OPTION TO PURCHASE AGREEMENT
(Elm Street Commons Affordable Housing Project)
This OPTION TO PURCHASE AGREEMENT (“Option Agreement”) is effective as of this 15th day of July , 2025 (“Effective Date ”), by and among ELM STREET COMMONS , a California limited partnership (“ Borrower”), the ANAHEIM HOUSING AUTHORITY, a public body, corporate and politic (herein referred to as “Anaheim” or “Authority” or “Junior Lender”) with regard to the Elm Street Commons Affordable Housing Project (“Project”). References herein below to the “Parties” shall mean Borrower and Anaheim, and references to “Party” shall mean any one of the foregoing entities depending on the context.
RECITALS
A. California Community Reinvestment Corporation, a California nonprofit public benefit corporation (“ Senior Lender” and collectively with the Junior Lender , the “ Lenders” or “either Lender”), has provided certain loan financing for the Project). Senior Lender is currently the owner of a loan (“Senior Loan”) evidenced, in part, by: (1) that certain Promissory Note, dated as of June 25, 2009 (“ Senior Note”), executed by Borrower, in favor and to the order of Lender in the original principal amount of $3,617,800, and (2) that certain Loan Agreement dated as of June 25, 2009 entered into by and between Borrower and Senior Lender (“Senior Loan Agreement”). The Senior Loan is secured by, among other things, that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of June 25, 2009 (“Senior Deed of Trust”), and recorded on August 12, 2009, as Instrument No. 2009-000433413 in the Official Records, County of Orange, State of California, which Senior Deed of Trust encumbers Borrower’s interest in and to that certain real property commonly known as 111 and 125 West Elm Street, Anaheim, CA 92805-7700 (“Property”).
B. The Property is legally described in the attached and fully incorporated Exhibit A hereto.
C. Borrower is the fee title owner of the Property . Borrower and Anaheim have entered into that certain Affordable Housing Agreement dated as of December 12, 2006, relating to the development, operation, and management of the Project, which is a 52 unit multi-family affordable rental housing project located at the Property.
D. Anaheim made a loan to Borrower (“Anaheim Loan”) in the original principal amount of $3,750,000, which is evidenced by a promissory note dated on or about February 9, 2007 (“Anaheim Note”) and secured by a deed of trust on the Property dated February 9, 2007, and recorded in the Official Records of Orange County (“Official Records”) on February 14, 2007, as Document No. 2007-000097858 (“Anaheim Deed of Trust”). The Anaheim Note was subsequently amended on July 1, 2010 to reflect the actual amount disbursed by the Authority in the amount of $3,518,257.28 (“Acknowledgment of Disbursement of Funds and Amendment to Promissory Note”). Together, the original Anaheim Note as modified by the Acknowledgment of Disbursement of Funds and Amendment to Promissory Note is referred to as the “Anaheim Note”. The Anaheim Deed of Trust securing the Anaheim Note is currently in second position behind Senior Lender ’s Senior Deed of Trust. The Anaheim Note and Anaheim Deed of Trust may together be referred to as the “Anaheim Loan”.
E. The Affordable Housing Agreement was amended by that certain First Amendment to Affordable Housing Agreement (“First Amendment”) dated as of January 12, 2010 by and between 2 Anaheim and Borrower that authorized an additional subsidy and reimbursement up to $128,632.28 as reimbursement for certain Remediation Costs incurred by Borrower during construction of the Project. Together the original Affordable Housing Agreement and the First Amendment are referred to herein as the “Amended Affordable Housing Agreement”. A copy of the original Affordable Housing Agreement and original First Amendment are on file with the Authority Secretary as a public record. The Affordable Housing Agreement together with the implementing documents therefor, including without limitation the Anaheim Loan may be referred to as the Anaheim Documents.
F. On December 11, 2024, Senior Lender sent Borrower, Anaheim, and others written Notice of Default in connection with Borrower’s claimed failure to make certain payments in accordance with the terms of the Senior Loan. Certain defaults under the Senior Loan also constitute defaults under the Anaheim Loan.
G. On February 25, 2025, Senior Lender recorded a Notice of Default in the Official Records of the Recorder’s Office in Orange County as Instrument No. 2025-000062800.
H. Junior Lender has been informed that Westlake Housing, L.P. (“ Manager”), Borrower’s agent and the manager of the Property and the Project , desires to resign as the property manager and that Borrower desires to cease operations in connections with the Property and transfer their ownership and control of the Project and the Property to the Junior Lender.
I. Borrower and Junior Lender desire to work cooperatively to provide for an orderly exit of Manager and Borrower with Borrower transferring all of its rights, title, and interest in the Project as well as its interest in the Property and all improvements thereon (collectively, the “ Borrower’s Interest”) to Anaheim by no later than August 31, 2025. In order to effectuate the transfer of the Borrower’s Interest, Borrower agrees to grant to Junior Lender the option to purchase Borrower’s Interest as provided in Section 2 below (“Option to Purchase”).
NOW THEREFORE, as consideration for entering into these discussions, the Parties acknowledge the foregoing, and further agree to be bound by the following terms and conditions:
AGREEMENT
1. Operation and Management.
1.1 Management. Borrower, through the Manager, shall continue to operate and manage the Property through and including August 31, 2025, or such later date as may be extended in accordance with this Section 1.1 (“Exit Date”), upon the same terms as Manager has previously operated the Property; provided, however, in the event that Junior Lender exercises the option set forth in Section 2.2, then the Exit Date shall automatically extend until September 30, 2025. If the Exit Date is extended pursuant to the immediately preceding sentence, then, during the period from August 31, 2025 to the Exit Date, Borrower will make its best efforts to manage the Project; provided, however, if Borrower is unable to manage the Property beyond August 31, then Junior Lender will take all steps required to manage the Property, including engaging an interim property manager.
1.2 Exit Date. The Parties acknowledge that as of the Exit Date, at which time this Agreement shall terminate, Borrower shall have no further obligation to operate and manage the Project nor have any further rights to collect or spend any revenues generated by the Project, 3 and the Junior Lender shall waive any and all rights they may have against Borrower with respect to the operation of the Project, and Borrower shall waive any and all rights it may have against the Junior Lender with respect to such termination.
2. Option to Purchase . In connection with and in consideration for Junior Lender’s payment to Borrower of an option fee in the amount of $100 payable upon the execution of this Agreement, Borrower hereby grants to Junior Lender the Option to Purchase on the terms and conditions contained herein:
2.1 Option Exercise . Junior Lender may exercise the Option to Purchase by delivering written notice of its election to purchase Borrower’s Interest (“ Option Exercise Notice”) at any time during the term of this Agreement, but in no event later than August 31, 2025. Upon timely delivery of the Option Exercise Notice, Borrower shall be bound to sell and Junior Lender shall be obligated to purchase Borrower’s Interest, upon the terms and conditions contained in this Agreement (subject to all of the terms and conditions thereof). If Junior Lender does not timely deliver an Option Exercise Notice, the Option to Purchase shall lapse and Borrower shall have no obligation to sell Borrower’s Interest to Junior Lender under this Option Agreement, nor shall Junior Lender have any obligation to purchase Borrower’s Interest.
2.2 Purchase Price. The purchase price for Borrower’s Interest shall be equal to $100 after the payment of all loan fees and costs incurred for the assignment and assumption of the indebtedness under the Anaheim Loan.
2.3 Terms of Purchase and Closing. The following terms shall apply to the purchase and sale of Borrower’s Interest (“Transaction”):
2.3.1 The Transaction shall be consummated through an escrow opened with a reputable title company that offers escrow services and designated by Junior Lender in its sole discretion, and in accordance with any state and local requirements (“Escrow Holder”).
2.3.2 The closing of the Transaction shall occur no later than the Exit Date.
2.3.3 The Transaction shall be pursuant to a purchase and sale agreement or assignment agreement, as applicable, in commercially reasonable form mutually approved by the Parties (“Definitive Agreement”).
2.3.4 The Transaction shall be without recourse or warranty whatsoever as more particularly set forth in the Definitive Agreement.
2.3.5 The Parties shall execute and deliver any amendments to the loan documents for the Anaheim Loan as reasonably required by Junior Lender.
2.3.6 Junior Lender shall deliver to Escrow Holder funds sufficient to pay the purchase price and any closing costs in accordance with the Definitive Agreement.
2.3.7 Closing costs for escrow, title insurance and recording fees and charges shall be paid by Junior Lender as purchaser or assignee, and the parties shall execute a closing statement in a customary form prepared by Escrow Holder. 4 2.3.8 Real property taxes and assessments, rent and other charges for services provided to the Property pursuant to the Affordable Housing Agreement shall be prorated as of the Closing. Borrower shall cooperate with Junior Lender in transferring all utility accounts relating to the Property to Junior Lender as of the closing of the Transaction (“Closing”). Junior Lender shall arrange for its own insurance of the Property effective as of the Closing.
2.3.9 The closing of the Transaction shall be subject in all respects to the approval of the Anaheim Housing Authority Board, and if applicable the City Council of the City of Anaheim . Absent that approval, Borrower understands that the transaction will not close and the Parties shall have no rights, duties, or liabilities under this Option Agreement thereafter . Junior Lende r shall promptly seek that approval following the full execution of this Option Agreement.
2.3.10 As of the date of Closing, Junior Lender and Borrower shall release each other from all known and unknown claims arising from conduct undertaken pursuant to the terms of this Option Agreement and waive the protections of California Civil Code §1542 limiting the ability to waive unknown claims, except for those necessary for Junior Lender to exercise its rights and remedies against the Project.
3. Reservation of Rights. The Junior Lender hereby reserves all of its rights and remedies under the Affordable Housing Agreement, the Anaheim Loan, any other agreement between either of the Junior Lender and the Borrower, law, and equity, including the right to commence and complete a dispossession through foreclosure of the Anaheim Deed of Trust securing the Anaheim Note (or deed in lieu thereof), and Junior Lender has not waived any right to so foreclose or accept a deed in lieu, and nothing in this Option Agreement, and no delay on the part of either or both Junior Lender in exercising any such rights or remedies, should be construed as a waiver of any such rights or remedies.
4. Mutual Release.
4.1 The Definitive Agreement, shall provide that, upon the Closing, except for the obligations imposed upon each of the Parties within such Definitive Agreement, the Parties, and each of them, forever and finally fully and completely release, relieve, acquit, remise, and discharge each other, as well as their representatives, heirs, executors, administrators, successors, transferees, assigns, affiliates, officers, directors, agents, employees, and shareholders, and attorneys from any and all liens, claims, loss es, debts, liabilities, demands, obligations, acts, agreements, costs, and expenses (including without limitation attorney fees) damages, suits, actions, or causes of action, whether known or unknown, suspected or unsuspected, contingent or fixed, including but not limited to those arising in or related to the matters set forth in the Recitals, above, the Project, the Anaheim Loan, [if acquired by Junior Lender, the Senior Loan and the Senior Loan documents], and the relationship between and among the Parties (collectively, “Released Claims”). The Released Claims shall not include any contentions or matters to the extent caused by Borrower’s gross negligence, intentional or willful misconduct, or fraud.
4.2 Except as provided in this Option Agreement, t he releases set forth in Section 4.1 are intended to be full and complete releases of any and all Released Claims . In making these mutual releases, the Parties intend to and shall release each other from any and all liability of any nature whatsoever for all damage or injury arising from the Project as well 5 as for all consequences, effects, and results of such injury or damage whether the same are known or unknown, expected or unexpected, have already appeared to develop, or may now be latent or may in the future appear or develop.
4.3 The Parties agree that the Definitive Agreement shall include, upon the Closing, a waiver of the provisions of California Civil Code Section 1542 which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
THAT THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FA VOR AT
THE TIME OF EXECUTING THE RELEASE AND THAT, IF
KNOWN BY HIM OR HER, WOULD HA VE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.
5. Borrower Representation re Legal Proceedings. Borrower represents and warrants to Anaheim that, to its current, actual knowledge, it is unaware of any legal proceedings or judgments against the Property or the Project other than the foreclosure proceedings by the Senior Lender on the Senior Deed of Trust and certain environmental issues currently being managed by Snyder Geologic for Borrower. Copies of certain reports and other documents with respect to the environmental issues can be made available to Anaheim upon Anaheim's written request and Anaheim acknowledges and agrees that said reports and documents are for informational purposes only and neither Borrower nor any author of said reports and documents are not representing or warranting, nor should Borrower rely on, the matters set forth in such reports and documents.
6. Loan Documents Still in Force . Notwithstanding any other provision of this Option Agreement, or any claim of any of the Parties, to the contrary, the Anaheim Documents are in full force and effect and shall remain unmodified (except as they may have been previously formally modified in writing pursuant to modification documents signed by an authorized representative of Junior Lender) and in full force and effect.
7. No Clog of the Equity of Redemption. The Parties agree that neither this Option Agreement nor any transaction that may result in Borrower conveying the collateral for the Anaheim Loan to an owner other than Borrower or engaging in the conduct being facilitated by this Option Agreement shall in any way clog or otherwise violate Borrower’s equity of redemption. The Borrower and Junior Lender each irrevocably covenant to never claim otherwise.
8. No Joint Venture . Nothing contained herein shall be deemed to constitute a joint venture or partnership agreement of any kind between any of the Junior Lender and Borrower or otherwise create the relationship of joint venturers or partners between the Parties, or characterize Junior Lender as a mortgagee-in-possession, joint venturer, or partner or member of or in Borrower.
9. Representations and Warranties. Each Party to this Option Agreement represents and warrants that it has the authority to enter into this Option Agreement and Borrower warrants and represents that it holds good title to the Property and has not transferred its right, title, and interest in either the Property or the Project to any other person or entity other than the Senior Lender.
10. Effect of Option Agreement . Except as expressly provided herein, nothing in this Option Agreement shall alter or affect any provision, condition or covenant contained in the Anaheim 6 Documents, nor affect or impair any rights, powers, remedies or defenses under any of the Anaheim Documents. In particular, the exercise of this Option i s not intended by the Parties to result in the exoneration, release, or settlement of the Junior Deed of Trust or its underlying obligation, nor to result in any merger of title , Each Party acknowledges and represents to the other that it has received legal advice from counsel of its choice regarding the meaning and legal significance of this Option Agreement and that it is satisfied with its legal counsel and the advice received from such counsel .
Each Party acknowledges that it executed and delivered this Option Agreement on its own independent judgment, and had the opportunity to obtain the independent advice of legal counsel of its choice, and is under no threat, coercion or duress from any Party.
11. Cooperation. Each Party agrees to reasonably cooperate with and among the Parties to effectuate the provisions of this Option Agreement.
12. Miscellaneous. This Option Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument. This Option Agreement constitutes the entire agreement between or among the Parties concerning the subject matter and supersedes any prior or contemporaneous representations or agreements between or among the Parties not contained herein concerning the subject matter of this Option Agreement. Each person executing this Option Agreement on behalf of any Party represents and warrants that he or she is competent, duly authorized, with full legal capacity, authority and power, acting alone, to act on behalf of such Party, bind such Party in all respects and perform all necessary action for the execution, delivery and performance of this Option Agreement and the discussions contemplated hereunder, which shall be enforceable against such Party (but not against the signatory individually) in accordance with the terms hereof. This Option Agreement shall inure to the benefit of and be binding upon each Party hereto, and their respective heirs, successors and assigns and shall be governed and construed in accordance with California law . Paragraph headings used herein are for convenience only and shall not be used to interpret any term thereof. This Option Agreement may be amended only by an agreement in writing signed by all of the Parties (or their respective successors - in-interest). The provisions of this Option Agreement shall survive termination of the negotiations and discussions hereunder and shall be applicable to all future negotiations and discussions of the Parties even after the termination of any prior negotiations or discussions.
13. Governing Law, Etc. This Option Agreement and all issues arising hereunder shall be governed by California law, without giving effect to principals of conflict of laws . EACH PARTY
CONSENTS TO THE JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS
SITTING IN ORANGE COUNTY, CALIFORNIA, AND AGREE NOT TO OBJECT TO SUCH JURISDICTION OR TO THE LAYING OF VENUE IN SUCH COURTS.
14. Tax Consequences. No representation is made to Borrower as to the tax consequences of this action. Borrower is encouraged to seek the advice of a tax professional of its choice in determining the nature and extent of any such consequences.
15. Use of Electronic Signatures . The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Option Agreement or any document to be signed in connection with this Option Agreement shall be deemed to include electronic signatures (including, without limitation, those using digital signature providers AdobeSign and DocuSign), deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any 7 applicable law, including the federal Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transactions Act (UETA), Civil Code section 1633.1, et seq., the New York State Electronic Signatures and Records Act, or any other state laws based on the Uniform Electronic Transactions Act, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means.
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IN WITNESS WHEREOF, the Parties have executed this Option Agreement as of the date and year first above written.
ANAHEIM HOUSING AUTHORITY,
a public body, corporate and politic
By:
Grace Ruiz-Stepter, Executive Director
or Authorized Designee
ATTEST:
THERESA BASS
AUTHORITY SECRETARY
Authority Secretary
or Authorized Designee
APPROVED AS TO FORM:
OFFICE OF THE CITY ATTORNEY
Ryan O. Hodge, Esq.
Deputy City Attorney IV
or Authorized Designee
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Dated: ____________, 2025
“BORROWER”
ELM STREET COMMONS, a California
limited partnership
By: Elm Street Commons -OH, LLC, an Ohio
limited liability company
Its: Co-General Partner
By:
David Sebastian, Vice President
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Dated: ____________, 2025
“BORROWER”
ELM STREET COMMONS, a California
limited partnership
By: Community Revitalization &
Development Corporation a California
public benefit corporation
Its: Co-General Partner
By:
David Rutledge, President
EXHBIT A
LEGAL DESCRIPTION OF PROPERTY
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF ANAHEIM, COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
LOT 1 AS SHOWN ON LOT LINE ADJUSTMENT NO. 617 AS EVIDENCED BY DOCUMENT RECORDED ON MARCH 30, 2007 AS INSTRUMENT NO. 2007000206302, OF OFFICIAL RECORDS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
THE SOUTHERLY 150 FEET OF LOT 54 OF THE ORIGINAL TOWN OF ANAHEIM, IN THE
CITY OF ANAHEIM, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 4, PAGES 629 AND 630 OF DEEDS, IN THE OFFICE OF THE COUNTY
RECORDER OF LOS ANGELES COUNTY, CALIFORNIA, TOGETHER WITH THE EASTERLY ONE HALF OF LOT 55 OF THE ORIGINAL TOWN OF ANAHEIM, IN THE CITY OF ANAHEIM, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 4, PAGES 629 AND 630 OF DEEDS, IN THE OFFICE OF THE COUNTY RECORDER OF LOS ANGELES COUNTY, CALIFORNIA.
APN: 037-021-12 , 037-021-13
Common Address: 111 and 125 West Elm Street, Anaheim, CA 92805-7700