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FIRST AMENDMENT TO
DISPOSITION AND DEVELOPMENT AGREEMENT
THIS FIRST AMENDMENT TO DISPOSITION AND DEVELOPMENT
AGREEMENT (“First Amendment”) is entered into as of March __, 2024, by and between the LANCASTER HOUSING AUTHORITY, a public body corporate and politic (the “Authority”) and RAVELLO HOLDINGS, INC., a California corporation (the “Developer”) (Authority and Developer are sometimes singularly referred to as “Party” and collectively referred to as “Parties”).
RECITALS
A. On May 10, 2023, the Authority and the Developer entered into that certain Disposition and Development Agreement (the “DDA”) providing for the development of the “Authority Parcel” (as defined in the DDA) in three (3) phases.
B. The Authority Parcel constitutes “exempt surplus land,” as defined in California Government Code Section 54221, pursuant to the exemption set forth in Section 54221(f)(1)(H).
C. In pertinent part, California Government Code Section 54221(f)(1)(H)(iii) provides for an exemption from the Surplus Lands Act for land upon which “[a]t least 25 percent of the residential units shall be restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with…an affordable rent pursuant to [Section 50053] of the Health and Safety Code, for a minimum of 55 years for rental housing,….”
D. The Authority and the Developer now desire to amend the DDA as provided herein in order to, among other things: (1) reduce the Purchase Price (as defined in Section
2.1 of the DDA) by Forty Thousand Dollars ($40,000.00) in order to compensate and reimburse Developer for certain work (the “Title Work”) needed to clear title exceptions and/or otherwise put title in a condition acceptable to Developer (such Purchase Price reduction having been previously agreed to in concept by the Parties under an unsigned amendment to the DDA, is accordingly being formalized in this First Amendment), and (2) ensure compliance with California Government Code Section 54221(f)(1)(H)(iii), all as more fully set forth in this First Amendment.
AGREEMENTS
NOW, THEREFORE, the Authority and the Developer agree as follows:
1. Defined Terms. All capitalized terms used without definition in this First Amendment shall have the meanings given them in the DDA.
2. Project.
(A) The first clause of the first paragraph of Recital C of the DDA is hereby amended in its entirety to read as follows:
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“To address the Authority’s objectives of providing affordable housing, the Developer has proposed to acquire from the Authority certain property located at the southwest corner of Sierra Highway and Avenue H and depicted on Attachment 1A (the “Authority Parcel”), to construct between 450 and 499 detached homes (and such additional homes as may be approved by the City) to be built in three (3) phases, with:” (B) The second sentence of the last paragraph of Recital C of the DDA is hereby amended in its entirety to read as follows:
“Residential Units are anticipated to be financed with federal Low Income Housing Tax Credits, tax exempt affordable housing bonds and/or other affordable housing financing sources (any of the foregoing “Tax Credit Financing”). In each Phase, not less than twenty five percent (25%) of the residential units shall be affordable to households whose annual income is at or below eighty percent (80%) of area median income (“AMI”) for the County of Los Angeles determined based on Section 50079.5 of the California Health and Safety Code, with affordable rent as defined in Sections 50052.5 and 50053 of the Health and Safety Code; and the balance of the residential units in each Phase (excluding manager’s units) shall be affordable to households whose annual income is at or below eighty percent (80%) of AMI based on Tax Credit Financing guidelines (the development of the Authority Parcel as provided under this Agreement constitutes and is referred to herein collectively as the “Project”).”
(C) The definition of “Project” in Section 1.1 of the DDA is hereby amended in its entirety to read as follows:
““Project” means between 450 and 499 horizontal Residential Units (and such additional homes as may be approved by the City) to be built in three Phases (Phase 1, Phase 2, and Phase 3), with a unit mix of senior and/or family-oriented units to be determined as provided in the Scope of Development. It is anticipated that the homes will be financed with Tax Credit Financing. In each Phase, not less than twenty five percent (25%) of the residential units shall be affordable to households whose annual income is at or below eighty percent (80%) of AMI for the County of Los Angeles determined based on Section 50079.5 of the California Health and Safety Code, with affordable rent as defined in Sections 50052.5 and 50053 of the Health and Safety Code; and the balance of the residential units (excluding manager’s units) shall be affordable to households whose annual income is at or below eighty percent (80%) of AMI based on Tax Credit Financing guidelines.”
3. Permitted Transfers. Section 1.3(b)(B) of the DDA is hereby amended in its entirety to read as follows:
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“Any transfer or assignment for financing purposes (subject to such financing being considered and approved by Authority pursuant to Section
4.10 of this Agreement), including the grant of any deed(s) of trust to secure the funds necessary for construction and permanent financing of the Developer Improvements or any portion thereof, and also including any transfer by foreclosure or deed in lieu of foreclosure with respect to any such deed(s) of trust.”
4. Amendment of Purchase Price. The purchase price of the Phase 1 Parcel as set forth in Section 2.1 of the DDA is hereby reduced by (a) Forty Thousand Dollars ($40,000) in respect of the Title Work and (b) Forty-Nine Thousand Seven Hundred Sixty-Two and 94/100 Dollars ($49,762.94) in respect of the removal of the Parking Parcel (as defined in Section 12 below) from the Phase 1 Parcel, resulting in a Phase 1 Parcel total purchase price of $2,376,917.89 and an aggregate Purchase Price of $5,762,749.57.
5. Number of Units. The first sentence of Section 4.1(a) of the DDA is hereby amended in its entirety to read as follows:
“As set forth in Section 3.1 of this Agreement and the Scope of Development, the Developer shall construct the number and mix of residential units on the Phase 1 Parcel set forth in the Phase 1 Notice, the number and mix of residential units on the Phase 2 Parcel set forth in the Phase 2 Notice, and the number and mix of residential units on the Phase 3 Parcel set forth in the Phase 3 Notice, at least twenty-five percent (25%) of each of which will be designated for and occupied at Affordable Rents by Qualified Residents.”
6. Period of Affordability. The first sentence of Section 4.1(b) of the DDA is hereby amended in its entirety to read as follows:
“During the entire term of the Affordability Period, Developer agrees to make available, restrict occupancy to, and rent at least twenty-five percent (25%) of the Residential Units to Qualified Residents at Affordable Rents.”
7. Form of Phase Parcel Grant Deed. The form of the Phase Parcel Grant Deed attached as Attachment No. 2 to the DDA is hereby amended as follows:
(A) The references in Sections 3(a) and (b) to “this Agreement” are hereby deemed revised to refer to “the Agreement”.
(B) Section 3(c)(A) is hereby amended in its entirety to read as follows: “(A) Any mortgage or deed of trust permitted by the Agreement or otherwise approved by Grantor; or”.
(C) The sentence immediately following Section 3(c)(B) is hereby amended in its entirety to read as follows: “Grantor shall promptly execute and deliver any documents requested by such mortgage holders certifying that the Grantor’s rights under this Section 3 and Section 5.5 of the Agreement are subordinate to mortgage holder’s rights.” 105744\17308314v9 4
(D) All references in Section 3 to (i) the “Authority” are hereby deemed revised to refer to “Grantor”, and (ii) the “Developer” are hereby deemed revised to refer to “Grantee”.
8. Scope of Development. The Scope of Development attached as Attachment No. 4A to the DDA is hereby amended as follows:
(A) The second sentence under the header “General Description” of the Scope of Development attached as Attachment No. 4A to the DDA is hereby amended in its entirety to read as follows:
“Developer shall develop three separate phases on the Authority Property containing between 450 and 499 (and such additional homes as may be approved by the City) income restricted detached homes (at least twenty- five percent (25%) of which will be designated for and occupied at Affordable Rents by Qualified Residents), defined as the “Residential Units” in the attached DDA.”
(B) The first sentence under the header “Residential Units” of the Scope of Development attached as Attachment No. 4A to the DDA is hereby amended in its entirety to read as follows:
“Twenty-five percent (25%) of the Residential Units in all Phases will be income restricted, as required by the attached DDA.”
9. Phase 1 Parcel. Attachment No. 1B to the DDA depicting the Phase 1 Parcel is hereby deleted in its entirety and replaced with Attachment No. 1B attached to this First Amendment describing the Phase 1 Parcel.
10. Phase 1 Development Plans. Attachment No. 4B to the DDA is hereby deleted in its entirety and replaced with Attachment No. 4B attached to this First Amendment.
11. Residential Declaration of Conditions, Covenants and Restrictions and Regulatory Agreement.
(A) The second sentence of Section 1 of that certain “Residential Declaration of Conditions, Covenants and Restrictions and Regulatory Agreement” attached as Attachment No. 5 to the DDA is hereby amended in its entirety to read as follows:
“Twenty-five percent (25%) of such Residential Units shall be designated for and occupied by Qualified Residents at Affordable Rents, as follows:
(B) Affordability Requirements. Section 1(a) of that certain “Residential Declaration of Conditions, Covenants and Restrictions and Regulatory Agreement” attached as Attachment No. 5 to the DDA is hereby amended in its entirety to read as follows:
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“Affordability Requirements. At least twenty-five percent (25%) of the Residential Units will be designated for and occupied at Affordable Rents by lower income households as defined by California Health and Safety Code Section 50079.5.”
(C) Duration of Affordability Requirements. Section 1(b) of that certain “Residential Declaration of Conditions, Covenants and Restrictions and Regulatory Agreement” attached as Attachment No. 5 to the DDA is hereby amended in its entirety to read as follows:
“Duration of Affordability Requirements. During the entire term of the Affordability Period, Covenanter agrees to make available, restrict occupancy to, and rent at least twenty-five percent (25%) of the Residential Units to Qualified Residents at affordable rents as set forth in Section (a) above. In addition to any requirements of the Code, Covenanter agrees to comply with the provisions of Health and Safety Code Section 33413 through Section 33418 to the extent necessary to enable the Covenantee to count at least twenty-five percent (25%) of the Residential Units for purposes of meeting the requirements of Section 33413 of the Health and Safety Code. The term “Affordability Period” means the period beginning upon the first day of the first full month following the date on which the first Residential Unit in the Project is occupied and ending on the last day of the 660th month thereafter.”
12. Parking Parcel. Prior to the Closing of the Phase 1 Parcel, the so-called “parking parcel” as depicted on Exhibit A attached hereto and incorporated herein (the “Parking Parcel”) has been removed from, and no longer constitutes a part of, the Phase 1 Parcel.
Accordingly, (a) the purchase price of the Phase 1 Parcel as set forth in Section 2.1 of the DDA is hereby correspondingly reduced by Forty-Nine Thousand Seven Hundred Sixty- Two and 94/100 Dollars ($49,762.94) and (b) the Parties acknowledge that such reduction in the purchase price of the Phase 1 Parcel is reflected in Section 4 of this First Amendment above.
13. Offsite Infrastructure Work. The Authority hereby acknowledges that certain portions of the required infrastructure work associated with the development of the Project relate to certain offsite conditions. A general description of such offsite work is set forth on Exhibit B attached hereto (the “Offsite Work”). Accordingly, the Authority shall, and shall cause the City to, cooperate with Developer to (i) enter into the City’s standard form of entry license agreement(s) (as reasonably approved by Developer), as may be reasonably required for Developer to perform and complete such Offsite Work from and after the Closing for the Phase 1 Parcel, and (ii) provide for appropriate (and as approved by Developer) impact fee credits or reimbursements associated with such Offsite Work pursuant to the City’s so-called [“fee program”] [NTD: Please confirm the name of this program]. With respect to the Offsite Work, Developer shall comply with all applicable requirements regarding payment of prevailing wages or related obligations as set forth in California Labor Code Section 1720 et seq., and all applicable requirements under that certain Community Workforce Agreement, dated July 1, 2018 by and between the Los Angeles/Orange Counties Building and Construction Trades Council and the signatory 105744\17308314v9 6
Local Unions and District Councils, on the one hand, and the City, on the other hand, as amended by that certain Amendment No I to the Community Workforce Agreement dated as of July 29, 2020.
14. Estoppel Certificates. Not in limitation of Sections 3.10(a) and 6.20 of the DDA, Authority acknowledges and agrees that Authority shall, from time to time, sign and deliver, within a reasonable time following Developer’s reasonable written request therefor, an estoppel certificate (in a form reasonably approved by the Authority) pertaining to the matters set forth in the DDA, including, without limitation, confirming to the extent applicable (i) the DDA is in full force and effect, (ii) the DDA has not been assigned, supplemented, modified or amended, except as expressly set forth in the estoppel, (iii) no default under, or violation of, the DDA exists, and no condition exists which, with the giving of notice or the lapse of time or both, will constitute an actionable default or violation of the DDA, except as may be expressly set forth in the estoppel, (iv) which “Tasks/Activities” in the Schedule of Performance attached as Attachment No. 3 to the DDA have been completed, (v) the dates (as the same may have been extended in accordance with the DDA) by which any then-uncompleted “Tasks/Activities” must be completed or otherwise met, and (vi) such other matters as may be reasonably requested.
15. Effect of First Amendment. Except as set forth in this First Amendment, all provisions of the DDA shall remain unchanged and in full force and effect.
16. Counterparts. This First Amendment may be executed in one or more counterparts by actual or facsimile signature (with original signatures to follow by overnight mail). All counterparts so executed shall constitute one contract, binding on all parties, even though all parties are not signatories to the same counterpart. [SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Authority and the Developer have executed this First Amendment as of the date first written above.
AUTHORITY:
LANCASTER HOUSING AUTHORITY,
a public body corporate and politic
By: _____________________________
Jason Caudle, City Manager
APPROVED AS TO FORM:
_______________________________
Authority Deputy Executive Director
_______________________________
Authority Counsel
ATTEST:
_______________________________
Authority Secretary
DEVELOPER:
RAVELLO HOLDINGS, INC.,
a California corporation
By:
Phil Ram, Chief Executive Officer
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Exhibit A
Depiction of Parking Parcel
[See attached.]
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Exhibit B
Description of Offsite Work
1. Frontage improvements along Sierra Highway in accordance with the following conditions of approval for TTM 84221 which include:
a. Condition #37
i. 7-foot raised median
ii. 29 feet of pavement from the raised median to the curb iii. 14-foot meandering sidewalk/adjacent sidewalk/separated sidewalk b. Condition #39
i. Potential additional paving beyond centerline as follows – 7’ raised median and 21 feet of pavement
c. Condition #40
i. Traffic Signal Interconnect improvement
d. Condition #41
i. City owned and maintained LS3 Street lighting system e. Conditions #76 – 80
i. All City owned and maintained Landscape Maintenance District (LMD) Improvements
2. Completion of the following drainage and park improvements located on Whit Carter Park pursuant to those certain drainage and improvement plan sets pertaining to Whit Carter Park as may be submitted by Developer to, and approved by, the City from time to time:
a. All grading
b. Placement of asphalt
c. Signage, striping and curb stops (if required)
d. Parling lot lighting [NTD: City to confirm if this will be required] e. Landscaping around the parking lot as required
3. Completion of the following City parking lot improvements located west of the project that will serve Mariposa Park pursuant to those certain grading and improvement plan sets pertaining to such parking lot as may be submitted by Developer to, and approved by, the City from time to time:
a. All grading
b. All storm drain improvements
c. All security fencing
d. All maintenance access
e. All park amenity improvements (the current conceptual design is a passive athletic field area)
f. All landscaping and pedestrian access walks
g. All site lighting
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ATTACHMENT NO. 1B
DESCRIPTION PHASE 1 PARCEL
[See attached.]
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ATTACHMENT NO. 4B
PHASE 1 DEVELOPMENT PLANS
[See attached.]