ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY (this “Indemnity”), dated as of ________________________________, 2024, is made by CITY OF LAKE ELSINORE, a municipal corporation within the geographic boundaries of the County of Riverside (referred to as “Indemnitor”), whose address for purposes of giving notices is 130 South Main Street, City of Lake Elsinore, CA 92530, Attention: City Clerk, in favor of the COUNTY OF RIVERSIDE, a political subdivision of the State of California (“COUNTY” or “County”), whose address for purposes of giving notices is 3403 Tenth Street, Suite #300, Riverside, CA 92501.
WITNESSETH
WHEREAS, Indemnitor is the owner of the real property in the City of Lake Elsinore, County of Riverside, California, as more particularly described on Exhibit A attached hereto and made a part hereof, and the real property improvements thereon or to be constructed thereon (collectively referred to as the “Property”);
WHEREAS, Indemnitor and COUNTY have entered into that certain Loan Agreement for the Use of American Rescue Plan Act (ARPA) Funds, dated as of ________________________________, 2024 (the “Loan Agreement”), pursuant to which COUNTY agreed to loan to Indemnitor, or its assignee, Five Million and 0/100 Dollars ($5,000,000) in ARPA Program funds (the “ARPA Loan”) for the purpose of developing a sixteen (16) unit multifamily rental affordable housing development, including one manager’s unit, and related improvements and amenities on the Property; and WHEREAS, Indemnitor has agreed to execute and deliver to COUNTY this Indemnity to induce COUNTY to enter into the Loan Agreement and provide the ARPA Loan to Indemnitor.
NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual agreements hereinafter set forth, Indemnitor hereby agrees with COUNTY as follows:
Section 1. DEFINITIONS
For the purpose of this Indemnity, “Hazardous Materials” or “Hazardous Substances” shall include, but not be limited to, any substance or material (whether a raw material, building component or waste, a product or by-product of manufacturing or other activities, or any other substance or material) which is or becomes designated, classified or regulated as being “hazardous” or “toxic”, or is or becomes otherwise similarly designated, classified or regulated, under any Federal, state or local law, regulation or ordinance, including without limitation (i) any substance defined as a “hazardous substance” or a “hazardous waste” for purposes of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., or the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., respectively, (ii) any substance defined as a “hazardous waste” or a “hazardous substance” for purposes of applicable state or local law, and (iii) petroleum, flammable explosives, urea formaldehyde insulation, asbestos and radioactive materials, substances defined as “extremely hazardous substances,” “hazardous substances,” “hazardous materials,” “hazardous waste” or “toxic substances” under the Hazardous Materials Transportation Act, 49
U.S.C. Sections 1801, et seq.; and those substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code, as “infectious waste” in Section 25117.5 of the California Health and Safety Code, or as “hazardous substances” in Section 25316 of the California Health and Safety Code or “hazardous materials” as defined in Section 353 of the California Vehicle Code; and in the regulations adopted and publications promulgated pursuant to said laws. “Hazardous Materials” and “Hazardous Substances” shall expressly exclude substances typically used in the construction, development, operation and maintenance of an apartment complex provided such substances are used in accordance with all applicable laws.
For the purpose of this Indemnity, “ARPA Loan Documents” shall refer to the Loan Agreement, any agreement entered into in the form of an Attachment thereto or in connection therewith, and any extensions, modifications or amendments thereto.
Section 2. COVENANTS AND INDEMNITY
The following covenants and indemnities are hereby given and made by Indemnitor:
2.1 Covenants.
(a) Indemnitor covenants that it shall comply with any and all laws, regulations, and/or orders which may be promulgated, from time to time, with respect to the discharge and/or removal of Hazardous Materials, to pay immediately when due the costs of the removal of, or any other action required by law with respect to, any such Hazardous Materials, and to keep the Property free of any lien imposed pursuant to any such laws, regulations, or orders. (b) Indemnitor covenants that the Property will not, while Indemnitor is the owner thereof, be used for any activities involving, directly or indirectly, the use, generation, treatment, storage, release, or disposal of any Hazardous Materials, except for de minimis quantities used at the Property in compliance with all applicable environmental laws and required in connection with the development of the Property in conformance with the ARPA Loan Documents.
(c) Indemnitor further agrees that Indemnitor shall not release or dispose of any Hazardous Materials at the Property, except for de minimis quantities released or disposed of at the Property in compliance with all applicable environmental laws, without the express written approval of COUNTY and that any such release or disposal shall be affected in strict compliance with all applicable laws and all conditions, if any, established by COUNTY. (d) COUNTY shall have the right, upon reasonable notice and subject to rights of tenants, to conduct an environmental audit of the Property at COUNTY’s expense, unless Hazardous Materials are found in violation of this Indemnity, then at Indemnitor’s sole cost and expense, and Indemnitor shall cooperate in the conduct of any such environmental audit but in no event shall such audit be conducted unless COUNTY reasonably believes that such audit is warranted. Other than in an emergency, such audit shall be conducted only after prior notice has been given to Indemnitor and only in the presence of a representative of Indemnitor. Indemnitor shall give COUNTY and its agents and employees access to the Property to remove, or otherwise to mitigate against the effects of, Hazardous Materials, provided, however, that COUNTY may
exercise this right only if Indemnitor has failed to commence action to mitigate the effects of the Hazardous Materials within thirty (30) days of receipt of notice from COUNTY. (e) Indemnitor shall not install, or permit to be installed, on the Property friable asbestos or any substance containing asbestos and deemed hazardous by federal or state regulations respecting such material, and, with respect to any such material currently present in the Property, Indemnitor shall promptly either (i) remove or cause to be removed any material that such regulations deem hazardous and require to be removed, or (ii) otherwise comply with such federal and state regulations, at Indemnitor’s sole cost and expense. If Indemnitor shall fail to so do within the cure period permitted under applicable law, regulation, or order, COUNTY may do whatever is necessary to eliminate said substances from the premises or to otherwise comply with the applicable law, regulation, or order, and the costs thereof shall be added to the Obligations (as hereinafter defined) of Indemnitor under this Section 2. (f) Indemnitor shall immediately advise COUNTY in writing of any of the following: (i) any pending or threatened environmental claim against Indemnitor or the Property, or (ii) any condition or occurrence on the Property that (A) results in noncompliance by Indemnitor with any applicable environmental law, (B) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any environmental law, or (C) could reasonably be anticipated to form the basis of an environmental claim against the Property or Indemnitor that could reasonably have material adverse effect on the Property.
2.2 Indemnity. Indemnitor shall indemnify, protect, and hold COUNTY and its directors, officers, employees, and agents (the “Indemnified Parties”) harmless from and against any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or expenses (including, without limitation, attorneys’ and experts’ fees and disbursements) of any kind or of any nature whatsoever (collectively, the “Obligations”) which may at any time be imposed upon, incurred by or asserted or awarded against COUNTY and arising in connection with, from or out of:
(a) The presence of any Hazardous Materials on, in, under, or affecting all or any portion of the Property, which were stored, discharged, released or emitted on the Property;
(b) The breach of any covenant made by Indemnitor in Section 2.1 hereof; or (c) The enforcement by COUNTY of any of the provisions of this Section 2.2 or the assertion by Indemnitor of any defense to its obligations hereunder.
Notwithstanding the foregoing, Indemnitor’s liability under this Section 2.2 shall not extend to (i) any Hazardous Substance present or released in, on, or around any part of the Property, or in the soil, groundwater, or soil vapor or under the Property that first arise, commence or occur after the actual dispossession of the Property from Indemnitor and all entities which control, are controlled by, or are under common control with Indemnitor, following foreclosure or acquisition of the Property by a deed in lieu of foreclosure, or (ii) any Obligations arising from the gross negligence or intentional misconduct of COUNTY or any of its Indemnified Parties.
Section 3. INDEMNITOR’S UNCONDITIONAL OBLIGATIONS
3.1 Unconditional Obligations. Indemnitor hereby agrees that the Obligations will be paid and performed strictly in accordance with the terms of this Indemnity, regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting the ARPA Loan Documents or affecting any of the rights of COUNTY with respect thereto. The obligations of Indemnitor hereunder shall be absolute and unconditional irrespective of:
(a) The validity, regularity, or enforceability of the Loan Agreement or any other instrument or document executed or delivered in connection therewith; (b) Any alteration, amendment, modification, release, termination, or cancellation of the ARPA Loan Documents, or any change in the time, manner, or place of payment or performance of, or in any other term in respect of, all or any of the obligations of Indemnitor contained in any of the ARPA Loan Documents; (c) Any exculpatory provision in any of the ARPA Loan Documents or any document delivered in connection therewith limiting COUNTY’s recourse to property encumbered by the deed of trust securing Indemnitor’s obligations under the ARPA Loan Documents, or to any other security, or limiting COUNTY’s rights to a deficiency judgment against Indemnitor;
(d) The insolvency or bankruptcy of Indemnitor; or
(e) Any other circumstance that might otherwise constitute a defense available to, or a discharge of, Indemnitor with respect to any or all of the Obligations.
3.2 Continuation. The Indemnity provided under Section 2.2 (a) is a continuing indemnity and shall remain in full force and effect until the satisfaction in full of all of the Obligations (notwithstanding the release or other extinguishment of the deed of trust securing Indemnitor’s obligations under the ARPA Loan Documents); and (b) shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the COUNTY upon the insolvency, bankruptcy, or reorganization of Indemnitor, all as though such payment had not been made.
3.3 Termination. Notwithstanding the payment (and performance) in full of all of the Obligations and the payment (or performance) in full of all of Indemnitor’s obligations under the ARPA Loan Documents, this Indemnity shall not terminate if any of the following shall have occurred:
(a) COUNTY has at any time or in any manner participated in the management or control of, taken possession of (whether personally, by agent or by appointment of a receiver), or taken title to the Property or any portion thereof, whether by foreclosure, deed in lieu of foreclosure, sale under power of sale or otherwise; or
(b) There has been a change, between the date hereof and the date on which all of the Obligations are paid and performed in full, in any Hazardous Materials laws, the effect of which may be to make a lender or mortgagee liable in respect of any of the Obligations, notwithstanding the fact that no event, circumstance, or condition of the nature described in paragraph (a) above ever occurred.
Section 4. WAIVER
Indemnitor hereby waives the following:
(a) Promptness and diligence;
(b) Notice of acceptance and notice of the incurrence of any obligation by Indemnitor;
(c) Notice of any action taken by COUNTY, or any other interested party under the Loan Agreement or under any other agreement or instrument relating thereto; (d) All other notices, demands, and protests, and all other formalities of every kind, in connection with the enforcement of the Obligations, the omission of or delay in which, but for the provisions of this Section 4, might constitute grounds for relieving Indemnitor of its Obligations hereunder;
(e) Any requirement that COUNTY protect, secure, perfect, or insure any security interest or lien in or on any property subject thereto, (f) Any requirement that COUNTY exhaust any right or take any action against Borrower or any other person or collateral;
(g) Any defense that may arise by reason of:
(1) The incapacity, lack of authority, death or disability of, or revocation hereof by, any person or persons;
(2) The failure of COUNTY to file or enforce any claim against the estate (in probate, bankruptcy, or any other proceedings) of any person or persons; or (3) Any defense based upon an election of remedies by COUNTY, including, without limitation, an election to proceed by non-judicial foreclosure or which destroys or otherwise impairs the subrogation rights of COUNTY or any other right of COUNTY to proceed against Indemnitor.
Section 5. NOTICES
Any notice, demand, statement, request, or consent made hereunder shall be in writing and shall be personally served, mailed by first-class registered mail, return receipt requested, to the address set forth in the first paragraph of this Indemnity, above, or given by telecopier to the telecopier numbers stated below, with confirmations mailed by first class registered mail, return
receipt requested to the address set forth above, of the party to whom such notice is to be given (or to such other address as the Parties hereto, shall designate in writing):
In the case of COUNTY:
County of Riverside
Housing and Workforce Solutions
3403 Tenth Street, Suite #300
Riverside, CA 92501
Attn: Director
In the case of Indemnitor:
City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
Attention: City Clerk
Email: [email protected]
with copies to:
Leibold McClendon & Mann
9841 Irvine Center Drive, Suite 230
Irvine, California 92618
Attention: Barbara Leibold, Esq.
Email: [email protected]
Any notice that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, shall be deemed delivered upon its transmission; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof.
Section 6. MISCELLANEOUS
6.1 Indemnitor shall make any payment required to be made hereunder in lawful money of the United States of America, and in same day funds, to COUNTY at its address specified in the first paragraph hereof.
6.2 No amendment of any provision of this Indemnity shall be effective unless it is in writing and signed by Indemnitor and COUNTY, and no waiver of any provision of this Indemnity, and no consent to any departure by Indemnitor from any provision of this Indemnity, shall be effective unless it is in writing and signed by COUNTY, and then such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which given.
6.3 No failure on the part of COUNTY to exercise, and no delay in exercising, any right hereunder or under the ARPA Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of COUNTY provided herein and in the other loan documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law.
6.4 Any provision of this Indemnity that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof and without affecting the validity or enforceability of such provision in any other jurisdiction.
6.5 This Indemnity shall (a) be binding upon Indemnitor, and Indemnitor’s successors and assigns; and (b) inure, together with all rights and remedies of COUNTY hereunder, to the benefit of COUNTY, its respective directors, officers, employees, and agents, any successors to COUNTY’s interest in the Property, any other person who acquires any portion of the Property at a foreclosure sale or otherwise through the exercise of COUNTY’s rights and remedies under the ARPA Loan Documents, any successors to any such person, and all directors, officers, employees, and agents of all of the aforementioned parties. Without limiting the generality of clause (b) of the immediately preceding sentence, COUNTY may, subject to, and in accordance with, the provisions of the ARPA Loan Documents, assign or otherwise transfer all or any portion of its rights and obligations under the ARPA Loan Documents, to any other person, and such other person shall thereupon become vested with all of the rights and obligations in respect thereof that were granted to COUNTY herein or otherwise. None of the rights or obligations of Indemnitor hereunder may be assigned or otherwise transferred without the prior written consent of COUNTY, except as provided in the ARPA Loan Documents.
6.6 Indemnitor hereby (a) irrevocably submits to the jurisdiction of the Superior Court of Riverside County in any action or proceeding arising out of or relating to this Indemnity, (b) waives any defense based on doctrines of venue or forum non convenient or similar rules or doctrines, and (c) irrevocably agrees that all claims in respect of any such action or proceeding may be heard and determined in such California or federal court. Indemnitor irrevocably consents to the service of any and all process which may be required or permitted in any such action or proceeding to the address specified in the first paragraph of this Indemnity, above. Indemnitor agrees that a final judgment in any such action or proceeding shall be inclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.
6.7 The title of this document and the captions used herein are inserted only as a matter of convenience and for reference and shall in no way define, limit, or describe the scope or the intent of this Indemnity or any of the provisions hereof.
6.8 This Indemnity shall be governed by, and construed and interpreted in accordance with, the laws of the State of California applicable to contracts made and to be performed therein, except to the extent that the laws of the United States preempt the laws of the State of California.
6.9 This Indemnity may be executed in any number of counterparts, each of which shall constitute an original and all of which together shall constitute one agreement. [Signatures on the Following Page]
IN WITNESS WHEREOF, Indemnitor has duly executed this Indemnity as of the date first set forth above.
INDEMNITOR:
CITY OF LAKE ELSINORE,
a municipal corporation
By: __________________________
Name: Jason Simpson
Title: City Manager
ATTEST:
By:____________________________________
Candice Alvarez, MMC, City Clerk
APPROVED AS TO FORM:
By: ____________________________________
Barbara Leibold, City Attorney
Exhibit A
LEGAL DESCRIPTION
Real Property in the City of Lake Elsinore, County of Riverside, State of California, described as follows:
ALL OF LOTS 2, 4, 6 AND 8, ALL IN BLOCK 51 OF S. D. HEALD'S RESUBDIVISION AS SHOWN BY MAP ON FILE IN BOOK 8 PAGE 378 OF OFFICIAL RECORDS OF SAN DIEGO COUNTY, CALIFORNIA.
EXCEPTING THEREFROM ANY PORTION OF SAID LAND LYING EASTERLY AND SOUTHEASTERLY OF
THE WESTERLY AND NORTHWESTERLY BOUNDARY LINE DESCRIBED WITHIN THAT CERTAIN
QUITCLAIM DEED CONVEYED TO RIVERSIDE COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT BY DOCUMENT RECORDED OCTOBER 26, 1993 AS INSTRUMENT NO. 1993-420648 OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM ANY PORTION OF SAID LAND LYING WITHIN THAT CERTAIN QUITCLAIM DEED CONVEYED TO CITY OF LAKE ELSINORE BY DOCUMENT RECORDED JULY 23, 2019 AS INSTRUMENT NO. 2019-0273768 OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM ANY PORTION OF SAID LAND LYING WITHIN THAT CERTAIN GRANT
DEED CONVEYED TO JOSE LUIS MORALES GUITRON, A MARRIED MAN BY DOCUMENT RECORDED OCTOBER 24, 2018 AS INSTRUMENT NO. 2018-0419883 OF OFFICIAL RECORDS.
NOTE: THE ABOVE DESCRIPTION DESCRIBING PARCEL B IS FOR IDENTIFICATION PURPOSES ONLY AND HAS BEEN PROVIDED FOR THE ACCOMMODATION OF THIS REPORT. SAID DESCRIPTION IS
NOT INSURABLE PURSUANT TO THE SUBDIVISION MAP ACT OF THE STATE OF CALIFORNIA AND SHOULD NOT BE RELIED UPON TO CONVEY OR ENCUMBER SAID LAND. [portion of APN: 374-162-036]