ATTACHMENT NO. 14
ASSIGNMENT OF AGREEMENTS
FOR VALUE RECEIVED, the undersigned , KATELLA TERRACE, L.P. , a California limited partnership (“Borrower”), assigns to the THE CITY OF ORANGE, a municipal corporation (“City”), all of its rights, title and interest in and to:
1. All architectural, design, engineering and development agreements, and any and all amendments, modifications, supplements, addenda and general conditions thereto relating to the construction and development of the Project (collectively, “Architectural Agreements”); and
2. All plans and specifications, shop drawings, working drawings, amendments, modifications, changes, supplements, general conditions and addenda thereto relating to the construction and development of the Project (collectively “Plans and Specifications”) heretofore or hereafter into or prepared by any architect, engineer or other person or entity (collectively “Architect”), for or on behalf of Borrower in connection with the construction of the Improvements. The Plans and Specifications, as of the date hereof, are those which Borrower has heretofore, or will hereafter deliver to City. The Architectural Agreements include, but are not limited to, the architectural contract between Borrower and ____, located at _______.
This ASSIGNMENT OF AGREEMENT S AND PLANS AND SPECIFICATION (“Assignment”) constitutes a present and absolute assignment to City as of the Effective Date, subordinate to the rights of ______________________ (“Construction Lender ”); provided, however, City confers upon Borrower the right to enforce the terms of the Architectural Agreements and Borrower’s rights to the Plans and Specifications so long as no Default or event which would constitute a Default after notice or the passage of time, or both, has occurred and is continuing under the Disposition and Development Agreement dated as of __________, 2022, between City and Borrower (the “DDA”), as well as any amendments and implementation agreements. Capitalized terms not otherwise defined herein have the meaning set forth in the DDA.
Upon the occurrence of a Default or event which would constitute a Default after notice or the passage of time, or both, under the DDA, City may, in its sole discretion, give notice to Architect of its intent to enforce the rights of Borrower under the Architect Agreements and of its rights to the Plans and Specifications and may initiate or participate in any legal proceedings respecting the enforcement of said rights. Borrower acknowledges that by accepting this Assignment, City does not assume any of Borrower’s obligations under the Architectural Agreements or with respect to the Plans and Specifications.
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Borrower represents and warrants to City, as of the Effective Date, that: (a) all Architectural Agreements entered into by Borrower are in full force and effect and are enforceable in accordance with their terms and no default, or event which would constitute a default after notice or the passage of time, or both, exists with respect to said Architectural Agreements; (b) all copies of the Architectural Agreements and Plans and Specifications delivered to City are complete and correct; and (c) Borrower has not assigned any of its rights under th e Architectural Agreements or with respect to the Plans and Specifications.
Borrower agrees: (a) to pay and perform all obligations of Borrower under the Architectural Agreements; (b) to enforce the payment and performance of all obligations of any other person or entity under the Architectural Agreements; (c) not to modify the existing Architectural Agreements nor to enter into any future Architectural Agreements without City’s prior written approval except as otherwise may be permitted in the DDA; and (d) not to further assign (other than assignment in connection with a loan from the Construction Lender), for security or any other purposes, its rights under the Architectural Agreements or with respect to the Plans and Specifications without City’s prior written consent.
This Assignment secures performance by Borrower of all obligations of Borrower under the DDA and agreements and documents issued or entered into pursuant to the DDA . This Assignment is supplemented by the provisions of the DDA and said provisions are incorporated herein by reference.
This Assignment will be governed by the laws of the State of California, without reference to the principles governing conflicts of laws , and Borrower consents to the jurisdiction of any Federal or State Court wi thin the State of California having proper venue for the filing and maintenance of any action arising hereunder and agrees that the prevailing party in any such action will be entitled, in addition to any other recovery, to reasonable attorney’s fees and costs.
This Assignment will be binding upon and inure to the benefit of the heirs, legal representatives, assigns, and successors-in-interest of Borrower and City; provided, however, this will not be construed and is not intended to waive any restrictions on assignment, sale, transfer, mortgage, pledge, hypothecation or encumbrance by Borrower contained in any of the DDA.
The attached Architect’s Consent, Schedule 1 and Exhibit A are incorporated by reference.
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Assignment of Agreements
BORROWER:
Executed as of _____________2022.
KATELLA TERRACE, L.P., a California limited
partnership
By: HORIZON-ELOM HOLDINGS, LLC., a
California limited liability company, Developer’s
Administrative General Partner
Dated: ______________, 2022 By: _______________________________ Name: Keith Stanley
Its: Manager
By: ORANGE SENIOR HOUSING, INC ., a
California non -profit public benefit corporation,
Developer’s Managing General Partner
Dated: ______________, 2022 By: _______________________________ Name: Paul Abbondante
Its: President
Dated: ______________, 2022 By: _______________________________ Name: Katherine Connaghan
Its: Vice President
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Architect’s Consent
ARCHITECT’S CONSENT
The undersigned architect ( “Architect”) hereby consents to the foregoing Assignment to which this Architect’s Consent (“Consent”) is part, and acknowledges that the re presently exists no unpaid claims due to the Architect except as set forth on Schedule 1 attached hereto, arising out of the preparation and delivery of the Plans and Specifications to Borrower and/or the performance of the Architect’s obligations under the Assignment.
Architect agrees that if, at any time, City will succeed to or acquire Borrower’s leasehold interest in said Property, or, pursuant to its rights under the DDA and/or the Ground Lease between City and Borrower entered into pursuant to the DDA, elects to undertake or cause the completion of construction of the Improvements on any portion of the Property, in accordance with the Plans and Specifications, and gives Architect written notice of such election; THEN, so long as Architect has received, receives or continues to receive the compensation called for under the Agreements, City may, at its option, use and rely on the Plans and Specifications for the purposes for which they were prepared, and Architect will continue to perform its obligatio ns under the Agreements for the benefit and account of City in the same manner as if performed for the benefit or account of Borrower in the absence of the Assignment.
Architect further agrees that, in the event of a breach by Borrower of the Agreements, o r any agreement entered into with Architect in connection with the Plans and Specifications, so long as Borrower’s interest in the Agreements and Plans and Specifications is assigned to City, Architect will give written notice to City of such breach at the address shown below. City will have thirty (30) days from the receipt of such written notice of default to remedy or cure said default. Nothing herein will require City to cure said default or to undertake completion of construction of the Improvements.
[Architect’s Signature on Following Page]
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Architect’s Consent
Architect warrants and represents that it/he has no knowledge of any prior assignment(s) of any interest in the Plans and Specifications and/or the Agreements. Except as otherwise defined herein, the terms used herein will have the meanings given them in the Assignment.
Executed as of___________, 2021.
[ARCHITECT NAME]
By: __________________________
Name:
Title:
[architect address]
City’s Address:
CITY OF ORANGE
300 E. Chapman Avenue
Orange, California 92866
Attn: City Manager
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Assignment of Agreements
Schedule of Unpaid Claims
SCHEDULE OF UNPAID CLAIMS
Schedule 1 to Assignment of Architectural Agreements and Plans and Specifications dated as of____________, 2022 between KATELLA TERRACE , L.P . as Borrower, and CITY OF ORANGE, as City.
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Schedule of Unpaid Claims
PROPERTY DESCRIPTION
Exhibit A to Assignment of Agreement and Plans and Specifications dated as of ___________, 2022, between KATELLA TERRACE, L.P, as Borrower, and THE CITY OF ORANGE.
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ATTACHMENT NO. 15
ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY (“ Indemnity”), dated as of _________________, 202__ made by KATELLA TERRACE , L.P. , a California limited partnership (“Borrower”), in favor of the CITY OF ORANGE, a municipal corporation (“City”).
WITNESSETH
WHEREAS, Borrower is the owner of a leasehold interest in the real property in the City of Orange, as more particularly described on Exhibit A attached hereto and made a part hereof, and the real property improvements thereon (collectively referred to as the “Property”); WHEREAS, Borrower and the City, entered into that certain Disposition and Development Agreement, dated as of ____________ __, 2022 (“DDA”), pursuant to which the City agreed to make the City Ground Rent Loan to Borrower (“CITY GROUND RENT LOAN”) to provide part of the financing for the leasehold acquisition of the Property, and to lease the Property to Developer, and the Developer agreed to develop and construct on the Property a 74-unit housing project for occupancy by lower income and very low income senior households except for one Manager’s Unit (the DDA and the documents and instruments referred to therein which are being executed by B orrower concurrently herewith are referred to collectively as the “ Loan Documents”); and
WHEREAS, Borrower has agreed to execute and deliver to the City this Indemnity to induce the City to make the City Ground Rent Loan and to enter into the DDA.
NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual agreements hereinafter set forth, Borrower hereby agrees with the City as follows:
Section 1. DEFINITIONS
1.1 For the purpose of this Indemnity, “Hazardous Materials” or “Hazardous Substances” will include, but not be limited to, substances defined as “extremely hazardous substances,” “hazardous substances,” “hazardous materials,” “hazardous waste” or “toxic substances” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 11001-11050; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, 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. Other capitalized terms 964
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used in this Indemnity will have the meanings ascribed to them in the DDA with the same force and effect as if set forth in full below.
1.2 For purposes of this Indemnitee, “Obligations” will include, but not be limited to, the obligations, agreements, covenants and indemnities of Borrower described or referred to in this Indemnity
Section 2. COVENANTS AND INDEMNITY
The following covenants and indemnities are hereby given and made by Borrower:
2.1 Covenants.
(a) Borrower covenants that it will 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) Borrower covenants that the Property will not, while Borrower is the leasehold owner thereof, be used for any activities involving, directly or indirectly, the use, generation, treatment, storage, release, or disposal of any Hazardous M aterials, except for de minimis quantities used at the Property in compliance with all applicable environmental laws and required in connection with the routine construction, operation and maintenance of the Property. (c) Borrower further agrees that Borrower will not release or dispose of any Hazardous Materials at the Property without the express written approval of the City and that any such release or disposal will be effected in strict compliance with all applicable laws and all conditions, if any, established by the City.
(d) The City will have the right, at any time, to conduct an environmental audit of the Property at the City’s expense, unless Hazardous Materials are found, then at Borrower’s sole cost and expense, and Borrower will cause Borrower to cooperate in the conduct of any such environmental audit but in no event will such audit be conducted unless the City believes that such audit is warranted. Other than in an emergency, such audit will be conducted only after reasonable prior notice has been given to Borrower and only in the presence of a representative of Borrower.
Borrower will give the City and its agents and employees access to the Property at all reasonable times to remove, or otherwise to mitigate against the effects of, Hazardous Materials. (e) Borrower will 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, Borrower will promptly either (i) remove or cause to be removed any material that such regulations 965
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deem hazardous and require to be removed, or (ii) otherwise comply with such federal and state regulations, at Borrower’s sole cost and expense. If Borrower will fail to so do within the cure period permitted under applicable law, regulation, or order, the City 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 will be added to the Obligations of Borrower. (f) Borrower will immediately advise the City in writing of any of the following:
(i) any pending or threatened environmental claim against Bo rrower or the Property, (ii) any condition or occurrence on the Property that (A) results in noncompliance by Borrower 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 Borrower.
2.2 Indemnity. Borrower will indemnify, protect, and hold the City 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, reasonable attorneys’ and experts’ fees and disbursements) of any kind or of any nature whatsoever which may at any time be imposed upon, incurred by or asserted or awarded against the City and arising from or out of:
(a) The presence of any Hazardous Materials on , in, under, or affecting all or any portion of the Property or any surrounding areas;
(b) The breach of any covenant made by Borrower in Section 2.1 hereof; or (c) The enforcement by the City of any of the provisions of this Section 2.2 or the assertion by Borrower of any defense to its Obligations hereunder.
Subject to the qualifications set forth in Section 2.3, below, Borrower will be liable for payment and performance of the Obligations to the full extent (but only to the extent) of the property and assets (including the Property) which constitute security for such Obligations. If default occurs in the timely and proper payment an d performance of any such Obligations (after notice and reasonable opportunity to cure) , any judicial proceedings brought by the City against Borrower will be limited to the protection and preservation of the Property, the preservation, enforcement and foreclosure of the liens, mortgages, assignments, rights and security interests securing such Obligations and enforcement and collection of such Obligations for which Borrower remains liable as provided in this Section. If there is a foreclosure of any such liens, mortgages, assignments, rights and security interests by power of sale or otherwise, no personal judgment for any deficiency thereon will be sought or obtained by the City against any of the officers, directors, agents, attorneys, servants or employ ees of Borrower . In no event shall Borrower be liable for any Obligations resulting exclusively from the gross negligence and/or willful misconduct of the City. 966
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2.3 Exceptions to Non-Recourse Liability. Notwithstanding the foregoing provisions of Section 2.2 or any other agreements,
(a) the City may proceed against any other person or entity whatsoever with respect to the enforcement of any guarantees, surety bonds, letters of credit, reimbursement agreements or similar rights to payment or performance; and (b) The City may recover personally from any person or entity other than Borrower’s Limited Partners:
(1) any damages, costs and expenses incurred by the City as a result of the negligence of such person or entity, involving, directly or indirectly, the use, generation, treatment, storage, release, or disposal of any Hazardous Materials by such person or entity or by others; (2) any damages, costs and expenses incurred by City as a result of fraud or any criminal act or acts of Borrower or any partner, shareholder, officer, director or employee of Borrower, or of any general or limited partner of Borrower; and (3) all court costs and attorneys’ fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions.
Section 3. BORROWER’S UNCONDITIONAL OBLIGATIONS
3.1 Unconditional Obligations . Borrower hereby agrees that the Obligations of Borrower under this Indemnity will be paid and performed strictly in accordance with the terms of this Indemnity, regardless of any l aw, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Loan Documents or affecting any of the rights of the City with respect thereto. The O bligations of Borrower hereunder will be absolute and unconditional irrespective of:
(a) The validity, regularity, or enforceability of the Loan Documents or any other instrument or document executed or delivered in connection therewith;
(b) Any alteration, amendment, modification, release, termination, or cancellation of any of the Loan Documents, or any change in the time, manner, or place of payment of, or in any other term in respect of, all or any of the obligations of Borrower contained in any of the Loan Documents; (c) Any extension of the maturity of the Loan or any waiver of, or consent to any departure from, any provision contained in any of the Loan Documents; 967
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(d) Any exculpatory provision in any of the Loan Documents limiting the City’s recourse to property encumbered by the City Ground Rent Loan Deed of Trust securing the Loan, or to any other security, or limiting the City’s rights to a deficiency judgment against Borrower;
(e) Any exchange, addition, subordination, or release of, or nonperfection of any lien on or security interest in, any collateral for the Loan, or any release, amendment, waiver of, or consent to any departure from any provision of, any other Borrower or guarantee given in respect of the Loan; (f) The insolvency or bankruptcy of Borrower, Borrower, or of any indemnitor or guarantor under any other indemnity or guarantee given in respect of the Loan; or
(g) Any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower, Borrower, or any other indemnitor or guarantor with respect to the Loan or any or all of the Obligations.
3.2 Continuation. This Indemnity (a) is a continuing indemnity and will remain in full force and effect until the satisfaction in full of all of the Obligations (notwithstanding the payment in full of the Loan or the release or other extinguishment of any security for the Loan); and (b) will continue to be effective or will 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 City upon the insolvency, bankruptcy, or reorganization of Borrower, or otherwise, 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 Borrower’s obligations under the Loan Documents, this Indemnity will not terminate if any of the following will have occurred:
(a) The City 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.
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Section 4. WAIVER
Borrower hereby waives the following:
(a) Promptness and diligence;
(b) Notice of acceptance and notice of the incurrence of any obligation by Borrower; (c) Notice of any action taken by the City, Borrower, or any other interested party under any Loan Doc ument 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 Borrower of its Obligations hereunder;
(e) The right to a trial by jury with respect to any dispute arising under, or relating to, this Indemnity;
(f) Any requirement that the City protect, secure, perfect, or insure any security interest or lien in or on any property subject thereto;
(g) Any requirement that the City exhaust any right or take any action against Borrower or any other person or collateral; and
(h) 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 the City 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 the City, including, without limitation, an election to proceed by nonjudicial foreclosure or which destroys or otherwise impairs the subrogation rights of the City or any other right of the City to proceed against Borrower.
Section 5. NOTICES
Any notice, demand, statement, request, or consent made hereunder will be in writing and will be personally delivered or mailed by first class registered mail, return receipt requested to the 969
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following addresses of the party to whom such notice is to be given (or to such oth er address as the parties hereto, will designate in writing):
In the case of the City:
The City of Orange
300 E. Chapman Avenue
Orange, California 92866
Attn: City Manager
In the case of Borrower:
Katella Terrace, L.P.
c/o Orange Senior Housing, Inc.
555 S. Shaffer Street
Orange, CA 92866
Attn: President
With a copy to:
Horizon ELOM Holdings, LLC
26565 West Agoura Road, Suite 200
Calabasas, California 91302
Attn: Keith Stanley
With a copy to Investor Limited Partner at:
[ ]
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 documented date of receipt; 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.
Section 6. MISCELLANEOUS
6.1 Borrower will make any payment required to be made hereunder in lawful money of the United States of America, and in same day funds, to the City at its address specified in Section 5 above.
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6.2 No amendment of any provision of this Indemnity will be effective unless it is in writing and signed by Borrower and the City, and no waiver of any provision of this Indemnity, and no consent to any departure by Borrower from any provision of this Indemnity, will be effective unless it is in writing and signed by the City, and then such waiver or consent will be effective only in the specific instance and for the specific purpose for which given.
6.3 No failure on the part of the City to exercise, and no delay in exercising, any right hereunder or under any other Loan Document will operate as a waiver thereof, nor will 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 the City 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.
The rights of the City under any Loan Document against any party thereto are not conditional or contingent on any attempt by the City to exercise any of its rights under any other Loan Document against such party or against any other person or collateral.
6.4 Any provision of this Indemnity that is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability wit hout invalidating the remaining portions hereof and without affecting the validity or enforceability of such provision in any other jurisdiction.
6.5 This Indemnity will (a) be binding upon Borrower, and Borrower’s successors and assigns; and (b) inure, together with all rights and remedies of the City hereunder, to the benefit of the City, its respective directors, officers, employees, and agents, any successors to the City’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 the City’s rights and remedies under the 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, the City may, subject to, and in accordance with, the provisions of the Loan Documents, assign or otherwise transfer all or any portion of its rights and obligations under any other Loan Document, to any other person, and such other person will thereupon become vested with all of the rights and obligations in respect thereof that were granted to the City herein or otherwise. None of the rights or O bligations of Borrower hereunder may be assigned or otherwise transferred without the prior written consent of the City.
6.6 Borrower hereby (a) irrevocably submits to the jurisdiction of any California or federal court sitting, in each instance, in Orange 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.
Borrower irrevocably consents to the service of any and all process which may be required or permitted in any such action or p roceeding to the address specified in the first paragraph of this Indemnity, above. Borrower agrees that a final judgment in any such action or proceeding will be 971
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conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any ot her 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 will 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 will 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 will constitute an original and all of which together will constitute one agreement.
IN WITNESS WHEREOF, Borrower has duly executed this Indemnity as of the date first set forth above.
KATELLA TERRACE, L.P., a California limited
partnership
By: HORIZON-ELOM HOLDINGS, LLC., a
California limited liability company, Developer’s
Administrative General Partner
By: _______________________________
Name: Keith Stanley
Its: Manager
By: ORANGE SENIOR HOUSING, INC ., a
California non -profit public benefit corporation,
Developer’s Managing General Partner
By: _______________________________
Name: Paul Abbondante
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Its: President
By: _______________________________
Name: Katherine Connaghan
Its: Vice President
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Exhibit A – Legal Description
Exhibit A
to Environmental Indemnity
LEGAL DESCRIPTION
Real Property in the City of Orange, County of Orange, State of California, described as follows:
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974
RESOLUTION NO. 11386
A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF ORANGE, (1) APPROVING THE
DISPOSITION AND DEVELOPMENT
AGREEMENT BY AND BETWEEN THE CITY OF
ORANGE AND KATELLA TERRACE, L.P . AND
ITS ATTACHMENTS, ESTABLISHING THE
TERMS AND CONDITIONS FOR THE GROUND
LEASE OF CERTAIN PROPERTY LOCATED AT
1249 E. KATELLA AVENUE, ORANGE ,
CALIFORNIA AND THE DEVELOPMENT OF AN
AFFORDABLE RESIDENTIAL RENTAL
PROJECT FOR SENIOR LOWER INCOME
HOUSEHOLDS ON S AID PROPERTY; ( 2)
APPROVING THE GROUND LEASE OF SAID
PROPERTY TO A LIMITED PARTNERSHIP
ENTITY FOR SUCH PROJECT ; AND ( 3)
APPROVING OTHER RELATED ACTIONS
WHEREAS, the City of Orange (the “City”) is a municipal corporation organized and existing under the Constitution of the State of California;
WHEREAS, on February 8, 2022, the City and OSH Katella Terrace, LLC entered into an Agreement to Convey Land providing for the conveyance to the City of certain real property located at 1249 E. Katella Terrace, Orange, California (the “Site”) for the purpose of facilitating development of the Site with a project to provide rental housing affordable to senior lower income households;
WHEREAS, Katella Terrace, L.P. (“ Developer”) has proposed to finance, develop, and operate on the Site a 74-unit residential rental project affordable to lower income senior households, together with ancillary improvements, all as described in the proposed Disposition and Development Agreement and i ts Attachments (collectively, the “Project”). Developer’s proposed financing for the Project is anticipated to include a combination of the construction loan, permanent loan, City Council Ground Rent Loan (i.e., a carry-back loan by the City to Developer to finance Developer’s prepayment of the capitalized annual lease payments over the term of the Ground Lease), other public and private affordable housing funds and financing, Developer equity derived from the syndication of low income tax credits, and deferred developer fee;
WHEREAS, the City has previously approved certain entitlements for the Project under applicable City codes, ordinances and regulations;
WHEREAS, in order to carry out and implement the Project, and pursuant to the terms and conditions of the proposed Disposition and Development Agreement including its Attachments (collectively, “Agreement”), the City proposes (i) to lease the Site to Developer pursuant to the proposed Ground Lease for not less than the fair market value of the Site for the 975
2 development and operation of the Project, and (ii) to finance Developer’s ground lease of the Site with a carry-back loan based on the appraised fair market val ue of the Site at the time of commencement of the Ground Lease, as prepayment of the capitalized annual lease payments over the term of the Ground Lease;
WHEREAS, the City desires to enter into the Agreement with Developer for the purpose of and related to the development and operation of the Project on the Site;
WHEREAS, the City is authorized to sell or lease land such as the Site for development of affordable housing; and
WHEREAS, pursuant to California Government Code Section 65402 (a), it is determined that the location, purpose and extent of the proposed disposition of the Site for the purposes and uses proposed by Developer as outlined and provided for in the Agreement conform with the City’s adopted General Plan;
WHEREAS, in accordance with California Government Code Sections 54221 and 37364, the Site is “exempt surplus land” under the Surplus Land Act because , pursuant to the proposed Agreement, the Site will be used exclusively (with the exception of one unit for the residen t manager) to provide housing affordable to lower income senior households, meeting the requirements of Section 37364 , the proposed disposition of the Site for the purposes and uses proposed by Developer pursuant to the Agreement are in the City’s best interests, and the proposed Project will comply with the terms of Section 37364;
WHEREAS, Government Code Section 37364 authorizes a city to sell, lease, ex change, quitclaim, convey, or otherwise dispose of real property to provide housing affordable to persons and families of low or moderate income, provided the following conditions are met:
a. Not less than 80 percent of the area of any parcel of property will be used for development of housing;
b. Not less than 40 percent of the total number of those housing units developed on any parcel shall be affordable to households whose incomes are equal t o, or less than, 75 percent of the maximum income of lower income households, and at least half of which shall be affordable to very low-income households; and
c. Dwelling units produced for persons and families of low or moderate income under Government Code Section 37364 shall be restricted by regulatory agre ement to remain continually affordable to those persons and families for the longest feasible time, but not less than 30 years , with such regulatory agreement recorded in the office of the county recorder in which the housing development is located; and
WHEREAS, the California Department of Housing and Community Development has confirmed that the transfer of the Site pursuant to the Agreement, the Ground Lease and this Resolution will be a transfer of exempt surplus land;
WHEREAS, pursuant to California Government Code Section 52201, the City has caused the preparation of a summary report (“Summary Report”);
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3 WHEREAS, a public hearing has been duly called, noticed and advertised as required by law for Tuesday, April 12, 2022, at 6:00pm at the Council Chambers located in the City Hall, for the City Council to consider approval of the Agreement and the disposition of the Site by ground lease pursuant to the proposed Agreement, and copies of the proposed Agreement and the Summary Report were made available for public inspection and comment as required by the applicable law; and
WHEREAS, the City Council did receive and consider a staff report on the proposed project and any comments received during the public review period.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Orange as follows:
1. The City Council finds and determines that the foregoing recitals are true and correct and are incorporated herein by this reference as a substantive part of this Resolution.
2. The City Council has received and heard all oral and written objections (if any) to the proposed Agreement, to the proposed ground lease disposition of the Site, and to other matters pertaining to this transaction, and that all such oral and written objections (if any) are hereby overruled.
3. Based on the whole record before it , the Ci ty Council finds and determines, pursuant to California Government Code Section 65402(a), that the location, purpose and extent of the proposed disposition of the Site for the purposes and uses proposed by Developer as outlined and provided for in the proposed Agreement are in conformance with the City’s adopted General Plan.
4. Pursuant to California Government Code Section 37364, the City Council finds and determines that the Site can be used to provide housing affordable to persons and families of low or m oderate income, as defined by California Health and Safety Code Section 50093 or as defined by the United States Department of Housing and Urban Development or its successors , and that the proposed disposition of the Site for the purposes and uses proposed by Developer pursuant to the proposed Agreement are in the City’s best interests.
5. Based on the whole record before it , the City Council finds and d etermines pursuant to California Government Code Section 54221 (b)(1) that the Sit e is “exempt surplus land” under the California Surplus Land Act based on California Government Code Section 54221(f)(1)(A) bec ause the Site will be transferred pursuant to California Government Code Section 37364 and used to provide housing pursuant to the proposed Ag reement, including 73 units of the total 74 units (or more than 98 % of the total units) that will be restricted and covenanted by the recorded Regulatory Agreement to be exclusively rented at affordable rent to lower income senior households, and more than half of which shall be rented at affordable rent to very low income senior households , meeting the requirements o f California Government Code Section 37364, and the proposed Project will comply with the terms of Section 37364 pursuant to the proposed Agreement.
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4 6. Based on the whole record before it, the City Council finds and determines pursuant to California Government Code Section 52201, each of the following:
a. That the lease of the Site as described in the proposed Agreement will provide affordable housing for very low and low er income persons and will assist in the creation of economic opportunity.
b. That the consideration for the lease of the Site pursuant to the proposed Ground Lease (Attachment No. 7 to the Disposition and Develop ment Agreement) is not less than the fair market value of the Site at its highest and best use , based on an independent appraisal of the Site.
7. The City Council approves the terms and provisions for the lease of the Site and approves the proposed Agreement between the City and Developer for the lease of the Site and the development and operation of the Project, including all exhibits and Attachments thereto, in the form as submitted by the City Manager of the City.
8. The City Council authorizes and directs the Mayor of the City to execute the Disposition and Development Agreement on behalf of the City, subject to the approval as to form by the City Manager of the City and its legal counsel.
9. The City Council authorizes and directs the City Manager of the City, or designee, to execute all documents, instruments, and agreements required by and for the implementation of the Disposition and Development Agreement including, without limitation, all Attachments to the Disposition and Development Agreement, on behalf of the City, subject to the approval as to form by the City Manager of the City and its legal counsel.
10. The City Council authorizes and directs the City Manager of the City, or designee, (i) to make such amendments, changes or revi sions to the Agreement or to any document, instrument, or agreement required by and for the implementation of the Agreement on behalf of the City, as approved by the City Manager of the City and its legal counsel ; (ii) to execute such other documents and take such other actions as are necessary or desirable and appropriate to carry out and implement the purposes of the Agreement and to effectuate the intent of this Resolution on behalf of the City including, without limitation, approving extensions of deadlines set forth in the Agreement (or any portion thereof) as determined necessary by the City Manager, or designee, to effectuate the purposes of the Agreement; and (iii) to administer the City’s obligations, responsibilities and duties to be performed under the Agreement and all documents, instruments, and agreements required by and for the implementation of the Agreement on behalf of the City.
11. If any provision of this Resolution or the application of any such pro vision to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution that can be given effect without the invalid provision or application, and to this end the provisions of this Resolut ion are severable. The City Council declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion of this Resolution.
12. This Resolution shall take effect upon the date of its adoption. 978
5 ADOPTED this ____ day of ____________________, 2022
Mark A. Murphy, Mayor, City of Orange
ATTEST:
Pamela Coleman, City Clerk, City of Orange
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6 STATE OF CALIFORNIA )
COUNTY OF ORANGE )
CITY OF ORANGE )
I, PAMELA COLEMAN, City Clerk of the City of Orange, California, do hereby certify that the foregoing Resolution was duly and regularly adopted by the City Council of the City of Orange at a regular meeting thereof held on the day of , 2022 by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
Pamela Coleman, City Clerk, City of Orange
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SUMMARY REPORT PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 52201 ON A PROPOSED DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT BY
AND BETWEEN THE CITY OF ORANGE AND KATELLA TERRACE, LP
1. Copy. A copy of the proposed Disposition, Development and Loan Agreement (the “Agreement”) is attached hereto as Exhibit A and incorporated herein by this reference. Any initially-capitalized term not defined herein shall have the meaning set forth in the Agreement.
2. Summary.
(a) Cost to City. There is no estimated cost of the Agreement to the City, as the land will be leased for fair market value.
(b) Fair Market Value. The estimated value of the interest to be conveyed, determined at the highest and best uses permitted under the general plan or zoning, will be based on an appraisal of the fair market value of the Property by a Certified Residential Real Estate Appraiser retained by the City.
(c) Fair Reuse Value. This section is not applicable as the property will be leased based on the fair market value appraisal.
(d) Economic Opportunity. The sale of the Property will assist in the creation of economic opportunity, as the Project consists of the development on the Property of 74 dwelling units to be rented to Low Income households, and “economic opportunity” includes the creation of such affordable housing (see California Government Code Section 52200.2(c)), provided that a demonstrated affordable housing need exists in the community, as defined in the approved housing element or regional housing needs assessment, which is the case. 981
Exhibit A
Copy of Agreement
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A copy of the agreement is attached as the first attachment to the staff report. 982