AGREEMENT TO CONVEY LAND
(Katella Terrace Apartments
1249 E. Katella Avenue)
By and Between
THE CITY OF ORANGE, CALIFORNIA
(“City”)
and
OSH KATELLA TERRACE LLC
(“Owner”)
AGREEMENT TO CONVEY LAND
KATELLA TERRACE
This AGREEMENT TO CONVEY LAND (the “Agreement”), dated as of ______________, 2022, is entered into by and between THE CITY OF ORANGE, a municipal corporation, (the “City”), and OSH KATELLA TERRACE LLC., a California limited liability company (the “Owner”). City and Owner agree as follows:
RECITALS
A. Owner currently owns fee title to that certain real property in City of Orange commonly known as 1249 E. Katella Avenue, described in the Legal Description attached hereto as Attachment No. 1 (the “Property”).
B. Owner and City entered into that certain Density Bonus Housing Agreement concerning the Property dated January 20, 2020 and recorded in the Official Records, Orange County Clerk - Recorder, on March 2, 2020 as Document No. 2020000090418 (the “Density Bonus Agreement”), providing for the development of the Property with a 74 dwelling unit development to be exclusively rented to Senior Lower Income Household Eligible Tenants at Affordable Rent (the “Housing Development”).
C. In o rder to achieve the purposes and satisfy the terms, conditions, covenants and requirements of the Density Bonus Agreement: (1) Owner proposes to convey the Property to City in accordance with the provisions of this Agreement, subject to the Density Bonus Agreement and the Covenant Agreement required by Section 1.2 of this Agreement; (2) following such conveyance, City intends to enter into exclusive good faith negotiations with Katella Terrace, L.P., a California limited partnership, the proposed developer of the Housing Development on the Property (the “ Developer”), for the lease of the Property to Developer consistent with the provisions of this Agreement for the development of the Housing Development by Developer; and (3) following such lease of the Property to Developer and Completion of the Housing Development by Developer, Developer would manage and operate the Housing Development for rental exclusively to Senior Lower Income Household Eligible Occupants at a Rental Cost that will not exceed Affordable Rent, all in accordance with the terms and conditions of this Agreement, including all attachments hereto.
D. In furtherance of the public purposes set forth in the laws of the State of California to provide for and facilitate urgently needed affordable housi ng, Owner desires to convey the Property to City subject to the terms and conditions of this Agreement.
E. The conveyance and use of the Property pursuant to this Agreement, and the fulfillment generally of this Agreement are in the vital and best interests of the City of Orange and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements.
F. All capitalized terms in this Agreement which are not defi ned herein shall have the meaning ascribed to them in the Density Bonus Agreement.
AGREEMENT TO CONVEY LAND
KATELLA TERRACE
NOW, THEREFORE, in consideration of their mutual promises set forth herein, City and Owner hereby agree as follows:
ARTICLE 1 CONVEYANCE OF THE PROPERTY
Section 1.1 Conveyance of the Property
In accordance with and subject to all the terms, covenants, a nd conditions of this Agreement and the covenant agreement required by Section 1.2 of this Agreement to be entered into between Owner and City and recorded against the Property concurrently with the Close of Escrow hereunder (the “Covenant Agreement”), Owner agrees to convey the Property to City and City agrees to accept title to the Property from Owner, for and in consideration of (i) the performance by City of its obligations under this Agreement and the Covenant Agreement and (ii) the waiver by City as of the Close of Escrow of joint representation litigation fees in the approximate amount of Ninety Thousand Dollars ($90,000) owed to City by Owner arising from certain previously pending and now settled litigation pertaining to the Project.
Section 1.2 Covenant Agreement
The Covenant Agreement shall provide for the continuation of all of the terms, agreements, covenants and requirements of the Density Bonus Agreement and shall require City to perform the following obligations after the Close of Escrow hereunder:
a. Negotiate exclusively and in good faith with Developer , pursuant to an agreement to negotiate in form and substance reasonably acceptable to City, to enter into a proposed Disposition and Development Agreement with Developer (the “DDA”) consistent with the Density Bonus Agreement, this Agreement, the Covenant Agreement and the criteria for an exempt surplus land transfer set forth in California Government Code Section 37364;
b. Use reasonable best efforts to obtain the HCD Transfer Approval described in Section
1.3.b (1) (b) of this Agreement;
c. Expeditiously consider approval of the proposed DDA in the manner required by law;
d. In the event the DDA is approved by City and entered into with Developer, diligently and in good faith perform the obligations of City under the DDA and lease the Property to Developer for a 60-year term as and when required by the DDA so long as the DDA is in effect in accordance with its terms , pursuant to a written lease in form and substance consistent with the terms and conditions of the Form of Lease attached hereto as Attachment No. 2;
e. In the event the Property is leased to Developer by City under the DDA, diligently and in good faith perform the obligations of City under the lease for the term of the lease unless earlier terminated pursuant to the provisions of the lease.
AGREEMENT TO CONVEY LAND
KATELLA TERRACE
Section 1.3 Escrow
a. Opening of Escrow
Within thirty (30) days after the HCD Transfer Approval is received by City from the California Department of Housing and Community Development (“HCD”) , Owner shall open an escrow for the conveyance of the Property to City with Escrow Agent and deli ver to the Escrow Agent a fully executed copy of this Agreement. Thereafter, Developer and City shall execute and deliver to Escrow Agent any supplemental escrow instructi ons reasonably required by Escrow Agent or otherwise agreed to by the parties to consummate the conveyance of the Property to City as contemplated herein (the “Joint Escrow Instructions”); provided that neither City nor Developer shall have any obligation to execute any such additional or amended escrow instructions except to the extent necessary and consistent with this Agreement.
b. Conditions Precedent to the Close of Escrow
1. City’s Conditions. City’s obligation to acquire the Property from Owner under this Agreement shall be conditioned upon the satisfaction, or City’s signed written waiver, of each of the following conditions precedent on or before the Close of Escrow:
(a) Title Policy. Title Company will be ir revocably committed to issue a title policy for the conveyance of the Property to City in form and substance reasonably acceptable to City.
(b) HCD Transfer Approval. The receipt by City of evidence satisfactory to City, in its sole and absolute discretion, that HCD approves the transfer of the Property pursuant to the DDA as contemplated by this Agreement as being a transfer of exempt surplus land as defined by Government Code Section 54221(f)(1)(A) and Section 37364.
(c) Owner’s Deliveries. Owner will have delivered to Escrow Agent, on or before the Close of Escrow the Grant Deed and the Covenant Agreement executed by Owner in recordable form, and any other documents to be executed (and acknowledged where required) by Owner to consummate the transaction contemplated herein.
(d) Owner’s Performance . Owner will have performed all of its material obligations required by this Agreement to be performed before the Close of Escrow.
(e) Possession of the Property. The Property shall be vacant, free of any leases, contracts, agreements or other rights of occupancy or possession on the part of any third parties which will be binding on the Property or any portion thereof after the Close of Escrow, and Owner shall have satisfied, at its sole expense, all s tatutory requirements applicable to removal of any occupants or termination of any such leases, contracts, agreements or other rights of occupancy or possession, if any.
AGREEMENT TO CONVEY LAND
KATELLA TERRACE
(f) Owner’s Closing Statement. Owner will have reasonably approved Owner’s escrow closing statement.
2. Owner’s Conditions. Owner’s obligation to convey the Property to City under this Agreement shall be conditioned upon the satisfaction, or Owner’s signed written waiver, of each of the following conditions precedent on or before the Close of Escrow:
(a) City’s Deliveries. City will have delivered to Escrow Agent, on or before the Close of Escrow, the Covenant Agreement executed by City in recordable form, documentary evidence of the waiver of payment by Owner of the litigation fees referred to in Section 1.1 of this Agreement, and any other documents to be executed (and acknowledged where required) by City to consummate the transaction contemplated herein.
(b) HCD Transfer Approval. The receipt by City of the HCD Transfer Approval described in Section 1.3.b (1) (b) of this Agreement.
(c) City’s Performance. City will have performed all of its material obligations required by this Agreement to be performed before the Closing Date.
(d) City’s Closing Statement. City will have reasonably approved City’s escrow closing statement.
Section 1.4 Close of Escrow.
a. The Close of Escrow for conveyance of title to the Property to City (the “Close of Escrow”) will occur on or before June 30, 2022, unless such date is extended by written agreement of Owner and City. City and Owner agree to perform all acts necessary to satisfy the conditions precedent to Close of Escrow set forth in Section 1.3.b above in sufficient time for the Close of Escrow to timely occur under this Agreement.
b. Possession of the Property will be delivered to City concurrently with the Close of Escrow.
Section 1.5 Condition of Title
Owner will convey to City fee simple merchantable title to the Property free and clear of all liens, encumbrances, assessments, easements, leases and taxes, subject only to the Density Bonus Agreement and the Covenant Agreement and such title exceptions as may be first approved in writing by City in its sole and absolute discretion . Owner shall convey the Property to City pursuant to a grant deed reasonably acceptable to the parties consistent with the terms and conditions of this Agreement (the “Grant Deed”).
ARTICLE 2 RELATIONSHIP OF THE PARTIES INVOLVED IN THE PROJECT
AGREEMENT TO CONVEY LAND
KATELLA TERRACE
Section 2.1 Relationship of City and Owner
Nothing contained in this Agreement or in any other document or instrument made in connection with this Agreement shall be deemed or construed to create a partnership, tenancy in common, joint tenancy, joint venture or co -ownership by or between City and Owner. City shall not be in any way responsible or liable for the debts, losses, obligations or duties of Owner with respect to the Project or the Property.
Section 2.2 Not a Development Agreement
This Agreement is not a “Development Agreement” as provide d in Section 65864 et seq. of the California Government Code. The development of the Property must comply with all required City approvals and permits and all applicable conditions of approval required by City.
Section 2.3 Disclaimer of Responsibility by City
a. City neither undertakes nor assumes nor will have any responsibility, right or duty to Owner or to any third party to review, inspect, supervise, pass judgment upon or inform Owner or any third party of any matter in connection with the Property or Project.
b. It is understood and agreed by Owner that City review of plans and applications for land use decisions for the Project, including without limitation building permits and zoning, shall be conducted by City in its governmental capacity, and nothing in this Agreement shall be construed so as to bind City to make any approval or any particular exercise of its discretion, except to the extent required by applicable law.
Section 2.4 Nonliability of City Officials and Employees
No member, official, employee or consultant of City will be personally liable to the other party, or any successor in interest, in the event of any default or breach by City or for any amount which may become due to the other party or to its successor, or on any obligations under the terms of this Agreement.
Section 2.5 No Third Party Beneficiaries
The provisions of this Agreement shall be for the sole benefit of Owner and City, and neither Developer nor any other person or entity shall have any rights under this Agreement nor be deemed to be a third party beneficiary of this Agreement or of any of the obli gations of the parties to this Agreement.
Section 2.6 Relationship of Owner and Developer
The parties hereto contemplate that on or before the execution of the DDA, Developer will be organized as a California limited partnership in which Owner will not control or own a majority interest in Developer entity, with Horizon-ELOM Holdings, LLC a s the Administrative General
AGREEMENT TO CONVEY LAND
KATELLA TERRACE
Partner of Developer with an interest in the Developer entity of 0.005%, Owner as the Managing General Partner of Developer with a no n-controlling interest in the Developer entity of 0.005%, and the limited partner(s) of Developer having an interest in the Developer entity of 99.99%; and that prior to commencement of the development of the Housing Development, the limited partners shall be comprised of one or more tax credit investors. Owner may be removed as Managing General Partner of Developer by either the Administrative General Partner or the Limited Partner in accordance with the provisions of the Developer entity limited par tnership agreement. Owner represents and warrants that the facts set forth in this Agreement, including without limitation this Section 2.6, are true and correct.
ARTICLE 3 TERMINATION AND INDEMNIFICATION
Section 3.1 Termination
Either Owner or City shall have the right to terminate this Agreement at any time prior to the Close of Escrow by delivering a written notice of termination to the other party if:
a. The other party is in material default of any material obligation hereunder, and following receipt of written notice specifying in reasonable detail the nature of such default and the actions required to cure such default, fails to cure such default within thirty (30) days of receipt of such notice of default; or
b. HCD does not issue the HCD Transfer Approval described in Section 1.3.b (1) (b) of this Agreement within one hundred twenty (120) days of the E ffective Date of this Agreement; or
c. The conveyance of the Property from Owner to City pursuant to this Agreement does not occur on or before June 30, 2022, except as such date might be extended pursuant to either Section 1.4 or Section 4.6 of this Agreement.
Section 3.2 Indemnification
Owner agrees to and will defend, indemnify and hold City and its officers, employees, contractors and agents (the “City Indemnitees”) harmless from and against all claims, liability, obligations, penalties, litigation, demands, defenses, judgments, suits, proceedings, disbursements, loss, damage, costs or expenses (including reasonable attorneys’ fees, experts’ fees and court costs) of any kind or of any nature whatsoever (“Indemnified Liabilities”) arising from or as a result of the death of any person or any a ccident, injury, loss or damage whatsoever caused to any person or to the property of any person arising directly or indirectly out of or related to the use of the Property or development of the Project on the Property or any other actions or omissions on the part of Owner or its officers, employees, contractors or agents in connection therewith, whether occurring prior to or after the Close of Escrow. Owner shall further indemnify and defend City Indemnitees from any Indemnified Liabilities arising from (i) ownership, operation or occupancy of the Property, but only to the extent first arising prior to the Close of Escrow and (ii) the presence of any hazardous m aterials on, in, under, or affecting all or any portion of the Property whether
AGREEMENT TO CONVEY LAND
KATELLA TERRACE
arising prior to or after the Close of Escrow , except to the extent such hazardous m aterials were caused by (a) Indemnitee, its employees, officers, agents or consultants , or (b) Developer, its employees, contractors, officers, agents, consultants, successors and assigns, or tenants after lease or license of the Property from City to Developer, or (c) any other third party after lease or license of the Property from City to Developer.
Owner represents and warrants to City that Owner has received no written notice of (i) any release of hazardous m aterials on or in the vicinity of the Property, or (ii) any actual or alleged violation of hazardous materials laws, or any pending or threatened investigation of any potential violation, on, in or under, or in the vicinity of the Property.
ARTICLE 4 GENERAL PROVISIONS
Section 4.1 Notices, Demands and Communications between the Parties
Formal notices, demands and communications between City and Owner will be sufficiently given if dispatched by overnight delivery with a nationally or regionally-recognized courier or by registered or certified mail, postage prepaid, return receipt requeste d, to the principal offices of City and Developer, at the following addresses:
City: City of Orange
300 E. Chapman Avenue
Orange, California 92866
Attention: Director of Community Development
With a copy to: Office of the City Attorney
City of Orange
300 E. Chapman Avenue
Orange, California 92866
Owner: OSH Katella Terrace LLC
555 S. Shaffer Street
Orange, California 92866
Attention: President
Such written notices, demands and communications may be sent i n the same manner to such other addresses as either party may from time to time designate by ma il as provided in this Section 4 .1. Any notice that is transmitted by electronic facsimile transmission followed by delivery of a “hard” copy, shall be deemed d elivered upon its transmission; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), will be deemed received on the docu mented date of receipt by the recipient; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof.
AGREEMENT TO CONVEY LAND
KATELLA TERRACE
Section 4.2 Conflicts of Interest
a. No member, official or employee of City may have any personal interest, direct or indirect, in this Agreement nor may any such member, official or employee participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is, directly or indirectly, interested.
b. Owner warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement.
Section 4.3 Nonliability of City Officials and Employees
No member, official, employee or consultant of City or Owner will be personally liable to the other party, or any successor in interest, in the event of any default or breach by City or Owner or for any amount which may become due to the other party or to its successor, or on any obligations under the terms of this Agreement.
Section 4.4 Captions
The captions of the paragraphs of this Agreement are for convenience and reference only, and the words contained in the captions are in no way to be held to explain, modify, amplify or aid in the interpretations, constructions or meaning of the provisions of this Agreement.
Section 4.5 Inspection of Books and Records
Owner must maintain complete, accurate, and current records pertaining to the Property for a period of five (5) years after the creation of such records, and permit any duly authorized representative of City, at City’s sole expense and upon reasonable advance notice, to inspe ct and copy records, including records pertaining to income and household size of occupants of the Units, during regular business hours. Records must be kept accurate and current and located in the County of Orange, California.
Section 4.6 Approvals; Administrative Extensions
Unless otherwise provided in this Agreement, approvals required of City or Owner will not be unreasonably conditioned, delayed or withheld. In addition, unless otherwise provided in this Agreement, a requirement of City approval or execution of any additional documents or instruments contemplated by this Agreement means the approval or execution thereof by City Manager or designee. The City Manager or designee shall not unreasonably withhold approval of up to three (3) extensions of the time for Close of Escrow and/or performance by Owner of its obligations under this Agreement, so long as the City Manager is reasonably satisfied that Owner is diligently proceeding in good faith with its obligations under this Agreement, and provided that (i) no single extension shall be for more than six (6) months, and (ii) in no event shall the time for Close of Escrow be extended to a date beyond December 31, 2023.
AGREEMENT TO CONVEY LAND
KATELLA TERRACE
Section 4.7 Real Estate Commissions
Neither City nor Owner will be liable for any real estate commissions, brokerage fees or finders’ fees which may arise from the sale of the Property to City. City and Owner each represent to the other that it has employed no broker, agent, or finder in connection with this transaction and that no person has claimed any commission, fee or other compensation in connection with this transaction.
Section 4.8 Further Assurances
Each of the parties hereto will execute any further documents consistent with the terms of this Agreement, including documents in recordable form, as the other party may from time to time reasonably find necessary or ap propriate to effectuate their respective purposes in entering into this Agreement.
Section 4.9 Time Is of the Essence
Time is of the essence of this Agreement and of the performance of all the terms, covenants and conditions of Owner and City contained in this Agreement.
Section 4.10 Authority of the Parties
Each of the Parties has the full power and authority to execute and deliver this Agreement and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and t o perform and observe the terms and provisions of all of the above.
AGREEMENT TO CONVEY LAND
KATELLA TERRACE
Section 4.11 Authority of Persons Executing Documents
This Agreement and all other documents or instruments executed and delivered pursuant to this Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of each of the respective Parties. In addition, all actions required under each of the Parties' organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement and all other documents or instruments executed and delivered pursuant to this Agreement, have been duly taken.
ARTICLE 5 ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS
a. This Agreement may be executed in counterparts and/or duplicate originals each of which is deemed to be an original.
b. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, constitutes the entire understanding and agreement of the parties, and supersedes all negotiations or previous agreements between the parties with respect to all or any part of the Property, except for the Density Bonus Agreement.
c. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of City or Owner, and all amendments hereto must be in writing and signed by the appropriate authorities of City and Owner. This Agreement and any provisions hereof may be amended by mutual written agreement by Owner and City.
ARTICLE 6 TIME FOR ACCEPTANCE OF AGREEMENT BY CITY; DATE OF
AGREEMENT
This Agreement, when executed by Owner and delivered to City, will not be effective until executed by City following City approval as required by law. If City fails to approve, execute and deliver this Agreement to Owner within ten (10) working days after this Agreement is signed by Owner, Owner will have the right to withdraw its offer to enter into this Agreement by providing written notice to City. This Agreement will be dated for reference purposes as of the date set forth in the introductory paragraph hereof, but will not be effective until executed by City and expiration of any appeals periods applicable thereto (the “Effective Date”).
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AGREEMENT TO CONVEY LAND
KATELLA TERRACE
IN WITNESS WHEREOF, City and Developer have signed this Agreement as of the dates set opposite their signatures.
THE CITY OF ORANGE
Dated: , 2022 By:
Mark A. Murphy, Mayor
ATTEST:
Pamela Coleman, City Clerk
APPROVED AS TO FORM:
By:
Gary A. Sheatz, City Attorney
APPROVED AS TO FORM:
KANE, BALLMER & BERKMAN
Special Counsel to the City
By:
OSH KATELLA TERRACE LLC., a California
limited liability company
Dated: , 2022 By:
Name:
Its:
Dated: , 2022 By:
Name:
Its:
ATTACHMENT NO. 1
LEGAL DESCRIPTION
(Subject to verification by City)
The Property referred to herein below is situated in the City of Orange, County of Orange, State of California, and is described as follows:
PARCEL A:
THAT PORTION OF LOT H OF THE VAN DE GRAAFF TRACT, AS SHOWN ON A MAP THEREOF RECORDED IN BOOK 4, PAGE 440, MISCELLANEOUS RECORDS IN THE
OFFICE OF THE COUN TY RECORD ER OF LOS ANGELES COUNTY, SHOWN AS PARCEL 2 ON A MAP THEREOF RECORDED IN BOOK 139, PAGES 5 AND 6 OF PARCEL
MAPS RECORDS OF SAID ORANGE COUNTY, RESERVING THEREFROM CERTAIN
NON-EXCLUSIVE EASEMENTS FOR INGRESS EGRESS AND PARKING PURPOSES, AS
SET FORTH IN THE DECLARATION OF RECIPROCAL EASEMENTS RECORDED OCTOBER 24, 1979 IN BOOK 13367, PAGE 97, AS INSTRUMENT NO. 38132, RECORDS OF ORANGE COUNTY.
PARCEL B:
A NON-EXCLUSIVE EASEMENT FOR INGRESS, EGRESS AND PARKING PURPOSES AS
SET FORTH IN THAT CERTAIN DECLARATION OF RECIPROCAL EASEMENTS RECORDED OCTOBER 24, 1979 IN BOOK 13367, PAGE 97, AS INSTRUMENT NO. 38132, RECORDS OF ORANGE COUNTY, OVER THOSE PORTIONS OF SAID PROPERTY.
APN 375-461-48
ATTACHMENT NO. 2
FORM OF LEASE
(Behind this page)