Lease Option
(426 Piedmont Avenue and 507 Naranja Drive)
EXHIBIT 3
LEASE OPTION
THIS LEASE OPTION (“Option”) is made this 30th day of January, 2024, by and between THE HOUSING AUTHORITY OF THE CITY OF GLENDALE, a public body, corporate and politic (“Lessor”) on the one hand, and EAH, a California nonprofit public benefit corporation (“ Lessee”), on the other hand.
In consideration of the payment by Lessee to Lessor of the sum of One Dollar ($1.00), the receipt and sufficiency of which is acknowledged by Lessor, and other good and valuable consideration, Lessor grants to Lessee an option to lease the real property described on Exhibit “A” attached hereto (“Property”), on the terms and conditions set forth herein and in the loan commitment letter between Lessor (“ Housing Authority ” therein) and Lessee (“ Borrower” therein) of approximately even date herewith (“Loan Commitment”), which is incorporated into this Option by reference.
1. Term of Option
The term of the Option (“Option Term”) shall commence on the date hereof and shall expire at 5:00 p.m. PST on December 31, 2024.
2. Manner of Exercising Option
Provided Lessee is not in default under any term or provision of this Option and provided further that Lessor and Lessee (or a limited partnership formed by Lessee and approved by Lessor) have entered into an Affordable Housing Agreement for the Property (“ AHA”) specifying the terms of the development and use of the Property and Lessee has satisfied, or Lessor has waived, the conditions precedent to execution of the Ground Lease set forth in the AHA, the Option may be exercised by Lessee delivering to Lessor, prior to the expiration of the Option Term, written notice of such exercise.
3. Lease Term
The term of the Lease will be for 55 years from the date of recordation of the regulatory agreement by Lessee in favor of the California Tax Credit Allocation Committee (“TCAC”), or such longer period as mutually agreed upon by the Lessor and Lessee and required by the tax credit investor, upon terms and conditions approved by the Housing Authority.
Lease Option
(426 Piedmont Avenue and 507 Naranja Drive)
EXHIBIT 3
4. Rent Amount
The fully capitalized value of the annual rent for the Property will be Eleven Million Nine Hundred Thousand Dollars ($11,900,000), which will be paid in the form of a promissory note from Lessee to Lessor (“Authority Note”) upon the terms set forth in the AHA.
5. Escrow
Within five (5) business days (excluding weekends and California state holidays) following Lessee’s exercise of this Option pursuant to Paragraph 2, the parties will execute escrow instructions for the lease of the Property at a mutually acceptable licensed escrow company (“Escrow Agent”) upon the following terms and conditions:
(a) The escrow will be for a period of thirty (30) days, or such longer period as mutually agreed in writing by Lessor and Lessee;
(b) Lessee will have delivered to Lessor or the Escrow Agency the Authority Note and all documents related thereto, duly executed and acknowledged;
(c) Lessee will pay the premium for Lessor’s ALTA policy of lender’s title insurance with an endorsement to make the policy applicable to a leasehold estate, subject only to those matters approved by Lessor.
(d) Lessee will pay recording charges and all of the escrow charges.
(e) Lessor and Lessee will deposit an executed memorandum of lease in escrow for recording at the close of escrow.
(f) Possession will be given to Lessee at the close of escrow.
(g) Taxes and assessments will be prorated to the close of escrow.
(h) Close of escrow will be subject to Lessee ’s satisfaction, or Lessor ’s waiver, of the closing conditions set forth in the AHA.
6. Tax Credits
Lessee represents that it will submit an application for an allocation of 9% Low Income Housing Tax Credits from TCAC. It will be a condition of exercise of this Option by Lessee that prior to the exercise of this Option, Lessee will demonstrate to Lessor that it has in place all financing commitments necessary for the development of the Property upon the terms and conditions mutually
Lease Option
(426 Piedmont Avenue and 507 Naranja Drive)
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agreed upon by Lessor and Lessee, and that the funding will close concurrently with the exercise of this Option. If the funding fails to close by the expiration of the Option T erm, this Option will thereupon be null and void.
7. Ground Lease
Following satisfaction by Lessee, unless waived by Lessor, of the conditions precedent to execution of the Ground Lease set forth in the AHA and upon Lessee’s exercise of this Option, Lessor and Lessee will execute a Ground Lease for the Property. The final form of the Ground Lease will be subject to the discretionary approval of Lessor and will include all provisions and attachments customarily included in Housing Authority ground lease agreements.
8. Notice
All notices or communications hereunder shall be sent by U.S. Mail, postage prepaid, registered or certified, return receipt requested, addressed as follows:
Lessor: Housing Authority of the City of Glendale
141 N. Glendale Avenue, Suite 202
Glendale, California 91206
Attn: Executive Director
Lessee: EAH INC
22 Pelican Way
San Rafael, CA 94901
Attn: Welton Jordan, Chief Real Estate Development Officer
No notice of exercise of Option shall be of any force or effect unless actually received by Lessor prior to the expiration of the Option Term at the foregoing address during regular business hours.
9. Right to Enter
During the Option Term, Lessee and its designated agents and independent contractors will have the right to enter upon the Property, subject to and conditioned upon the terms and conditions of the Right of Entry Agreement between Lessor and Lessee dated as of October 16, 2023.
10. Failure to Exercise Option
It is agreed that time is of the essence of this Option. If the Option is not exercised in the manner provided in Paragraph 2 prior to the expiration of the Option Term, Lessee will have no interest
Lease Option
(426 Piedmont Avenue and 507 Naranja Drive)
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whatsoever in the Property and Lessee agrees to deliver to Lessor the results of all soil tests, engineering and marketing studies undertaken by Lessee.
11. Commissions
Lessor and Lessee each represent to the other that they have not entered into any agreement or incurred any obligation which might result in the obligation to pay a sales, leasing, or brokerage commission on this transaction.
12. California Law to Apply
This Option will be governed by the internal laws of the State of California, without reference to the principles relating to conflicts of laws, and any question arising hereunder shall be construed or determined according to California law.
13. Assignment
It is anticipated that, to effectuate the purposes of the Loan Commitment and the AHA, Lessee will form a limited partnership approved by Lessor, in which case, Lessee may assign this Option to such limited partnership. This Option may not be assigned by Lessee to any other entity without Lessor's prior written consent.
14. Attorneys’ Fees
In the event of any legal action hereunder, the prevailing party will be entitled to reasonable attorneys’ fees and costs as the court may determine.
15. Entire Agreement
This Lease Option and the Loan Commitment contain the entire agreement between the parties respecting the matters set forth herein, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose.
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Lease Option
(426 Piedmont Avenue
and 507 Naranja Drive)
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IN WITNESS WHEREOF, the parties have entered into this Option effective as of the date first set forth above.
LESSOR:
HOUSING AUTHORITY OF THE CITY OF
GLENDALE, a public body, corporate and politic
By:_____________________________
Roubik R. Golanian, P.E.
Executive Director
APPROVED AS TO FORM AND LEGALITY:
Michael Garcia, City Attorney
General Counsel to the Authority
By:________________________________
Michael J. Garcia
APPROVED AS TO FORM AND LEGALITY:
KANE, BALLMER & BERKMAN
Special Counsel to the Housing Authority
By: ___________________________
Susan Apy
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Lease Option
(426 Piedmont Avenue
and 507 Naranja Drive)
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EXHIBIT 3
LESSEE:
EAH Inc., a California nonprofit public benefit corporation
By: ________________________________
Welton Jordan,
Chief Real Estate Development Officer
Lease Option
(426 Piedmont Avenue and 507 Naranja Drive)
Exhibit A - Legal Description
EXHIBIT 3
EXHIBIT A
LEGAL DESCRIPTION
All that certain real property situated in the County of Los Angeles, State of California, described as follows:
PARCEL 1:
LOT 17 OF TRACT NO. 1026, IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 17, PAGES 70 AND 71 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL 1A:
THAT PORTION OF LOT 16 OF TRACT NO. 1026, IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 17, PAGES 70 AND 71 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTHWEST CORNER OF SAID LOT 16; THENCE, EAST ALONG THE NORTHERLY LINE OF SAID LOT 16, 130.31 FEET; THENCE, SOUTH PARALLEL WITH THE EASTERLY LINE OF SAID LOT 16 TO INTERSECTION WITH THE SOUTH LINE OF SAID LOT 16; THENCE,
WEST ALONG THE SOUTHERLY LINE OF SAID LOT TO THE WESTERLY LINE THEREOF;
THENCE,
NORTHERLY ALONG THE WESTERLY LINE OF SAID LOT 16 TO THE POINT OF
BEGINNING,
PARCEL 1B:
LOT 16 OF TRACT NO. 1026, IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 17, PAGES 70 AND 71 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT THEREFROM THAT PORTION THEREOF LYING WEST OF A LINE DESCRIBED AS FOLLOWS:
Lease Option
(426 Piedmont Avenue and 507 Naranja Drive)
Exhibit A - Legal Description
EXHIBIT 3
BEGINNING AT A POINT IN THE NORTH LINE OF SAID LOT 16 THAT IS DISTANT THEREON, 130.31 FEET EASTERLY FROM THE NORTHWEST CORNER THEREOF;
THENCE,
SOUTH PARALLEL WITH THE E AST LINE OF SAID LOT 16 OF THE SOUTH LINE THEREOF.
PARCEL 1C:
THAT PORTION OF LOT 15 OF TRACT NO. 1026, IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 17, PAGES 70 AND 71 OF MAPS, IN THE OFFICE OF THE COUNT Y RECORDER OF SAID COUNTY.
DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST WESTERLY CORNER OF SAID LOT 15; THENCE, NORTHERLY ALONG THE WESTERLY LINE OF SAID LOT 15, BEING A CURVE CONCAVE TO THE EAST AND HAVING A RADIUS OF 178.00 FEET, A DISTANCE OF 50.00 FEET TO THE NORTHWEST CORNER THEREOF; THENCE,
NORTH 77° 30' 30" EAST ALONG THE NORTHWESTERLY LINE OF SAID LOT 15, A DISTANCE OF 122.74 FEET TO THE NORTHWEST CORNER OF THE LAND DESCRIBED IN DEED TO RYLAND SIZER AND WIFE, RECORDED AUGUST 3, 1948, BOOK 27898, PAGE 185 OF OFFICIAL RECORDS OF SAID COUNTY, THENCE,
SOUTHERLY ALONG THE WESTERLY LINE OF SAID LAND OF RYLAND AND PARALLEL WITH THE EASTERLY LINE OF SAID LOT 15, A DISTANCE OF 26.76 FEET TO A LINE PARALLEL WITH AND DISTANCE 50.00 FEET NORTHERLY THEREON, MEASUR ED ALONG SAID EASTERLY LINE OF SAID LOT 15; FROM THE SOUTHERLY LINE OF SAID LOT 15; THENCE,
EASTERLY ALONG LAST MENTIONED PARALLEL LINE TO THE NORTHWEST CORNER
OF THE LAND DESCRIBED IN DEED TO ARTHUR P, HAASCH AND WIFE, RECORDED JULY 29, 1948, BOOK 27837, PAGE 246 OF OFFICIAL RECORDS; THENCE, SOUTHERLY PARALLEL WITH SAID EASTERLY LINE OF SAID LOT 15, TO A POINT IN SAID SOUTHERLY LINE OF SAID LOT 15 DISTANCE WESTERLY THEREON 89.70 FEET FROM THE SOUTHEAST CORNER THEREOF; THENCE,
Lease Option
(426 Piedmont Avenue and 507 Naranja Drive)
Exhibit A - Legal Description
EXHIBIT 3
WESTERLY ALONG SAID SOUTHERLY LINE OF SAID LOT 15, A DISTANCE OF 140.61 FEET TO THE POINT OF BEGINNING.
PARCEL 2:
THE EASTERLY 89.70 FEET MEASURED ALON G THE SOUTHERLY LINE OF THE SOUTHERLY 50 FEET MEASURED ON THE EASTERLY LINE OF LOT 15 OF TRACT NO. 1026, IN THE CITY OF GLENDALE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 17, PAGES 70 AND 71 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
Assessor’s Parcel Numbers: 5645-007-903 and 5645-007-902