "City Loan") has been paid in full any payments of Additional Rent pursuant to
paragraphs (a) (b) and (c) ofthis Section 4 3 shall be applied to the repayment of the City Loan and
shall be credited against any amounts owing thereunder.
Deleted: costs and expenses paid by
Lesson for as capital improvements
completed by Lessee
Deleted: the terms ofthe DDA and
Deleted: (andforiaposesoftlds
clause (i), such costs my include,
without limitation, reasonable amhitects'
and engineers' fees and other reasonable
"soft" costs, as such term is customarily
undersmod in the construction industry in
Los Angeles, California, minting to the
making ofmch permitted capital
Deleted: the
Deleted: , and (iv) any amount paid to
the limited partner in lessee (who
purchased such interest in order to benefit
from the favorable tax treatment arising
from the Housing Development for arty
repurchase or redemption ofsubh
parmer's limited partnership interest in
Lessee completed by Lessee in
accordance with the terms ofthis Lease).
Deleted: 903
Deleted: of the DDA
Deleted; .
Deleted: the total cost of construction
ride, Housing Project [add definition of
total coal of construction].
4.4 Payment of Rent. All rent that becomes due and payable pursuant to this Lease shall
be paid to City at the address of City listed in Section 25.7 or such other place as City may from time
Deleted: ¶
1085816.4 12098-003 3e ,-
to time designate by written notice to the Lessee without notice or demand, and without setoff,
counterclaim, abatement, deferment, suspension or deduction.
5. USE OF THE SITE.
5.1 Use of the Site. Lessee covenants and agrees for itself, its successors and assigns,
that during the Term, the Site and the Housing Development shall be devoted to those uses as set
forth in this Leas"nd the Regulatory Agreement, Lessee covenants and agrees to cause the Deleted:,mooPn
Housing Development W be used,only for the purposes set forth in Section 6 hereof, and no other
uses without the prior approval of the City, which approval may be given or withheld as provided
therein.
5.2 Only Lawful Uses Permitted. Lessee shall not use the Site or the Housing
Development for any purpose that is in violation of any law, ordinance or regulation of any federal,
state, county or local governmental agency, body or entity. Furthermore, Lessee shall not maintain
or commit any nuisance or unlawful conduct (as now or hereafter defined by any applicable statutory
or decisional taw) on the Site or the Housing Development, or any part thereof
ana other matters relevant to the management ofthe Housing Development The Site Management
Plan shall prohibit the Property Manager from lobbying influencing, or attempting to influence any
residents of the Housing Development or other registered voters of the City with respect to any
hereto as Exhibit D and incorporated herein The Site Management Plan may be revised from time
and Lessee shall use its best efforts to correct such deficiencies In the event that such deficiencies
have not been cured within the time set forth in this Lease the City shall have the right to require
scone of the Housing Development
5.4
Plan, and according to a system which provides an agreed upon priority for persons employed or
residing in the City of Vernon or within a 1 mile radius as measured from the center of the Site The
Site Management Plan shall include a system for the random selection of tenants from a Pool of
Deleted:9
1085816.4 12098-003 44______
applicants. Tenants shall meet criteria which is reasonable and customary for similar multifamily
developments. Tenant selection shall be made in an open and public manner. The tenant selection
system in the Site Management Plan shall be designed to prevent favoritism and outside influences
of any kind in the selection process. The tenant selection system shall provide for due diligence by
Lessee in evaluation of the applications for eligibility criteria, including the basis of any requested
5.5 Capital Reserve Requirements. Lessee shall also, or cause the Property Manager
to, annually set aside an amount of Three Hundred Dollars ($300) per Housing Unit (or such larger
amount as may be required by a Housing Development lender), from the Bross rents received from
be credited towards Lessee's obligations under this section. Such amount shall be adiusted annually
by the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for
All Urban Consumers, Los Angeles —Riverside —Orange County. California (all items),1982-84 —
100, or its successor index (the "Consumer Price Index"). Funds in the Capital Replacement
Reserve shall be used for capital replacements to the Housing Development fixtures and equipment
which are normally capitalized under generally accepted accounting principles. The non -availability
of funds in the Capital Replacement Reserve does not in any manner relieve Lessee of the obli ag tion
to undertake necessary capital repairs and improvements and to continue to maintain the Housing
Development in the manner prescribed herein. Not less than once per year. Lessee, at its expense,
shall submit to the City an accounting for the Capital Replacement Reserve. Capital repairs to and
replacement of the Housing Development shall include only those items with a long useful life,
including without limitation the following: carpet and drape replacement; appliance replacement;
exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures
replacement, including tubs and showers, toilets, lavatories, sinks, faucets: air conditioning and
heating replacement: asphalt repair and replacement and seal coating; roofing repair and
replacement; landscape tree replacement; irrigation pipe and controls replacement; gas line pipe
replacement; lighting fixture replacement; common area furniture replacement: common area
repainting, and uninsured losses due to casualties such as earthquakes.
5.6 Namine Rights. City shall have the exclusive non-commercial right to select the
name of the Housing Development in its sole discretion to honor one or more civic or business
leaders, as the City Council may designate. Lessee agrees to cooperate in the placement of a suitable
monument or other feature to memorialize this honor, at the City's expense. Lessee shall use the
ceremonies, and the press announcements regarding such ceremonies, and both parties shall have the
right to participate in any such naming ceremonies.
5.7 Prohibition on Lobbying. Lessee and its officers and employees shall not lobby,
influence, or attempt to influence any residents of the Housing Development or other registered
voters of the City with respect to any matters which require the approval of the City or the electorate Deieted:3
of the City. Any violation of this Section 5t7 shall_be deemed a material breach of this Lease. - "
_________________________.________.___---- Deleted:9
6. OPERATING COVENANT.
6.1 Operation in Accordance with Agreement. The Lessee covenants and agrees that,
at all times during the Term of this Lease, Lessee shall operate the Housing Development as a forty-
five unit multifamily apartment projecte _ All uses conducted - - on _the - Site,including, without -.--- Deleted: waccordancewilh he DDA,
----- - - ---- --- Jesse.
limitation, all activities undertaken by the Lessee pursuant to this Lease, shall conform to all the Regulatory Agreement a ad this
applicable provisions of the City Municipal Code, and the recorded documents pertaining to and
running with the Site.
6.2 Subordination of Affordability Requirements.
2014, which subordinates the affordable housing covenants set forth in the Regulatory Agreement to
the liens of the construction loan and permanent loan In connection with any future refinancing of
such loans and in the event that the City finds that an economically feasible method of financing for
the construction and operation of the Housing Development, without the subordination of the
affordable housing covenants as may be set forth in the R_ eg_ story Agreement, is not reasonably --_----
Deleted: DDA, this Leese end the
available, the City shall make the affordable housing covenants set forth in the Rjegulatory ---------
Deleted: DDA, thisL. eaadthe
Agreement junior and subordinate to the deeds of trust and other documents required in connection
withsuch refinancing for the Housing Development approved pursuant to Section 5 hereof. Any -------
Deleted: the cros cdoa aad
subordination agreement entered into by the City with respect to such refinancing shall contain
''
Pe""a"eota"eneiog
written commitments which the City finds are reasonably designed to protect City's investment in
Deleted: 401 or the DDA.
the event of Default, such as either of the following: (a) a right of City to cure a default on the loan
prior to foreclosure, or (b) a right of City to negotiate with the lender after notice of default from the
lender and prior to foreclosure.
7. UTILITIES AND TAXES.
7.1 Utilities. Lessee shall pay all charges for gas, electricity, garbage collection, and
other utilities furnished to the Site and the Housing Development and all hookup or similar charges
or assessments for utilities levied against the Site and the Housing Development for any period
included within the Term.
7.2 Real Estate Taxes.
(a) Lessee covenants and agrees to pay before delinquency all real estate taxes,
assessments and liens of every kind and nature upon Lessee's possessory interest in the Site and the
Housing Development. "Real estate taxes" shall mean all real estate taxes, assessments for
improvements to the Site, public agency water and sewer rates and charges, or any other assessments
or taxes, which shall be levied against the Site or the Housing Development, or any interest therein,
and which become a lien thereon and accrue during the Term.
(b) Lessee shall have the right to apply for and receive a welfare exemption from
the payment of property taxes pursuant to Revenue and Taxation Code Section 214(g) (or successor
statute).
(c) Lessee shall have the right to contest the amount or validity of any real estate
taxes, in whole or in part, by appropriate administrative and legal proceedings, without any costs or
expense to City. Deleted:1
1085816.4 12098A03
7.3 Personal Property. Lessee covenants and agrees to pay before delinquency all
personal property taxes, assessments and liens of every kind and nature upon all personal property as
may be from time to time situated within the Site and the Housing Development.
8. OWNERSHIP OF IMPROVEMENTS, FIXTURES AND FURNISHINGS.
8.1 Ownership of Improvements During Term. All improvements constructed on the
Site by Lessee as permitted by this Lease (the "Housing Development") shall, during the Term, be
and remain the property of Lessee; provided, however, that Lessee shall have no right to waste the
Housing Development, or to destroy, demolish or remove the Housing Development except as
otherwise permitted pursuant to this Lease; and provided further that Lessee's rights and powers
with respect to the Housing Development are subject to the terms and limitations of this Lease.
8.2 Ownership of Land During Term. The Site (exclusive of the Housing
Development) shall, throughout the Term, be and remain the property of City. City represents and
warrants to Lessee that it has the power and authority to enter into this Lease and to perform all
obligations and agreements incidental or pertinent to this Lease. City shall not incur any lien or
encumbrance on or against the Site unless such lien or encumbrance is a Permitted Fee
Encumbrance For purposes of this Lease. a "Permitted Fee Encumbrance" shall mean any of the
Development for which payment is not delinquent; or (c) the covenants, conditions, restrictions,
reservations, rights, rights -of -way, and easements of record prior to the recordation of the
Memorandum of Lease.
9. INDEMNIFICATION: FAITHFUL PERFORMANCE.
Lessee shall not suffer or permit any liens to be enforced against the City's fee simple estate
as to the Site, to City's fee simple estate in reversion of the Housing Development, nor against
Lessee's leasehold interest therein by reason of work, labor, services or materials supplied or
claimed to have been supplied to Lessee or anyone holding the Site and the Housing Development,
or any part thereof, through or under Lessee. Lessee agrees to defend, indemnify, and hold City and
its officers, officials, employees, agents, and representatives, harmless against such liens. If any
such lien shall at anytime be filed against the Site or the Housing Development, Lessee shall, within
thirty (30) days after notice to Lessee of filing thereof, cause the same to be discharged of record;
provided, however, that Lessee shall have the right to contest the amount or validity, in whole or in
part, of any such lien by appropriate proceedings but in such event, Lessee shall notify City and
promptly bond such lien in the manner authorized by law with a responsible surety company
qualified to do business in the State of California or provide other security acceptable to City.
Lessee shall prosecute such proceedings with due diligence. Nothing in this Lease shall be deemed
to be, nor shall be construed in any way to constitute, the consent or request of City, express or
implied, by inference or otherwise, to any person, firm or limited partnership for the performance of
any labor or the furnishing of any materials for any construction, rebuilding, alteration or repair of or
to the Site, the Housing Development, or any part thereof. Prior to commencement of construction
of the Housing Development on the Site, or any repair or alteration thereto, Lessee shall give City
1085816.4 12098-003 7
not less than thirty (30) days advance notice in writing of intention to begin said activity in order that
nonresponsibility notices may be posted and recorded as provided by State and local laws.
10. MAINTENANCE AND REPAIR.
Lessee agrees to assume full responsibility for the management, operation and maintenance
of the Housing Development and the Site throughout the Term without expense to City, and to
perform all repairs and replacements necessary to maintain and preserve the Housing Development
and the Site in good repair, in a neat, clean, safe and orderly condition, in accordance with the
standard of maintenance of high quality apartment projects within Los Angeles County, California,
reasonably satisfactory to City and in compliance with all applicable laws. Lessee shall maintain the
Housing Development, all buildings, all exterior facades, all sidewalks, and all exterior areas, in a
safe and sanitary fashion. The Lessee agrees to provide utility services, administrative services,
supplies, contract services, maintenance, maintenance reserves, and management which are
necessary for the maintenance of the Housing Development. Lessee agrees that City shall not be
required to perform any maintenance, repairs or services or to assume any expense in connection
with the Housing Development and the Site. Lessee hereby waives all rights to make repairs or to
cause any work to be performed at the expense of City as may be provided for in Section 1941 and
1942 ofthe California Civil Code, if applicable. The Lessee shall manage and maintain the Housing
Development on the Site in conformity with the City Municipal Code. Parking lots, lighting
fixtures, trash enclosures, and all areas which can be seen from the adjacent streets shall be kept free
from any debris or waste materials by regularly scheduled maintenance. If at any time Lessee fails
to maintain the Housing Development in accordance with this Lease and such condition is not
corrected within five days after written notice from the City with respect to graffiti, debris, and waste
Development and perform all acts and work necessary to protect, maintain, and preserve the Housing
Development, and to attach a lien upon the Housing Development, or to assess the Housing
Development, in the amount of the expenditures arising from such acts and work of protection,
maintenance, and preservation by the City and/or costs of such cure, including a reasonable
administrative charge, which amount shall be promptly paid by Lessee to the City upon demand
11. ENVIRONMENTAL MATTERS.
11.1 Definitions. For the purposes ofthis Lease, unless the context otherwise specifies or
requires, the following terms shall have the meanings herein specified:
(a) The term "Hazardous Materials" shall mean any substance, material, or waste
which is or becomes regulated by any local governmental authority, the County of Riverside, the
State of California, regional governmental authority or the United States Government, including, but
not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely
hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed
pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5
(Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 ofthe
California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous
Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or
pele6ed:9
1085816.4 12098-003
"hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20,
Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20,
Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos,
(vii) polychlorinated byphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely
hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Division 4,
Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water
Act (33 U. S.C. § 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. §6901 .et seq. (42 U.S.C. §6903) or (xi) defined as
"hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. §9601 et seq. "Hazardous Materials" shall not include
such products in quantities as are customarily used in the construction, maintenance, rehabilitation or
management of residential developments or associated buildings and grounds, or typically used in
residential activities in a mannertypical of other comparable residential developments, or substances
commonly ingested by a significant population living within the Housing Development, including
without limitation alcohol, aspirin, tobacco and saccharine.
(b) The term "Hazardous Materials Contamination" shall mean the contamination
(whether presently existing or hereafter occurring) ofthe improvements, facilities, soil, groundwater,
air or other elements on, in or of the Site by Hazardous Materials, or the contamination of the
buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a result
of Hazardous Materials at any time (whether before or after the Date of Lease) emanating from the
Site.
(c) The term "Governmental Requirements" shall mean all past, present and
future laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States,
the state, the county, the city, or any other political subdivision in which the Site is located, and any
other state, county city, political subdivision, agency, instrumentality or other entity exercising
jurisdiction over City, Lessee or the Site.
11.2 Site Evaluation. Pursuant to Sections 205 and 206 of the DDA, Lessee has had an
opportunity, prior to the Commencement Date of this Lease, to engage its own environmental
consultant to make such investigations of the Site as Lessee has deemed necessary, and Lessee has
approved the environmental condition of the Site. Lessee assumes any and all responsibility and
Liabilities (as defined in Section 11.3 of this Lease) for all Hazardous Materials Contamination of
the Site which occurs during the Term of this Lease or extension thereof.
11.3 Indemnification. Upon and after the Commencement Date of this Lease, Lessee
agrees to indemnify, defend and hold City harmless from and against any claim, action, suit,
proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense
(including, without limitation, reasonable attorneys' fees), resulting from, arising out of, or based
upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous Materials on,
under, in or about, or the transportation of any such Hazardous Materials to or from, the Site during
the term of this Lease, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule,
regulation, permit, judgment or license relating to the use, generation, release, discharge, storage,
disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Site during
the term of this Lease, excepting only any such loss, liability, claim, or judgment arising out of the
Deleted: ¶
1085816.4 12098-003 91
intentional wrongdoing or gross negligence of City, or its officers, officials, employees, members,
agents, volunteers, or representatives. This indemnity shall include, without limitation, any damage,
liability, fine, penalty, cost or expense arising from or out of any claim, action, suit or proceeding,
including injunctive, mandamus, equity or action at law, for personal injury (including sickness,
disease or death), tangible or intangible property damage, compensation for lost wages, business
income, profits or other economic loss, damage to the natural resource or the environment, nuisance,
contamination, leak, spill, release or other adverse effect on the environment. Lessee's obligations
under this Section 11.3 shall survive the expiration of this Lease.
City agrees to indemnify, defend and hold Lessee and its officers, employees, agents and
representatives harmless from and against any claim, action, suit, proceeding, damage, liability,
deficiency, fine, penalty, or punitive damage (including, without limitation, reasonable attorneys'
fees), resulting from, arising out of, or based upon the negligent acts or willful misconduct of the
City or its officers, employees, agents, representatives or contractors with respect to the disposal or
handling of any Hazardous Materials on, under, in or about, or the transportation of any such
Hazardous Materials to or from, the Site. At the request of the City, the Lessee shall cooperate with
and assist the City in its defense of any such claim, action, suit, proceeding, loss, cost, damage,
liability, deficiency, fine, penalty, punitive damage, or expense; provided that the Lessee shall not be
obligated to incur any expense in connection with such cooperation or assistance.
11.4 Duty to Prevent Hazardous Materials Contamination. Lessee shall take all
commercially reasonable precautions to prevent the release of any Hazardous Materials into the
environment. Such precautions shall include compliance with all Governmental Requirements with
respect to Hazardous Materials. In addition, Lessee shall install and utilize such equipment and
implement and adhere to such procedures as are consistent with commercially reasonable standards
generally applied by similar industrial facilities as respects the disclosure, storage, use, removal, and
disposal of Hazardous Materials.
11.5 Obligation of Lessee to Remediate Premises. Lessee shall, at its sole expense,
design and install a vapor barrier and a venting system to reduce the vapor release from the Site to an
acceptable level, and perform all Remediation required pursuant to the DDA. Notwithstanding the
obligation of Lessee to indemnify City pursuant to Section 11.3 of this Lease, Lessee shall, at its sole
cost and expense, promptly take (i) all actions required by any federal, state, regional, or local
governmental agency or political subdivision or any Governmental Requirements and (ii) all actions
necessary and commercially reasonable to develop and operate the Housing Development in
accordance with this Lease, which requirements or necessity arise from the presence upon, about or
beneath the Site of any Hazardous Materials or Hazardous Materials Contamination no matter when
occurring. Such actions shall include, but not be limited to, the investigation of the environmental
condition of the Site, the preparation of any feasibility studies or reports and the performance of any
cleanup, remedial, removal or restoration work. Lessee shall take all actions necessary to promptly
restore the Site to an environmentally sound condition for the uses contemplated by this Lease
notwithstanding any lesser standard of remediation allowable under applicable Governmental
Requirements. The Lessee's duties hereunder shall not affect any rights Lessee has pursuant to
Section 11.3 hereof.
11.6 Right of Entry. Notwithstanding any other term or provision of this Lease, Lessee
shall permit City or its agents or employees to enter the Site at any time during normal business
Deleted: g
1085916.4 12098-003 1q i
hours (except in the event of an emergency), without prior notice in the event of an emergency, and
with not less than forty-eight (48) hours advance notice if no emergency is involved, to inspect,
monitor and/or take emergency or long-term remedial action with respect to Hazardous Materials
and Hazardous Materials Contamination on or affecting the Site, or to discharge Lessee's obligations
hereunder with respect to such Hazardous Materials and Hazardous Materials Contamination when
Lessee has failed to do so after notice from City and an opportunity to cure such deficiency. All
costs and expenses incurred by City in connection with performing Lessee's obligations hereunder
shall be reimbursed by Lessee to City within thirty (30) days of Lessee's receipt of written request
therefor.
11.7 Storage or Handling of Hazardous Materials. Lessee, at its sole cost and expense,
shall comply and shall cause its tenants to comply with all Governmental Requirements for the
storage, use, transportation, handling and disposal of Hazardous Materials,on or about the Site,
including without limitation wastes generated in connection with the uses conducted on the Site. In
the event Lessee will store, use, transport, handle or dispose of any Hazardous Materials, Lessee
shall notify City in writing at least ten (10) days prior to their first appearance on the Site and
Lessee's failure to do so shall constitute a material default under this Lease. Lessee shall conduct all
monitoring activities required or prescribed by applicable Governmental Requirements, and shall, at
its sole cost and expense, comply with all posting requirements of Proposition 65 or any other
similarly enacted Governmental Requirements. In addition, in the event of any complaint or
governmental inquiry, or if otherwise deemed necessary by City in its reasonable judgment, City
may require Lessee, at Lessee's sole cost and expense, to conduct specific monitoring or testing
activities with respect to Hazardous Materials on the Site. Such monitoring programs shall be in
compliance with applicable Governmental Requirements, and any program related to the specific
monitoring of or testing for Hazardous Materials on the Site, shall be satisfactory to City, in City's
reasonable discretion. Lessee shall further be solely responsible, and shall reimburse City, for all
costs and expenses incurred by City arising out of or connected with the removal, clean-up and/or
restoration work and materials necessary to return the Site and any property adjacent to the Site
affected by Hazardous Materials emanating from the Site to their condition existing at the time ofthe
Lessee's Site Evaluation. Lessee's obligations hereunder shall survive the termination of this Lease.
11.8 Environmental Inquiries. Lessee shall notify City, and provide to City a copy or
copies, of the following environmental permits, disclosures, applications, entitlements or inquiries
relating to the Site: notices of violation, notices to comply, citations, inquiries, clean-up or
abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements, and
reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous
Materials and underground tanks, and Lessee shall report to City, as soon as possible after each
incident, any unusual, potentially important incidents.
In the event of a release of any Hazardous Materials into the environment, Lessee shall, as
soon as possible after the release, furnish to City a copy of any and all reports relating thereto and
copies of all correspondence with governmental agencies relating to the release. Upon request of
City, Lessee shall famish to City a copy or copies of any and all other environmental entitlements or
inquiries relating to or affecting the Site including, but not limited to, all permit applications, permits
and reports including, without limitation, those reports and other matters which may be characterized
as confidential.
Deleted:
12. ALTERATION OF IMPROVEMENTS.
Upon completion of the Housing Development pursuant to the requirements of the DDA,
Lessee shall not make or permit to be made any structural alteration of the exterior of the Housing
Development, nor demolish all or any part of the Housing Development, without obtaining all
required City permits and entitlements, and without obtaining the prior written consent of City,
which consent shall not be unreasonably withheld. The foregoing shall not prohibit or restrict the
repair and/or replacement of the Housing Development by Lessee in accordance with Section 10
hereof. In requesting such consent of the City Lessee shall submit to City detailed plans and
specifications of the proposed work and an explanation of the need and reasons therefor. This
provision shall not limit or set aside any obligation of Lessee under this Lease to maintain the
Housing Development and the Site in a clean and safe condition, including structural repair and
restoration of damaged Housing Development. City shall not be obligated by this Lease to make any
improvements to the Site or to assume any expense therefor. Lessee shall not commit or suffer to be
committed any waste or impairment of the Site or the Housing Development, or any part thereof,
except as otherwise permitted pursuant to this Lease.
13. DAMAGE OR DESTRUCTION.
13.1 Obligation to Repair and Restore Damage Due to Casualty Covered by
Insurance. Subject to Section 13.3 below and the provisions of all Mortgages, if the Housing
Development shall be totally or partially destroyed or rendered wholly or partly uninhabitable by fire
or other casualty required to be insured against by Lessee, Lessee shall promptly proceed to obtain
insurance proceeds and take all steps necessary to begin reconstruction and, immediately upon
receipt of insurance proceeds, to promptly and diligently commence the repair or replacement ofthe
Housing Development to substantially the same condition as the Housing Development is required to
be maintained in pursuant to this Lease, whether or not the insurance proceeds are sufficient to cover
the actual cost of repair, replacement, or restoration, and Lessee shall complete the same as soon as
possible thereafter so that the Housing Development can be occupied in accordance with this Lease.
Subject to Section 25.22, in no event shall the repair, replacement, or restoration period exceed one
(1) year from the date Lessee obtains insurance proceeds unless the City Administrator or designee,
in his or her sole and absolute discretion, approves a longer period of time. City shall cooperate with
Lessee, at no expense to City, in obtaining any governmental permits required for the repair,
replacement, or restoration. If, however, the then -existing laws of any other governmental agencies
with jurisdiction over the Site or the provisions of any Mortgages do not permit the repair,
replacement, or restoration, Lessee may elect not to repair, replace, or restore the Housing
Development by giving notice to City (in which event Lessee will be entitled to all insurance
proceeds, subject to Lessee's obligations toMortgagees or other third parties, but Lessee shall be Deleted: lenders
required to remove all debris from the Site) or Lessee may reconstruct such other improvements on
the Site as are consistent with applicable land use regulations and approved by the City, and all other
governmental agency or agencies withjurisdiction. In the event Lessee elects not to repair, replace,
or restore and give City notice of such election as provided herein, this Lease shall terminate.
13.2 Continued Operations. During any period of repair, Lessee shall continue, or cause
the continuation of, the operation of the Housing Development on the Site to the extent reasonably
practicable from the standpoint of prudent business management.
Deleted: ¶
1085816.4 12098-003 12, i - -
13.3 Damage or Destruction Due to Cause Not Required to be Covered by Insurance.
If the Housing Development is completely destroyed or substantially damaged by a casualty for
which Lessee is not required to (and has not) insured against, then City shall deliver written notice to
Lessee of its obligations under this Section 13.3 within thirty (30) days of such event of substantial
damage or destruction, and Lessee shall not be required to repair, replace, or restore such
improvements and may elect not to do so by providing City with written notice of election not to
repair, replace, or restore within ninety (90) days after such substantial damage or destruction. In
such event, Lessee shall remove all debris from the applicable portion of the Site. As used in this
Section 13.3, "substantial damage" caused by a casualty not required to be (and not) covered by
insurance shall mean damage or destruction which is fifteen percent (15%) or more of the
replacement cost of the improvements comprising the Housing Development. In the event that the
City delivers such notice to Lessee but Lessee does not timely elect not to repair, replace, or restore
the Housing Development as set forth in the first sentence of this Section 13.3, Lessee shall be
conclusively deemed to have waived its right not to repair, replace, or restore the Housing
Development and thereafter Lessee shall promptly commence and complete the repair, replacement,
or restoration of the damaged or destroyed Housing Development in accordance with Section 13.1
above and continue operation of the Housing Development during the period of repair (if
practicable) in accordance with Section 13.2 above. In the event Lessee elects not to repair, replace,
or restore, and gives City notice of such election as provided herein, this Lease shall terminate ..... Deleted:.
termination shall occur so long as (i) the holder of any Mortgage provides a notice of default to
Lessee based on such failure to repair, replace and rebuild and thereafter seeks to obtain possession
of the Site for the purDoses of causing such rebuilding to occur, or the holder of the Mortgage or its
designee becomes the Lessee under a New Lease pursuant to section 24.5(e) hereof and thereafter
reasonable schedule which is mutually acceptable to such party and City.
14. SALE, ASSIGNMENT, LEASE OR OTHER TRANSFER
14.1 Prohibition of Sale, Assignment, Lease or Transfer. Except for Permitted•------
Formatted: Lvl 2 Cont
Transfers as provided pursuant to Section 4.2 hereof, _ Lessee shall not sell, assigni_Lea50, Or- --_--
-
Deleted: 703 ofNe DDA
otherwise transfer this Lease or any right therein, nor make any total or partial sale, assignment,
ease, or transfer in any other mode or form_ of the whoor any part of the Site or the Housing
Deleted: Lease
-...---
Development (each of which events is referred to in this Lease as an "Assignment'), without prior
written approval of City_.- Any purported assignment without the prior written consent of City, except --,.--
Deleted: panoont m section?a3 oru e
for assignments permitted pursuant to 4.2 hereof, shall render this Lease absolute) null and void
- - ---- - y
DDA
and shall confer no rights whatsoever upon any purported assignee or transferee. Lessee shall only
Deleted: section 703 ofihe DDA
assign, Lease, or transfer the Site and the Housing Development as a whole and is not permitted to
subdivide the Site and the Housing Development for the duration of this Lease without the prior
written approval of City. Notwithstanding any provision in this Section 14.1 to the contrary, in no
event shall Lessee make any assignment which would or could be effective beyond the Term
(including extensions thereof) without the prior written consent of the City. City may assign or
transfer any of its rights or obligations under this Lease with the approval of the Lessee, which
approval shall not be unreasonably withheld.
-
Deleted:9
1085816.4 12098403 13
14.2 Permitted Transfers. Notwithstanding any other provision of this Lease to the
contrary. City approval of an assignment of this Lease or conveyance ofthe Housing Development
or any part thereof, shall not be required in connection with any of the following
(a) The conveyance or dedication of any portion of the Site to the City, or the
granting of easements or permits to facilitate construction of the Housing Development
(b) Any required assignment for financing purposes (subject to such financing
being considered and approved by City), including the grant of a deed of trust to secure the funds
necessary for land acquisition construction and permanent financing of the Housing Development
(c) Any transfers to a limited partnership formed for the purpose of obtaining Tax
Credits for the Housing Development in which Meta Housing Corporation (or an entity wholly
owned by Meta Housing Comoration or John Huskey) is the administrative general partner and
Western Community Housing Inc (or a limited liability company wholly owned by Westem
Community Housing. Inc.) is the managing general partner, subiect to City approval of the identity
of the limited partners.
(d) The lease of Housing Units to qualified tenants
(e) Lessee's conveyance ofthe Site or the limited partnership interest in Lessee to
Meta Housing Corporation, or another entity affiliated with and controlled by Meta Housing
Corporation or John Huskey, in accordance with the option to purchase set forth in Lessee's
partnership agreement.
(1) A transfer of a general partnership interest in Lessee to a nonprofit man in
general partner entity.
(g) Notwithstanding anything to the contrary contained herein, without the
consent of the City, each Investor Limited Partner shall have the right to assign its interests as
limited partner in the Lessee to an entity which is controlled by such Investor Limited Partner or is
under common control with such Investor Limited Partner.
(h) Notwithstanding anything to the contrary contained herein, Investor Limited
Partner shall have the right to remove either general partner of Lessee or both general partners and
substitute any Investor Limited Partner or an affiliate thereof as a general partner of the Lessee
pursuant to the Partnership Agreement, without City's consent. Any proposed replacement of a
general partner with an entity other than an Investor Limited Partner or an affiliate thereof will be
subject to City's prior consent, which shall not be unreasonably withheld
(i) The foreclosure or deed in lieu thereof by a Mortgagee of its interest in the
Housing Development pursuant to a Project Loan
(j) Califomia Community Reinvestment Corporation's acquisition ofthe Prome
Loan from Bank of America N.A. in furtherance of the conversion of such loan.
In the event of an assignment by Lessee under subparagraph (c) or (e) above not requiring
City's prior approval Lessee nevertheless agrees that at least thirty (30) days prior to such
assignment it shall give written notice to City of such assignment and provide to the City an
assignment and assumption agreement reasonably satisfactory to City. Upon the City's approval of
such assignment and assumption agreement, the assigning Lessee shall not be responsible for any
obligations hereunder which arise after the effective date of the assignment and assumption
agreement, provided that the assigning Lessee shall retain all indemnification obligations underthis
Lease.
f WIMU16310"
Lessee may, at any time and from time to time during the Term, upon prior written notice to
City and subject to the requirements of Sections 401 - 408 of the DDA, mortgage, pledge,
hypothecate or otherwise encumber in connection with project financing to a federally or state
chartered bank or savings and loan, a life insurance company, a mortgage company, a pension fund,
investment trust or similar institutional lender or trustee as required in connection with project
financing (herein called "Lender"), by deed of trust or mortgage or other security instrument, all of
Lessee's right, title and interest pursuant to this Lease and the leasehold estate hereby ("Project
Loan"). Project Loans shall include the construction loan and permanent loan approved by the City
pursuant to Section 401 of the DDA as set forth on Exhibit E attached hereto, and the refinancing of
the permanent loan, provided that the principal amount of the refinancing does not exceed the then
current amount owed pursuant to the loan, and the interest rate and other terms and conditions of the
together with refinancing of the Project Loans and any other loan or encumbrance approved by City
pursuant to the DDA and this Lease, shall be deemed to be "Permitted Encumbrances."
Notwithstanding anything in this Section 15 to the contrary, Lessee shall not, without the prior
written consent of City, which may be given or withheld in City's sole discretion, obtain any Project
Loan or other conveyance for financing secured by the Housing Development or this Lease, the term
of which Capital Project Loan or other conveyance for financing purposes extends beyond the Term.
16. INDEMNITY.
Lessee shall defend, indemnify, assume all responsibility for, and hold City and its officers,
employees, agents, and representatives harmless from, all claims, demands, damages, defense costs
or liability of any kind or nature (including reasonable attorneys' fees and costs) and for any
damages to property or injuries to persons, including accidental death, which may be caused by or
arise out ofLalthe Lessee's performance or failure to perform its obligations pursuant to this Lease,
whether such activities or performance thereof be by the Lessee or by anyone employed or
contracted with by the Lessee and whether such damage shall accrue or be discovered before or after
termination of this Lease, or 01from, any defect in the Site or the Housing Development, or for any
defects in the Development Plans approved by City pursuant to the DDA, or for any structural or
reasonably caused by the City's review and approval of the Development Plans, or (c) from any
displacement of residents or liability for relocation assistance pursuant to Government Code Section
7260, et seq., due to the acts of Lessee hereunder, or (d) Lessee's performance or nonperformance of _ - pelecea: &e to m. � ofLoswo
.b. ..LI:....d...... .... d.... rL.. Tl A T.........J.. bev=der.
the California Environmental Quality Act approvals made in connection therewith. or (f) the
noncompliance by Lessee of any applicable local, state and/or federal law, including, without
Deleted: g
108581E 4 12098-003 15,
limitation. any applicable federal and/or state labor laws (including, without limitation, if applicable,
the requirement to pay state prevailing wages):(p) the implementation of Section 1781 ofthe Labor
Code, as the same may be amended from time to time, or any other similar law: or (h) failure by
Lessee to provide any required disclosure or identification as required by Labor Code Section 1781,
as the same may be amended from time to time, or any other similar law. Lessee shall not be liable
for property damage or bodily injury occasioned by the negligence of, willful misconduct of, or
breach of this Lease by City or its agents or employees.
10858164 1209"03 160
17. INSURANCE.
17.1 Insurance to be Provided by Lessee. During the Term, Lessee, at its sole cost and
expense, shall itself take out and maintain, or cause to betaken out and maintained, the following
insurance coverage, in addition to any insurance which may be required pursuant to the DDA:
(a) Maintain a policy or policies of all-risk property insurance. Such insurance
policy shall be maintained in an amount not less than one hundred percent (100%) of the "Full
Insurable Value" of the Housing Development, as defined herein in this Section 17.
(b) Maintain, in an amount not less than One Million Dollars ($1,000,000) per
occurrence with a Three Million Dollars ($3,000,000) aggregate, commercial general liabilitypolicy
including contractual liability. The required amount of insurance shall be subject to increases as
City may reasonably require from time to time, but not more frequently than every twenty-four (24)
months. In no event shall such increase or increases exceed the increase during such period in the
CPI.
(c) Maintain a comprehensive automobile liability policy in not less than the
amount of One Million Dollars ($1,000,000) combined single limit. The required amount of
insurance shall be subject to increases as City may reasonably require from time to time, but not
more frequently than every twenty-four (24) months. In no event shall such increase or increases
exceed the increase during such period in the CPI.
(d) Maintain worker's compensation insurance issued by a responsible carrier
authorized under the laws of the State of California to insure employers against liability for
compensation under the workers' compensation laws now in force in California, or any laws
hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such workers'
compensation insurance shall cover all persons employed by Lessee and/or Property Manager in
connection with the Site and the Housing Development and shall cover full liability for
compensation under any such act aforesaid, based upon death or bodily injury claims made by, for
on behalf of any person incurring or suffering injury or death in connection with the Site or the
Housing Development or the operation thereof by Lessee or Property Manager.
(e) Maintain until the completion of construction of the Housing Development a
builder's risk policy covering damage or loss up to the value of labor and materials.
(1) Maintain or caused to be maintained use and occupancy or business
interruption or rental income insurance against the perils of fire, lightning, vandalism, malicious
mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage
fire insurance policies, in the amount that is reasonably acceptable to the Lessee and City.
17.2 Definition of"Full Insurable Value." The term "Full Insurable Value" as used in
this Section 17 shall mean the actual replacement cost of the Housing Development, including the
cost of construction of the Housing Development, architectural and engineering fees, applicable
governmental fees, and inspection and supervision. Lessee shall maintain the insurance policy
required by Section 17.1(a) hereof at the current Full Insurable Value of the Housing Development.
Deleted:
17.3 General Insurance Provisions. All policies of insurance provided for in this Section
17, except for the workers' compensation insurance, shall name Lessee and any subtenant as the
insured and City and its officers, employees, agents, and representatives, as additional insureds, as
their respective interests may appear. Lessee agrees to timely pay or cause to be timely paid all
premiums for such insurance and, at its sole cost and expense, to comply and secure compliance with
all insurance requirements necessary for the maintenance of such insurance. Lessee agrees to submit
policies of all insurance required by this Section 17 of this Lease, or certificates evidencing the
existence thereof, to City on or before the effective date of this Lease, indicating full coverage ofthe
contractual liability imposed by this Lease. At least thirty (30) days prior to expiration of any such
policy, copies of renewal policies, or certificates evidencing the existence thereof, shall be submitted
to City. All policies shall be written by good and solvent insurers qualified to do business in
California and reasonably acceptable to the City Director or designee. All policies or certificates of
insurance shall also: (i) provide that such policies shall not be cancelled or limited in any manner
without at least thirty (30) days prior written notice to City; and (ii) provide that such coverage is
primary and not contributing with any insurance as may be obtained by City and shall contain a
waiver of subrogation for the benefit of the City. Lessee agrees that provisions of this Section as to
maintenance of insurance shall not be construed as limiting in any way the extent to which Lessee
may be held responsible for the payment of damages to persons or property resulting from Lessee's
activities, activities of its sublessees or the activities of any other person or persons for which Lessee
is otherwise responsible
17.4 Failure to Maintain Insurance. If Lessee fails or refuses to procure or maintain
insurance as required by this Lease, City shall have the right, at City's election, and upon ten (10)
days prior notice to Lessee, to procure and maintain such insurance. The premiums paid by City
shall be treated as added Rent due from Lessee, to be paid on the first day of the month following the
date on which the premiums were paid. City shall give prompt notice of the payment of such
premiums, stating the amounts paid and the name of the insured(s).
17.5 Insurance Proceeds Resulting from Loss or Damage to Housing Development.
All proceeds of insurance with respect to loss or damage to the Housing Development during the
term of this Lease shall be payable, under the provisions of the policy of insurance and subjeetto the
provisions of all Mortgages, to Lessee, and said proceeds shall constitute a trust fund to be used for
the restoration, repair and rebuilding of the Housing Development in accordance with plans and
specifications approved in writing by City. To the extent that such proceeds exceed the cost of such
restoration, repair or rebuilding, then such proceeds shall be used to repay any outstanding loans
secured by encumbrances upon the Site, and any remaining proceeds shall be apportioned between
Lessee and City as their interests may appear. Notwithstanding the foregoing, within the period
during which a Permitted Encumbrance is in effect, such proceeds shall be payable in accordance
with the Permitted Encumbrance documents.
In the event this Lease is terminated by mutual agreement of City and Lessee, as approved by
all Mortgagees, and the Housing Development is not restored, repaired or rebuilt, then, subject to the
consent of the Mortgagees, the insurance proceeds shall be jointly retained by City and Lessee and
shall be applied first to any payments due under this Lease from Lessee to City, second to restore the
Site and Housing Development to their original condition and to a neat and clean conditiorL� -,-_- Deleted:,
permitted by the Mortgagees), third to repay any outstanding loans secured by encumbrances upon
the Site, and finally any excess shall be apportioned between Lessee and City as their interests may D 1eted,
e ,1
1095816.4 12098-003 1 �,
appear, and Lessee shall have no further obligation hereunder to restore, repair or rebuild the
Housing Development. The value of each interest for the purpose of apportioning excess proceeds
under this Section 17.5 shall be the fair market value of such interests immediately prior to the
occurrence of the damage or destruction.
18. EMINENT DOMAIN.
In the event that the Site and/or the Housing Development or any part thereof shall be taken
for public purposes by condemnation as a result of any action or proceeding in eminent domain,
then, as between City and Lessee, but subject to the provisions of all Mortgages, the interests of City
and Lessee in the award and the effect of the taking upon this Lease shall be as follows:
(a) In the event of such taking of only a part ofthe Site, leaving the remainder of
the Site in such location and in such form, shape and size as to be used effectively and practicably
for the conduct thereon of the uses permitted hereunder, this Lease shall terminate and end as to the
portion of the Site so taken as of the date title to such portion vests in the condemning authority, but
shall continue in full force and effect as to the portion of the Site not so taken and from and after
such date the rental required by this Lease to be paid by Lessee to City shall be reduced in the
proportion which the number of square feet so taken bears to the total number of square feet in the
Site.
(b) In the event of taking of only a part of the Site, leaving the remainder of the
Site in such location, or in such form, shape or reduced size as to render the same not effectively and
practicably usable and economically feasible for the conduct thereon of the uses permitted
hereunder, as reasonably determined by the Lessee, this Lease and all right, title and interest
thereunder shall cease on the date title to the Site or the portion thereof so taken vests in the
condemning authority.
(e) In the event the entire Site is taken, this Lease and all of the right, title and
interest thereunder, shall cease on the date title to the Site so taken vests in the condemning
authority.
(d) In the event of taking of only Lessee's leasehold interest in the Site, subject to
the approval of all Mortgagees, this Lease shall terminate.
(e) Promptly after a partial taking, at Lessee's expense and in the manner
specified in provisions of this Lease related to maintenance, repairs, alterations, Lessee shall restore
the Housing Development, to the extent possible and as permitted by law, and to the extent of
condemnation proceeds received by Lessee, so as to place them in a condition suitable for the uses
and purposes for which the Site was leased.
(f) In the event of any taking under subparagraphs (a), (b), (c) or (d) hereinabove,
that portion of any award of compensation attributable to the fair market value of the Site or portion
thereof taken, valued as subject to this Lease, shall belong to City. That portion of any award
attributable to the fair market value of Lessee's leasehold interest in the Site and Improvements
pursuant to this Lease, and any separate award made to Lessee for loss of business or for the taking
of Lessee's fixtures and improvements, shall belong to Lease% subject to the provisions of the ------ Deleted:.
Mortgages. This Section 18 shall be Lessee's sole and exclusive remedy in the event of any taking. Deleted: I
1085816.4 12098-003 19 ,
Lessee hereby waives the benefits of California Code of Civil Procedure § 1265.130.
(g) In the event of a partial taking, where the Lease remains in effect and Lessee
is obligated to restore or repair the Housing Development, then Lessee shall be entitled to any
portion of the award attributable to severance damages to Lessee's interest in the remaining Housing
Development, and any remaining severance damages shall bepayable to City_ essee's award shall
be used for the restoration, repair or rebuilding of the Housing Development in accordance with
plans and specifications approved in writing by City to the extent necessary to restore or repair the
Housing Development subject to the provisions of the Mortgaees. The value ofeach interest forthe.
purpose of apportionment under this Section shall be the fair market value of such interests at the
time of the taking.
(h) Notwithstanding the foregoing provisions of this Section, City may, in its
discretion and without affecting the validity and existence of this Lease, transfer City's interests in
the Site in lieu of condemnation to any authority entitled to exercise the power of eminent domain.
In the event of such transfer by City, Lessee (or mortgagee if a mortgage is then in effect) and City
shall retain whatever rights they may have to recover from said authority the fair market value of
their respective interests in the Housing Development taken by the authority.
(i) All valuations to be made pursuant to this Section 18 shall be made by mutual
agreement of City and Lessee.
19. OBLIGATION TO REFRAIN FROM DISCRIMINATION.
Lessee covenants by and for itself and any successors in interest that there shall be no
discrimination against or segregation of any person or group of persons on account of race, color,
creed, religion, sex, marital status, national origin or ancestry in the sale, lease, transfer, use,
occupancy, tenure or enjoyment of the Site, nor shall Lessee itself or any person claiming under or
through it establish or permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of residents, lessees, or vendees of the
Site or any portion thereof. The foregoing covenants shall run with the land.
20. NONDISCRIMINATION IN EMPLOYMENT.
Lessee, for itself and its successors and assigns, agrees that during the operation of the
Housing Development provided for in this Lease, and during any work of repair or replacement,
Lessee shall not discriminate against any employee or applicant for employment because of race,
color, creed, religion, sex, marital status, physical or mental disability, sexual orientation, ancestry or
national origin, or on the basis of any other category or status not permitted by law.
21. COMPLIANCE WITH LAW.
Deleted: mtheexmtnecesswyto
restore or repair the Housing
Deleted: said
Deleted: and any remaining sevwence
Lessee agrees, at its sole cost and expense, to itself comply, and to use its best commercially
reasonable efforts to secure compliance by all contractors and subtenants of the Site and Housing
Development, with all the requirements now in force, or which may hereafter be in force, of all
municipal, county, state and federal authorities, pertaining to the Site and the Housing Development,
as well as operations conducted thereon, and to faithfully observe and secure compliance by all
contractors and subtenants of the Site and Housing Development with, in the use of the Site and the Deleted: I
1095816.4 12098-003 2q
Housing Development all applicable county and municipal ordinances and state and federal statutes
now in force or which may hereafter be in force, and to pay before delinquency all taxes,
assessments, and fees, if any, assessor levied upon Lessee or the Site or the Housing Development,
including the land and any buildings, structures, machines, appliances or other improvements of any
nature whatsoever, erected, installed or maintained by Lessee or by reason of the business or other
activities of Lessee upon or in connection with the Site and the Housing Development. Lessee shall
use good faith efforts to prevent residential tenants from maintaining any nuisance or other unlawful
conduct on or about the Property, and shall take such actions as are reasonably required to abate any
such violations by residential tenants of the Site and Housing Development. The judgment of any
court of competentjurisdiction, or the admission of Lessee or any residential tenant or permittee in
any action or proceeding against them, or any of them, whether City be a party thereto or not, that
Lessee, residential tenant or permittee has violated any such ordinance or statute in the use of the
Site or the Housing Development shall be conclusive of that fact as between City and Lessee, or
such residential tenant or permittee.
22. ENTRY AND INSPECTION.
City reserves and shall have the right during reasonable business hours (except in cases of
emergency), upon forty-eight (48) hours prior written notice (except in cases of emergency) to
Lessee by the City Administrator or designee, to enter the Site and the Housing Development forthe
purpose of viewing and ascertaining the condition of the same, or to protect its interests in the Site
and the Housing Development or to inspect the operations conducted thereon, subject to the City's
indemnification obligations as set forth in Section 16 hereof.
23. RIGHT TO MAINTAIN.
In the event that the entry or inspection by City pursuant to Section 22 hereof discloses that
the Site or the Housing Development are not in a decent, safe, and sanitary condition, City shall have
the right, after thirty (30) days written notice to Lessee (except in case of emergency, in which event
no notice shall be necessary), to have any necessary maintenance work done for and at the expense
of Lessee and Lessee hereby agrees to pay promptly any and all costs incurred by City in having
such necessary maintenance work done in order to keep the Site and the Housing Development in a
decent, safe and sanitary condition, provided that the City delivers such notice which is required
hereunder. The rights reserved in this Section shall not create any obligations on City or increase
obligations elsewhere in this Lease imposed on City.
Deletetl: ¶
1085816.4 12098.003 24
24. EVENTS OF DEFAULT AND REMEDIES.
24.1 Events of Default by Lessee. Subject to the force majeure provisions of Section
25.22 hereof, the occurrence of any one or more of the following shall constitute an event of default
hereunder:
(a) Lessee shall fail to construct the Housing Development in accordance with the
DDA and within the times set forth in the DDA, subject to force majeure delays as set forth in
Section 702 of the DDA, within thirty (30) days of notice from the City that such construction has
not been completed within the required time; or
(b) Lessee shall abandon or surrender the Site or the Housing Development; or
(c) Lessee shall fail or refuse to pay, within thirty (30) days of notice from City
that the same is due, any installment of Rent or any other sum required by this Lease to be paid by
Lessee; or
(d) Lessee shall fail to materially perform any covenant or condition ofthis Lease,
other than as set forth in subparagraphs (a) or (b) above, and any such failure is not cured within
thirty (30) days following the service on Lessee of a written notice from City specifying the failure
complained of, or if it is not reasonably practicable to cure or remedy such failure within such
thirty (30) day period, then Lessee shall not be deemed to be in default if Lessee shall commence
such cure within such thirty (30) day period and thereafter diligently prosecute such cure to
completion; or
(e) Subject to any restrictions or limitations placed on City by applicable laws
governing bankruptcy, Lessee's (i) application for, consent to or suffering of the appointment of a
receiver, trustee or liquidator for all or for a substantial portion of its assets; (ii) making a general
assignment for the benefit of creditors; (iii) admitting in writing its inability to pay its debts or its
willingness to be adjudged a bankrupt; (iv) becoming unable to or failing to pay its debts as they
mature; (v) being adjudged a bankrupt; (vi) filing a voluntary petition or suffering an involuntary
petition under any bankruptcy, arrangement, reorganization or insolvency law (unless in the case of
an involuntary petition, the same is dismissed within ninety (90) days of such filing); (vii) convening
a meeting of its creditors or any class thereof for purposes of effecting amoratorium, extension or
composition of its debts; or (viii) suffering or permitting to continue unstayed and in effect for ninety
(90) consecutive days any attachment, levy, execution or seizure of all or a portion of Lessee's assets
or of Lessee's interest in this Lease.
Notwithstanding anything to the contrary contained in this Lease, prior to declaring any
default or taking any remedy permitted under this Lease or applicable law based upon an alleged
default, Lessee's limited partner (as set forth on Exhibit E. the "Tax Credit Partner") shall have a
period of not less than sixty (60) days to cure such alleged default; provided, however, if in order to
cure such default Tax Credit Partner reasonably believes that it must remove a general partner of
Lessee, or all of them, pursuant to that certain Lessee's limited partnership agreement, Tax Credit
Partner shall so notify City and so long as Tax Credit Partner is reasonably and diligently attempting
to remove the general partner or general partners, Tax Credit Partner shall have until the date sixty
Deleted: ¶
1085816.4 I2098-003 22 ;' ,
(60) days after the effective date of the removal of the general partner or general partners to cure
such default but in no event more than one (1) year.
24.2 Remedies of City.
In the event of any such default as described in Section 24.1, City may, at its option:
(a) Correct or cause to be corrected said default and charge the costs thereof
(including costs incurred by City in enforcingthis provision) to the account of Lessee, which charge
shall be due and payable within thirty (30) days after presentation by City of a statement of all or
part of said costs;
(b) Correct or cause to be corrected said default and pay the costs thereof
(including costs incurred by City in enforcing this provision) from the proceeds of any insurance;
(c) Exercise its right to maintain any and all actions at law or suits in equity to
compel Lessee to correct or cause to be corrected said default;
(d) Have a receiver appointed to take possession of Lessee's interest in the Site
and the Housing Development, with power in said receiver to administer Lessee's interest in the Site
and the Housing Development, to collect all funds available to Lessee in connection with its
operation and maintenance of the Site and the Housing Development; and to perform all other
consistent with Lessee's obligation under this Lease as the court deems proper; and
In the event that Lessee's default has not been cured within one hundred twenty (120)
days from the date of City's notice pursuant to Section 24.1, in addition to the foregoing remedies
City shall also be entitled to terminate this Lease and immediately regain possession of the Site.
Notwithstanding anything to the contrary in this Lease, in no event shall City have the right to
terminate this Lease as a result of the occurrence and continuance of an Event of Default or
otherwise until the expiration of the fifteen (15) year tax credit compliance period as described in
Section 42(i)(1) of the Internal Revenue Code of 1986, as amended, except with the consent of the Deleted: rPace o m�
Tax Credit Partner. ;
Deleted:
1085816A 12098-003 23 , ;/
24.3 Damages. Damages which City recovers in the event of default under this Lease
shall be those which are then available under applicable California case and statutory law to lessors
for leases in the State of California including, but not limited to, any accrued but unpaid rent and the
worth at the time of award of the amount by which the unpaid rent for the balance of the term of this
Lease after the date of award exceeds the amount of such rental loss for the same period that Lessee
proves could be reasonably avoided.
24.4 Rights and Remedies are Cumulative. The remedies provided by this Section 24
are not exclusive and shall be cumulative to all other rights and remedies possessed by City. The
exercise by City of one or more such rights or remedies shall not preclude the exercise by it, at the
same or different times, of any other rights or remedies for the same default or any other default by
Lessee.
24.5 Rights of Lenders.
(a) General Provisions. At all times during the Term, Lessee shall have the right
to mortgage, pledge, deed in trust, assign rents, issues and profits and/or collaterally (or absolutely
for purposes of security if required by any lender) assign its interest in this Lease, or otherwise
encumber this Lease, and/or the interest of Lessee hereunder, in whole or in part, and any interests or
rights appurtenant to this Lease, and to assign or pledge the same as security for any debt (the holder
of any such mortgage, pledge or other encumbrance, and the beneficiary of any such deed of trust
being hereafter referred to as "Mortgagee" and the mortgage, pledge, deed of trust or other
instrument hereafter referred to as "Mortgage"), upon and subject to each and all of the following
terms and conditions:
Any Mortgage is subject to the requirements of Section 15 hereof.
H. JExcegtt as otherwise set forth herein to the contrary, all rights acquired - Deleted: au
by said Mortgagee shall be subject to each and all of the covenants, conditions and restrictions set
forth in this Lease, and to all rights of City thereunder, none of which covenants, conditions and
restrictions is or shall be waived by City by reason of the giving of such Mortgage. If Lessee
encumbers its leasehold estate by way of a Mortgage as permitted herein, and if City is advised in
writing of the name and address of the Mortgagee, then this Lease shall not be terminated or
canceled on account of any Event of Default by Lessee in the performance ofthe terms, covenants or
conditions hereof until City shall have complied with the provisions of this Lease as to the
Mortgagee's rights to cure and to obtain a new lease.
(b) Consent of Mortgagee Required. No cancellation, surrender, termination, or
modification of this Lease shall be effective without the rp for written consent of the holder of any
Mortgage.
(c) Notice of Defaults. If Lessee or Lessee's successors__ or_ assigns_ shall_
mortgage the leasehold interest herein demised, then, as long as any such Mortgage shall remain
unsatisfied of record Citysprees togive Mortgagee immediate notice of all defaults by Lessee under
the Lease, and to simultaneously give to Mortgagee a written copy of all notices and demands that
City gives to Lessee. No notice or demand under the Lease shall be effective until after notice is
received by Mortgagee. Any notices of default given by City under the Lease shall describe the
Deleted: Rights and Obligations of
Leasehold Mortgagees
Fontmetted: Lvl 3 cont, Tabs: Not at
144 pt
Deleted: the following provisions shall
appirl
No caucdtadon. City will nor cancel,
accept a surrender of terminate or modify
this Lease without the prior consent in
writing ofthe Modgagee.Nodce of
Defaults.
Deleted:g
default(s) with reasonable detail. Mortgagee shall have the right to cure any breach or default within Formatted: Font: Not Bold, Not
the time periods given below -------------------------------- -- = bidden
(d) Mortgagee's Cure Rights.
i. Notice and Cure. After receipt by Lessee and Mortgagee of a notice
of default under the Lease and the subsequent expiration of any applicable period of cure given to
Lessee under the Lease, City shall deliver an additional notice ("Mortgagee's Notice") to Mortgagee
again specifying the default and stating that Lessee's period of cure has expired. Mortgagee shall
thereupon have the additional periods of time to cure any uncured default, as set forth below, without
payment of default charges, fees, late charges or interest that might otherwise be payable by Lessee.
City shall not terminate the Lease or exercise its other remedies under the Lease if:
A. Within sixty (60) days after Mortgagee's receipt of the
Mortgagee's Notice, Mortgagee (i) cures the default, or (ii) if the default reasonably requires more
than ix 60 days to cure, commences to cure said default and diligentlyprosecutes the same to
Deleted:180
----- -------------------------------------------------------- - - -----------------
completion; or
B. Where the default cannot be cured by payment or expenditure
of money or without possession of the Property or otherwise, Mortgagee initiates foreclosure or
other appropriate proceedings within sixty (60) days after receipt of the Mortgagee's Notice, cures
all other defaults reasonably capable of cure, complies with all other covenants and conditions ofthe
Lease reasonably capable of compliance, andcauses the continued payment ofall rents, real property
...... Deleted: continues to pay
taxes and assessments, and insurance premiums to be paid by Lessee under the Lease. ................ -,.._-
Deleted: Mortgagee shall then have
sixty (60) days following the later to
ii. City agrees to accept performance by Mortgagee of all cures,
occur of(i) the date of execution and
delivery of a new lease ofthe Property (a
conditions and covenants as though performed by Lessee, and agrees to permit Mortgagee access to
"New Lease''), or (ii) the dare on which
the Property to take all such actions as may be necessary or useful to perform an condition or
P y ar% P y
Mortgagee or its nominee is able to
occupy the Property Mowing eviction of
covenants of the Lease or to cure any default of Lessee. Mortgagee shall not be required to perform
ry such defauh seeeem Lease, co
any act which is not susceptible to performance by Mortgagee.
amhat
ifansuch default, provided, its nature is such
that it cannot practicably be cured within
iii. If Mortgagee elects any of the above -mentioned options, then
sixty (60) days, than Mortgagee shall
Mortgagee or its desi ee, or the successful bidder at the foreclosure sale, acquires the Lease by .,
have such time as shall be reasonably
necessary to cure the default provided
foreclosure, whether by power of sale or otherwise or by deed or assignment in lieu of foreclosure,
that Mortgagee co rreances such ones
or if a receiver be appointed, the Lease shall continue in full force and effect, provided thatt
within such sixty (60) day period and
thereafter ditigenuyprosecutesthe care, to
Mortgagee or such other party shall cure all prior defaults of Lessee under the Lease that are `•,
` completion.
reasonably capable of being cured by Mortgagee or such other Darts within the time set forth in said
Deleted' upon Mertgagee's acquisition
Section, and City shall treat Mortgagee or such other party as Lessee under the Lease. If Mortgagee
of
commences an action as set forth above, and thereafter Lessee cures such defaults (which cure City
Deleted: , ifMertgagee `leas the
option provided above, than upon
shall be obligated to accept) and Mortgagee then terminates all proceedings under the option in said
Mortgagee's acquisition of the Lease.
Section, then the Lease shall remain in full force and effect between City and Lessee.
Mortgagee
(e) New Lease. hi the event the Lease is terminated for any reason prior to the
end of the Lease Term, City shall enter into a new lease ("New Lease") with Mortgagee or
Mortgagee's nominee covering the Property, provided that Mortgagee (a) requests such New Lease
by written notice to City within thirty (30) days after written notice by City to Mortgagee of
termination of the Lease, and (b) cures all prior defaults of Lessee that are reasonably capable of
Deleted: I
1085816.4 12098-003 2$
being cured by Mortgagee. Mortgagee shall then have sixty (60) days following the later to occur of
(i) the date of execution and delivery of anew lease of the Properly (a "New Lease"), or (ii) the date
on which Mortgagee or its nominee is able to occupv the Property following eviction of or vacating
such cure within such sixty (60) day period and thereafter diligently prosecutes the cure to
completion. The New Lease shall be for the remainder of the Lease Term, effective at the date of
such termination, and shall only include all the rents and all the covenants, agreements, conditions,
provisions, restrictions and limitations contained in the Lease, except as otherwise provided in the
Lease. In connection with a New Lease, City shall assign to Mortgagee or its nominee all of City's
interest in all existing subleases of all or any part of the Property and all attomment given by the
sublessees. City shall not terminate or agree to terminate any sublease or enter into any new lease or
sublease for all or any portion of the Property without Mortgagee's prior written consent, unless
Mortgagee fails to deliver its request for a New Lease under this Section. In connection with any
such New Lease, City shall, by grant deed, convey to Mortgagee or its nominee title to the
Improvements, if any, which become vested in City as a result of termination of the Lease. City
shall allow to the Lessee under the New Lease a credit equal to the net income derived by City from
the Property during the period from the date of termination of the Lease until the date of execution of
the New Lease under this Section, against rent due during such period. Anything herein contained to
the contrary notwithstanding, the provisions of this Section shall inure only to the benefit of the
to be void and of no force or effect.
(f) Security Deposits. Mortgagee or any other purchaser at a foreclosure sale of
the Mortgage (or Mortgagee or its nominee if one of them enters into a New Lease with City) shall
succeed to all the interest of Lessee in any security or other deposits or other impound payments paid
by Lessee to City.
(g) Permitted Delays. So long as Mortgagee is prevented by any process or
injunction issued by any court or by any statutory stay, or by reason of any action by any court
havingjurisdiction of any bankruptcy or insolvency proceeding involving Lessee, from commencing
or prosecuting foreclosure or other appropriate proceedings in the nature thereof, Mortgagee shall
not be deemed for that reason to have failed to commence such proceedings or to have failed to
diligently prosecute such proceedings, provided that Mortgagee uses reasonable efforts to contest
and appeal the issuance or continuance of any such process, stay or injunction.
(h) Defaults Deemed Cured. On transfer of the Lease at any foreclosure sale
under the Mortgage or by deed or assignment in lieu of foreclosure, or upon creation of a New
Lease, any or all of the following defaults relating to the prior owner of the Lease shall be deemed
cured:
i. Attachment, execution or other judicial levy upon this Lease or the
leasehold estate hereby created;
108581GA 12098-003 2�----
ii. Assignment ofthis Lease or the leasehold estate hereby created for the
direct or indirect benefit of creditors of any prior Lessee;
iii. Judicial appointment of a receiver or similar officer to take possession
of the Premises, this Lease or any property of any prior Lessee not located on the Premises;
iv. Filing any petition by, for or against any prior Lessee (or any affiliate)
under any chapter of the federal Bankruptcy Act or any federal or state debtor relief statute, as
amended;
V. Any failure by any prior Lessee to make a disclosure of a hazardous
substance release as required by the California Health and Safety Code, this Lease or otherwise;
vi.
interest in this Lease;
vii.
Lessee;
Any default under any provision restricting transfers of Lessee's
Any breach of any representation or warranty given by any prior
viii. Any other defaults personal to Lessee and/or not otherwise reasonably
curable by each Mortgagee.
(i) Ckty's Forbearance and Right to Cure Defaults on Leasehold Mortgages.
i. Notice. City will give to Mortgagee a copy of each notice or other
communication with respect to any claim that a default exists or is about to exist from City to Lessee
hereunder at the time of giving such notice or communication to Lessee, and City will give to
Mortgagee a copy of each notice of any rejection of this Lease by any trustee in bankruptcy of
Lessee. City will not exercise any right, power or remedy with respect to any Event of Default
hereunder, and no notice to Lessee of any such Event of Default and no termination ofthis Lease in
connection therewith shall be effective, unless City has given to Mortgagee written notice or a copy
of its notice to Lessee of such Event of Default or any such termination, as the case may be, and an
opportunity to cure or enter into aNew Lease as provided above.Mortgagee's Transferees, Etc, in
the event the leasehold estate hereunder shall be acquired by foreclosure, trustee's sale or deed or
assignment in lieu of foreclosure of a Mortgage, the purchaser at such sale or the transferee by such
assignment and its successors as holders of the leasehold estate hereunder shall be permitted to make
a transfer to an unaffiliated third party without City's consent and shall not be not be liable for any
rent, if any, including without limitation av Additional Rent or other obligations accruing after its or
their subsequent sale or transfer of such leasehold estate and such purchaser or transferee and its
successors shall be entitled to transfer such estate or interest without consent or approval of City;
provided that, the purchaser or transferee or successor as holder of the leasehold estate hereunder
shall be liable for the payment of all rent, if any, becoming due with respect to the period during
which such purchaser, transferee or other successor is the holder of the leasehold estate hereunder.
This Section shall also apply to the rights of a Mortgagee in connection with the entry into a new
lease and to the appointment of a receiver on behalf of aMogagee.NoLiability ofMortgagee for
Prior Indemnified Acts. A Mortgagee shall not be obligated to assume the liability of Lessee for
any indemnities or damages arising for a period prior to Mortgagee's acquiring the right to
possession of the Property under this Lease.
Deleted: Mythmg herein contained to
the contrary notwithstanding, the
provisions ofthis Section shall inure only
to the benefit of the holders of
Mortgages. If the holders orom Nan
cove such Mortgage shall make written
requests upon City in accordance with
this Lease, the new lease (as provided for
above) shall be entered into pursuant to
the request ofthe holder whose Mortgage
shall be prior in lieu thereto and
thereupon the written requests for a new
lease of each holder ofa Mortgageiunior
in Gan shall be and be deemed to be void
and ofno Porte or effect. t
(k) City Cooperation. City covenants and agrees that it will act and fully
cooperate with Lessee in connection with Lessee's right to grant leasehold mortgages as hereinabove
provided. At the request of Lessee or any proposed or existing Mortgagee, City shall promptly
execute and deliver (i) any documents or instruments reasonably requested to evidence, acknowledge
and/or perfegtthe rights of Mortgagees as herein provided; and (ii) an estoppel certificate certifying
the status of this Lease and Lessee's interest herein and such matters as are reasonably requested by
Lessee or such Mortgagees. Such estoppel certificate shall include, but not be limited to,
certification by City that (a) this Lease is unmodified and in full force and effect (or, if modified,
state the nature of such modification and certify that this Lease, as so modified, is in full force and
effect), (b) all rents currently due under the Lease have been paid, (c) there are not, to City's
knowledge, any uncured Events of Default on the part of Lessee under the Lease or facts, acts or
omissions which with the giving of notice or passing of time, or both, would constitute an Event of
Default. Any such estoppel certificate may be conclusively relied upon by any proposed or existing
leasehold Mortgagee or assignee of Lessee's interest in this Lease.
(1) Claims. City and Lessee shall deliver to Mortgagee notice of any litigation or
arbitration proceedings between the parties or involving the Property or the Lease. Mortgagee shall
have the right, at its option, to intervene and become a party to any such proceedings. If Mortgagee
elects not to intervene or become a party, City shall deliver to Mortgagee prompt notice of and a
copy of any award, decision or settlement agreement made in connection with any such proceeding.
(m) Further Amendments. City and Lessee shall reasonably consider including
in the Lease by suitable amendment from time to time any provision which may be reasonably
requested by any proposed Mortgagee for the purpose of implementing the mortgagee protection
provisions contained in this Lease and allowing that Mortgagee reasonable means to protect or
preserve the lien of its Mortgage upon the occurrence of a default under the terms of the Lease. City
and Lessee each agree to execute and deliver (and to acknowledge for recording purposes, if
necessary) any agreement required to effect any such amendment which they have approved.
25. MISCELLANEOUS.
25.1 Governing Law. The laws of the State of California shall govern the interpretation
and enforcement of this Lease.
25.2 Legal Actions. In addition to any other rights or remedies, either party may institute
legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain
any other remedy consistent with the purpose of this Lease. Such legal actions must be instituted in
the Superior Court of Los Angeles County, State of California.
25.3 Acceptance of Service of Process. In the event that any legal action is commenced
by Lessee against City, service of process on City shall be made by personal service upon the City
Clerk of City, or in such other manner as may be provided by law.
In the event that any legal action is commenced by City against Lessee, service of process on
Lessee shall be made by personal service upon Lessee or in such other manner as may be provided
by law, and shall be effective whether made within or without the State of California.
Deleted:, including, without limitation,
end deed(s) ofaust encumbering City's
foe title in the Property as security for
loans obbeted by Lessee is connection
with the Property
25.4 Attorneys' Fees and Court Costs. In the event that either City or Lessee shall bring Deleted: I
1085816.4 12098-003 2k ;' ,
or commence an action to enforce the terms and conditions of this Lease or to obtain damages
against the other party arising from any default under or violation of this Lease, then the prevailing
party shall be entitled to and shall be paid reasonable attorneys' fees and court costs therefor in
addition to whatever other relief such prevailing party may be entitled.
25.5 Inspection of Books And Records. City shall have the right (at Lessee's office,
upon not less than forty-eight (48) hours' notice, and during normal business hours) to inspect and
make copies of the books and records of Lessee pertaining to the Site as pertinent to the purposes of
this Lease.
25.6 Interest. Any amount due City that is not paid when due shall bear interest from the
date such amount becomes due until it is paid. Interest shall be at a rate equal to the lesser of (i) the
discount rate established by the San Francisco office of the Federal Reserve Bank, plus two percent
(2%), on the first day of the month such amount becomes due, and (ii) the maximum rate permitted
by applicable law. '
25.7 Notices. All notices, statements, demands, requests, consents, approvals,
authorizations, offers, agreements, appointments or designations hereunder by either party to the
other shall be in writing and shall be given either by (i) personal service, (ii) delivery by reputable
document delivery service such as Federal Express that provides a receipt showing date and time of
delivery, or (iii) mailing in the United States mail, certified or registered mail, return receipt
requested, postage prepaid, and addressed as follows:
To City: City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Attention: City Administrator
Copy to: City Attorney
Copy to: City Director of Community Services and Water
To Lessee: , 2'd Drive Apartments. L.P.
c/o Meta Housing Corporation
1640 A. Sepulveda Blvd., Suite 425
Los Angeles, CA 90025
Attention: John Huskey
With copy to: Bocarsly, Emden, Cowan, Esmail & Arndt, LLP
633 West Fifth Street, 70' Floor
Los Angeles, CA 90071
Attention: Nicole Deddens
To Construction Bank of America. N.A.
To Permanent California Community Reinvestment Corporation
Lender: 255 West Broadway, Suite 120
Glendale, CA 91204
1095816.4 12098A03 29�
Deletetl:.... .
Deleted: ¶
Attention: Mary Kaiser, President
To Investor LP: Bank of America, N.A.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention:
(617) (Telephone)
(617) (Facsimile)
To Special LP: Special Limited Partner
Banc of America CDC Special Holding Company, Inc.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention:
(617) (Telephone)
(617)346-2724 (Facsimile)
or to such other address as either party shall later designate for such purposes by written notice to the
other party. City shall also give copies of such notices to any party in interest under a Permitted
Encumbrance which has requested such notice. Notices shall be deemed effective upon personal
delivery or within three (3) days after mailing thereof as provided above; provided, however that
refusal to accept delivery after reasonable attempts thereto shall constitute receipt. Any notices
attempted to be delivered to an address from which the receiving party has moved without notice to
the delivering party shall be effective on the third day after the attempted delivery or deposit in the
United States mail.
25.8 Time is of the Essence. Time is of the essence in the performance of the terms and
conditions of this Lease.
25.9 Non -Merger of Fee and Leasehold Estates. If both City's and Lessee's estates in
the Site or the Housing Development or both become vested in the same owner, this Lease shall
nevertheless not be destroyed by application of the doctrine of merger except at the express election
of City and Lessee's Mortgagee. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, shall not work as a merger and shall, at the option of City, terminate all
or any existing tenant leases or subtenancies or may, at the option of City, operate as an assignment
to City of any or all such existing tenant leases or subtenancies.
25.10 Holding Over. The occupancy of the Site after the expiration of the Tenn of this
Lease shall be construed to be a tenancy from month to month, and all other terms and conditions of
this Lease shall continue in full force and effect.
25.11 Conflict of Interest. No member, official or employee of City shall have any
personal interest, direct or indirect, in this Lease nor shall any such member, official or employee
participate in any decision relating to the Lease which affects his personal interests or the interests of
any limited partnership, partnership or association in which he is directly or indirectly interested.
peletetl: t
1085816R 12098.003 3Q
Lessee warrants that it has not paid or given, and will not pay or give, any third party any money or
other consideration for obtaining this Lease.
25.12 Non -Liability of City and City Officials and Employees. No member, official,
officer, employee, agent, or representative of City shall be personally liable to Lessee, or any
successor in interest, in the event of any default or breach by City or for any amount which may
become due to Lessee or successor or on any obligations under the terms of this Lease.
25.13 Relationship. The relationship between the parties hereto shall at all times be
deemed to be that of landlord and tenant. The parties do not intend nor shall this Lease be deemed to
create a partnership orjoint venture. Lessee acknowledges and agrees that neither this Lease nor any
other agreement with City in its proprietary capacity as Lessee shall bind the City in its regulatory
capacity and that nothing contained herein is an agreement of the City as a governmental body
having regulatoryjurisdiction of the Site to issue or gramto Lessee any permit, including building,
grading or other land use permits. Lessee shall be required to apply for and obtain all permits
including building, grading and other land use permits needed from the City in its governmental
regulatory capacity, and to comply with all laws, ordinances, rules and regulations ofCitygoveming
the construction, use and occupancy of the Housing Complex.
25.14 Waivers and Amendments. All waivers of the provisions of this Lease must be in
writing and signed by the appropriate authorities of City or Lessee. The waiver by City of any
breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition, or any subsequent breach of the same or any other term, covenant
or condition herein contained. The subsequent acceptance of rent hereunder by City shall not be
deemed to be a waiver of any preceding breach of Lessee of any term, covenant or condition of this
Lease, regardless of City's knowledge of such preceding breach at the time of acceptance of such
rent. Failure on the part of City to require or exact full and complete compliance with any of the
covenants or conditions of this Lease shall not be construed as in any manner changing the terms
hereof and shall not prevent City from enforcing any provision hereof. All amendments hereto must
be in writing and signed by the appropriate authorities of City and Lessee. The Lessee's mortgagee
permitted by this Lease shall not be bound by any waiver or amendment to this Lease without
Lessee's mortgagee giving its prior written consent.
25.15 ZjLationshi with DDA. None ofthe terms, covenants or conditions agreed upon in Deleted: Non -Merger
s be writing in the DDA and other instruments the parties to ths Le this with respect to
obligations to be performed, kept or observed by Lessee or City in respect to the Site or any part
thereof, shall be deemed to be merged with this Lease. Upon the occurrence of each of the
following: (a) City's issuance of Final Certificate of Occupancy for the Housing Development. and
(b) the City's determination that the construction of the Housing Development has been completed in
accordance with the requirements of the DDA, and (c) Lessee's certify to the City that it is in
compliance with the requirements of Section 310 of the DDA, then the DDA shall thereupon be
terminated and of no further force or effect. Upon the request of Lessee, City shall execute and
deliver to Lessee a termination agreement or a written certification that the DDA has been
terminated in accordance with the requirements of this section.
25.16 Entire Agreement; Duplicate Originals; Counterparts. This Lease sets forth the
entire understanding of the parties with respect to Lessee's ground lease of the Site. This Lease is
Deleted: p
1085816.4 12099-003 31e
executed in three (3) duplicate originals and counterparts, each of which is deemed to be an original.
This Lease includes three exhibits, Exhibits A, B, and C.
25.17 Severability. If any provision of this Lease or the application thereof to any person
or circumstances shall be invalid or unenforceable to any extent, the remainder of this Lease and the
application of such provisions to other persons or circumstances shall not be affected thereby and
shall be enforceable to the greatest extent permitted by law.
25.18 Terminology. All personal pronouns used in this Lease, whether used in the
masculine, feminine, or neuter gender, shall include all other genders; the singular shall include the
plural, and vice versa. Titles of sections are for convenience only, and neither limit nor amplify the
provisions of the Lease itself. Except for terms expressly defined in this Lease, all terms shall have
the same meaning as set forth in the DDA.
25.19 Recordation. A short form memorandum of this Lease, in the form attached hereto
as Exhibit "C", shall be recorded at or within five (5) working days after the time the Lease is
executed.
25.20 Binding Effect. This Lease, and the terms, provisions, promises, covenants and
conditions hereof, shall be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns.
25.21 Estoppel Certificate. Each of the parties shall at any time and from time to time
upon not less than twenty (20) days' prior notice by the other, execute, acknowledge and deliver to
such other party a statement in writing certifying that this Lease is unmodified and is in full force
and effect (or if there shall have been modifications that this Lease is in full force and effect as
modified and stating the modifications), and the dates to which the rent has been paid, and stating
whether or not to the best knowledge of the signer of such certificate such other party is in default in
performing or observing any provision of this Lease, and, if in default, specifying each such default
of which the signer may have knowledge, and such other matters as such other party may reasonably
request, it being intended that any such statement delivered by Lessee may be relied upon by City or
any successor in interest to City or any prospective mortgagee or encumbrancer thereof, and it being
further intended that any such statement delivered by City may be relied upon by any prospective
assignee of Lessee's interest in this Lease or any prospective mortgagee or encumbrancer thereof.
Reliance on any such certificate may not extend to any default as to which the signer of the
certificate shall have had no actual knowledge.
25.22 Force Majeure. In addition to specific provisions of this Lease, performance by
either party hereunder shall not be deemed to be in Default, and all performance and other dates
specified in this Lease shall be extended, where delays or Defaults are due to causes beyond the
control or without the fault of the party claiming an extension of time to perform, which may include
the following: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of
God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of
transportation; governmental restrictions or priority; unusually severe weather; acts or omissions of
the other party; or acts or failures to act of the City or any other public or governmental agency or
entity (other than the acts or failures to act of City which shall not excuse performance by City).
Notwithstanding anything to the contrary in this Lease, an extension of time for any such cause shall
Deleted:l
1085816.4 12098,003 321,
be for the period of the enforced delay and shall commence to run from the time of the
commencement of the cause, if notice by the party claiming such extension is sent to the other party
within thirty (30) days of the commencement of the cause. Times of performance under this Lease
may also be extended in writing by the mutual agreement of City and Lessee.
25.23 Quiet Enjoyment. City does hereby covenant, promise and agree to and with Lessee
that Lessee, for so long as Lessee is not in default hereof, shall and may at all times peaceably and
quietly have, hold, use, occupy and possess the Site throughout the Tenn.
25.24 City Approvals and Actions. Whenever a reference is made herein to an action or
approval to be undertaken by City, the City Administrator or his or her designee is authorized to act
on behalf of City unless specifically provided otherwise or the law otherwise requires.
Deleted: ¶
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed by their
lawfully authorized offcers.
CITY:
CITY OF VERNON, a California charter city and
municipal corporation
LIM
ATTEST:
City Clerk
APPROVED AS TO FORM:
I------------------------------ i- -------------------------------------------------
City Attorney
------------------------------------------------------ -----------------------------
Kronick Moskovitz Tiedemann & Girard,
Special Counsel to City
LESSEE:
-
... IDeleted:
Nicholas George Roddguezj
Formatted: Underline
Deleted:
,52ND DRIVE APARTMENTS, L.P.,------
Deleted: [META nOUSjNG
a California limited partnership
CORPORATION LIMITED
PARTNERSU1P11
9
By: QBA Affordable III, LLC
---- Deleted:
a California limited liabili!)_t company, ------------
Formatted: No underline
its Managing General Partner
Deleted:
BY: —1
BY: Community Home Builders and
Associates, a California nonprofit
Public benefit corporation, its sole
member and manager
By
Graham P. Espley-Jones
President
Deleted:j
1085816.4 12098-003 34
BY: 52nd Drive Apartments LLC,
a California limited liability company,
its Administrative General Partner
By:
Name:
------ i Formatted: Indent: Left: 220.5 pt
EXHIBIT A
SITE MAP
[To be provided]
Formatted: Left
10858164 12098-003 A-1
EXHIBIT B
SITE DESCRIPTION
That real property located in the City of Vernon, County of Los Angeles, State of California,
described as follows:
Lot Nos. 45 through 53 of Tract No. 7923
APN: 6314-002-900 (portion)
Formatted: Left
1085816.4 12098-003 B-1
EXHIBIT C
ITO Be Attacbedl
1085816.4 12098-003 C-1
Deleted: Exempt From Recording Fee
Pursuant to Government Code Sections
6I03 and 273831
Deleted: RECORDING REQUESTED
BY. ..)I
AND VIHEN RECORDED MAIL
TO:..)T
m
City of Vernon .....)¶
4305 Septa Fe Avenue.... )1
Vamon,Cahfomia 90058 . ..)q
Attention: City Clerk.. .. )A f1
Deleted: THIS MEMORANDUM OF
LEASE ("Memorandum') is hereby
entered intoa of
201 by and between the CITY OF
VERNON, a charter city and municipal
corporation (the "City'), and [META
HOUSING CORPORATION
ENTITY] (the "Lcssee").1
REC/TAGS¶
A.. City and Lessee have entered into a
"Ground Lease" dated conanrreudy
herewith for that certain parcel ofmal
property which is legally described in
Exhibit A attached hereto and
incorporated herein by reference (the
"Site"). Aanpyofdre Ground Leaeis
available for public inspection at City's
office at 4305 Seem Fe Avenue, Vernon,
Califomis Thetermoftha Ground
Lease is sixty-five (65) years with one ten
(10) year wrtansion option.1
B.. The Ground Lease provides the a
short form memorandum ofdre Ground
Lease shell be "cooled and recorded in
the Official Records of Los Angeles
County, Cabibminj
NOW, THEREFORE, the parties hereto
certify as follows:¶
City, pursuant to the Ground Leese,
hereby Leases the Site to the Lessee upon
the terms and conditions provided for
therein. This MemarandumafLeae is
not a complete summary ofthe Ground
Lease, and shall not be used to interpret
the provisions of the Ground Leese.1
.__________ Page Break__ ________.
EXHIBIT ID
PROPERTY SITE MANAGEMENT PLAN
[To Be Insertedl
EXHIBIT E
PERMITTED LENDERS AND INVESTORS
1. jConstruction Lender[Mortgagee:
2.
Bank of America. N.A.
Califomia Community Reinvestment Corporation
255 West Broadway, Suite 120
Glendale, CA 01204
Attention: Mary Kaiser, President
3. Tax Credit Partner:
Investor Limited Partner:
Bank of America. N.A.
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention:
(617) (Telephone)
617) (Facsimile)
Special Limited Partner
Banc of America CDC Special Holding Company, Inc.
MA1-225-02-02
225 Franklin Street
Boston, MA 02,110
Attention:
(617) (Telephone)
......... (617) 346-2724 (Facsimile)
1085816.4 12098-003 C-2
Deleted: Cr T:I
CrrY OF VERNON,iapaCl coIn—
charter city ad micdon¶ry
BY:..... .I
Formatted: _1.0sp 0", Indent: Left:
36 pt
Deleted: ATTEST:I _
9
-n
City Clwk¶
I
APPROVED AS TO FORM:¶
�_9
Nicholas George Rodriguez,¶
City Amomeyl
9
�9
IGoniek Moskovitz iiedemann &Girard
Formatted: @Normal
Deleted: LESSEE:¶
[META HOUSING CORPORATION
ENTIFY11
Br:... 1
Br:... _ I
Formatted: @Normal, Indent: Left:
Deleted: Section Break (Nerd Page)-
EXHIBrr A TO MEMORANDUM OF
LEASE¶
LEGALDESCRDTIONy
That real property located in the City of
Vernon, Couaty of Los Angeles, State of
California, described as follows:'
Lot Nos. 45 through 53 of Tract No. 79231
APN: 6314-002-900(portion)¶
------SecOon Break (Next Page),......
.___-------.Page Break ------____.
STATE OF CALIFORNIA ( ... f21
Formatted: Normal
Regulatory Agreement
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Attn: City Clerk
This document is exempt from the payment of ^------- Formatted: Left
recording fee pursuant to Government Code Sections
6103 and 27383. --- Deleted: I
REGULATORY AGREEMENT
THIS REGULATORY AGREEMENT (the "Agreement") is entered into as o arch oeteted:
2014 by and between the CITY OF VERNON, a California charter city and municipal corporation 201�
(the "City"), and$2ND DRIVE APARTMENTS L.P., a-Califomia limited partnership (the_--.--- Deieted:[MErA HousING
"•Developer") — CORPORATION ENTITY],
RECITALS
A. Pursuant to a "Ground Lease" between City and Developer dated Xs of March _ --- Deleted: 201�
2014 Developer has ground leased from the City certain real property located within the City of
Vernon, as particularly described in the Legal Description attached hereto as Exhibit A, which is
incorporated herein by reference (the "Site").
B. Developer desires to construct a forty-five (45) unit multifamily affordable housing
development on the Site (the "Housing Development"), and to make available and rent the apartment
units within the Housing Development (the "Housing Units') for extremely low, very low and lower
income persons at an affordable rent.
C. Developer and City have entered into a Disposition and Development Agreement (the
"DDA") dated as of February 19, 2013. Subject to the terms and conditions therein, the Developer
has agreed to lease the Site and construct and operate the Housing Development, and the Developer
has agreed to make available and lease two (2) of the Housing Units to Extremely Low Income
Households, fourteen (14) of the Housing Units to Very Low Income Households, and six (6) of the
Housing Units to Lower Income Households, all at an Affordable Rent (as those terms are defined
herein). The execution and recording of this Agreement is a requirement of the DDA and the
Ground Lease.
1 1082298.2 12098-003 Attachment No. 9-1
NOW, THEREFORE, the parties hereto agree as follows:
1. Number of Affordable Units. Developer agrees to make available, restrict
occupancy to, and rent two (2) of the Housing Units to Extremely Low Income Households,
fourteen (14) of the Housing Units to Very Low Income Households, and six (6) of the Housing
Units to Lower Income Households, all at an Affordable Rent (the "Affordable Units").
For purposes hereof:
"Extremely Low Income Household" means an annual gross income that does not exceed the
qualifying limits, adjusted for household size and other factors, for an "extremely low-income
family" as defined under the United States Housing Act of 1937 as amended, and as determined
from time to time by HUD for the Los Angeles Metropolitan Statistical Area. If HUD should cease
making such determination, "extremely low income" shall be defined as equal to or less than 30% of
Area Median Income, or City in its reasonable discretion may designate another definition of
"extremely low income" used by any other federal or state agency.
"Lower Income Household" means an annual gross income that does not exceed the
qualifying limits, adjusted for household size and other factors, for a " low-income family" as
defined under the United States Housing Act of 1937 as amended, and as determined from time to
time by HUD for the Los Angeles Metropolitan Statistical Area. If HUD should cease making such
determination, "low income" shall be defined as equal to or less than 60% of Area Median Income,
or City in its reasonable discretion may designate another definition of "low income" used by any
other federal or state agency.
"Very Low Income Household" means an annual gross income that does not exceed the
qualifying limits, adjusted for household size and other factors, for a "very low-income family" as
defined under the United States Housing Act of 1937 as amended, and as determined from time to
time by HUD for the Los Angeles Metropolitan Statistical Area. If HUD should cease making such
determination, "very -low income" shall be defined as equal to or less than 50% of Area Median
Income, or City in its reasonable discretion may designate another definition of "very -low income"
used by any other federal or state agency.
2. Duration of Affordability Requirements. The Affordable Units shall be subject to
the requirements of this Agreement for the entire term of the Ground Lease, as it may be extended.
The duration of this requirement shall be known as the "Affordability Period."
3. Household Income Requirements. Developer shall obtain, or shall cause to be
obtained by the Property Manager, a certification from each household leasing an Affordable Unit
demonstrating that such household is an Extremely Low Income Household, Very Low Income
Household or Lower Income Household, as applicable, and meets the eligibility requirements
established for the Housing Unit. Developer shall verify, or shall cause to be verified by the
Property Manager, the income certification of the household.
4. Affordable Rent. The maximum Monthly Rent chargeable for the Affordable Units
shall be annually determined in accordance with the following requirements. The Monthly Rent for
the Affordable Units to be rented to Extremely Low Income Households shall not exceed the
1 1092298.2 1209"03 Attachment No. 9-2
maximum rent allowable under Section 42 of the Internal Revenue Code and the rules and
regulations implementing the foregoing (the "Tax Credit Rules") for a tenant earning thirty percent
(30%) of the Los Angeles County area median income for a household size appropriate to the unit.
The Monthly Rent for the Affordable Units to be rented to Very Low Income Households shall not
exceed the maximum rent allowable under the Tax Credit Rules for a tenant earning fifty percent
(50%) of the Los Angeles County area median income for a household size appropriate to the unit.
The Monthly Rent for the Affordable Units to be rented to Lower Income Households shall not
exceed the maximum rent allowable under the Tax Credit Rules for a tenant earning sixty percent
(60%) of the Los Angeles County area median income for a household size appropriate to the unit.
For purposes of this Agreement, "Monthly Rent" means the total of monthly payments for (a)
use and occupancy of each Affordable Unit and land and facilities associated therewith, (b) any
separately charged fees or service charges assessed by the Developer which are required of all
tenants, other than security deposits, (c) a reasonable allowance for an adequate level of service of
utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity, gas
and other heating, cooking and refrigeration fuels, but not including telephone service, and (d)
possessory interest, taxes or other fees or charges assessed for use of the land and facilities
associated therewith by a public or private entity other than Developer. In the event that all utility
charges are paid by the landlord rather than the tenant, no utility allowance shall be deducted from
the rent.
5. Site Management Plan; Property Management. The Developer has prepared a
"Site Management Plan" which sets forth in detail the Developer's property management duties, a
marketing plan, a tenant selection process, a security system and crime prevention program, the
procedures forthe collection of rent, the procedures for eviction of tenants, the rules and regulations
of the Housing Development and manner of enforcement, a standard lease form, an operating
budget, the identity of the manager of the Housing Development (the "Property Manager"), the
resident services program to be provided pursuant to Section 7 hereof, and other matters relevant to
the management of the Housing Development. The Site Management Plan shall prohibit the
Property Manager from lobbying, influencing, or attempting to influence any residents of the
Housing Development or other registered voters of the City with respect to any matters which
require the approval of the City or the electorate of the City. Any violation of this Section 706 shall
be deemed a material breach of this Agreement.
The Site Management Plan is attached to the Ground Lease asAttachment No. and
,. - oeletea:oon
- - - - - - --------- --
incorporated herein. The Site Management Plan maybe revised from time to time with the approval Deleted:8
of the City. The management of the Housing Development shall be in compliance with the Site
Management Plan which is approved by the City.
If the City determines that the performance of the Property Manager is deficient based upon
the standards set forth in the Site Management Plan and in this Agreement, the City shall provide
notice to the Developer of such deficiencies, and the Developer shall use its best efforts to correct
such deficiencies. In the event that such deficiencies have not been cured within the time set forth in
the Ground Lease, the City shall have the right to require the Developer to immediately remove and
replace the Property Manager with another property manager or property management company
which is reasonably acceptable to the City, which is not related to or affiliated with the Developer,
1082298.2 12098-003 Attachment No. 9-3
and which has not less than five (5) years experience in property management, including significant
experience managing housing facilities of the size, quality and scope of the Housing Development.
6. Selection of Tenants. Developer shall be responsible for the selection oftenants for
the Housing Units in compliance with lawful and reasonable criteria, as set forth in the Site
Management Plan, and according to a system which provides an agreed upon priority for persons
employed or residing in the City of Vernon or within a 1 mile radius as measured from the center of
the Site. The Site Management Plan shall include a system for the random selection oftenants from
a pool of applicants. Tenants shall meet criteria which is reasonable and customary for similar
multifamily developments. Tenant selection shall be made in an open and public manner. The
tenant selection system in the Site Management Plan shall be designed to prevent favoritism and
outside influences of any kind in the selection process. The tenant selection system shall provide for
due diligence by Developer in evaluation of the applications for eligibility criteria, including the
basis of any requested priority. Representatives of the City shall be entitled to enter, inspect the
records of, and audit the Housing Development with respect to the tenant selection process as
provided in Section 14 hereof Any violation of the tenant selection system shall be deemed a
material breach of this Agreement.
7. Resident Services. At all times during the Affordability Period, Developer shall
provide, or cause to be provided, activities and programs appropriate to the needs of the residents of
the Housing Development, with the selection of such activities and programs to be determined by
Developer in collaboration with the residents of the Housing Development. The specific types of
social services to be provided shall be submitted to and approved by the City, and may be revised
with the prior approval of the City, which approval shall not be unreasonably withheld. The annual
cost of resident services shall be not less than $15,000, as adjusted annually by the increase in the
CPI during the previous 12 month period.
8. Maintenance. The Developer shall maintain the Housing Development or cause it to
be maintained in a decent, safe and sanitary manner, and in accordance with the standard of
maintenance of first class apartment units within Los Angeles County, California. If at any time
Developer fails to maintain the Housing Development in accordance with this Agreement and such
condition is not corrected within five days after written notice from the City with respect to graffiti,
debris, and waste material, or thirty days after written notice from the City with respect to general
maintenance, landscaping and building improvements, then the City, in addition to whatever remedy
it may have at law or at equity, shall have the right to enter upon the applicable portion of the
Housing Development and perform all acts and work necessary to protect, maintain, and preserve the
Housing Development, and to attach a lien upon the Housing Development, or to assess the Housing
Development, in the amount of the expenditures arising from such acts and work of protection,
maintenance, and preservation by the City and/or costs of such cure, including a reasonable
administrative charge, which amount shall be promptly paid by Developer to the City upon demand.
9. Capital Reserve Requirements. The Developer shall also, or cause the Property
Manager to, annually set aside an amount of Three Hundred Dollars ($300) per Housing Unit (or
such larger amount as may be required by a Housing Development lender), from the gross rents
received from the Housing Development, into a separate interest -bearing trust account in the name of
the Developer (the "Capital Replacement Reserve"); provided, however, to the extent the Developer
is required by any lender to maintain a separate account to hold deposits for capital reserves, the
1 1082298.2 12098-003 Attachment No. 9-4
amount of such deposits shall be credited towards Developer's obligations under this section. Such
amount shall be adjusted annually by the Consumer Price Index of Bureau of Labor Statistics of
the U.S. Department of Labor for All Urban Consumers, Los Angeles — Riverside —Orange County,
California (all items), 1982-84 =100, or its successor index (the "Consumer Price Index"). Funds in
the Capital Replacement Reserve shall be used for capital replacements to the Housing Development
fixtures and equipment which are normally capitalized under generally accepted accounting
principles. The non -availability of funds in the Capital Replacement Reserve does not in any
manner relieve the Developer of the obligation to undertake necessary capital repairs and
improvements and to continue to maintain the Housing Development in the manner prescribed
herein. Not less than once per year, Developer, at its expense, shall submit to the City an accounting
for the Capital Replacement Reserve. Capital repairs to and replacement of the Housing
Development shall include only those items with a long useful life, including without limitation the
following: carpet and drape replacement; appliance replacement; exterior painting, including
exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and
showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement; asphalt repair
and replacement, and seal coating; roofing repair and replacement; landscape tree replacement;
irrigation pipe and controls replacement; gas line pipe replacement; lighting fixture replacement;
common area furniture replacement; common area repainting, and uninsured losses due to casualties
such as earthquakes.
10. Relationship to Tax Credit Requirements. Notwithstanding any other provisions
of this Agreement, to the extent that the regulatory agreement executed by the Developer as a
requirement of receiving the Tax Credits (the "Tax Credit Regulatory Agreement") is less restrictive
with respect to the requirements applicable to tenant selection, tenant income levels and unit rent
levels than as provided in this Agreement and the DDA, this Agreement and the DDA shall control.
11. Prohibited Uses. None of the Housing Units in the Housing Development shall at
any time be utilized on a transient basis, nor shall the Housing Development or any portion thereof
ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital,
nursing home, sanitarium or rest home.
12. Non Discrimination Covenants. Developer covenants by and for itself, its
successors and assigns, and all persons claiming under or through them that there shall be no
discrimination against or segregation of any person or group of persons on account of race, color,
religion, sex, marital status, familial status, disability, national origin, or ancestry in the sale, lease,
transfer, use, occupancy, tenure, or enjoyment of the Housing Development, nor shall Developer
itself or any person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy of
tenants, lessees, or vendees in the Housing Development.
13. Naming Rights. City shall have the exclusive non-commercial right to select the
name of the Housing Development in its sole discretion to honor one or more civic or business
leaders, as the City Council may designate. Developer agrees to cooperate in the placement of a
suitable monument or other feature to memorialize this honor, at the City's expense. Developer shall
use the name selected by City on all exterior and interior project signage, written materials and
letterhead, leases and other project documents, and shall verbally refer to the Housing Development
by the selected name. The parties shall jointly agree in advance on the scheduling of any official
1082298.2 12098-003 Attachment No. 9-5
naming ceremonies, and the press announcements regarding such ceremonies, and both parties shall
have the right to participate in any such naming ceremonies.
14. Monitoring and Recordkeeping. Throughout the Affordability Period, prior to
April 15 of each year, Developer shall annually complete and submit to City an audited financial
statement for the Housing Development and a report which includes (i) the name, address, income
and household size of each occupant of an Affordable Unit during the prior year, identifying the
bedroom count and Monthly Rent for such Affordable Unit, (ii) an identification of vacancies of
Affordable Units during the prior year, (iii) the amount deposited into reserve accounts in the prior
year, (iv) the amount and purposes of all expenditures of reserve accounts during the prior year, (v)
the current balance of reserve accounts, (vi) an operating budget for the current year, (vii) a detailed
accounting of operating expenditures in the prior year, and (viii) a description of and cost of social
service programs conducted in the prior year. City agrees that the Developer may submit reporting
forms prepared and submitted in connection with the Tax Credits, to the extent those fors contain
the information required hereunder. Representatives of the City shall be entitled to enter the
Housing Development, upon at least forty-eight (48) hours prior written notice, to monitor
compliance with this Agreement, to inspect and make copies of the records of the Housing
Development, and to conduct an independent audit or inspection of such records. The Developer
agrees to cooperate with the City in making the Housing Development available for such inspection
or audit. Developer agrees to maintain records in businesslike manner, and to maintain such records
for the ter of this Agreement.
15. Compliance with Laws and Ground Lease. The ut Developer shall carry othe --. Deleted: DDA
operation of the Housing Development in conformity with the�Ground-Lease and all applicable laws, _- Deleted: DDA
including all applicable state labor standards, City zoning and development standards, building,
plumbing, mechanical and electrical codes, and all other provisions ofthe City Municipal Code, and
all applicable disabled and handicapped access requirements, including without limitation the
Americans With Disabilities Act, 42 U.S.C. Section 12101, etseq., Government Code Section 4450,
et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code
Section 51, et seq.
16. Successors and Assigns. This Agreement shall run with the land, and all of the
terms, covenants and conditions of this Agreement shall be binding upon the Developer and the City
and the permitted successors and assigns of the Developer and the City. Whenever the term
"Developer" or "City" is used in this Agreement, such ter shall include any other successors and
assigns as herein provided.
17. No Third Party Beneficiaries. This Agreement is made and entered into for the sole
protection and benefit of the City and its successors and assigns, and Developer and its successors
and assigns, and no other person or persons shall have any right of action hereon.
18. Partial Invalidity. If any provision of this Agreement shall be declared invalid,
illegal, or unenforceable, the validity, legality, and enforceability ofthe remaining provisions hereof
shall not in any way be affected or impaired.
19. Governing Law. This Agreement and the documents and other instruments given
pursuant hereto shall be construed in accordance with and be governed by the laws of the State of
108229&2 12099-003 Attachment No. 9-6
California. Any references herein to particular statutes or regulations shall be deemed to refer to
successor statutes or regulations, or amendments thereto.
20. Amendment. This Agreement may not be changed orally, but only by agreement in
writing signed by Developer and the City.
21. Notices. Any approval, disapproval, demand, document or other notice ("Notice")
which either party may desire to give to the other party under this Agreement must be in writing and
may be given either by (i) personal service, (ii) delivery by reputable document delivery service such
as Federal Express that provides a receipt showing date and time of delivery, or (iii) mailing in the
United States mail, certified mail, postage prepaid, return receipt requested, addressed to the address
of the party as set forth below, or at any other address as that party may later designate by Notice.
To City: City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Attention: City Administrator
Copy to: City Attorney
Copy to: City Director of Community Services and Water
To Developer: �2nd Drive Apartments._ L.P ------------------------------------------------------- Deleted: p.1a61w Parm .up)
c/o Meta Housing Corporation
1640 A. Sepulveda Blvd., Suite 425
Los Angeles, CA 90025
Attention: John Huskey
With copy to: Bocarsly, Emden, Cowan, Esmail & Arndt, LLP
633 West Fifth Street, 70th Floor
Los Angeles, CA 90071
Attention: Nicole Deddens
1 1092298.2 12098-003 Attachment No. 9-7
To Construction Bank of America. N.A. -----------------_------------.......---..... _ Deleted:. vim
Lender: —9
.- 1
To Permanent California Community Reinvestment Corporation
Lender: 255 West Broadway Suite 120
Glendale, CA 91204
Attention: Mary Kaiser, President
To Investor LP: Bank of America. N.A
MAI-225-02-02
225 Franklin Street
Boston, MA 02110
Attention:
(617) (Telephone)
(617) (Facsimile)
To Special LP: Special Limited Partner
Banc of America CDC Special Holding Company Inc
MA1-225-02-02
225 Franklin Street
Boston, MA 02110
Attention:
(617) (Telephone)
(617) 346-2724 (Facsimile)
Any written notice, demand or communication shall be deemed received immediately upon
receipt; provided, however, that refusal to accept delivery after reasonable attempts thereto shall
constitute receipt. Any notices attempted to be delivered to an address from which the receiving
party has moved without notice shall be effective on the third day from the date of the attempted
delivery or deposit in the United States mail.
1 1082298.2 1209M03 Attachment No. 9-8
•-- ---- Formatted: Indent: Lek: 3C pt,
Don't keep with next, Don't keep
lines together
IN WITNESS WHEREOF, the parties hereto have executed this Regulatory Agreement
effective as of the date and year set forth above.
CITY:
CITY OF VERNON, a California charter city and
municipal corporation
10
City Clerk
APPROVED AS TO FORM:
City Attorney---------------------------
Kronick Moskovitz Tiedemann & Girard,
Special Counsel to City
1 1082298.212098-003 Attachment No. 9-9
Formatted: Font: 11 A Bold
Formatted: Indent: First line: 0 pt
Deleted: Nicholas George Rodrip-,q
----------------
Formatted: Font: 11 pt, Bold
.,- Formatted: Space After: 12 pt
--------------- Deleted: DEVELOPER:9
[META HOUSING CORPORATION
LIMITED PARTNERSHIPIy
Formatted: Normal, Indent: Left:
216 Pt, Don't hyphenate
----------------------------------------
a_____________________________________________..._.__.__._.---
DEVELOPER:
52ND DRIVE APARTMENTS, L.P..
a California limited paitnership
By: CHBA Affordable III, LLC,
a Califomia limited liability company,
its Managing General Partner
By: Community Home Builders and Associates.
a California nonprofit public benefit corporation, its sole member and
manager
By
Graham P. Espley-Jones
President
By: 52nd Drive Apartments LLC.
a California limited liability company.
its Administrative General Partner
By:
Name:
1 1082298.212098-003 Attachment No. 9-10
Formatted: Font: Bold
--------------
Deleted: -Section Break (Ned Page)•
Exhibit "A"
LEGAL DESCRIPTION OF PROPERTY
That real property located in the City of Vernon, County of Los Angeles, State of California,
described as follows:
Lot Nos. 45 through 53 of Tract No. 7923
APN: 6314-002-900 (portion)
1 10822982 12098-003 Attachment No. 9-11
STATE OF CALIFORNIA )
ss
COUNTY OF )
On , before me, Notary Public,
personally appeared who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument, and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
Notary Public
1 1082299.2 12098.003 Attachment No. 9-12
STATE OF CALIFORNIA
ss
COUNTY OF
On , before me, , Notary Public,
personally appeared who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument, and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
Notary Public
1092298.2 1209&003 Attachment No. 9-13
TRANSMITTAL COMMUNICATION
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: March 11, 2014
TO: Kevin Wilson, Director of Community Services & Water
.
FROM: Deborah Juarez, Records Management Assistant
RE: Resolution No. 2014-05 — A Resolution of the City Council of the City of Vernon
Approving and Authorizing the Execution of Documents Relating to the Financing of the
Meta Housing Corporation Housing Development
Transmitted herewith for your reference and proper processing of the related documents is a copy of
Resolution No. 2014-05 referenced above, which was approved by City Council on March 4, 2014.
Please ensure that after filing the Notice of Exemption with the County Clerk and execution and
recordation of the miscellaneous documents associated with this resolution that the originals are sent to the
City Clerk's office for the file.
Thank you.
Attachment
c: Resolution No. 2014-05
Agreement No. 14-008