late charges and attorney'sfees,second to accrued interest, then to Base Rent and Common Area Operating Expenses, and any remaining amountto any other outstanding charges or costs.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit assecurity for Lessee'sfaithful performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any portion ofsaid Security Deposit for the payment of any amount already due Lessor, for Rents which will be due in the future, and/ orto reimburse or compensate Lessorfor any liability, expense, loss or damage which Lessor may suffer orincur by reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessorso that the total amount of the Security Deposit shall at all times bear the same proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee, Lessorshall have the right to increase the Security Deposit to the extent necessary, in Lessor'sreasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs during this Lease and following such change the financial condition of Lessee is, in Lessor's reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor asshall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on such change in financial condition. Lessor shall not be required to keep the Security Depositseparate from its general accounts. Within 90 days afterthe expiration or termination of this Lease, Lessorshall return that portion ofthe Security Deposit not used or applied by Lessor. Lessor shall upon written request provide Lessee with an accounting showing how that portion of the Security Deposit that was not returned was applied. No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. THE SECURITY DEPOSIT SHALL NOT BE USED BY LESSEE IN LIEU OF PAYMENT OF THE LAST MONTH'S RENT.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which isreasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or properties. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, orreptiles. Lessorshall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use,so long as the same will not impair the structural integrity of the improvements of the Building, will not adversely affect the mechanical, electrical, HVAC, and other systems of the Building, and/or will not affect the exterior appearance of the Building. If Lessor elects to withhold consent, Lessorshall within 7 days after such request give written notification of same, which notice shall include an explanation of Lessor's objections to the change in the Agreed Use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, orrelease, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health,safety or welfare, the environment orthe Premises, (ii) regulated or monitored by any governmental authority, or(iii) a basis for potential liability of Lessorto any governmental agency orthird party under any applicable statute or common law theory. Hazardous Substancesshall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, byproducts orfractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessee's expense) with all Applicable Requirements. "Reportable Use" shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice,registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materialsreasonably required to be used in the normal course of the Agreed Use such as ordinary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long assuch use is in compliance with all Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consentto any Reportable Use upon receiving such additional assurances as Lessorreasonably deems necessary to protect itself, the public, the Premises and/or the environment against damage, contamination, injury and/or liability, including, but not limited to, the installation (and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and/or increasing the Security Deposit. (b) Duty to Inform Lessor. If Lessee knows, or hasreasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or aboutthe Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice ofsuch fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance. (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing orsanitary sewer system) and shall promptly, at Lessee's expense, comply with all Applicable Requirements and take all investigatory and/orremedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, (d) LessorIndemnification. Except as otherwise provided in paragraph 8.7, Lessor and itssuccessors and assignsshall indemnify, defend, reimburse and hold Lessee, its employees and lenders, harmlessfrom and against any and all environmental damages, including the cost ofremediation, which result from Hazardous Substances which existed on the Premises prior to Lessee's occupancy or which are caused by the negligence or willful misconduct of Lessor, its agents or employees. Lessor's obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. (e) Investigations and Remediations. Lessorshall retain the responsibility and pay for any investigations orremediation measuresrequired by
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to Lessee's occupancy, unlesssuch remediation measure is required as a result of Lessee's use (including "Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor, including allowing Lessor and Lessor's agents to have reasonable access to the Premises at reasonable timesin order to carry out Lessor's investigative and remedial responsibilities. (f) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is legally responsible therefor(in which case Lessee shall make the investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor'srights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and remediate such Hazardous Substance Condition, ifrequired, assoon asreasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or(ii) if the estimated cost to remediate such condition exceeds 12 timesthe then monthly Base Rent or $100,000, whicheveris greater, give written notice to Lessee, within 30 days afterreceipt by Lessor of knowledge of the occurrence ofsuch Hazardous Substance Condition, of Lessor's desire to terminate this Lease as ofthe date 60 daysfollowing the date of such notice. In the event Lessor electsto give a termination notice, Lesseemay, within 10 daysthereafter, give written notice to Lessor of Lessee's commitment to pay the amount by which the cost of the remediation ofsuch Hazardous Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said funds orsatisfactory assurance thereof within 30 days following such commitment. In such event, this Lease shall continue in full force and effect, and Lessorshall proceed to make such remediation assoon asreasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time provided, this Lease shall terminate as of the date specified in Lessor's notice of termination.
6.3 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in Paragraph 30) and consultants authorized by Lessorshall have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times, after reasonable notice, for the purpose of inspecting and/or testing the condition of the Premises and/or for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or a Hazardous Substance Condition (see Paragraph 9.1(e)) is found to exist or be imminent, orthe inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably related to the violation or contamination. In addition, Lessee shall provide copies of allrelevant materialsafety data sheets (MSDS) to Lessor within 10 days of the receipt of written request therefor. Lessee acknowledges that any failure on its part to allow such inspections or testing will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly,should the Lessee fail to allow such inspections and/ortesting in a timely fashion the Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater forthe remainder to the Lease. The Parties agree thatsuch increase in Base Rentrepresents fair and reasonable compensation for the additional risk/coststhat Lessor will incur by reason of Lessee'sfailure to allow such inspection and/or testing. Such increase in Base Rent shall in no event constitute a waiver of Lessee's Default or Breach with respect to such failure nor prevent the exercise of any of the other rights and remedies granted hereunder.
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.
7.1 Lessee's Obligations. Notwithstanding Lessor's obligation to keep the Premises in good condition and repair, Lessee shall be responsible for payment of the cost thereof to Lessor as additional rent for that portion of the cost of any maintenance and repair of the Premises, or any equipment (wherever located) that serves only Lessee or the Premises, to the extent such cost is attributable to abuse or misuse.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subjectto reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repairthe foundations, exterior walls,structural condition of interior bearing walls, exteriorroof, fire sprinklersystem, fire alarm and/or smoke detection systems, fire hydrants, and the Common Areas.
7.3 Utility Installations; Trade Fixtures; Alterations. (a) Definitions. The term "Utility Installations" refersto all floor and window coverings, air lines, vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment, and plumbing in or on the Premises. The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can be removed without doing material damage to the Premises. The term "Alterations" shall mean anymodification ofthe improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "LesseeOwned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). (b) Consent. Lessee shall not make any Alterations or Utility Installationsto the Premises without Lessor's prior written consent. Lessee may, however, make non-structural Alterations or Utility Installations to the interior of the Premises(excluding the roof) without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof, ceilings, floors or any existing walls, will not affect the electrical, plumbing, HVAC, and/orlife safety systems, do not trigger the requirement for additional modifications and/or improvements to the Premises resulting from Applicable Requirements, such as compliance with Title 24, and the cumulative cost thereof during this Lease as extended does not exceed $2000. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installationsthat Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications priorto commencement of the work, and (iii) compliance with all conditions ofsaid permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations orUtility Installationsshall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs an amount in excess of one month's Base Rent, Lessor may condition its consent upon Lessee
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
providing a lien and completion bond in an amount equalto 150% of the estimated cost ofsuch Alteration orUtility Installation and/or upon Lessee's posting an additional Security Deposit with Lessor.
(c) Liens; Bonds. Lessee shall pay, when due, all claimsfor labor or materials furnished or alleged to have been furnished under contract with Lessee at orfor use on the Premises, which claims are or may be secured by anymechanic's or materialmen'slien against the Premises or any interest therein. Lessee shall give Lessor not lessthan 10 days notice prior to the commencement of any work in, on or about the Premises, and Lessorshall have the right to post notices of nonresponsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, atitssole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessorshall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessor's attorneys' fees and costs.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee, but considered a part ofthe Premises. Lessor may, at any time, elect in writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all LesseeOwned Alterations and Utility Installations shall, at the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises. (b) Removal. By delivery to Lessee of written notice from Lessor not earlierthan 90 and notlater than 30 days priorto the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent. (c) Surrender; Restoration. Lessee shallsurrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfacesthereof clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing and the provisions of Paragraph 7.1(a), if the Lessee occupies the Premises for 12 months or less, then Lessee shallsurrender the Premisesin the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shallrepair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings, and equipment as well asthe removal of any storage tank installed by orfor Lessee. Lessee shall also remove from the Premises any and all Hazardous Substances brought onto the Premises by orfor Lessee, or any third party (except Hazardous Substances which were deposited via underground migration from areas outside of the Premises) to the levelspecified in Applicable Requirements. Trade Fixturesshallremain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee notremoved on or before the Expiration Date or any earliertermination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessorshall constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
8.1 Insurance Premiums. The cost of the premiums for the insurance policies maintained by Lessor pursuant to paragraph 8 are included as Operating Expenses(see paragraph 4.2 (c)(iv)). Said costsshall include increases in the premiums resulting from additional coverage related to requirements of the holder of a mortgage or deed of trust covering the Premises, Building and/or Project, increased valuation of the Premises, Building and/or Project, and/or a general premium rate increase. Said costs shall not, however, include any premium increases resulting from the nature of the occupancy of any other tenant of the Building. Ifthe Project was not insured for the entirety of the Base Year, then the base premium shall be the lowest annual premium reasonably obtainable for the required insurance as of the Start Date, assuming the most nominal use possible of the Building and/or Project. In no event, however, shall Lessee be responsible for any portion of the premium cost attributable to liability insurance coverage in excess of $2,000,000 procured under Paragraph 8.2(b).
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out ofthe ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not lessthan $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000. Lessee shall add Lessor as an additional insured by means of an endorsement at least as broad as the Insurance Service Organization's "Additional Insured-Managers or Lessors of Premises" Endorsement and coverage shall also be extended to include damage caused by heat,smoke or fumesfrom a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee'sindemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall provide an endorsement on itsliability policy(ies) which providesthat itsinsurance shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only.
(b) Carried by Lessor. Lessorshallmaintain liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value. (a) Building and Improvements. Lessorshall obtain and keep in force a policy or policies of insurance in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Building and/or Project. The amount of such insurance shall be equal to the full insurable replacement cost of the Building and/or Project, asthe same shall exist from time to time, orthe amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's personal property shall be insured by Lessee not by Lessor. If the coverage is available and commercially appropriate, such policy or policiesshall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for debrisremoval and the enforcement of any Applicable Requirementsrequiring the upgrading, demolition, reconstruction or replacement of any portion ofthe Premises asthe result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver ofsubrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of notless than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumersfor the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amountshall not exceed $5,000 per occurrence. (b) Rental Value. Lessor shall also obtain and keep in force a policy or policiesin the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an additional 180 days("Rental Value insurance"). Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflectthe projected Rent otherwise payable by Lessee, for the next 12 month period.
(c) Adjacent Premises. Lessee shall pay for any increase in the premiumsforthe property insurance ofthe Building and for the Common Areas or other buildings in the Project if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises.
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
(d) Lessee'sImprovements. Since Lessoristhe Insuring Party, Lessorshall not be required to insure LesseeOwned Alterations and Utility Installations unless the item in question has become the property of Lessor under the terms of this Lease.
8.4 Lessee's Property; BusinessInterruption Insurance; Worker's Compensation Insurance. (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be fullreplacement cost coverage with a deductible of notto exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee forthe replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. (b) Worker's Compensation Insurance. Lessee shall obtain and maintain Worker's Compensation Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a 'Waiver of Subrogation' endorsement. Lessee shall provide Lessor with a copy of such endorsement along with the certificate of insurance or copy of the policy required by paragraph 8.5. (c) BusinessInterruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirectloss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of accessto the Premises as a result of such perils.
(d) No Representation of Adequate Coverage. Lessor makes no representation thatthe limits or forms of coverage of insurance specified herein are adequate to cover Lessee's property, business operations or obligations under this Lease.
8.5 Insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a "General Policyholders Rating" of at least A-, VII, as set forth in the most current issue of "Best'sInsurance Guide", orsuch other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates with copies of the required endorsements evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 10 days prior written notice to Lessor. Lessee shall, at least 30 days prior to the expiration ofsuch policies, furnish Lessor with evidence of renewals or "insurance binders" evidencing renewal thereof, or Lessor may increase hisliability insurance coverage and charge the cost thereof to Lessee, which amountshall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whicheveris less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.
8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perilsrequired to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby.
8.7 Indemnity. Lessor shall indemnify and save harmless the Lessee, its officers, agents, employees, attorney, volunteers, and servants from all claims, suits, or actions of every name, kind, description, brought for, or on account of injuries to or death of any person or damage to property resulting from the faultor negligence of Lessor, its officers, agents, employees, attorney, volunteers, and/or servants in connection with this agreement.
8.8Lessee shall indemnify and save harmless Lessor, its officials, agents, employees, attorney, volunteers and servantsfrom all claims, suits, or actions of every name, kind, description, brought for, or on account of injuriesto or death of any person or damage to property resulting from the fault or negligence of the Lessee, its officials, officers, agents, employees, attorney, volunteers and/or servantsin connection with this Agreement.
8.9 Lessee's Right to Self-insure. So long as the Lessee in legal and physical occupation of the whole of the Premises isthe City of Grover Beach, Lessee may by notice to Lessor, and subject to the requirementsstated below, electin its sole discretion, to not purchase from an insurer, the insurance policies required to satisfy its obligations under the Section 8. This right (the "Self-insurance Right") is subject to the following terms and conditions:
a. Lesseemust demonstrate to Lessorthat (i) itmaintains financialreserves adequate to protect the Leasehold Improvements and all property referred to as the Premises on a full replacement costs basis as well as the business interruption losses provide for in Section 8.4 (c). b. Lessee must give to Lessor at leastthirty (30) days prior written notice of its intention to exercise the Self-Insurance Right, and must, at the same time as it gives notice, provide to Lessor satisfactory evidence of its ability to meet the requirementsin paragraph (a) above. The evidence must include separate, unconsolidated, audited financialstatements issued not more than fifteen (15) months priorto Lessee’s notice. If Lessor requires any additional information, Lessee will provide same immediately upon Lessor’s written request. If Lessor does not confirm in writing, using good faith and reasonable due diligence, that the evidence provided by Lessee to Lessor is adequate, then Lessee’s exercise of the Self-Insurance Right shall be void.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be repaired in 3 months or less from the date of the damage or destruction, and the cost thereof does not exceed a sum equal to 6 month's Base Rent. Lessorshall notify Lessee in writing within 30 daysfrom the date ofthe damage or destruction asto whether or not the damage is Partial or Total. (b) "Premises Total Destruction" shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 3 months or lessfrom the date of the damage or destruction and/or the cost thereof exceeds a sum equal to 6 month's Base Rent. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.
(c) "Insured Loss" shall mean damage or destruction to improvements on the Premises, otherthan LesseeOwned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately priorthereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance, in, on, or under the Premises which requires restoration.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessorshall, at Lessor's expense, repairsuch damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor's election, make the repair of any damage or destruction the total cost to repair of which is $5,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basisfor that purpose. Notwithstanding the foregoing, ifthe required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds as
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
and when required to complete said repairs. In the event, however,such shortage was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay forthe shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written notice ofsuch shortage and request therefor. If Lessor receivessaid funds or adequate assurance thereof within said 10 day period, the party responsible for making the repairs shall complete them assoon asreasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shallremain in full force and effect, or(ii) have this Lease terminate 30 daysthereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding thatthere may be some insurance coverage, butthe net proceeds of any such insurance shall be made available for the repairs if made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by the sole negligence or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), Lessor may either: (i) repair such damage as soon as reasonably possible at Lessor's expense (subject to reimbursement pursuant to Paragraph 4.2), in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice to Lessee within 30 days afterreceipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date ofsuch notice. In the event Lessor elects to terminate this Lease, Lessee shall have the right within 10 days afterreceipt of the termination notice to give written notice to Lessor of Lessee's commitment to pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessorshall proceed to make such repairs assoon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate 60 days following such Destruction. Ifthe damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the rightto recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is damage for which the cost to repair exceeds one month's Base Rent, whether or not an Insured Loss, Lessor or Lessee may terminate this Lease effective 60 daysfollowing the date of occurrence of such damage by giving a written termination notice to Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in insurance proceeds(or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is 10 days after Lessee's receipt of Lessor's written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's commercially reasonable expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee failsto exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee's option shall be extinguished.
9.6 Abatement of Rent; Lessee's Remedies.
(a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair, remediation orrestoration ofsuch damage shall be abated in proportion to the degree to which Lessee's use of the Premises isimpaired, but not to exceed the proceeds received from the Rental Value insurance. If rent is abated in excess of 50% of the payable Rent, Lessee shallbe entitled to terminate this agreement with no further obligations to Lessor. (b) Remedies. In addition to this termination provisions in 9.6 (a), If Lessor is obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessee's election to terminate this Lease on a date not less than 60 daysfollowing the giving of such notice. If Lessee givessuch notice and such repair or restoration is not commenced within 30 daysthereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect. "Commence" shallmean eitherthe unconditional authorization of the preparation of the required plans, orthe beginning of the actual work on the Premises, whichever first occurs.
9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustmentshall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit as has not been, or is not then required to be, used by Lessor.
10. Real Property Taxes.
10.1 Definitions. As used herein, the term "Real Property Taxes" shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Project, Lessor'sright to other income therefrom, and/or Lessor's business of leasing, by any authority having the direct or indirect powerto tax and where the funds are generated with reference to the Project address. "Real Property Taxes" shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Project, (ii) a change in the improvements thereon, and/or (iii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.
10.2 Payment of Taxes. Except as otherwise provided in Paragraph 10.3, Lessorshall pay the Real Property Taxes applicable to the Project, and said payments shall be included in the calculation of Operating Expenses in accordance with the provisions of Paragraph 4.2. Notwithstanding this Section 10 or any other provision in this Agreement to the contrary, in no eventshall any tax increase in any given year of any term period of this agreement be in excess of 2 percent per year.
10.3 Additional Improvements. Operating Expenses shall not include Real Property Taxes specified in the tax assessor's records and work sheets as being caused by additional improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of such other lessees or by increase in Real Property Tax increases due to a sale and reappraisalof the property. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the time Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxesif assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee's request.
10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned in the assessor's work sheets orsuch otherinformation as may be reasonably available. Lessor'sreasonable determination thereof, in good faith, shall be conclusive.
10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned Alterations and Utility
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises. When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee'ssaid property shall be assessed with Lessor'sreal property, Lessee shall pay Lessor the taxes attributable to Lessee's property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee's property.
11. Utilities and Services.
11.1 Services Provided by Lessor. Lessor shall provide heating, ventilation, air conditioning, reasonable amounts of electricity for normal lighting and office machines, water forreasonable and normal drinking and lavatory use in connection with an office, and replacementlight bulbs and/or fluorescent tubes and ballasts forstandard overhead fixtures. Lessorshall also provide janitorialservices to the Premises and Common Areas 5 times per week, excluding Building Holidays, or pursuant to the attached janitorialschedule, if any. Lessorshall not, however, be required to provide janitorialservices to kitchens orstorage areas included within the Premises.
11.2 Services Exclusive to Lessee. Notwithstanding the provisions of paragraph 11.1, Lessee shall pay for all water, gas, light, power, telephone and other utilities and servicesspecially or exclusively supplied and/or metered exclusively to the Premises or to Lessee, together with any taxesthereon. Notwithstanding the provisions of Paragraph 4.2(vi), if a service is deleted by Paragraph 1.13 and such service is notseparatelymetered to the Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a reasonable proportion to be determined by Lessor of all charges for such jointly metered service.
11.3 Excess Usage by Lessee. Lessee shall not make connection to the utilities except by or through existing outlets and shall not install or use machinery or equipment in or about the Premises that uses excess water, lighting or power, or suffer or permit any act that causes extra burden upon the utilities orservices, including but not limited to security and trash services, overstandard office usage for the Project. Lessorshall require Lessee to reimburse Lessor for any excess expenses or coststhat may arise out of a breach of thissubparagraph by Lessee. Lessormay, in itssole discretion, install at Lessee's expense supplemental equipment and/or separate metering applicable to Lessee's excess usage or loading.
11.4 Interruptions. There shall be no abatement ofrent and Lessor shall not be liable in any respect whatsoever forthe inadequacy,stoppage, interruption or discontinuance of any utility orservice due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor's reasonable control or in cooperation with governmental request or directions.
11.5 Within fifteen days of Lessor's written request, Lessee agrees to deliver to Lessorsuch information, documents and/or authorization as Lessor needs in orderfor Lessorto comply with new or existing Applicable Requirements relating to commercial building energy usage, ratings, and/or the reporting thereof.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber(collectively, "assign or assignment") orsublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior written consent. (b) Unless Lessee is a corporation and its stock is publicly traded on a national stock exchange, a change in the control of Lessee shall constitute an assignmentrequiring consent. The transfer, on a cumulative basis, of 25% or more ofthe voting control of Lessee shall constitute a change in control forthis purpose. (c) The involvement of Lessee orits assets in any transaction, or series of transactions (by way of merger,sale, acquisition, financing, transfer, leveraged buyout or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee's assets occurs, which results or willresult in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth asit was represented at the time of the execution of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction ortransactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles. (d) An assignment orsubletting without consentshall, at Lessor's option, be a Default curable after notice per Paragraph 13.1(d), or a non-curable Breach without the necessity of any notice and grace period. If Lessor elects to treatsuch unapproved assignment or subletting as a non-curable Breach, Lessor may either:
(i) terminate this Lease, or (ii) upon 30 days written notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% ofthe price previously in effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent.
(e) Lessee'sremedy for any breach of Paragraph 12.1 by Lessorshall be limited to compensatory damages and/orinjunctive relief. (f) Lessor may reasonably withhold consent to a proposed assignment orsubletting if Lessee is in Default at the time consent is requested. (g) Notwithstanding the foregoing, allowing a de minimis portion ofthe Premises, i.e. 20 square feet orless, to be used by a third party vendor in connection with the installation of a vending machine or payphone shall not constitute a subletting.
12.2 Terms and Conditions Applicable to Assignment and Subletting. (a) Regardless of Lessor's consent, no assignment orsubletting shall : (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or(iii) alter the primary liability of Lessee forthe payment of Rent or for the performance of any other obligations to be performed by Lessee. (b) Lessormay accept Rent or performance of Lessee's obligations from any person otherthan Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessor's rightto exercise its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment orsubletting shall not constitute a consentto any subsequent assignment orsubletting. (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee's obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor's remedies against any other person or entity responsible therefor to Lessor, or any security held by Lessor. (e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor's determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee of $500 as consideration for Lessor's considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 36) (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession ofthe Premises or any portion thereof, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment orsublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment orsublease to which Lessor has specifically consented to in writing. (g) Lessor's consent to any assignment orsubletting shall not transfer to the assignee orsublessee anyOption granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing. (See Paragraph 39.2)
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditionsshall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfersto Lessor all of Lessee's interest in all Rent payable on any sublease, and Lessor may collectsuch Rent and apply same toward Lessee's obligations under this Lease; provided, however, that until a Breach shall occurin the performance of Lessee's obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessee's then outstanding obligations any such excess shall be refunded to Lessee. Lessorshall not, by reason of the foregoing or any assignment ofsuch sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease,to pay to Lessor all Rent due and to become due underthe sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary. (b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in which event Lessorshall undertake the obligations of the sublessor undersuch sublease from the time of the exercise of said option to the expiration ofsuch sublease; provided, however, Lessorshall not be liable for any prepaid rents orsecurity deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches ofsuch sublessor. (c) Anymatter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor. (d) No sublessee shall further assign orsublet all or any part of the Premises without Lessor's prior written consent. (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any,specified in such notice. The sublessee shall have a right ofreimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A "Breach" is defined asthe occurrence of one ormore of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:
(a) The abandonment of the Premises;the vacating of the Premises priorto the expiration or termination ofthis Lease without providing a commercially reasonable level ofsecurity, or where the coverage of the property insurance described in Paragraph 8.3 isjeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism; or failure to deliverto Lessor exclusive possession ofthe entire Premisesin accordance herewith priorto the expiration or termination of this Lease.
(b) The failure of Lessee to make any payment of Rent or any Security Deposit required to bemade by Lessee hereunder, whetherto Lessor orto a third party, when due, to provide reasonable evidence of insurance orsurety bond, orto fulfill any obligation under this Lease which endangers orthreatens life or property, where such failure continuesfor a period of 3 business daysfollowing written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF
RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES.
(c) The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste, act or acts constituting public or private nuisance, and/or an illegal activity on the Premises by Lessee, where such actions continue for a period of 3 business days following written notice to Lessee. In the eventthat Lessee commits waste, a nuisance or an illegal activity a second time then,the Lessor may elect to treat such conduct as a non-curable Breach rather than a Default.
(d) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment orsubletting, (iv) an Estoppel Certificate or financialstatements, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any documentrequested under Paragraph 41, (viii) materialsafety data sheets (MSDS), or(ix) any other documentation or information which Lessormay reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of 10 daysfollowing written notice to Lessee.
(e) A Default by Lessee asto the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs 13.1(a), (b) or (c), above, where such Default continues for a period of 30 days after written notice; provided, however, thatif the nature of Lessee's Default issuch that more than 30 days are reasonably required forits cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion. (f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor" as defined in 11U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee,the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee'sinterest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other judicialseizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions. (g) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false. (h) If the performance of Lessee's obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's liability with respect to this Lease otherthan in accordance with the terms ofsuch guaranty, (iii) a Guarantor's becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor'srefusal to honor the guaranty, or (v) a Guarantor's breach of its guaranty obligation on an anticipatory basis, and Lessee's failure, within 60 daysfollowing written notice of any such event, to provide written alternative assurance orsecurity, which, when coupled with the then existing resources of Lessee, equals or exceedsthe combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within 10 days after written notice (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee's behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to 115% ofthe costs and expenses incurred by Lessor in such performance upon receipt of an invoice therefor. In the event of a Breach, Lessormay, with or without further notice or demand, and withoutlimiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee'sright to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental lossthatthe Lessee proves could have been reasonably avoided; (iii)the worth at the time of award of the amount by which the unpaid rentfor the balance of the term after the time of award exceeds the amount of such rental lossthat the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
necessary renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessorto mitigate damages caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover any damagesto which Lessor is otherwise entitled. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, orto perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainerstatute shallrun concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periodsshall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute. (b) Continue the Lease and Lessee'sright to possession and recoverthe Rent asit becomes due, in which event Lesseemay sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor'sinterests, shall not constitute a termination of the Lessee's right to possession.
(c) Pursue any otherremedy now or hereafter available under the laws orjudicial decisions ofthe state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee'sright to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease asto matters occurring or accruing during the term hereof or by reason of Lessee's occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or other charges,the cost of tenant improvementsfor Lessee paid for or performed by Lessor, or forthe giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessee's entering into this Lease, all of which concessions are hereinafter referred to as "Inducement Provisions," shall be deemed conditioned upon Lessee's full and faithful performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure ofsaid Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges thatlate payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costsinclude, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within 30 days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to 10% of each such overdue amount or $100, whichever is greater. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason ofsuch late payment.
Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the otherrights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor's option, become due and payable quarterly in advance.
13.5 Interest. Anymonetary payment due Lessor hereunder, other than late charges, notreceived by Lessor, when due shall bearinterest from the 31st day afterit was due. The interest ("Interest") charged shall be computed at the rate of 10% per annum butshall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice of Breach. Lessorshall not be deemed in breach ofthis Lease unless Lessorfails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished to Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor's obligation issuch thatmore than 30 days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion. (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender curessaid breach within 30 days after receipt ofsaid notice, orif having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee's expense and offset from Rent the actual and reasonable costto perform such cure, provided, however, thatsuch offset shall not exceed an amount equalto the greater of onemonth's Base Rent or the Security Deposit, reserving Lessee'sright to seek reimbursement from Lessor for any such expense in excess ofsuch offset. Lessee shall document the cost ofsaid cure and supply said documentation to Lessor.
14. Condemnation. If the Premises or any portion thereof are taken underthe power of eminent domain or sold under the threat of the exercise ofsaid power (collectively "Condemnation"), this Lease shallterminate as to the parttaken as of the date the condemning authority takes title or possession, whichever first occurs.
Ifmore than 10% ofthe rentable floor area ofthe Premises, or more than 25% of Lessee's Reserved Parking Spaces, if any, are taken by Condemnation, Lessee may, at Lessee's option, to be exercised in writing within 10 days after Lessorshall have given Lessee written notice of such taking (orin the absence of such notice, within 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takessuch possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premisesremaining, exceptthat the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whethersuch award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or forseverance damages; provided, however,that Lessee shall be entitled to any compensation paid by the condemnor for Lessee'srelocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. AllAlterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.
15. Brokerage Fees.
15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.10 above, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee or anyone affiliated with Lessee acquires from Lessor any rights to the Premises or other premises owned by Lessor and located within the Project, (c) if Lessee remainsin possession of the Premises, with the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent isincreased, whether by agreement or operation of an escalation clause herein, then, Lessorshall pay Brokers a fee in accordance with the fee schedule of the Brokersin effect at the time the Lease was executed. The provisions of this paragraph are intended to supersede the provisions of any earlier agreement to the contrary.
15.2 Assumption of Obligations. Any buyer or transferee of Lessor'sinterest in this Lease shall be deemed to have assumed Lessor's obligation hereunder.
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
Brokersshall be third party beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Lease when due, then such amountsshall accrue Interest. In addition, if Lessorfails to pay any amountsto Lessee's Broker when due, Lessee's Broker may send written notice to Lessor and Lessee ofsuch failure and if Lessor fails to pay such amounts within 10 days after said notice, Lessee shall pay said moniesto its Broker and offsetsuch amounts against Rent. In addition, Lessee's Brokershall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Lessor and Lessor's Broker for the limited purpose of collecting any brokerage fee owed.
15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the otherthat it has had no dealings with any person, firm, broker, agent or finder (other than the Brokers and Agents, if any) in connection with this Lease, and that no one other than said named Brokers and Agentsis entitled to any commission or finder'sfee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys' feesreasonably incurred with respect thereto.
16. Estoppel Certificates.
(a) Each Party (as "Responding Party")shall within 10 days after written notice from the other Party (the "Requesting Party") execute, acknowledge and deliverto the Requesting Party a statement in writing in form similarto the then most current "Estoppel Certificate" form published by AIR CRE, plussuch additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party. (b) Ifthe Responding Party shall failto execute or deliverthe Estoppel Certificate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease isin full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if Lessor isthe Requesting Party, not more than one month'srent has been paid in advance.
Prospective purchasers and encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate. In addition, Lessee acknowledgesthat any failure on its part to provide such an Estoppel Certificate will expose Lessor to risks and potentially cause Lessorto incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, should the Lessee fail to execute and/or deliver a requested Estoppel Certificate in a timely fashion the monthly Base Rentshall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater for remainder of the Lease. The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee's failure to provide the Estoppel Certificate. Such increase in Base Rentshall in no event constitute a waiver of Lessee's Default or Breach with respect to the failure to provide the Estoppel Certificate nor prevent the exercise of any of the other rights and remedies granted hereunder. (c) If Lessor desiresto finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantorsshall within 10 days after written notice from Lessor deliver to any potential lender or purchaser designated by Lessorsuch financial statements as may be reasonably required by such lender or purchaser, including but not limited to Lessee's financial statementsfor the past 3 years. Allsuch financialstatementsshall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.
17. Definition of Lessor. The term "Lessor" as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if thisis a sublease, of the Lessee's interest in the prior lease. In the event of a transfer of Lessor's title or interest in the Premises orthis Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor.
Subjectto the foregoing, the obligations and/or covenantsin this Lease to be performed by the Lessorshall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mean and referto calendar days.
20. Time of Essence. Time is ofthe essence with respect to the performance of all obligationsto be performed or observed by the Parties under this Lease.
21. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrantsto the Brokers that it has made, and isrelying solely upon, its own investigation asto the nature, quality, character and financial responsibility of the other Party to this Lease and asto the use, nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party.
22. Notices.
22.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, or by email, and shall be deemed sufficiently given ifserved in a mannerspecified in this Paragraph 23. The addresses noted adjacent to a Party'ssignature on this Lease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the otherspecify a different address for notice, except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing.
22.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, orif no delivery date isshown, the postmark thereon. If sent by regular mailthe notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices delivered by hand, or transmitted by facsimile transmission or by email shall be deemed delivered upon actualreceipt. If notice is received on a Saturday, Sunday or legal holiday, itshall be deemed received on the next business day.
22.3 Options. Notwithstanding the foregoing, in orderto exercise anyOptions (see paragraph 39), the Notice must be sent by Certified Mail (return receipt requested), Express Mail (signature required), courier(signature required) or some other methodology that provides a receipt establishing the date the notice was received by the Lessor.
23. Waivers.
(a) No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any otherterm, covenant or condition hereof. Lessor's consent to, or approval of, any actshall not be deemed to render unnecessary the obtaining of Lessor's consentto, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. (b) The acceptance of Rent by Lessorshall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of monies or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment. (c) THE PARTIES AGREE THAT THE TERMSOF THIS LEASE SHALL GOVERN WITHREGARD TO ALL MATTERS RELATED THERETOAND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.
24. Disclosures Regarding The Nature of a Real Estate Agency Relationship. (a) When entering into a discussion with a real estate agent regarding a real estate transaction, a Lessor or Lessee should from the outset understand whattype of agency relationship orrepresentation it has with the agent or agents in the transaction. Lessor and Lessee acknowledge being advised by the Brokersin this transaction, as follows:
(i) Lessor's Agent. A Lessor's agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lessor's agent or subagent hasthe following affirmative obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agent's duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.
(ii) Lessee's Agent. An agent can agree to act as agent for the Lessee only. In these situations, the agent is not the Lessor's agent, even if by agreement the agent may receive compensation for servicesrendered, eitherin full or in part from the Lessor. An agent acting only for a Lessee hasthe following affirmative obligations. To the Lessee: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the Lessor: (a) Diligent exercise ofreasonable skills and care in performance of the agent's duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties.
An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative dutiesset forth above.
(iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting directly orthrough one or more associate licensees, can legally be the agent of both the Lessor and the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the Lessee. In a dual agency situation, the agent hasthe following affirmative obligations to both the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Lessor or the Lessee. (b)Other dutiesto the Lessor and the Lessee asstated above in subparagraphs (i) or(ii). In representing both Lessor and Lessee, the agentmay not, without the express permission ofthe respective Party, disclose to the other Party confidential information, including, but not limited to, facts relating to either Lessee's or Lessor's financial position, motivations, bargaining position, or other personal information thatmay impact rent, including Lessor's willingness to accept a rent less than the listing rent or Lessee's willingness to pay rent greater than the rent offered. The above duties of the agent in a real estate transaction do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor and Lessee should carefully read all agreements to assure that they adequately express their understanding ofthe transaction. A real estate agent is a person qualified to advise about real estate. If legal ortax advice is desired, consult a competent professional. Both Lessor and Lessee should strongly consider obtaining tax advice from a competent professional because the federal and state tax consequences of a transaction can be complex and subject to change. (b) Brokers have no responsibility with respect to any default or breach hereof by either Party. The Parties agree that no lawsuit or other legal proceeding involving any breach of duty, error or omission relating to this Leasemay be brought against Broker more than one year afterthe Start Date and that the liability (including court costs and attorneys' fees), of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant to this Lease; provided, however, thatthe foregoing limitation on each Broker's liability shall not be applicable to any gross negligence or willful misconduct of such Broker.
(c) Lessor and Lessee agree to identify to Brokers as "Confidential" any communication orinformation given Brokers thatis considered by such Party to be confidential.
25. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. At or priorto the expiration or termination of this Lease Lessee shall deliver exclusive possession of the Premisesto Lessor. For purposes of this provision and Paragraph
13.1(a), exclusive possession shall mean that Lessee shall have vacated the Premises,removed all of its personal property therefrom and that the Premises have been returned in the condition specified in this Lease. In the event that Lessee does not deliver exclusive possession to Lessor asspecified above, then Lessor's damages during any holdover period shall be computed at the amount of the Rent (as defined in Paragraph 4.1) due during the last full month before the expiration or termination of this Lease (disregarding any temporary abatement of Rent that may have been in effect), but with Base Rent being 150% of the Base Rent payable during such last full month. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.
26. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all otherremedies at law or in equity.
27. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are forthe convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singularshall include the plural and vice versa. This Lease shall not be construed asif prepared by one of the Parties, but rather according to itsfair meaning as a whole, as if both Parties had prepared it.
28. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personalrepresentatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located. Signatures to this Lease accomplished by means of electronic signature or similar technology shall be legal and binding.
28.1 Non-Disturbance. With respect to Security Devices entered into by Lessor afterthe execution ofthis Lease, Lessee's subordination of this Lease shall be subject to receiving a commercially reasonable Recognition and Attornment Agreement ("Attornment Agreement") from the Lender which Agreement provides that Lessee's possession of the Premises, and this Lease, including any options to extend the term hereof, will be recognized by the Lender and not be disturbed so long as Lessee is not in Breach hereof. Further, within 60 days after the execution of this Lease, Lessor shall, if requested by Lessee, use its commercially reasonable effortsto obtain a Recognition and Attornment Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Recognition and Attornment Agreement within said 60 days, then Lessee may, at Lessee's option, terminate this agreement.
29. Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder,the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon,shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, asthe case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fees award shall not be computed in accordance with
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
any court fee schedule, butshall be such as to fully reimburse all attorneys' feesreasonably incurred. In addition, Lessor shall be entitled to attorneys' fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence forsuch services and consultation).
30. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agentsshall have the rightto enterthe Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the purpose ofshowing the same to prospective purchasers, lenders, or tenants, and making such alterations,repairs, improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect on Lessee's use of the Premises. Allsuch activities shall be without abatement of rent or liability to Lessee.
31. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor's prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.
32. Signs. Lessor may place on the Premises ordinary "For Sale" signs at any time and ordinary "For Lease" signs during the last 6 months of the term hereof. Lessor may not place any sign on the exterior of the Building that covers any of the windows of the Premises. Except for ordinary "For Sublease" signs which may be placed only on the Premises, Lessee shall not place any sign upon the Project without Lessor's prior written consent. Allsigns must comply with all Applicable Requirements.
33. Termination; Merger. Unlessspecifically stated otherwise in writing by Lessor, the voluntary or other surrender ofthis Lease by Lessee,the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee,shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor'sfailure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor's election to have such event constitute the termination ofsuch interest.
34. Consents. All requestsfor consent shall be in writing. Except as otherwise provided herein, whereverin this Lease the consent of a Party isrequired to an act by orfor the other Party, such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (including but not limited to architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consentsto an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor's consent to any act, assignment or subletting shall not constitute an acknowledgmentthat no Default or Breach by Lessee of this Lease exists, norshallsuch consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time ofsuch consent. The failure to specify herein any particular condition to Lessor's consent shall not preclude the imposition by Lessor atthe time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requeststhe reasonsfor such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days following such request.
35. Guarantor.
35.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form mostrecently published by AIR CRE.
35.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence of the execution of the guaranty, including the authority of the party signing on Guarantor's behalf to obligate Guarantor, and in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, (b) current financialstatements, (c) an Estoppel Certificate, or(d) written confirmation that the guaranty is still in effect.
36. Quiet Possession. Subject to payment by Lessee ofthe Rent and performance of all ofthe covenants, conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.
37. Options. If Lessee is granted anyOption, as defined below, then the following provisions shall apply.
37.1 Definition. "Option" shall mean: (a) the right to extend or reduce the term of or renew this Lease or to extend or reduce the term of or renew any lease that Lessee has on other property of Lessor; (b) the right of firstrefusal or first offerto lease eitherthe Premises or other property of Lessor; (c) the rightto purchase, the right of first offer to purchase or the right of first refusal to purchase the Premises or other property of Lessor.
37.2 Options Personal ToOriginal Lessee. AnyOption granted to Lessee in this Lease is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises and, if requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or subletting.
37.3 Multiple Options. In the event that Lessee has anymultiple Optionsto extend orrenew this Lease, a later Option cannot be exercised unlessthe prior Options have been validly exercised.
37.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing untilsaid Default is cured, (ii) during the period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii) during the time Lessee is in Breach of this Lease, or(iv) in the event that Lessee has been given 3 or more notices ofseparate Default, whether or notthe Defaults are cured, during the 12 month period immediately preceding the exercise of the Option.
(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee's due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, (i) Lessee failsto pay Rent for a period of 30 days aftersuch Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this Lease.
38. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties. In the event, however,that Lessor should elect to provide security services,then the cost thereof shall be an Operating Expense.
39. Reservations.
(a) Lessorreservesthe right: (i) to grant, without the consent orjoinder of Lessee,such easements,rights and dedicationsthat Lessor deems necessary, (ii) to cause the recordation of parcel maps and restrictions, (iii) to create and/or install new utility raceways,so long as such easements,rights, dedications, maps, restrictions, and utility raceways do not unreasonably interfere with the use of the Premises by Lessee. Lessor may also: change the name, address ortitle of the
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
Building or Project upon atleast 90 days prior written notice; provide and install, at Lessee's expense, Building standard graphics on the door of the Premises and such portions of the Common Areas as Lessor shall reasonably deem appropriate; grant to any lessee the exclusive right to conduct any business aslong assuch exclusive right does not conflict with any rights expressly given herein; and to place such signs, notices or displays as Lessorreasonably deems necessary or advisable upon the roof, exterior ofthe Building orthe Project or on signs in the Common Areas. Lessee agreesto sign any documentsreasonably requested by Lessor to effectuate such rights. The obstruction of Lessee's view, air, or light by any structure erected in the vicinity of the Building, whether by Lessor or third parties, shall in no way affect this Lease or impose any liability upon Lessor.
(b) Lessor also reservesthe right to move Lessee to otherspace of comparable size in the Building or Project. Lessor must provide at least 45 days prior written notice ofsuch move, and the new space must contain improvements of comparable quality to those contained within the Premises. Lessorshall pay the reasonable out of pocket costs that Lessee incurs with regard to such relocation, including the expenses of moving and necessary stationary revision costs. In no event, however, shall Lessor be required to pay an amount in excess of two months Base Rent. Lessee may not be relocated more than once during the term of this Lease.
(c) Lessee shall not: (i) use a representation (photographic or otherwise) ofthe Building or Project ortheir name(s) in connection with Lessee's business; or (ii) suffer or permit anyone, except in emergency, to go upon the roof of the Building.
40. Performance Under Protest. If at any time a dispute shall arise as to any amount orsum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such paymentshall not be regarded as a voluntary payment and there shallsurvive the right on the part ofsaid Party to institute suit for recovery ofsuch sum. If it shall be adjudged that there was no legal obligation on the part ofsaid Party to pay such sum or any part thereof,said Party shall be entitled to recoversuch sum or so much thereof asit was not legally required to pay. A Party who does not initiate suit forthe recovery of sums paid "under protest" within 6 monthsshall be deemed to have waived itsright to protest such payment.
41. Authority; Multiple Parties; Execution.
(a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrantsthat he orshe is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of such authority. (b) Ifthis Lease is executed bymore than one person or entity as "Lessee", each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same asif all of the named Lessees had executed such document. (c) This Lease may be executed by the Partiesin counterparts, each of which shall be deemed an original and all of which togethershall constitute one and the same instrument.
42. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisionsshall be controlled by the typewritten or handwritten provisions.
43. Offer. Preparation ofthis Lease by either party or their agent and submission of same to the other Party shall not be deemed an offerto lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto.
44. Amendments. This Leasemay be modified only in writing, signed by the Partiesin interest at the time of the modification. Aslong asthey do not materially change Lessee's obligations hereunder, Lessee agreesto make such reasonable non-monetary modificationsto this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises.
45. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY INANY ACTIONOR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.
46. Arbitration of Disputes. An Addendum requiring the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease is not attached to this Lease.
47. Accessibility; Americans with Disabilities Act.
(a) The Premises:
have not undergone an inspection by a Certified Access Specialist (CASp). Note: A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner orlessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee ortenant, ifrequested by the lessee ortenant. The partiesshall mutually agree on the arrangementsfor the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises. have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises met all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 etseq. Lessee acknowledgesthat it received a copy of the inspection report at least 48 hours prior to executing this Lease and agrees to keep such report confidential.
have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises did not meet all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledgesthat itreceived a copy of the inspection report at least 48 hours priorto executing this Lease and agreesto keep such report confidential except as necessary to complete repairs and corrections of violations of construction related accessibility standards.
In the event that the Premises have been issued an inspection report by a CASp the Lessorshall provide a copy of the disability accessinspection certificate to Lessee within 7 days of the execution of this Lease.
(b) Since compliance with the Americans with Disabilities Act(ADA) and otherstate and local accessibility statutes are dependent upon Lessee'sspecific use of the Premises, Lessor makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation. In the event that Lessee's use of the Premisesrequires modifications or additions to the Premisesin order to be in compliance with ADA or other accessibility statutes, Lessee agrees to make any such necessary modifications and/or additions at Lessee's expense.
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
LESSOR AND LESSEE HAVE CAREFULLY READAND REVIEWED THIS LEASE AND EACH TERM AND PROVISIONCONTAINED HEREIN, ANDBY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
ATTENTION: NOREPRESENTATIONOR RECOMMENDATIONIS MADE BY AIR CRE OR BY ANY BROKER AS TOTHE LEGAL SUFFICIENCY, LEGAL EFFECT,OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TOTHE LEGAL AND TAX CONSEQUENCESOF THIS LEASE.
2. RETAINAPPROPRIATE CONSULTANTS TOREVIEW AND INVESTIGATE THE CONDITIONOF THE PREMISES. SAID INVESTIGATIONSHOULD INCLUDE BUTNOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING AND SIZE OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF
THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDEDUSE.
WARNING: IF THE PREMISES ARE LOCATED IN A STATEOTHER THANCALIFORNIA, CERTAIN PROVISIONSOF THE LEASE MAY NEED TO BE REVISED TO COMPLYWITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED.
48. POSSESSION OF PREMISES, CONDITION OF PREMISES: Tenant shall be allowed to take early possession, December 1, 2023 provided the fully executed lease, Security Deposit, first monthsrent and proof of insurance are submitted prior to occupying the facility. This lease agreement shall be contingent upon Lessor being able to deliver possession by December 1, 2023. If Lessor is not able to deliver possession by this date, Lessor shall move possession date thirty (30) days to January 1, 2024, as well Lease Commencement and Rent Commencement thirty (30) days. Thereafter Lessee shall have the right to terminate this lease agreement if possession is not received after the first thirty (30) day delay. Landlord shall deliver the space in it's present condition, with all systems in good working order. Including but not limited to electrical, plumbing, and roof. Lessee reserves the right to do tenant improvements to space which would include but not limited to interior & exterior lighting, security system, electrical upgrades, automatic roll up doors. Lessee has asked and Lessor has agreed to leave Automatic Lifts in space for Lessee to use.
49. LESSORAND LESSEE'SOPERATING/MAINTENANCE RESPONSIBILITIES: Notwithstanding anything in this Lease to the contrary, Lessor shall be responsible for the payment of the Common Area Operating Expenses described in "Paragraph 4.2" of the Lease. Lessorshall be responsible, at its, sole expense, to maintain the exterior of the building, including but not limited to roof, slab, exterior walls/glass, the building shell's mechanical, electrical and plumbing.
Lessorwill not be responsible for any improvements ormodificationsinstalled by Lessee.
Lessee is responsible, at Lessee's expense to maintain the interior of the building. As an example, the Lessee shall be responsible for their janitorial, plumbing issues as a result of Lessee's use and lighting fixtures. This is not a Full Service Gross Lease. Maintenance or damage as a result of Lessee's operation will be the responsibility of Lessee, to correct any issues to bring the space to its original condition.
This Paragraph shall not apply to Paragraph 11 of the Lease.
50. LESSEE'S WORK: All other work required to make the Premises suitable for Lessee's occupancy and operation of its business shall be completed by Lessee at Lessee's sole cost and expense, in accordance with the following:
(A) Approval of Plans. PRIOR TOMAKINGANY GOVERNMENTAL APPLICATIONS REGARDINGLESSEE'S WORK, Lessee shall deliverto Lessorin writing for its approval, which approvalshall not be unreasonable withheld, the necessary drawings, specifications and contractors estimate (the "Drawings") for Lessee's Work. If Lessor does not approve the Drawings as delivered by Lessee, Lessor shall, within ten (10) business days of submission thereof, advise Lessee of the changes required in the Drawings so that they will meet the Lessor's approval. In the event Lessor neither approves nor rejects such Drawings within the time provided, and such failure continues for three (3) business days following a notice to Lessor,such Drawings shall be deemed approved. Lessee shall cause the Drawingsto be revised and delivered to Lessor for its final review and approval after Lessee's receipt of such advice. (B) Contractor's Insurance.
(1) Lessee shall not permit Lessee's contractors to commence any work until all required insurance has been obtained by Lessee's contractors and certificates evidencing such coverage have been delivered to Lessor. Lessee's contractors shall secure, pay for and maintain during the continuance of their respective work within the Building, insurance, which shall be endorsed in all policiesto include Lessor and its mortgagee and their respective employees and agents as additional insured parties and which shall provide thirty (30) days' prior written notice of any alteration or termination of coverage. Lessorshall have the right, by delivery of a facsimile notice to Lessee, followed by a copy of such notice delivered by overnight delivery, to cause Lessee to cease any activities which would violate the provisions of the Paragraph.
(2) Lessee's contractors shall procure, pay for and keep in full force and effect:
(a) Commercial General Liability Insurance with respect to the Premises and the operations on or on behalf of the contractorsin, on or about the Premises, including but not limited to personal injury, product liability (if applicable), blanket contractual, broad form property damage liability coverage, with a minimum limit of $1,000,000 per occurrence and $2,000,000 in the aggregate. (b) Automobile Liability Insurance for all owned, non-owned, and hired vehicles with a minimumlimit to $1,000,000 per accident.
(c) Workers' Compensation coverage asrequired by law, together with Employers Liability coverage with a limit of not less than $500,000
54. SIGNAGE: Tenantshall be allowed signage subjectto Landlord and City approval.
55. PROFESSIONAL CONSULTATION DISCLOSURE:The undersigned acknowledgesthat they are advised to consult appropriate professionals concerning any and all existing and potential legal, tax and environmental responsibilities, implications, and impacts to them resulting from his Agreement. Neither Trujillo Commercial Real Estate Group, Inc., nor Rod Trujillo have made any representations regarding the above matters.
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
The parties hereto have executed this Lease at the place and on the dates specified above theirrespective signatures.
Executed at:
On:
By LESSOR:
Thomas M. Pryor & Jutta Pryor
By:
Name Printed: Thomas M. Pryor
Title:
Phone:
Fax:
Email:
By:
Name Printed: Jutta Pryor
Title:
Phone:
Fax:
Email:
Address:
Federal ID No.:
Executed at:
On:
By LESSEE:
City of Grover Beach
By:
Name Printed: Matthew Bronson
Title: City Manager
Phone:
Fax:
Email:
By:
Name Printed:
Title:
Phone:
Fax:
Email:
Address:
Federal ID No.:
BROKER BROKER
Trujillo Commercial Real Estate Group
Attn: Rod Trujillo Attn:
INITIALS
© 2019 AIR CRE. All Rights Reserved.
OFG-21.30, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
Title:
Address:
Phone:
Fax:
Email:
Federal ID No.:
Broker DRE License #:
Agent DRE License #: 01388764
Title:
Address:
Phone:
Fax:
Email:
Federal ID No.:
Broker DRE License #:
Agent DRE License #:
AIR CRE * https://www.aircre.com * 213-687-8777 * [email protected] NOTICE: No part of these works may be reproduced in any form without permission in writing.
INITIALS
© 2017 AIR CRE. All Rights Reserved.
RA-8.00, Revised 10-13-2022
INITIALS
Last Edited: 10/9/2023 3:54 PM
RENT ADJUSTMENT(S)
(ORIGINAL TERM)
STANDARD LEASE ADDENDUM
Dated: September 12, 2023
By and Between
Lessor: Thomas M. Pryor & Jutta Pryor
Lessee: City of Grover Beach
Property Address: 45 Newport Avenue, Suite 2, Grover Beach CA. 93433 (street address, city, state, zip)
Paragraph: 56
Themonthly Base Rent during the Original Term of the Lease shall be increased by using themethod(s)selected below (check method(s)to be used and fill in appropriately):
I. Consumer Price Index.
a. The monthly Base Rent shall be increased on and every monthsthereafter during the Original Term ("CPI Increase Date(s)") commensurate with the increase in the CPI (as herein defined) determined asfollows: the monthly Base Rentscheduled forthe firstmonth of the Original Term shall be multiplied by a fraction the denominator of which isthe Base CPI (as herein defined), and the numerator of which isthe Comparison CPI (as herein defined). The amountso calculated shall constitute the new Base Rent until the next CPI Increase Date, but in no event shall any such new Base Rent be less than the Base Rent for the month immediately preceding the applicable CPI Increase Date. b. The term "CPI" shallmean the Consumer Price Index of the Bureau of Labor Statistics ofthe U.S. Department of Laborfor (select one): CPI W (Urban Wage Earners and Clerical Workers) or CPI U (All Urban Consumers), for (fill in Urban Area): or the area in which the Premises islocated, All Items (1982-1984 = 100). The term "Comparison CPI" shall mean the CPI of the calendar month which is 2 full months prior to the applicable Original Term CPI Increase Date. The term "Base CPI" shall mean the CPI of the calendar month which is 2 full months prior to the Commencement Date of the Original Term. c. If the compilation and/or publication of the CPI istransferred to another governmental department, bureau or agency oris discontinued, then instead the index most nearly the same as the CPI shall be used to calculate the Base Rent increases hereunder. If the Parties cannot agree on such alternative index, then the mattershall be submitted for decision to the American Arbitration Association in accordance with the then rules ofsaid association and the decision of the arbitrators shall be binding upon the parties, with the cost of such arbitration being paid equally by the Parties.
II. Fixed Percentage. The monthly Base Rent shall be increased on and every months thereafter during the Original Term ("Percentage Increase Date(s)") by percent ( %) of themonthly Base Rentscheduled to be paid forthe month immediately preceding the applicable Percentage Increase Date.
III. Fixed Rental Adjustment(s) ("FRA").
Themonthly Base Rent shall be increased to the following amounts on the dates set forth below:
On (fill in FRA Adjustment Date(s)): The new Base Rent shall be:
01/01/2025 $9,286.85
01/01/2026 $9,565.46
01/01/2027 $9,852.42
BROKER'S FEE: For each adjustmentin Base Rent specified above, the Brokersshall be paid a Brokerage Fee in accordance with paragraph 15 ofthe Lease or if applicable, paragraph 9 of the Sublease.
AIR CRE * https://www.aircre.com * 213-687-8777 * [email protected]
INITIALS
© 2017 AIR CRE. All Rights Reserved.
RA-8.00, Revised 10-13-2022
INITIALS
Last Edited: 10/9/2023 3:54 PM
NOTICE: No part of these works may be reproduced in any form without permission in writing.
INITIALS
© 2017 AIR CRE. All Rights Reserved.
OE-7.02, Revised 01-13-2023
INITIALS
Last Edited: 10/9/2023 3:54 PM
OPTION(S) TO EXTEND TERM
STANDARD LEASE ADDENDUM
Dated: September 12, 2023
By and Between
Lessor: Thomas M. Pryor & Jutta Pryor
Lessee: City of Grover Beach
Property Address: 45 Newport Avenue, Suite 2, Grover Beach CA. 93433 (street address, city, state, zip)
Paragraph: 57 OPTION(S) TO EXTEND TERM. Subject to the terms, conditions and provisions of Paragraph 39, Lessor grants Lessee one option(s) to extend the term of the Lease ("Extension Option(s)"), with each Extension Option being for a term of twenty-four (24) months, commencing when the prior term expires ("Option Term(s)"). In order to exercise an Extension Option, Lessee must give written notice ofsuch election to Lessor and Lessor mustreceive such notice at least three (3) but not more than six (6) months priorto the date that the applicable Option Term would commence, time being of the essence. If timely and proper notification of the exercise of an Extension Option is not given by Lessee and/or received by Lessor,such Extension Option shall automatically expire. Except asspecifically modified, the terms, conditions and provisions of the Lease shall apply during Option Terms but the amount of Rent during Option Terms shall be established by using the method(s) selected below (check method(s) to be used and fill in appropriately):
I. Consumer Price Index.
(a) During the Option Term(s) which start(s) on , the monthly Base Rent shall be increased on and every months thereafter during suchOption Term(s) ("Option Term CPI Increase Date(s)") commensurate with the increase in the Option Term CPI (as herein defined) determined as follows: the monthly Base Rentscheduled forthe month immediately preceding the first occurring Option Term CPI Increase Date shall be multiplied by a fraction the denominator of which is the Option Term Base CPI (as herein defined), and the numerator of which isthe Option Term Comparison CPI (as herein defined). The amountso calculated shall constitute the new Base Rent until the next Option Term CPI Increase Date during the applicable Option Term, but in no event shall any such new Base Rent be less than the Base Rent for the month immediately preceding the applicable Option Term CPI Increase Date. (b) The term "Option Term CPI" shallmean the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Laborfor (select one):
CPI W (Urban Wage Earners and Clerical Workers) or CPI U (All Urban Consumers), for (fill in Urban Area): or the area in which the Premises is located, All Items(1982-1984 = 100). The term "Option Term Comparison CPI" shall mean the CPI ofthe calendar month which is 2 full months priorto the applicable Option Term CPI Increase Date. The term "Option Term Base CPI" shallmean the CPI of the calendar month which is 2 full months prior to (select one):
Commencement Date of the Original Term, start of the applicable Option Term, or (fill in month) . (c) If compilation and/or publication of the CPI is transferred to another governmental department, bureau or agency or is discontinued, then instead the index most nearly the same asthe CPI shall be used to calculate the Base Rent increases hereunder. If the Parties cannot agree on such alternative index, then the mattershall be submitted for decision to the American Arbitration Association in accordance with the then rules ofsaid association and the decision of the arbitrators shall be binding upon the parties, with the cost of such arbitration being paid equally by the Parties.
II. Fixed Percentage. During the Option Term(s) which start(s) on , the monthly Base Rentshall be increased on and every months thereafter during such Option Term(s) ("Option Term Percentage Increase Date(s)") by percent ( %) of the monthly Base Rent scheduled to be paid for the month immediately preceding the applicable Option Term Percentage Increase Date.
III. Fair MarketValue.
(a) During the Option Term(s) which start(s) on , the amount of Rent shall be the amount forecasted to be the fair market rental value of the Premises during such Option Term established pursuant to the procedures, terms, assumptions and conditions set forth herein ("Fair Market Value"); provided, however, regardless ofsuch Fair Market Value, Base Rent during an Option Term shall not be lessthan the Base Rent scheduled as of when the prior term expires.
Starting as of Lessee's exercise ofthe applicable Extension Option (but not earlierthan six (6) months before start ofthe applicableOption Term), the Parties shall for thirty (30) days("Negotiation Period") attempt to agree upon the Fair Market Value. If during the Negotiation Period the Parties do not agree on the Fair Market Value, then the Fair Market Value shall be established pursuant to the procedures set forth herein, which shall be binding. (b) Each Party shall, within fifteen (15) days afterthe end of the Negotiation Period, in writing submit to the other Party such Party's determination ofthe Fair Market Value ("Submitted Value(s)"). If a Party fails to timely provide a Submitted Value, then the other Party's Submitted Value shall be the Fair Market Value. If both Partiestimely provide Submitted Values, then each Party shall, within fifteen (15) days after both Parties have exchanged Submitted Values, in writing notify the other Party ofsuch Party'sselected valuator who shall meet the qualifications set forth herein ("Advocate Valuator(s)"). Lessor and Lessee may select an Advocate Valuator who isfavorable to such Party's position and may, prior to or after appointment of an Advocate Valuator, consult with such Party's Advocate Valuator. If a Party fails to timely and properly provide notice of such Party's chosen Advocate Valuator, then the other Party's Submitted Value shall be the Fair Market Value. (c) If both Partiestimely and properly designate Advocate Valuators, then such Advocate Valuatorsshall, within fifteen (15) days after theirselection, choose a third (3rd) neutral valuator who shall meet the qualifications set forth herein ("Neutral Valuator"). The Neutral Valuatorshall be engaged jointly by Lessor and Lessee.
If Advocate Valuatorsfail to agree upon and timely appoint a Neutral Valuator, then the President of AIR CRE shall appoint such Neutral Valuator within fifteen (15) days after request by either Party. If the President of AIR CRE does not timely appoint theNeutral Valuator, then either Partymay file an appropriate legal action for a
INITIALS
© 2017 AIR CRE. All Rights Reserved.
OE-7.02, Revised 01-13-2023
INITIALS
Last Edited: 10/9/2023 3:54 PM
judge with competentjurisdiction overthe Parties to appoint theNeutral Valuator. (d) The Advocate Valuators and the Neutral Valuator ("Valuator(s)")shall be duly licensed real estate brokers orsalespersons in good standing in the state in which the Premisesis located,shall have been active overthe five (5) year period before their appointment in the leasing of propertiessimilar to the Premises within the general real estate market of the Premises. TheNeutral Valuatorshall additionally not be related to or affiliated with either Party or Advocate Valuator, and shall not have previously represented in a real estate transaction a Party or anyone related to or affiliated with a Party. Allmattersto be determined by the Valuatorsshall be decided by a majority vote of the Valuators, with each Valuator having one (1) vote. The Valuators may, as the Valuators determine, hold hearings and require briefs, including market data and additional information. (e) Within thirty (30) days afterselection of the Neutral Valuator, the Valuatorsshall first determine the Fair Market Value established by taking into account the terms, assumptions and conditions set forth herein ("Valuators' Market Value"), then decide which Party's Submitted Value is closer in monetary amount to the Valuators' Market Value ("Selected Market Value"), then provide the Parties a copy ofthe Valuators' Market Value and finally notify the Parties of the Selected Market Value. The Selected Market Value shall be the Fair Market Value. The Valuatorsshall have no right to decide a Selected Market Value which is a compromise to (or modification of) the Submitted Values. The decision of the Valuators shall be binding upon the Parties. The Party whose Submitted Value is not the Selected Market Value shall, within ten (10) days after the Valuators decide the Selected Market Value, pay the fees and costs of all three (3) Valuators. (f) If the Fair Market Value has not been established before the start ofthe applicable Option Term, then Lessee shall continue to pay to Lessor rent in the amount payable forthe month immediately preceding the start ofsuch Option Term and Lessor's acceptance ofsuch rent shall not waive, adversely affect or prejudice the Parties' right to complete establishment of the Fair Market Value or Lessor'sright to collect the full amount ofthe Fair Market Value once the Fair Market Value is established. Lessee shall, within ten (10) days after establishment of the Fair Market Value, pay to Lessor any deficiency in rent then due forthe Option Term.
Following establishment of Fair Market Value, the Partiesshall, within ten (10) days after request by either Party,sign an amendment to this Lease to confirm the Fair Market Value and the expiration date of this Lease, but the Parties' failure to request or to sign such an amendment shall not affect establishment of the Fair Market Value or extension of the Lease term.
(g) The Valuators, in deciding the Valuators' Market Value, shall take into accountrent rates,rent abatements, periodic rent increases, real property taxes, insurance premiums and other operating expenses, tenant improvement and other applicable allowances, building services, length of lease term and other factors professionalreal estate brokers and/or appraisers customarily considerin determining fair market rent of property in an arm'slength transaction by ready, willing and able parties forspace of comparable location, size, age, condition, quality, parking, visibility, view, signage and accessibility if the Premises were marketed in a normal and customary manner for a reasonable length of time on the open market to be leased to a tenant with financial strength and credit worthiness comparable to Lessee and guarantors (if any) of this Lease (as of Lessee's exercise of the Extension Option) for a term comparable to the length of the applicable Option Term and used for the Agreed Use (or other reasonably comparable uses). The Valuators, in deciding the Valuators' Market Value, shall not consider as a comparable transaction any of the following: a sublease, lease assignment, lease renewal or extension; lease with a tenant that has equity, isrelated to or affiliated with the landlord; or a lease ofspace that wassubject to a right of first refusal, right of first offer, expansion option or other encumbrances. The Valuators, in deciding the Valuators' Market Value,shall reduce the Fair Market Value on account of Alterations and improvements made by Lessee to the extent the cost thereof was paid solely by Lessee (in excess of any applicable improvement allowance, abated rent in lieu of improvement allowance or other consideration provided by Lessor for Lessee's improvement of the Premises), shall not reduce the Fair Market Value on account of any real estate brokerage commission savings by Lessor, and shall notreduce the Fair Market Value on account of deferred maintenance or repair of the Premisesfor which Lessee wasresponsible under the Lease but did not perform.
IV. Fixed Rental Adjustment(s) ("FRA").
Themonthly Base Rent shall be increased to the following amounts on the dates set forth below:
On (fill in FRA Adjustment Date(s)): The new Base Rent shall be:
01/01/2028 $10,147.99
01/01/2029 $10,452.43
V. Continuation of Original Term Adjustments.
The monthly Base Rent during the Option Term(s) which start(s) on shall be increased in accordance with the same formula provided in the Lease to be used to calculate increases in the Base Rent during the Original Term of the Lease.
BROKER'S FEE: For each adjustment in Base Rent specified above, the Brokersshall be paid a Brokerage Fee in accordance with paragraph 15 ofthe Lease or if applicable, paragraph 9 of the Sublease.
AIR CRE * https://www.aircre.com * 213-687-8777 * [email protected] NOTICE: No part of these works may be reproduced in any form without permission in writing.
INITIALS
© 2019 AIR CRE. All Rights Reserved.
AD-3.01, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIP
(Asrequired by the Civil Code)
When you enterinto a discussion with a real estate agent regarding a real estate transaction, you should from the outset understand whattype of agency relationship or representation you wish to have with the agent in the transaction.
SELLER'S AGENT
A Seller's agent under a listing agreement with the Seller acts as the agent forthe Seller only. A Seller's agent or a subagent of that agent hasthe following affirmative obligations:
To the Seller: A fiduciary duty of utmost care, integrity, honesty and loyalty in dealings with the Seller.
To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill and care in performance of the agent's duties. (b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose all facts known to the agentmaterially affecting the value or desirability ofthe property that are not known to, or within the diligent attention and observation of, the parties.
An agent is not obligated to reveal to either party any confidential information obtained from the other party that does not involve the affirmative dutiesset forth above.
BUYER'S AGENT
A Buyer's agent can, with a Buyer's consent, agree to act as agent for the Buyer only. In these situations, the agent is notthe Seller's agent, even if by agreementthe agentmay receive compensation forservices rendered, either in full or in part from the Seller. An agent acting only for a Buyer hasthe following affirmative obligations:
To the Buyer: A fiduciary duty of utmost care, integrity, honesty and loyalty in dealings with the Buyer.
To the Buyer and the Seller:
(a) Diligent exercise of reasonable skill and care in performance of the agent's duties. (b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose all facts known to the agentmaterially affecting the value or desirability ofthe property that are not known to, or within the diligent attention and observation of, the parties.
An agent is not obligated to reveal to either party any confidential information obtained from the other party that does not involve the affirmative dutiesset forth above.
AGENT REPRESENTING BOTH SELLER AND BUYER
A real estate agent, either acting directly orthrough one or more salesperson and broker associates, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and the Buyer.
In a dual agency situation, the agent hasthe following affirmative obligationsto both the Seller and the Buyer:
(a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either the Seller or the Buyer. (b) Other duties to the Seller and the Buyer as stated above in their respective sections.
In representing both Seller and Buyer, a dual agent may not, without the express permission of the respective party, disclose to the other party confidential information, including, but not limited to, facts relating to eitherthe Buyer's or Seller's financial position, motivations, bargaining position, or other personal information that may impact price, including the Seller's willingness to accept a price less than the listing price or the Buyer's willingnessto pay a price greaterthan the price offered.
SELLER AND BUYER RESPONSIBILITIES
Either the purchase agreement or a separate document will contain a confirmation of which agent is representing you and whether that agent isrepresenting you exclusively in the transaction or acting as a dual agent. Please pay attention to that confirmation to make sure it accurately reflects your understanding of your agent's role. The above duties ofthe agentin a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect his or her own interests. You should carefully read all agreements to assure that they adequately express your understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional. If you are a Buyer, you have the duty to exercise reasonable care to protect yourself, including as to those facts about the property which are known to you or within your diligent attention and observation. Both Sellers and Buyers should strongly consider obtaining tax advice from a competent professional because the federal and state tax consequences of a transaction can be complex and subject to change.
Throughout your real property transaction you may receive more than one disclosure form, depending upon the number of agents assisting in the transaction. The law requires each agent with whom you have more than a casual relationship to present you with this disclosure form. You should read its contents each time it is presented to you, considering the relationship between you and the real estate agent in your specific transaction. This disclosure form includesthe provisions of Sections 2079.13 to 2079.24, inclusive, of the Civil Code set forth on page 2. Read it carefully. I/WE ACKNOWLEDGE RECEIPT OF A COPY OF THIS DISCLOSURE AND THE PORTIONS OF THE CIVIL CODE PRINTED ON THE BACK (OR A SEPARATE PAGE).
Buyer Seller Lessor Lessee Date:
Buyer Seller Lessor Lessee Date:
Agent: Trujillo Commercial Real Estate Group, Inc. DRE Lic. #: 02126103 Real Estate Broker (Firm)
By: DRE Lic. #: 01388764 Date:
(Salesperson or Broker-Associate)
INITIALS
© 2019 AIR CRE. All Rights Reserved.
AD-3.01, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
THIS FORM HAS BEEN PREPARED BY AIR CRE. NOREPRESENTATION IS MADE AS TO THE LEGAL VALIDITY OR ADEQUACY OF THIS FORM FOR ANY SPECIFIC TRANSACTION. PLEASE SEEK LEGAL COUNSEL AS TO THE APPROPRIATENESS OF THIS FORM.
INITIALS
© 2019 AIR CRE. All Rights Reserved.
AD-3.01, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIP
CIVIL CODE SECTIONS 2079.13 THROUGH 2079.24 (2079.16 APPEARS ONTHE FRONT) 2079.13. As used in Sections 2079.7 and 2079.14 to 2079.24, inclusive, the following terms have the following meanings:
(a) “Agent” means a person acting under provisions of Title 9 (commencing with Section 2295) in a real property transaction, and includes a person who is licensed as a real estate broker under Chapter 3 (commencing with Section 10130) of Part 1 of Division 4 of the Business and Professions Code, and under whose license a listing is executed or an offer to purchase is obtained. The agent in the real property transaction bears responsibility for that agent's salespersons or broker associates who perform as agents of the agent. When a salesperson or broker associate owes a duty to any principal, or to any buyer or seller who is not a principal, in a real property transaction, that duty is equivalent to the duty owed to that party by the broker for whom the salesperson or broker associate functions. (b) “Buyer” means a transferee in a real property transaction, and includes a person who executes an offer to purchase real property from a seller through an agent, or who seeks the services of an agent in more than a casual, transitory, or preliminary manner, with the object of entering into a real property transaction. “Buyer” includes vendee or lessee of real property. (c) “Commercial real property” means all real property in the state, except (1) single-family residential real property, (2) dwelling units made subject to Chapter 2 (commencing with Section 1940) of Title 5, (3) a mobile home, as defined in Section 798.3, (4) vacant land, or (5) a recreational vehicle, as defined in Section 799.29. (d) “Dual agent” means an agent acting, either directly or through a salesperson or broker associate, as agent for both the seller and the buyer in a real property transaction. (e) “Listing agreement” means a written contract between a seller of real property and an agent, by which the agent has been authorized to sell the real property or to find or obtain a buyer, including rendering other servicesfor which a real estate license isrequired to the seller pursuant to the terms of the agreement. (f) “Seller's agent” means a person who has obtained a listing of real property to act as an agent for compensation. (g) “Listing price” is the amount expressed in dollars specified in the listing for which the seller is willing to sell the real property through the seller's agent. (h) “Offering price” is the amount expressed in dollars specified in an offer to purchase for which the buyer is willing to buy the real property. (i) “Offer to purchase” means a written contract executed by a buyer acting through a buyer's agent that becomes the contract for the sale of the real property upon acceptance by the seller. (j) “Real property” means any estate specified by subdivision (1) or (2) of Section 761 in property, and includes (1) single-family residential property, (2) multi-unit residential property with more than four dwelling units, (3) commercial real property, (4) vacant land, (5) a ground lease coupled with improvements, or (6) a manufactured home as defined in Section 18007 of the Health and Safety Code, or a mobile home as defined in Section 18008 of the Health and Safety Code, when offered for sale or sold through an agent pursuant to the authority contained in Section 10131.6 of the Business and Professions Code. (k) “Real property transaction” means a transaction for the sale of real property in which an agent is retained by a buyer, seller, or both a buyer and seller to act in that transaction, and includes a listing or an offer to purchase. (l) “Sell,” “sale,” or “sold” refers to a transaction for the transfer of real property from the seller to the buyer and includes exchanges of real property between the seller and buyer, transactions forthe creation of a real property sales contract within themeaning of Section 2985, and transactions forthe creation of a leasehold exceeding one year's duration. (m) “Seller”means the transferor in a real property transaction and includes an owner who lists real property with an agent, whether or not a transfer results, or who receives an offer to purchase real property of which he or she is the owner from an agent on behalf of another. “Seller” includes both a vendor and a lessor of real property. (n) “Buyer's agent” means an agent who represents a buyer in a real property transaction. 2079.14. A seller's agent and buyer's agent shall provide the seller and buyer in a real property transaction with a copy of the disclosure form specified in Section 2079.16, and shall obtain a signed acknowledgment of receipt from that seller and buyer, except as provided in Section 2079.15, as follows: (a) The seller's agent, if any, shall provide the disclosure form to the seller prior to entering into the listing agreement. (b) The buyer's agent shall provide the disclosure form to the buyer as soon as practicable prior to execution of the buyer's offer to purchase. If the offer to purchase is not prepared by the buyer's agent, the buyer's agent shall present the disclosure form to the buyer not later than the next business day after receiving the offer to purchase from the buyer. 2079.15. In any circumstance in which the seller or buyer refuses to sign an acknowledgment of receipt pursuant to Section 2079.14, the agent shall set forth, sign, and date a written declaration of the facts of the refusal. 2079.16 Reproduced on Page 1 of this AD form.
2079.17(a) As soon as practicable, the buyer's agent shall disclose to the buyer and seller whether the agent is acting in the real property transaction as the buyer's agent, or as a dual agent representing both the buyer and the seller. This relationship shall be confirmed in the contract to purchase and sell real property or in a separate writing executed or acknowledged by the seller, the buyer, and the buyer's agent prior to or coincident with execution of that contract by the buyer and the seller, respectively. (b) As soon as practicable, the seller's agent shall disclose to the seller whether the seller's agent is acting in the real property transaction as the seller's agent, or as a dual agent representing both the buyer and seller. This relationship shall be confirmed in the contract to purchase and sell real property or in a separate writing executed or acknowledged by the seller and the seller's agent prior to or coincident with the execution of that contract by the seller. (C) CONFIRMATION: The following agency relationships are confirmed for thistransaction.
Seller's Brokerage Firm DO NOT COMPLETE, SAMPLE ONLY License Number Is the broker of (check one): the seller; or both the buyer and seller. (dual agent) Seller's Agent DO NOT COMPLETE, SAMPLE ONLY License Number Is (check one): the Seller's Agent. (salesperson or broker associate); or both the Buyer's Agent and the Seller's Agent. (dual agent) Buyer's Brokerage Firm DO NOT COMPLETE, SAMPLE ONLY License Number Is the broker of (check one): the buyer; or both the buyer and seller. (dual agent) Buyer's Agent DO NOT COMPLETE, SAMPLE ONLY License Number Is (check one): the Buyer's Agent. (salesperson or broker associate); or both the Buyer's Agent and the Seller's Agent. (dual agent) (d) The disclosures and confirmation required by thissection shall be in addition to the disclosure required by Section 2079.14. An agent's duty to provide disclosure and confirmation ofrepresentation in thissection may be performed by a real estate salesperson or broker associate affiliated with that broker. 2079.18 (Repealed pursuant to AB-1289, 2017-18 California Legislative session) 2079.19 The payment of compensation orthe obligation to pay compensation to an agent by the seller or buyer is not necessarily determinative of a particular agency relationship between an agent and the seller or buyer. A listing agent and a selling agent may agree to share any compensation or commission paid, or any right to any compensation or commission for which an obligation arises as the result of a real estate transaction, and the terms of any such agreement shall not necessarily be determinative of a particular relationship.
2079.20Nothing in this article prevents an agentfrom selecting, as a condition of the agent's employment, a specific form of agency relationship not specifically
INITIALS
© 2019 AIR CRE. All Rights Reserved.
AD-3.01, Revised 10-22-2020
INITIALS
Last Edited: 10/9/2023 3:54 PM
prohibited by this article if the requirements of Section 2079.14 and Section 2079.17 are complied with. 2079.21 (a) A dual agent may not, without the express permission of the seller, disclose to the buyer any confidential information obtained from the seller. (b) A dual agentmay not, without the express permission ofthe buyer, disclose to the seller any confidential information obtained from the buyer. (c) “Confidential information” meansfactsrelating to the client's financial position, motivations, bargaining position, or other personal information that may impact price, such as the selleris willing to accept a price lessthan the listing price or the buyer is willing to pay a price greater than the price offered. (d) Thissection does not alter in any way the duty or responsibility of a dual agent to any principal with respect to confidential information other than price. 2079.22Nothing in this article precludes a seller's agent from also being a buyer's agent. If a seller or buyerin a transaction chooses to not be represented by an agent, that does not, of itself, make that agent a dual agent. 2079.23 (a) A contract between the principal and agent may be modified or altered to change the agency relationship at any time before the performance of the act which is the object of the agency with the written consent of the parties to the agency relationship. (b) A lender or an auction company retained by a lender to control aspects of a transaction of real property subject to this part, including validating the sales price, shall not require, as a condition of receiving the lender's approval of the transaction, the homeowner or listing agent to defend orindemnify the lender or auction company from any liability alleged to result from the actions of the lender or auction company. Any clause, provision, covenant, or agreement purporting to impose an obligation to defend or indemnify a lender or an auction company in violation of this subdivision is against public policy, void, and unenforceable. 2079.24Nothing in this article shall be construed to either diminish the duty of disclosure owed buyers and sellers by agents and their associate licensees,subagents, and employees or to relieve agents and their associate licensees, subagents, and employeesfrom liability for their conduct in connection with acts governed by this article or for any breach of a fiduciary duty or a duty of disclosure.
AIR CRE * https://www.aircre.com * 213-687-8777 * [email protected] NOTICE: No part of these works may be reproduced in any form without permission in writing.
Agenda Item No. 8
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: October 23, 2023 FROM: Matthew Bronson, City Manager
PREPARED BY: Deanne Purcell, Administrative Services Director SUBJECT: Proposition 218 Noticing Process for a Hearing on Proposed Water and Wastewater Rates
RECOMMENDATION
Approve a new Proposition 218 noticing process for holding a public hearing on December 11, 2023 on proposed water and wastewater rates.
BACKGROUND:
On September 5, 2023, the Council received a Utility Rate Study and preliminary findings and recommendations for increases to water and wastewater rates. On September 25, 2023, Council received and filed the final report of the Utility Rate Study and approved implementing the Proposition 218 noticing process for holding a public hearing on the proposed water and wastewater rate structure on November 13, 2023.
Staff subsequently issued Proposition 218 notices to all utility account holders in English and Spanish, per Council direction, on September 27. However, notices are required for both account holders and property owners of record under Proposition 218 and staff has determined that property owners were inadvertently not included with this noticing process. Therefore, staff recommends the Council approve a new Proposition 218 noticing process for holding a public hearing on December 11, 2023 to ensure compliance with the requirements of Proposition 218.
Notices will be provided in English and Spanish. For any protests that have been received before the second noticing process, staff will send specific information, along with self-addressed, stamped envelopes to resubmit protests to be counted toward the total number of protests.
FISCAL IMPACT
Resending Proposition 218 notices will cost approximately $8,000 from the operating budgets of the Water and Wastewater Enterprise Funds.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Approve a Proposition 218 noticing process for holding a public hearing on December 11, 2023 on proposed water and wastewater rates; or
2. Do not approve a Proposition 218 noticing process for holding a public hearing on December 11, 2023 on proposed water and wastewater rates Amended to correct hearing date and
new wording on notice
Staff Report: Proposition 218 Noticing Process for Water and Wastewater Rates Page 2 October 23, 2023
3. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Attachments
1. Proposition 218 Notice
1 NOTICE TO PROPERTY OWNERS OF PUBLIC HEARING
REGARDING PROPOSED WATER AND WASTEWATER RATES
Hearing Date & Time: December 11, 2023 6:00 PM
Hearing Loca�on: City Hall
154 South 8th Street, Grover Beach, CA 93433
Why are you receiving this notice?
The City of Grover Beach (City) is mailing this no�ce to you because you are a water and/or wastewater customer or are the owner of record of a property that receives water or wastewater service. This no�ce describes proposed changes to the water and wastewater rates and gives informa�on about a public hearing to be held on December 11, 2023 at the City Hall, 154 South 8th Street, Grover Beach, CA, 93433 regarding these proposed changes.
What do water and wastewater rates fund?
The City provides water and wastewater service to residen�al, landscape, and commercial customers. Monthly rates charged to system users (customers) on a bi-monthly basis are the primary source of revenue to operate the water and wastewater systems and are used solely for this purpose. Rate revenue provides funding for annual opera�ng and maintenance costs, capital projects to improve water and wastewater infrastructure, administra�on, and maintaining adequate fund reserves and planning for con�ngencies.
Y
In order to maintain a high level of water quality and ensure adequate supply, several water system capital projects are proposed to be supported by your water payments that include the: Central Coast Blue Water Sustainability Project; Reservoir Maintenance; Automated Meter Reading; Water Meter Replacements; Booster Sta�on upgrades, and other projects. Capital projects that are supported by your wastewater payments include the: sewer upgrades for both future and exis�ng flows, Fronts Street Li� Sta�on Upgrades, South Oak Park Li� Sta�on Upgrades; System Repairs; and Citywide Sewer Lining projects.
New Drought-Resistant Water Supply: Central Coast Blue Water Sustainability Project Central Coast Blue is a regional water sustainability project that will create a new, high-quality, and drought-resistant water supply for Grover Bech, Pismo Beach, and Arroyo Grande. These communi�es are designing and building a new advanced water purifica�on facility that willsupplement local groundwater supplies. The Advanced Treatment Facility will treat water from the City of Pismo Beach's Wastewater Treatment Plant to produce purified water that will be injected into the groundwater basin to supplement the natural groundwater supply and to create a seawater intrusion barrier. The project allows these communi�es to have sufficient water supplies even in �mes of drought.
Central Coast Blue will enhance local supply reliability and help protect the communi�es from droughts by diversifying supply sources and avoiding excessive reliance on any one source of water. This project also reduces the amount of treatment plant effluent to the ocean by 74%. For more informa�on, visit www.centralcoastblue.com.
Maintaining Sustainable Water and Wastewater Systems
Water and wastewater rates support the overall financial plans for water and wastewater. These financial plans account for increasing opera�ng expenses, including support for rising personnel costs, electricity, chemicals, and purchased water (Lopez Lake water). The financial plans also include ensuring adequate reserves and debt service coverage ra�os. 2 Why are rate increases needed?
Current rates do not provide adequate funding for long-term opera�on and maintenance expenses and capital projects.
The City engaged a consultant to perform studies of the City’s water and wastewater funds, and to recommend user rates designed to meet the City’s financial obliga�ons, including opera�ng and debt service costs, funds for needed capital projects, and maintenance of cash reserves. The rate structures developed in the studies comply with federal, state, and City laws and guidelines. They are consistent with good industry prac�ces and are equitable among the City’s customer classes. At the City Council Mee�ng on October 23, 2023, the report on these studies was presented which included recommended u�lity rates through January of 2028. The City Council reviewed the report and approved the proposed rate schedule to be considered at a public hearing on December 11, 2023.
The proposed rates are based on a comprehensive u�lity rate study and financial plan to ensure reliable and func�onal water and wastewater systems. The City will annually review revenues and expenditures for the water and wastewater funds to ensure that sufficient and appropriate revenues are collected to effec�vely provide for the short and long-term service needs of the community. The rate study report providing the rate development methodology is available at City Hall and on the City’s website at www.groverbeach.org.
New rates
In order to provide necessary funding to operate and carry out long-term improvements of the water and wastewater systems, the City is proposing to implement new rates as a series of annual revenue adjustments over the next five years.
The following tables summarize the proposed water and wastewater rates.
Water Current and Proposed Monthly Fixed Charges
Current Proposed
Rate Jan 1, 2024 Jan 1, 2025 Jan 1, 2026 Jan 1, 2027 Jan 1, 2028 Residential
Meter Size Fixed Charge ($ per month)
5/8" $16.47 $17.91 $21.44 $25.67 $30.73 $31.96
3/4" $16.47 $17.91 $21.44 $25.67 $30.73 $31.96
1" $16.47 $17.91 $21.44 $25.67 $30.73 $31.96
1.5" $54.85 $59.70 $71.47 $85.55 $102.41 $106.51
2" $87.80 $95.52 $114.34 $136.87 $163.84 $170.40
3" $175.61 $191.04 $228.68 $273.73 $327.66 $340.77
4" $274.55 $298.50 $357.31 $427.71 $511.97 $532.45
Non-Residential
Meter Size Fixed Charge ($ per month)
5/8" $16.47 $17.91 $21.44 $25.67 $30.73 $31.96
3/4" $24.71 $26.87 $32.17 $38.51 $46.10 $47.95
1" $27.52 $29.85 $35.74 $42.79 $51.22 $53.27
1.5" $54.85 $59.70 $71.47 $85.55 $102.41 $106.51
2" $87.80 $95.52 $114.34 $136.87 $163.84 $170.40
3" $175.61 $191.04 $228.68 $273.73 $327.66 $340.77
4" $274.55 $298.50 $357.31 $427.71 $511.97 $532.45
3 Water Current and Proposed Variable (Consump�on) Rates Wastewater Current and Proposed Monthly Charges
Impact on your bill
For the proposed rates effec�ve January 1, 2024, a typical single-family home that uses 15 Units* of water every two months, the water por�on of your bill would increase from $93.69 per billing cycle (every two months) currently to $120.37 per billing cycle or $13.34 more per month. The wastewater por�on of the bill would increase from $25.64 to $30.64 per billing cycle or $2.50 per month. The accompanying graph provides a summary of combined bills, exis�ng and proposed, for water and wastewater under three usage scenarios. The comparison includes wastewater charges from South San Luis Obispo County Sanita�on District as well as a 1.0% U�lity Tax applied to the water bill. The dark blue boxes represent the total increases by usage level. The City’s total u�lity rates are currently near or at the lowest rates in the county compared with other ci�es and would remain near the lowest countywide a�er the first-rate increase.
Current Proposed
Classification Rate Jan 1, 2024 Jan 1, 2025 Jan 1, 2026 Jan 1, 2027 Jan 1, 2028 Variable Charge ($ per HCF)
Residential
Tier 1 - 0 to 10 units $2.99 $4.20 $5.03 $6.03 $7.22 $7.51 Tier 2 - 11 to 22 units $6.17 $8.51 $10.19 $12.20 $14.61 $15.20 Tier 3 - Over 22 units $8.90 $11.91 $14.26 $17.07 $20.44 $21.26 Landscape $6.72 $9.11 $10.91 $13.06 $15.64 $16.27
All Other $6.47 $7.90 $9.46 $11.33 $13.57 $14.12
Current Proposed
Classification Charge Jan 1, 2024 Jan 1, 2025 Jan 1, 2026 Jan 1, 2027 Jan 1, 2028 Fixed Charge ($ per month)
Boarding House (per unit) $15.54 $18.57 $22.19 $26.52 $31.69 $32.96 Per Bedroom Charge 10.00 11.95 14.28 17.06 20.39 21.21
Car Washes & Laundromats (min charge) 6.19 7.40 8.84 10.56 12.62 13.12 Per 100 cubic feet above minimum 0.00 0.00 0.00 0.00 0.00 0.00 Church 15.06 18.00 21.51 25.70 30.71 31.94
Per parsonage or dwelling unit 12.82 15.32 18.31 21.88 26.15 27.20 Commercial Establishment (Public place up to 5 Fixtures) 15.04 17.97 21.47 25.66 30.66 31.89 Each additional fixture 4.12 4.92 5.88 7.03 8.40 8.74
Factories, Industrial Plants (20 employees or less) 10.12 12.09 14.45 17.27 20.64 21.47 Each additional employee over 20 1.16 1.39 1.66 1.98 2.37 2.46 Hotel, Motel Auto Court or Lodge (per unit) 15.45 18.46 22.06 26.36 31.50 32.76 Mobile Home (per space) 12.82 15.32 18.31 21.88 26.15 27.20 Restaurants (min charge) 2.14 2.56 3.06 3.66 4.37 4.54
Per 100 cubic feet against minimum 0.00 0.00 0.00 0.00 0.00 0.00 Schools (min annual charge per ADA and employee) 3.31 3.96 4.73 5.65 6.75 7.02 Schools with Cafeterias (additional) Per ADA and employees 1.38 1.65 1.97 2.35 2.81 2.92 Single-Family Dwelling Unit 12.82 15.32 18.31 21.88 26.15 27.20 Theater, Clubhouse or Place of Amusement 15.04 17.97 21.47 25.66 30.66 31.89 Travel Trailer and Recreation Vehicle Space 6.60 7.89 9.43 11.27 13.47 14.01 Multi-family, Two or More Dwellings (per unit) 12.82 15.32 18.31 21.88 26.15 27.20 Per each coin-operated washer 2.80 3.35 4.00 4.78 5.71 5.94 Excess Discharge per 100 cubic feet $0.40 $0.48 $0.57 $0.68 $0.81 $0.84 4 Example bill calcula�ons using proposed January 1, 2024 rates at 15 HCF (Units):
Water: .....................$17.91 Monthly ¾” Meter Base Charge X 2 Months + $4.20/HCF X 10 HCF +$8.51/HCF X 5 HCF = $120.37 City Wastewater:.....................................................$15.32 per Month per Dwelling Unit X 2 Months X 1 Dwelling Unit = $30.64 South San Luis Obispo County Sanitation District:........................................................... $25.48 per Month X 2 Months = $50.96
1.0% Utility Tax: ....................................................................................................................................................................... $1.20 Total: $203.17
How do you file a protest or participate in the public hearing? The City Council will consider the new rate structure and proposed revenue increase at a public hearing on Monday, December 11, 2023 at 6:00 p.m. at City Hall, 154 South 8th Street, Grover Beach, CA, 93433. You are invited to present oral or writen tes�mony at the public hearing.
Any registered property owner or customer of record of a parcel subject to the proposed rates may submit a writen protest against the proposed rate revisions. If writen protests are filed with respect to a majority of the affected property parcels, the proposed rate revisions will not be adopted. There will only be one protest allowed per parcel of property.
A writen protest must contain the street address or Assessor's Parcel Number (APN) for the parcel(s) with respect to which the protest is made. The protest must also be signed by the registered property owner or customer. Protests may be mailed 23or hand delivered to the City’s offices at 154 South 8th Street, Grover Beach, CA, 93433. Protests may also be delivered to the City Clerk at the public hearing. To be valid, a signed writen protest must be received by the City Clerk at or before the �me of the protest hearing.
The City previously sent a similar no�ce of a public hearing concerning these rates on or around September 27, 2023. Due to a distribu�on uncertainty, it was necessary to resubmit this no�ce to the public with a revised hearing date. If you $131.01 $147.47
$171.23
$203.17
$286.76
$359.57
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
Current 7 HCF Proposed 7 HCF Current 15 HCF Proposed 15 HCF Current 30 HCF Proposed 30 HCF $16.46
$31.94
$72.81
5 received the prior no�ce please disregard it as this no�ce will be the per�nent no�ce for compliance with submi�ng a protest. You will also be required to submit a new protest even if you previously submited one pursuant to the September 27, 2023 no�ce.
*1 Unit = 1 HCF, 1 HCF = 748 Gallons
Agenda Item No. 9
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: October 23, 2023 FROM: Matthew Bronson, City Manager
PREPARED BY: Megan Martin, Community Development Director Janet Reese, Associate Planner
SUBJECT: Public Hearing and Resolution Regarding the Closeout of State Community Development Block Grant Coronavirus (CDBG-CV) Contract
RECOMMENDATION
Receive a report summarizing the accomplishments performed under the State Community Development Block Grant Coronavirus (CDBG-CV) Agreement 20-CDBG-CV2-3-00087; conduct a public hearing to solicit citizen input regarding expenditures and accomplishments of the funding received under the contract; and direct staff to proceed with submitting required documents for closeout to the State.
BACKGROUND
The U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) program authorizes the use of funds to assist low- and moderate-income families or aid in the prevention or elimination of slums or blight. There are two types of CDBG programs:
“entitlement” and “non-entitlement”. Metropolitan cities and urban counties are entitled to receive annual grants under the “entitlement” program direct from HUD. Metropolitan cities are principal cities or Metropolitan Areas (MAs) or other cities within MAs that have populations of at least 50,000. Urban Counties are within MAs that have population of 200,000 or more excluding the population of metropolitan cities within their boundaries.
In 2011, the City opted to leave “entitlement” program administered by the County of San Luis Obispo’s Planning and Building Department and participate in the “non-entitlement” program. The “non-entitlement” program is administered by the State Department of Housing and Community Development (HCD). The City has applied for funding under a competitive application process.
The City previously received a total of $5.8 million of CDBG funding in 2013, 2017, and 2020 for water line improvements and $1.2 million in funding for Eviction Prevention and Security Deposit programs through successful applications for the non-entitlement program. An additional $417,000 in CDBG-CV (CDBG-Coronavirus) funds was also received in 2021 for Warming Shelter Operations, a Childcare Training Program, and a Homeless Services Program.
In order to officially close out a contract, the City is required to first conduct a public hearing to solicit input regarding expenditures and accomplishments of the funding received under the contract and then submit required documents to HCD.
Staff Report: CDBG Contract Closeout Page 2
October 23, 2023
On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in response to the impacts of the COVID-19 pandemic. HCD published a Notice of Funding Availability (NOFA) for Community Development Block Grant Coronavirus Aid, Relief, and Economic Security (CDBG-CV) funds. The City was eligible to receive $369,468 based on a formula provided by HCD for rounds 2 and 3 of CV funds and received $113,000 in funds for the operations of the Winter Warming Shelter (Contract 20-CDBG-CV2-3-00087) operated by 5Cities Homeless Coalition (5CHC). During the 2022-23 winter season, the Winter Warming Shelter provided shelter for a total of 58 nights, serving 117 unduplicated persons during the winter months. Staff has submitted final funds requests for all eligible expenses and will be packaging the required closeout documents to initiate the closeout process.
The balance of the CV2-3 funds, $256,468, was designated for a Homeless Services Program, also operated by 5CHC. This program, which expands outreach efforts by 5CHC to address the health and safety challenges related to COVID-19 by providing hotel isolation, testing, transportation, and distribution of PPE and hygiene supplies, is still underway and will continue to operate through Fall 2024 based on the current expenditure rate. Staff will return to the Council for closeout for that particular contract with a complete summary of accomplishments.
FISCAL IMPACT
There is no fiscal impact from this report as the CV2-3 funds were 100% grant funded and have been completely expended.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Conduct a public hearing, receive public comment and review the accomplishments performed under the 20-CDBG-CV2-3-00087 agreement; and provide direction for staff to send the HCD required closeout forms and documents; or
2. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The public hearing notice was published in the New Times on October 12, 2023, in English and Spanish, as required by HCD. In addition, the notice was also posted on the City Hall bulletin board, City website, and social media accounts. 5Cities Homeless Coalition was also notified of the meeting.
Agenda Item No. 10
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: October 23, 2023 FROM: Matthew Bronson, City Manager
PREPARED BY: Steve Khan, Interim Public Works Director/City Engineer Gabriel Munoz-Morris, Senior Engineer
SUBJECT: City Streets Pavement Cut Policy
RECOMMENDATION
Adopt a Pavement Cut Policy to establish guidelines for pavement cuts in recently paved streets.
BACKGROUND
The City has completed approximately 70% of its scheduled Measure K-14 local street paving projects since 2014. These projects represent an investment of approximately $34 million in local street rehabilitation and repair with an additional $14 million planned over the next 7-9 years. In addition to Measure K-14 projects, the City has also completed $2.4 million in major street rehabilitation projects in recent years and is in design or construction of an additional $12.5 million expected to be completed in the next five years. These investments have resulted in a significant increase in the systemwide Pavement Condition Index (PCI), an industry-recognized metric for evaluating the condition of a street network. Staff’s assessment is that this public investment in city streets since 2014 has contributed to greater private development and increased property values throughout the city.
Local utility providers are also routinely working to modernize and improve their facilities, many of which are located under city streets. When planning street projects, staff works extensively with utility providers to try and schedule utility work ahead of street paving. In addition, when reviewing plans for private development projects, staff notifies applicants of upcoming paving projects so that required work in the street can be completed ahead of the City’s paving project. These efforts have resulted in successful coordination between the City and other utility companies and developers though it is impossible to prevent all cuts to recently paved City streets.
Streets are often cut into to facilitate underground utility work, installation of public improvements associated with private development, or emergency underground repair work. These pavement cuts are becoming more common given increased development activity throughout the city and increasingly affect repaved streets. When a street is first paved, the PCI is reset to 100 but begins to slowly degrade over time due to routine use, weather impacts, and degradation of the asphalt over time. If a newly paved street is cut into, the PCI is immediately adjusted down by up to 20 points reducing the PCI to as low as 80 as the new cut creates a discontinuity in the paved surface.
These discontinuities typically lead to accelerated degradation of the street and can, over time, lead to more rutting or potholes over the life of the pavement section. The City’s engineering standard for utility trench restoration counters this effect by requiring a “tee cut” at the topmost layer of the paved surface to bridge between the trench section and the surrounding paved roadway section but no restoration can fully offset the effect of the pavement cut. Also, projects cutting into the street typically require multiple cuts for different utility connections (electric, gas, Staff Report: City Streets Pavement Cut Policy Page 2
October 23, 2023
water, sewer) which leads to a patchwork of original street section and trenches.
For development projects, the City’s development code does not include specific language governing pavement cuts into recently paved streets as the intent of the Development Code is to establish uniform requirements for all projects. The significant investment by the City to pave its street network in such an accelerated timeframe leads to cases where a development project begins construction a few years after a street was paved.
Given the City’s significant investment in streets and to base decisions on a formal policy rathe rather than best engineering practices, staff is recommending the adoption of a Pavement Cut Policy that dictates required pavement repairs, in excess of standard utility trench restorations, for cuts into recently paved streets. Staff has prepared the attached Pavement Cut Policy that establishes required pavement restorations in addition to the requirements of the City’s adopted engineering standards that protect the City’s investment in its streets while allowing for needed cuts in the street in an orderly manner. The proposed policy establishes three categories for pavement cuts as documented below.
Pavement Cuts Within Five Years of Paving
It is most critical to protect newly paved streets from degradation through pavement cuts though it is not possible to fully prevent such cuts. This policy establishes a five-year window during which pavement cuts limited to one side of the street must restore the street from the edge of the gutter (or pavement edge) to the centerline. Any pavement cuts that cross the street centerline must restore the street from edge of gutter to edge of gutter (or pavement edge to pavement edge).
The restoration area width shall be equal to the width of the property (or project disturbance for cuts not associated with one unique property).
Utility trenches would be restored per City engineering standards to ensure proper compaction of subgrade soils and a 2-inch grind and overlay of the top asphalt section for the entire limits described here would be installed to avoid small cut areas and create a pavement bridge between roadway sections and utility trenches. Cuts limited to areas outside the vehicle travel lanes would only be required to restore the asphalt to the edge of the travel lane to avoid cutting into the vehicle travel area, which is more heavily loaded due to vehicle traffic and more susceptible to early failure as a result of pavement cuts.
Pavement Cuts Within Five to Ten Years of Paving
Pavement cuts in streets paved between 5 and 10 years ago also accelerate pavement degradation though routine use of the street has already begun that process. It is still critical to ensure proper restoration of the roadway to prevent accelerated degradation of the street as much as possible. During this time, any pavement cuts limited to one side of the street must restore the street from the edge of the gutter (or pavement edge) to the centerline. Any pavement cuts that cross the street centerline must restore the street from edge of gutter to edge of gutter (or pavement edge to pavement edge). The restoration area width shall be equal to the project disturbance. Any patches within two-feet of a gutter, asphalt dyke, concrete v-ditch, or other concrete improvement shall replace the top 2-inches of asphalt to that concrete improvement.
For projects with multiple trenches/pavement cuts, any pavement cuts within four feet of each other shall require a two-inch grind and overlay for the area between the two pavement cuts.
Trench restorations shall be as wide as the widest cut on the trench alignment. Cuts limited to areas outside the vehicle travel lanes would only be required to restore the asphalt to the edge of Staff Report: City Streets Pavement Cut Policy Page 3
October 23, 2023
the travel lane to avoid cutting into the vehicle travel area, which is more heavily loaded due to vehicle traffic and more susceptible to early failure as a result of pavement cuts.
Pavement Cuts After More Than Ten Years From Paving or On Sealed Streets Pavement cuts in streets paved more than 10 years ago or in streets that were sealed on the last pavement project including that street would only be required to restore the asphalt per the current edition of the City’s engineering standards. Trenches and patches shall include a one-foot tee-cut on all sides. Any patches within two-feet of a gutter, asphalt dyke, concrete v-ditch, or other concrete improvement shall tee-cut to that concrete improvement. For projects with multiple trenches/pavement cuts, any pavement cuts within four feet of each other shall require a two-inch grind and overlay for the area between the two pavement cuts. Trench restorations shall be as wide as the widest cut on the trench alignment.
The policy also provides for a variance to standard requirements if approved by the City Engineer.
This would be for unique cases where the standard requirement would be impossible to achieve.
See Attachment 2 for exhibits depicting typical pavement cuts and proposed pavement restoration areas per this policy.
Lastly, staff reviewed similar policies in nearby agencies. The City of Pismo Beach passed an ordinance detailing pavement cut requirements similar to the requirements of this policy in 2018.
The City of Arroyo Grande has a pavement cut moratorium which dictates that pavement cuts will not be approved on newly paved streets. Pavement cut policies including moratoriums are common in most cities to dictate restoration requirements on newly paved streets in excess of typical engineering standards to protect the public investment in paving streets.
FISCAL IMPACT
There is no fiscal impact of adopting this policy although it is possible that the City could realize a savings in long term pavement maintenance and street rehabilitation costs as a result of more orderly pavement cuts that protect the City’s investment in its rehabilitated streets.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Adopt a Pavement Cut Policy; or
2. Adopt a modified version of this policy; or
3. Do not adopt a policy; or
4. Provide alternate direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Attachments
1. Pavement Cut Policy
2. Pavement Cut Restoration Exhibits
City of Grover Beach
P U B L I C W O R K S D E P A R T M E N T
Policy Procedure Guideline
GUIDELINE TITLE:
Pavement Cut Policy
GUIDELINE #
0003
EFFECTIVE DATE:
November 1, 2023
REVISED DATE: PAGE(S):
2 Purpose:
To establish a policy for pavement cut requirements after a street has been paved. The requirements of this policy supplement requirements for pavement restorations detailed in Development Code Section
5.20 for development projects.
Adopted Procedure:
This policy shall apply to pavement cuts on all streets as pavement cuts on any street reduce the Pavement Condition Index (PCI) of that street in an irreparable way. The Public Works Department shall require more extensive pavement repairs when a project cuts a recently paved street to ensure that recently paved streets maintain high PCIs.
The City’s Capital Improvement Program (CIP) lists all upcoming pavement rehabilitation projects.
Property owners, contractors, developers, and utility companies are encouraged to review this list to make every effort to perform their work ahead of a City street paving project.
City’s Adopted Capital Improvement Program:
https://www.grover.org/DocumentCenter/View/10276/07_Capital-Projects In addition to the City’s CIP, the City maintains a list of all future Measure K-14 projects. Property owners, contractors, developers, and utility companies are encouraged to review this list to make every effort to perform their work ahead of a Measure K-14 paving project.
Measure K-14 Streets Yet to Be Paved:
https://www.grover.org/DocumentCenter/View/12022/StreetRehabandRepairMap_ALL_completed_curr ent_future?bidId=
In addition to the City’s CIP, the City maintains a list of all future major street paving projects. Property owners, contractors, developers, and utility companies are encouraged to review this list to make every effort to perform their work ahead of a major street paving project.
Major Streets Yet to Be Paved:
https://www.grover.org/DocumentCenter/View/12022/StreetRehabandRepairMap_ALL_completed_curr ent_future?bidId=
Pavement Restoration Requirements:
Pavement restoration requirements for all projects subject to a City building permit shall be conditioned per Development Code Section 5.20. For all projects subject to a City building permit, this policy shall supplement the requirements of Development Code Section 5.20. For all projects not subject to a City building permit, work in the public Right-of-Way shall still require an encroachment permit and all Attachment 1
Title: Pavement Cut Policy Guideline 0003
Effective: November 1, 2023 Revised: Page 2 of 2
pavement restoration shall conform to all applicable City standards and specifications as well as this policy. Pavement cuts shall be divided into three categories as follows:
Pavement cuts within five years of paving:
Pavement cuts within five years from the City’s last paving project shall be required to restore the PCI of the street as much as possible. For any cuts contained to one side of the street centerline only but that disturb the travel lane, a full half-width pavement repair shall be required for the limits of the property/project disturbance. Any trenching shall be restored in accordance with the current edition of the City’s Engineering Standards and Specifications for trench repairs and an additional two-inch grind and overlay shall be required from the gutter/edge of pavement to the centerline. For any cuts crossing the centerline, a full-width pavement repair shall be required for the limits of the property/project disturbance. Any trenching shall be restored in accordance with the current edition of the City’s Engineering Standards and Specifications for trench repairs and an additional two-inch grind and overlay shall be required from the gutter/edge of pavement to opposite gutter/edge of pavement. Cuts limited to areas outside the vehicle travel lanes shall only be required to restore the asphalt to the edge of the travel lane to avoid cutting into the vehicle travel area.
Pavement cuts within five to ten years of paving:
For any cuts contained to one side of the street centerline only, a full half-width pavement repair shall be required for the limits of the project disturbance. Any trenching shall be restored in accordance with the current edition of the City’s Engineering Standards and Specifications for trench repairs and an additional two-inch grind and overall shall be required from the gutter/edge of pavement to the centerline. For any cuts crossing the centerline, a full-width pavement repair shall be required for the limits of the project disturbance. Any trenching shall be restored in accordance with the current edition of the City’s Engineering Standards and Specifications for trench repairs and an additional two-inch grind and overall shall be required from the gutter/edge of pavement to apposite gutter/edge of pavement. Trenches and patches shall include a one-foot tee cut on all sides. Any patches within twofeet of a gutter, asphalt dyke, concrete v-ditch, or other concrete improvement shall tee-cut to that concrete improvement. For projects with multiple trenches/pavement cuts, any pavement cuts within four feet of each other shall require a two-inch grind and overlay for the area between the two pavement cuts. Trench restorations shall be as wide as the widest cut on the trench alignment. Cuts limited to areas outside the vehicle travel lanes shall only be required to restore the asphalt to the edge of the travel lane to avoid cutting into the vehicle travel area.
Pavement cuts after more than ten years from paving or on sealed streets (regardless of time since last seal treatment):
Pavement cuts after more than ten years from the City’s last paving project shall only be required to restore asphalt per the current edition of the City’s Engineering Standards and Specifications.
Specifically, trenches and patches shall include a one-foot tee cut on all sides. Any patches within twofeet of a gutter, asphalt dyke, concrete v-ditch, or other concrete improvement shall tee-cut to that concrete improvement. For projects with multiple trenches/pavement cuts, any pavement cuts within four feet of each other shall require a two-inch grind and overlay for the area between the two pavement cuts. Trench restorations shall be as wide as the widest cut on the trench alignment.
Any variance from this policy must be approved in writing by the City Engineer prior to commencement of work. No variance will be approved otherwise. To request a variance, please email Public Works at [email protected] and detail why your project is not able to meet the requirements of this policy.
Attachment 2