constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, its remedies in respect of deposits, insurance proceeds, condemnation awards or other monies or other collateral or letters of cre dit securing the Authority Loans ; (f) relieve Developer of its obligations under an indemnity delivered by Developer to the Authority; or (g) affect in any way the validity of a guarantee (if any) or indemnity from any person of all or any of the obligations evidenced and secured by the LMIHAF Note, the Measure S Note, the HOME Note, or the Authority Deed of Trust . The foregoing provisions of this paragraph are limited by the provision that in the event of the occurrence of a default, Developer and its successors and assigns will have personal liability hereunder for any deficiency judgment, but only if and to the extent Developer, its principals, shareholders, partners or its successors and assigns received rentals, other revenues, or other pay ments or proceeds in respect of the mortgaged Property after the occurrence of such default, which rentals, other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property, ordinary and reasonable capital improvements to the mortgaged Property, debt service, real estate taxes in respect of the mortgaged Property and basic management fees, but not incentive fees, payable to an entity or person unaffiliated with Developer in connection with the operation of the mortgaged Property, which are then due and payable. Notwithstanding the first sentence of this paragraph, the Authority may recover directly from Developer or from any other party:
1. damages, costs and expenses incur red by the Authority as a result of fraud or criminal act or acts of Developer or a partner, shareholder, officer, director or employee of Developer, or of a member or general or limited partner of Developer , or of a general or limited partner of such member or general or limited partner;
2. damages, costs and expenses incurred by the Authority as a result of misappropriation of funds provided for the construction of the Improvements, rents and revenues from the operation of the Improvements or proceeds of insurance policies or condemnation proceeds;
3. any and all amounts owing by Developer pursuant to the indemnification regarding Hazardous Substances under the Environmental Indemnity, and
4. all court costs and attorneys ’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Authority will pay Developer’s reasonable court costs and attorneys’ fees if Developer is the prevailing party in such enforcement or collection action).
ARTICLE VII. GENERAL PROVISIONS
Section 7.01 Notices
Formal notices, demands and communications between the Authority and the Developer and Investor Limited Partner will be sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Authority and the Developer, as designated in Section 1.04 and Section 1.05 hereof, and to the Investor Limited 123 of 545
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Partner at the address given in the LMIHAF Note. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section 7.01. Any notice that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, will be deemed delivered upon its transmission; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S.
Postal Service), will be deemed received on the documented date of receipt by the recipient; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof.
Section 7.02 Conflicts of Interest
a. No member, official or employee of the Authority will have any personal interest, direct or indirect, in this Agreement nor will any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is, directly or indirectly, interested. b. Developer 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 Agreement.
Section 7.03 Nonliability of Authority Officials and Employees No member, official, employee or consultant of the Authority will be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the Authority or for any amount which may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement.
Section 7.04 Force Majeure
In addition to specific provisions of this Agreement, performance by either party hereunder will not be deemed to be in default where delays or defaults are due to Force Majeure Events.
Section 7.05 Inspection of Books and Records
a. Developer will maintain complete, accurate, and current records pertaining to the Property for a period of five (5) years after the creation of such records, and shall permit any duly authorized representative of the Authority to inspect and copy records, during regular business hours upon reasonable advance notice. Records must be kept accurate and current. b. The Authority reserves the right to inspect, monitors, and observe work and services performed by Developer at any and all reasonable times. c. The Authority reserves the right to audit the records of Developer any time during the performance of this Agreement and for a period of five years after final payment is made under this Agreement.
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d. If required, Developer will provide the Authority with a certified audit of Developer’s records representing the January 1 – December 31 fiscal year during which the Project becomes Complete, pursuant to the requirements of OMB Circular A-133. e. Access will be immediately granted to the Authority, HUD, the Comptroller General of the United States, or any of their duly authorized representatives to any books, documents, papers, and records of Developer or its contractors for the purpose of performing audits and examinations or making copies and transcriptions. This requirement must be included in all contracts and subcontracts.
Section 7.06 Approvals
a. Except as otherwise expressly provided in this Agreement, approvals required of Authority or Developer in this Agreement, inc luding the attachments hereto, will not be unreasonably withheld or delayed. All approvals will be in writing. Except as otherwise expressly provided in this Agreement, failure by either party to approve a matter within the time provided for approval of the matter will not be deemed a disapproval, and failure by either party to disapprove a matter within the time provided for approval of the matter will not be deemed an approval.
b. Except as otherwise expressly provided in this Agreement, approvals required of the Authority will be deemed granted upon the written approval of the Authority ’s Executive Director or designee. Authority agrees to provide notice to Developer of the name of the Executive Director’s designee on a timely basis, and to provide updates from time to time. Notwithstanding the foregoing, the Executive Director or designee may, in his or her sole discretion, refer to the governing body of the Authority any item requiring Authority approva l; otherwise, “ Authority approval” means and refer to approval by the Executive Director or designee.
Section 7.07 Real Estate Commissions
Neither the Authority nor the Developer will be liable for any real estate commis sions, brokerage fees or finder fees which may ar ise from this transaction. The Authority and the Developer each represent to the other that it has employed no broker, agent, or finder in connection with this transaction.
Section 7.08 No Third Party Beneficiaries
This Agreement is made solely and specifically between the Authority and Developer and their respective successors and assigns; and, except as expressly provided otherwise in this Agreement, no other person will have any rights, interest or claims under this Agreement or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.
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Section 7.09 Authority to Sign
Developer hereby represents that each person executing this Agreement on behalf of Developer has full authority to do so and to bind Developer to perform pursuant to the terms and conditions of this Agreement.
Section 7.10 No Partnership
Nothing contained in this Agreement will be deemed or construed to create a partnership, joint venture, or any other similar relationship between the parties hereto or cause Authority to be responsible in any way for the debts or obligations of Developer or any other Person.
Section 7.11 Compliance With Law
Developer agrees to comply 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 development and use of the Property and the Improvements, as well as operations conducted thereon. The judgment of any court of competent jurisdic tion, or the admission of Developer in any action or proceeding, whether Authority be a party thereto or not, that Developer has violated any such ordinance or statute in the development and use of the Property will be conclusive of that fact as between Authority and Developer.
Section 7.12 Binding Effect
This Agreement, and the terms, provisions, promises, covenants and conditions hereof, will be binding upon and will inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.
Section 7.13 Incorporation by Reference
Each of the attachments and exhibits attached hereto is incorporated herein by this reference.
Section 7.14 Counterparts
This Agreement may be executed by each party on a separate signature page, and when the executed signature pages are combined, will constitute one single instrument.
Section 7.15 Construction and Interpretation of Agreement a. The language in all parts of this Agreement will in all cases be construed simply, as a whole and in accordance with its fair meaning and not strictly for or against any party. The parties hereto acknowledge and agree that this Agreement has been prepared jointly by the parties and has been the subject of arm’s length and careful negotiation over a considerable period of time, that each party has been given the opportunity to independently review this Agreement with legal 126 of 545
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counsel, and that each party has the requisite experience and sophistication to understand, interpret, and agree to the particular language of the provisions hereof. Accordingly, in the event of an ambiguity in or dispute regarding the interpretation of this Agreement, this Agreement will not be interpreted or construed against the party preparing it, and instead other rules of interpretation and construction will be utilized.
b. If any term or provision of this Agreement, the deletion of which would not adversely affect the receipt of any material benefit by any party hereunder, will be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement will not be affected thereby and each other term and provision of this Agreement will be valid and enforceable to the fullest extent permitted by law. It is the intention of the parties hereto that in lieu of each clause or provision of this Agreement that is illegal, invalid, or unenforceable, there be added as a part of this Agreement an enforceable clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible. c. The captions of the articles, sections and subsections herein are inserted solely for convenience and under no circumstances are they or any of them to be treated or construed as part of this instrument.
d. References in this instrument to this “ Agreement” mean, refer to and include this instrument as well as any riders, exhibits, addenda and attachments hereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in this instrument. Any references to any covenant, condition, obligation, and/or undertaking “herein,” “hereunder,” or “pursuant hereto” (or language of like import) means , refer to, and include the covenants, obligations, and undertakings existing pursuant to this instrument and any riders, exhibits, addenda, and attachments or other documents affixed to or expressly incorporated by reference in this instrument.
e. As used in this Agreement, and as the context may require, the singular includes the plural and vice versa, and the masculine gender includes the feminine and vice versa.
Section 7.16 Entire Agreement, Waivers and Amendments
a. This Agreement will be executed in three duplicate originals each of which is deemed to be an original. This Agreement will constitute the entire understanding and agreement of the parties.
b. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties with respect to all or any part of the Property.
c. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the Authority or the Developer, and all amendments hereto must be in writing and signed by the appropriate authorities of the Authority and the Developer . This 127 of 545
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Agreement and any provisions hereof may be amended by mutual written agreement by the Developer and the Authority.
Section 7.17 Time for Acceptance of Agreement by Authority This Agreement, when executed by Developer and delivered to Authority, must be authorized, executed and delivered by Authority within thirty (30) days after date of signature by Developer or this Agreement may be terminated by Developer upon written notice to Authority.
The effective date of this Agreement will be the date when this Agreement has been executed by Authority.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES ON FOLLOWING PAGE]
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Page S-1
IN WITNESS WHEREOF, Authority and Developer have signed this Agreement as of the dates set opposite their signatures.
“AUTHORITY”
THE HOUSING AUTHORITY OF THE
CITY OF GLENDALE
Dated: November ____, 2022 By:_____________________________ Roubik R. Golanian, P.E.
Executive Director
APPROVED AS TO FORM AND LEGALITY:
MICHAEL J. GARCIA, CITY ATTORNEY
General Counsel to the Authority
By:______________________________
Michael J. Garcia
APPROVED AS TO FORM:
KANE, BALLMER & BERKMAN
Special Counsel to the Authority
By: ___________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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Page S-2
“DEVELOPER”
Linc-CORE Pioneer LP,
a California limited partnership
By: NCRC Pioneer GP LLC,
a California limited liability company,
its managing general partner
By: National Community Renaissance of California,
a California nonprofit public benefit corporation,
its sole member/manager
By: __________________________________
Michael Finn
Chief Financial Officer
By: Linc Pioneer LLC,
a California limited liability company,
its co-managing general partner
By: LINC Housing Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By: __________________________________
Anders Plett
Senior Vice President of Housing Development
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Attachment 1
SITE MAP
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ATTACHMENT NO. 2
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF GLENDALE
IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
ALL OF LOTS 167 TO 176, 186 AND 187 AND THOSE PORTIONS OF LOTS 177 TO 185 INCLUSIVE AND LOT 188 OF TRACT NO. 1587, IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 20 PAGE 95 OF MAPS , IN THE OFFICE OF THE COU NTY RECORDER OF SAID COUNTY, AND A PORTION OF FAIRMONT AVENUE 50 FEET WIDE, AS SHOWN ON THE MAP OF SAID TRACT NO. 1587, DESCRIBED AS A WHOLE AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 176, THENCE ALONG THE WESTERLY LINE OF SAID LOTS 176 AND 177, NORTH 00° 20’ 57” WEST 185.09 FEET TO A POINT DISTANT THEREON NORTH 00° 20’ 57” WEST 64.09 FEET FROM THE SOUTHWEST CORNER OF SAID LOT 177; THENCE NORTH 89° 39’ 03” EAST 4.00 FEET; THENCE NORTH 78° 01’ 45” EAST 144.07 FEET; THENCE NORTH 83° 41’ 51” EAST 452.49
FEET TO THE INTERSECTION WITH THE NORTHERLY PROLONGATION OF THE EASTERLY LINE OF SAID LOT 188; THENCE SOUTHERLY ALONG SAID
PROLONGATION AND SAID EASTERLY LINE TO THE SOUTHERLY LINE OF THE NORTHERLY 71.5 FEET OF SAID LOT 188; THENCE WESTERLY ALONG SAID SOUTHERLY LINE TO THE EASTERLY LINE OF SAID LOT 187; THENCE SOUTHERLY ALONG SAID EASTERLY LINE TO THE SOUTHEAST CORNER THEREOF; THENCE WESTERLY A DISTANCE OF 50 FEET ALONG THE SOUTHERLY LINE OF SAID LOT 187 TO THE NORTHEAST CORNER OF SAID LOT 167; TH ENCE SOUTHERLY ALONG THE EASTERLY LINE OF SAID LOT 167, A DISTANCE OF 121.00 FEET TO THE SOUTHEAST CORNER OF SAID LOT 167; THENCE WESTERLY ALONG THE SOUTHERLY LINE OF SAID LOTS 167 TO 176 INCLUSIVE, A DISTANCE OF 494.59 FEET TO THE POINT OF BEGINNING.
TOGETHER WITH THAT PORTION OF FAIRMONT AVENUE AS VACATED BY RESOLUTION NO. 18543, RECORDED FEBRUARY 15, 1978 AS INSTRUMENT NO. 78 - 173308 OF OFFICIAL RECORDS.
EXCEPT FROM THAT PORTION OF SAID LAND LYING WITHIN THE LINES OF LOTS 177 TO 187 INCLUSIVE, ALL MINERALS, OILS, GASES AND OTHER HYDROCARBONS
BY WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR UNDER SAID LAND,
WITHOUT, HOWEVER, THE RIGHT TO DRILL, DIG OR MINE THROUGH THE SURFACE
THEREOF AS EXCEPTED BY THE STATE OF CALIFORNIA, DEPARTMENT OF PUBLIC 132 of 545
WORKS IN DEED RECORDED JULY 16, 1968 AS INSTRUMENT NO. 451 IN BOOK D-4066 PAGE 666, OFFICIAL RECORD.
ABOVE LEGAL DESCRIPTION IS DESCRIBED AS LOT A OF PARCEL MAP NO. 1259A AND RECORDED IN BOOK 91 PAGE 89 OF PARCEL MAPS IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA.
APN: 5637-023-806
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ATTACHMENT NO. 3
METHOD OF FINANCING
This is the Method of Financing attached to the Affordable Housing Agreement between the Housing Authority of the City of Glendale (the “Authority”) and LINC-CORE PIONEER LP, a California limited partnership (“Developer”), relating to Developer’s construction of a 340-unit (including three manager’s units) residential rental project, to be rented at Affordable Rents to Extremely Low Income, Very Low Income, and Low Income families and Senior Citizen Households. Any capitalized term not otherwise defined herein will have the meaning ascribed to such term in the Affordable Housing Agreement.
The Project will be financed by a combination of co nstruction and permanent loans , a LMIHAF Loan, a HOME Loan, a Measure S Loan, a CalHFA MIP loan (referred to herein as the “Subsidy Loan”), and Developer Equity derived from the syndication of the Four Percent Tax Credits and a Developer loan derived from the sale o f California Certificated State Tax Credits .
For purposes of this Agreement, “Four Percent” refers to the applicable percentage of the qualified basis for a building that is not federally subsidized, as provided in Internal Revenue Code Section 42(b)(1).
1. Definitions. Unless otherwise defined herein, capitalized terms will have the meanings ascribed to them in the Affordable Housing Agreement.
2. Acquisition and Development Cost s. The parties estimate that the total Acquisition and Development Costs will be approximately $167,926,758, of which approximately $12,465,000 (including carrying costs) is allocated to acquisition costs and approximately $155,461,758 is allocated to development and construction costs. The Measure S Loan in the total amount of $25,100,000 consists of the Authority’s carry back of the fully capitalized rent under the Ground Lease in the amount of $12,400,000 and a loan of construction to permanent funds in the amount of $12,700,000. The HOME Loan consists of a loan of construction to permanent funds in the amount of $2,000,000. The LMIHAF Loan consists of a loan of construction to permanent funds in the amount of $1,300,000.
3. Sources of Construction Financing . The parties anticipate t hat the Acquisition and Development Costs will be financed during the Construction Period with the following combinations of funds:
a. The Construction Loan, in the approximate original principal amount of $91,645,016, to be secured by a first deed of trust.
b. A second priority HOME Loan in the original principal amount of $2,000,000, less a $200,000 hold-back, equal to ten percent (10%) of disbursements during construction.
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c. A second priority LMIHAF Loan in the original principal amount of $1,300,000, less a $130,000 hold-back, equal to ten percent (10%) of disbursements during construction.
d. A second priority Measure S Loan in the original principal amount of $25,100,000, consisting of a $12,400,000 land loan and a construction to permanent loan of $ 12,700,000, less a $1,270,000 hold-back, equal to ten percent (10%) of disbursements during construction.
e. Accrued deferred interest in the amount of $1,057,687 for the Authority’s development loan and accrued deferred interest in the amount of $819,708 for the Authority’s Ground Lease.
f. Costs deferred to Conversion in the amount of $3,525,764, of which, $1,153,404 will be applied at Conversion to fund the Operating Reserve and $2,372,360 will be applied at Conversion to pay the balance of capitalized developer fee, TCAC fees, and syndication costs.
g. Developer Equity consisting of: (i) advances and capital contributions made by Developer’s Limited Partner, in the approximate amount of $26,184,520; (ii) a General Partner l oan of $4,440,500 from the certificated state cr edit sale proceeds; (iii) a cash contribution from Developer in the amount of $4,957,268; and (iv) the deferral of a portion of the Developer Fee in the amount of $6,896,295 (“Deferred Developer Fee”) , $0 of which will be paid at Conversion, with the $6,896,295 balance of the Deferred Developer Fee to be paid from the net cash flow of the Project. Developer ’s right to pay the theretofore unpaid balance of the Deferred Developer Fee from the net cash flow of the Project will be prior to the Authority’s right to receive Residual Receipts payments.
h. Developer will be responsible during the Construction Period to provide funds if and as needed to pay for cost o verruns and contingencies not otherwise funded by the sources of funds as described herein.
4. Sources of Permanent Financing. Developer must make every reasonable effort to structure the terms of the permanent financing in a way that will minimize t he amount of the Authority Loan needed to fill the financing gap. The parties anticipate that the Acquisition and Development Costs will be financed during the Permanent Period with the following combinations of funds:
a. The Permanent Loan, in the approximate original principal amount of $30,757,000, to be secured by a first priority deed of trust; b. The HOME Loan described in paragraph 3.b above in the original principal amount of $2,000,000, secured by a second priority deed of trust ahead of the Subsidy Loan;
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c. The LMIHAF Loan described in paragraph 3.c above in the original principal amount of $1,300,000, secured by a second priority deed of trust ahead of the Subsidy Loan;
d. The Measure S Loan des cribed in paragraph 3.d above in the original principal amount of $25,100,000, secured by a second priority deed of trust ahead of the Subsidy Loan;
e. Accrued deferred interest in the amount of $1,057,687 for the Authority’s development loan and accrued deferred interest in the amount of $819,708 for the Authority’s Ground Lease;
f. A CalHFA (“Subsidy Lender”) Mixed-Income (MIP) Subsidy Loan in the original principal amount of $5,000,000 and the CalHFA Supplemental MIP Subsidy Loan in the additional principal amount of $ 5,203,625 (collectively, “Subsidy Loan”); and Developer Equity described in paragraph 3.f above, consisting of (1) the Deferred Developer Fee in the approximate amount of $6,896,295 (to be paid to the extent available from the net cash flow of the Project), plus (2) Developer’s cash contribution in the amount of $4,957,268, plus (3) the initial Limited Partner’s Capital Contribution of $26,184,520, plus the additional Limited Partner’s Capital Contribution in the approximate amount of $46,348,776, plus (iv) the initial General Partner’s loan of $4,440,500 from the sale of the Certificated State Credits, plus the remainder of the General Partner Certificated Credit sale loan proceeds in the approximate amount of $7,861,379.
5. Project Budget. The parties anticipate that all Acquisition and Development Costs will be as set forth in the Project Budget attached to the Affordable Housing Agreement as Attachment No. 6, which is incorporated herein by this re ference (the “Project Budget ”). The Project Budget will be subject to change from time- to-time, subject to th e prior written approval of the Authority Executive Director or designee (which approval will not be unreasonably withheld), upon which approval , the Project Budget will be replaced by the approved revised Project Budget. Within the respective times prov ided therefor in the Schedule of Performance, the Developer will obtain all approvals needed for the Construction Loan and demonstrate, to the satisfaction of the Authority Executive Director, that all Developer Equity will be available for payment or refinancing of Development Costs when and as required by this Method of Financing.
6. Evidence of Financing. The sum of the Construction Loan plus the Developer’s Equity plus the LMIHAF Loan plus the HOME Loan plus the Measure S Loan plus the Subsidy Loan will, at all times, be sufficient to pay all Acquisition and Development Costs as set forth in the most recently approved Project Budget. Prior to the Construction Financing Event, Developer will submit for Authority review and approval evidence of such financing, including: (a) copies of all documents required by the Construction Lender to obtain construction financing; (b) a firm commitment for the Permanent Loan and copies of all documents that will be required by Permanent Lender to obtain the Permanent Loan; (c) copies of all documents required by Subsidy Lender to obtain the Subsidy Loan; and (d) the amended and restated limited partnership 136 of 545
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agreement upon inclusion of the Investor Limited Partner, including all exhibits thereto, and other documentation evidencing the availability of the Limited Partner Capital Contribution, and such other documentation as may be appropriate to evidence other Developer Equity. The Authority will not unreasonably withhold its approval.
7. Authority Loans.
a. In accordance with and subject to the terms and conditions of the Affordable Housing Agreement and this Method of Financing, the Authority agrees to make the LMIHAF Loan, the Measure S Loan, and the HOME Loan to Developer and Developer agrees to borrow such funds for the purpose of paying Acquisition and Development Costs. b. Developer hereby acknowledges that the Authority Loan s are intended to be “gap” financing, not to exceed the amount needed to bridge the gap between the total Acquisition and Development Costs and the maximum Senior Loan obtainable by Developer plus the maximum amount of Developer ’s Equity set forth above but in any event not to exceed the dollar amount set forth above. If at any time Developer obtains additional financial assistance, Developer must promptly notify the Authority. The Authority will determine if such additional assistance would result in an over -subsidy of the Project, in which case, the Authority and Developer will mutually agree upon appropriate procedures for reducing the Authority Loan to eliminate the over-subsidy.
c. The Authority Loan will be used exclusively to pay Acquisition and Development Costs identified in the Project Budget.
d. At the Construction Financing Event, the Authority and Developer will execute and deliver such instruments and documents as may be necessary to evidence and secure the Authority Loan, consistent with the terms of the Affordable Housing Agreement and this Method of Financing, and each in a form that is acceptable to the Authority Executive Director or designee, including the following documents, as applicable, which are referred to collectively as the “Authority Loan Documents”:
1. Agreement Containing Covenants;
2. Notice of Affordability Restrictions on Transfer of Property;
3. Agreement Containing HOME Program Requirements;
4. Promissory Note evidencing the LMIHAF Loan;
5. Promissory Note evidencing the HOME Loan;
6. Promissory Note evidencing the Measure S Loan;
7. Authority Deed of Trust securing the LMIHAF Loan, the Measure S Loan, and the HOME Loan;
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8. Assignment of Rents and Leases;
9. Assignment of Agreements;
10. Environmental Indemnity;
11. UCC-1 Financing Statements (one for recording and one for filing); and
12. Disbursement Agreement.
8. Subordination.
a. The lien of the Authority Deed of Trust, but not the Agreement Containing Covenants, the HOME Regulatory Agreement, or the Notice of Affordability Restrictions, will be subordinate to the lien created by the Construction Loan Deed of Trust and the Permanent Loan Deed of Trust, and any other of the Senior Loan Documents and all of the terms and conditions contained in the Senior Loan Documents.
b. Prior to the Construction Financing Event, the Executive Director of the Authority or designee will execute a Subordination Agreement(s) that is consistent with applicable laws and regulations governing subordination of the LMIHAF Loan, the Measure S Loan, and the HOME Loan and is mutually acceptable to the Authority Executive Director or designee, the Construction Lender, Permanent Lender, and Developer. The Subordination Agreement (s) will subordinate the Authority Deed of Trust, but not the Agreement Containing Covenants, the HOME Regulatory Agreement, or the Notice of Affordability Restrictions, to the Construction Loan Deed of Trust and ot her Senior Loan Documents. The Subordination A greement(s) must provide the Authority with all rights under California Civil Code Section 2924b and 2924c and must contain written commitments reasonably designed to protect the Authority’s investment in the event of a default. Such written commitments will provide for, but not necessarily be limited to: (i) a right to cure a default on the Senior Loan deed of trust; (ii) a right to negotiate with Senior Lender after notice of default and prior to Senior Lender commencing foreclosure proceedings; (iii) a right to purchase Developer’s leasehold interest in the Property at any time after a default on the Senior Loan (provided that the Ground Lease contains appropriate non- merger provisions); and (iv) an agreement that if prior to foreclosure of the Senior Loan, the Authority takes title to the Developer’s leasehold interest in the Property and cures the default on the Senior Loan, the Senior Lender will not exercise any right it may have to accelerate the Senior Loan by reason of the transfer of title to the Authority.
9. Recordation. Upon the Construction Financing Event, the Title Company will record the recordable Authority Loan Documents in accordance with instructions provided by the Authority, and will be prepared to issue to the Authority an ALTA policy of title insurance, insuring the Authority Deed of Trust as a second priority lien on the Property, in amounts and with endorsements as the Authority may determine is appropriate. 138 of 545
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10. Disbursement of Authority Loans.
a. The Authority Loans will be disbursed for the payment of Acquisition and Development Costs in accordance with a disbursement agreement among the Authority, Construction Lender, and Developer, substantially in the form attached to the Affordable Housing Agreement as Attachment No. 19 or in such other form and substance that is mutually acceptable to the Executive Director, Construction Lender, and Developer (the “Disbursement Agreement”). b. The Authority Loan will be disbursed based on vouchers for actual expenses incurred or paid, accompanied by contractor/subcontractor invoices and other information and documentation (e.g., lien releases) requested or required by the Authority. The Authority will have the right to condition any disbursement upon receipt and approval of such documentation, evidence or information that it may request, including, but not limited to, vouchers, invoices, and architect’s, inspector’s and/or engineer’s periodic certifications of the percentage and/or stage of construction that has been completed. Requests for HOME Loan disbursements must be submitted on forms specified by the Authority, with adequate and proper documentation of eligible costs incurred in compliance with 24 CFR 92.206 and necessary for HUD IDIS disbursement requirements. The Authority will have the right in its sole discretion to make disbursements of funds payable jointly to Developer and third parties entitled to such payment. The Authority will have the right to review and audit all records of Developer pertaining to disbursement of the Authority Loan. Developer must maintain such records for a period of not less than five years after Completion. c. Disbursements upon Applications for Payment will be subje ct to a ten percent (10%) retention. Developer may submit a final invoice upon Completion. Final payment, including retention previously withheld, will be made according to the Disbursement Agreement. d. Designated representatives of the Housing Authority wil l have the right to participate in weekly construction meetings during the construction of the Improvements and to approve proposed finishes, colors, fixtures, and like matters.
11. Repayment Terms. The repayment terms of the Authority Loan s will be as set forth in the LMIHAF Note, the Measure S Note, and the HOME Note attached to the Affordable Housing Agreement as Attachments No. 12, 13, and 14, respectively.
12. Conditions Precedent to Construction Financing Event The Construction Financing Event is conditioned upon each of the following occurring to the satisfaction of, and in a form approved by, the Authority Executive Director prior to the time for the Construction Financing Event set forth in the Schedule of Performance:
1. Developer submits evidence that the final working drawings have been approved by the City, and, to the extent required by the Affordable Housing Agreement, the Authority Executive Director or designee;
2. Developer submits a copy of the general construction contract between the Developer and a licensed general contractor approved by the Authority 139 of 545
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Executive Director or designee, covering all construction required by the Affordable Housing Agreement and the approved final working drawings;
3. Developer submits for Authority approval copies of the mechanical, electrical, plumbing, and framing subcontracts and subcontracts for other trades identified by the Authority;
4. Developer submits for Authority approval copies of contracts with the architect, the property manager (which must contain a provision allowing Developer’s termination of the management agreement without cause, upon thirty (30) days prior written notice), and other consultants and service providers identified by the Authority;
5. Developer submits a final Project Bud get, current as of the Construction Financing Event date, demonstrating to the satisfaction of the Authority Executive Director or designee the availability of sufficient funds to pay all Acquisition and Development Costs;
6. Developer submits evidence satisf actory to the Authority Executive Director or designee that the Developer has financing commitments sufficient to pay all Acquisition and Development Costs in accordance with the Affordable Housing Agreement, including the Construction Loan, Permanent Loan , Subsidy Loan, and Developer’s Equity (including the Limited Partner Capital Contribution) in the respective amounts set forth in this Method of Financing;
7. Developer submits copies of final Construction Loan Documents;
8. Developer submits copies of final Subsidy Loan documents;
9. Developer submits copies of Amended and Restated Limited Partnership Agreement (admitting Investor Limited Partner) or other final limited partnership agreement and related documents;
10. Developer submits the evidence of insurance policies and the endorsements required by the Affordable Housing Agreement;
11. Developer submits evidence satisfactory to the Authority Executive Director or designee that Developer has satisfied all conditions precedent to the issuance of all Permits necessary for the construction of the Improvements, other than payment of fees (for which funds have been budgeted in the Project Budget) and conveyance of title;
12. Developer submits, if requested by the Authority, an estimated draw schedule for the Authority Loan;
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Method of Financing
13. Developer submits the Annual Project Budget for the first year of operation, as required by the Affordable Housing Agreement;
14. Developer, Construction Lender, and Authority agree on a Disbursement Agreement providing for dis bursement of the Authority Loan, Developer Equity, and Construction Loan;
15. Developer, Senior Lenders, and Authority agree on Subordination Agreements;
16. Developer and Authority agree on Subordination Agreements for the junior loans;
17. Title Insurance Company is prepared to issue the title insurance policies required by the Affordable Housing Agreement;
18. Developer duly executes and delivers to the Authority or into escrow the Ground Lease, the Memorandum of Lease, and the Authority Loan Documents;
19. Developer duly executes and delivers into escrow the Density Bonus Housing Agreement with the City; and
20. Authority Executive Director determines that Developer is not in default of its obligations to the Authority under the Affordable Housing Agreement.
Notwithstanding the foregoing, the Authority, in the sole discretion of the Authority Executive Director, may waive any of the foregoing conditions precedent to the Construction Financing Event. A waiver of any of the foregoing conditions will not operate in any way as a waiver, or estoppel with respect to, any subsequent or other failure to comply with such condition, or any other condition contained in the Affordable Housing Agreement, this Method of Financing, or any of the other Authority Loan Documents. The Authority’s approval to record the Authority Deed of Trust will confirm the Authority’s approval or waiver of the conditions set forth in this Section
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Attachment No. 4
Scope of Development
ATTACHMENT NO. 4
SCOPE OF DEVELOPMENT
The project site is located at 515 Pioneer and is 2.799 acres (121,966.91 square feet) and is located immediately south of the 134 freeway, at the northwest corner of Pioneer Drive and Pacific Avenue. The site was owned and operated by AT&T and is improved with three structures totaling approximately 18,000 square feet and surfa ce parking. The Improvements to be constructed on the site include a unit mix consisting of 92 affordable senior units (a mix of 32 studio and 60 one- bedroom units) and 245 affordable family units (a mix of 200 one -bedroom units and 45 two- bedroom units); three two-bedroom manager units; approximately 37,750 square feet of common open space (including community centers, outdoor recreation stations, tot lot playground, community gardens, outdoor courtyards with BBQ picnic areas, programmed rooftop decks and a walking path); and added pedestrian enhancement amenities along the Kenilworth Avenue cul- de-sac and the existing pedestrian tunnel which may include, without limitation , overhead lighting, surveillance, art applied to the pedestrian tunnel walls, benches, decorative pavers, trees, and an enhanced/inviting entrance on the south end of the pedestrian tunnel.
The proposed Project would demolish the existing structures and parking lot and would redevelop the site with three new 5-story, 75-foot high, residential buildings with 337 for-rent dwelling units and 3 two-bedroom manager units. The Project would provide 13,600 square feet of private open space and 37,750 square feet of common open space, and would include multiple interior ground floor courtyards and roof decks totaling 7,284 square feet. The Project will have a proposed Floor Area Ratio (FAR) of 2.45:1 with a total of approximately, 298,020 square feet of floor area for residential uses, including community rooms, lobby/mail rooms, and office/service space within the ground floor of each of the three buildings for use by the residents. 342 automobile stalls will be provided in a two -level subterranean parking garage, including 35 EV-ready stalls. The Project is providing the required amount of parking per Glendale Municipal Code (GMC). As set forth in the Density Bonus and Inclusionary Housing Plan (Density Bonus Housing Plan Case No. PDBP2112447) approved by the City Council on August 10, 2021, the City may not impose any parking ratio for the Proje ct. Despite Government Code section 65915(p)(3)(A), the Project, as designed, will provide a total of 342 parking stalls. The Project’s main pedestrian and vehicular access points will be on Pioneer Drive. 142 of 545
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Attachment No. 5 - Schedule of Performance
ATTACHMENT NO. 5
SCHEDULE OF PERFORMANCE
1. Submittal - Management Plan and Maintenance
Program. Developer will submit to the Housing
Authority for approval the Management Plan
(including a Tenant Selection and Eligibility Plan)
and the Maintenance Program.
Prior to the initial lease -up of
the Project.
2. Submittal – Affirmative Marketing Plan .
Developer will prepare and submit to the Housing
Authority for approval the Affirmative Marketing
Plan described in paragraph b.9 of Section 5.01 of
the Affordable Housing Agreement.
Prior to the initial lease -up of
the Project.
3. Submittal - Annual Project Budget.
Developer will submit to the Housing Authority
for approval a current Annual Project Budget for
the first year of operation.
Prior to submittal of the
Affordable Housing
Agreement to the Housing
Authority for approval;
revisions to the approved
Annual Project Budget must
be submitted for approval
prior to the scheduled date for
the Construction Financing
Event.
4. Submittal – Bidding Procedures. Developer will
submit to the Housing Authority for approval its
bidding procedures as required by Section 4.04 of
the Agreement.
Prior to submittal of the
Affordable Housing
Agreement to the Housing
Authority for approval.
5. Approval of Affordable Housing Agreement by
the Housing Authority ’s Board of
Commissioners. The Housing Authority will
consider approval of the Affordable Housing
Agreement, and authorize the Executive Director
to execute and deliver the Affordable Housing
Agreement to the Developer.
After staff approval of
Developer’s proposed Annual
Project B udget and
Developer’s subcontract
bidding procedures, and after
submission of executed
Affordable Housing
Agreement by Developer ,
estimated to be November 1,
2022.
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6. Submittal - Basic Concept/Schematic Drawings .
Developer will submit to the Housing Authority
for approval the Basic Concept/Schematic
Drawings and related documents.
Completed.
7. Approval - Basic Concept/Schematic Drawings .
The Housing Authority will approve or
disapprove the Basic Concept/Schematic
Drawings and related documents (site plans,
elevations and preliminary floor plans).
Completed.
8. Submittal - Final Construction Drawings and
Specifications. Developer will prepare and
submit to the Housing Authority for approval the
Final Construction Drawings and Specifications.
November 1, 2022
9. Approval - Final Construction Drawings and
Specifications. The Housing Authority will
approve or disap prove the Final Construction
Drawings and Specifications.
One week prior to the
scheduled date for the
Construction Financing Event.
10. Submittal – Subcontracts. Developer will submit
to the Housing Authority for approval the
subcontracts required by Section 4.0 3 of the
Agreement.
One week prior to the
scheduled date for the
Construction Financing Event.
11. Submittal – Environmental Assessments .
Developer will deliver to the Housing Authority
copies of the environmental assessments as
required by Section 4.02 of the Agreement.
Completed.
12. Submittal - Evidence of Financing.
Developer will submit to the Housing Authority
substantially final Construction Loan documents ,
tax credit documents, documentation of other
sources of financing, and documentation of
Developer Equity, as described in the Method of
Financing.
Ten (10) days prior to the
scheduled date for the
Construction Financing Event.
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13. Approval of Financing . The Housing Authority
will approve or disapprove the evidence of
financing.
Within ten (10) days after
receipt of each such submittal
of evidence of financing to the
Housing Authority.
14. Construction Financing Event . All conditions
precedent to the Construction Financing Event
will have been satisfied.
Estimated to occur by
December 12, 2022, but which
will occur as soon as possible
following Developer’s receipt
of an allocation of Low
Income Housing Tax Credits.
15. Submittal - Tenant Lease. Developer will prepare
and submit to the Housing Authority for approval
the tenant lease with the lease provisions
described in the Agreement Containing
Covenants and the HOME Regulatory
Agreement.
Prior to the initial lease -up of
the Project.
16. Approval – Management Plan, Tenant Selection
and Eligibility Plan, Maintenance Program,
Affirmative Marketing Plan, Tenant Lease . The
Housing Authority will approve or disapprove
Developer’s proposed Management Plan, Tenant
Selection and Eligibility Plan, Maintenance
Program, Affirmative Marketing Plan, and Tenant
Lease.
Prior to the initial lease -up of
the Project.
17. Commencement of Construction. Developer will
commence construction of the I mprovements on
the Property.
Within sixty (60) days after the
Construction Financing Event,
but no later than December 13,
2022.
18. Completion of Construction . Developer will
complete construction of the Improvements on the
Property.
Not later than March 30, 2026,
or such later date as may be
approved by the Housing
Authority and the California
Tax Credit Allocation
Committee.
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Attachment No. 5 - Schedule of Performance
19. Submittal – Identity of HOME Units . Developer
will submit to the Authority for approval the street
address and unit numbers of the proposed HOME
Units.
Thirty (30) days prior to initial
rental of the units.
20. Submittal – Rent Schedule. Developer will submit
its proposed rent schedule and utility allowance to
the Housing Authority for approval.
Thirty (30) days prior to initial
rental of the units and on an
annual basis thereafter.
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Attachment No. 6
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Attachment No. 7 – Ground Lease
GROUND LEASE
By and Between
THE HOUSING AUTHORITY
OF THE CITY OF GLENDALE
and
LINC-CORE PIONEER LP,
a California limited partnership
(515 Pioneer)
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Page i
TABLE OF CONTENTS
Article I DEFINITIONS ................................................................................................................. 2 Article II LEASE OF THE PROPERTY ........................................................................................ 8 Section 201 Purpose of Lease .................................................................................................... 8 Section 202 Leased Area ........................................................................................................... 9 Section 203 Assignment of Utility Rights ................................................................................. 9 Section 204 Recorded Encumbrances ........................................................................................ 9 Article III TERM .......................................................................................................................... 10 Section 301 Commencement and Term ................................................................................... 10 Section 301 Recordable Quitclaim Deed. ................................................................................ 10 Article IV CONSIDERATION FOR THE LEASE ...................................................................... 10 Section 401 Obligations and Covenants; Rent......................................................................... 10 Article V USE OF THE PROPERTY AND SITE CONDITIONS. ............................................. 10 Section 501 Use of the Property. ............................................................................................. 10 Section 502 Compliance with Law. ......................................................................................... 13 Section 503 Site Conditions. .................................................................................................... 14 Section 504 Hazardous Materials. ........................................................................................... 15 Article VI CONSTRUCTION OF IMPROVEMENTS ON THE PROPERTY ........................... 19 Section 601 Construction of Improvements. ........................................................................... 19 Section 602 Contractors and Subcontractors ........................................................................... 19 Section 603 Permits ................................................................................................................. 20 Section 604 Performance of Construction Work ..................................................................... 20 Section 605 Release of Construction Covenants ..................................................................... 21 Section 606 Ownership of Improvements................................................................................ 22 Section 607 No Liens on Landlord’s Interest .......................................................................... 22 Section 608 Removal of Liens on Leasehold Interest ............................................................. 22 Section 609 Notice of Completion ........................................................................................... 23 Article VII ALTERATIONS. ....................................................................................................... 23 Section 701 Alterations ............................................................................................................ 23 Article VIII NO LIABILITY OF LANDLORD ........................................................................... 24 Section 801 No Liability of Landlord. ..................................................................................... 24 Section 802 Discovery of Toxic Substances ............................................................................ 25 Article IX MAINTENANCE AND REPAIRS ............................................................................. 25 Section 901 Maintenance and Repairs ..................................................................................... 25 150 of 545
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Section 902 Repairs ................................................................................................................. 25 Section 903 Landlord’s Obligation .......................................................................................... 25 Article X DAMAGE OR DESTRUCTION .................................................................................. 26 Section 1001 Tenant to Give Notice .......................................................................................... 26 Section 1002 Repair of Damage or Destruction ........................................................................ 26 Section 1003 Application of Insurance Proceeds ...................................................................... 27 Section 1004 Tenant’s Obligations ............................................................................................ 27 Section 1005 Option to Terminate ............................................................................................. 27 Article XI ENTRY BY LANDLORD .......................................................................................... 28 Article XII UTILITIES AND SERVICES ................................................................................... 28 Section 1201 Utilities and Services ........................................................................................... 28 Section 1202 Easements ............................................................................................................ 29 Article XIII PROHIBITION AGAINST ENCUMBRANCE OR TRANSFER ........................... 29 Section 1301 Prohibitions .......................................................................................................... 29 Section 1302 Consent to Assignment ........................................................................................ 30 Article XIV TAXES AND IMPOSITIONS ................................................................................. 31 Article XV INSURANCE ............................................................................................................. 31 Section 1501 Required Insurance .............................................................................................. 31 Section 1502 Disposition of Insurance Proceeds ....................................................................... 34 Article XVI DEFENSE, INDEMNIFICATION AND HOLD HARMLESS ............................... 35 Article XVII EMINENT DOMAIN.............................................................................................. 36 Section 1701 Tenant to Give Notice .......................................................................................... 36 Section 1702 Total Taking ......................................................................................................... 36 Section 1703 Partial Taking ....................................................................................................... 36 Section 1704 Application of Awards and Other Payments ....................................................... 36 Article XVIII COMPLIANCE WITH ALL LAWS ..................................................................... 37 Article XIX PERMITS AND LICENSES .................................................................................... 37 Article XX PRODUCTION OF REPORTS, RECORDS AND STATEMENTS ........................ 37 Article XXI NONDISCRIMINATION ........................................................................................ 37 Article XXII LEASEHOLD MORTGAGES................................................................................ 39 Section 2201 Leasehold Mortgages ........................................................................................... 39 Section 2202 No Subordination ................................................................................................. 39 Section 2203 Notice to Landlord ............................................................................................... 40 Section 2204 Notice to Permitted Leasehold Mortgagee .......................................................... 40 Section 2205 Permitted Leasehold Mortgagee’s Rights ............................................................ 40 151 of 545
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Section 2206 Obligations of Permitted Leasehold Mortgagee Upon Acquisition of Leasehold Estate .................................................................................................. 41 Section 2207 No Modification or Termination of Lease Without Permitted Leasehold Mortgagee’s Consent ........................................................................................... 41 Section 2208 Right of Permitted Leasehold Mortgagee to Cure Default .................................. 41 Section 2209 Foreclosure in Lieu of Curing Default ................................................................. 42 Section 2210 Assignment of Lease Upon Foreclosure .............................................................. 43 Section 2211 New Lease to Permitted Leasehold Mortgagee ................................................... 43 Section 2212 No Merger of Estates ........................................................................................... 45 Section 2213 Amendments for Benefit of Permitted Leasehold Mortgagee ............................. 45 Section 2214 Restriction on Landlord’s Right to Encumber its Interest ................................... 45 Section 2215 Restriction on Subordination of Tenant’s Interest ............................................... 45 Section 2216 Multiple Leasehold Mortgages ............................................................................ 45 Article XXIII EVENTS OF DEFAULT ....................................................................................... 45 Section 2301 Events of Default ................................................................................................. 46 Section 2302 Procedures for Declaring an Event of Default ..................................................... 46 Article XXIV REMEDIES ........................................................................................................... 48 Section 2401 Right of Termination............................................................................................ 48 Section 2402 Transfer of Interest Upon Termination ................................................................ 48 Section 2403 Damages ............................................................................................................... 48 Section 2404 Specific Performance ........................................................................................... 48 Section 2405 Cumulative Remedies .......................................................................................... 48 Section 2406 Limited Recourse ................................................................................................. 49 Article XXV INTEREST ON PAST DUE OBLIGATIONS ....................................................... 49 Article XXVI NOTICES............................................................................................................... 49 Article XXVII ESTOPPEL CERTIFICATE ................................................................................ 52 Article XXVIII SURRENDER ..................................................................................................... 52 Section 2801 Surrender .............................................................................................................. 52 Section 2802 Title to Improvements .......................................................................................... 52 Section 2803 Removal of Personal Property ............................................................................. 53 Section 2804 Holdover .............................................................................................................. 53 Article XXIX NO CONFLICT OF INTEREST, WARRANTY .................................................. 53 Section 2901 No Conflict of Interest ......................................................................................... 53 Section 2902 Warranty Against Speculation ............................................................................. 53 Article XXX ADDITIONAL PROVISIONS ............................................................................... 54 152 of 545
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Section 3001 Time is of the Essence ......................................................................................... 54 Section 3002 Waiver .................................................................................................................. 54 Section 3003 Costs of Litigation................................................................................................ 54 Section 3004 Institution of Legal Actions ................................................................................. 54 Section 3005 Applicable Law .................................................................................................... 55 Section 3006 Acceptance of Service of Process ........................................................................ 55 Section 3007 Relationship of Parties ......................................................................................... 55 Section 3008 Captions for Convenience .................................................................................... 55 Section 3009 Entire Agreement ................................................................................................. 55 Section 3010 Binding Effect ...................................................................................................... 55 Section 3011 Construction ......................................................................................................... 55 Section 3012 Tenant’s Payment of Property Taxes ................................................................... 56 Section 3013 Recording of this Ground Lease .......................................................................... 56 Section 3014 Severability .......................................................................................................... 56 Section 3015 Counterparts ......................................................................................................... 56
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Page v
ATTACHMENTS
EXHIBIT A - LEGAL DESCRIPTION
EXHIBIT B - SITE MAP
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Attachment No. 7 – Ground Lease
GROUND LEASE
BETWEEN THE HOUSING AUTHORITY OF THE CITY OF GLENDALE
AND LINC-CORE PIONEER LP
(515 Pioneer)
This Ground Lease (this “Lease”) dated as of ____________, 2022, is entered into by and between the HOUSING AUTHORITY OF THE CITY OF GLENDALE, a public body corporate and politic (the “Landlord”) and LINC-CORE PIONEER LP, a California limited partnership (the “Tenant”) and is made with reference to the following:
RECITALS
A. Landlord is the owner of that certain real property located within the City of Glendale, County of Los Angeles, State of California (the “ Property”), as more particularly described in Exhibit A attached hereto and shown on the Site Map attached as Ex hibit B, incorporated herein by reference.
B. To carry out its public purposes under the California Community Redevelopment Law (Health and Safety Code, §§ Sections 33000 et seq. ) (the “CRL”), Measure S (the Glendale Quality of Life and Community Services P rotection Measure, which enacted a .75% sales tax increase and was approved by Glendale voters in 2018) (“Measure S”), and the United States Department of Housing and Urban Development’s Home Investment Partnerships Program (“HOME Program”), Landlord desires to enter into this Lease with Tenant subject to and in accordance with all of the terms and conditions of the Affordable Housing Agreement (the “AHA”) dated as of November 18, 2022 by and between Landlord and Tenant.
C. The AHA requires the construction, operation, and maintenance on the Property of three hundred thirty-seven (337) affordable rental housing units for extremely low, very low, and low income senior and family households (the “Units”) plus three manager’s units, and other facilities, all as described in the Scope of Development (collectively, the “Project”). The AHA contemplates that, during the term of this Lease, the three hundred thirty -seven (337) affordable rental housing Units will be restricted as follows: ninety-two (92) Units (a mix of 32 studio and 60 one-bedroom units) will be restricted at an Affordable Rent to Senior Citizen Households at the affordability levels set forth herein and t wo hundred forty -five (245) Units (a mix of 200 one - bedroom units and 45 two- bedroom units) will be restricted at an Affordable Rent to family households at the affordability levels set forth herein. 155 of 545
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D. Pursuant to the AHA, and to assist in providing housing within the City of Glendale that is affordable to persons and familie s of low and moderate income by assisting in payment of the Acquisition and Development Costs for the Project , Landlord is making an LMIHAF Loan, a Measure S Loan, and a HOME Loan to Tenant.
E. Landlord and Tenant desire to enter into a seventy-eight (78) year ground lease of the Property to allow the Tenant to construct, operate, and maintain the Project on the Property on the terms and conditions set forth in the AHA and herein.
NOW THEREFORE, it is mutually agreed by and between Landlord and Te nant as follows:
ARTICLE I DEFINITIONS
Capitalized terms used herein have the meanings given to them where first used in this Lease or as set forth in this Article 1. Unless otherwise defined herein, capitalized terms have the meanings given to them in the AHA.
“Acquisition and Development Costs ” means all costs which are actually incurred by Tenant for the acquisition of Tenant’s leasehold interest in the Property and the financing, development, and construction of the Project, and include, without limitation, all of the items of cost set forth in the final Project Budget and similar costs, fees and expenses as approved by Landlord’s Executive Director, but not including Operating Costs. “Affiliate” means any Person directly or indirectly controlling, controlled by or under common control with another Person. The term “control” as used in the immediately preceding sentence, means the power to direct the management or the power to control election of the board of directors. It will be a presumption that control with respect to a corporation or limited liability company is the right to exercise or control, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to t he controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, control is the possession, indirectly or directly, of the power to direct or cause the direction of the management or policies of the controlled entity. For purposes of this definition, each general partner will be considered an “Affiliate” of Tenant.
“Agreement Containing Covenants ” means the Agreement C ontaining Covenants entered into between Landlord and Tenant, dated and recorded on or around the date hereof, encumbering Tenant’s Leasehold Interest.
“Anti-Terrorism Laws ” means all laws relating to terrorism or money laundering, including, without limitation, the Currency and Foreign Transactions Reporting Act of 1970, Pub.
L. No. 91-508, 84 Stat. 1305 (1970), as amended from time to time. “Assignment of Agreements” means the assignment by Tenant to Landlord (in its capacity as lender to the Project) of plans, contracts and permits for the Project, dated on or around the date hereof.
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“Assignment of Rents and Leases” means the assignment by Tenant to Landlord (in its capacity as lender to the Project) of rents and leases for the Project dated and recorded on or around the date hereof, encumbering Tenant’s Leasehold Interest. “Authority Loan” means, individually and collectively, the LMIHAF Loan, the Measure S Loan, and the HOME Loan.
“Authority Note” means, individually and collectively, the LMIHAF Note, the Measure S Note, and the HOME Note.
“City” means the City of Glendale, California.
“Construction Financing Event ” means the point in time when (i) all conditions precedent to the Construction Financing Event as set forth in the Meth od of Financing have been satisfied; (ii) this Lease is executed and delivered, and the Memorandum of Lease is recorded; and (iii) the Construction Loan Deed of Trust and other Construction Loan documents, the Authority Deed of Trust and other Authority Loan Documents are executed and recorded (as applicable). “Conversion” means the point in time when the Permanent Loan has been funded, the additional Limited Partner Capital Contribution has been funded (less that portion, not to exceed 10%, of the Limited Partner Capital Contribution that will be funded upon receipt of Form (s) 8609), and the Construction Loan has been repaid in full. “Environmental Indemnity” means the indemnity by Tenant for the benefit of Landlord dated on or around the date hereof.
“Force Majeure” or “Force Majeure Event” means the following events, provided that they actually delay and interfere with the timely performance of the matter to which it would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such interf erence: war; insurrection; strikes; lock -outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; pandemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this transaction or any element thereof; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other party; acts or failure to act of any Governmental Authority (except acts or failure to act of Landlord will not excuse performance by Landlord); the imposition of any applicable moratorium by a Governmental Authority; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference.
Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Event unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay will deliver such written notice within ten (10) business days after it obtains actual knowledge of the event giving rise to a claim of Force Majeure. 157 of 545
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“Force Majeure Delay ” means a delay in taking any action requi red by this Lease, proximately caused by the occurrence of a Force Majeure Event. “General Partner” means individually and collectively, LINC Pioneer LLC, a California limited liability company and NCRC Pioneer GP LLC, a California limited liability company and other entity admitted as a general partner pursuant to the Limited Partnership Agreement and permitted under the terms of this Lease and the AHA.
“HOME Loan” means the loan from Landlord to Tenant in the original principal amount of $2,000,000.
“HOME Note” means the promissory note from Tenant to Landlord, dated on or around the date hereof, evidencing the HOME Loan.
“HOME Regulatory Agreement ” means the Agreement Containing HOME Program Requirements entered into between Landlord and Tenant, dated and recorded on or around the date hereof, encumbering Tenant’s Leasehold Interest.
“Improvements” means the improvements to be constructed on the Property in accordance with this Lease and the AHA, including but not limited to the Scope of Development. “Investor Limited Partner ” means the entity identified as such in Tenant’s Limited Partnership Agreement, and its successors and assigns.
“Leasehold Interest” means Tenant’s interest in the leasehold estate created by this Lease. “Leasehold Mortgage” means a conveyance of a security interest in Tenant’s Leasehold Interest to a lender to the Project.
“Leasehold Mortgagee” means the authorized beneficiary of a Leasehold Mortgage. “LMIHAF Loan” means the loan from Landlord to Tenant in the original principal amount of $1,300,000.
“LMIHAF Note” means the promissory note from Tenant to Landlord, dated on or around the date hereof, evidencing the LMIHAF Loan.
“Measure S Loan ” means the loan from Landlord to Tenant in the original principal amount of $25,100,000.
“Measure S Note” means the promissory note from Tenant to Landlord, dated on or around the date hereof, evidencing the Measure S Loan.
“Memorandum of Lease ” means the Memorandum of Lease dated and recorded on or around the date hereof, between Landlord and Tenant, encumbering Tenant’s Leasehold Interest. “Method of Financing ” means the Method of Financing attached to the Affordable Housing Agreement as Attachment No. 3.
“Operating Costs” has the same meaning as the definition of Operating Expenses set forth in the Authority Note.
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“Permitted Leasehold Mortgage ” means a Leasehold Mortgage that satisfies all of the following conditions:
(a) The Leasehold Mortgage will secure a loan made for payment of Acquisition and Development Costs or for payment of the costs of constructing the Improvements or for payment of other costs related to the Project and approved by Landlord or for the sole purpose of refinancing loans made for any of the foregoing permitted financing purposes so long as such refinanced loans are not in an amount greater than the loan(s) being refinanced and approved by Landlord. (b) The Leasehold Mortgage will cover all of Tenant’s interest in the Lease, the Property, and the Improvements and will cover no interest in any other real property other than the Property.
(c) The Leasehold Mortgage will be without subordination of Landlord’s fee title to the Property.
(d) No Leasehold Mortgage permitted by this Lease will cover more than one indebtedness; that is, there will be no cross-collateralization permitted. (e) A Leasehold Mortgage is to be originated only by a Qualified Lender. For the purposes hereof, the term “Qualified Lender” includes Bank of America, N.A. and CalHFA and means:
(i) the mortgagee of purchase money financing of a Permitted Transfer or other Transfer approved by Landlord;
(ii) one or a combination of the following lending institutions authorized under applicable California or federal law to make mortgage loans and not under any order or judgment of any court or administrative authority restricting or impairing its operation as a lender: a commercial or savings bank, a trust company, an insurance company, a savings and loan association, or a building and loan association;
(iii) a company engaged in the ordinary course of business as a lender with a net worth of not less than $50,000,000, which is duly licensed or registere d (if legally required) with a regulatory agency having jurisdiction over its operation, and is not under an order or judgment of any court or administrative authority restricting or impairing its operation as a lender, including, without limitation, the following: a real estate investment trust, an educational institution, a pension, retirement or welfare fund, a charity, or an endowment fund or foundation authorized to make loans in the State of California;
(iv) a partner of Tenant’s partnership, as provided in the AHA; and 159 of 545
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(v) governmental entities , government -sponsored entities, and other public bodies.
No Permitted Leasehold Mortgage will be binding upon Landlord in the enforcement of its rights and remedies herein, unless and until Landlord receives a copy of the fully executed original Permitted Leasehold Mortgage bearing the date and recording information, and a copy of the original note secured by the Permitted Leasehold Mortgage, each certified by either Tenant or the Permitted Leasehold Mortgagee, together with written notice of the address of the Permitted Leasehold Mortgagee to which notices may be sent. In the event of an assignment of such Permitted Leasehold Mortgage, such assignment will not be binding upon Landlord unless and until Landlord receives a copy thereof, certified by either the assignor or the assignee, bearing the date and recording information, together with written notice of the address of the assignee thereof to which notices may be sent.
“Permitted Leasehold Mortgagee” means the authorized beneficiary of a Permitted Leasehold Mortgage. Landlord and Tenant expressly acknowledge that Bank of America, N.A. and CalHFA and its successors and assigns, and the Housing Authority of the City of Glendale and its successors and assigns, are Permitted Leasehold Mortgagees for all purposes of this Lease. “Permitted Transfer” means any of the following, provided (except for subsection f. below) Tenant, a General Partner of Tenant , or an Affiliate of such General Partner, retains day- to-day control over management and operations of the Property and the Improvements and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-Terrorism Laws:
(a) An assignment of this Lease and Tenant ’s Leasehold Interest to an Affiliate or a conveyance back from the Affiliate to Tenant;
(b) A conveyance of a security interest in the Property or any portion thereof or interest therein, in connection with a Permitted Leasehold Mortgage; (c) The inclusion of equity participation in the Project by addition of limited partners or similar mechanism, and any transfers of limited partnership interests in Tenant’s partnership;
(d) The lease for occupancy of all or any part of the Improvements on the Property in accordance with this Lease, the Agreement Containing Covenants, and the HOME Regulatory Agreement;
(e) The granting of easements or permits to facilitate the development of the Property in accordance with the AHA;
(f) The withdrawal, removal and/or replacement of a general partner of Tenant’s partnership pursuant to the terms of Tenant’s partnership agreement, or a 160 of 545
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conveyance of Tenant’s interest in the Property and the Improvements and a transfer of limited partnership interests to a General Partner pursuant to the option provided to that partner in Tenant’s partnership agreement, will not constitute a default under this Lease or any of the Authority Loan Documents, nor will such actions accelerate the maturity of the Authority Loan, provided that any required substitute general partner is reasonably acceptable to Landlord, as evidenced by Landlord’s written consent, and is selected with reasonable promptness; (g) A transfer of Tenant’s leasehold estate pursuant to Article XXII; and (h) Any transfer approved in writing by Landlord’s Executive Director or designee, at his or her sole discretion.
A transfer described in clauses a. or b. or c. will be subject to the reasonable approval of the Landlord’s Executive Director or designee; provided that, Landlord approves the transfer of limited partner interests in Tenant’s partnership, so long as such transfer is not a result of a resyndication of the Low Income Housing Tax Credits and does not otherwise result in increased equity participation in Tenant, and further provided that such transfer is not to a Prohibited Person or would otherwise violate Anti-Terrorism Laws.
“Person” means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, domestic or foreign. “Prohibited Person” means any of the following:
(a) a Person that is listed in or is otherwise subject to the prohibitions of, any Executive Order relating to money laundering or anti-terrorism;
(b) a Person owned or controll ed by, or acting for or on behalf of, any Person that is listed in or is otherwise subject to the prohibitions of, any Executive Order relating to money laundering or anti-terrorism;
(c) a person or entity with whom Tenant or Investor Limited Partner is prohibited from dealing or otherwise engaging in any transaction by Anti-Terrorism Laws; (d) a Person that is named as a “specially designated national and blocked person” on the most current list published by the Office of Foreign Asset Control of the U.S.
Treasury Department.
“Project Budget ” means the most recently approved schedule of Acquisition and Development Costs in the form attached to the AHA as Attachment No. 6. “Project Plans” means the architectural and construction plans and drawings prepared on behalf of Tenant for the Project in accordance with the AHA. “Release of Construction Covenants ” has the meaning set forth in Section 605 of this Lease.
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“Schedule of Performance” means the Schedule of Performance attached to the Affordable Housing Agreement as Attachment No. 5.
“Scope of Development ” means the Scope of Development attached to the Affordable Housing Agreement as Attachment No. 4.
“Senior Leasehold Mortgage” means a Permitted Leasehold Mortgage which secures a Senior Loan.
“Senior Loan” means a loan used to pay a portion of the Acquisition and Development Costs, secured by a Permitted Leasehold Mortgage which is approved by the Housing Authority’s Executive Director as being senior in priority to the lien of the Authority Deed of Trust. The initial holder of the first priority Senior Loan is Bank of America, N.A., and the subsequent holder is CalHFA.
“Transfer” means:
(a) the sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein (including, without limitation, a beneficial interest), whether voluntary, involuntary, by operation of law or otherwise, the execution of any install ment sale contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all or substantially all of the Property or Project.
(b) “Transfer” also includes the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of an interest in Tenant, or a conversion of Tenant to an entity form other than that of Tenant at the time of execution of this Lease, except that, a cumulative change in ownership interest of a general partner of Tenant of forty-nine percent (49%) or less will not be deemed a “Transfer” for purposes of this Lease.
Notwithstanding paragraphs (a) and (b), “Transfer” will not include Permitted Transfers.
ARTICLE II LEASE OF THE PROPERTY
Section 201 Purpose of Lease
The purpose of this Lease is to provide for the construction of a 340-unit apartment community and related amenities, in accordance with the AHA, and the maintenance, management, and operation of the Improvements , in accordance with the Agreement Containing Covenants, the HOME Regulatory Agreement, and applicable law. Tenant will not occupy or use the Property, or permit the Property to be used or occupied, nor do or permit anything to be done in, on or about the Property, in whole or in part, for any other purpose , or for any purpose not permitted by the AHA, this Lease, the Agreement Containing Covenants, the HOME Regulatory Agreement, and applicable law.
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Section 202 Leased Area
Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the Property on the terms and conditions set forth in thi s Lease. Landlord also leases to Tenant, and Tenant leases from Landlord, Landlord’s right, title and interest in and to any easements and rights of way, present or reversionary, which are appurtenant to the Property; provided however, that the Landlord reserves to itself, its successors and assigns, together with the right to grant and transfer all or a portion of the same, the following:
(a) Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights, and other hydrocarbon substances by whatsoever name known, geothermal resources, and all products derived from any of the foregoing, that may be within or under the land, together with the perpetual right of drilling, mining, exploring, prospecting and operating therefor and storing in and removing the same from the Property or any other land, including the right to whipstock or directionally drill and mine from lands other than those leased hereby, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Propert y, and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines; without, however, the right to enter, drill, mine, store, explore or operate on or through the surface or the upper 500 feet of the subsurface of the Property; and (b) Any and all water, water rights or interests therein, no matter how acquired by Landlord, together with the rig ht and power to explore, drill, redrill, remove and store the same from the Property or to divert or otherwise utilize such water, water rights or interests on any other property owned or leased by Landlord, whether such water rights will be riparian, overlying, appropriative, percolating, littoral, prescriptive, adjudicated, statutory or contractual.
Notwithstanding the foregoing (a) or (b), such reservation shall be without any right to enter upon the surface of the Property in the exercise of such rights and, provided further, that the exercise of any such rights by Landlord will not result in any damage or injury to the improvements constructed on the Property by Tenant, including without limitation, any subsidence of all or any part of such improvements, or interfere with Tenant’s operation of the Project.
Section 203 Assignment of Utility Rights
Landlord, by virtue of its fee title to the Property, may hold certain rights, entitlements or credits with respect to utility capacity, connections, etc. (the “ Utility Rights”). Landlord hereby assigns said Utility Rights to Tenant as an incidence of its leasehold interest in the Property.
Section 204 Recorded Encumbrances
This Lease and the interest of Tenant hereunder are in all respects subject to and bound by all of the covenants, conditions, restrictions, reservations, rights, rights -of-way and easements of record affecting the Property.
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ARTICLE III TERM
Section 301 Commencement and Term
The term of this Lease (“Term ”) will commence upon the date of the Construction Financing Event and will continue thereafter until the seventy-eighth (78th) anniversary of the date of Conversion, unless earlier terminated in accordance with its terms or extended in accordance with the option term described herein.
Section 301 Recordable Quitclaim Deed.
At the expiration or earlier termination of this Lease, Tenant will execute, acknowledge and deliver to Landlord, within thirty (30) days after written demand by Landlord, a valid and recordable quitclaim deed covering the Property and the Improvements, free and clear of all liens and encumbrances.
ARTICLE IV CONSIDERATION FOR THE LEASE
Section 401 Obligations and Covenants; Rent
Landlord is entering into this Lease with Tenant in consideration of Tenant’s obligations and covenants contained herein. Landlord will lease the Property to Tenant for a fully capitalized rent equal to $12,400,000, which is equivalent to the fair market value of the Property (“Rent”).
Landlord hereby acknowledges that Tenant prepaid the Rent in full upon the Construction Financing Event, using proceeds of the Authority Loan.
ARTICLE V USE OF THE PROPERTY AND SITE CONDITIONS.
Section 501 Use of the Property.
Tenant will use the Property solely for the construction of the Project, in accordance with this Lease and the AHA, including the Scope of Development , and for the maintenance and operation of the Project in accordance with this Lease, the Agreement Containing Covenants, and the HOME Regulatory Agreement . Accordingly, Tenant, its successors and assign s, will use the Property exclusively to provide 340 units of rental housing, including three two-bedroom manager’s units. Ninety-two (92) Units (a mix of 32 studio and 60 one -bedroom units) will be restricted at an Affordable Rent to Senior Citizen Households and two hundred forty -five (245) Units (a mix of 200 one -bedroom units and 45 two- bedroom units) will be restri cted at an Affordable Rent to family households, subject to all of the terms and conditions of this Lease. (a) The units will be allocated as follows:
i. Fourteen (14) units will be rented exclusively to Extremely Low Income households at an Affordable Rent as provided in California Health and Safety Code Section 50053, consisting of fourteen (14) studio units; ii. Twenty (20) units will be rented exclusively to Very Low Income households at an Affordable Rent as provided in California Health and 164 of 545
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Safety Code Secti on 50053, consisting of the following: (a) eighteen (18) studio units; and (b) two (2) one-bedroom units;
iii. Forty-eight (48) units will be rented exclusively to Low Income households at an Affordable Rent as provided in California Health and Safety Code Section 50053, consisting of forty-eight (48) one-bedroom units; iv. Thirty-four (34) units will be rented exclusively to households meeting the fifty percent (50%) income limit under the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of the following: (a) twenty -nine (29) one-bedroom units; and (b) five (5) two-bedroom units;
v. One hundred thirty-one (131) units will be rented exclusively to households meeting the sixty percent (60%) income limit under the Exten ded Use Agreement recorded against the Property in connection with the Tax Credits, consisting of one hundred thirty-one (131) one-bedroom units; and vi. Ninety (90) units will be rented exclusively to households meeting the eighty percent (80%) income limit u nder the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of the following: (a) fifty (50) one -bedroom units; and (b) forty (40) two - bedroom units.
The 337 affordable units shall consist of 92 Senior Citizen Households (a mix of 32 studio units and 60 one-bedroom units) and 245 family households (a mix of 200 one-bedroom units and 45 two-bedroom units).
(b) For purposes of this Agreement, the maximum incomes of eligible tenants for the restricted Units described in paragraphs (a)(i), (a)(ii), and (a)(iii) of this Section 501 will be determined on the basis of the income limits for Extremely Low, Very Low Income, and Low Income households in the Los Angeles-Long Beach SMSA, published approximately annually by the California Department of Housing and Community Development (“HCD ”). If HCD discontinues publishing such income limits, the term “Extremely Low Income ” shall mean a household income that does not exceed 30% of the area median income for the Los Angeles-Long Beach SMSA, published approximately annually by HCD (“Area Median Income”), adjusted for family size, the term “Very Low Income” shall mean a household income that does not exceed 50% of the Area Median Income, and the term “Low Income ” shall mean a household income that does not exceed 80% of the Area Median Income. For the term of the Tax Credits, in no case will household income exceed applicable Tax Credit income limits. (c) Immediately prior to a prospective household’s occupancy of a restricted Unit , Tenant will obtain and maintain on file an income computation and certification form from such 165 of 545
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household dated immediately prior to the date of initial occupancy. Tenant will verify that the income information provided by an applicant is accurate by following all applicable Landlord policies and procedures and by taking one or more of the following steps as a part of the verification process: (i) obtain two (2) pay stubs from the most recent pay periods; (ii) obtain a written verification of income and employment from applicant’s current employer; (iii) obtain an income verification form from the Social Security Administration and/or California Department of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant’s income as is reasonably satisfactory; or (v) obtain such other information as may be reasonably required. Tenant will update the foregoing records annually and provide copies of updated tenant eligibility records and monthly rental records to Landlord for review. Upon review of such records, Landlord may at its option perform an independent audit of the household eligibility records in order to verify compliance with the income and affordability requirements set forth herein. Tenant will retain the records described in this Paragraph (e) for a period of five (5) years after the date each record was created.
(d) Rents charged to a household occupying a restricted Unit may not exceed rents that are affordable to such households (as “Affordable Rent” is defined below). The maximum rents, including a reasonable utility allowance for utilities and services (excluding telephone) to be paid by a tenant of a restricted Unit will be the lower of the maximum rent permitted to be charged for the unit pursuant to the Extended Use Agreement for so long as such requirements are applicable, and the maximum rent set forth below. For purposes of determining Affordable Rent, household size appropriate to the unit will mean one person in the case of a studio, two persons in the case of a one-bedroom unit, and three persons in the case of a two-bedroom unit. (i) In the case of a household occupying an Extremely Low Income restricted Unit, the maximum rent will be a rent that does not exceed thirty percent (30%) of thirty percent (30%) of Area Median Income, adjusted for household size appropriate to the unit. (ii) In the case of a household occupying a Very Low Income restricted Unit, the maximum rent will be a rent that does not exceed thirty percent (30%) of fifty percent (50%) of Area Median Income, adjusted for household size appropriate to the unit. (iii) In the case of a household occupying a Low Income restricted Unit , the maximum rent will be a rent that does not exceed thirty percent (30%) of sixty percent (60%) of Area Median Income, adjusted for household size appropriate to the unit. (iv) In the case of a household occupying a unit described in paragraph (a)(iv), (a)(v), or (a)(vi) of this Section 501, the maximum rent will be the maximum allowable rent under the Extended Use Agreement.
(e) Tenant, its successors or assigns, may not terminate a lease or refuse to renew the lease of a household described in this Section 501, except: for serious or repeated violation of the 166 of 545
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terms and conditions of the lease; for violation of applicable federal, state, or local law; in order to comply with applicable requirements of federal law relating to the Low Income Housing Tax Credit, or for other good cause. Any termination or refusal to renew must be provided by Tenant’s service upon such household of a written notice specifying the grounds for the action in the time and manner proscribed by law.
(f) The affordability requirement set forth in this Section 501 will continue in full force and effect for the full Term of this Lease, whether or not the Agreement Containing Covenants or the HOME Regulatory Agreement continue to be an encumbrance on the Property . Tenant will submit to Landlord on an annual basis the report required by Health and Safety Code section 33418. The annual report will include for each residential unit the rental rate and the income an d family size of the occupants. The income information will be supplied by the occupants in a certified statement on a form provided by Landlord. Tenant will provide for the submission of such information in its lease or occupancy agreements for the restricted Units. (g) Landscape Maintenance Agreement . Landlord and the State of California, acting by and through the Department of Transportation (the “State”) have or will enter into that certain Landscape Maintenance Agreement, as it may be amended from time to time (the “Maintenance Agreement”) for Landlord to perform certain work including, but not limited to, inspection, emergency repair, replacement, and maintenance of landscaping (collectively the “Landscaping Work”) within the State’s right of way which is located adjacent to the Property. Landscaping Work shall mean and include any and all obligations of Landlord (“Authority” thereunder) under the Maintenance Agreement. As a material part of Landlord’s consideration for entering into this Lease, Tenant shall perform any and all Landscaping Work on behalf of Landlord under the Maintenance Agreement at no cost to Landlord. Tenant shall be responsible for performing or coordinating the performance or satisfaction of all of the Landscaping Work at no cost to Landlord.
All Landscaping Work shall be performed, completed, and/or satisfied in accordance with all applicable federal, State and local laws and regulations, includ ing the Maintenance Agreement , and performed, completed, and/or satisfied in accordance with all of the terms and conditions of this Lease. All terms and conditions of this Lease shall apply to the Landscaping Work, including, without limitation, terms and conditions relating to construction work, insurance , Tenant indemnifications, and defaults.
Section 502 Compliance with Law.
Tenant will carry out the development, construction (as defined by applicable law) , and operation of the Project on the Property, including, without limitation, the Landscaping Work and any and all public works (as defined by applicable law), if any, in conformity with all applicable local, state and federal laws, including, without limitation, all applicable federal and state labor laws (including, without limitation, any applicable requirement to pay state prevailing wages).
Tenant hereby agrees that Tenant will have the obligation to provide any and all disclosures, representations, statements, rebidding, and/or identifications which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Tenant hereby agrees that Tenant will have the obligation to provide 167 of 545
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and maintain any and all bonds to sec ure the payment of contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Tenant will indemnify, protect, defend and hold harmless Landlord, the City of Glendale, and their respective officers, employees, contractors and agents, with counsel reasonably acceptable to Landlord and City, from and against any and all loss, liability, damage, claim, cost, expense, and/or “increased costs” (including labor costs, penalties, reasonable attorneys’ fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction (as defined by applicable law) and/or operation of the Project, including, without limitation, any and all public works (if any) (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Tenant of any applicable l ocal, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Chapter 804, Statutes of 2003; (3) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any other similar law; (4) failure by Tenant to provide any required disclosure representation, statement, rebidding and/or identification which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and/or (5) failure by Tenant to provide and maintain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provi sion of law. Tenant hereby expressly acknowledges and agrees that neither City nor Landlord has ever previously affirmatively represented to the Tenant or its contractor(s) for the Project in writing or otherwise, that the work to be covered by the bid or contract is not a “public work,” as defined in Section 1720 of the Labor Code. It is agreed by the parties that, in connection with the development, construction (as defined by applicable law) and operation of the Project, including, without limitation, any public work (as defined by applicable law), if any, Tenant will bear all risks of payment or non- payment of state prevailing wages and/or the implementation of Chapter 804, Statutes of 2003 and/or Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and/or any other provision of law. “Increased costs” as used in this Section will have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time. The foregoing indemnity will survive termination of this Agreement and will continue after recordation of the Release of Construction Covenants.
Section 503 Site Conditions.
(a) All portions of the Property, and any improvements thereon, which are lea sed to Tenant by Landlord will be leased in an “as is” condition, with no warranty, express or implied, by Landlord as to the condition of the soil, its geology, or the presence of known or unknown faults or the presence of any Hazardous Materials, as defi ned in Section 504 below, and it will be the sole responsibility of Tenant, at Tenant’s expense, to investigate and determine the soil conditions of the Property and the suitability of the Property for the development of the Project. If the soil 168 of 545
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conditions of the Property, or any part thereof, are not in all respects entirely suitable for the use or uses to which the Property will be put, then it is the sole responsibility and obligation of Tenant to take such action as may be necessary to place the Property and the soil conditions thereof in all respects in a condition entirely suitable for the development of the Property as described in the AHA, including without limitation, the Scope of Development which may include demolition, clearing, or moving buildings, structures, or other improvements, and removal of Hazardous Materials.
(b) Tenant hereby releases Landlord, the City and their respective officers, employees, agents and consultants from any and all claims, liabilities, losses, damages, judgments, costs or expenses arising from or connected to any and all matters or statements of fact affecting the Property concerning or related to the physical condition of the Property.
Section 504 Hazardous Materials.
(a) “Hazardous Materials” means and includes the following:
(i) a “Hazardous Substance” as defined by Section 9601 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§9601 et seq . or as “Hazardous Waste” as defined by Section 6903 of the Resource Conservation and Recovery Act, 42 U.S.C. §§6901 et seq.;
(ii) an “Extremely Hazardous Waste,” a “Hazardous Waste,” or a “Restricted Hazardous Waste,” as defined by The Hazardous Waste Control Law under §§25115, 25117 or 25122.7 of the California Health and Safety Code, or is listed or identified pursuant to §25140 of the California Health and Safety Code;
(iii) a “Hazardous Mater ial,” “Hazardous Substance,” “Hazardous Waste,” or “Toxic Air Contaminant” as defined by the California Hazardous Substance Account Act, laws pertaining to the underground storage of hazardous substance s, hazardous materials release response plans, or the California Clean Air Act under §§ 25316, 25281, 25501, 25501.1, 117690 or 39655 of the California Health and Safety Code;
(iv) “Oil” or a “Hazardous Substance” listed or identified pursuant to §311 of the Federal Water Pollution Control Act, 33 U.S.C. §1321; (v) materials, substances and wastes listed or defined as a “Hazardous Waste,” “Extremely Hazardous Waste,” or an “Acutely Hazardous Waste” pursuant to Chapter 11 of Title 22 of the California Code of Regulations Sections 66261.1 - 66261.126; (vi) materials, subs tances and wastes listed by the State of California under Proposition 65 Safe Drinking Water and Toxic Enforcement Act of 1986 as a chemical known by the State to cause cancer or reproductive toxicity pursuant to §25249.8 of the California Health and Safety Code;
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(vii) a material which due to its characteristics or interaction with one or more other substances, chemical compounds, or mixtures, damages or threatens to damage, health, safety, or the environment, or is required by any law or public agency to be remediated, including remediation which such law or government agency requires in order for the property to be put to any lawful purpose;
(viii) any material whose presence would require remediation pursuant to the guidelines set forth in the State of California Leaking Underground Fuel Tank Field Manual, whether or not the presence of such material resulted from a leaking underground fuel tank; (ix) pesticides regulated under the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§136 et seq.;
(x) asbestos, PCBs, and other substances regulated under the Toxic Substances Control Act, 15 U.S.C. §§2601 et seq.;
(xi) any radioactive material including, without limitation, any “source material,” “special nuclear material,” “by -product material,” “low -level wastes,” “high - level radioactive waste,” “spent nuclear fuel” or “transuranic waste,” and any other radioactive materials or radioactive wastes, however produced, regulated under the Atomic Energy Act, 42 U.S.C. §§2011 et seq ., the Nuclear Waste Policy Act, 42 U.S.C. §§10101 et seq ., or pursuant to the California Radiation Control Law, California Health and Safety Code §§114960 et seq.; (xii) materials, substances and wastes regulated under the Occupational Safety and Health Act, 29 U.S.C. §§651 et seq ., or the Ca lifornia Occupational Safety and Health Act, California Labor Code §§6300 et seq.; and
(v) materials, substances and wastes regulated under the Clean Air Act, 42 U.S.C. §§7401 et seq . or pursuant to the California Clean Air Act, Sections 3900 et seq. of the California Health and Safety Code.
(b) Tenant hereby represents and warrants that the development, construction and uses of the Project and Property permitted under the AHA and this Lease do not require the presence of any Hazardous Materials on the Property that cannot or will not be kept, stored, used and maintained in compliance with all applicable laws and the manufacturer’s guidelines. (c) If at any time during the term of this Lease, any Hazardous Material is present on, in or under the Property (including, w ithout limitation, the soil and groundwater) in violation of applicable law, Tenant will at no expense to Landlord, at the earliest practicable date, remove such Hazardous Materials from the Property (including without limitation any Hazardous Materials in the soil or groundwater) and any surrounding areas to which such Hazardous Materials may have migrated in accordance with and to the extent required by any and all applicable legal requirements. The parties intend to require Tenant to remove all Hazardou s Materials from the 170 of 545
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Property and surrounding areas to which such Hazardous Materials may have migrated to the extent required by applicable law, if such Hazardous Materials are present at levels of concentration which require removal under applicable law. If, at any time during the term of this Lease, Landlord has reasonable cause to believe one or more Hazardous Materials may be present on, in or under the Property in violation of applicable law, Landlord may, by written notice, inform Tenant of the basi s for Landlord’s concern and require Tenant to cause the Property to be tested for such Hazardous Material(s) at Tenant’s sole expense , in accordance with a testing plan and schedule first approved in writing by Landlord. Tenant will submit a testing plan to Landlord within thirty (30) days after the date of Landlord’s notice, and cause the testing to begin within thirty (30) days from Landlord’s approval of the testing plan. (d) Tenant will not bring or allow to be brought onto the Property or use or store on the Property any Hazardous Materials without the prior express written consent of Landlord, except for those Hazardous Materials (including without limitation fuel stored in motor vehicles) customarily used in the ordinary course of business in the use and operation of the Property and the Improvements (defined herein).
(e) The following covenants pertain to Tenant’s occupancy and use of the Project and Improvements:
(i) No underground storage tanks for Hazardous Materials will be installed without the prior written approval of Landlord’s Executive Director. (ii) Landlord, or its officers, employees, contractors or agents will at all times have the right to go upon and inspect the Property and Improvements and the operations conducted thereon to assure compliance with the requirements herein stated. Landlord will provide reasonable prior notice to Tenant of such entry, and will seek to minimize interference with Tenant’s use of the Property and Improvements as much as is reasonably feasible. Such entry will be in compliance with all applicable safety rules and regulations. If there is reasonable cause to believe in the presence of Hazardous Materials, t his inspection may include taking samples for testing of substances and materials present and/or testing soils on the Property and Improvements.
Landlord will indemnify, defend, and hold harmless Tenant from and against any claims, liabilities, losses, and d amage caused by Landlord during any such inspections, and will be responsible for the prompt repair and/or restoration of any such damage caused by Landlord during any such inspection.
(iii) Tenant will be responsible for posting on t he Property and Improvements all notices and signage required by Section 25249.6 of the California Health and Safety Code and regulations promulgated pursuant thereto. Tenant will also complete and file all business response plans or inventories required by Cha pter 6.95 of the California Health and Safety Code and regulations promulgated pursuant thereto. Tenant will concurrently file a copy of such business response plan or inventory with Landlord.
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(iv) Tenant will immediately notify Landlord in writing of the release of any Hazardous Material on the Property or Improvements in violation of applicable law. (v) Tenant will, to the extent required by applicable law , immediately remove all Hazardous Materials located on the Property and Improvements and will dispose of such Hazardous Materials in a safe and legal manner. Tenant will immediately disclose to Landlord its disposal of any Hazardous Material located on the Property and Improvem ents and upon Landlord’s written request will provide written documentation of its safe and legal disposal. (f) Tenant will be responsible for and bear the entire cost of removal and disposal of Hazardous Materials. Landlord may also pas s through to Tenant any and all clean -up costs incurred by the Landlord as a result of Tenant’s activities on the Property and Improvements or the presence of any Hazardous Material(s) on, in or under the Property and Improvements after the commencement of this Lease. Upon termination of this Lease, Tenant is required, in accordance with all applicable laws, to remove from the Property and Improvements all equipment or improvement to the Property that is contaminated by Hazardous Materials. (g) By this Lease, Tenant provides to Landlord, effective upon the date of this Lease, an indemnification of Landlord, the City and their respective members, officers, employees, agents, contractors and consultants, relating to the environmental condition of the Property and the presence of Hazardous Materials thereon. Therefore, Tenant hereby agrees to indemnify, defend and hold harmless Landlord, the City and their respective members, officers, agents, employees, contractors and consultants, from any claims, actions, suits, legal and administrative proceedings, liability, injury, deficiency, damages, fines, penalties, punitive damages, costs and expenses (including, without limitation, the cost of any cleanup, remediation, removal, mitigation, monitoring or testing of Hazardous Materials, and reasonable attorneys’ fees) (collectively, the “Claims”) resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any Hazardous Materials to or from, the Property; 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 or Hazardous Materials on, under, in or about, to or from, the Property , provided, however, that this indemnity shall not extend to any Claims resulting solely from the gross negligence or willful misconduct of Landlord. (h) From the date of this Lease, Tenant hereby waives, releases and discharges Landlord, the City and their respective members, officers, employees, agents, contractors and consultants, from any and all present and future cla ims, demands, suits, legal and administrative proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses (including, without limitation, attorneys’ fees) arising out of or in any way connected with Landlord’s or Tenant’s use, maintenance, ownership or operation of the Property, any Hazardous Substances on the Property, or the existence of Hazardous Substances contamination in any state on the Property, however the Hazardous Substances came to be placed there, except that arising out of the intentional misconduct of Landlord, the City, or their respective employees, officers or 172 of 545
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agents. Tenant acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code 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 favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”
________ Initialed by Tenant’s authorized signatory.
________ Initialed by Tenant’s authorized signatory.
As such relates to Section 503 above, and this Section 504, Tenant hereby waives and relinquishes all rights and bene fits which it may have under Section 1542 of the California Civil Code.
ARTICLE VI CONSTRUCTION OF IMPROVEMENTS ON THE PROPERTY Section 601 Construction of Improvements.
Tenant will construct or cause to be constructed on the Property, with financing as provided in the Method of Financing, the Improvements in accordance with this Lease and the AHA, including the Scope of Development. Prior to the commencement of any work or construc tion, Tenant will:
(a) Notify Landlord in writing, at least ten (10) days in advance of commencing construction or delivery of materials to the Property, of Tenant’s intention to construct the Improvements. Landlord will have the right to post and maintain on the Property any notices of non-responsibility provided for under applicable law, and to have access to the Property at all reasonable times to satisfy itself that Tenant is carrying out construction in accordance with the terms of this Lease, the AHA and Project Plans, and is complying with all applicable laws and regulations, including without limitation, those regulations pertaining to safety of the construction site.
(b) Procure and deliver to Landlord at Tenant’s expense, evidence of issuance of all required permits and approvals, including, but not restricted to, a grading permit, building permits, zoning and planning approvals, and all required approvals from any governmental agencies and bodies having jurisdiction over the Project.
Section 602 Contractors and Subcontractors.
For purposes of this Section, the terms “contractor,” “subcontractor,” “contract,” and “subcontract,” will refer to all tradespersons, contractors, subcontractors, construction managers, materialmen or suppliers furnishing services or materi als in connection with the construction of the Improvements, and contracts or agreements written or oral, with them. Landlord will have the right to disapprove the general contractor and the subcontractors performing mechanical, electrical, plumbing, framing and other trades identified by the Authority and used by Tenant for 173 of 545
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construction of the Project, to which Landlord has reasonable objection, which approval will not be unreasonably delayed or withheld.
(a) Tenant’s contracts with general contractors and subcontractors must give Landlord the right to receive notices of Tenant’s default under said contracts and must give Landlord a reasonable opportunity to cure any such default and the right (but not the obligation) to assume Tenant’s obligations and rights under such contracts if Tenant commits an Event of Default under this Ground Lease. Landlord’s exercise of its rights pursuant to this Section 602 will not be in lieu of or constitute a waiver of any other right Landlord may have against Tenant, any guarantor or surety or any other person or entity.
(b) Tenant will comply, and Tenant will require all of Tenant’s cont ractors and subcontractors to comply, with all laws, statutes, ordinances, regulations, building codes, zoning codes and regulations and the orders, judgments, rules, regulations and requirements of all federal, state, local and municipal governments (hereinafter “Legal Requirements ”) in connection with the performance of all work on the Property including the Landscaping Work. (c) Tenant must not, and Tenant will require that all Tenant’s contractors and subcontractors will not, discriminate against any employ ee or applicant for employment on the basis of disability, race, religion or creed, sex, marital status, national origin, condition of having Acquired Immune Deficiency Syndrome, or sexual orientation.
Section 603 Permits.
(a) Tenant will obtain all permits, licenses and other governmental approvals and authorizations required for the construction or operation of the Improvements. (b) Before allowing occupancy or use of any portion of the Improvements, Tenant, at its own cost and expense, wil l obtain and deliver to Landlord partial, temporary or final Certificate(s) of Occupancy in the form customarily issued by the appropriate governmental authority.
Section 604 Performance of Construction Work.
(a) Any and all construction work will be done diligently, in conformity with all legal requirements, in a good and workmanlike manner, and in accordance with the terms of the AHA , including without limitation, the Scope of Development, the Project Plans, and under the supervision of an architect approved by Landlord. Once Tenant commences construction of the Improvements, as set forth in the Schedule of Performance , Tenant will diligently pursue completion of construction within the time set forth in the Schedule of Performance, subject to Force Majeure Delays. Construction will be deemed to be completed, solely for purposes of this Lease, when a Release of Construction Covenants is recorded in the Official Records, as set forth in Section 605, below.
(b) Tenant agrees it will take all safety measures reasonably required (taking into consideration usual and customary practices in the construction industry) to protect persons in, on and around the Property from injury or damage caused by or resulting from or in connection with 174 of 545
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the performance of any work during all phases of construction. All work performed under this Lease will be performed in such a manner as to meet or exceed the safety standards outlined by applicable State of California safety regulations. In addition to any other obligation set forth herein, Tenant will maintain the Property free of hazards to persons and property resulting from its operations. Any hazardous condition noted by Tenant will immediately be reported to Landlord.
(c) All work will be performed in a manner so as not to unreasonably impair or interfere with the use, occupancy or enjoyment of adjacent property, or with any business conducted on adjacent property.
(d) All areas of the Property that are used for staging areas for the storage of material and equipment, construction shacks and workers’ parking areas will be located, to the extent reasonably practicable, away from public view in areas remote from pedestrian and vehicular traffic, and will be fenced or otherwise barricaded as appropriate. (e) At all times during the performance of work for any phase of construction of the Project, all areas other than the actual construction site and the staging area will , to the extent reasonably practicable, be kept clean and free of mud, dust, equipment or construction materials related to the work.
Section 605 Release of Construction Covenants.
(a) After Completion of all construction and development to be performed by Tenant upon the Property pursuant to the terms of the AHA, the Project Plans, and this Lease, Landlord will furnish Tenant with a Release of Construction Covenants, in such form as to permit it to be recorded in the Official Records, upon written request therefor by Tenant. Lan dlord will not unreasonably withhold such Release of Construction Covenants. Such Release of Construction Covenants will constitute evidence of satisfactory C ompletion of the construction required pursuant to the terms of the AHA , the Project Plans, and t his Lease, and the Release of Construction Covenants will so state.
(b) If Landlord refuses or fails to furnish a Release of Construction Covenants for the Property after written request from Tenant, Landlord will provide Tenant with a written statement of the reasons Landlord refused or failed to furnish the Release of Construction Covenants for the Property. The statement will also contain Landlord’s opinion of the action Tenant must take to obtain a Release of Construction Covenants for the Property, but it need not contain technical information or instructions. If the reason for such refusal is confined to the immediate availability of specific items of landscaping or other minor items or the failure to complete “punch list” items, Landlord will issue the Release of Construction Covenants upon the posting of a bond or other security instrument in form and content reasonably acceptable to Landlord and in an amount representing the fair value of the work not yet completed, which bond or other security instrument will secure Tenant’s obligation to complete all outstanding items of construction and development within sixty (60) days following the issuance of the Release of Construction Covenants. 175 of 545
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(c) Such Release of Construction Covenants will not constitute evidence of compliance with or satisfaction of any obligation of Tenant to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the improvements on the Property or any part thereof.
Such Release of Construction Covenants is not a notice of completion under Section 3093 of the California Civil Code.
Section 606 Ownership of Improvements.
All Improvements on the Property, whether existing on the Property as of the date this Lease is executed or thereafter constructed by Tenant, will be owned by Tenant until expiration of the Lease Term or earlier termination of this Lease. Tenant will not remove any Improvement from the Property or waste, destroy or modify any Improvements on the Property, except as permitted by this Lease. The parties covenant for themselves and all persons claiming under them that the Improvements are real property. Upo n the expiration or termination of this Lease, all improvements and fixtures will become the sole property of Landlord. Tenant will not be required to remove any Improvements or fixtures on the Property upon the expiration or earlier termination of this Lease, except as otherwise expressly provided herein.
Section 607 No Liens on Landlord’s Interest.
Under no circumstance whatsoever will any lien, including any mechanic’s lien, stop notices, materialmen’s lien, or any lien for goods, labor, material, services or work delivered or performed on the Property, attach to or encumber Landlord’s fee or reversionary interest in the Property. If any mechanic’s lien, stop notice, materialmen’s lien, or any other lien is filed against the Property for work done or claimed to have been done or for materials or services furnished or claimed to have been furnished with respect to the Property at any t ime during the term of this Lease, or at any time whatsoever arising because of any action or inaction by Tenant or any subtenant, or any other person claiming or having any right related to any part of the Property, then such lien will be discharged by Tenant at its sole cost and expense in a timely manner no later than ninety (90) days thereafter, whether by payment, release, or posting of a bond or other similar assurance. Landlord may, in its sole and complete discretion, bond or discharge the same by paying the amount claimed to be due, and Tenant will reimburse Landlord for all sums paid by Landlord under this Section, together with reasonable attorneys’ fees and costs, plus interest on those sums, fees, and costs from the date of payment, at the highest rate allowed by law.
Section 608 Removal of Liens on Leasehold Interest.
If Tenant does not cause to be recorded the bond described in California Civil Code Section 3143 or otherwise protect its leasehold interest under any alternative or successor statute, and a final judgment has been entered against Tenant by a court of competent jurisdiction for the foreclosure of a mechanic’s, materialmen’s, contractor’s, or subcontractor’s lien claim, and if Tenant fails to stay the execution of the judgment by lawful means or to pay the judgment, Landlord will have the right, but not the duty, to pay or otherwise discharge, stay, or prevent the execution of any such judgment or lien or both. Tenant will reimburse Landlord for all sums paid 176 of 545
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by Landlord under this Section, together with reasonable attorneys’ fees and costs, plus interest on those sums, fees, and costs from the date of payment at the highest rate allowed by law.
Section 609 Notice of Completion.
On completion of construction of improvements to the Property, Tenant will file or cause to be filed a notice of completion pursuant to California Civil Code section 3093. Tenant hereby appoints Landlord as Tenant’s attorney-in-fact to file the notice of completion on Tenant’s failure to do so after the work of improvement has been substantially completed.
ARTICLE VII ALTERATIONS.
Section 701 Alterations.
(a) After the Improvements have been constructed and completed in accordance with the provisions of Article VI , Tenant may, at Tenant’s sole expense, make alterations to such Improvements. Tenant may do so only in compliance with all applicable legal requirements and all requirements of the Project Plans, and if the alterations are material, only with the prior written approval of Landlord, which will not be unreasonably withheld or delayed. (b) All alterations will be done promptly and in a good and workmanlike manner and will be in quality and class at least equal to the original work or installations in the Property.
However, if materials of the same type as those used for the original work are unavailable, or if due to changes in technologies in the building industry, the use of materials of the same type as those used for the original work would be imprac tical, or if materials of the same type as those used for the original work are prohibitively expensive, then Tenant will have the right to use material of a type different from those used for the original work provided that the use of such material is in compliance with all applicable Legal Requirements and such material is of a quality and class equivalent to the original materials used.
(c) Tenant may from time to time after completion of construction of the Improvements as provided herein, without Landlord’s prior approval, perform alterations to the Improvements that are interior and nonstructural alterations, additions and improvements (“ Permitted Alterations”) so long as the Permitted Alterations:
(i) are performed in compliance with all of the provisions of this Lease, an d does cause a violation of any provision of this Lease;
(ii) does not change the character of the Improvements or the use for which they were intended;
(iii) does not involve any change in the exterior design, materials, colors or appearance of the buildings, or any part thereof;
(iv) is not of lesser quality than the existing Improvements; (v) does not diminish the value of Tenant’s Leasehold Interest; 177 of 545
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(vi) would not require an excessive expense to readapt the Property to marketable use upon the termination of this Lease; and
(vii) does not threaten the structural integrity of any part of the Improvements. (d) Tenant will not, without the prior written consent of Landlord, demolish or remove all or any part of the Improvements after recordation of the Release of Construction Covenants.
ARTICLE VIII NO LIABILITY OF LANDLORD
Section 801 No Liability of Landlord.
Tenant accepts the Property in its “as is” condition as of the date of execution of this Lease.
Tenant warrants and represents that Tenant has fully and completely inspected all aspects of the Property and has fully satisfied itself as to the condition and value of the Property and the suitability of the Pr operty or any part thereof for the construction of the Improvements. Tenant acknowledges that Landlord has not made any representation in connection with the Property or in any way relating to this Lease except as expressly provided herein. In addition t o the indemnifications set forth in Article XVI , Landlord will have no liability to Tenant, or its successors, assigns, residents, subtenants, or guests, of any kind whatsoever for, in connection with, or as a result of, the ownership or operation of the Property or in connection with the Property or the Landscape Ma intenance Agreement, at any time during the Lease Term, whether for any damage or injury to any persons whatsoever or to any property of Tenant or of any other person, for any reason whatsoever, for any injury to Tenant’s residents, subtenants or others for actions or inactions after the date of the execution of this Lease, proximately caused by:
(a) Construction, operation or maintenance of any of the Improvements, or the condition of any part of the Property.
(b) Heating, ventilation or air conditioning systems, electrical wiring, plumbing, dampness, water, gas, steam, or other pipes, or sewage, or the breaking of any electrical wire, bursting, leaking or running of water from any tank, washstand, water closet or waste pipe, supply pipe, sprinkler system, radiato r, or any other pipe now or hereinafter installed on or about the Property.
(c) Fire, explosion, discharge or release of any gas, vapor, liquid or any other substance, falling plaster, electricity or smoke, being or occurring on, at or in connection with the Property.
(d) Acts of Tenant or any subtenant, occupant, user, licensee or invitee of all or any part of the Property or related to the Landscape Maintenance Agreement. (e) Any latent defect in or condition of the Property or any Improvement or real or personal property, which at any time may be erected or situated thereon; provided that Landlord will be liable for a latent defect in the Property if Landlord knew of such latent defect and Landlord failed to disclose such latent defect to Tenant.
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(f) The loss or theft of any property of Tenant or any other person at, on, or around the Property.
(g) The cessation, interruption, suspension, failure or inadequacy of any utilities furnished to the Property or any apparatus or appliance used in connection therewith.
Section 802 Discovery of Toxic Substances
During the term of this Lease, Landlord will have the right to terminate this Lease upon the discovery of any Hazardous Material which Landlord determines, in consultation with the holder of a Senior Loan, renders the Property unsuitabl e for its designated use without environmental mitigation measures which are determined by Landlord , in consultation with the holder of a Senior Loan, to be unacceptable, excessive, or unfeasible.
ARTICLE IX MAINTENANCE AND REPAIRS
Section 901 Maintenance and Repairs.
Tenant, a t its own expense, will maintain and keep the Property and all Improvements thereon in good repair and in a decent, safe and sanitary condition, in accordance with the terms of the AHA, the Agreement Containing Covenants , and the HOME Regulatory Agreement .
Tenant will also make any repairs, structural or nonstructural, interior or exterior, to the Property made necessary by reason of alterations made by Tenant or by the acts or omissions of Tenant, or its employees, agents, subtenants, licensees, invitees or others, or by normal wear and tear, the elements, or other casualty or cause. Routine maintenance may be performed by Tenant without notice to or permission of Landlord.
Section 902 Repairs.
When used in this Section, the term “repairs” applies to all equipment, machinery, apparatus and fixtures of every kind used in connection with the operation and maintenance of the Property and all Improvements thereon and will be deemed to include replacements, restorations and renewals of the equipment, machinery, apparatus and fixtures. Tenant will have the right at any time and from time to time to remove and to dispose of the equipment, machinery, apparatus and fixtures; provided, however, that Tenant will promptly replace same with other equipment, machinery, apparatus or fixtures which are equally or more effective.
Section 903 Landlord’s Obligation.
The parties hereto intend that Landlord will have no obligation, in any manner whatsoever, to repair or maintain the Property , or any Improvements constructed thereon , or the equipmen t therein, whether structural or nonstructural. These obligations are the sole responsibility of Tenant. Tenant expressly waives the benefit of any statute now or hereinafter in effect which would otherwise afford Tenant the right to make repairs at Land lord’s expense or terminate this Lease because of Landlord’s failure to keep the Property in good order, condition and repair. 179 of 545
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ARTICLE X DAMAGE OR DESTRUCTION
Section 1001 Tenant to Give Notice.
If there is any damage to or destruction of the Property or t he Improvements, or any part thereof, in excess of an amount equal to Twenty Five Thousand Dollars ($25,000) escalated from the date of commencement of this Lease in accordance with the applicable consumer price index, Tenant will, within ten (10) days after Tenant becomes aware or reasonably should have become aware of such damage or destruction, give written notice thereof to Landlord, generally describing the nature and extent of such damage or destruction.
Section 1002 Repair of Damage or Destruction.
(a) Tenant covenants and agrees that in case of damage to or destruction of the Property or Improvements by any cause, insured or uninsured, it will , subject to the provisions of this Section, restore, repair, replace or rebuild the Property and Improvements as nearly as possible to the condition, quality and class they were in , immediately prior to such damage or destruction.
Tenant will commence the restoration, repairs, replacement or rebuilding of the Improvements with such alterations and additions as may be approved by Landlord (such restoration repairs, replacement, rebuilding, alterations and additions, together with any temporary repairs and property protection pending completion of the work will be referred to hereinafter as “Restoration”) within thirty (30) days of such damage or destruction, plus any additional period reasonably required to obtain Net Insurance Proceeds (if any), as defined in subsection (b) below, to be used to pay all or a portion of the costs of such Restoration and will complete such Restoration within a reasonable time thereafter.
(b) As used herein, the term “ Net Insurance Proceeds ” means the gross insurance proceeds paid by an insurer to Tenant for loss or damage to the Property and Improvements, less any and all costs and expenses (including, without limitation, reasonable attorney’s fees) incurred to recover said proceeds. Subject to the terms of the Senior Loan, Tenant agrees to promptly commence and prosecute to completion the settlement of insurance proceeds with respect to an event of damage to or destruction of the Improvements or the Property. (c) Tenant agrees that, notwithstanding any other p rovision of this Lease, upon an event of damage or destruction to the Improvements, Tenant will at its sole cost and expense (whether or not Tenant terminates or intends to terminate this Lease pursuant to Section 1005 below) immediately take or cause to be taken such actions and complete such work as is necessary to assure the safe condition of the damaged Improvements pending their ultimate disposition. In any instance where Tenant has the right to terminate this Lease, rather than restore the Improvements, if Tenant elects not to terminate this Lease, then Tenant must promptly restore the Improvements.
(d) Tenant will not be entitled to any compensation or damages from Landlord for loss of use of the whole or any part of Tenant’s Leasehold Estate or Tenant’s personal property, or any inconvenience or annoyance occasioned by damage, repair, reconstruction, or restoration of the Improvements. Tenant waives the provisions of clause 2 of California Civil Code section 1932 and 180 of 545
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clause 4 of California Civil Code section 1933, with respect to termination upon destruction of or damage to the Property or Improvements.
Section 1003 Application of Insurance Proceeds.
Insurance proceeds from policies of insurance carried under Section 1501 which are received on account of any damage to or destruction of the Property or the Improvements thereon, or any portion thereof, (less the costs, fees and expens es incurred in the collection thereof, including without limitation, attorney’s fees and expenses), if Tenant does not make the election permitted in Section 1005 below, will be applied as follo ws, subject to the rights of Permitted Leasehold Mortgagees:
(a) Within a reasonable time and in any event within one hundred eighty (180) days after the damage to or destruction of the Property or the Improvements, Tenant will furnish, or cause to b e furnished to Landlord and Permitted Leasehold Mortgagees evidence satisfactory to Landlord and each Permitted Leasehold Mortgagee, (a) of the total cost of Restoration of the damaged or destroyed Improvements, and (b) that the total amount of money available to Tenant will, when added to the insurance proceeds received and available to pay for the Restoration pursuant to the terms of this Section, be sufficient to pay the cost of such Restoration. (b) Net Insurance Proceeds received on account of any damage to or destruction of the Improvements, or any part thereof, will be paid to Tenant or as Tenant may direct from time to time as Restoration progresses, or to the holder of the Senior Loan, as set forth in the Senior Loan documents, solely to pay (or reimburse Tenant for) the cost of Restoration. Upon receipt by Landlord and Permitted Leasehold Mortgagees of evidence that Restoration has been completed and the cost thereof paid in full or has been adequately provided for, and that there are no mechanic’s or similar liens for labor or materials supplied in connection therewith, which have not been adequately provided for, the balance, if any, of such proceeds will be paid to Tenant.
Section 1004 Tenant’s Obligations.
If the Net Insurance Proceeds actually available to Tenant and recovered with respect to any insured damage or destruction, less the cost of recovery, are insufficient to pay the entire cost of such Restoration, Tenant covenants to use reasonable efforts to secure additional funding to remedy such insufficiency to restore, repair, replace or rebuild the Improvements.
Section 1005 Option to Terminate.
If at any time during the term of this Lease, any buildings or improvements located on the Property are destroyed, in w hole or in part , by fire, theft, the elements, or any other cause (collectively hereinafter referred to as a “ Casualty”), then this Lease will continue in full force and effect; provided, however, that Tenant, subject to the rights of Permitted Leasehold Mortgagees, will have the option of terminating this Lease on the last calendar day of any month by giving Landlord at least thirty (30) days’ prior written notice of Tenant’s intent to do so and by removing, within one hundred twenty (120) days of the Cas ualty, at Tenant’s own cost and 181 of 545
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expense, all debris and remains of the damaged improvements from the Property, under the following circumstances:
(a) buildings or improvements located on the Property are so damaged or destroyed by a Casualty during the last fi ve (5) years of the Term of this Lease that such buildings or improvements cannot be repaired and restored at a cost which is less than fifty percent (50%) of the cost to replace all of the buildings and improvements located on the Property if totally destroyed; or
(b) buildings or improvements located on the Property are damaged or destroyed by a Casualty at any time during the term of this Lease and either (i) insurance proceeds available to Tenant from the insurance required in Section 1501 or by a Permitted Leasehold Mortgagee are not sufficient to cover one hundred percent (100%) of the cost, less Two Hundred Fifty Thousand Dollars ($250,000), to repair and restore such damaged or destroyed buildings or improvements , or (ii) the damage or destruction results from a Casualty that is not required to be insured by Tenant under the terms of this Lease or a Leasehold Mortgage, and for which Tenant has not obtained such insurance , and the cost to repair and restore such damaged or destroyed buildings or improvements is more than Two Hundred Fifty Thousand Dollars ($250,000).
ARTICLE XI ENTRY BY LANDLORD
Landlord and its agents, representatives, employees and independent contractors will have the right, at all reasonable times and on prior reasonable notice, to enter the Property to ascertain whether Tenant is complying with its obligations under this Lease, the AHA, the Agreement Containing Covenants, and the HOME Regulatory Agreement and for any other purpose permitted under this Lease; provided, however, that such entry does not unnecessarily or unreasonably disturb lawful occupants of the Property. Neither the ri ght of entry reserved by this Article, nor the exercise thereof, will impose any responsibility or liability on Landlord for the care or supervision of the Property or Improvements on the Property.
ARTICLE XII UTILITIES AND SERVICES
Section 1201 Utilities and Services
Tenant, at its sole expense, will maintain or will cause to be maintained , all utility lines, whether located on or off the Property, servicing the Property. Tenant will pay promptly all assessments, deposits, rents, costs, connection and tap-in fees and other charges for the connection of utilities, including any fees or charges imposed by any utility company or governmental entity or agency for making such connections. Tenant expressly agrees that Tenant will pay all charges for fuel, gas, water, electricity, light, heat, power, telephone or other communication services, and all other utilities or services necessary to carry on the operations of the Tenant. Tenant will indemnify Landlord from, and defend and hold Landlord harmless against, any claim, liability, damage, loss, cost or expense in connection with such charges. Landlord may, after giving Tenant at least ten (10) business days’ notice and an opportunity to cure, pay or cause to be paid any items or charges which are delinquent. Thereafter, on demand by Landlord, Tenant will pay and 182 of 545
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reimburse Landlord for such items or charges, with interest at the highest rate allowed by law , from the date of payment by Landlord until Landlord is repaid in full by Tenant.
Section 1202 Easements
Landlord agrees, at the request of Tenant and at Tenant’s sole cost and expense (or at the expense of the utility company or other third party), to join in the grant of easements over the Property that are necessary to obtain required utility services to the Project. Any such grant of an easement over the Property must be approved in writing by Landlord, which approval will not be unreasonably withheld.
ARTICLE XIII PROHIBITION AGAINST ENCUMBRANCE OR TRANSFER Section 1301 Prohibitions.
(a) The qualifications and identity of Tenant are of particular concern to Landlor d. It is because of those qualifications and identity that Landlord has entered into this Lease with Tenant. No voluntary or involuntary successor in interest of Tenant will acquire any rights or powers under this Lease except as expressly set forth herein and in Article XXII. (b) Except for Permitted Transfers, Tenant will not assign or sublease all or any part of this Lease without the prior written approval of Landlord. Landlord agrees to reasonably give such approval if, in Landlord’s reasonable determination, the proposed reconstituted Tenant is comparable in all material respects (including experience, character and financial capability) to Tenant as of the date of this Lease. Any such change (or assignment or sublease of this Lease in connection therewith) will be subject to approval by Landlord’s Executive Director (or his/her designee) of evidence of the proposed assignee’s qualifications to meet Tenant’s obligations under this Lease and must be by instruments satisfactory to Landlord’s Executive Dir ector (or his/her designee).
(c) For the reasons cited above, Tenant represents and agrees for itself and each successor in interest that, except for P ermitted Transfers, there will be no cumulative change in ownership interest of any general partner of greater than 49%, or with respect to the identity of the parties in control of Tenant or the degree thereof, by any method or means, without Landlord’s prior written approval.
(d) Tenant will promptly notify Landlord of any and all changes whatsoever in the identity of the parties in control of Tenant or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. Landlord may exercise its remedies under this Lease, if there is any significant change (voluntary or involuntary) in membership, management or control of Tenant (other than such changes occasioned by the death or incapacity of any individual), except for Permitted Transfers. (e) Tenant will not, except for Permitted Transfers or as permitted by this Lease, initiate a Transfer without prior written approval of Landlord, except as expressly permitted by 183 of 545
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this Lease. Consent to one such transaction will not be deemed to be a waiver of the right to require consent to future or successive transactions. Any such proposed transferee will have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by Landlord, to fulfill the obligations undertaken in this Lease by Tenant. Any such proposed transferee, by instrument in writing satisfactory to Landlord and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of Landlord will expressly assume all of the obligations of Tenant under this Lease and agree to be subject to all conditions and restrictions applicable to Tenant in this Lease. There will be submitted to Landlord for review all instruments and other legal documents proposed to affect any such transfer; and if approved by Landlord, its approval will be indicated to Tenant in writing. Attempts to effectuate a Transfer, except for Permitted Transfers or as permitted by this Lease, without Landlord’s approval, will be null and void and any transferee under such attempted Transfer will acquire no right or interest by reason of such attempted Transfer. (f) Notwithstanding the foregoing, Tenant may: (i) lease the Units , in conformance with the Agreement Containing Covenants and the HOME Regulatory Agreement , without the written consent of Landlord; and (ii) enter into a management agreement with an entity approved in writing by Landlord, in its reasonable discretion, and approved by the Permitted Leasehold Mortgagees. National Community Renaissance of California, a California nonprofit public benefit corporation, is approved as the initial management agent.
Section 1302 Consent to Assignment
Subject to the limitations on transfer set forth in Section 1301, Landlord agrees it will not unreasonably withhold its consent to a proposed assignment of this Lease to an assignee if all of the following conditions are met:
(a) Tenant is not in default of any provision of this Lease, or any other agreement with Landlord or the City in connection with this Property;
(b) Landlord has issued the Release of Construction Covenants to Tenant and Conversion has occurred;
(c) Tenant has demons trated to Landlord’s satisfaction in Landlord’s reasonable discretion that the proposed assignee is financially sound and possesses a reputation and experience in owning and managing low-income residential units that is at least comparable to that of Tenant. Any assignment of this Lease must be in writing and must be executed by the assignee and a duplicate original of such assignment and assumption must be delivered to Landlord as a condition of its effectiveness . The original named Tenant will not be re lieved of its obligation pursuant to this Lease, the Agreement Containing Covenants, the HOME Regulatory Agreement, or the AHA; and
(d) The p roposed assignee has agreed in the assignment and assumption agreement delivered to Landlord to assume, and be bound by , all of the terms, covenants, conditions and obligations of Tenant pursuant to this Lease, the Agreement Containing Covenants , the HOME Regulatory Agreement, and the AHA.
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ARTICLE XIV TAXES AND IMPOSITIONS
Subject to Tenant’s right to claim any exemption to which it may be entitled under State law, Tenant will directly bear, pay and discharge all Taxes and Impositions (as defined below) before the first day on which a penalty or interest may accrue or be assessed thereon for nonpayment (or, if no penalty or interest thereon may accrue or be assessed, then before such Taxes and Impositions become delinquent or past due). “ Taxes” and “Impositions” mean and include all real property taxes, possessory interest taxes, personal property taxes and special assessments imposed, levied or assessed on the Property or Improvements thereon. Taxes and Impositions include all costs, expenses and charges of any kind whatsoever (whether foreseen or unforeseen) which may become due or owing with respect to all or any part of the Property during the term of this Lease. Taxes and Impositions include, without limitation, all ad valorem taxes and other assessments, water and sewage charges, and governmental impositions and charges of every kind and nature whatsoever, extraordinary as well as ordinary, which will or may during the Lease term be charged, laid, levied, assessed, imposed upon or become payable out of, or become liens upon, or arise in connection with the ownership, leasing, operation, use, occupancy, or possession of the Prope rty or with respect to the privilege of entering into or holding this Lease, or leasing space within the Property, regardless of whether assessed or levied upon or payable by Tenant or Landlord. Pursuant to Health & Safety Code section 37001.5, and subject to Tenant’s right to claim any exemption to which it may be entitled under State law, Tenant will pay taxes on the assessed value of the entire Property and not merely on the assessed value of its Leasehold Interest.
In the event of nonpayment of any Tax or Imposition, Landlord may, after giving Tenant at least ten (10) business days’ notice of its intention to do so, pay or cause to be paid any item or items of Taxes and Impositions which are delinquent or past due. Tenant will pay and reimburse Landlord therefor when requested to do so by Landlord, and the same will become due and payable, with interest at the highest rate permissible by law from the date of Landlord’s payment of said Tax or Imposition, until Landlord is repaid in full by Tenant.
ARTICLE XV INSURANCE
Section 1501 Required Insurance
(a) Prior to the Construction Financing Event (except as provided in the next sentence), Tenant will furnish or cause to be furnished to Landlord evidence of the following policies of insurance, naming Tenant as insured and Landlord and the City as certificate holders and, except as to the insurance described in paragraph (iv), below, Landlord and the City as additional insureds.
The insurance requirements set forth in this Subsection (a) are subject to change prior to the Construction Financing Event, as needed to satisfy Landlord’s then-applicable requirements.
Evidence of insurance must include additional insured endorsements naming both Landlord and the City as additional insureds and including a primary insurance and waiver of contribution clause, a separation of insureds clause and a cancellation notice clause, in the form provided by Landlord. The insurance described in paragraph (ii) will be obtained prior to the initial rent-up of the apartments.
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(i) Fire Policies: Tenant will maintain or cause to be maintained a policy or policies of insurance against loss or damage to the Property or the Improvements and all property of an insurable nature located upon the Property, resulting from fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage fire insurance policies. Such insurance will be maintained in an amount not less than one hundred percent (100%) of the full insurable value of the Improvements, as defined herein in paragraph
(c).
(ii) Rental Income Insurance: Tenant will maintain or cause 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 an amount that is acceptable to Tenant and Landlord.
(iii) Liability Insurance: Tenant will maintain or cause to be maintained general liability insurance, to protect against loss from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever on or about the Property and the business of the Tenant on the Property, or in connection with the operation thereof, resulting directly or indirectly from any acts or activities of Tenant or its sublessees, or any person acting for Tenant , or under its respective control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person occurring on or about the Property, or in connection with the operation thereof, caused directly or indirectly by or from acts o r activities of Tenant or its tenants, or any person acting for Tenant , or under its control or direction. Such property damage and personal injury insurance will also provide for and protect Authority against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance will be maintained in full force and effect during the term of the Authority Loan in the following amounts: commercial general liability in a general aggregate amount of not less than Five Million Dollars ($5,000,000); and not less than Two Million Dollars ($2,000,000) of bodily injury and property damage insurance. It is the mutual intent of the parties that the levels of insurance coverage described herein will be and remain comparabl e to the level of insurance coverage that is customary with comparable operations in Los Angeles County. At any time during the term of the Authority Loan, and from time to time, either party may provide notice to the other party that the level of insurance being maintained by Tenant is no longer comparable to the level of insurance coverage that is customary with comparable operations in Los Angeles County, and request that the minimum limit hereinabove designated will be changed (either increased or decr eased) accordingly. The party receiving such request will not unreasonably withhold its consent to such change. Tenant agrees that provisions of this paragraph as to maintenance of insurance will not be construed as limiting in any way the extent to which Tenant may be held responsible for the indemnification of Authority or the payment of damages to persons or property resulting from Tenant ’s activities, activities of its tenants or the activi ties of any other person or persons for which Tenant is othe rwise responsible. Tenant will require its insurer to waive its subrogation rights against Landlord and the City and will provide endorsements evidencing same.
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(iv) Workers’ Compensation Insurance: Tenant will maintain or cause to be maintained workers’ 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 will cover all persons employed by Tenant in connection with the Property and will cover liability within statutory limits for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death in connection with the Property or the operation thereof by Tenant . Notwithstanding the foregoing, Tenant may, in compliance with the laws of the State of California and in lieu of maintaining such insurance, self-insure for workers’ compensation in which event Lessee will deliver to Authority evidence that such self-insurance has been approved by the appropriate State authorities. If Tenant is required to maintain Workers’ Compensation Insurance under this paragraph, Tenant will furnish Landlord with a certificate of waiver of subrogation under the terms of the Workers’ Compensation Insurance. Tenant will require its general contractor to waive subrogation and will require that its subcontractors waive subrogation to the extent that such a waiver is commercially available.
(b) All policies hereunder will not be subject to cancellation, reduction in coverage, or non-renewal except after notice in writing will have been sent by registered mail addressed to Landlord and the City not less than thirty (30) days in advance of the effective date, except for cancellation for nonpayment of premium, in which event notice will be given not less th an ten days in advance of the effective date. All policies will name Landlord, Tenant and/or any general contractor as insureds, additional insureds, and/or loss payable parties as their interests may appear.
(c) The term “full insurable value” as used in thi s Section 1501 means the actual replacement cost (excluding the cost of excavation, foundation and footings below the lowest floor and without deduction for depreciation) of the Improvements on the Property immediately before such casualty or other loss, including the cost of construction, architectural and engineering fees, and inspection and supervision. To ascertain the amount of coverage required, Tenant will cause the full insurable value to be determined from time to time by appraisal by the insurer, by the insurer’s automatic inflationary measure if acceptable to the Tenant and Landlord, by agreement between Tenant and Landlord or by an appraiser mutually acceptable to Landlord and Tenant, not less often than once every three years.
(d) All insurance provided under this Section 1501 will be for the benefit of Tenant , Landlord and City. Tenant agrees to timely pay 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. Tenant agrees to submit policies of all insurance required by this Section 1501, or certificates and endorsements evidencing the existence thereof, to Authority within 30 days prior to the Construction Financing Event, indicating full coverage of the 187 of 545
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contractual liability imposed hereby. Within thirty (30) days, if practicable, but in any event prior to expiration of any such policy, copies of renewal policies, or certificates evidencing the existence thereof, will be submitted to Landlord. All insurance herein provided for under this Section 1501 will be effected under policies issued by insurers of recognized responsibility, licensed or permitted to do business in the State of California reasonably approved by Landlord. (e) Tenant must cause all contractors and subcontractors performing work relating to the Project to maintain, at a minimum, the liability insurance and workers compensation insurance described in this Section 1501, except that with respect to any contractors such contractors shall maintain in full force commercial general liability in an aggregate amount of not less than T en Million Dollars ($10,000,000) and not less than Ten Million Dollars ($10,000,000) of bodily injury and property damage insurance, and with respect to any subcontrac tors such subcontractors shall maintain in full force commercial general liability in an amount not less than One Million Dollars ($1,000,000) of bodily injur y and property damage insurance, and Tenant must also cause its architects and engineers to maintain Architects and Engineers Professional Liability (Errors and Omissions) insurance on a “claims made basis” in an amount of not less $1,000,000. When coverage is provided on a “claims made basis”, Tenant must cause all contractors and subcontractors to continue to renew the insurance for a period of five (5) years after the end of the Construction Period. Such insurance must have the same coverage and limits as the policy that was in effect during the Construction Period, and cover Tenant for all claims made by Landlord arising out of any acts or omissions of Tenant , or its officers, employees or agents during the Construction Period.
(f) If Tenant fails or refuses to procure or maintain insurance as required by this Agreement, Landlord will have the right, at Landlord’s election, and upon ten (10) days prior notice to Tenant, to procure and maintain such insurance. The premiums paid by Landlord will be treated as a loan, due from Tenant, to be paid on the first day of the month following the date on which the premiums were paid. Landlord will give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s).
Section 1502 Disposition of Insurance Proceeds
(a) Subject to the provisions of subsection (b) below, proceeds of insurance with respect to loss or damage to the Improvements to be maintained and repaired by Tenant during the Lease Term will be payable, under the provisions of the policy of insurance, to Tenant, or, if such loss or damage involves the need for Tenant to obtain any governmental approvals or permits, jointly to Tenant and Landlord, and said proceeds will constitute a trust fund to be used for the repair, restoration or rec onstruction of the Improvements in accordance with plans and specifications approved in writing by Landlord.
(b) Notwithstanding the foregoing paragraph, within the period during which there is an outstanding Permitted Leasehold Mortgage on all or part of the Property and Improvements, distribution of said proceeds will be subject to the prior rights of such Permitted Leasehold 188 of 545
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Mortgagees.
(c) If this Lease is terminated by mutual agreement of Landlord and Tenant and the Improvements are not repaired, restored or reconstructed, the insurance proceeds will be applied first to payments due under this Lease from Tenant to Landlord, second to restore the Property to a neat and clean condition, and finally any excess will be paid to Tenant. Provided, however, that within any period when there is a Permitted Leasehold Mortgage in effect, such proceeds will be applied first to discharge the debt secured by such mortgage and then for the purposes and in the order set forth above in this paragraph.
(d) Tenant hereby waives any claim against Landlord, the City of Glendale, and their respective members, officers, agents, employees and volunteers, for any loss covered by insurance of the type specified in Section 1501; and Tenant will obtain from its insurance company or companies a waiver of any right of subrogation that it may otherwise have against Landlord or the City.
ARTICLE XVI DEFENSE, INDEMNIFICATION AND HOLD HARMLESS Tenant hereby agrees , to the fullest extent of the law, to defend, indemnify and hold harmless Landlord, the City of Glendale, and their respective members, officers, agents, employees and volunteers (hereinafter collectively referred to as “Indemnitees”) from and against any and all loss, damage, cost, expense, liability, claims, demands, suits, reasonable attorneys’ fees and judgments arising directly or indirectly from or in any manner connected to Tenant’s possession, occupancy or use of the Property, or arising from or in any manner connected to Tenant’s business, activities, operations, services or work conducted in, on or about the Property regardless of any active or passive negligence by any or all Indemnitees, or arising from or in any manner connected to the Landscape Maintenance Agreement and/or the Landscaping Work , except as otherwise stated herein.
Tenant further agrees to indemnify, defend and hold harmless Indemnitees from and against all loss, damage, costs, expense, liability, claims, demands, suits, reasonable attorneys’ fees and judgments arising from or in any manner connected to the furnishing or supplying of any work, services, materials, equipment or supplies to Tenant or on Tenant’s behalf by any persons, firms, corporations or other entities in, on or about the Property.
Without limiting the generality of the foregoing, Tenant agrees that Indemnitees will not be liable for any injury to Tenant’s business or any loss of income therefrom, or for damage to the goods, wares, merchandise, improvements or other property of Tenant, or to Tenant’s officers, agents, employees, invitees, customers, contractors, or any other person in, on or about the Property or for damages to any of Tenant’s officers, agents, employees, invitees, customers or contractors.
Indemnitees will be entitled to recovery of attorney’s fees incurred as a result of Tenant’s failure to provide the defense and indemnity required by this Article XVI. This Article XVI will survive the expiration or termination of this Lease.
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ARTICLE XVII EMINENT DOMAIN
Section 1701 Tenant to Give Notice
In case of a taking of all or any part of the Property and Improvements through the exercise of the power of eminent domain (“ Taking”), or the commencement of any proceedings or negotiations which might result in such Taking, Tenant will promptly give written notice thereof to Landlord, generally describing the nature and extent of such Taking or the nature of such proceedings or negotiations, and the nature and extent of the Taking which might result therefrom, as the case may be.
Section 1702 Total Taking
In case of a Taking of the entire Property and Improvements, or in case of the taking of only a part of the Property and Improvements, leaving the remainder of the Property and Improvements in such location, or in such form, shape or reduced size as to render the same not effectively and practicably usable for the conduct thereon of the uses permitted hereunder, this Lease will terminate as of the date title vests in the condemning authority or the date the condemning authority is entitled to possession, whichever first occurs (the “Date of Taking”). A Taking of the Property and Improvements of the character referred to in this Section that results in the termination of this Lease is referred to herein as a “Total Taking.” Section 1703 Partial Taking
In case of a Taking of the Property and Improvements other than a Total Taking (a “Partial Taking”), (i) this Lease w ill remain in full force and effect as to the portion of the Property and Improvements remaining immediately after such Partial Taking, without any abatement or reduction of any sum payable hereunder, and (ii) Tenant, to the extent the awards or payments, if any, on account of such Partial Taking will be sufficient for the purpose, at its expense, but first subject to Section 1704 (a), will within a reasonable period of time commence and complete, or cause to be commenced and completed, Restoration of the Property and Improvements as nearly as possible to its value, condition, and character immediately prior to such Partial Taking, with such alterations and additions as may be made at Tenant’s election pursuant to and subject to the terms of Section 701, except for any reduction in area caused thereby; provided, however, that in case of a Partial Taking for temporary use Tenant will not be required to effect Restoration until such Partial Taking is terminated.
Section 1704 Application of Awards and Other Payments
Awards and other payments on account of a Taking, less costs, fees and expenses incurred in the collection thereof (“Net Awards and Payments”) will be applied as follows:
(a) In case of a Taking other than a Total Taking or a Taking for temporary use, Tenant will furnish to Landlord and Permitted Leasehold Mortgagees evidence satisfactory to Landlord and such mortgagees of the total cost of the Restoration required by Section 1703. 190 of 545
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(b) Net Awards and Payments received on account of a Taking other than a Total Taking or a Taking for temporary use will be held and applied as provided with respect to proceeds of insurance in Section 1502. The balance, if any, will be paid to Tenant and Landlord as their respective interests may appear in the Property and the Improvements. (c) Net Awards and Payments received on account of a Total Taking will be allocated as follows:
First: There will be paid to each Permitted Leasehold Mortgagee, in the order of its priority, an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Permitted Leasehold Mortgage, and any interest accrued thereon, all as of the date on which such payment is made; provided, however, that each such Permitted Leasehold Mortgagee will only be paid to the extent of its security in the applicable portion which is the subject of the Taking.
Second: To Tenant and Landlord, as their respective interests may appear in the Property and the Improvements; provided, that payment s to Permitted Leasehold Mortgagees or pursuant to the preceding paragraph will be charged against Tenant’s interest.
ARTICLE XVIII COMPLIANCE WITH ALL LAWS
Tenant will conduct its operations in compliance with all applicable state or federal laws, and with all ordinances, rules and regulations, in effect or hereinafter adopted by the City of Glendale, the County of Los Angeles, the State of California and the United States.
ARTICLE XIX PERMITS AND LICENSES
Tenant will, at its sole cost and expense, obtain and maintain during the Term of this Lease, all appropriate licenses, permits and certificates that may be required in connection with the construction of the Improvements, and the ope ration of the Project, and the provision of services hereunder.
ARTICLE XX PRODUCTION OF REPORTS, RECORDS AND STATEMENTS Tenant will maintain such records as are reasonably required by Landlord to verify compliance with the terms of this Lease, the AHA, the Agreement Containing Covenants, and the HOME Regulatory Agreement . Tenant will, within ten (10) business days of their receipt or completion, submit copies to Landlord of all annual budgets, financial statements, audits and all other reports, records and statements that pertain to or are in any manner connected with the Property. The records, reports, statements and other documents of Tenant that pertain to or are in any manner connected with the Property will be available for inspection and copying by Landlord during normal business hours, but will be kept confidential by Landlord and will not be disclosed to any other person without Tenant’s prior written approval, except as may be otherwise required by law. Tenant will pay to Landlord the required fees in connection with affordability monitoring and reporting.
ARTICLE XXI NONDISCRIMINATION
Tenant covenants and agrees for itself, its successors, its assigns and every successor in 191 of 545
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interest to the Property or any part thereof or interest therein, there will be no discrimination against or segregation of any person, or group of persons, on account of sex, sexual orientation, marital status, race, color, creed, religion, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor will Tenant, 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, subtenants, sublessees, or vendees of the Property. All deeds, leases or contracts will contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
1. In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there will be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor will the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, locat ion, number, use or occupancy of tenants, lessees , subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants will run with the land.”
Notwithstanding the preceding paragraph, the provisions relating to discrimination on the basis of familial status will not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code nor be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivi sion (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code will also apply to the preceding paragraph.
2. In leases: “The Tenant herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
That there will be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor will the Tenant himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with 192 of 545
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reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.” Notwithstanding the preceding paragraph, the provisions relating to discrimination on the basis of familial status will not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code nor be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code will also apply to the preceding paragraph.
3. In contracts: There will be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land, nor will the transferee itself or any person claiming under or through him or her, 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 , sublessees, subtenants, or vendees of the land.”
ARTICLE XXII LEASEHOLD MORTGAGES
Section 2201 Leasehold Mortgages
Other than Permitted Leasehold Mortgages, Tenant may not grant a Leasehold Mortgage without Landlord’s prior written consent.
Section 2202 No Subordination
Landlord’s reversionary fee interest in the Property and Landlord’s rights and interests, as lessor, in the Property and this Lease, including without limitation Landlord’s right to receive payments and reimbursements from Tenant, will not be subordinated to the rights of the holder of any lien, mortgage or security interest (including without limitation, the rights of any Leasehold Mortgagees) granted by Tenant. Notwithstanding the foregoing, a Permitted Leasehold Mortgagee will have all of the rights set forth in the Permitted Leasehold Mortgage, to the extent that such rights are not inconsistent with the terms of this Lease, including the right to commence an action against Tenant for the appointment of a receiver and to obtain possession of the Property under and in accordance with the terms of said Permit ted Leasehold Mortgage; provided, that all obligations of Tenant hereunder are kept current, including but not limited to the payment of sums owing under this Lease and curing of all defaults and Events of Default hereunder which are capable of cure by Permitted Leasehold Mortgagee.
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Section 2203 Notice to Landlord
Tenant will require each Permitted Leasehold Mortgagee to give Landlord the right to receive notices of an event of default by Tenant under the applicable Leasehold Mortgage and the right to cure such default in the same period of time as is given to Tenant thereunder plus an additional ten (10) business days with respect to those defaults that are curable; provided that during such ten business day period, the Permitted Leasehold Mortgagee will have the right to commence, but not complete its remedies on account of such default. If and to the extent Tenant fails to cure such default, and Landlord exercises its right to cure the same, Tenant will reimburse Landlord for all of Landlord’s reasonable costs and expenses, including without limitation reasonable attorneys’ fees. Landlord may record in the Official Records of Los Angeles County a request for notice of default.
Section 2204 Notice to Permitted Leasehold Mortgagee
Landlord, if requested by a Permitted Leasehold Mortgagee, will mail to such mortgagee a duplicate copy of notices Landlord may from time to time give to or serve on Tenant, pursuant to or relating to this Lease. Tenant will at all times keep Landlord informed in writing of the name and mailing address of such Permitted Leasehold Mortgagee and any changes in such mortgagee’s mailing address. Notices or other communications permitted by this or any other Section of this Lease, or by law, to be served on or given to Permitted Leasehold Mortgagees by Landlord, will be deemed duly served on or given to m ortgagees by deposit in the United States mail, certified, return receipt requested or by overnight courier, return receipt, addressed to such m ortgagees at the last mailing address furnished in writ ing to Landlord by Tenant or by such m ortgagee. The date of notice will be the date marked on the return receipt.
Section 2205 Permitted Leasehold Mortgagee’s Rights
Permitted Leasehold Mortgagees will have the right, but not the obligation, without further consent of Landlord, at any time during the Term of this Lease to:
(a) Do any act or thing required of Tenant under this Lease, and such act or thing done and performed by a Permitted Leasehold Mortgagee will be as effective to prevent a forfeiture or loss of Tenant’s rights under this Lease as if done by Tenant itself; (b) Do any act or thing required of Tenant, and enforce the obligations of Tenant, under any regulatory agreement recorded against Tenant’s leasehold estate in connection with the Permitted Leasehold Mortgage;
(c) Transfer, convey or assign the right, title and interest of Tenant in and to the leasehold estate created by this Lease to a purchaser at a foreclosure sale, whether the foreclosure is conducted pursuant to court order or pursuant to a power of sale cont ained in a Permitted Leasehold Mortgage; and
(d) Acquire and succeed to the right, title and interest of Tenant u nder this Lease by virtue of a foreclosure proceeding, whether the foreclosure is conducted pursuant to a court order or pursuant to a power of sal e contained in a Permitted Leasehold Mortgage, or by virtue of a 194 of 545
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transfer in lieu of foreclosure (“ Foreclosure”) and, following such Foreclosure, transfer, convey or assign the right, title and interest of Tenant in and to the leasehold est ate granted by this Lease to a third party.
Section 2206 Obligations of Permitted Leasehold Mortgagee Upon Acquisition of Leasehold Estate
If the holder of a Permitted Leasehold Mortgage, or another party through a Foreclosure, acquires the leasehold estate created hereunder or otherwise acquires possession of the Property and Improvements pursuant to available legal remedies, Landlord will look to such holder to perform the obligations of Tenant hereunder from and after the dat e of Foreclosure or possession and will not hold such holder responsible for the past ac tions or inactions of Tenant.
Notwithstanding the foregoing, (i) on and after the date of such Foreclosure or possession, such holder will be required to perform and a bide by each and every obligation of Tenant under this Lease; and (ii) on and after the date of such Foreclosure or possession, Landlord will have the right to enforce each and every provision of this Lease against such holder. Nothing herein is intended or will be construed to limit or restrict Landlord’s rights and remedies against Tenant, provided that Landlord’s pursuit of such remedies will not affect the rights of Permitted Leasehold Mortgagee to the use, enjoyment or operation of the Property and Improvements.
Section 2207 No Modification or Termination of Lease Without Permitted Leasehold Mortgagee’s Consent
Tenant and Landlord hereby express ly stipulate and agree, except for the California Tax Credit Allocation Committee Lease Rider and Estoppel Agreement (Tax Credits) to be entered into in association with the recording of the Regulatory Agreement between Tenant and the California Tax Credit Allocation Committee (“TCAC”), that they will not modify this Lease in any way nor cancel or terminate this Lease by mut ual agreement, nor will Tenant surrender its interest in this Lease, without the prior written consent of Permitted Leasehold Mortgagees and Tenant’s Investor Limited Partner . Tenant and Landlord further agree that each will not take advantage of any provi sions of the United States Bankruptcy Code that would result in a termination of this Lease or make it unenforceable. At the time required by TCAC, Tenant and Landlord agree to execute and record against the Premises in the official records of the County of Los Angeles a lease rider in the form required by TCAC with such revisions to the lease rider requested by Landlord and agreed to by TCAC.
Section 2208 Right of Permitted Leasehold Mortgagee to Cure Default Before Landlord may terminate this Lease because of a default under or breach of this Lease by Tenant, Landlord must ( i) give written notice of the default or breach (the “Initial Default Notice”), and (ii) give written notice of the failure of Tenant to cure the default or breach (the “ Second Default Notice”) , to Permitted Leasehold Mortgagee concurrently with the transmittal of such notices to Tenant , and afford the Permitted Leasehold Mortgagee the opportunity to:
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(a) Cure the breach or default (including payment of all accrued and delinquent Rent) at any time prior to the sixtieth ( 60th) day after service on Leasehold Mortgagee of the Second Default Notice, where the default can be cured by the payment of money to Landlord or an other person;
(b) Cure the breach or defa ult within ninety (90) days after service on Leasehold Mortgagee of the Second Default Notice, where the breach or default must be cured by something other than the payment of money and can reasonably be cured within that time; or (c) Cure the breach or defaul t in such reasonable time as may be required where something other than the payment of money is required to cure the breach or default and cannot be reasonably cured within ninety (90) days after service on Leasehold Mortgagee of the Second Default Notice, provided that acts to cure the breach or default are commenced within that time period after service of the Second Default Notice on Leasehold Mortgagee by Landlord and are thereafter diligently continued by Leasehold Mortgagee.
If, to complete the cure of the default or breach, a Permitted Leasehold Mortgagee requires access to the Property and Project , the foregoing cure period will not commence until such Leasehold Mortgagee obtains possession of the property, provided that such Leasehold Mortgagee diligently seeks to obtain such possession by a foreclosure action or otherwise and diligently pursues such action all within the time periods set forth in Section 2302 below, or such longer period approved by Landlord. If a Permitted Leasehold Mortgagee completes the cure of the default or breach in a timely and proper manner, Landlord will accept the cure as fulfilling the terms of this Lease.
Section 2209 Foreclosure in Lieu of Curing Default
Notwithstanding any other provision of this Lease, a Permitted Leasehold Mortgagee may forestall termination of this Lease by Landlord for a default under or brea ch of this Lease by Tenant, by commencing proceedings to foreclose its Permitted Leasehold Mortgage, whether the foreclosure is conducted pursuant to a court order or pursuant to a power of sale contained in a Permitted Leasehold Mortgage, or by virtue of a transfer in lieu of for eclosure. Commencement of the foreclosure will not, however, forestall termination of this Lease by Landlord for the default or breach by Tenant unless:
(a) It occurs within sixty (60) days after service on Permitted Leasehold Mortgagee of the Second Default Notice or such longer period as approved by Landlord; (b) It is diligently pursued; and
(c) Permitted Leasehold Mortgagee keeps and performs all of the terms, covenants and conditions of this Lease which it is capable of performing (including the payment of Rent, including past due Rent, under this Lease) requiring the payment or expenditure of money by Tenant, accruing after commencement of the f oreclosure, until the foreclosure is complete or is discharged by redemption, satisfaction, payment or conveyance of the leasehold estate to Permitted Leasehold Mortgagee.
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Section 2210 Assignment of Lease Upon Foreclosure
Provided that a Permitted Leasehold Mortgagee gives written notice of transfer to Landlord setting forth the name and address of the transferee as well as the effective date of the transfer, the written consent of Landlord will not be required for transfer of Tenant’s right, title and interest under this Lease to:
(a) a purchaser, which may include the Permitted Leasehold Mortga gee, at a foreclosure sale of the Leasehold Mortgage, whether the foreclosure is conducted pursuant to court order or pursuant to a power of sale in the instrument creating the Leasehold Mortgage; or (b) a purchaser from the Permitted Leasehold Mortgagee after foreclosure, where the Permitted Leasehold Mortgagee was the purchaser of Tenant’s interest at the foreclosure sale of the Leasehold Mortgage or acquired Tenant’s interest by transfer in lieu of foreclosure. The purchase from the Permitted Leasehold Mortgagee will be subject to all the terms and conditions of this Lease. The Permitted Leasehold Mortgagee, the purchaser at a foreclosure sale, or the purchaser from the Permitted Leasehold Mortgagee will be subject to all the terms and conditions of this Lease except that (i) the time for performance of any unperformed acts required by Article VI of this Lease will be extended for a period equal to the delay in performance of the act caused by Tenant’s inability or failure to perform the act and the time required to transfer the Lease to the purchaser at a foreclosure sale and/or to the purchaser from Permitted Leasehold Mortgagee, (ii) the performance of acts required by this Lease that have already been performed and purchaser’s liability for acts or inactions of the original Tenant will be excused; provided, however, that on and after the date of such possession, (1) the purchaser will be obligated to bring the management and maintenance of the Project into compliance with the Agreement Containing Covenants and the HOME Regulatory Agreement; and (2) Landlord will have the right to enforce each and every provision of this Lease ag ainst such purchaser with respect to matters arising or continuing after such date of possession, and (iii) Permitted Leasehold Mortgagee will be able to absolutely assign or transfer this Lease regardless of the date of the assignmen t and any purchaser, assignee or transferee of this Lease from Permitted Leasehold Mortgagee will be able to assign this Lease without the approval or consent of Landlord regardless of the date of the assignment. (c) No Permitted Leasehold Mortgagee shall be r esponsible for any liability, costs or expenses which occur or accrue under this Lease after such Permitted Leasehold Mortgagee transfers its interest in this Lease.
Section 2211 New Lease to Permitted Leasehold Mortgagee Notwithstanding any other provision of this Lease, if this Lease terminates for any reason, including without limitation, the insolvency or bankruptcy of Tenant , then Landlord will, within thirty (30) days after the request set forth in Subsection (a) below is received, execute and deliver a new Lease for the Property and Project to the Permitted Leasehold Mortgagee, provided:
(a) A written request for the new Lease is served on Landlord by Permitted Leasehold Mortgagee within sixty (60) days after service on Permitted Leasehold Mortgagee of notice that 197 of 545
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the Lease has terminated; and, Landlord agrees to give Permitted Leasehold Mortgagee notice of such termination.
(b) The new Lease (i) is for a term ending on the same date the term of this Lease would have ended had not this Lease been terminated, and (ii ) contains the same covenants, conditions and provisions as are contained in this Lease, except that the Permitted Leasehold Mortgagee will be able to absolutely assign or transfer the new Lease regardless of the date of the assignment and a purchaser, assignee or transferee of the Lease from Permitted Leasehold Mortgagee will be able to assign or transfer the Lease without the approval or consent of Landlord regardless of the date of the assignment.
(c) After termination of the Lease but before the expiration of the period within which Permitted Leasehold Mortgagee has to request and receive a new Lease, Landlord will not terminate existing subleases under which sublessee is not in default, or enter into new subleases for the Property or Project , and Landlord will account to Permitted Leasehold Mortgagee for all subtenant rents during such period.
(d) The new Lease will be subject to all existing subleases under which each such subtenant is not in default and will be assignable by Permitted Leasehold Mortgagee without further approval or consent by Landlord provided the conditions of this Section are satisfied. (e) The new Lease will:
(i) Extend the time for performance of unperformed acts required by Article VI of this Lease for a period equal to the delay in performance of the act caused by Tenant’s inability or failure to perform the act, and the time required to terminate this Lease, execute a new Lease to Permitted Leasehold Mortgagee, and Permitted Leasehold Mortgagee’s timely assignment of such new Lease; and
(ii) Excuse the performance of an act required by Article VI of this Lease that has already been performed and excuse the new Tenant from acts or inactions of the original Tenant; provided, however, that on and after the date of such possession, (i) the new Tenant will be obligated to bring the management and maintenance of the Project into compliance with the Agreement Containing Covenants and the HOME Regulatory Agreement ; and (ii) Landlord will have the right to enforce each and every provision of the new Lease with respect to matters arising or continuing after the date of the new Lease, including but not limited to Article VI , against the new Tenant; and provided further, that Permitted Leasehold Mortgagee and its assignee as Tenant under the new Lease, will be liable for removal or bonding of all mechanic’s liens, stop notices, materialmen’s liens, or any liens for goods, labor, material, services or work manufactured for, delivered to, or performed on, the Property.
(iii) The new Lease and the Permitted Leasehold Mortgage will have the same priority as the original Lease and the Permitted Leasehold Mortgage on the original Lease, and intervening liens will not have priority over the new Lease or Permitted Leasehold Mortgage. 198 of 545
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(iv) Permitted Leasehold Mortgagee, on execution of the new Lease, will pay to Landlord all of Landlord’s reasonable costs and expenses, including reasonable attorney’s fees and court costs incurred in terminating this Lease, recovering possession of the Property and Project from Tenant, and preparing the new Lease.
Section 2212 No Merger of Estates
During the existence of any Permitted Leasehold Mortgage, if the same person or entity holds the leasehold estate created by this Lease and Landlord’s reversionary interest or fee interest in the Property, such estates will remain separate and there will be no merger without the consent of each Permitted Leasehold Mortgagee.
Section 2213 Amendments for Benefit of Permitted Leasehold Mortgagee Landlord and Tenant will cooperate in including in this Lease, by suitable amendment from time to time, provisions which may reasonably be requested by a Permitted Leasehold Mortgagee or proposed Permitted Leasehold Mortgagee for the purpose of implementing the mortgagee- protection provisions contained in this Article and allowing such Permitted Leasehold Mortgagee reasonable means to protect or preserve its Permitted Leasehold Mortgage on the occurrence of a default under the terms of this Lease; provided, however, that such amendment will not have a material adverse effect on Landlord’s rights or obligations under this Lease. Landlord and Tenant each agree to execute and deliver (and to acknowledge, if neces sary for recording purposes) any agreement necessary to effect such amendment.
Section 2214 Restriction on Landlord’s Right to Encumber its Interest Landlord will not mortgage, hypothecate, pledge or encumber its interest in the Property or any part thereof without the prior written consent of the holder of a Senior Leasehold Mortgage, unless there is an express recognition of Tenant’s rights under this Lease and subordination of the new lender’s lien on Landlord’s interest in the Property to this Lease, which subordination will be in a form acceptable to Tenant and the holder of such Senior Leasehold Mortgage.
Section 2215 Restriction on Subordination of Tenant’s Interest Any subordination or attempted subordination of this Lease by Tenant to a mortgage, deed of trust, encumbrance or other security interest in Landlord’s interest in the Property or any part thereof will be void ab initio and will have no force or effect unless first agreed to in writing by the holder of a Senior Leasehold Mortgage.
Section 2216 Multiple Leasehold Mortgages
Where there is a right herein to be exercised by a Permitted Leasehold Mortgagee and there exists more than one Permitted Leasehold Mortgage, the right may be exercised in the order of priority of each Permitted Leasehold Mortgage.
ARTICLE XXIII EVENTS OF DEFAULT
The occurrence of one or more of the events described below will constitute a material 199 of 545
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default and a breach of this Lease, entitling Landlord to terminate this Lease prior to the expiration of the Term.
Section 2301 Events of Default
The following will constitute an “Event of Default” by Tenant:
(a) Subject to Force Majeure Delays and other provisions of this Lease that may modify the provisions hereof, failure by Tenant to commence or to complete construction of the Improvements according to the scheduled time periods set forth in the Schedule of Performance, and in accordance with the drawings delivered to Landlord and the Scope of Development. (b) After Tenant commences construction of the Improvements on the Property, Tenant’s abandonment of the Project for a period of thirty (30) days or more. (c) Tenant’s failure to p erform or to comp ly with the covenants , conditions and obligations set forth in this Lease and such failure is not cured within the time provided for herein or Tenant’s failure to perform or to comply with the covenants, conditions and obligations set forth in the Landscape Maintenance Agreement and such failure is not cured within any time provided for therein.
(d) Except as expressly permitted in this Lease, an attempted Transfer, without the prior written consent of Landlord.
(e) The sale of Tenant’s interest in the Property or any portion thereof, under attachment, execution or similar legal process; or Tenant is adjudicated as bankrupt or insolvent, or an order for relief is entered against Tenant under Federal Bankruptcy Code , and such adjudication or order is not vacated within ten (10) days. (f) The commencement of a case under any chapter of the Federal Bankruptcy Code, by or against Tenant or any guarantor of Tenant’s obligations hereunder, or the filing of a voluntary or involuntary petition proposing the adjudication of Tenant or any guarantor of Tenant’s obligations hereunder as bankrupt or insolvent, unless the same is dismissed within ninety (90) days.
(g) The appointment of a receiver or trustee for the business or property of T enant (except by a Permitted Leasehold Mortgagee) or any guarantor of Tenant’s obligations hereunder, unless such appointment is vacated within ten (10) days of its entry. (h) The discovery by Landlord that any financial statement or other material financial information delivered by Tenant to Landlord is materially false as of the date delivered. (i) The occurrence of any other event described as constituting an “Event of Default” elsewhere in this Lease that is not cured within the time provided for herein.
Section 2302 Procedures for Declaring an Event of Default (a) Landlord will give written notice of default to Tenant, specifying the default complained of. Failure or delay in giving such notice will not constitute waiver of a default, nor 200 of 545
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will it change the time of default. Except as otherwise expres sly provided in this Lease, failures or delays by Landlord in asserting any of its rights and remedies as to a default will not operate as waiver of the default or of such rights or remedies. Delays by Landlord in asserting any of its rights and remedies will not deprive Landlord of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce such rights or remedies. (b) If a monetary event of default occurs, prior to exerci sing its remedies hereunder, Landlord will give Tenant and the Investor Limited Partner concurrent written notice of such default. Tenant will have ten (10) days after such notice is given within which to cure the default, prior to Landlord’s exercise of remedies by the Landlord under this Lease. In no event will Landlord be precluded from exercising remedies if its security becomes or is about to become materially impaired by a failure to cure a default or the default is not cured within ten (10) calendar days after the notice of default is received or deemed received. (c) If a non -monetary event of default occurs, prior to exercising its remedies hereunder, Landlord will give Tenant written notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Tenant will have such period to effect a cure prior to exercise of remedies by Landlord. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Tenant (i) initiates corrective action within said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Tenant will have such additional time as is reasonably necessary to cure the default prior to Landlord’s exercise of its remedies. If Tenant fails to take corrective action or cure the default within a reasonable time, Landlord will give Tenant and, as provided in paragraph (d), below, the Investor Limited Partner, notice thereof, whereupon the Investor Limited Partner may remove and replace the general p artner with a substitute general partner, who will effect a cure within a reasonable time thereafter , in accordance with the foregoing provisions. Landlord agree s to accept cures tendered by the Investor Limited Partner within the cure periods provided in this Lease or within the time periods provided in Civil Code Section 2924c, whichever is longer. Additionally, if the Investor Limited Partner is precluded from curing a non-monetary default due to its inability to remove the general p artner as a result of a bankruptcy, injunction, or similar proceeding by or against Tenant or its general partner, Landlord agrees to forbear from terminating this Lease during the period during which the Investor Limited Partner is so precluded from acting, not to exceed ninety (90) days, provided such limited partner is otherwise in compliance with the foregoing provisions. In no event will Landlord be precluded from exercising rem edies if its security becomes or is about to become materially jeopardized by a failure to cure a default or the default is not cured within one hundred eighty (180) days after the first notice of default is given. (d) Landlord will send the Investor Limited Partner a copy of all notices of default and all other notices that Landlord sends to Tenant, at the address for the Investor Limited Partner provided in Article XXVI .
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ARTICLE XXIV REMEDIES
Upon, or at any time after, the declaration of an Event of Default (following all applicable notice and cure periods), and if permitted hereunder, the following remedies described in this Article XXIV will apply.
Section 2401 Right of Termination
Landlord will have the right to terminate this Lease and Tenant’s right to possession of the Property by giving notice of such termination to Tenant. Upon the date of the giving of such notice (or, if such notice specifies a later date for such termination, then upon such later date), this Lease and Tenant’s right to possession hereunder and all of Tenant’s right, title and inte rest hereunder, in and to the Property and Improvements , will expire and terminate on such date. Landlord will be entitled to recover from Tenant all damages proximately caused by such default. In the event of termination of this Lease, Landlord will have the option of assuming the existing master tenancies and sub-tenancies, if any.
Section 2402 Transfer of Interest Upon Termination
If Landlord terminates this Lease as provided above, all of the right, title, estate and interest of Tenant in and to the following wil l automatically pass to, and vest in, and belong to Landlord, without further action on the part of either party: (i) the Property including, without limitation, the land, the Improvements , and any alterations thereto; (ii) all unaccrued rents, income, rec eipts, revenues, issues, and profits issuing from the Property or any part thereof; and (iii) all insurance policies and all proceeds thereof. Although not required to effectuate the automatic termination of Tenant’s interest in the Property, Tenant agrees that upon Landlord’s termination of this Lease, Tenant will execute appropriate documents, including a quitclaim deed, and perform any act reasonably necessary, to evidence the termination of its interest in the Property.
Section 2403 Damages
Subject to the limited r ecourse provisions of Section 2406, if either party defaults with regard to any of the provisions of this Lease, subject to the notice and cure provisions of Section 2302, the defaulting party will be liable to the non- defaulting party for damages caused by such default, and the non-defaulting party may, after such notice and opportunity to cure (but not before) commence an action for damages against the defaulting party with respect to such default.
Section 2404 Specific Performance
If either party de faults with regard to any of the provisions of this Lease, subject to the notice and cure provisions of Section 2302, the non-defaulting party, at its option, may, after such notice and opportunity to cure (but not before) commence an action for specific performance of the terms of this Lease pertaining to such default.
Section 2405 Cumulative Remedies
Landlord will have the right to pursue , in addition to the rem edies expressly enumerated herein, any remedy now or hereafter available under state or federal laws, including a proceeding 202 of 545
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to compel specific performance by Tenant. No remedy or election by either party hereunder will be deemed exclusive, but will, wherever possible, be cumulative with all other remedies available at law or in equity.
Section 2406 Limited Recourse
Each obligation of Tenant under this Lease is a nonrecourse obligation of Tenant and its partners. Neither Tenant nor any of its general or limited partners, nor any other party, will have any personal liability for payment of obligations to Landlord.
Notwithstanding the foregoing, Landlord may recover directly from Tenant or any other party:
(a) damages, costs and expenses incurred by Landlord as a result of fraud or a criminal act or acts of Tenant or any partner, shareholder, officer, director or employee of Tenant, or of any member or general or limited partner of Tenant, or of any member or general or limited partner of such member or general or limited partner;
(b) damages, costs and expenses incurred by Landlord as a result of any misappropriation of funds provided for the construction of the Improvements, rents and revenues from the operation of the Improvements or proceeds of insurance policies or condemnation proceeds;
(c) all amounts owing by Tenant pursuant to the indemnification regarding Hazardous Substances given in this Lease, and
(d) all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Landlord will pay Tenant’s reasonable court costs and attorneys’ fees if Tenant is the prev ailing party in any such enforcement or collection action).
ARTICLE XXV INTEREST ON PAST DUE OBLIGATIONS
Except as expressly provided herein, amounts due to either party, not paid when due, after the expiration of the permitted period to cure hereunder , will bear interest at the maximum rate then allowable by law, from the due date. Payment of such interest will not excuse or cure a default under this Lease.
ARTICLE XXVI NOTICES
All notices, demands, and requests for approval to be given under this Lease will be given in writing , and will be deemed served when delivered personally , or will be deemed served seventy-two (72) hours after the deposit thereof in the United States mail, postage prepaid, registered mail, addressed as hereinafter provided.
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Attachment No. 7 – Ground Lease
To Landlord: HOUSING AUTHORITY OF
THE CITY OF GLENDALE
141 N. Glendale Avenue, Room 202,
Glendale, California 91206
Attention: Executive Director
Facsimile: 818-548-3724
With a copy to: KANE, BALLMER & BERKMAN
515 S. Figueroa St., Suite 780
Los Angeles, California 90071-3301
Attention: Susan Apy
To Tenant:
LINC-CORE PIONEER LP
c/o National Community Renaissance of
California
9421 Haven Avenue
Rancho Cucamonga, California 91730
Attn: Chief Financial Officer
Copy to:
LINC Housing Corporation
3590 Elm Avenue
Long Beach, CA 90807
Attn: Chief Operating Officer
With a copy to:
Gubb & Barshay LLP
235 Montgomery Street
Suite 1110
San Francisco, CA 94104
Attn: Lauren B. Fechter
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With a copy to
Investor Limited Partner:
Bank of America, N.A.
MAI-225-02-02 225
Franklin Street Boston, MA 02110
Attention: Asset Management
Facsimile: 617-346-2257
And:
Banc of America CDC Special Holding Company, Inc.
MAI-225-02-02 225
Franklin Street Boston, MA 02110
Attention: Asset Management
Facsimile: 617-346-2257
And:
Buchalter, a Professional Corporation
1000 Wilshire Boulevard, Suite 1500
Los Angeles, CA 90017
Attn: Michael A. Williamson, Esq. (Ref: B0965-0684)
With a copy to
Construction Lender:
U.S. Bank Trust Company, National Association
Global Corporate Trust
One California Street, Suite 1000
San Francisco, CA 94111
And:
Bank of America, N.A.
Mailcode: CA4-704-06-06
2000 Clayton Road, 6th Floor
Concord, CA 94520
Attention: Loan Administration Manager
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And:
Buchalter, a Professional Corporation
1000 Wilshire Boulevard, Suite 1500
Los Angeles, CA 90017
Attn: Michael A. Williamson, Esq. (Ref: B0965-0685)
With a copy to
Permanent Lender:
California Housing Finance Agency
Office of General Counsel
500 Capitol Mall, Suite 1400, MS 1440
Sacramento, CA 95814
ARTICLE XXVII ESTOPPEL CERTIFICATE
Each party to this Lease will, at any time, and upon not less than ten (10) days prior written notice from the other party, execute, acknowledge and deliver to the requesting party a statement in writing: (1) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification , and certifying that this Lease, as so modified, is in full force and effect); and (2) acknowledging that there are not, to such party’s knowledge, any uncured defaults hereunder, or specifying such defaults, if any, as are claimed. Any such statement may be conclusively relied upon by a prospective purchaser or encumbrancer of the Property.
ARTICLE XXVIII SURRENDER
Section 2801 Surrender
Tenant will, on the last day of the Lease Term or upon any earlier termination of this Lease, peaceably and quietly surrender and yield immediate possession of the entire Property, including the Improvements thereon, to Landlord. Tenant will not remove from the Property any appurtenant fixtures attached or used in connection with the operation of the Improvements and necessary for the proper operation thereof. All such fixtures and all operating manuals necessary for the operation of the Improvements will be surrendered and delivered to Landlord upon expiration or termination of this Lease.
Section 2802 Title to Improvements
The parties agree that upon expiration of the Lease Term, or upon an earlier termination of this Lease, title to and ownership of all Improvements will automatically vest in Landlord without the execution of any further instrument and without any payment by Landlord therefor. Tenant will, at Landlord’s request and without payment therefor, promptly execute, acknowledge and deliver to Landlord a quitclai m deed in recordable form conveying and transferring to Landlord all right, title and interest of Tenant in and to the leasehold interest and the Improvements. 206 of 545
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Section 2803 Removal of Personal Property
On the last day of the Lease Term or upon an earlier termination of this Lease, Tenant will remove all of its personal property not required to be surrendered. Personal property not removed by Tenant upon the last day of the Lease Term or upon an earlier termination of this Lease will be deemed abandoned , and may be appropriated, sold, destroyed, or otherwise disposed of by Landlord following ten (10) days prior written notice to Tenant. Tenant will pay to Landlord all reasonable costs and expenses incurred in receiving, storing or disposing of same and for restoring any damage to the Property caused by such personal property or the removal thereof from the Property.
Section 2804 Holdover
If Tenant fails to surrender possession of the Property, or any part thereof, at the expiration of the Lease Term or upon an earlier termination of this Lease, the continuance in possession of Tenant will constitute a “holding over” by Tenant on a month-to-month basis for which Tenant is and will be liable to pay rent at fair market value (taking into consideration the Affordability Restrictions, if any remain in place on the Property) as such rent is determined by Landlord in its sole and absolute discretion. A holding over by Tenant after the expiration or earlier termination of this Lease will not constitute a renewal or extension of the Lease Term.
ARTICLE XXIX NO CONFLICT OF INTEREST, WARRANTY
Section 2901 No Conflict of Interest
Each party to this Lease covenants that neither they, nor any of their agents or employees who presently exercise any function or responsibility in connection with this Lease , have or will have, or will acquire, any financial interest which constitutes a conflict of interest under applicable City, state or federal laws, ordinances, rules , and regulations, including the Political Reform Act of 1974 (Government Code Sections 81000 et seq.), as it may be amended from time to time. No member, officer, or employee of either party or the governing body of the locality in which the Project is situated, nor any member of the governing body of the locality in which Tenant was activated, and no other public official of such locality or localities who exercises any functions or responsibilities with respect to the Project, during his or her tenure or for two (2) years thereafter, will have any interest, direct or indirect, in this Lease or the proceeds thereof.
Section 2902 Warranty Against Speculation
Tenant hereby represents and warrants that this Lease, the development and construction of the Improvements, and its other undertakings pursuant hereto, are, and will be used for, the purpose of pro viding affordable housing for low and moderate income households, and not for speculation in land holding. Tenant further recognizes:
(a) The importance of the development of the Project to the general welfare of the community; and
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(b) The substantial financing and other public aids that have been made available by law and by Landlord for the purpose of making such development possible; and (c) The fact that a change in ownership or control of Tenant or of a part thereof, or any other act or transaction involving or resulting in a change in ownership , or with respect to the identity of the parties in control of Tenant or the degrees thereof, is for practical purposes a transfer or disposition of the Property and Improvements, except as to Permitted Transfers; and (d) The Property is not to be acquired or used for speculation, but only for development and operation by Tenant in accordance with the terms of the AHA and this Lease.
The qualifications and identity of Tenant, and its principals, are of particular concern to the community and Landlord. Tenant further recognizes that it is because of such qualifications and identity that Landlord is entering into this Lease with Tenant.
ARTICLE XXX ADDITIONAL PROVISIONS
Section 3001 Time is of the Essence
Except as otherwise specifically provided in this Lease, time is of the essence in connection with each and every provision contained herein.
Section 3002 Waiver
No waiver by either party of any provision hereof will be deemed t o be a waiver of any other provision hereof, or of any subsequent breach of the same or any other provision. No party’s consent to, or approval of, any act will be deemed to render unnecessary the obtaining of such party’s consent to or approval of any subsequent act. The acceptance of any payment hereunder will not be a waiver of any preceding breach of any provision hereof, other than the failure to make such payment itself, regardless of such party’s knowledge of the preceding breach at the time of acceptance of such payment.
Section 3003 Costs of Litigation
If legal action is necessary to enforce a provision hereof, or for damages by re ason of an alleged breach of a provision of this Lease, the prevailing party will be entitled to receive from the losing party all costs and expenses , and such amount as the court may adjudge to be reasonable attorneys’ fees for the costs incurred by the prevailing party in such action or proceeding.
Section 3004 Institution of Legal Actions
Subject to the notice and cure provisions of Section 2302 and the limited recourse provisions of Section 2406, in addition to any other rights or remedies (and except as otherwise provided in this Lease), either party may institute legal action to cure, correct or remedy a default, to recover damages for a 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 the County of Los Angeles, State of California, in any other appropriate court of that county, or in the United States District Court for the Central District of California.
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Section 3005 Applicable Law
The internal laws of the State of California will govern the interpretation and enforcement of this Lease, without reference to the principles governing conflicts of law.
Section 3006 Acceptance of Service of Process
(a) If a legal action is commenced by Tenant against Landlord, service of process on Landlord will be made by personal service upon Landlord’s Executive Director or in such other manner as may be provided by law.
(b) If a legal action is commenced by Landlord against Tenant, service of process on Tenant will be made by personal service upon Tenant (or upon an officer of Tenant) and will be valid whether made within or without the State of California, or in such manner as may be provided by law.
Section 3007 Relationship of Parties
Nothing contained in this Lease will be deemed or construed to create the relationship of principal and agent, or of partnership, or of joint venture, or of any association between Landlord and Tenant, other than that of landlord and tenant.
Section 3008 Captions for Convenience
The captions herein are for convenience and reference only and are not a part of this Lease, and do not in any way limit, define, or amplify the terms and provisions hereof.
Section 3009 Entire Agreement
This Lease represents the full and complete understanding of every kind or nature whatsoever between the parties hereto , in connection with the lease of the Property , and all preliminary negotiations an d agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant will be held to vary the provisions hereof.
Section 3010 Binding Effect
This Lease, and the terms, provisions, promises, covenants, and conditions hereof, will be binding upon and will inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors, and assigns.
Section 3011 Construction
The parties agree that each party and its counsel have reviewed this Lease, and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party will not apply in the interpretation of this Lease, or any amendments or exhibits hereto. 209 of 545
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Section 3012 Tenant’s Payment of Property Taxes
To the extent required by California Health and Safety Code Section 33673, but subject to Tenant’s rights to claim exemptions under California Revenue and Taxation Code Section 214, Tenant will pay real property taxes upon the entire assessed value of the Property and not merely the assessed value of its leasehold interest in the Property.
Section 3013 Recording of this Ground Lease
A Memorandum of Lease, substantially in the form attached to the AHA as Attachment No. 8 will be recorded in the Official Records upon commencement of this Lease.
Section 3014 Severability
If any provision of this Lease is adjudged invalid or unenforceable by a court of competent jurisdiction, the remaining provisions of this Lease will not be affected thereby, and will be valid and enforceable to the fullest extent permitted by law.
Section 3015 Counterparts
This Lease may be executed in several counterparts, each of which is an original, and all of which together constitute but one and the same document.
[Remainder of Page Intentionally Left Blank; Signatures on Following Pages]
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Page S-1
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
“LANDLORD”
THE HOUSING AUTHORITY OF THE
CITY OF GLENDALE
Dated: November ____, 2022 By:_____________________________ Roubik R. Golanian, P.E.
Interim Executive Director
APPROVED AS TO FORM AND LEGALITY:
MICHAEL J. GARCIA, CITY ATTORNEY
General Counsel to the Authority
By:______________________________
Michael J. Garcia
APPROVED AS TO FORM:
KANE, BALLMER & BERKMAN
Special Counsel to the Authority
By: ___________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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Attachment No. 7 – Ground Lease
Page S-2
“TENANT”
Linc-CORE Pioneer LP,
a California limited partnership
By: NCRC Pioneer GP LLC,
a California limited liability company,
its managing general partner
By: National Community Renaissance of California,
a California nonprofit public benefit corporation,
its sole member/manager
By: __________________________________
Michael Finn
Chief Financial Officer
By: Linc Pioneer LLC,
a California limited liability company,
its co-managing general partner
By: LINC Housing Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By: __________________________________
Anders Plett
Senior Vice President of Housing Development
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Exhibit A – Legal Description
EXHIBIT A
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF GLENDALE
IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
ALL OF LOTS 167 TO 176, 186 AND 187 AND THOSE PORTIONS OF LOTS 177 TO 185 INCLUSIVE AND LOT 188 OF TRACT NO. 1587, IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STA TE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 20 PAGE 95 OF MAPS , IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AND A PORTION OF FAIRMONT AVENUE 50 FEET WIDE, AS SHOWN ON THE MAP OF SAID TRACT NO. 1587, DESCRIBED AS A WHOLE AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 176, THENCE ALONG THE WESTERLY LINE OF SAID LOTS 176 AND 177, NORTH 00° 20’ 57” WEST 185.09 FEET TO A POINT DISTANT THEREON NORTH 00° 20’ 57” WEST 64.09 FEET FROM THE SOUTHWEST CORNER OF SAID LOT 177; THENCE NORTH 89° 39’ 03” EAST 4.00 FEET; THENCE NORTH 78° 01’ 45” EAST 144.07 FEET; THENCE NORTH 83° 41’ 51” EAST 452.49
FEET TO THE INTERSECTION WITH THE NORTHERLY PROLONGATION OF THE EASTERLY LINE OF SAID LOT 188; THENCE SOUTHERLY ALONG SAID
PROLONGATION AND SAID EASTERLY LI NE TO THE SOUTHERLY LINE OF THE NORTHERLY 71.5 FEET OF SAID LOT 188; THENCE WESTERLY ALONG SAID SOUTHERLY LINE TO THE EASTERLY LINE OF SAID LOT 187; THENCE SOUTHERLY ALONG SAID EASTERLY LINE TO THE SOUTHEAST CORNER THEREOF; THENCE WESTERLY A DISTANCE OF 50 FEET ALONG THE SOUTHERLY LINE OF SAID LOT 187 TO THE NORTHEAST CORNER OF SAID LOT 167; THENCE SOUTHERLY ALONG THE EASTERLY LINE OF SAID LOT 167, A DISTANCE OF 121.00 FEET TO THE SOUTHEAST CORNER OF SAID LOT 167; THENCE WESTERLY ALONG THE SOUTHERLY LINE OF SAID LOTS 167 TO 176 INCLUSIVE, A DISTANCE OF 494.59 FEET TO THE POINT OF BEGINNING.
TOGETHER WITH THAT PORTION OF FAIRMONT AVENUE AS VACATED BY RESOLUTION NO. 18543, RECORDED FEBRUARY 15, 1978 AS INSTRUMENT NO. 78 - 173308 OF OFFICIAL RECORDS.
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Attachment No. 7 – Ground Lease
Exhibit A – Legal Description
EXCEPT FROM THAT PORTION OF SAID LAND LYING WITHIN THE LINES OF LOTS 177 TO 187 INCLUSIVE, ALL MINERALS, OILS, GASES AND OTHER HYDROCARBONS
BY WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR UNDER SAID LAND,
WITHOUT, HOWEVER, THE RIGHT TO DRILL, DIG OR MINE THROUGH THE SURFACE
THEREOF AS EXCEPTED BY THE STATE OF CALIFORNIA, DEPARTMENT OF PUBLIC WORKS IN DEED RECORDED JULY 16, 1968 AS INSTRUMENT NO. 451 IN BOOK D-4066 PAGE 666, OFFICIAL RECORD.
ABOVE LEGAL DESCRIPTION IS DESCRIBED AS LOT A OF PARCEL MAP NO. 1259A AND RECORDED IN BOOK 91 PAGE 89 OF PARCEL MAPS IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA.
APN: 5637-023-806
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ioneer
Attachment No. 7 – Ground Lease
Exhibit B – Site Map
EXHIBIT B
SIT
E MAP
[
Immediately Follows This Page]
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S
ITE MAP
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Attachment No. 8 - Memorandum of Lease
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
HOUSING AUTHORITY OF
THE CITY OF GLENDALE
141 North Glendale Avenue, Suite 202
Glendale, California 91206
Attn: Director of Housing
and Community Development
APN: 5637-023-806 OFFICIAL BUSINESS
Document entitled to free
recording per Government
Code Section 27383
DOCUMENTARY TRANSFER TAX:
City $_______________.
County of Los Angeles $_______________.
Computed on the basis of the full value of interest or property conveyed.
_____________________________________
Signature of Declarant or Agent
MEMORANDUM OF LEASE BETWEEN THE HOUSING AUTHORITY OF THE CITY OF
GLENDALE AND LINC-CORE PIONEER LP
(515 PIONEER)
THIS MEMORA NDUM OF LEASE (“ Memorandum”), dated as of
________________________, 2022, is entered into by and between the Housing Authority of the City of Glendale, a public body, corporate and politic, (“Landlord”) and LINC-CORE PIONEER LP, a California limited partnership (“Tenant”).
RECITALS
A. Landlord and Tenant have entered into that certain Ground Lease dated as of ________________________, 2022 (“Lease”) pursuant to which Landlord leased to Tenant and Tenant leased from Landlord certain real property more particularly described in Exhibit “A” and incorporated herein by reference (the “Property”).
B. Landlord and Tenant desire to execute this Memorandum to provide constructive notice of the Lease to third parties.
OPERATIVE PROVISIONS
1. Lease Commencement and Term. Landlord leases the Property to Tenant for a term commencing on the Commencement Date ( ___________, 2022) and continuing thereafter until 217 of 545
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Attachment No. 8 - Memorandum of Lease
the seventy-eighth (78th) anniversary of the date o f Conversion (as defined in the Lease), unless earlier terminated as provided in the Lease.
2. Lease Terms. The terms and provisions of the Lease are hereby incorporated into this Memorandum of Lease by this reference.
3. Leasehold Deeds of Trust. Provisions for leasehold mortgages are contained in the Lease.
4. Assignment. Tenant’s rights under the Lease may not be assigned except in compliance with the terms of the Lease.
5. Successors and Assigns. This Memorandum of Lease and the Lease bind and inure to the benefit of, the parties and their respective, permitted heirs, successors in interest, and assigns, subject, however, to the terms of the Lease concerning assignment. The provisions of this Memorandum of Lease are solely for the purpose of providing notice of the Lease and, in the event of any conflict between the provisions of this Memorandum of Lease and the provisions of the Lease, the provisions of the Lease will prevail.
6. Execution in Counterparts. This Memorandum of Lease may be executed by each party on a se parate signature page, and when the executed signature pages are combined, will constitute one single instrument.
[Remainder of Page Intentionally Left Blank; Signatures on Following Pages] 218 of 545
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Attachment No 8 - Memorandum of Lease
Page S-1
IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease as of the date first set forth above.
LANDLORD
THE HOUSING AUTHORITY OF THE
CITY OF GLENDALE
Dated: November ____, 2022 By:_____________________________ Roubik R. Golanian, P.E.
Executive Director
APPROVED AS TO FORM AND LEGALITY:
MICHAEL J. GARCIA, CITY ATTORNEY
General Counsel to the Authority
By:______________________________
Michael J. Garcia
APPROVED AS TO FORM:
KANE, BALLMER & BERKMAN
Special Counsel to the Authority
By: ___________________________
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Attachment No 8 - Memorandum of Lease
Page S-2
TENANT
Linc-CORE Pioneer LP,
a California limited partnership
By: NCRC Pioneer GP LLC,
a California limited liability company,
its managing general partner
By: National Community Renaissance of California,
a California nonprofit public benefit corporation,
its sole member/manager
By: __________________________________
Michael Finn
Chief Financial Officer
By: Linc Pioneer LLC,
a California limited liability company,
its co-managing general partner
By: LINC Housing Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By: __________________________________
Anders Plett
Senior Vice President of Housing Development
220 of 545
STATE OF CALIFORNIA )
)
COUNTY OF )
On , before me, ,
a 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.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 221 of 545
STATE OF CALIFORNIA )
)
COUNTY OF )
On , before me, ,
a 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.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 222 of 545
STATE OF CALIFORNIA )
)
COUNTY OF )
On , before me, ,
a 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.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 223 of 545
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Attachment No. 8 - Memorandum of Lease
Exhibit A – Legal Description
EXHIBIT A
LEGAL DESCRIPTION
A leasehold interest created by that certain Ground Lease between the Housing Authority of the City of Glendale and LINC-CORE PIONEER LP, a California limited partnership, dated as of _______________, 2022 in the real property described as follows:
THE LA ND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF
GLENDALE IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
ALL OF LOTS 167 TO 176, 186 AND 187 AND THOSE PORTIONS OF LOTS 177 TO 185 INCLUSIVE AND LOT 188 OF TRACT NO. 15 87, IN THE CITY OF GLENDALE,
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 20 PAGE 95 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AND A PORTION OF FAIRMONT AVENUE 50 FEET WIDE, AS SHOWN ON THE MAP OF SAID TRACT NO. 1587, DESCRIBED AS A WHOLE AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 176, THENCE ALONG THE WESTERLY LINE OF SAID LOTS 176 AND 177, NORTH 00° 20’ 57” WEST 185.09 FEET TO A POINT DISTANT THEREON NORTH 00° 20’ 57” WEST 64.09 FEET FROM THE SOUTHWEST CORNER OF SAID LOT 177; THENCE NORTH 89° 39’ 03” EAST
4.00 FEET; THENCE NORTH 78° 01’ 45” EAST 144.07 FEET; THENCE NORTH 83° 41’ 51” EAST 452.49 FEET TO THE INTERSECTION WITH THE NORTHERLY PROLONGATION OF THE EASTERLY LINE OF SAID LOT 188; THENCE
SOUTHERLY ALONG SAID PROLONGATION AND SAID EASTERLY LINE TO THE SOUTHERLY LINE OF THE NORTHERLY 71.5 FEET OF SAID LOT 188; THENCE
WESTERLY ALONG SAID SOUTHERLY LINE TO THE EASTERLY LINE OF SAID LOT 187; THENCE SOUTHERLY ALONG SAID EASTERLY LINE TO THE SOUTHEAST CORNER THEREOF; THENCE WESTERLY A DISTANCE OF 50 FEET ALONG THE SOUTHERLY LINE OF SAID LOT 187 TO THE NORTHEAST CORNER OF SAID LOT 167; THENCE SOUTHERLY ALONG THE EASTERLY LINE OF SAID LOT 167, A DISTANCE OF 121.00 FEET TO THE SOUTHEAST CORNER OF SAID LOT 167; THENCE WESTERLY ALONG THE SOUTHERLY LINE OF SAID LOTS 167 TO 176 INCLUSIVE, A DISTANCE OF 494.59 FEET TO THE POINT OF BEGINNING.
TOGETHER WITH THAT PORTION OF FAIRMONT AVENUE AS VACATED BY RESOLUTION NO. 18543, RECORDED FEBRUARY 15, 1978 AS INSTRUMENT NO. 78- 173308 OF OFFICIAL RECORDS.
EXCEPT FROM THAT PORTION OF SAID LAND LYING WITHIN THE LINES OF LOTS 177 TO 187 INCLUSIVE, ALL MINERALS, OILS, GASES AND OTHER
HYDROCARBONS BY WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR 224 of 545
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Attachment No. 8 - Memorandum of Lease
Exhibit A – Legal Description
UNDER SAID LAND, WITHOUT , HOWEVER, THE RIGHT TO DRILL, DIG OR MINE
THROUGH THE SURFACE THEREOF AS EXCEPTED BY THE STATE OF CALIFORNIA, DEPARTMENT OF PUBLIC WORKS IN DEED RECORDED JULY 16, 1968 AS INSTRUMENT NO. 451 IN BOOK D-4066 PAGE 666, OFFICIAL RECORD.
ABOVE LEGAL DESCRIPTION IS DESCRIBED AS LOT A OF PARCEL MAP NO. 1259A AND RECORDED IN BOOK 91 PAGE 89 OF PARCEL MAPS IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA.
APN: 5637-023-806
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Attachment No. 9 - Notice of Affordability Restrictions
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
HOUSING AUTHORITY OF THE
CITY OF GLENDALE
141 North Glendale Avenue, Suite 202
Glendale, California 91206
Attn: Director of Housing
and Community Development
APN: 5637-023-806 OFFICIAL BUSINESS
Document entitled to free
recording per Government
Code Section 27383
Notice of Affordability Restrictions on Transfer of Property
NOTICE IS HEREBY GIVEN that pursuant to Health & Safety Code Section 33334.3(f), the Housing Authority of the City of Glendale is recording this Notice of Affordability Restrictions on Transfer of Property (hereinafter the “Notice”) with regard to the prop erty located at 515 Pioneer , Glendale, California and more particularly described in Exhibit “A” attached hereto (the “Property”).
The Property is subject to an Agreement Containing Covenants (the “Covenants”) recorded concurrently herewith, which restricts the use of the Property as follows:
i. Fourteen (14) units will be rented exclusively to Extremely Low Income households at an Affordable Rent as provided in
California Health and Safety Code Section 50053, consisting of fourteen (14) studio units;
ii. Twenty (20) units will be rented exclusively to Very Low Income households at an Affordable Rent as provided in
California Health and Safety Code Section 50053, consisting of the following: (a) eighteen (18) studio units; and (b) two (2) one- bedroom units;
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Attachment No. 9 - Notice of Affordability Restrictions
iii. Forty-eight (48) units will be rented exclusively to Low Income households at an Affordable Rent as provided in California Health and Safety Code Section 50053, consisting of the forty- eight (48) one-bedroom units;
iv. Thirty-four (34) units will be rented exclusively to households meeting the fifty percent (50%) income limit under the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of the following: (a) twenty-nine (29) one-bedroom units; and (b) five (5) two-bedroom units;
v. One hundred thirty-one (131) units will be rented exclusively to households meeting the sixty percent (60%) income limit under the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of one hundred thirty-one (131) one-bedroom units; and
vi. Ninety (90) units will be rented exclusively to households meeting the eighty percent (80%) income limit under the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of the following: (a) fifty (50) one -bedroom uni ts; and (b) forty (40) two -bedroom units.
The 337 affordable units shall consist of 92 Senior Citizen Households (a mix of 32 studio units and 60 one -bedroom units) and 245 family households (a mix of 200 one-bedroom units and 45 two-bedroom units).
The maximum incomes of eligible tenants under ( i), (ii), and (iii) above will be determined on the basis of the income limits for Extremely Low Income , Very Low Income , and Low Income households in the Los Angeles -Long Beach SMSA, published approximately annuall y by the California Department of Housing and Community Development (“ HCD”). If HCD discontinues publishing such income limits, the term “Extremely Low Income” will mean a household income that does not exceed 30% of the area median income, adjusted for family size, the term “Very Low Income” shall mean a household income that does not exceed 50% of the area median income, adjusted for family size , and the term “Low Income” shall mean a 227 of 545
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Attachment No. 9 - Notice of Affordability Restrictions
household income that does not exceed 80% of the area median income, adjusted for family size.
Rents charged to a tenant shall not exceed rents t hat are affordable to Extremely Low Income, Very Low Income, and Low Income households, as applicable, (as “ Affordable Rent ” is defined below). The maximum rents, including a reasonable utility allowance for utilities and services (excluding telephone) to be paid by Extremely Low Income, Very Low Income, and Low Income Senior Citizen Households and family households will be the lower of the maximum rent applicable to Low Income Housing Tax Credits pursuant to the Tax Reform Act of 1986, as amended, and gove rned by Section 42 of Internal Revenue Code requirements for so long as such requirements are applicable or the maximum rent for the applicable income level as set forth below:
a. In the case of an Extremely Low Income household, the maximum rent will be a rent that does not exceed 30 percent (30%) of thirty percent (30%) of the area median income adjusted for household size appropriate to the unit, as determined by HCD.
b. In the case of a Very Low Income household, the maximum rent will be a rent that does not exceed 30 percent (30%) of fifty percent (50%) of the area median income adjusted for household size appropriate to the unit, as determined by HCD.
c. In the case of a Low Income household, the maximum rent will be a rent that does not exceed 30 percent of sixty percent (60%) of the area median income adjusted for household size appropriate to the unit, as determined by HCD.
d. In the case of a household occupying a unit described in paragraphs (iv), (v), or (vi) above , the maximum rent will be the maximum allowable rent under the Extended Use Agreement recorded against the Property in connection with the Tax Credits.
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Attachment No. 9 - Notice of Affordability Restrictions
e. For the purpose of determining Affordable Rent, household size appropriate to the unit will mean one person in the case of a studio, two pers ons in the case of a one-bedroom unit, and three persons in the case of a two-bedroom unit.
The affordability restrictions imposed on the Property by the Covenants are scheduled to expire on the date that is seventy-eight (78) years after the date of Conversion.
This Notice is recorded for the purpose of providing notice only and it in no way modifies the provisions of the Covenants.
[Remainder of Page Intentionally Left Blank; Signatures on Following Pages] 229 of 545
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Attachment No. 9 - Notice of Affordability Restrictions S-1
THE HOUSING AUTHORITY OF THE
CITY OF GLENDALE
Dated: November ___, 2022 By:_____________________________ Roubik R. Golanian, P.E.
Interim Executive Director
APPROVED AS TO FORM AND LEGALITY:
MICHAEL J. GARCIA, CITY ATTORNEY
General Counsel to the Authority
By:______________________________
Michael J. Garcia
APPROVED AS TO FORM:
KANE, BALLMER & BERKMAN
Special Counsel to the Authority
By: ___________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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Attachment No. 9 - Notice of Affordability Restrictions Consent to Recordation
CONSENT TO RECORDATION
The undersigned, owner of the leasehold interest in real property legally described in Exhibit “A” hereto, hereby consents to the recordation of the foregoing Notice of Affordability Restrictions on Transfer of Property against said real property.
Linc-CORE Pioneer LP,
a California limited partnership
By: NCRC Pioneer GP LLC,
a California limited liability company,
its managing general partner
By: National Community Renaissance of California,
a California nonprofit public benefit corporation,
its sole member/manager
By: __________________________________
Michael Finn
Chief Financial Officer
By: Linc Pioneer LLC,
a California limited liability company,
its co-managing general partner
By: LINC Housing Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By: __________________________________
Anders Plett
Senior Vice President of Housing Development
231 of 545
STATE OF CALIFORNIA )
)
COUNTY OF )
On , before me, ,
a 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.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 232 of 545
STATE OF CALIFORNIA )
)
COUNTY OF )
On , before me, ,
a 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.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 233 of 545
STATE OF CALIFORNIA )
)
COUNTY OF )
On , before me, ,
a 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.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 234 of 545
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Attachment No. 9 - Notice of Affordability Restrictions Exhibit A – Legal Description
Exhibit “A”
LEGAL DESCRIPTION
A leasehold interest created by that certain Ground Lease between the Housing Authority of the City of Glendale and LINC-CORE PIONEER LP , a California limited partnership, dated as of _______________, 2022 in the real property described as follows:
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF GLENDALE
IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
ALL OF LOTS 167 TO 176, 186 AND 187 AND THOSE PORTIONS OF LOTS 177 TO 185 INCLUSIVE AND LOT 188 OF TRACT NO. 1587, IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 20 PAGE 95 OF MAPS , IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AND A PORTION OF FAIRMONT AVENUE 50 FEET WIDE, AS SHOWN ON THE MAP OF SAID TRACT NO. 1587, DESCRIBED AS A WHOLE AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 176, THENCE ALONG THE WESTERLY LINE OF SAID LOTS 176 AND 177, NORTH 00° 20’ 57” WEST 185.09 FEET TO A POINT DISTANT THEREON NORTH 00° 20’ 57” WEST 64.09 FEET FROM THE SOUTHWEST CORNER OF SAID LOT 177; THENCE NORTH 89° 39’ 03” EAST 4.00 FEET; THENCE NORTH 78° 01’ 45” EAST 144.07 FEET; THENCE NORTH 83° 41’ 51” EAST 452.49
FEET TO THE INTERSECTION WITH THE NORTHERLY PROLONGATION OF THE EASTERLY LINE OF SAID LOT 188; THENCE SOUTHERLY ALONG SAID
PROLONGATION AND SAID EASTERLY LINE TO THE SOUTHERLY LINE OF THE NORTHERLY 71.5 FEET OF SAID LOT 188; THENCE WESTERLY ALONG SAID SOUTHERLY LINE TO THE EASTERLY LINE OF SAID LOT 187; THENCE SOUTHERLY ALONG SAID EASTERLY LINE TO THE SOUTHEAST CORNER THEREOF; THENCE WESTERLY A DISTANCE OF 50 FEET ALONG THE SOUTHERLY LINE OF SAID LOT 187 TO THE NORTHEAST CORNER OF SAID LOT 167; THENCE SOUTHERLY ALONG THE EASTERLY LINE OF SAID LOT 167, A DISTANCE OF 121.00 FEET TO THE SOUTHEAST CORNER OF SAID LOT 167; THENCE WESTERLY ALONG THE SOUTHERLY LINE OF SAID LOTS 167 TO 176 INCLUSIVE, A DISTANCE OF 494.59 FEET TO THE POINT OF BEGINNING.
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Attachment No. 9 - Notice of Affordability Restrictions Exhibit A – Legal Description
TOGETHER WITH THAT PORTION OF FAIRMONT AVENUE AS VACATED BY RESOLUTION NO. 18543, RECORDED FEBRUARY 15, 1978 AS INSTRUMENT NO. 78 - 173308 OF OFFICIAL RECORDS.
EXCEPT FROM THAT PORTION OF SAID LAND LYING WITHIN THE LINES OF LOTS 177 TO 187 INCLUSIVE, ALL MINERALS, OILS, GASES AND OTHER HYDROCARBONS
BY WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR UNDER SAID LAND,
WITHOUT, HOWEVER, THE RIGHT TO DRILL, DIG OR MINE THROUGH THE SURFACE
THEREOF AS EXCEPTED BY THE STATE OF CALIFORNIA, DEPARTMENT OF PUBLIC WORKS IN DEED RECORDED JULY 16, 1968 AS INSTRUMENT NO. 451 IN BOOK D-4066 PAGE 666, OFFICIAL RECORD.
ABOVE LEGAL DESCRIPTION IS DESCRIBED AS LOT A OF PARCEL MAP NO. 1259A AND RECORDED IN BOOK 91 PAGE 89 OF PARCEL MAPS IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA.
APN: 5637-023-806
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RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
HOUSING AUTHORITY OF
THE CITY OF GLENDALE
141 North Glendale Avenue, Suite 202
Glendale, California 91206
Attn: Director of Housing
and Community Development
APN: 5637-023-806 OFFICIAL BUSINESS
Document entitled to free
recording per Government
Code Section 27383
AGREEMENT CONTAINING COVENANTS
(Including Rental Restrictions)
(515 Pioneer)
THIS AGREEMENT CONTAINING COVENANTS (“Agreement”) is entered into as of __________________, 2022 by and between the HOUSING AUTHORITY OF THE CITY OF GLENDALE, a public body, corporate and politic (“Authority”) and LINC-CORE PIONEER LP, a California limited partnership (“Developer”).
WHEREAS, Developer is the owner of a leasehold interest in that certain real property (“Property”) located in the City of Glendale and more particularly described in Exhibit “A” which is attached hereto and incorporated herein by this reference; and WHEREAS, for the purpose of providing housing that will be affordable to Extremely Low Income, Very Low Income, and Low Income Senior Citizen Households and family households, Developer and the Authority have entered into an Affordable Housing Agreement, dated as of November 18, 2022, as amended from time to time (“Affordable Housing Agreement”), which is incorporated herein by this reference (any capitalized term that is not otherwise defined in this Agreement has the meaning ascribed to such term in the Affordable Housing Agreement); and WHEREAS, pursuant to t he Affordable Housing Agreement , the Authority is providing financial assistance to Developer to assist in the acquisition and development of the Property, using LMIHAF and Measure S Funds; and
WHEREAS, the Developer has obtained an allocation of Low Income Housing Tax Credits pursuant to the Tax Reform Act of 1986, as amended, and governed by Section 42 of Internal Revenue Code (“Tax Credits”); and
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WHEREAS, the use of the Tax Credits to finance the development of the Property imposes income and affordability requirements; provided however, that nothing herein will be deemed to authorize charging rents in excess of the Affordable Rent for the specified units set forth in Section
3.a below; and
WHEREAS, the Affordable Housing Agreement contains certain provisions relating to the use of the Property and imposes additional income and affordability requirements.
NOW, THEREFORE, AUTHORITY AND DEVELOPER COVENANT AND AGREE AS FOLLOWS:
1. Construction Covenant.
Developer hereby covenants and agrees on behalf of itself and its successors and assigns in the Property or any portion thereof or any improvements thereon or any interest therein that Developer and such successors and assigns will develop and construct on the Property a residential apartment Project, which will contain three hundred forty (340) residential rental units and associated amenities, in accordance with the Affordable Housing Agreement (including but not limited to the Scope of Development), the Ground Le ase, this Agreement, and plans approved by the City of Glendale.
2. Maximum Incomes.
a. Developer covenants and agrees for itself and its successors, its assigns and every successor in interest to the Property or any part thereof, that Developer and its successors and assignees will use the Property exclusively to provide affordable housing for Extremely Low, Very Low, and Low Income Senior Citizen Households and family households, subject to all of the terms and conditions of this Agreement, except for three two-bedroom units designated as the management units for the on-site managers. The remaining 337 units will be allocated as follows:
i. Fourteen (14) units will be rented exclusively to Extremely Low Income households at an Affordable Rent as provi ded in California Health and Safety Code Section 50053, consisting of fourteen (14) studio units; ii. Twenty (20) units will be rented exclusively to Very Low Income households at an Affordable Rent as provided in California Health and Safety Code Section 50053, consisting of the following: (a) eighteen (18) studio units; and (b) two (2) one-bedroom units;
iii. Forty-eight (48) units will be rented exclusively to Low Income households at an Affordable Rent as provided in California Health and Safety Code Section 50053, consisting of forty-eight (48) one-bedroom units;
iv. Thirty-four (34) units will be rented exclusively to households meeting the fifty percent (50%) income limit under the Extended Use Agreement 238 of 545
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recorded against the Property in connection with the Tax Credits, consisting of the following: (a) twenty -nine (29) one -bedroom units; and (b) five (5) two-bedroom units;
v. One hundred thirty -one (131) units will be rented exclusively to households meeting the sixty percent (60%) income limit under the Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of one hundred thirty -one (131) one - bedroom units; and
vi. Ninety (90) units will be rented exclusively to households meeting the eighty percent (80%) income limit under t he Extended Use Agreement recorded against the Property in connection with the Tax Credits, consisting of the following: (a) fifty (50) one -bedroom units; and (b) forty (40) two-bedroom units.
The 337 affordable units shall consist of 92 Senior Citizen Households (a mix of 32 studio units and 60 one-bedroom units) and 245 family households (a mix of 200 one-bedroom units and 45 two-bedroom units).
b. The maximum incomes of eligible tenants for the units described in paragraphs 2.(a)(i), 2.(a)(ii), and 2.(a)(ii i) above will be determined on the basis of the income limits for Extremely Low, Very Low Income, and Low Income households respectively in the Los Angeles-Long Beach SMSA, published approximately annually by the California Department of Housing and Community Development (“HCD”). If HCD discontinues publishing such income limits, the term “Extremely Low Income” will mean a household income that does not exceed 30% of the area median income, adjusted for family size, the term “Very Low Income” will mean a household income that does not exceed 50% of the area median income, adjusted for family size, and the term “Low Income” will mean a household income that does not exceed 8 0% of the area median income, adjusted for family size. For the term of the Tax Credits, in no case will household income exceed applicable Tax Credit income limits.
c. Developer will obtain and maintain on file an income computation and certification form from such prospective tenant dated immediately prior to t he date of initial occupancy. Developer will verify that the income information provided by an applicant is accurate by following all applicable Authority policies and procedures and by taking one or more of the following steps as a part of the verificati on process: (i) obtain two (2) pay stubs from the most recent pay periods; (ii) obtain a written verification of income and employment from applicant’s current employer; (iii) obtain an income verification form from the Social Security Administration and/or California Department of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant’s income as is reasonably satisfactory; or (v) obtain such other information as may be reasonably required. Each tenant lease will contain a provision to the effect that Developer has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of a Unit, and that any material 239 of 545
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misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease.
d. Developer will update income records annually and provide copi es of updated tenant eligibility records and monthly rental records to the Authority for review. Upon review of such records, the Authority may at its option perform an independent audit of the tenant eligibility records in order to verify compliance with the income and affordability requirements set forth herein. Costs for such an audit performed by the Authority will be deemed an Operating Expense, deductible from the Project’s Revenue (as such terms are defined in the LMIHAF Note and the Measure S Note). Developer will retain the records described in this Section for a period of not less than five (5) years after the date each record was created.
3. Maximum Rents.
a. Rents charged to a tenant will not exceed rents that are affordable to Extremely Low Income, Very Low Income , and Low Income households, as applicable, (as “Affordable Rent ” is defined below). The maximum rents, including a reasonable utility allowance for utilities and services (excluding telephone) to be paid by Extremely Low Income, Very Low Income, and Low Income Senior Citizen Households and family households will be the lower of the maximum rent permitted to be charged pursuant to the Extended Use Agreement recorded against the Property in connection with the Tax Credit requirements for so long as suc h requirements are applicable and the maximum rent for the applicable income level as set forth below:
i. In the case of an Extremely Low Income household, the maximum rent will be a rent that does not exceed 30 percent (30%) of thirty percent (30%) of the area median income adjusted for household size appropriate to the unit, as determined by HCD.
ii. In the case of a Very Low Income household, the maximum rent will be a rent that does not exceed 30 percent (30%) of fifty percent (50%) of the area median income adjusted for household size appropriate to the unit, as determined by HCD. iii. In the case of a Low Income household, the maximum rent will be a rent that does not exceed 30 percent of sixty percent (60%) of the area median income adjusted for household size appropriate to the unit, as determined by HCD. iv. In the case of a household occupying a unit described in paragraphs
2.(a)(iv), 2.(a)(v), and 2.(a)(vi) above, the maximum rent will be the maximum allowable rent under the Extended Use Agreement recorded against the Property in connection with the Tax Credits.
v. For the purpose of determining Affordable Rent , household size appropriate to the unit will mean one person in the case of a studio, two persons in the case of a one-bedroom unit, and three persons in the case of a two-bedroom unit. 240 of 545
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b. This affordability requirement will continue in effect for the Term of this Agreement.
c. Failure to comply with the affordability requirements of this Agreement following notice from the Authority and an opportunity to cure such failure is an event of default under the terms of the LMIHAF Loan and the Measure S Loan. Pursuant to the LMIHAF Promissory Note evidencing the LMIHAF Loan and the Measure S Promissory Note evidencing the Measure S Loan, subject to the right to cure, the LMIHAF Loan and the Measure S Loan will each be due and payable immediately if the housing does not meet the affordability requirements of this Agreement.
d. Upon request, the Authority Executive Director will notify Developer of the maximum rents that may be charged under paragraphs 2.(a)(i), 2.(a)(ii), and 2.(a)(iii) (not to exceed Affordable Rent) and the maximum income of persons who are eligible to occupy the Property, based on the then- current area median income. In no event will rents exceed the maximum rent permitted by the tax credit regulations or (with regard to the allocation of units set forth in Section
2.a hereof) the rules applicable to the use of LMIHAF and Measure S Fund moneys, whichever is the lowest.
e. Developer, its successors and assigns will not charge rents in excess of the amounts determined as set forth in Section 3. In the event that either Developer or the Authority determines that Developer has charged a tenant rent in excess of the amount set forth herein, Developer will immediately reimburse the tenant the amount of overpayment, with interest, from the date of rental payment, at the highest non-usurious rate of interest permitted by law, within ten (10) days of such determination. Developer may revise rents not more than once annually.
4. Project Monitoring Fee.
Annually, on or before the first day of each fiscal year, Developer will pay to t he Authority a Project monitoring fee in an amount equal to $100 per Unit per year, as adjusted annually by the City of Glendale. The Project monitoring fee shall accrue interest if not paid when and as due under this Agreement, from the date the fee is due until paid in full, at the highest non -usurious rate of interest then permitted by law. Notwithstanding any other provision of this Agreement, this provision shall be subject to a fifteen (15) day notice and cure period.
5. Tenant Selection.
Developer will adopt, based upon a draft prepared by the Authority, written tenant selection policies and criteria, for approval by the Authority, that meet the following requirements:
a. Are consistent with the purpose of providing housing for Extremely Low, Very Low Income, and Low Income households.
b. Are reasonably related to program eligibility and the applicants’ ability to perform the obligations of the lease.
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c. Give reasonable consideration to the housing needs of persons that would have a preference under 42 CFR §906.211 (Federal selection preferences for admission to Public Housing);
d. Provide for:
i. The selection of otherwise eligible tenants from a written waiting list in the chronological order of their application, insofar as is practicable, taking into account applicants’ need for accessible features;
ii. The prompt written notification to any rejected applicant of the grounds for any rejection;
e. Tenant selection will be administered in accordance with the tenant selection plan approved by the Authority.
f. Carry out the Affirmative Marketing procedures of the City of Glendale, to provide information and otherwise attract eligible persons from all racial, ethnic and gender groups in the housing market area. Developer and Authority will cooperate to effectuate this provision during the Developer’s initial lease-up of the Property and as vacancies occur.
6. Nondiscrimination Based on Source of Income.
Developer, its successors and assigns, will not refuse to accept for occupancy an otherwise eligible household that is a holder of a certificate or voucher under 24 CFR part 982- Section 8 Tenant- Based Assistance: Unified Rule for Tenant -Based Assistance under the Section 8 Rental Certificate Program and the Section 8 Rental Voucher Program or to the holder of a comparable document evidencing participation in a HOME tenant-based rental assistance program because of the status of the prospective tenant as a holder of such certificate of family participation, rental voucher, or comparable HOME tenant-based assistance document.
7. Increases in Tenant Incomes.
This Section will govern in the eve nt of increases in tenant incomes : (a) a tenant who initially qualified as an Extremely Low Income Household, but who, due to an increase in income, no longer qualifies as an Extremely Low Income Household but does qualify as a Very Low Income Household, will pay as rent an amount that is Affordable Rent to a Very Low Income Household, , as set forth in Health and Safety Code section 50053; (b) a tenant who initially qualified as a Very Low Income Household, but who, due to an increase in income, no longer qualifies as a Very Low Income Household but does qualify as a Low Income Household, will pay as rent an amount that is Affordable Rent to a Low Income Household, as set forth in Health and Safety Code section 50053; and (c) a tenant who initially qualified as a Very Low Income or a Low Income Household, but who, due to an increase in income, no longer qualifies as either a Very Low Income or a Low Income Household, will pay as rent the lesser of the amount payable by the tenant under tax credit regulations, State or local law or 30 percent of the household’s adjusted income. 242 of 545
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8. Tenant Protections.
Each tenant lease must provide for housing for not less than one year, unless by mutual agreement between the tenant and the Developer. The lease may not contain any of the following provisions (in which references to “owner” will mean the Developer, its successors or assigns):
a. Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the owner in a lawsuit brought in connection with the lease; b. Agreement by the tenant that the owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing unit after the tenant has moved out of the unit. The owner may dispose of this personal property in accordance with state law; c. Agreement by the tenant not to hold the owner or the owner’s agents legally responsible for any action or failure to act, whether intentional or negligent; d. Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant;
e. Agreement by the tenant that the owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; f. Agreement by the tenant to waive the right to a trial by jury; g. Agreement by the tenant to waive the tenant’s right to appeal, or to otherwise challenge in court, a court decision in connection with the tenant housing agreement; and
h. Agreement by the tenant to pay attorney’s fees or other legal costs even i f the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses.
9. Termination of Lease.
Developer, its successors or assigns, may not terminate a lease or refuse to renew the lease of a tenant, except for: serious or repeated violation of the terms and conditions of the lease; violation of applicable federal, state, or local law; or other good cause. Any termination or refusal to renew must be provided by Developer’s service upon the tenant of a written notice specifying the grounds for the action in the time and manner proscribed by law.
10. Maintenance Obligations.
Developer will maintain the improvements on the Property in compliance with all applicable 243 of 545
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housing quality standards and local code requirements, and will keep the Property free from any unreasonable accumulation of debris or waste materials. When and as required by the Affordable Housing Agreement , Developer shall prepare and submit to the Executive Director of the Authority for approval a program (the “ Maintenance Program ”) for the maintenance of the Property and the Improvements. For the Term of this Agreement , Developer, and its successors and assigns, will maintain the Property and the Improvements in accordance with the Authority - approved Maintenance Program, as the same may be amended from time to time with the written approval of the Executive Director of the Authority. In the event the Developer fails t o maintain the Property and the Improvements in accordance with the approved Maintenance Program, and does not cure such failure within thirty (30) days following notice from the Authority, with such additional time as may be reasonably necessary to cure s uch default provided that Developer has commenced to cure within such thirty (30) day period and is diligently prosecuting the cure to completion, the Authority will have the right, but not the obligation, to enter the Property, correct any violation, and hold the Developer responsible for the cost thereof, and such cost, until paid, will constitute a lien on the Property.
11. Nondiscrimination.
Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property or any part thereof, there will be no discrimination against or segregation of any person, or group of persons, on account of race, color, national origin, religion or sex in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of t he Property nor will 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, subtenants, sublessees or vendees of the Property. All deeds, leases or contracts will contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
a. In deeds: “The grantee herein covenants by and for himself or herself, hi s or her heirs, executors, administrators, 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 any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed.
The foregoing covenants shall run with the land.”
b. In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or group of persons, on 244 of 545
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account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit an y such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”
c. In contracts: There shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land, nor shall the transferee itself or any person claiming under or through him or her, e stablish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of the land.”
12. Management Obligations.
When and as required by the Affordable Housing Agreement, Developer shall prepare and submit to the Authority Executive Director for approval a “ Management Plan ” pursuant to the Affordable Housing Agreement , describing Developer ’s proposed plans for managing and operating the Property, a copy of which is on file at the offices of the Authority . For the Term of this Agreement, Developer will manage and operate the Property in accordance with the Authority- approved Management Plan, including such amendments as may be approved in writing from time to time by the Developer and the Authority Executive Director. Throughout the Term of this Agreement, the Project must include at least one on-site Property Manager.
13. Removal and Replacement of Property Manager.
Developer’s agreement with the Property Manager must provide that it is subject to termination by Developer without penalty, upon thirty (30) days prior written notice. Developer hereby covenants and agrees that, if the Authority determines in its reasonable judgment that the Project is not being operated and managed in accordance with the approved Management Plan, the Authority may deliver notice to the Developer of its determination that the Project’s management practices do not conform to the Management Plan (the “Authority Notice”), including a reasonably detailed explanation of such non-conformance. The Authority and Developer will meet and confer in good faith to identify act ions to be taken by Developer to bring its management practices into conformance with the Management Plan, which could include replacing the Property Manager. Developer will have thirty (30) days after receipt of the Authority Notice (or such longer time as may be granted by the Authority) to either change its management practices to conform to the Management Plan or replace the Property Manager with a manager approved by the Authority and by all of Developer’s “Permitted Leasehold Mortgagees” as such term is defined in the Ground 245 of 545
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Lease. Developer must promptly notify the Authority upon learning that there is a change in the management or control of the Property Manager, and, if the change is unsatisfactory to the Authority, it may require Developer to replace the Property Manager in accordance with the terms of this paragraph. Notwithstanding the foregoing, if the Authority determines that the Property Manager has violated local, state, or federal campaign finance laws, it will have the right to require Developer to immediately remove and replace the Property Manager with a manager approved by the Authority.
14. Financial Reports.
Developer will submit the following financial reports for the Project:
a. On or before the first day of each fiscal year, an estimated annual budget for management of the Property (the “Annual Project Budget”). The Annual Project Budget will include all necessary operating expenses, current maintenance charges, expenses of reasonable upkeep and repairs, taxes and special assessment levies , prorated amount required for insurance and all other expenses incident to the operation of the Project; and will show the expected revenues to pay such expenses, including annual debt service requirements and reserve fund deposits and balances. The Annual Project Budget, including any amendments proposed by the Developer, will be subject to the approval of the Authority Executive Director. b. Sixty (60) days following the last day of each quarter of the fiscal year, beginning on the date of first occupancy , a quarterly report for the management of the Property (the “Quarterly Report”) during such quarter. The Quarterly Report will include a profit and loss statement, budget to date figures, and occupancy report. The Executive Director in his sole discretion may waive the requirement of the Quarterly Report for one or more quarterly reporting periods. However, such waiver will not operate to waive any future right of the Authority to require a subsequent Quarterly Report. If at any time the Authority determines that the Property is not being managed or maintained in accordance with the approved Management Plan, Developer will change its management personnel or the practices complained of, upon receipt of written notice from the Authority.
c. Developer will pay to Authority a late fee in the amount of $ 500 for each Annual Project Budget and/or Quarterly Report which is not submitted to the Authority within the times and in the form and substance required by this Agreement, which late fee shall accrue interest if not paid when and as due under this Agreement, from the date the fee is due until paid in full, at the highest non- usurious rate of interest then permitted by law. Notwithstanding any other provision of this Agreement, this provision shall be subject to a fifteen (15) day notice and cure period.
15. Term of This Agreement.
The covenants established in this Agreement and any amend ments hereto approved by the Authority and the Developer will, without regard to technical classification and designation, be binding for the benefit and in favor of the Authority, its successors and assigns, and the City of Glendale. The requirements of this Agreement will commence at its recordation and will remain 246 of 545
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in effect until the date that is seventy-eight (78) years after Conversion (the “ Term”). This Agreement will remain in effect throughout its full Term, notwithstanding the payment in full of the LMIHAF Loan and/or the Measure S Loan. This Agreement is secured by the Deed of Trust recorded concurrently herewith and Developer will not be entitled to a reconveyance of the Deed of Trust prior to the expiration of the full Term of this Agreement. This Agreement will unconditionally be and remain at all times prior and superior to the lien created by the Senior Deed of Trust and any other of the Senior Loan Documents and all of the terms and conditions contained in the Senior Loan Documents and to the lien of any new mortgage debt which is for the purpose of refinancing all or any part of the Senior Loan.
16. Enforcement of This Agreement.
The Authority and the City of Glendale are deemed beneficiaries of the terms and provisions of this Agreement and the covenants herein, both for and in their own right and for the purposes of protecting the interests of the community and other parties, public or private, for whose benefit this Agreement and the covenants running with the land have been provided. The Autho rity and the City will each have the right, if the covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants are entitled. Developer hereby agrees that specific enforcem ent of its obligations contained herein is the only means by which the Authority may fully obtain the benefits of this Agreement, and Developer therefore agrees to the imposition of the remedy of specific performance against it in the case of uncured default by Developer hereunder.
17. Waiver.
A waiver by the Authority or the City of the performance of any covenant or condition herein will not invalidate this Agreement nor will it be considered a waiver of any other covenants or conditions, nor will the delay or forbearance by the Authority or the City in exercising any remedy or right be considered a waiver of, or an estoppel against, the later exercise of such remedy or right.
18. Covenants Run With the Land.
The covenants and agreements contained herein will run with the land and not be personal obligations of Developer. Upon the sale, conveyance or other transfer of the Property approved by the Authority or otherwise permitted under the Affordable Housing Agreement, the Authority Note and Deed of Trust (a “ Transfer”) and the assumption of the obligations hereunder by a transferee, the Developer’s liability for performance will be terminated as to any obligation to be performed hereunder after the date of such Transfer.
19. Amendments.
This Agreement may be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the Official Records of the County of Los Angeles, State of California; provided, however, the restrictions on the income and rent restrictions must be 247 of 545
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