• Airport and Airway Improvement Act of 1982 (49 USC § 471, Section 47123), as amended (prohibits discrimination based on race, creed, color, national origin, or sex); • The Civil Rights Restoration Act of 1987 (PL 100-209) (broadened the scope, coverage and applicability of Title VI of the Civil Rights Act of 1964, the Age Discrimination Act of 1975 and Section 504 of the Rehabilitation Act of 1973, by expanding the definition of the terms “programs or activities” to include all of the programs or activities of the Federal-aid recipients, sub-recipients and contractors, whether such programs or activities are Federally funded or not);
• Titles II and III of the Americans with Disabilities Act of 1990, which prohibit discrimination on the basis of disability in the operation of public entities, public and private transportation systems, places of public accommodation, and certain testing entities (42 USC §§ 12131 – 12189) as implemented by U.S. Department of Transportation regulations at 49 CFR parts 37 and 38;
• The Federal Aviation Administration’s Nondiscrimination statute (49 USC § 47123) (prohibits discrimination on the basis of race, color, national origin, and sex); • Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, which ensures nondiscrimination against minority populations by discouraging programs, policies, and activities with disproportionately high and adverse human health or environmental effects on minority and low-income populations;
• Executive Order 13166, Improving Access to Services for Persons with Limited English Proficiency, and resulting agency guidance, national origin discrimination includes discrimination because of limited English proficiency (LEP). To ensure compliance with Title VI, you must take reasonable steps to ensure that LEP persons have meaningful access to your programs (70 Fed. Reg. at 74087 to 74100);
• Title IX of the Education Amendments of 1972, as amended, which prohibits you from discriminating because of sex in education programs or activities (20 USC 1681 et seq).
Reference: 49 USC § 47123, FAA Order 1400.11
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FAA – 07 Clean Air/Water Pollution Control
Contractor agrees to comply with all applicable standards, orders, and regulations issued pursuant to the Clean Air Act (42 USC § 740-7671q) and the Federal Water Pollution Control Act as amended (33 USC § 1251-1387). The Contractor agrees to report any violation to the Owner immediately upon discovery. The Owner assumes responsibility for notifying the Environmental Protection Agency (EPA) and the Federal Aviation Administration.
Contractor must include this requirement in all subcontracts that exceeds $150,000.
Reference: 2 CFR § 200, Appendix II(G)
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FAA – 08 Contract Work Hours and Safety Standards
CONTRACT WORKHOURS AND SAFETY STANDARDS ACT REQUIREMENTS
1. Overtime Requirements.
No contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic, including watchmen and guards, in any workweek in which he or she is employed on such work to work in excess of forty hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in excess of forty hours in such workweek.
2. Violation; Liability for Unpaid Wages; Liquidated Damages.
In the event of any violation of the clause set forth in paragraph (1) of this clause, the Contractor and any subcontractor responsible therefor shall be liable for the unpaid wages. In addition, such contractor and subcontractor shall be liable to the United States (in the case of work done under contract for the District of Columbia or a territory, to such District or to such territory), for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic, including watchmen and guards, employed in violation of the clause set forth in paragraph (1) of this clause, in the sum of $10 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of forty hours without payment of the overtime wages required by the clause set forth in paragraph (1) of this clause.
3. Withholding for Unpaid Wages and Liquidated Damages.
The Federal Aviation Administration (FAA) or the Owner shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld, from any moneys payable on account of work performed by the contractor or subcontractor under any such contract or any other Federal contract with the same prime contractor, or any other federally assisted contract subject to the Contract Work Hours and Safety Standards Act, which is held by the same prime contractor, such sums as may be determined to be necessary to satisfy any liabilities of such contractor or subcontractor for unpaid wages and liquidated damages as provided in the clause set forth in paragraph (2) of this clause.
4. Subcontractors.
The Contractor or subcontractor shall insert in any subcontracts the clauses set forth in paragraphs (1) through (4) and also a clause requiring the subcontractor to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in paragraphs (1) through (4) of this clause.
Reference: 2 CFR § 200, Appendix II(E)
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FAA – 09 Copeland Anti-Kickback
Contractor must comply with the requirements of the Copeland “Anti-Kickback” Act (18 USC 874 and 40 USC 3145), as supplemented by Department of Labor regulation 29 CFR part 3.
Contractor and subcontractors are prohibited from inducing, by any means, any person employed on the project to give up any part of the compensation to which the employee is entitled. The Contractor and each Subcontractor must submit to the Owner, a weekly statement on the wages paid to each employee performing on covered work during the prior week. Owner must report any violations of the Act to the Federal Aviation Administration.
Reference: 2 CFR § 200, Appendix II(D), 29 CFR Parts 3 and 5 Item 3A - Page 348
FAA – 10 Davis Bacon Requirements
DAVIS-BACON REQUIREMENTS
1. Minimum Wages.
(i) All laborers and mechanics employed or working upon the site of the work will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by the Secretary of Labor under the Copeland Act (29 CFR Part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalent thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the Contractor and such laborers and mechanics.
Contributions made or costs reasonably anticipated for bona fide fringe benefits under section 1(b)(2) of the Davis-Bacon Act on behalf of laborers or mechanics are considered wages paid to such laborers or mechanics, subject to the provisions of paragraph (1)(iv) of this section; also, regular contributions made or costs incurred for more than a weekly period (but not less often than quarterly) under plans, funds, or programs which cover the particular weekly period, are deemed to be constructively made or incurred during such weekly period.
Such laborers and mechanics shall be paid the appropriate wage rate and fringe benefits on the wage determination for the classification of work actually performed, without regard to skill, except as provided in 29 CFR Part 5.5(a)(4). Laborers or mechanics performing work in more than one classification may be compensated at the rate specified for each classification for the time actually worked therein: Provided that the employer’s payroll records accurately set forth the time spent in each classification in which work is performed. The wage determination (including any additional classification and wage rates conformed under (1)(ii) of this section) and the Davis-Bacon poster (WH-1321) shall be posted at all times by the Contractor and its subcontractors at the site of the work in a prominent and accessible place where it can easily be seen by the workers.
(ii)(A) The contracting officer shall require that any class of laborers or mechanics, including helpers, which is not listed in the wage determination and which is to be employed under the contract shall be classified in conformance with the wage determination. The contracting officer shall approve an additional classification and wage rate and fringe benefits therefore only when the following criteria have been met:
(1) The work to be performed by the classification requested is not performed by a classification in the wage determination;
(2) The classification is utilized in the area by the construction industry; and (3) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination. (B) If the Contractor and the laborers and mechanics to be employed in the classification (if known), or their representatives, and the contracting officer agree on the classification and wage rate (including the amount designated for fringe benefits where appropriate), a report of the action taken shall be sent by the contracting officer to the Administrator of the Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, Washington, DC 20210. The Administrator, or an authorized representative, will approve, Item 3A - Page 349
modify, or disapprove every additional classification action within 30 days of receipt and so advise the contracting officer or will notify the contracting officer within the 30-day period that additional time is necessary.
(C) In the event the Contractor, the laborers, or mechanics to be employed in the classification, or their representatives, and the contracting officer do not agree on the proposed classification and wage rate (including the amount designated for fringe benefits where appropriate), the contracting officer shall refer the questions, including the views of all interested parties and the recommendation of the contracting officer, to the Administrator for determination. The Administrator, or an authorized representative, will issue a determination within 30 days of receipt and so advise the contracting officer or will notify the contracting officer within the 30-day period that additional time is necessary. (D) The wage rate (including fringe benefits where appropriate) determined pursuant to subparagraphs (1)(ii) (B) or (C) of this paragraph, shall be paid to all workers performing work in the classification under this contract from the first day on which work is performed in the classification.
(iii) Whenever the minimum wage rate prescribed in the contract for a class of laborers or mechanics includes a fringe benefit which is not expressed as an hourly rate, the contractor shall either pay the benefit as stated in the wage determination or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof.
(iv) If the Contractor does not make payments to a trustee or other third person, the Contractor may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program:
Provided that the Secretary of Labor has found, upon the written request of the Contractor, that the applicable standards of the Davis-Bacon Act have been met. The Secretary of Labor may require the Contractor to set aside in a separate account assets for the meeting of obligations under the plan or program.
2. Withholding.
The Federal Aviation Administration or the sponsor shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld from the Contractor under this contract or any other Federal contract with the same prime contractor, or any other federally-assisted contract subject to Davis-Bacon prevailing wage requirements, which is held by the same prime contractor, so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees, and helpers, employed by the Contractor or any subcontractor the full amount of wages required by the contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee, or helper, employed or working on the site of work, all or part of the wages required by the contract, the Federal Aviation Administration may, after written notice to the Contractor, Sponsor, Applicant, or Owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations have ceased.
3. Payrolls and Basic Records.
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(i) Payrolls and basic records relating thereto shall be maintained by the Contractor during the course of the work and preserved for a period of three years thereafter for all laborers and mechanics working at the site of the work. Such records shall contain the name, address, and social security number of each such worker; his or her correct classification; hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents thereof of the types described in 1(b)(2)(B) of the DavisBacon Act); daily and weekly number of hours worked; deductions made; and actual wages paid. Whenever the Secretary of Labor has found under 29 CFR 5.5(a)(1)(iv) that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under a plan or program described in section 1(b)(2)(B) of the Davis-Bacon Act, the Contractor shall maintain records that show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and that show the costs anticipated or the actual costs incurred in providing such benefits. Contractors employing apprentices or trainees under approved programs shall maintain written evidence of the registration of apprenticeship programs and certification of trainee programs, the registration of the apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs.
(ii)(A) The Contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the Federal Aviation Administration if the agency is a party to the contract, but if the agency is not such a party, the Contractor will submit the payrolls to the applicant, Sponsor, or Owner, as the case may be, for transmission to the Federal Aviation Administration. The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. Instead the payrolls shall only need to include an individually identifying number for each employee (e.g. the last four digits of the employee’s social security number). The required weekly payroll information may be submitted in any form desired. Optional Form WH–347 is available for this purpose from the Wage and Hour Division Web site at www.dol.gov/whd/forms/wh347instr.htm or its successor site. The prime contractor is responsible for the submission of copies of payrolls by all subcontractors. Contractors and subcontractors shall maintain the full social security number and current address of each covered worker and shall provide them upon request to the Federal Aviation Administration if the agency is a party to the contract, but if the agency is not such a party, the Contractor will submit them to the applicant, sponsor, or Owner, as the case may be, for transmission to the Federal Aviation Administration, the Contractor, or the Wage and Hour Division of the Department of Labor for purposes of an investigation or audit of compliance with prevailing wage requirements. It is not a violation of this section for a prime contractor to require a subcontractor to provide addresses and social security numbers to the prime contractor for its own records, without weekly submission to the sponsoring government agency (or the applicant, Sponsor, or Owner).
(B) Each payroll submitted shall be accompanied by a "Statement of Compliance," signed by the Contractor or subcontractor or his or her agent who pays or supervises the payment of the persons employed under the contract and shall certify the following:
(1) The payroll for the payroll period contains the information required to be provided under 29 CFR § 5.5(a)(3)(ii), the appropriate information is being maintained under 29 CFR § 5.5 (a)(3)(i), and that such information is correct and complete; Item 3A - Page 351
(2) Each laborer and mechanic (including each helper, apprentice, and trainee) employed on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned, other than permissible deductions as set forth in Regulations 29 CFR Part 3;
(3) Each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into the contract. (C) The weekly submission of a properly executed certification set forth on the reverse side of Optional Form WH-347 shall satisfy the requirement for submission of the “Statement of Compliance” required by paragraph (3)(ii)(B) of this section. (D) The falsification of any of the above certifications may subject the Contractor or subcontractor to civil or criminal prosecution under Section 1001 of Title 18 and Section 231 of Title 31 of the United States Code.
(iii) The Contractor or subcontractor shall make the records required under paragraph (3)(i) of this section available for inspection, copying, or transcription by authorized representatives of the sponsor, the Federal Aviation Administration, or the Department of Labor and shall permit such representatives to interview employees during working hours on the job. If the Contractor or subcontractor fails to submit the required records or to make them available, the Federal agency may, after written notice to the Contractor, Sponsor, applicant, or Owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds. Furthermore, failure to submit the required records upon request or to make such records available may be grounds for debarment action pursuant to 29 CFR 5.12.
4. Apprentices and Trainees.
(i) Apprentices. Apprentices will be permitted to work at less than the predetermined rate for the work they performed when they are employed pursuant to and individually registered in a bona fide apprenticeship program registered with the U.S. Department of Labor, Employment and Training Administration, Bureau of Apprenticeship and Training, or with a State Apprenticeship Agency recognized by the Bureau, or if a person is employed in his or her first 90 days of probationary employment as an apprentice in such an apprenticeship program, who is not individually registered in the program, but who has been certified by the Bureau of Apprenticeship and Training or a State Apprenticeship Agency (where appropriate) to be eligible for probationary employment as an apprentice. The allowable ratio of apprentices to journeymen on the job site in any craft classification shall not be greater than the ratio permitted to the contractor as to the entire work force under the registered program. Any worker listed on a payroll at an apprentice wage rate, who is not registered or otherwise employed as stated above, shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any apprentice performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. Where a contractor is performing construction on a project in a locality other than that in which its program is registered, the ratios and wage rates (expressed in percentages of the journeyman’s hourly rate) specified in the Contractor’s or subcontractor’s registered program shall be observed. Every apprentice must be paid at not less than the rate specified in the registered program for the apprentice’s level of progress, expressed as a Item 3A - Page 352
percentage of the journeymen hourly rate specified in the applicable wage determination.
Apprentices shall be paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for the applicable classification. If the Administrator determines that a different practice prevails for the applicable apprentice classification, fringes shall be paid in accordance with that determination. In the event the Bureau of Apprenticeship and Training, or a State Apprenticeship Agency recognized by the Bureau, withdraws approval of an apprenticeship program, the Contractor will no longer be permitted to utilize apprentices at less than the applicable predetermined rate for the work performed until an acceptable program is approved.
(ii) Trainees. Except as provided in 29 CFR 5.16, trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in a program which has received prior approval, evidenced by formal certification by the U.S. Department of Labor, Employment and Training Administration. The ratio of trainees to journeymen on the job site shall not be greater than permitted under the plan approved by the Employment and Training Administration. Every trainee must be paid at not less than the rate specified in the approved program for the trainee’s level of progress, expressed as a percentage of the journeyman hourly rate specified in the applicable wage determination. Trainees shall be paid fringe benefits in accordance with the provisions of the trainee program. If the trainee program does not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed on the wage determination unless the Administrator of the Wage and Hour Division determines that there is an apprenticeship program associated with the corresponding journeyman wage rate on the wage determination that provides for less than full fringe benefits for apprentices. Any employee listed on the payroll at a trainee rate that is not registered and participating in a training plan approved by the Employment and Training Administration shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any trainee performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. In the event the Employment and Training Administration withdraws approval of a training program, the Contractor will no longer be permitted to utilize trainees at less than the applicable predetermined rate for the work performed until an acceptable program is approved. (iii) Equal Employment Opportunity. The utilization of apprentices, trainees, and journeymen under this part shall be in conformity with the equal employment opportunity requirements of Executive Order 11246, as amended, and 29 CFR Part 30.
5. Compliance with Copeland Act Requirements.
The Contractor shall comply with the requirements of 29 CFR Part 3, which are incorporated by reference in this contract.
6. Subcontracts.
The Contractor or subcontractor shall insert in any subcontracts the clauses contained in 29 CFR Part 5.5(a)(1) through (10) and such other clauses as the Federal Aviation Administration may by appropriate instructions require, and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor Item 3A - Page 353
shall be responsible for the compliance by any subcontractor or lower tier subcontractor with all the contract clauses in 29 CFR Part 5.5.
7. Contract Termination: Debarment.
A breach of the contract clauses in paragraph 1 through 10 of this section may be grounds for termination of the contract, and for debarment as a contractor and a subcontractor as provided in 29 CFR 5.12.
8. Compliance with Davis-Bacon and Related Act Requirements.
All rulings and interpretations of the Davis-Bacon and Related Acts contained in 29 CFR Parts 1, 3, and 5 are herein incorporated by reference in this contract.
9. Disputes Concerning Labor Standards.
Disputes arising out of the labor standards provisions of this contract shall not be subject to the general disputes clause of this contract. Such disputes shall be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR Parts 5, 6, and 7.
Disputes within the meaning of this clause include disputes between the Contractor (or any of its subcontractors) and the contracting agency, the U.S. Department of Labor, or the employees or their representatives.
10. Certification of Eligibility.
(i) By entering into this contract, the Contractor certifies that neither it (nor he or she) nor any person or firm who has an interest in the Contractor’s firm is a person or firm ineligible to be awarded Government contracts by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR
5.12(a)(1).
(ii) No part of this contract shall be subcontracted to any person or firm ineligible for award of a Government contract by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1). (iii) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 USC 1001.
Reference: 2 CFR § 200, Appendix II(D), 29 CFR Part 5
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FAA – 11 Debarment and Suspension
A11.3.1 Bidder or Offeror Certification
By submitting a bid/proposal under the solicitation for this contract, the Contractor must have certified that neither it nor its principals are presently debarred or suspended by any Federal department or agency from participation in this transaction.
A11.3.2 Lower Tier Contract Certification
CERTIFICATION OF LOWER TIER CONTRACTORS REGARDING DEBARMENT The Contractor, by administering each lower tier subcontract that exceeds $25,000 as a “covered transaction”, must verify each lower tier participant of a “covered transaction” under the project is not presently debarred or otherwise disqualified from participation in this federally assisted project. The Contractor will accomplish this by:
1. Checking the System for Award Management at website: http://www.sam.gov.
2. Collecting a certification statement similar to the Certification of Offerer /Bidder Regarding Debarment, above.
3. Inserting a clause or condition in the covered transaction with the lower tier contract.
If the Federal Aviation Administration later determines that a lower tier participant failed to disclose to a higher tier participant that it was excluded or disqualified at the time it entered the covered transaction, the FAA may pursue any available remedies, including suspension and debarment of the non-compliant participant.
Reference: 2 CFR part 180 (Subpart C), 2 CFR part 1200, DOT Order 4200.5 Item 3A - Page 355
FAA – 12 Disadvantaged Business Enterprise
Contract Assurance (§ 26.13) –
The Contractor or subcontractor shall not discriminate on the basis of race, color, national origin, or sex in the performance of this contract. The Contractor shall carry out applicable requirements of 49 CFR part 26 in the award and administration of Department of Transportation-assisted contracts. Failure by the Contractor to carry out these requirements is a material breach of this contract, which may result in the termination of this contract or such other remedy as the Owner deems appropriate, which may include, but is not limited to:
1) Withholding monthly progress payments;
2) Assessing sanctions;
3) Liquidated damages; and/or
4) Disqualifying the Contractor from future bidding as non-responsible.
Prompt Payment (§26.29) – The prime contractor agrees to pay each subcontractor under this prime contract for satisfactory performance of its contract no later than [10 days] days from the receipt of each payment the prime contractor receives from [the City]. The prime contractor agrees further to return retainage payments to each subcontractor within [30 days] days after the subcontractor’s work is satisfactorily completed. Any delay or postponement of payment from the above referenced time frame may occur only for good cause following written approval of the [City]. This clause applies to both DBE and non-DBE subcontractors.
Reference: 49 CFR part 26
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FAA – 13 Distracted Driving
TEXTING WHEN DRIVING
In accordance with Executive Order 13513, “Federal Leadership on Reducing Text Messaging While Driving”, (10/1/2009) and DOT Order 3902.10, “Text Messaging While Driving”, (12/30/2009), the Federal Aviation Administration encourages recipients of Federal grant funds to adopt and enforce safety policies that decrease crashes by distracted drivers, including policies to ban text messaging while driving when performing work related to a grant or subgrant.
In support of this initiative, the Owner encourages the Contractor to promote policies and initiatives for its employees and other work personnel that decrease crashes by distracted drivers, including policies that ban text messaging while driving motor vehicles while performing work activities associated with the project. The Contractor must include the substance of this clause in all sub-tier contracts exceeding $3,500 that involve driving a motor vehicle in performance of work activities associated with the project.
Reference: Executive Order 13513, DOT Order 3902.10
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FAA – 14 Energy Conservation Requirements
Contractor and Subcontractor agree to comply with mandatory standards and policies relating to energy efficiency as contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (42 USC 6201et seq).
Reference: 2 CFR § 200, Appendix II(H)
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FAA – 15 Drug Free Workplace Requirements
The Drug-Free Workplace Act of 1988 requires some Federal contractors and all Federal grantees to agree that they will provide drug-free workplaces as a condition of receiving a contract or grant from a Federal agency. The Act does not apply to contractors, subcontractors, or subgrantees, although the Federal grantees workplace may be where the contractors, subcontractors, or subgrantees are working.
Reference: 49 CFR part 32, Drug-Free Workplace Act of 1988 (41 U.S.C. 701 et seq., as amended)
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FAA – 16 Equal Employment Opportunity
A16.3.1 EEO Contract Clause
During the performance of this contract, the Contractor agrees as follows:
(1) The Contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The Contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, sexual orientation, gender identify, or national origin. Such action shall include, but not be limited to, the following:
employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff, or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of this nondiscrimination clause.
(2) The Contractor will, in all solicitations or advertisements for employees placed by or on behalf of the Contractor, state that all qualified applicants will receive considerations for employment without regard to race, color, religion, sex, or national origin. (3) The Contractor will send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice to be provided advising the said labor union or workers’ representatives of the Contractor’s commitments under this section and shall post copies of the notice in conspicuous places available to employees and applicants for employment.
(4) The Contractor will comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor. (5) The Contractor will furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the administering agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.
(6) In the event of the Contractor’s noncompliance with the nondiscrimination clauses of this contract or with any of the said rules, regulations, or orders, this contract may be canceled, terminated, or suspended in whole or in part and the Contractor may be declared ineligible for further Government contracts or federally assisted construction contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.
(7) The Contractor will include the portion of the sentence immediately preceding paragraph (1) and the provisions of paragraphs (1) through (7) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take such action with respect to any subcontract or purchase order as the administering agency may direct as a means of enforcing such provisions, including sanctions for noncompliance: Provided, Item 3A - Page 360
however, that in the event a contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the administering agency the Contractor may request the United States to enter into such litigation to protect the interests of the United States.
A16.3.2 EEO Specification
STANDARD FEDERAL EQUAL EMPLOYMENT OPPORTUNITY
CONSTRUCTION CONTRACT SPECIFICATIONS
1. As used in these specifications:
a. “Covered area” means the geographical area described in the solicitation from which this contract resulted;
b. “Director” means Director, Office of Federal Contract Compliance Programs (OFCCP), U.S. Department of Labor, or any person to whom the Director delegates authority; c. “Employer identification number” means the Federal social security number used on the Employer’s Quarterly Federal Tax Return, U.S. Treasury Department Form 941; d. “Minority” includes:
(1) Black (all persons having origins in any of the Black African racial groups not of Hispanic origin);
(2) Hispanic (all persons of Mexican, Puerto Rican, Cuban, Central or South American, or other Spanish culture or origin regardless of race); (3) Asian and Pacific Islander (all persons having origins in any of the original peoples of the Far East, Southeast Asia, the Indian Subcontinent, or the Pacific Islands); and (4) American Indian or Alaskan native (all persons having origins in any of the original peoples of North America and maintaining identifiable tribal affiliations through membership and participation or community identification).
2. Whenever the Contractor, or any subcontractor at any tier, subcontracts a portion of the work involving any construction trade, it shall physically include in each subcontract in excess of $10,000 the provisions of these specifications and the Notice which contains the applicable goals for minority and female participation and which is set forth in the solicitations from which this contract resulted.
3. If the Contractor is participating (pursuant to 41 CFR part 60-4.5) in a Hometown Plan approved by the U.S. Department of Labor in the covered area either individually or through an association, its affirmative action obligations on all work in the Plan area (including goals and timetables) shall be in accordance with that Plan for those trades which have unions participating in the Plan. Contractors shall be able to demonstrate their participation in and compliance with the provisions of any such Hometown Plan. Each contractor or subcontractor participating in an approved plan is individually required to comply with its obligations under the EEO clause and to make a good faith effort to achieve each goal under the Plan in each trade in which it has employees. The overall good faith performance by other contractors or subcontractors toward a goal in an approved Plan does not excuse any covered contractor’s or subcontractor’s failure to take good faith efforts to achieve the Plan goals and timetables.
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4. The Contractor shall implement the specific affirmative action standards provided in paragraphs 7a through 7p of these specifications. The goals set forth in the solicitation from which this contract resulted are expressed as percentages of the total hours of employment and training of minority and female utilization the Contractor should reasonably be able to achieve in each construction trade in which it has employees in the covered area. Covered construction contractors performing construction work in a geographical area where they do not have a Federal or federally assisted construction contract shall apply the minority and female goals established for the geographical area where the work is being performed. Goals are published periodically in the Federal Register in notice form, and such notices may be obtained from any Office of Federal Contract Compliance Programs office or from Federal procurement contracting officers.
The Contractor is expected to make substantially uniform progress in meeting its goals in each craft during the period specified.
5. Neither the provisions of any collective bargaining agreement nor the failure by a union with whom the Contractor has a collective bargaining agreement to refer either minorities or women shall excuse the Contractor’s obligations under these specifications, Executive Order 11246, or the regulations promulgated pursuant thereto.
6. In order for the non-working training hours of apprentices and trainees to be counted in meeting the goals, such apprentices and trainees shall be employed by the Contractor during the training period and the Contractor shall have made a commitment to employ the apprentices and trainees at the completion of their training, subject to the availability of employment opportunities. Trainees shall be trained pursuant to training programs approved by the U.S. Department of Labor.
7. The Contractor shall take specific affirmative actions to ensure equal employment opportunity. The evaluation of the Contractor’s compliance with these specifications shall be based upon its effort to achieve maximum results from its actions. The Contractor shall document these efforts fully and shall implement affirmative action steps at least as extensive as the following:
a. Ensure and maintain a working environment free of harassment, intimidation, and coercion at all sites, and in all facilities at which the Contractor’s employees are assigned to work.
The Contractor, where possible, will assign two or more women to each construction project. The Contractor shall specifically ensure that all foremen, superintendents, and other onsite supervisory personnel are aware of and carry out the Contractor’s obligation to maintain such a working environment, with specific attention to minority or female individuals working at such sites or in such facilities. b. Establish and maintain a current list of minority and female recruitment sources, provide written notification to minority and female recruitment sources and to community organizations when the Contractor or its unions have employment opportunities available, and maintain a record of the organizations’ responses.
c. Maintain a current file of the names, addresses, and telephone numbers of each minority and female off-the-street applicant and minority or female referral from a union, a recruitment source, or community organization and of what action was taken with respect to each such individual. If such individual was sent to the union hiring hall for referral and was not referred back to the Contractor by the union or, if referred, not employed by the Contractor, this shall be documented in the file with the reason therefore along with whatever additional actions the Contractor may have taken.
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d. Provide immediate written notification to the Director when the union or unions with which the Contractor has a collective bargaining agreement has not referred to the Contractor a minority person or female sent by the Contractor, or when the Contractor has other information that the union referral process has impeded the Contractor’s efforts to meet its obligations.
e. Develop on-the-job training opportunities and/or participate in training programs for the area which expressly include minorities and women, including upgrading programs and apprenticeship and trainee programs relevant to the Contractor’s employment needs, especially those programs funded or approved by the Department of Labor. The Contractor shall provide notice of these programs to the sources compiled under 7b above.
f. Disseminate the Contractor’s EEO policy by providing notice of the policy to unions and training programs and requesting their cooperation in assisting the Contractor in meeting its EEO obligations; by including it in any policy manual and collective bargaining agreement; by publicizing it in the company newspaper, annual report, etc.; by specific review of the policy with all management personnel and with all minority and female employees at least once a year; and by posting the company EEO policy on bulletin boards accessible to all employees at each location where construction work is performed. g. Review, at least annually, the company’s EEO policy and affirmative action obligations under these specifications with all employees having any responsibility for hiring, assignment, layoff, termination, or other employment decisions, including specific review of these items, with onsite supervisory personnel such superintendents, general foremen, etc., prior to the initiation of construction work at any job site. A written record shall be made and maintained identifying the time and place of these meetings, persons attending, subject matter discussed, and disposition of the subject matter. h. Disseminate the Contractor’s EEO policy externally by including it in any advertising in the news media, specifically including minority and female news media, and providing written notification to and discussing the Contractor’s EEO policy with other contractors and subcontractors with whom the Contractor does or anticipates doing business. i. Direct its recruitment efforts, both oral and written, to minority, female, and community organizations, to schools with minority and female students; and to minority and female recruitment and training organizations serving the Contractor’s recruitment area and employment needs. Not later than one month prior to the date for the acceptance of applications for apprenticeship or other training by any recruitment source, the Contractor shall send written notification to organizations, such as the above, describing the openings, screening procedures, and tests to be used in the selection process. j. Encourage present minority and female employees to recruit other minority persons and women and, where reasonable, provide after school, summer, and vacation employment to minority and female youth both on the site and in other areas of a contractor’s workforce.
k. Validate all tests and other selection requirements where there is an obligation to do so under 41 CFR part 60-3.
l. Conduct, at least annually, an inventory and evaluation at least of all minority and female personnel, for promotional opportunities and encourage these employees to seek or to prepare for, through appropriate training, etc., such opportunities.
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m. Ensure that seniority practices, job classifications, work assignments, and other personnel practices do not have a discriminatory effect by continually monitoring all personnel and employment related activities to ensure that the EEO policy and the Contractor’s obligations under these specifications are being carried out. n. Ensure that all facilities and company activities are non-segregated except that separate or single user toilet and necessary changing facilities shall be provided to assure privacy between the sexes.
o. Document and maintain a record of all solicitations of offers for subcontracts from minority and female construction contractors and suppliers, including circulation of solicitations to minority and female contractor associations and other business associations. p. Conduct a review, at least annually, of all supervisor’s adherence to and performance under the Contractor’s EEO policies and affirmative action obligations.
8. Contractors are encouraged to participate in voluntary associations, which assist in fulfilling one or more of their affirmative action obligations (7a through 7p). The efforts of a contractor association, joint contractor union, contractor community, or other similar groups of which the Contractor is a member and participant may be asserted as fulfilling any one or more of its obligations under 7a through 7p of these specifications provided that the Contractor actively participates in the group, makes every effort to assure that the group has a positive impact on the employment of minorities and women in the industry, ensures that the concrete benefits of the program are reflected in the Contractor’s minority and female workforce participation, makes a good faith effort to meet its individual goals and timetables, and can provide access to documentation which demonstrates the effectiveness of actions taken on behalf of the Contractor. The obligation to comply, however, is the Contractor’s and failure of such a group to fulfill an obligation shall not be a defense for the Contractor’s noncompliance.
9. A single goal for minorities and a separate single goal for women have been established.
The Contractor, however, is required to provide equal employment opportunity and to take affirmative action for all minority groups, both male and female, and all women, both minority and non-minority. Consequently, if the particular group is employed in a substantially disparate manner (for example, even though the Contractor has achieved its goals for women generally), the Contractor may be in violation of the Executive Order if a specific minority group of women is underutilized.
10. The Contractor shall not use the goals and timetables or affirmative action standards to discriminate against any person because of race, color, religion, sex, or national origin.
11. The Contractor shall not enter into any subcontract with any person or firm debarred from Government contracts pursuant to Executive Order 11246.
12. The Contractor shall carry out such sanctions and penalties for violation of these specifications and of the Equal Opportunity Clause, including suspension, termination, and cancellation of existing subcontracts as may be imposed or ordered pursuant to Executive Order 11246, as amended, and its implementing regulations, by the Office of Federal Contract Compliance Programs. Any contractor who fails to carry out such sanctions and penalties shall be in violation of these specifications and Executive Order 11246, as amended.
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13. The Contractor, in fulfilling its obligations under these specifications, shall implement specific affirmative action steps, at least as extensive as those standards prescribed in paragraph 7 of these specifications, so as to achieve maximum results from its efforts to ensure equal employment opportunity. If the Contractor fails to comply with the requirements of the Executive Order, the implementing regulations, or these specifications, the Director shall proceed in accordance with 41 CFR part 60-4.8.
14. The Contractor shall designate a responsible official to monitor all employment related activity to ensure that the company EEO policy is being carried out, to submit reports relating to the provisions hereof as may be required by the Government, and to keep records. Records shall at least include for each employee, the name, address, telephone number, construction trade, union affiliation if any, employee identification number when assigned, social security number, race, sex, status (e.g., mechanic, apprentice, trainee, helper, or laborer), dates of changes in status, hours worked per week in the indicated trade, rate of pay, and locations at which the work was performed. Records shall be maintained in an easily understandable and retrievable form; however, to the degree that existing records satisfy this requirement, contractors shall not be required to maintain separate records.
15. Nothing herein provided shall be construed as a limitation upon the application of other laws which establish different standards of compliance or upon the application of requirements for the hiring of local or other area residents (e.g. those under the Public Works Employment Act of 1977 and the Community Development Block Grant Program).
Reference: 2 CFR 200, Appendix II(C), 41 CFR § 60-1.4, 41 CFR § 60-4.3, Executive Order 11246
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FAA – 17 Federal Fair Labor Standards Act
The provisions of 29 CFR part 201, the Federal Fair Labor Standards Act (FLSA), are incorporated by reference with the same force and effect as if given in full text. The FLSA sets minimum wage, overtime pay, recordkeeping, and child labor standards for full and part-time workers.
The [Contractor | Consultant] has full responsibility to monitor compliance to the referenced statute or regulation. The [Contractor | Consultant] must address any claims or disputes that arise from this requirement directly with the U.S. Department of Labor – Wage and Hour Division.
Reference: 29 USC § 201, et seq
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FAA – 18 Lobbying and Influencing Federal Employees
Consultants and contractors that apply or bid for an award of $100,000 or more must have certified that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant, or another award covered by 31 USC 1352. Each tier must also disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award.
Reference: 31 USC § 1352 – Byrd Anti-Lobbying Amendment, 2 CFR part 200, Appendix II(J), 49 CFR part 20, Appendix A
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FAA – 19 Prohibition of Segregated Facilities
(a) The Contractor agrees that it does not and will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it does not and will not permit its employees to perform their services at any location under its control where segregated facilities are maintained. The Contractor agrees that a breach of this clause is a violation of the Equal Employment Opportunity clause in this contract.
(b) “Segregated facilities,” as used in this clause, means any waiting rooms, work areas, rest rooms and wash rooms, restaurants and other eating areas, time clocks, locker rooms and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees that are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, sex, or national origin because of written or oral policies or employee custom. The term does not include separate or single-user rest rooms or necessary dressing or sleeping areas provided to assure privacy between the sexes.
(c) The Contractor shall include this clause in every subcontract and purchase order that is subject to the Equal Employment Opportunity clause of this contract.
Reference: 41 CFR § 60
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FAA – 20 Occupational Safety and Health Act
All contracts and subcontracts that result from this solicitation incorporate by reference the requirements of 29 CFR Part 1910 with the same force and effect as if given in full text. The employer must provide a work environment that is free from recognized hazards that may cause death or serious physical harm to the employee. The employer retains full responsibility to monitor its compliance and their subcontractor’s compliance with the applicable requirements of the Occupational Safety and Health Act of 1970 (20 CFR Part 1910). The employer must address any claims or disputes that pertain to a referenced requirement directly with the U.S.
Department of Labor – Occupational Safety and Health Administration.
Reference: 29 CFR part 1910
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FAA – 21 Procurement of Recovered Materials
Contractor and subcontractor agree to comply with Section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, and the regulatory provisions of 40 CFR Part 247. In the performance of this contract and to the extent practicable, the Contractor and subcontractors are to use products containing the highest percentage of recovered materials for items designated by the Environmental Protection Agency (EPA) under 40 CFR Part 247 whenever:
1) The contract requires procurement of $10,000 or more of a designated item during the fiscal year; or
2) The contractor has procured $10,000 or more of a designated item using Federal funding during the previous fiscal year.
The list of EPA-designated items is available at www.epa.gov/smm/comprehensiveprocurement-guidelines-construction-products.
Section 6002(c) establishes exceptions to the preference for recovery of EPA-designated products if the contractor can demonstrate the item is:
a) Not reasonably available within a timeframe providing for compliance with the contract performance schedule;
b) Fails to meet reasonable contract performance requirements; or c) Is only available at an unreasonable price.
Reference: 2 CFR § 200.322, 40 CFR part 247, Solid Waste Disposal Act Item 3A - Page 370
FAA – 22 Rights to Inventions
Contracts or agreements that include the performance of experimental, developmental, or research work must provide for the rights of the Federal Government and the Owner in any resulting invention as established by 37 CFR part 401, Rights to Inventions Made by Non-profit Organizations and Small Business Firms under Government Grants, Contracts, and Cooperative Agreements. This contract incorporates by reference the patent and inventions rights as specified within 37 CFR §401.14. Contractor must include this requirement in all subtier contracts involving experimental, developmental, or research work.
Reference: 2 CFR § 200, Appendix II(F), 37 CFR §401
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FAA - 23 Seismic Safety
A23.3.1 Professional Service Agreements for Design
SEISMIC SAFETY
In the performance of design services, the Consultant agrees to furnish a building design and associated construction specification that conform to a building code standard that provides a level of seismic safety substantially equivalent to standards as established by the National Earthquake Hazards Reduction Program (NEHRP). Local building codes that model their building code after the current version of the International Building Code (IBC) meet the NEHRP equivalency level for seismic safety. At the conclusion of the design services, the Consultant agrees to furnish the Owner a “certification of compliance” that attests conformance of the building design and the construction specifications with the seismic standards of NEHRP or an equivalent building code.
A23.3.2 Construction Contracts
SEISMIC SAFETY
The Contractor agrees to ensure that all work performed under this contract, including work performed by subcontractors, conforms to a building code standard that provides a level of seismic safety substantially equivalent to standards established by the National Earthquake Hazards Reduction Program (NEHRP). Local building codes that model their code after the current version of the International Building Code (IBC) meet the NEHRP equivalency level for seismic safety.
Reference: 49 CFR part 41
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FAA – 24 Tax Delinquency and Felony Conviction
The Contractor must have certified under the procurement process that resulted in the award of this contract that:
• Contractor has not been convicted of a Federal felony within the last 24 months; or • Contractor does not have any outstanding tax liability for which all judicial and administrative remedies have lapsed or been exhausted.
Reference: Sections 415 and 416 of Title IV, Division L of the Consolidated Appropriations Act, 2014 (Pub. L. 113-76), and similar provisions in subsequent appropriations acts.
DOT Order 4200.6 - Requirements for Procurement and Non-Procurement Regarding Tax Delinquency and Felony Convictions
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FAA – 25 Termination of Contract
A25.3.1 TERMINATION FOR CONVENIENCE (CONSTRUCTION & EQUIPMENT
CONTRACTS)
The Owner may terminate this contract in whole or in part at any time by providing written notice to the Contractor. Such action may be without cause and without prejudice to any other right or remedy of Owner. Upon receipt of a written notice of termination, except as explicitly directed by the Owner, the Contractor shall immediately proceed with the following obligations regardless of any delay in determining or adjusting amounts due under this clause:
1. Contractor must immediately discontinue work as specified in the written notice.
2. Terminate all subcontracts to the extent they relate to the work terminated under the notice.
3. Discontinue orders for materials and services except as directed by the written notice.
4. Deliver to the Owner all fabricated and partially fabricated parts, completed and partially completed work, supplies, equipment and materials acquired prior to termination of the work, and as directed in the written notice.
5. Complete performance of the work not terminated by the notice.
6. Take action as directed by the Owner to protect and preserve property and work related to this contract that Owner will take possession.
Owner agrees to pay Contractor for:
1) completed and acceptable work executed in accordance with the contract documents prior to the effective date of termination;
2) documented expenses sustained prior to the effective date of termination in performing work and furnishing labor, materials, or equipment as required by the contract documents in connection with uncompleted work;
3) reasonable and substantiated claims, costs, and damages incurred in settlement of terminated contracts with Subcontractors and Suppliers; and 4) reasonable and substantiated expenses to the Contractor directly attributable to Owner’s termination action.
Owner will not pay Contractor for loss of anticipated profits or revenue or other economic loss arising out of or resulting from the Owner’s termination action.
The rights and remedies this clause provides are in addition to any other rights and remedies provided by law or under this contract.
TERMINATION FOR CONVENIENCE (PROFESSIONAL SERVICES)
The Owner may, by written notice to the Consultant, terminate this Agreement for its convenience and without cause or default on the part of Consultant. Upon receipt of the notice of termination, except as explicitly directed by the Owner, the Contractor must immediately discontinue all services affected.
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Upon termination of the Agreement, the Consultant must deliver to the Owner all data, surveys, models, drawings, specifications, reports, maps, photographs, estimates, summaries, and other documents and materials prepared by the Engineer under this contract, whether complete or partially complete.
Owner agrees to make just and equitable compensation to the Consultant for satisfactory work completed up through the date the Consultant receives the termination notice. Compensation will not include anticipated profit on non-performed services.
Owner further agrees to hold Consultant harmless for errors or omissions in documents that are incomplete as a result of the termination action under this clause.
A25.3.2 Termination for Default
TERMINATION FOR DEFAULT (CONSTRUCTION)
Section 80-09 of FAA Advisory Circular 150/5370-10 establishes conditions, rights, and remedies associated with Owner termination of this contract due to default of the Contractor.
TERMINATION FOR DEFAULT (EQUIPMENT)
The Owner may, by written notice of default to the Contractor, terminate all or part of this Contract if the Contractor:
1. Fails to commence the Work under the Contract within the time specified in the Notice- toProceed;
2. Fails to make adequate progress as to endanger performance of this Contract in accordance with its terms;
3. Fails to make delivery of the equipment within the time specified in the Contract, including any Owner approved extensions;
4. Fails to comply with material provisions of the Contract;
5. Submits certifications made under the Contract and as part of their proposal that include false or fraudulent statements; or
6. Becomes insolvent or declares bankruptcy.
If one or more of the stated events occur, the Owner will give notice in writing to the Contractor and Surety of its intent to terminate the contract for cause. At the Owner’s discretion, the notice may allow the Contractor and Surety an opportunity to cure the breach or default.
If within [10] days of the receipt of notice, the Contractor or Surety fails to remedy the breach or default to the satisfaction of the Owner, the Owner has authority to acquire equipment by other procurement action. The Contractor will be liable to the Owner for any excess costs the Owner incurs for acquiring such similar equipment.
Payment for completed equipment delivered to and accepted by the Owner shall be at the Contract price. The Owner may withhold from amounts otherwise due the Contractor for such completed equipment, such sum as the Owner determines to be necessary to protect the Owner against loss because of Contractor default.
Owner will not terminate the Contractor’s right to proceed with the Work under this clause if the delay in completing the work arises from unforeseeable causes beyond the control and without Item 3A - Page 375
the fault or negligence of the Contractor. Examples of such acceptable causes include: acts of God, acts of the Owner, acts of another Contractor in the performance of a contract with the Owner, and severe weather events that substantially exceed normal conditions for the location.
If, after termination of the Contractor’s right to proceed, the Owner determines that the Contractor was not in default, or that the delay was excusable, the rights and obligations of the parties will be the same as if the Owner issued the termination for the convenience the Owner.
The rights and remedies of the Owner in this clause are in addition to any other rights and remedies provided by law or under this contract.
TERMINATION FOR DEFAULT (PROFESSIONAL SERVICES)
Either party may terminate this Agreement for cause if the other party fails to fulfill its obligations that are essential to the completion of the work per the terms and conditions of the Agreement.
The party initiating the termination action must allow the breaching party an opportunity to dispute or cure the breach.
The terminating party must provide the breaching party [7] days advance written notice of its intent to terminate the Agreement. The notice must specify the nature and extent of the breach, the conditions necessary to cure the breach, and the effective date of the termination action.
The rights and remedies in this clause are in addition to any other rights and remedies provided by law or under this agreement.
a) Termination by Owner: The Owner may terminate this Agreement in whole or in part, for the failure of the Consultant to:
1. Perform the services within the time specified in this contract or by Owner approved extension;
2. Make adequate progress so as to endanger satisfactory performance of the Project; or
3. Fulfill the obligations of the Agreement that are essential to the completion of the Project.
Upon receipt of the notice of termination, the Consultant must immediately discontinue all services affected unless the notice directs otherwise. Upon termination of the Agreement, the Consultant must deliver to the Owner all data, surveys, models, drawings, specifications, reports, maps, photographs, estimates, summaries, and other documents and materials prepared by the Engineer under this contract, whether complete or partially complete.
Owner agrees to make just and equitable compensation to the Consultant for satisfactory work completed up through the date the Consultant receives the termination notice. Compensation will not include anticipated profit on non-performed services.
Owner further agrees to hold Consultant harmless for errors or omissions in documents that are incomplete as a result of the termination action under this clause.
If, after finalization of the termination action, the Owner determines the Consultant was not in default of the Agreement, the rights and obligations of the parties shall be the same as if the Owner issued the termination for the convenience of the Owner. b) Termination by Consultant: The Consultant may terminate this Agreement in whole or in part, if the Owner:
1. Defaults on its obligations under this Agreement;
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2. Fails to make payment to the Consultant in accordance with the terms of this Agreement;
3. Suspends the Project for more than [180] days due to reasons beyond the control of the Consultant.
Upon receipt of a notice of termination from the Consultant, Owner agrees to cooperate with Consultant for the purpose of terminating the agreement or portion thereof, by mutual consent.
If Owner and Consultant cannot reach mutual agreement on the termination settlement, the Consultant may, without prejudice to any rights and remedies it may have, proceed with terminating all or parts of this Agreement based upon the Owner’s breach of the contract.
In the event of termination due to Owner breach, the Engineer is entitled to invoice Owner and to receive full payment for all services performed or furnished in accordance with this Agreement and all justified reimbursable expenses incurred by the Consultant through the effective date of termination action. Owner agrees to hold Consultant harmless for errors or omissions in documents that are incomplete as a result of the termination action under this clause.
Reference: 2 CFR § 200 Appendix II(B), FAA Advisory Circular 150/5370-10, Section 80-09 Item 3A - Page 377
FAA – 26 Foreign Trade Restriction
TRADE RESTRICTION CERTIFICATION
By accepting this contract the Contractor certifies the following statements are true – 1) is not owned or controlled by one or more citizens of a foreign country included in the list of countries that discriminate against U.S. firms as published by the Office of the United States Trade Representative (USTR);
2) has not knowingly entered into any contract or subcontract for this project with a person that is a citizen or national of a foreign country included on the list of countries that discriminate against U.S. firms as published by the USTR; and 3) has not entered into any subcontract for any product to be used on the Federal project that is produced in a foreign country included on the list of countries that discriminate against U.S. firms published by the USTR.
This certification concerns a matter within the jurisdiction of an agency of the United States of America and the making of a false, fictitious, or fraudulent certification may render the maker subject to prosecution under Title 18 USC Section 1001.
The Contractor must provide immediate written notice to the Owner if the Contractor learns that its certification or that of a subcontractor was erroneous when submitted or has become erroneous by reason of changed circumstances. The Contractor must require subcontractors provide immediate written notice to the Contractor if at any time it learns that its certification was erroneous by reason of changed circumstances.
Unless the restrictions of this clause are waived by the Secretary of Transportation in accordance with 49 CFR 30.17, no contract shall be awarded to an Offeror or subcontractor:
1) who is owned or controlled by one or more citizens or nationals of a foreign country included on the list of countries that discriminate against U.S. firms published by the USTR or
2) whose subcontractors are owned or controlled by one or more citizens or nationals of a foreign country on such USTR list or
3) who incorporates in the public works project any product of a foreign country on such USTR list.
Nothing contained in the foregoing shall be construed to require establishment of a system of records in order to render, in good faith, the certification required by this provision. The knowledge and information of a contractor is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings.
The Contractor agrees it will incorporate this provision for certification without modification in all lower tier subcontracts. The Contractor may rely on the certification of a prospective subcontractor that it is not a firm from a foreign country included on the list of countries that discriminate against U.S. firms as published by USTR, unless the Contractor has knowledge that the certification is erroneous.
This certification is a material representation of fact upon which reliance was placed when making an award. If it is later determined that the Contractor or subcontractor knowingly Item 3A - Page 378
rendered an erroneous certification, the Federal Aviation Administration (FAA) may direct through the Owner cancellation of the contract or subcontract for default at no cost to the Owner or the FAA.
Reference: 49 USC § 50104, 49 CFR part 30
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FAA – 27 Veteran’s Preference
In the employment of labor (excluding executive, administrative, and supervisory positions), the Contractor and all sub-tier contractors must give preference to covered veterans as defined within Title 49 United States Code Section 47112. Covered veterans include Vietnam-era veterans, Persian Gulf veterans, Afghanistan-Iraq war veterans, disabled veterans, and small business concerns (as defined by 15 USC 632) owned and controlled by disabled veterans.
This preference only applies when there are covered veterans readily available and qualified to perform the work to which the employment relates.
Reference: 49 USC § 47112(c)
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THE MARSHALL RETAIL GROUP, LLC // PSP // RFP 10-22 AIRPORT CONCESSIONS RETAIL FOOD AND BEVERAGE
SECTION F ATTACHMENT D
Item 3A - Page 1
4 THE MARSHALL RETAIL GROUP, LLC // PSP // RFP 10-22 AIRPORT CONCESSIONS RETAIL FOOD AND BEVERAGE
SECTION F ATTACHMENT D
Item 3A - Page 2
5 ATTACHMENT D
PUBLIC INTEGRITY DISCLOSURE FORM -
PARADIES LAGARDERE @PSP, LLC
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PUBLIC INTEGRITY DISCLOSURE
APPLICANT DISCLOSURE FORM
1. Name of Entity
Paradies Lagardere @ PSP, LLC
2. Address of Entity (Principal Place of Business)
2849 Paces Ferry Road, Suite 400, Atlanta, GA 30339
3. Local or California Address (if different than #2)
3400 E. Tahquitz Canyon Way, Main Level Office, Palm Springs CA 92262
4. State where Entity is Registered with Secretary of State California
If other than California, is the Entity also registered in California? Yes No
5. Type of Entity
Corporation ■ Limited Liability Company Partnership Trust Other (please specify)
6. Officers, Directors, Members, Managers, Trustees, Other Fiduciaries (please specify) Note: If any response is not a natural person, please identify all officers, directors, members, managers and other fiduciaries for the member, manager, trust, or other entity
Gregg Paradies ■ Officer Director Member ■ Manager
[name] General Partner Limited Partner
■ Other: Officer and Manager of Member
The Paradies Shops, LLC
John Jamison ■ Officer Director Member ■ Manager
[name] General Partner Limited Partner
■ Other: Officer and Manager of Member
The Paradies Shops, LLC
Karen Suttle ■ Officer Director Member ■ Manager
[name] General Partner Limited Partner
■ Other: Officer and Manager of Member
The Paradies Shops, LLC
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Steven Menefee ■ Officer Director Member ■ Manager
General Partner Limited Partner
■ Other: Sole Officer and Director of
Member CRS Sophisticated Solutions, Inc.
7. Owners/Investors with a 5% beneficial interest in the Applicant Entity or a related entity
EXAMPLE
JANE DOE
[name of owner/investor]
50%, ABC COMPANY, Inc.
[percentage of beneficial interest in entity and
name of entity]
A.
The Paradies Shops, LLC, a Georgia
limited liability company
[name of owner/investor]
90%
[percentage of beneficial interest in entity and
name of entity]
B.
CRS Sophisticated Solutions, Inc.
a California corporation
[name of owner/investor]
10%
[percentage of beneficial interest in entity and
name of entity]
C.
Steven Menefee
[name of owner/investor]
100%, CRS Sophisticate Solutions, Inc. (which equates
to 10% beneficial interest in Paradies Lagardere @
PSP, LLC)
[percentage of beneficial interest in entity and
name of entity]
D.
[name of owner/investor] [percentage of beneficial interest in entity and name of entity]
E.
[name of owner/investor] [percentage of beneficial interest in entity and name of entity]
Item 3A - Page 5
I DECLARE UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE FOREGOING IS TRUE AND CORRECT.
Signature of Disclosing Party, Printed Name, Title
Gregg Paradies, President
Date
September 19, 2022
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CITY COUNCIL STAFF REPORT
12/05/2022
SUBJECT:
APPROVE AMENDMENT NO. 1 TO THE DISPOSITION AND DEVELOPMENT AGREEMENT WITH ALOE PALM CANYON, L.P. FOR DEVELOPMENT AND CONSTRUCTION OF THE ALOE PALM CANYON PROJECT LOCATED AT 1479
NORTH PALM CANYON DRIVE (SOUTHWEST CORNER OF NORTH PALM
CANYON DRIVE AND WEST STEVENS ROAD), AND DISPOSITION OF CITY-OWNED PARCEL WITH ASSESSOR PARCEL NUMBER 505-182-010; AND APPROVE AMENDMENT NO. 1 TO THE PURCHASE AND SALE AGREEMENT TO
SELL SUCCESSOR AGENCY OWNED PROPERTY WITH ASSESSOR PARCEL NUMBER 505-182-004 TO ALOE PALM CANYON, L.P. FOR THE ALOE PALM
CANYON PROJECT
RECOMMENDATION:
Find that the Project is exempt from the California Environmental Quality Act (CEQA) pursuant to Senate Bill 35 and as an affordable housing project that meets criteria found in Sections 15192 and 15194 of the CEQA Guidelines.
1. Approve Amendment No. 1 to the Disposition and Development Agreement with Aloe Palm Canyon, L.P. to defer documentation for the remaining project financing until March 1, 2023, and allow the City to disburse pre-development loan funds to Aloe to pay for the Successor Agency parcel, which would allow for the transfer of City Owned parcel APN 505-182-010 by year-end.
2. Approve, Amendment No. 1 to the Purchase and Sale Agreement with Aloe Palm Canyon, L.P. to make minor changes consistent with the proposed Amendment No. 1 to the DDA and allow the sale of Successor Agency parcel APN 505-182-004 for the unchanged purchase price of $900,000 by year-end.
3. Authorize the Interim City Manager or designee to execute all necessary documents to effectuate the Amendments and to make any additional changes to the Amendments, provided that such changes do not create a net gain in risk to the City or increase the City’s financial obligation, subject to the approval of the City Attorney.
4. Attachments
Item 3B
CITY COUNCIL STAFF REPORT
DATE: DECEMBER 5, 2022 BUSINESS & LEGISLATIVE
SUBJECT: APPROVE AMENDMENT NO. 1 TO THE DISPOSITION AND DEVELOPMENT AGREEMENT WITH ALOE PALM CANYON, L.P. FOR
DEVELOPMENT AND CONSTRUCTION OF THE ALOE PALM CANYON
PROJECT LOCATED AT 1479 NORTH PALM CANYON DRIVE
(SOUTHWEST CORNER OF NORTH PALM CANYON DRIVE AND WEST
STEVENS ROAD), AND DISPOSITION OF CITY-OWNED PARCEL WITH ASSESSOR PARCEL NUMBER 505-182-010; AND APPROVE
AMENDMENT NO. 1 TO THE PURCHASE AND SALE AGREEMENT TO
SELL SUCCESSOR AGENCY OWNED PROPERTY WITH ASSESSOR
PARCEL NUMBER 505-182-004 TO ALOE PALM CANYON, L.P. FOR
THE ALOE PALM CANYON PROJECT
FROM: Teresa Gallavan, Interim City Manager
BY: Community and Economic Development Department
SUMMARY:
The Disposition and Development Agreement (DDA) and the Purchase and Sale Agreement (PSA, collectively the Agreements) for the Aloe Palm Canyon project (Project) were approved by the City Council and Successor Agency to the Palm Springs Redevelopment Agency (SA) in September 2021. The Agreements contemplated closing escrow for the sale of adjacent City and SA owned parcels to Aloe Palm Canyon, L.P. (Aloe/Developer) before December 31, 2022, which aligns with the deadline to sell the SA parcel, declared Exempt Surplus Land as required by Senate Bill 1486, the Surplus Lands Act (SLA). Aloe is a single-purpose limited partnership that West Hollywood Community Housing Corporation (WHCHC) formed for the Project.
However, the Agreements were structured in such a way that the City and SA parcels could not be conveyed to Aloe until WHCHC received commitments for all required funding to make the construction and operation of the Project financially feasible. The Agreements contained a similar requirement for the disbursement of City loan funds which Aloe could use to pay for pre-development expenses. With costs increasing since the Project was approved, there is now a shortfall in funding. WHCHC has already secured more than 90% of the funding needed through the California Housing Accelerator program and No Place Like Home (NPLH) program, but it is uncertain if Developer will be able to receive additional funding commitments before December 31, 2022. Therefore, it Item 3B - Page 1
City Council Staff Report
December 5, 2022 -- Page 2
Aloe Palm Canyon First Amendment
is being recommended that the City and SA approve Amendment No. 1 to the DDA (Attachment A) to defer the requirement for certain financing documentation for the increased project costs until March 1, 2023. Amendment No. 1 to the PSA (Attachment B) is recommended to remove the $50,000 initial deposit requirement, giving Aloe more time to secure funds to purchase the SA parcel by December 31, 2022. The Amendments will still require the transfer of the SA and City parcels to Aloe no later than December 31, 2022 in order for the SA parcel to remain Exempt Surplus Land.
RECOMMENDATION:
1. Find that the Project is exempt from the California Environmental Quality Act (CEQA) pursuant to Senate Bill 35 and as an affordable housing project that meets criteria found in Sections 15192 and 15194 of the CEQA Guidelines.
2. Approve Amendment No. 1 to the Disposition and Development Agreement with Aloe Palm Canyon, L.P. to defer documentation for the remaining project financing until March 1, 2023 and allow the City to disburse pre-development loan funds to Aloe to pay for the Successor Agency parcel, which would allow for the transfer of City Owned parcel APN 505-182-010 by year-end.
3. Approve, Amendment No. 1 to the Purchase and Sale Agreement with Aloe Palm Canyon, L.P. to make minor changes consistent with the proposed Amendment No. 1 to the DDA and allow the sale of Successor Agency parcel APN 505-182- 004 for the unchanged purchase price of $900,000 by year-end.
4. Authorize the Interim City Manager or designee to execute all necessary documents to effectuate the Amendments and to make any additional changes to the Amendments, provided that such changes do not create a net gain in risk to the City or increase the City’s financial obligation, subject to approval of the City Attorney.
BACKGROUND:
On January 14, 2021, the City Council approved the Planned Development District application, Case No. 5.1520 PD-390, to construct a 71-unit multiple-family residential development on the Site.
On January 14, 2021, the City Council approved a funding commitment for Developer in the amount of $2,400,000, plus an estimated $204,300 in City’s share of proceeds from the sale of the SA Parcel, plus land valued at $1,400,000 (totaling $4,004,300), subject to Developer successfully securing sufficient funding for the entire project.
On June 23, 2021, WHCHC was awarded a $6,413,275 allocation in NPLH funds.
Item 3B - Page 2
City Council Staff Report
December 5, 2022 -- Page 3
Aloe Palm Canyon First Amendment
On September 9, 2021, the City Council acting as Successor Agency approved the Purchase and Sale Agreement (PSA) for the sale of the SA Parcel and declared the property Exempt Surplus Land.
On September 16, 2021, the Countywide Oversight Board of Riverside County approved the PSA for the sale of the Successor Agency Parcel.
On September 30, 2021, the City Council approved the Disposition and Development Agreement for the Project and declared the City Parcel Exempt Surplus land.
On October 25, 2022, WHCHC was awarded $19,200,000 of California Housing Accelerator Tier 2 funds.
STAFF ANALYSIS:
The Project is located at 1479 N. Palm Canyon Drive (Attachment C) and will serve lowincome seniors (age 62 and up, incomes ranging from 0% to 80% AMI). Aloe will restrict rents for 69 of the 71 units, which includes 25 Permanent Supportive Housing (PSH) units.
Supportive services provided in PSH units are what distinguish it from other types of affordable housing. The supportive services are intended to ensure housing stability and to maximize each tenant’s ability to live independently.
The Project will be built on two adjacent parcels separately owned by the City and SA.
City Parcel – This parcel is approximately 1 acre. The parcel contains an unused irrigation reservoir of approximately 100’ x 100’ by 12’ deep, formerly used to store water for the O’Donnell Golf Course nearly a mile away. This is the corner parcel at North Palm Canyon Drive and West Stevens Road.
Successor Agency Parcel – The parcel is approximately .75 acres. The Palm Springs Redevelopment Agency held this parcel until the Redevelopment Agency was dissolved in February 2012. Pursuant to the “Dissolution Law” (ABX1 26, AB 1484, and SB 107) successor agencies were created to manage the remaining obligations of the redevelopment agencies and to sell redevelopment agency assets according to a State Department of Finance approved Long Range Property Management Plan. The Palm Springs Long Range Property Management Plan identified this property to be sold for fair market value.
When the DDA was approved, the estimated Project cost was $35,719,740. The latest projection is that the Project will cost $37,018,868, which is an increase of $1,299,128.
The cost increases include:
• Permanent loan interest rates increased from 5% to 7.1%. • Construction loan interest rate increased from 3% to 5.85%.
Item 3B - Page 3
City Council Staff Report
December 5, 2022 -- Page 4
Aloe Palm Canyon First Amendment
• Construction costs increased by $2.6 million due to the increased cost of lumber and steel.
• Insurance rates have also contributed to the increase in costs.
Aloe has secured $34,290,868 in funding commitments, or 93% of the $37,018,868 needed to make the construction and operation of the Project financially feasible. This leaves a current shortfall of $2,728,000. Aloe has applied for additional funding from the California Housing Accelerator Program in the amount of $1,728,000 and the County of Riverside Permanent Local Housing Allocation (PLHA) funds in the amount of $1,000,000. If successful, the additional amount of $2,728,000 would cover the current shortfall created by increased project costs.
Disposition and Development Agreement Requirements
The Agreements include provisions for the City to provide a loan to Aloe in the amount of $4,004,300. Of this amount $1,400,000 is the value of the City parcel. Aloe will take ownership of the City parcel, and the City will incorporate the financing, or “carry back financing,” for Aloe’s purchase of City parcel as part of the City loan. Each year Aloe will make payments of principal and interest from fifty percent (50%) of residual receipts as determined by an audited financial statement. The City loan will accrue simple interest at a rate of one percent annually (1%) and have a term of 57 years. The residual receipts loan also provides the City with a form of recourse should the Developer not perform its obligations (i.e., fail to maintain required affordability levels) for the duration of the loan.
Aloe will also purchase the SA parcel for $900,000 using its own funds. Redevelopment Dissolution Law required proceeds from the sale of SA properties to be divided among the various taxing entities in the same proportions they contributed to the redevelopment agencies. The City share of the SA property proceeds will be disbursed to Aloe as part of the City loan.
The remaining $2,604,300 ($4,004,300 total loan less $1,400,000 value of the City parcel) of the City loan will be disbursed at various stages of the development process ensuring progress is made before funds are released and to reduce the risk of the potential loss of funds if the Project does not move forward. The disbursements are structured as follows:
• Subject to the requirements of the DDA, evidence that Aloe has received commitments for funding to make the construction and operation of the Project financially feasible, City will disburse $480,000.
• Subject to the requirements of the DDA, at the close of transfer of the Site from City to Developer, City will disburse $1,200,000.
• Upon Fifty Percent (50%) completion, as certified by the Project architect, the City shall disburse $600,000.
• Upon Issuance of the certificate of occupancy for the Project, the City shall disburse $120,000.
Item 3B - Page 4
City Council Staff Report
December 5, 2022 -- Page 5
Aloe Palm Canyon First Amendment
• Within 30 days of receipt, City will disburse its share of the SA parcel sales proceeds estimated to be $204,300.
At this time, however, Aloe has already been awarded, and has provided, the required evidence of financing commitments from the California Housing Accelerator Program and No Place Like Home Program as contemplated in the Agreements (Attachments D and E).
Surplus Land Act Requirements
The SLA was established to provide local government agencies with a process for making use of excess public lands. The law enabled cities, counties, and special districts to sell the land to private entities or transfer the land to a different public agency in order to create uses such as parks or housing. Assembly Bill 1486 amended the SLA to connect affordable housing developers to surplus local public land that is available for housing development. Among the changes made to the SLA was the requirement that grandfathered successor agency properties, those in legally binding agreements before December 31, 2020, are required to be sold by December 31, 2022.
If the SA property is not transferred by December 31, 2022, the City would be required to declare the SA property as Surplus Land (as opposed to Exempt Surplus Land) and follow the SLA process for disposing of Surplus properties. The SLA process requires the City to issue a notice of availability to required parties for a 60-day period, negotiate in good faith for 90 days prioritizing affordability, send the proposed disposition to HCD for review, address HCD’s findings, and then dispose of the land.
A local agency may be liable for a penalty of 30 percent of the final sale price of land sold in violation of the Act, and 50 percent for any subsequent violation. The State Department of Housing and Community Development informed staff they cannot extend the December 31, 2022, deadline or waive penalties if the sale of the SA property closes after December 31, 2022.
Proposed Amendments
The Amendments are being proposed to accelerate the transfer of the SA and City properties and defer the requirement for certain financing documentation for increased project costs until March 1, 2023. This would allow the City to transfer the SA and City properties to Aloe before the SLA deadline. If Aloe fails to secure the additional funding, the Properties would be returned to the City. An amendment to the PSA also waives the required deposit of $50,000 for purchase of the SA parcel as this would help streamline the escrow closing.
Item 3B - Page 5
City Council Staff Report
December 5, 2022 -- Page 6
Aloe Palm Canyon First Amendment
Developer Experience
WHCHC was first organized in 1986. In the past 21 years, WHCHC has developed more than 20 affordable rental communities, including permanent supportive housing, comprising a total of 1,000 affordable units. The communities range in size from eight units to 100 units. Each building is unique and designed to fit within their respective communities. The buildings they produce are environmentally sensitive and architecturally distinguished. After buildings are completed, they maintain a high standard of asset management and take pride in the way their developments enhance the neighborhoods in which they are built. The completed projects include Rampart Mint, Westmore Linden, and Blue Hibiscus, which are permanent supportive housing projects like the proposed Aloe Palm Canyon.
ENVIRONMENTAL ASSESSMENT:
Pursuant to Senate Bill 35 (SB35), the requested City Council action is exempt from the California Environmental Quality Act (CEQA). Additionally, the project is exempt from CEQA as an affordable housing project that meets criteria found in Sections 15192 and 15194 of the CEQA Guidelines.
ALIGNMENT WITH STRATEGIC PLANNING:
This action would further Strategy 1C, Quality of Life, Expand Affordable Housing, Pursue new affordable housing.
FISCAL IMPACT:
The proposed amendments would not have a fiscal impact as the funds for the Project have already been budgeted. The Amendments include a loan from the City to Aloe in the amount of $4,004,300.
REVIEWED BY:
Department Director: Jay Virata
Deputy City Manager: Flinn Fagg
Interim City Manager: Teresa Gallavan
ATTACHMENTS:
A. Amendment No. 1 to the Disposition and Development Agreement (redline) B. Amendment No. 1 to the Purchase and Sale Agreement (redline) C. Project Vicinity Map
D. Project Renderings
E. California Housing Accelerator Program Award Letter
F. No Place Like Home Program Award Letter
Item 3B - Page 6
ATTACHMENT A
Item 3B - Page 7
AMENDMENT NO. 1
TO
AFFORDABLE HOUSING DISPOSITION
AND DEVELOPMENT AGREEMENT
(STEVENS ROAD AND PALM CANYON DRIVE)
BETWEEN
THE CITY OF PALM SPRINGS
A CALIFORNIA CHARTER CITY AND MUNICIPAL CORPORATION
AND
ALOE PALM CANYON, L.P.
A CALIFORNIA LIMITED PARTNERSHIP
Item 3B - Page 8
55575.18175\40857827.2
TABLE OF CONTENTS
Page
i
ARTICLE I DEFINITIONS; REPRESENTATIONS AND WARRANTIES;
EFFECTIVE DATE ......................................................................................... 2
1.1 Definitions.............................................................................................................. 2
1.2 City’s Representations and Warranties ............................................................ 1312
1.3 Developer’s Representations and Warranties .................................................. 1413
1.4 Effective Date .................................................................................................. 1514 ARTICLE II PROPERTY DISPOSITION ..................................................................... 1615
2.1 Purchase and Sale ............................................................................................ 1615
2.2 Payment of Purchase Price ................................................................................... 16
2.3 Sale Contingent on PSA................................................................................... 1716
2.4 Eminent Domain .............................................................................................. 1716
2.5 Title Approval .................................................................................................. 1716
2.6 Developer Investigations ................................................................................. 1918
2.7 Developer to Obtain all Project Entitlements. ................................................. 2019
2.8 Delivery of Property Free of Occupants .......................................................... 2221
2.9 Project Marketing Plan .................................................................................... 2221 ARTICLE III ESCROW INSTRUCTIONS ..................................................................... 2221
3.1 Opening of Escrow .............................................................................................. 22
3.2 Conditions to Close of Escrow ........................................................................ 2322
3.3 Developer’s Escrow Deposits .......................................................................... 2524
3.4 City’s Escrow Deposits .................................................................................... 2625
3.5 Closing Procedure ............................................................................................ 2726
3.6 Close of Escrow ............................................................................................... 2726
3.7 Recordation and Distribution of Documents ................................................... 2827
3.8 Escrow Closing Costs, Taxes and Title Policy Premium ................................ 2827
3.9 Escrow Cancellation Charges .......................................................................... 2827
3.10 Escrow Cancellation ........................................................................................ 2928
3.11 Report to IRS ................................................................................................... 2928 ARTICLE IV PROJECT DEVELOPMENT .................................................................... 3028
4.1 Developer Covenant to Undertake Project ...................................................... 3028 Item 3B - Page 9
55575.18175\40857827.2
TABLE OF CONTENTS
(continued)
Page
ii
4.2 Construction Contract; Construction Schedule ................................................ 3029
4.3 Construction Start and Completion of Project ................................................. 3029
4.4 Compliance with Laws .................................................................................... 3129
4.5 Schedule of Performance ................................................................................. 3129
4.6 Developer Attendance at City Meetings .......................................................... 3130
4.7 City’s Right to Inspect Project and Site ........................................................... 3230
4.8 Cost of Construction ........................................................................................ 3231
4.9 Prevailing Wages ............................................................................................. 3331
4.10 Efforts to Hire Local Workers ......................................................................... 3332
4.11 Certificate of Completion ................................................................................ 3432 ARTICLE V DEVELOPMENT COVENANTS ............................................................. 3533
5.1 Obligation to Refrain from Discrimination ...................................................... 3533
5.2 Form of Non-Discrimination and Non-Segregation Clauses ........................... 3534
5.3 Environmental Indemnity of the City by the Developer .................................. 3736
5.4 Insurance .......................................................................................................... 3937 ARTICLE VI PROJECT FINANCING ............................................................................ 4240
6.1 Project Financing ............................................................................................. 4240
6.2 Project Budget .................................................................................................. 4543
6.3 Only Permitted Exceptions .............................................................................. 4543
6.4 City Right to Discharge Prohibited Encumbrances ......................................... 4544
6.5 Rights of Lender and City Regarding Permitted Security Instruments ........... 4644
6.6 Successor Agency Property Rebate ................................................................. 4846 ARTICLE VII DEFAULTS, REMEDIES, AND TERMINATION .................................. 4846
7.1 Defaults - General ............................................................................................ 4846
7.2 DEVELOPER’S ELECTION RE: SPECIFIC ENFORCEMENT OF
AGREEMENT OR WAIVER OF RIGHT TO SPECIFIC
PERFORMANCE AND LIMITATION ON RECOVERY OF
DAMAGES PRIOR TO CLOSE OF ESCROW ............................................. 4947
7.3 Legal Actions ................................................................................................... 5049
7.4 City Power of Termination Regarding the Property. ....................................... 5149
7.5 Rights and Remedies are Cumulative .............................................................. 5452 Item 3B - Page 10
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TABLE OF CONTENTS
(continued)
Page
iii
7.6 Developer Indemnification of the City ............................................................ 5452 ARTICLE VIII GENERAL PROVISIONS ........................................................................ 5452
8.1 Incorporation of Recitals .................................................................................. 5452
8.2 Restrictions on Transfers ................................................................................. 5453
8.3 Notices, Demands and Communications Between the Parties ........................ 5553
8.4 Conflict of Interest ........................................................................................... 5654
8.5 Warranty Against Payment of Consideration for Agreement .......................... 5654
8.6 Non-liability of City, Officials and Employees ............................................... 5755
8.7 Unavoidable Delay; Extension of Time of Performance ................................. 5755
8.8 Inspection of Books and Records .................................................................... 5755
8.9 Real Estate Commissions ................................................................................. 5756
8.10 Binding on Successors and Assigns ................................................................. 5856
8.11 Entire Agreement ............................................................................................. 5856
8.12 Execution of this Agreement ........................................................................... 5856
8.13 Survival of Indemnity Obligations................................................................... 5856
8.14 Time Declared to be of the Essence ................................................................. 5856
8.15 Approvals ......................................................................................................... 5857
8.16 Further Assurances........................................................................................... 5957
8.17 City Approvals and Actions ............................................................................. 5957 EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY ................................................. A-1 EXHIBIT B SCOPE OF DEVELOPMENT ............................................................................. B-1 EXHIBIT C SCHEDULE OF PERFORMANCE .................................................................... C-1 EXHIBIT D FORM OF GRANT DEED .................................................................................. D-1 EXHIBIT E FORM NOTICE OF AGREEMENT .................................................................... E-1 EXHIBIT F FORM OF OFFICIAL ACTION OF DEVELOPER ............................................ F-1 EXHIBIT G FORM OF CERTIFICATE OF COMPLETION ................................................. G-1
EXHIBIT H FORM OF DOCUMENTS FOR PREDEVELOPMENT COMPONENT OF CITY LOAN ................................................................................................ H-1
EXHIBIT I FORM OF DOCUMENTS FOR DEVELOPMENT COMPONENT OF CITY LOAN .................................................................................................. I-1 EXHIBIT J HHAP AGREEMENT ........................................................................................... J-1 Item 3B - Page 11
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AMENDMENT NO. 1 TO THE AFFORDABLE HOUSING DISPOSITION AND
DEVELOPMENT AGREEMENT
This AMENDMENT NO. 1 TO THE AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road and Palm Canyon Drive) (“Agreement”) is dated as of _______________, December __, 202___ 2 (“Date of Agreement”), for reference purposes only, and is entered into by and between the CITY OF PALMS SPRINGS, a California charter city and municipal corporation (“City”), and ALOE PALM CANYON, L.P., a California limited partnership (“Developer”). The City and the Developer are sometimes referred to in this Agreement, each individually, as a “Party,” or collectively, as the “Parties.”
RECITALS
This Agreement is entered into with reference to the following recitals of fact (“Recitals”) that City and Developer believe to be true as of the Effective Date of this Agreement:
1. The City is the owner of that certain real property located at 1479 N. Palm Canyon Drive, Palm Springs, California, 92262 (APN 505-182-010) and more specifically described in Exhibit A attached hereto and incorporated herein by this reference (“City Property”).
2. In the fall of 2019, the City issued a Request for Proposals (“RFP”) for the purchase and/or development of the City Property together with a contiguous parcel (APN 505-182-004) (“SA Property”) owned by the Successor Agency to the former Community Redevelopment Agency of the City of Palm Springs (“Successor Agency”). The City Property and SA Property together consist of approximately one and seventy-five one-hundredths (1.75) acres of real property (“Site”).
3. West Hollywood Community Housing Corporation, a California nonprofit corporation (the “Sponsor”), responded to the RFP with a submittal dated February 27, 2020 (“Sponsor’s Proposal”). The City Council selected the Sponsor as the developer for the Site in reliance on the Sponsor’s Proposal.
4. Sponsor and City entered into an Exclusive Negotiating Agreement on November 2, 2020, to negotiate the sale and development of the City Property from the City and the contiguous SA Property from the Successor Agency for the development of an affordable housing project on the Site (“ENA”). The sale of the City Property is exempt from the Surplus Land Act pursuant to Government Code Section 54221(f)(1)(A) because the entire Site will be used for the development of affordable housing subject to a regulatory agreement requiring units to remain continually affordable for over 30 years. The proposed project will consist of an extremely lowto lower income- housing complex for seniors (over 62 years of age), with a portion of units reserved for homeless seniors and seniors with special needs (“Project”).
5. The Project is not a “low-rent housing project” within the meaning of Section 1 of Article XXXIV of the California Constitution, as it will consist of seventy-one (71) rental units subject to a Regulatory Agreement (as defined below) between City and Developer that will restrict no more than thirty-five (35) of those units to households earning up to 50% of area median Item 3B - Page 12
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income. Developer intends to apply for an allocation of Low-Income Housing Tax Credits for sixty-nine (69) units that will be restricted by the California Tax Credit Allocation Committee to households earning up to 80% of area median income and two unrestricted manager’s units. The Project is more particularly described, including the anticipated affordability level distribution, in the Scope of Development attached hereto as Exhibit B.
6. The Project is exempt from the California Environmental Quality Act (CEQA) as an affordable housing project that meets the criteria found in Sections 15192 and 15194 of the CEQA Guidelines. The City is the “responsible agency” under CEQA with respect to the Project.
7. Sponsor has formed Developer to develop, construct, own and operate the Project.
8. On or about December 9, 2021, Developer and the Successor Agency have entered into a separate, concurrent Real Property Purchase and Sale Agreement and Joint Escrow Instructions to purchase the SA Property (“Original PSA”). The PSA was thereafter amended in December 2022 (“PSA”) and entered concurrently with this Agreement.
9. On or about December 9, 2021, Developer and City entered into that certain Affordable Housing Disposition and Development Agreement (Stevens Road and Palm Canyon Drive) (“Original Agreement”)To facilitate the development of the Project, the City desiresby which the City agreed to sell the City Property to Developer and extend a loan to Developer for Site acquisition and construction and permanent financing for the Project, subject to the terms and conditions in this the Original Agreement.
10. The Parties agree that the Effective Date of the Original Agreement is December 9, 2021 (“Original Effective Date”).
11. Due to unforeseen changes in the economy causing delays in Project funding and increased Project Costs, the Parties desire to amend the Original Agreement and enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein by this reference, the mutual promises set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by City and Developer, the Parties agree as follows:
TERMS AND CONDITIONS
ARTICLE I
DEFINITIONS; REPRESENTATIONS AND WARRANTIES; EFFECTIVE DATE
1.1 Definitions. All initially capitalized terms in this Agreement, including, in the Recitals above, that are not otherwise defined in this Agreement shall have the following meanings:
Item 3B - Page 13
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1.1.1 “Actual Knowledge” shall mean the actual knowledge of CEO of Developer and in the case of City shall mean the actual knowledge of the City Manager, and in each instance shall not impose a duty of investigation by City or Developer.
1.1.2 “Additional Insureds” has the meaning ascribed to such term in Section
5.45.4. 1.1.3 “Affiliate” means and refers to any person or entity, directly or indirectly, Controlling or Controlled by or under common Control with the applicable person or entity, whether by direct or indirect ownership of equity interests, by contract or otherwise.
1.1.4 “Agreement” means this Affordable Housing Disposition and Development Agreement (Stevens Road and Palm Canyon Drive).
1.1.5 “City Property” has the meaning ascribed to such term in Recital 1.
1.1.6 “City’s Title Notice Response” means the written response of the City to the Developer’s Title Notice, in which the City either (i) elects to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice, or (ii) elects not to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice.
1.1.7 “CEQA” means the California Environmental Quality Act, Public Resources Code Sections 21000, et seq.
1.1.8 “Certificate of Completion” means the written certification of City that the construction of the Project has been completed in compliance with the terms and conditions of this Agreement, substantially in the form of Exhibit G attached to this Agreement.
1.1.9 “City” means the City of Palm Springs, a California charter city and municipal corporation.
1.1.10 “City Loan” means the loan from the City to Developer in the amount of Four Million Four Thousand Three Hundred Dollars ($4,004,300) to be used by Developer to undertake predevelopment, development, acquisition, construction, and operation of the Project.
1.1.11 “City Loan Agreement” has the meaning ascribed to the term in Section
6.1.4.26.1.4.2, substantially in the form of Exhibit H-1.
1.1.12 “City Manager” means the City Manager of the City or his or her designee or successor in function.
1.1.13 “City Requirements” has the meaning ascribed to the term in Section
2.7.3. Item 3B - Page 14
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1.1.14 “Close of Escrow” or “Closing” means the recording of the Grant Deed for the City Property in the official records of the Recorder of the County, and completion of each of the actions set forth in Section 3.23.2 by the Escrow Holder for the City to sell the City Property to the Developer and the Developer to purchase the City Property from the City.
1.1.15 “Completion of Construction” means the issuance of a Certificate of Completion confirming that the final certificate of occupancy for the Project, based on the plans submitted by the Developer to the City, has been issued.
1.1.16 “Construction Financing” means one or more loans that Developer shall obtain from one or more Lenders, the proceeds of which are to be used and applied to pay the reasonable costs of obtaining such loan(s) and either: (a) the Project Costs; or (b) to refinance only the outstanding amount owed under a prior loan obtained by Developer to finance the amount described in “(a)” of this Section 1.1.581.1.56 (without any other amounts). Such loan(s) shall provide for normal and customary disbursement controls for the payment of Project Costs and normal and customary fees and expenses for loan(s) of similar size and purpose. The Construction Financing is set forth in the Project Budget.
1.1.17 “Construction Financing Documents” means the various documents and instruments made by and between Developer and one or more Institutional Lenders or the City that evidence or perfect the Construction Financing or the security for repayment of the Construction Financing, including any associated Security Instrument.
1.1.18 “Control” means and refers to possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether by ownership of equity interests, by contract or otherwise.
1.1.19 “Controlling” and “Controlled” mean and refer to exercising or having Control.
1.1.20 “County” means the County of Riverside, California.
1.1.21 “Deed of Trust” means the deed of trust securing the City Loan, substantially in the form of Exhibit I-2
1.1.22 “Developer” means Aloe Palm Canyon, L.P., a California limited partnership and its successors and assigns that are permitted by this Agreement.
1.1.23 “Developer’s Title Notice” means a written notice from the Developer to the City indicating the Developer’s objection to specific matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy for the City Property, describing in suitable detail the actions that the Developer reasonably believes are indicated to cure or correct each of the Developer’s objections.
1.1.24 “Due Diligence Investigations” means the Developer’s due diligence investigations of the City Property to determine the suitability of the City Property for development and operation of the Project, including, without limitation, investigations of the environmental and Item 3B - Page 15
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geotechnical suitability of the City Property, as deemed appropriate in the reasonable discretion of the Developer, all at the sole cost and expense of the Developer.
1.1.25 “Due Diligence Investigation Rejection Notice” means a written notice of the Developer delivered to the City and the Escrow Holder, prior to the end of the Due Diligence Period, indicating the Developer’s rejection of the condition of the City Property and refusal to accept a conveyance of fee title to the City Property, describing in reasonable detail the actions that the Developer reasonably believes are indicated to allow the Developer to accept the condition of the City Property.
1.1.26 “Due Diligence Period” means the date commencing on the Effective Date of the Original Agreement and ending at 5:00 p.m. on the one hundred twentieth (120th) day following the Effective Date of the Original Agreement.
1.1.27 “Effective Date” has the meaning ascribed to the term in Section 1.41.4.
1.1.28 “Environmental Claims” has the meaning ascribed to the term in Section
5.35.3. 1.1.29 “Environmental Laws” means all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability of standards of conduct concerning any hazardous substance (as later defined), or pertaining to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Property), occupational or environmental conditions on, under, or about the Property, as now or may at any later time be in effect, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) [42 USC Section 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (“RCRA”) [42 USC Section 6901 et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act (“FWPCA”) [33 USC Section 1251 et seq.]; the Toxic Substances Control Act (“TSCA”) [15 USC Section 2601 et seq.]; the Hazardous Materials Transportation Act (“HMTA”) [49 USC Section 1801 et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901 et seq.] the Clean Air Act [42 USC Section 7401 et seq.]; the Safe Drinking Water Act [42 USC Section 300f et seq.]; the Solid Waste Disposal Act [42 USC Section 6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USC Section 101 et seq.] the Emergency Planning and Community Right to Know Act [42 USC Section 11001 et seq.]; the Occupational Safety and Health Act [29 USC Section 655 and 657]; the California Underground Storage of Hazardous Substances Act [California Health & Safety Code Section 25288 et seq.]; the California Hazardous Substances Account Act [California Health & Safety Code Section 25300 et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [California Health & Safety Code Section 24249.5 et seq.] the Porter-Cologne Water Quality Act [California Water Code Section 13000 et seq.] together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hygiene, and only to the extent the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Site, or the Item 3B - Page 16
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regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use.
1.1.30 “Environmental Matters” has the meaning ascribed to the term in Section 5.35.3.
1.1.31 “Escrow” has the meaning ascribed to the term in Section 2.12.1.
1.1.32 “Escrow Closing Date” means, subject to extension due to Unavoidable Delay, on or before the fifth (5th) business day following the Escrow Holder’s receipt of written confirmation from both City and Developer of the satisfaction or waiver of all conditions precedent to the Close of Escrow or December 31, 2022, whichever occurs first.
1.1.33 “Escrow Holder” means Commonwealth Land Title Company, Attn:
Cheryl Greer, through its office located at 888 South Figueroa Street, Suite 2100, Los Angeles, CA 90017, or such other escrow holder mutually agreed upon in writing by both City and Developer.
1.1.34 “Escrow Opening Date” has the meaning ascribed to the term in Section
3.13.1. 1.1.35 “Event of Default” has the meaning ascribed to the term in Section
7.17.1. 1.1.36 “FIRPTA Affidavit” means an affidavit complying with Section 1445 of the United States Internal Revenue Code.
1.1.37 “Governmental Agency” means any and all courts, boards, agencies, commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, City, or otherwise) whether now or later in existence.
1.1.38 “Governmental Requirements” means all codes, statutes, ordinances, laws, permits, orders, and any rules and regulations promulgated thereunder of any Governmental Agency.
1.1.39 “Grant Deed” means a deed substantially in the form of Exhibit D to this Agreement, conveying all of the City’s interest in the City Property to the Developer.
1.1.40 “Hazardous Substances” means, without implied limitation, substances defined as “hazardous substances,” “hazardous material,” “toxic substance,” “solid waste,” or “pollutant or contaminate” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.; the TSCA; 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.; those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.101], or by the EPA, or any successor authority, as hazardous substances [40 CFR Part 302]; and those substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code or, as “hazardous substances” in Section 25316 of the California Health and Safety Code; other substances, materials, and wastes Item 3B - Page 17
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that are, or become, regulated or classified as hazardous or toxic under federal, state, or local laws or regulations and in the regulations adopted pursuant to said laws, and shall also include asbestos, polychlorinated biphenyl, flammable explosives, radioactive material, petroleum products, and substances designated as a hazardous substance pursuant to 33 USC Section 1321 or listed pursuant to 33 USC Section 1317. Notwithstanding the foregoing, “Hazardous Substances” shall not include such products in quantities as are customarily used in the construction, maintenance, development or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner generally used in other comparable residential developments, or substances commonly ingested by a significant population living within the Project including, without limitation, alcohol, aspirin, tobacco and saccharine.
1.1.41 “HCD” means the California Department of Housing and Community Development.
1.1.42 “HCD Accelerator Fund” means funds administered by HCD from the Coronavirus State Fiscal Recovery Fund established by the federal American Rescue Plan Act of 2021 (ARPA).
1.1.43 “HHAP Agreement” means the agreement between the City and the State of California Business, Consumer Services, and Housing Agency awarding the City a grant in the amount of Ten Million Dollars ($10,000,000.00) through the Housing, Homeless Assistance and Prevention (HHAP) Grant Program. A copy of the HHAP Agreement is attached as Exhibit J to this Agreement.
1.1.44 “Indemnified Parties” means City and its commissions, agents, attorneys, officers, employees, and authorized representatives.
1.1.45 “Institutional Lender” means any of the following: (a) a bank (State, Federal or foreign), trust company (in its individual or trust capacity), insurance company, credit union, savings bank (State or Federal), pension, welfare or retirement fund or system, real estate investment trust (or an umbrella partnership or other entity of which a real estate investment trust is the majority owner), Federal or State agency regularly making or guaranteeing mortgage loans, investment bank or a subsidiary of a Fortune 500 company; or (b) any person or entity that is an Affiliate of or is a combination of any one or more of the persons or entities described in “(a)” of this Section.
1.1.46 “Lender” means the holder of any Security Instrument and its successors and assigns.
1.1.47 “Note” means the promissory note made by Developer in favor of City substantially in the form of Exhibit I-1 attached to this Agreement evidencing the Development Component of the City Loan as described in Section 6.1.4.26.1.4.2. “Notes” means, collectively, the Note and the Predevelopment Component Note.
1.1.48 “Notice of Agreement” means the notice in the form of Exhibit E to this Agreement to be recorded against the Property at the Close of Escrow to provide constructive record notice of the existence and application of this Agreement to the Property.
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1.1.49 “Original Project Budget” means the Project Costs and anticipated sources of funds to pay the Original Project Costs as set forth in the Project proforma, dated as of December 1, 2021, and approved by the City as of the Original Effective Date, as may be modified from time to time pursuant to Section 6.26.2.
1.1.50 “Original PSA” means the Real Property Purchase and Sale Agreement and Joint Escrow Instructions, dated December 9, 2021, between the Successor Agency and Developer to purchase the SA Property.
1.1.491.1.51 “Parties” means, collectively, the City and the Developer.
1.1.501.1.52 “Party” means, individually, the City or the Developer, as applicable.
1.1.511.1.53 “PCO Statement” means a preliminary change of ownership statement provided for in California Revenue and Taxation Code Section 480.3.
1.1.521.1.54 “Permanent Loan” means any loan that the Developer shall obtain from a Lender, the proceeds of which are to be used and applied solely to pay: (1) the reasonable costs of obtaining such loan; (2) the then current outstanding principal and interest under any Construction Financing; and (3) any reasonable and customary fees or charges of the Lender providing the Construction Financing relating to pay-off of the Construction Financing.
The Permanent Loans are set forth in the Project Budget.
1.1.531.1.55 “Permitted Exceptions” means (i) any and all items shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that the Developer accepts, pursuant to Section 2.52.5; (ii) any exceptions from coverage under the proposed Title Policy; (iii) non-delinquent property taxes and assessments; (iv) this Agreement; (v) the Grant Deed; (vi) the Notice of Agreement; (vii) the Regulatory Agreement; (viii) the Deed of Trust; (ix) any Permitted Security Instrument; (x) the TCAC Regulatory Agreement, if any; (xi) any agreement restricting occupancy and rents of the Project required by an Institutional Lender or a Subordinate Loan Lender, if any; (xii) any agreement restricting occupancy and rents of the Project required by HCD for an award from the HCD Accelerator Fund, if any; and (xiii) any other document or encumbrance expressly required to be recorded against the Property or the Project pursuant to the terms of this Agreement.
1.1.541.1.56 “Permitted Security Instrument” means any Security Instrument that: (a) encumbers only the Property or any interest in the Property; (b) is held by a Lender that is an Institutional Lender, subject to the jurisdiction of the courts of the State, not immune from suit and cannot elect to be immune from suit; and (c) only secures: (i) the repayment of money used to pay or reimburse the Project Costs; (ii) a bona fide Permanent Loan; (iii) a bona fide Refinancing; or (iv) a delivery assurance fee regarding a Permanent Loan that is refundable to Developer at the close of the Permanent Loan. Promptly after execution, Developer shall delivery a copy of any Security Instrument to the City, with the Lender’s name and notice address.
1.1.551.1.57 “Permitted Transfer” means any of the following types of Transfer by Developer, which, unless otherwise provided, do not require the City’s prior written approval and where, except for a Transfer described in subsections .1, .2, .3, .4, .6, .7 and .9 below, Item 3B - Page 19
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the person or entity to which such Transfer is made expressly and unconditionally assumes in a written assignment and assumption agreement between such person or entity, Developer and City that is in a form reasonably acceptable to City (as evidenced by execution of such assignment and assumption agreement by the City), all obligations of Developer under this Agreement:
1.1.55.11.1.57.1 Any Transfer to an Institutional Lender: (1) pursuant to a Permitted Security Instrument as collateral for bona fide Construction Financing to pay all or any part of the Project Costs; or (2) pursuant to a Permitted Security Instrument as collateral for a bona fide Permanent Loan or bona fide Refinancing.
1.1.55.21.1.57.2 Any Transfer directly resulting from the foreclosure or deed in lieu of foreclosure of a Permitted Security Instrument for a loan from an Institutional Lender to the Project or as otherwise permitted under Section 6.5.76.5.7.
1.1.55.31.1.57.3 Any Transfer of stock or equity in the Party that does not change management or operational Control of the Project, with no material change in beneficial ownership (with the exception of any conveyance to member(s) of the immediate family(ies) of the transferor(s) or trusts for their benefit) and which constitutes a tax-free transaction under Federal income tax law and California real estate transfer tax.
1.1.55.41.1.57.4 The lease of residential units in the Project consistent with the Regulatory Agreement.
1.1.55.51.1.57.5 Any Transfer of this Agreement and the Site to a limited partnership in which a general partner is wholly owned by Sponsor or its Affiliate and the Sponsor or its Affiliate is a 501(c)(3) tax exempt nonprofit.
1.1.55.61.1.57.6 The Transfer and sale of limited partnership interests in Developer.
1.1.55.71.1.57.7 In the event that any general partner of the Developer, while the Developer is in the form of a limited partnership, is removed by the limited partner of such limited partnership for cause following default under the partnership agreement, the Transfer of the general partner interest to a 501(c)(3) tax exempt nonprofit corporation or its Affiliate selected by the limited partner and approved by the City, which approval shall not be withheld unreasonably, delayed or conditioned.
1.1.55.81.1.57.8 The Transfer of the Project from Developer, while the Developer is in the form of a limited partnership, to one or more of the general partners of the Developer or their Affiliates at the end of the tax credit compliance period for the Project; and
1.1.55.91.1.57.9 Any dilution of a general partner’s interest in the Developer while the Developer is in the form of a limited partnership, in accordance with the Developer’s limited partnership agreement.
1.1.561.1.58 “Plans and Specifications” has the meaning ascribed to the term in Section 2.7.12.7.1.
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1.1.571.1.59 “Predevelopment Component Note” means the promissory note made by Developer in favor of City in substantially the form of Exhibit H-2 attached to this Agreement evidencing the Predevelopment Component of the City Loan as described in Section
6.1.4.26.1.4.2. 1.1.581.1.60 “Preliminary Report” means a preliminary report issued by the Title Company in contemplation of the issuance of the Title Policy, accompanied by legible copies of all documents listed in Schedule B of the report as exceptions to coverage under the proposed Title Policy. The Parties acknowledge that they may prepare one (1) or more Preliminary Reports for each parcel, or group of parcels, comprising the Site. In such case, all reports, notices, and objection letters which pertain to the Preliminary Report for the entirety of the Site shall apply separately to each Preliminary Report associated with a parcel or a group of parcels.
1.1.591.1.61 “Project” means the construction and development of the Site as an affordable housing development for seniors, with a possible retail component, including all required or associated on-site and off-site improvements, all hardscape and all landscaping, all as specifically described in the Scope of Development, and all to be developed in accordance with the Plans and Specifications to be approved by the City in its reasonable discretion and any conditions imposed by the City in its approval of the Plans and Specifications.
1.1.601.1.62 “Project Budget” means the Project Costs and anticipated sources of funds to pay the Project Costs as set forth in the Project proforma, dated as of December 1, 2021_____________, and approved by the City as of the Effective Date, as may be modified from time to time pursuant to Section 6.26.2.
1.1.611.1.63 “Project Commencement Date” means no later than September 30, 2023the date thirty (30) days after the Escrow Closing Date.
1.1.621.1.64 “Project Completion Date” means that date set forth therefor by which a Certificate of Completion shall be issued for the Project, as more particularly provided in the Schedule of Performance. The Project Completion Date shall be no later than the date which is twenty four (24) months after the Close of EscrowProject Commencement Date, subject to Unavoidable Delay.
1.1.631.1.65 “Project Costs” means all of the costs of acquisition of the Site and development and construction of the Project.
1.1.641.1.66 “Property” means the real property of the Site, and all current and future improvements thereon (including, without implied limitation, the Project), legally described in Exhibit A.
1.1.651.1.67 “Property Transfer” means and refers to any “change in ownership,” as defined in Revenue and Taxation Code Sections 60, et seq., of all or any portion of the Property.
1.1.66 “PSA” means the Real Property Purchase and Sale Agreement and Joint Escrow Instructions, dated __________, 202___, between the Successor Agency and Developer to purchase the SA Property.
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1.1.671.1.68 “Purchase Price” means $1,400,000, which is the fair market value of the City Property, as determined by Michael M. Popwell, California Certified General Appraiser at Michael Popwell Associates, Inc., as of January 6, 2021.
1.1.681.1.69 “Record” “recorded”, “recording” or “recordation” each mean and refer to recordation of the referenced document in the official records of the Recorder of the County of Riverside, California.
1.1.691.1.70 “Refinancing” means and refers to any loan secured by a Permitted Security Instrument that the Developer obtains from an Institutional Lender subsequent to recordation of the Permanent Loan for a loan amount which when combined with all of the other security financing encumbering the Property exceeds: (i) prior to the completion of construction of the Project, ninety percent (90%) of the appraised as-completed value of the Property plus the value of any tax credits allocated to the Project pursuant to a Low Income Housing Tax Credit Program approved by the California Tax Credit Allocation Committee, and (ii) after the completion of construction of the Project, ninety percent (90%) of the appraised value of the Property plus the value of any tax credits allocated to the Project pursuant to a Low Income Housing Tax Credit Program approved by the California Tax Credit Allocation Committee, with said values evidenced by an appraisal or other evidence acceptable to City.
1.1.701.1.71 “Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants, Conditions and Restrictions Restricting the Use of Property for Affordable Housing in substantially the form of Exhibit I-3 attached to this Agreement, which shall be recorded against the Site at the Close of Escrow.
1.1.711.1.72 “Schedule of Performance” means the schedule for the performance of certain actions by the Parties pursuant to this Agreement, attached to this Agreement as Exhibit C.
1.1.721.1.73 “Scope of Development” means the detailed description of the Project attached to this Agreement as Exhibit B.
1.1.731.1.74 “Security Instrument” means any security instrument, deed of trust, security deed, contract for deed, deed to secure debt, or other voluntary real property (including leasehold) security instrument(s) or agreement(s) intended to grant real property (including leasehold) security for any obligation (including a purchase-money or other promissory note) encumbering the Property, as entered into, renewed, modified, consolidated, increased, decreased, amended, extended, restated, assigned (wholly or partially), collaterally assigned, or supplemented from time to time, unless and until paid, satisfied, and discharged of record. If two or more such security instruments are consolidated or restated as a single lien or held by the same Lender (as applicable), then all such security instruments so consolidated or restated shall constitute a single Security Instrument. A participation interest in a security instrument (or partial assignment of the secured loan) does not itself constitute a Security Instrument.
1.1.741.1.75 “Senior” means, referring to multiple Security Instruments, the Security Instrument that is most senior in lien of the same type. Where Senior is used as a comparative term as against any specified Security Instrument, such term refers to any Security Item 3B - Page 22
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Instrument of the same type that is senior in lien to such specified Security Instrument. If only one Security Instrument of a particular type exists, then it shall be deemed the Senior Security Instrument of such type.
1.1.751.1.76 “Senior Loan” has the meaning as set forth in Section
2.2.22.2.2. 1.1.761.1.77 “Sponsor” has the meaning as set forth in Recital 3.
1.1.771.1.78 “State” means the State of California.
1.1.781.1.79 “Subordinate Loan” means any loan approved through revisions to the Project Budget by the City pursuant to Section 6.26.2, and which is secured by a Permitted Security Instrument junior in lien priority to the Deed of Trust.
1.1.791.1.80 “Successor Agency” has the meaning set forth in Recital B.
1.1.801.1.81 “Tax Credit Equity” means the equity investment toward the cost of development and construction of the Project contributed to the Developer (when in the form of a limited partnership) by the Tax Credit Investor, in the amount set forth in the Project Budget.
1.1.811.1.82 “Tax Credit Investor” means the limited partner in Developer (when in the form of a limited partnership) that provides the Tax Credit Equity for the development and construction of the Project.
1.1.821.1.83 “Tax Credits” means an allocation from TCAC of four percent (4%) or nine (9%) federal low-income housing tax credits to finance a portion of the Project Costs, all in accordance with Section 42 of the Internal Revenue Code of 1986, as amended, all associated Internal Revenue Service regulations and all associated TCAC regulations.
1.1.831.1.84 “TCAC” means the California Tax Credit Allocation Committee or successor in function.
1.1.841.1.85 “TCAC Regulatory Agreement” means the regulatory agreement required to be recorded against the Property by TCAC to obtain the Tax Credits.
1.1.851.1.86 “Title Company” means Commonwealth Land Title Company, Attn: Kathy Religioso, through its office located at 888 South Figueroa Street, Suite 2100, Los Angeles, CA 90017, or such other title company mutually agreed upon in writing by both City and Developer.
1.1.861.1.87 “Title Policy” means an ALTA extended coverage policy of title insurance issued by the Title Company, with coverage in the full amount of the Purchase Price and insuring fee title to the City Property, subject only to the Permitted Exceptions. Developer shall pay for the Title Policy.
1.1.871.1.88 “Transfer” means any of the following:
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1.1.87.11.1.88.1 Any assignment, conveyance, grant, hypothecation, mortgage, pledge, sale, or other transfer, whether direct or indirect, of all or any part of such property, right or obligation, or of any legal, beneficial, or equitable interest or estate in such property, right or obligation or any part of it (including the grant of any easement, lien, or other encumbrance); or
1.1.87.21.1.88.2 Any conversion, exchange, issuance, modification, reallocation, sale, or other transfer of any direct or indirect equity interest(s) in the owner of such property, right or obligation by the holders of such equity interest(s); or
1.1.87.31.1.88.3 Any merger, consolidation, sale, or lease of all or substantially all of the assets of the Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest of all or substantially all of the assets of the Developer; or
1.1.87.41.1.88.4 Any Property Transfer; or
1.1.87.51.1.88.5 The recordation of any deed of trust, mortgage, lien or similar encumbrance against all or any portion of the Property or the Project.
1.1.881.1.89 “Unavoidable Delay” means any delay that is caused in all material respects by the other Party or that is beyond the control of the City or the Developer, including delay caused by strikes, acts of God, weather, inability to obtain labor or materials, inability to obtain governmental permits or approvals, governmental restrictions, pandemics, quarantine restrictions, civil commotion, fire or similar causes, but excluding circumstances subject to Section 8.7.18.7.1.
1.2 City’s Representations and Warranties. The representations and warranties of City contained in this Section 1.2 shall be based upon the Actual Knowledge of the City as of the Effective Date. All representations and warranties contained in this Section 1.2 are true and correct as of the Effective Date. City’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. City hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by Developer has been made in material reliance by Developer on such covenants, representations and warranties:
1.2.1 City is a California charter city and municipal corporation. City has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby.
1.2.2 The persons executing any instruments for or on behalf of City have been authorized to act on behalf of City and this Agreement is valid and enforceable against City in accordance with its terms and each instrument to be executed by City pursuant hereto or in connection herewith will, when executed, shall be valid and enforceable against City in accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of and compliance with this Agreement by City.
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1.2.3 City has taken all requisite action and obtained all requisite consents for agreements or matters to which City is a party in connection with entering into this Agreement and the instruments and documents referenced herein and in connection with the consummation of the transactions contemplated hereby.
1.2.4 City is the owner of the entire right, title and interest in and to the City Property.
1.2.5 There are no pending or, to the best of City’s knowledge, threatened claims, allegations or lawsuits of any kind that could materially and adversely affect the value of the City Property or prohibit the sale thereof, nor to the best of City’s knowledge, is there any governmental investigation of any type or nature pending or threatened against or relating to the City Property or the transactions contemplated hereby.
1.2.6 To the best of the City’s knowledge, the City Property has not at any time been used for the purposes of storing, manufacturing, releasing or dumping Hazardous Substances, and no underground storage tanks, pipelines or clarifiers have been or are located on the City Property.
1.2.7 If the City becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the City under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the City’s knowledge and/or belief as of a certain date, the City will give immediate written notice of such changed fact or circumstance to the Developer.
1.3 Developer’s Representations and Warranties. The representations and warranties of Developer contained in this Section 1.31.3 shall be based upon the Actual Knowledge of the Developer, as of the Effective Date. All representations and warranties contained in this Section 1.31.3 are true and correct as of the Effective Date. The Developer’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. The Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by City has been made in material reliance by City on such covenants, representations and warranties:
1.3.1 The Developer is a California limited partnership, lawfully entitled to do business in the State of California. The Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power, right and authority to bind the Developer.
1.3.2 The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required for the Developer’s authorization to enter into this Agreement.
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1.3.3 Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Developer or to the Property.
1.3.4 This Agreement is, and all agreements, instruments and documents to be executed by the Developer pursuant to this Agreement shall be, duly executed by and shall be valid and legally binding upon the Developer and enforceable in accordance with their respective terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of in compliance with this Agreement by the Developer.
1.3.5 If the Developer becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the Developer under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the Developer’s knowledge and/or belief as of a certain date, the Developer will give immediate written notice of such changed fact or circumstance to the City.
1.4 Effective Date. This Agreement is dated ____________, December __, 202__ 2 for reference purposes only. This Agreement shall not become effective until the date on which all of the following are true (“Effective Date”): (a) this Agreement is approved and executed by the appropriate authorities of Developer and delivered to City; (b) Developer has delivered to City a certified copy of the official action taken by all of the entities comprising the Developer approving this Agreement, substantially in the form attached to this Agreement as Exhibit F; (c) following all legally required notices and hearings, this Agreement is approved by the City Council; and (d) this Agreement is executed by the authorized representatives of City.
1.5 Exhibit List. The following is a list of the Exhibits attached to this Agreement.
Each of the Exhibits is incorporated by this reference into the text of this Agreement.
Exhibit A Legal Description of Property
Exhibit B Scope of Development
Exhibit C Schedule of Performance
Exhibit D Form of Grant Deed
Exhibit E Form of Notice of Agreement
Exhibit F Form of Official Action of Developer
Exhibit G Form of Certificate of Completion
Exhibit H Form of Documents for Predevelopment Component of City Loan Item 3B - Page 26
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H-1 Form of Loan Agreement
H-2 Form of Predevelopment Component Note
Exhibit I Form of Documents for Development Component of City Loan I-1 Form of Promissory Note
I-2 Form of Deed of Trust
I-3 Form of Regulatory Agreement
Exhibit J HHAP Agreement
ARTICLE II
PROPERTY DISPOSITION
2.1 Purchase and Sale. City agrees to convey the City Property to Developer and Developer agrees to acquire the City Property from City in accordance with and subject to all of the terms, covenants, and conditions of this Agreement. The Purchase Price for the City Property is to be paid by Developer to City as part of the City Loan. For the purposes of exchanging funds and documents to complete the sale from the City to the Developer and the purchase by the Developer from the City of the City Property pursuant to the terms of this Agreement, the City and the Developer agree to open an escrow (“Escrow”) with the Escrow Holder. ARTICLE IIIARTICLE III of this Agreement constitutes the joint escrow instructions of the Parties to the Escrow Holder for completion of the Escrow for the sale of the Property, as contemplated by this Agreement. The Developer and the City shall execute such further escrow instructions, consistent with the provisions of this Agreement, as may be reasonably requested by the Escrow Holder. In the event of any conflict between the provisions of this Agreement and any other escrow instructions requested by the Escrow Holder, the provisions of this Agreement shall control.
2.2 Payment of Purchase Price
2.2.1 Note and Deed of Trust. The Developer shall pay the Purchase Price by depositing the Note and the Deed of Trust into the Escrow, at least one (1) business day preceding the Escrow Closing Date.
2.2.2 Non-Recourse. The Developer shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the Note or the performance of the covenants of the Developer under the Deed of Trust. The sole recourse of the City with respect to the principal of, or interest on, the Note and defaults by Developer in the performance of its covenants under the Deed of Trust shall be to the Property, as described in the Deed of Trust.
2.2.3 Subordination. Except for any Subordinate Loan, the Deed of Trust and Regulatory Agreement shall be subordinated to other loans from Institutional Lenders that are consistent with the Project Budget (in each case, a “Senior Loan”), provided all of the proceeds Item 3B - Page 27
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of the proposed Senior Loan, less any transaction costs, must be used to provide financing for the Project. Notwithstanding the foregoing, City shall determine, in its reasonable discretion, whether the Deed of Trust or Regulatory Agreement shall be subordinated to other loans. The City Manager or his/her designee on behalf of the City is authorized to execute the subordination agreement documenting such subordination without the necessity of any further action or approval, provided that the form of such subordination shall be subject to the approval of the City Manager and City Attorney.
2.3 Sale Contingent on PSA. The sale of and Close of Escrow on the City Property shall not occur unless Developer is in a position, in all material respects, to close escrow on the SA Property being sold through the PSA with the Successor Agency.
2.4 Eminent Domain. If any portion of the City Property or any interest in any portion of the City Property, becomes the subject of any eminent domain proceeding prior to Close of Escrow, other than such a proceeding by the City, including the filing of any notice of intended condemnation or proceedings in the nature of eminent domain commenced by any Governmental Agency, the City shall immediately give the Developer notice of such occurrence, and the Developer shall have the option, exercisable within ten (10) business days after receipt of such notice from the City, to either: (1) cancel the Escrow and terminate this Agreement and the Escrow, in which case the Parties and the Escrow Holder shall proceed in accordance with Section
3.103.10; or (2) continue with this Agreement in accordance with its terms, in which event the City shall assign to the Developer any right of the City to receive any condemnation award attributable to the City Property.
2.5 Title Approval. As soon as practicable following the Effective Date, the City shall obtain from Title Company the Preliminary Report and deliver a copy of the Preliminary Report to the Developer. Within thirty (30) days following the Developer’s receipt of a Preliminary Report for the entire City Property, the Developer shall deliver the Developer’s Title Notice to the City. If the Developer fails to deliver the Developer’s Title Notice to the City within thirty (30) days following the Developer’s receipt of the Preliminary Report, the Developer will be deemed to approve the status of title to the City Property. Within twenty (20) days following receipt by the City of Developer’s Title Notice, if any, the City shall serve City’s Title Notice Response. If the City does not serve City’s Title Notice Response, if necessary, within twenty (20) days following its receipt of Developer’s Title Notice, the City shall be deemed to elect not to remove any matter objected to in Developer’s Title Notice, if any, from the Preliminary Report. If the City elects in City’s Title Notice Response to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, the City shall cause the removal of each such objectionable matter from the Preliminary Report within sixty (60) days following receipt by the Developer of City’s Title Notice Response or such other period of time that may be agreed to in writing by both the City and the Developer. If the City is unwilling or unable to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, then, within ten (10) days following the Developer’s receipt of City’s Title Notice Response stating that the City is unwilling to remove or cause the removal of any matter objected to in Developer’s Title Notice or upon the expiration of the above sixty (60) day time period during which the City elected to remove such objectionable matters from the Preliminary Report and was unable to do so, the Developer may either (1) refuse to accept the title to and conveyance of the City Property, in which case the Parties shall have the right, subject to Section 2.5.2, to cancel the Escrow and terminate Item 3B - Page 28
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this Agreement without liability to either Party or any other person, by delivery of a written notice of termination to the Escrow Holder, or (2) be deemed to waive its objection to any items set forth in Developer’s Title Notice.The Parties acknowledge that as of the Effective Date of this Agreement, Developer has received and approved the Preliminary Report for the City Property and that any obligations or rights of each Party under Section 2.5 of the Original Agreement have been deemed waived or satisfied.
2.5.1 If at any time prior to the Close of Escrow the Title Company issues an updated Preliminary Report containing any previously undisclosed matter affecting title to the City Property, or the City becomes aware of any previously undisclosed matter affecting title to the City Property, following the delivery of the Developer’s Title Notice, the City shall provide written notice to the Developer of such matter, together with any updated Preliminary Report related to such matter. If there is any objectionable matter in the updated Preliminary Report, Developer shall promptly deliver to City the Developer’s Title Notice setting forth the matter objected to.
The Parties shall meet and confer on removal of said matter and reach a resolution no later than five days before Close of Escrow (“Meet and Confer Deadline”). If the Parties are unable to do so, the Developer may either (1) refuse to accept the title to and conveyance of the City Property, in which case the Parties shall have the right to cancel the Escrow and terminate this Agreement without liability to either Party or any other person, by delivery of a written notice of termination to the Escrow Holder, or (2) be deemed to waive its objection to any items set forth in Developer’s Title Notice The City and the Developer shall have such rights and obligations with respect to such previously undisclosed title matters as they did with respect to any title matters set forth in the original Preliminary Report as set forth in Section 2.5.
2.5.2 Before exercising any right a Party may have under this Section 2.5 to cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating Party in writing of its election to terminate and shall, upon the non-terminating Party’s request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non-terminating Party for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable title matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable title matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such title matter unless such agreement is reduced to a writing which is approved by both Parties, in their sole and absolute discretion. If, by the Meet and Confer Deadlineat the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving such title matter, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section 3.103.10.
2.5.3 The City agrees not to place any matters of record against the City Property (other than Permitted Exceptions and any matters arising from City’s issuance or exercise of any remedy related to any approval for the Project), prior to the Close of Escrow, without the prior written consent of Developer.
Item 3B - Page 29
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2.6 Developer Investigations. The Developer shall have until the expiration of the Due Diligence Period to complete all of its Due Diligence Investigations with respect to the entirety of the City Property. The Developer shall complete all of its Due Diligence Investigations within the Due Diligence Period and shall conduct all of its Due Diligence Investigations at its sole cost and expense. The Developer shall rely solely and exclusively upon the results of its Due Diligence Investigations of the City Property, including, without limitation, investigations regarding geotechnical soil conditions, compliance with applicable laws pertaining to the use of the City Property by the Developer and any other matters relevant to the condition or suitability of the City Property for the Project, as the Developer may deem necessary or appropriate. City makes no representation or warranty to the Developer relating to the condition of the City Property or suitability of the City Property for any intended use or development by the Developer. The Developer shall deliver a Due Diligence Investigation Rejection Notice to the City prior to the end of the Due Diligence Period.Developer acknowledges that it did If the Developer does not timely deliver its Due Diligence Investigation Rejection Notice prior to the end of the Due Diligence Period, the Developer shall be deemed to have accepted the condition of the City Property in its current condition. If the condition of the City Property is rejected, then either Party shall have the right, subject to Section 2.6.2, to cancel the Escrow and terminate this Agreement, in its sole discretion, without liability to the other Party or any other person, by delivery of a written notice of termination to the other Party and Escrow Holder. The Developer shall accept all conditions of the City Property, without any liability of the City whatsoever, upon the Developer’s deemed acceptance of the condition of the City Property by its failure to timely deliver its Due Diligence Investigation Rejection Notice. The Developer’s failure to timely deliver its Due Diligence Investigation Rejection Notice shall evidences the acceptance of the condition of the City Property by the Developer in its existing “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition, as of the last day of the Due Diligence Period. City has or will provide written notice to Developer that Developer is deemed to have accepted the City Property in its existing condition.
In its sole discretion, the Developer may accept the City Property in its “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition at any time before the end of the Due Diligence Period. The Developer shall conduct during the Due Diligence Period such environmental assessment(s) of the City Property as the Developer deems appropriate. If such assessment(s) do not reveal the presence of any Hazardous Substances on the City Property in levels that exceed applicable Governmental Requirements, then the City shall promptly and at its sole cost and expense install security fencing around the City Property. If such assessment(s) do reveal the presence of any Hazardous Substances on the City Property in levels that exceed applicable Governmental Requirements, then the City and the Developer shall negotiate in good faith in an effort to reach agreement as to the allocation of responsibility and cost of remediation thereof.
2.6.1 Any Due Diligence Investigations of the City Property by the Developer shall not unreasonably disrupt any then-existing use or occupancy of the City Property or the operations of the City. The Developer shall be liable for any damage or injury to any person or property arising from the acts of the Developer, its employees, agents or representatives during the course of any Due Diligence Investigations on the City Property and the Developer shall indemnify, defend with counsel reasonably acceptable to the City and hold harmless the City and its elected officials, officers, directors, attorneys, contractors, agents and employees from any and all actual or alleged liens, claims, demands or liability arising from any Due Diligence Investigations by the Developer on the City Property other than for discovery of existing conditions on the City Property. Prior to commencing any Due Diligence Investigations on the City Property, the Developer shall deliver Item 3B - Page 30
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copies of policies or certificates of insurance to the City evidencing compliance by the Developer with the liability insurance requirements of Section 5.4.
2.6.2 Before exercising any right a Party may have under this Section 2.5 to cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating Party in writing of its election to terminate and shall, upon the non-terminating Party’s request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non-terminating Party for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable due diligence matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable due diligence matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such due diligence matter unless such obligation is reduced to a writing which is approved by both Parties, in their sole and absolute discretion. If, at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving the objectionable due diligence matter, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section 3.10.
2.7 Developer to Obtain all Project Entitlements.
2.7.1 Pursuant to the ENA, Developer has developed and presented to City staff for review, the following (collectively, the “Plans and Specifications”):
2.7.1.1 Proposed complete conceptual site plans and preliminary designs for the Project that describe and depict: (1) the location and placement of proposed buildings, (2) the architecture and elevations of the proposed buildings, and (3) any other features specified by the City (collectively, the “Conceptual Design”);
2.7.1.2 A proposed time schedule for the development of the Project, including but not limited to: (1) the date for the submittal of construction plans to City, (2) the date of the commencement of construction, and (3) the date for completion of construction and opening of the Project;
2.7.1.3 All information concerning the Project that is reasonably necessary to conduct the environmental review process; and
2.7.1.4 A preliminary financial pro forma analysis for the Project to evidence the financial feasibility of the Project, current as of the Agreement Date, which shall identify financing sources for all private and public improvements proposed for the Project.
2.7.2 Execution of this Agreement shall constitute the City’s approval of the Conceptual Design for the Project (“Approved Conceptual Design”). The City expressly reserves the right to request modifications to the Approved Conceptual Design, and Developer agrees to implement such modifications to the greatest extent practicable.
2.7.3 The City of Palm Springs’s zoning, building and land use regulations (whether contained in ordinances, the City’s municipal code, conditions of approval, policies, Item 3B - Page 31
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practice or elsewhere) (collectively, the “City Requirements”), shall be applicable to the use and development of the Project on the Site by the Developer. The Developer acknowledges that all Plans and Specifications and any changes to the Plans and Specifications shall be subject to the City Requirements. No action by the City with reference to this Agreement or any related documents shall be deemed to constitute a waiver of any City Requirements regarding the Site, the Project, the Developer, any successor-in-interest of the Developer or any successor-in-interest to the Site. No entitlement, permit or other approval from the City for development of the Project on the Site shall attach to any portion of the Site or otherwise become effective to allow the Developer to develop the Project on the Site until after the Developer owns fee title to that portion of the Site to which such entitlement, permit or other approval pertains. Under no circumstances shall the Developer commence development of any portion of the Project on the Site prior to the Developer owning fee title to the Site.
2.7.4 The approval of the Scope of Development shall not be binding on the City Council or the Planning Commission of the City regarding any approvals of the Project required by such bodies. The Developer obtains no right to develop the Project on the Site or any portion of the Site by virtue of this Agreement, except that following the Close of Escrow, the Developer shall possess the same rights as any other owner of property within the Site that desires to develop its property in a manner consistent with the City’s General Plan. If any revisions of the Scope of Development are required by a Governmental Agency (other than the City) having jurisdiction over the Site or the Project, the Developer shall promptly make any such revisions that are generally consistent with the Scope of Development.
2.7.5 Notwithstanding any provision to the contrary in this Agreement, following the Close of Escrow, the Developer agrees to accept and comply fully with any and all conditions of approval applicable to all approvals, permits and other governmental actions regarding the development or operation of the Project on the Site, so long as such conditions of approval are consistent with the Scope of Development and this Agreement in all material respects.
2.7.6 Developer to Pay All Costs and Expenses. The Parties agree that the City shall not provide any financial assistance to the Developer in connection with the Project except as may be expressly set forth in this Agreement. The Developer shall be solely responsible for paying for the costs of all design work, construction, labor, materials, fees and permit expenses associated with the Project, excluding any fees from which Developer is exempted in accordance with City Requirements. The Developer shall pay any and all fees, unless subject to exemption, pertaining to the review and approval of the Project by the City, any other Governmental Agency and utility service providers, including the costs of preparation of all required construction, planning and other documents reasonably required by a Governmental Agency pertinent to the development or operation of the Project on the Site , including, but not limited to, specifications, drawings, plans, maps, permit applications, land use applications, zoning applications, environmental review and disclosure documents and design review documents. The Developer shall pay for any and all costs, including, but not limited to, the costs of design, construction, relocation and securing of permits for sewer or utility improvements and connections, that may be required in development of the Project, whether located on or off of the Site. The Developer shall obtain any and all necessary approvals, prior to the commencement of applicable portions of construction, and the Developer shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. In accordance with this Section 2.72.7, Item 3B - Page 32
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Developer shall be responsible for the costs, or immediate reimbursement to the City upon delivery of an invoice for the costs, of the following:
2.7.6.1 all fees or expenses of engineers, architects, financial consultants, legal, planning or other consultants or contractors, retained by the Developer for any study, analysis, evaluation, report, schedule, estimate, environmental review, planning and/or design activities, drawings, specifications or other activity or matter relating to the Property or the Project or the negotiation of this Agreement that may be undertaken by the Developer;
2.7.6.2 all fees, charges and costs, make all deposits and provide all bonds or other security associated with the submission to and processing by the City of any and all applications and other documents and information to be submitted to the City by the Developer pursuant to this Agreement or otherwise associated with the Project; and
2.7.6.3 The Developer shall obtain all entitlements, permits and other approvals for use and development of the Project on the Site from each Governmental Agency, within the time period for such actions specifically set forth in the Schedule of Performance, subject to any extensions of time authorized by this Agreement upon the occurrence of an Unavoidable Delay.
2.8 Delivery of Property Free of Occupants. At the Close of Escrow, the City will deliver possession of the City Property to Developer free and clear of any contractual rights created by or with the consent of the City for any person or entity (other than Developer) to use or occupy the land.
2.9 Project Marketing Plan. At least forty-five (45) calendar days prior to the Close of Escrow, Developer shall submit to the City an affirmative fair housing marketing plan for the Project. Within ten (10) calendar days after the City receives such marketing plan submitted by Developer, the City shall approve or disapprove such marketing plan. The marketing plan shall include provisions to ensure that Developer shall use commercially reasonable efforts to market the Project to eligible residents of the City of Palm Springs, including but not limited to (i) no later than ninety (90) days after the issuance of building permits for the Project, notifying local government and nonprofit agencies serving Lower and Very-Low Income Households in the City of Palm Springs (a list of such organizations will be provided by the City) of the availability of the Qualifying Units and requesting that these organizations assist in publicizing the availability of the Qualifying Units to their members and clients; and (ii) advertising the availability of the Qualifying Units on social media outlets that cater to City of Palm Springs residents (a list of which will be provided by the City). The City’s failure to approve such marketing plan within the specified ten (10) calendar day period, shall constitute City’s deemed approval of such marketing plan.
ARTICLE III
ESCROW INSTRUCTIONS
3.1 Opening of Escrow. For purposes of this Agreement, the opening of Escrow shall be the first date on which a fully executed copy of this the Original Agreement is deposited with Item 3B - Page 33
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Escrow Holder. (“Escrow Opening Date”). The Original Agreement was deposited with Escrow Holder on November 18, 2022 (“Escrow Opening Date”). The Developer shall cause the Escrow to be opened within five (5) days following the Effective Date. Escrow Holder shall promptly confirm in writing to each of the Parties the date of the Escrow Opening Date. This ARTICLE IIIARTICLE III shall constitute the joint escrow instructions of the City and the Developer to Escrow Holder for conduct of the Escrow to complete the purchase and sale of the City Property between them, as contemplated in this Agreement.
3.2 Conditions to Close of Escrow. The conditions set forth below shall be satisfied or waived in writing by the respective benefited Party on or before the Escrow Closing Date or the Party benefited by any unsatisfied condition shall not be required to proceed to close Escrow.
3.2.1 Developer’s Conditions to Close of Escrow. The Developer’s obligation to purchase the City Property from the City on the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, each of which can only be waived in writing by the Developer:
3.2.1.1 The Developer agrees, or is deemed, to accept the title to and conveyance of the Property, pursuant to Section 2.52.5;
3.2.1.2 The Developer fails to deliver a Due Diligence Investigation Rejection Notice to the City prior to the expiration of the Due Diligence Period;
3.2.1.3 Developer has received the commitments for funding to make the construction and operation of the Project financially feasible consistent with the Project Budget, including, but not limited to, receipt of a Tax Credit reservation for the Project from TCAC, or an award from the HCD Accelerator Fund in lieu of Tax Credits, and funding from the No Place Like Home (NPLH) Program, or any other funding source satisfactory to the City;
3.2.1.4 The Title Company is unconditionally committed to issue the Title Policy for the City Property, subject to any Permitted Exceptions, to the Developer;
3.2.1.5 Developer approves the Escrow Holder’s estimated Escrow closing/settlement statement;
3.2.1.6 The representations, warranties and covenants of the City set forth in Section 1.21.2 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date;
3.2.1.7 The Developer has obtained all entitlements required in connection with the development of the Site, subject to conditions of approval reasonably acceptable to Developer, any applicable appeal period has expired without appeal having been filed or, if an appeal is filed, such appeal has been denied, and no legal action has been instituted against Developer or the City alleging the invalidity of such entitlements;
3.2.1.8 The City has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow; and Item 3B - Page 34
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3.2.1.9 The City deposits the items into the Escrow required by Section
3.33.3. 3.2.2 City’s Conditions to Close of Escrow. The City’s obligation to sell the City Property to the Developer on or before the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, which can only be waived in writing by the City:
3.2.2.1 The Developer agrees, or is deemed, to accept the title to and conveyance of the City Property, pursuant to Section 2.52.5;
3.2.2.2 The Developer fails to deliver a Due Diligence Investigation Rejection Notice to the City prior to the expiration of the Due Diligence Period;
3.2.2.3 The Title Company is unconditionally committed to issue the Title Policy for the City Property, subject to any Permitted Exceptions, to the Developer;
3.2.2.4 The Developer submits to the City evidence satisfactory to the City, in the City’s reasonable discretion, that the Developer has obtained all entitlements necessary for the development of the Site from each applicable Governmental Agency, including the City;
3.2.2.5 The Developer has received the commitments for funding to make the construction and operation of the Project financially feasible consistent with the Project Budget, including, but not limited to receipt of a Tax Credit reservation for the Project from TCAC, or an award from the HCD Accelerator Fund in lieu of Tax Credits, and funding from the No Place Like Home (NPLH) Program, and any other funding source satisfactory to the City;
3.2.2.6 The Developer has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow;
3.2.2.7 The Developer submits to the City the Developer’s organizational documents;
3.2.2.8 The Developer submits to the City the marketing plan for the Project pursuant to Section 2.92.9;
3.2.2.9 The Developer submits to the City a copy of the construction contract for the Project in substantially final form (with a copy of the final construction contract being delivered to the City by Close of Escrow);
3.2.2.10 The Developer submits to the City copies of the Construction Financing Documents in substantially final form (with copies of the final Construction Financing Documents being delivered to the City through Close of Escrow);
3.2.2.113.2.2.9 The Developer submits to the City a document evidencing a commitment from the Tax Credit Investor to Developer to provide the Tax Credit Equity or an award from the HCD Accelerator Fund in lieu of Tax Credits; Item 3B - Page 35
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3.2.2.123.2.2.10 The Developer submits to the City documents evidencing a commitment from an Institutional Lender to Developer to provide the Permanent Loan;
3.2.2.131.1.1.1 The Developer submits to the City documents evidencing a commitment from the Lender(s) of all Subordinate Loan(s), if any, to Developer to provide the Subordinate Loan(s);
3.2.2.143.2.2.11 The representations, warranties and covenants of the Developer set forth in Section 1.31.3 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date;
3.2.2.153.2.2.12 The Developer deposits the items into the Escrow required by Section 3.33.3; and
3.2.2.163.2.2.13 Developer is prepared, in all material respects, to close escrow on the SA Property being sold to Developer through the PSA with the Successor Agency.
3.3 Developer’s Escrow Deposits. Following satisfaction or waiver of each of the Developer’s conditions to Close of Escrow set forth in Section 3.2.13.2.1, the Developer shall deposit the following documents into Escrow at least one (1) business day prior to the Escrow Closing Date in a writing delivered to the Parties:
3.3.1 PCO Statement. A PCO Statement, as defined in Section 1.1.531.1.51, executed by the authorized representative(s) of the Developer.
3.3.2 Grant Deed. The Grant Deed, executed by the authorized representative(s) of the Developer in recordable form.
3.3.3 Notice of Agreement. The Notice of Agreement executed by the authorized representative(s) of the Developer in recordable form, to be recorded against the Site at the Close of Escrow.
3.3.4 Regulatory Agreement. The original Regulatory Agreement executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Site at the Close of Escrow.
3.3.5 Construction Financing Security Instrument(s). A Permitted Security Instrument(s) securing repayment of the Construction Financing, executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Site at the Close of Escrow.
3.3.6 Notes. The original Notes signed by the authorized representative(s) of Developer.
3.3.7 Loan Agreement. The Loan Agreement signed by the authorized representative(s) of Developer.
Item 3B - Page 36
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3.3.8 Deed of Trust. The Deed of Trust executed by the authorized representative(s) of Developer in recordable form, to be recorded against the City PropertySite at the Close of Escrow.
3.3.9 Subordinate Loan(s) Security Instrument(s). Permitted Security Instrument(s) securing repayment of the Subordinate Loan(s), if any, executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Site at the Close of Escrow.
3.3.10 Subordinate Loan Land Use Restriction Agreement(s).
Agreement(s) restricting occupancy and rents in the Project as required by the Subordinate Loans, if any, executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Site at the Close of Escrow.
3.3.11 Subordination Agreements. Subordination agreement(s) subordinating the Deed of Trust and Regulatory Agreement in the form provided by an Institutional Lender, reasonably approved by the City and executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Site at the Close of Escrow.
3.3.12 Other Funds and Documents. Such documents required from Developer under the terms of this Agreement to close the Escrow, including funds as required to pay all Escrow closing costs, which shall be the sole responsibility of Developer, or by the Escrow Holder in the performance of the Escrow Holder’s contractual or statutory obligations relating to the Escrow.
3.4 City’s Escrow Deposits. Following satisfaction or waiver of each of the City’s conditions to Close of Escrow set forth in Section 3.2.23.2.2, the City shall deposit the following documents into Escrow at least one (1) business day prior to the Escrow Closing Date:
3.4.1 Grant Deed. The Grant Deed executed by the authorized representative(s) of the City in recordable form.
3.4.2 FIRPTA Affidavit (City). The FIRPTA Affidavit completed and executed by the authorized representative(s) of the City.
3.4.3 Loan Agreement. The Loan Agreement signed by the authorized representative(s) of City;
3.4.4 Notice of Agreement. The Notice of Agreement executed by the authorized representative(s) of the City in recordable form.
3.4.5 Regulatory Agreement. The Regulatory Agreement signed by the authorized representative(s) of the City in recordable form, which shall be recorded against the Site.
3.4.6 Subordination Agreements. Subordination agreement(s) subordinating the Deed of Trust in the form provided by an Institutional Lender, reasonably Item 3B - Page 37
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approved by the City and executed by the authorized representative(s) of the City in recordable form, which shall be recorded against the Site. City’s deposit of any required City Loan funds into Escrow for disbursement to Developer.
3.4.7 Other Documents. Such other documents required from the City under the terms of this Agreement to close the Escrow or by the Escrow Holder in the performance of the Escrow Holder’s contractual or statutory obligations regarding the Escrow.
3.5 Closing Procedure. When each of the Developer’s Escrow required deposits, as set forth in Section 3.33.3, and each of the City’s Escrow required deposits, as set forth in Section
3.43.4, are deposited into Escrow, Escrow Holder shall request confirmation in writing from both the City and the Developer that each of their respective conditions to the Close of Escrow, as set forth in Section 3.23.2, are satisfied or waived. Upon Escrow Holder’s receipt of written confirmation from both the City and the Developer that each of their respective conditions to the Close of Escrow are either satisfied or waived, Escrow Holder shall close the Escrow for the City Property by doing all of the following:
3.5.1 Recordation of Documents. File the documents set forth in Section
3.73.7 with the Office of the Recorder of the County, for recordation in the order set forth in Section 3.73.7.
3.5.2 Distribution of Recorded Documents. Distribute each recorded document to the Party or person designated for such distribution in Section 3.73.7.
3.5.3 PCO Statement. File the PCO Statement with the Office of the Recorder of the County.
3.5.4 FIRPTA Affidavit. File the FIRPTA Affidavit with the United States Internal Revenue Service.
3.5.5 Title Policy. Obtain and deliver the Title Policy to the Developer.
3.5.6 Original Notes. Deliver the original Notes to the City.
3.5.7 Funds. Deliver all funds held by the Escrow Holder for the account of City to City, less any charges to the account of City pursuant to the terms of this Agreement, and all other remaining funds held by the Escrow Holder for the account of Developer to Developer and less any other charges to the account of Developer pursuant to the terms of this Agreement.
3.6 Close of Escrow. The Close of Escrow shall occur on or before the Escrow Closing Date. The City and the Developer may mutually agree to change the Escrow Closing Date by joint written instruction to the Escrow Holder. The City Manager is authorized to agree to one or more extensions of the Escrow Closing Date on behalf of the City up to a maximum time period extension of six (6) months in the aggregate, in the City Manager’s sole and absolute discretion.
If for any reason the Close of Escrow has not occurred by the Escrow Closing Date, then any Party not then in default of this Agreement may cancel the Escrow and terminate this Agreement, subject to the notice and cure provisions of Section 7.17.1 (to the extent applicable), without liability to any other Party or any other person for such termination and cancellation, by delivering written Item 3B - Page 38
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notice of termination to the other Party(ies) and Escrow Holder and, thereafter, the Parties shall proceed pursuant to Section 3.103.10 if the non-terminating Party is not in default or pursuant to Section 7.17.1 or 7.1.3.67.1.3.6 (as applicable) if the non-terminating Party is in default. Without limiting the right of any Party to terminate this Agreement, pursuant to the preceding sentence, if Escrow does not close on or before the Escrow Closing Date, and no Party has exercised its contractual right to cancel Escrow and terminate this Agreement before such time, then Escrow shall close as soon as reasonably possible following the first date on which Escrow Holder is in a position to close the Escrow pursuant to the terms and conditions of this Agreement.
3.7 Recordation and Distribution of Documents. As applicable, Escrow Holder shall cause the following documents to be recorded in the official records of the Recorder of the County in the following order of priority at the Close of Escrow: (a) the Grant Deed; (b) the TCAC Regulatory Agreement, if any; (c) any land use restriction agreement required by HCD for an award from the HCD Accelerator Fund, if any; (d) Permitted Security Instrument(s) securing the Construction Financing; (e) the Regulatory Agreement; (f) the Notice of Agreement; (g) the Deed of Trust; (h) the land use restriction agreement required by the Lender of the Subordinate Loan(s), if any; (i) the deed of trust securing the Subordinate Loan(s), if any; (j) the Subordination Agreements described in Sections 3.3.93.3.9 and 3.4.63.4.6; and (k) any other documents to be recorded through the Escrow upon the joint instructions of the City and the Developer. The Escrow Holder shall deliver conformed copies of all documents filed for recording in the official records of the County through the Escrow to the City, the Developer and any other entity or person designated in the written joint escrow instructions of the Parties to receive an original or conformed copy of each such document. Each copy of a document filed for recording shall show all recording information. The Parties intend and agree that this Section 3.73.7 shall establish the relative priorities of the documents to be recorded in the official records of the County through the Escrow, by providing for recordation of Senior interests prior in time to junior interests, as provided in this Section 3.73.7.
3.8 Escrow Closing Costs, Taxes and Title Policy Premium. The Developer shall pay the Escrow fees and such other costs as Escrow Holder may charge for the conduct of the Escrow. Escrow Holder shall notify the Developer and the City of the costs to be borne by Developer at the Close of Escrow by delivering the Escrow Holder’s estimated closing/settlement statement to both the City and the Developer at least four (4) business days prior to the Escrow Closing Date. The Developer shall pay the premium charged by the Title Company for the standard Title Policy for the City Property, as well as documentary transfer taxes and any and all other charges, fees and taxes levied by a Governmental Agency relative to the conveyance of any portion of the City Property through the Escrow transaction contemplated in this Agreement. The Developer shall additionally pay any and all recording fees relative to the conveyance of any portion of the City Property through the Escrow transaction contemplated in this Agreement.
3.9 Escrow Cancellation Charges. If the Escrow fails to close due to either the City’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the City shall pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close due to the Developer’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the Developer shall pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close for any reason other than the material default of either the Developer or the City and the Escrow is Item 3B - Page 39
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cancelled and this Agreement is terminated, the Developer and the City shall each pay one-half (1/2) of any ordinary and reasonable Escrow and title order cancellation charges.
3.10 Escrow Cancellation. If this Agreement is terminated and the Escrow cancelled pursuant to a contractual right granted to a Party in this Agreement to terminate this Agreement and cancel the Escrow, other than due to the material default of another Party, the Parties shall do each of the following:
3.10.1 Cancellation Instructions. The Parties shall, within three (3) business days of receipt of Escrow Holder’s written request, execute any reasonable Escrow cancellation instructions requested by Escrow Holder;
3.10.2 Return of Funds and Documents. Within ten (10) days of receipt by the Parties of a settlement statement of Escrow and title order cancellation charges from Escrow Holder: (a) the Developer or Escrow Holder shall return to the City any documents previously delivered by the City to the Developer or Escrow Holder, (b) the City or Escrow Holder shall return to the Developer all documents previously delivered by the Developer to the City or Escrow Holder; (c) Escrow Holder shall return to the Developer any funds deposited by Developer into Escrow, less the Developer’s share of customary and reasonable Escrow and title order cancellation charges, if any; and (d) Escrow Holder shall return to the City any funds deposited by City into Escrow if it has already been deposited, less the City’s share of customary and reasonable Escrow and title order cancellation charges, if any.
3.11 Report to IRS. Following the Close of Escrow and prior to the last date on which such report is required to be filed with the Internal Revenue Service, if such report is required pursuant to Section 6045(e) of the Internal Revenue Code, Escrow Holder shall report the gross proceeds of the purchase and sale of the City Property to the Internal Revenue Service on Form 1099-B, W-9 or such other form(s) as may be specified by the Internal Revenue Service pursuant to Section 6045(e). Upon the filing of such reporting form with the Internal Revenue Service, Escrow Holder shall deliver a copy of the filed form to the City and the Developer.
3.12 Conditions To Be Satisfied Post-Closing. City’s delivery and Developer’s acceptance of the Grant Deed herein shall be subject to the express condition, expressed in the Grant Deed, that Developer shall satisfy each of the below post-closing conditions (each, a “PostClosing Condition”) to the satisfaction of City. In the event a Post-Closing Condition is not satisfied, Developer shall transfer ownership of the City Property and SA Property to the City.Developer shall submit to the City a copy of the construction contract for the Project in substantially final form (with a copy of the final construction contract being delivered to the City by July 31, 2023);
3.12.2 Developer shall submit to the City copies of the Construction Financing Documents in substantially final form (with copies of the final Construction Financing Documents being delivered to the City by July 31, 2023);
3.12.3 Not later than July 31, 2023, Developer shall obtain for the City’s review and approval, which may be withheld or conditioned in City’s reasonable discretion and Item 3B - Page 40
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which shall not be unreasonably delayed, a conditional forward loan commitment for each Permanent Loan;
3.12.4 No later than July 31, 2023, tThe Developer shall submits to the City documents evidencing a commitment from the Lender(s) of all Subordinate Loan(s), if any, to Developer to provide the Subordinate Loan(s); and
3.12.5 In the event Developer is unable to obtain award commitments sufficient to finance the proposed Project by the Escrow Closing Date, Developer shall submit to City such additional funding award commitments no later than March 1, 2023.;
ARTICLE IV
PROJECT DEVELOPMENT
4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the benefit of the City, that the Developer shall commence and complete the development of the Project on the Site within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Site shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 4.14.1 shall run with the land of the Site until the date of recordation of the Certificate of Completion.
4.2 Construction Contract; Construction Schedule. Prior to commencing construction of the Project, Developer shall provide to City a copy of a stipulated sum-based construction contract or guaranteed maximum price construction contract between Developer and its general contractor for all of the improvements required to be constructed by Developer hereunder, certified by Developer to be a true and correct copy thereof. Developer shall obtain building permits, and commence and complete construction of the Project by the respective times established therefor in the Schedule of Performance. The City shall have the right, through completion of construction and upon reasonable notice, to inspect the books and records of the Developer and the general contractor pertaining to the construction of the Project as pertinent to the verification and to determine the reasonableness of all costs incurred during the course of construction.
4.3 Construction Start and Completion of Project. The Developer shall commence construction of the Project no later than the Project Commencement Date and, thereafter, shall diligently proceed to complete the construction of the Project in a good and workmanlike manner in substantial conformity with the approved plans, specifications, and conditions for the Project approved by the City and the Schedule of Performance, subject to Unavoidable Delays. The Developer shall obtain a Certificate of Completion on or before the Project Completion Date, subject to Unavoidable Delays. The Developer will, promptly upon Completion of Construction, Item 3B - Page 41
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cause the Project to be inspected by each Governmental Agency with jurisdiction over the Project, shall correct any defects and deficiencies that may be disclosed by any such inspection and shall cause to be duly issued all occupancy certificates and other licenses, permits and authorizations necessary for the operation and occupancy of the completed Project. The Developer shall do and perform all of the foregoing acts and things and cause to be issued and executed all such occupancy certificates, licenses, and authorizations for the Project on or before the date set forth therefor in the Schedule of Performance as the completion date for the Project. After commencement of the work of improvement of the Project, the Developer shall not permit the work of improvement of the Project to cease or be suspended for a time period in excess of thirty (30) consecutive calendar days, subject to Unavoidable Delays.
4.4 Compliance with Laws. All work performed in connection with the development of the Project shall comply with all Governmental Requirements.
4.5 Schedule of Performance. The Schedule of Performance establishes various dates and times for the accomplishment of various tasks assigned to the City and the Developer and the satisfaction of the conditions precedent to the close of the Escrow. The Parties agree that time is of the essence in the performance of such tasks and the satisfaction of conditions precedent, in view of the large investment of resources that all Parties recognize will be required for the undertaking of the Project. If the date or time for the performance of a task or the satisfaction of a condition, as set forth in either the text of this Agreement or in the Schedule of Performance, may not be achieved, then prior to such date or time set forth in the text of this Agreement or the Schedule of Performance, the Parties shall consider whether a modification to the text of this Agreement or to the Schedule of Performance is indicated. Any decision to approve a modification to a time or date established in either the text of this Agreement or the Schedule of Performance shall be subject to the sole discretion of each Party. Any modification of a time or date for performance of a particular task or satisfaction of a particular condition that does not result in a change of more than one hundred eighty (180) days may be approved on behalf of the City by the City Manager, in his or her reasonable discretion. A modification of a time or date for performance of a task or satisfaction of a condition (or a series of such modifications) that results in an aggregate change of more than one hundred eighty (180) days shall be subject to the approval of the City Council, in its sole and absolute discretion. If performance of a task or satisfaction of a condition in the Schedule Performance is prevented or delayed by Unavoidable Delays, the deadline for completion of such task or satisfaction of such condition shall be extended by the period of such Unavoidable Delays.
4.6 Developer Attendance at City Meetings. The Developer agrees to have one or more of its employees or consultants who are knowledgeable regarding this Agreement and the development of the Project, such that such person(s) can meaningfully respond to City questions regarding the progress of the Project, attend City Council meetings, as well as community meetings, neighborhood group meetings, business association meetings, task force meetings, subcommittee meetings, and City Council liaison meetings, when requested to do so on not less than ten (10) days prior written notice by City staff. Meetings may be attended by videoconference until California Governor Gavin Newsom’s Proclamation of a State of Emergency issued in response to the COVID-19 pandemic is lifted.
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4.7 City’s Right to Inspect Project and Site. Officers, employees, agents and representatives of the City shall have the right of reasonable access to the Site, without the payment of charges or fees, during normal construction hours, during the period of construction of the Project, provided that City will provide Developer with at least twenty-four (24) hours’ written notice in advance of any Site visit. Such officers, employees, agents or representatives of the City shall be those persons who are designated by the City Manager. Any and all officers, employees, agents or representatives of the City who enter the Site shall identify themselves at the construction management office on the Site, upon their entrance on to the Site, and shall at all times be accompanied by a representative of the Developer, while on the Site. The Developer shall make a representative of the Developer available for this purpose at all times during normal construction hours, upon reasonable notice from the City. The City shall indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the City of the right of access to the Site provided in this Section 4.7, other than injury, property damage or liability arising from the negligence or willful misconduct of the Developer or its officers, agents or employees. If in the City’s reasonable judgment it is necessary, the City shall have the further right, from time to time, to retain a consultant or consultants to inspect the Project and verify compliance by the Developer with the provisions of this Agreement. The Developer acknowledges and agrees that any such inspections are for the sole purpose of protecting the City’s rights under this Agreement, are made solely for the City’s benefit, that the inspections may be superficial and general in nature, and are for the purposes of informing the City of the progress of the Project and the conformity of the Project with the terms and conditions of this Agreement, and that the Developer shall not be entitled to rely on any such inspection(s) as constituting an approval, satisfaction or acceptance of any materials, workmanship, conformity of the Project with this Agreement or otherwise. The Developer agrees to make its own regular inspections of the work of construction of the Project to determine that the quality of the Project and all other requirements of the work of construction of the Project are being performed in a manner satisfactory to the Developer. The Developer also agrees to immediately notify the City in writing should the Developer’s inspections show any matters that will prevent the entire Project from being completed by the Project Completion Date set forth therefore in the Schedule of Performance.
Without limiting the foregoing, the Developer shall permit the City upon reasonable notice to examine and copy all books and account records and other papers relating to the Site and the construction of the Project. The Developer will use commercially reasonable efforts to cause all contractors, subcontractors and materialmen to cooperate with the City to enable such examination.
4.8 Cost of Construction. The cost and expense of undertaking and completing the Project, including, without limitation, constructing all legally imposed on- and off-site improvements, and providing all utilities therefor, shall be borne by Developer at its sole cost, expense and liability except as otherwise provided in this Agreement. Developer shall be solely responsible for payment of all land use, construction, inspection, plan check and development impact fees imposed by the City with respect to the development of the Project. Developer shall bear all costs and expenses associated with the processing and obtaining of the entitlements and shall bear all costs and expenses (except to the extent expressly set forth otherwise in this Agreement), associated with any and all terms, conditions, requirements, mitigation measures and other exactions imposed on, or required in connection with, the entitlements.
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4.9 Prevailing Wages. The Developer acknowledges that the City has not made any representation, express or implied, to the Developer or any person associated with the Developer regarding whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to Labor Code Sections 1720, et seq. The Developer agrees with the City that the Developer shall assume the responsibility and be solely responsible for determining whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification.
4.9.1 The Developer, on behalf of itself, its successors, and assigns, waives and releases the City from any right of action that may be available to it pursuant to Labor Code Sections 1726 and 1781. The Developer acknowledges the protections of Civil Code Section 1542 relative to the waiver and release contained in this Section 4.94.9, which reads as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE
CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR OR RELEASED PARTY.”
BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND
VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542
SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF
THIS SECTION 4.9.24.9.2.
Developer’s Initials
4.9.2 Additionally, in accordance with Section 7.57.56, the Developer shall indemnify, defend with counsel acceptable to the City and hold the City harmless against any claims pursuant to Labor Code Sections 1726 and 1781 arising from this Agreement or the construction or operation of the Project
4.10 Efforts to Hire Local Workers. Developer shall require its prime contractor and all subcontractors to make a good faith effort to hire residents of the City of Palm Springs for OnSite Jobs required for the construction of the Project, in accordance with their respective normal hiring practices. For purposes of this Agreement, “On-Site Jobs” means all jobs for which at least fifty percent of the work hours for such job requires the employee to be at the Site. The City acknowledges that the prime contractor and subcontractors shall determine in their respective subjective business judgment whether any particular applicant is qualified to perform the On-Site Job for which such applicant has applied. In furtherance of such good faith effort, Developer or its contractors shall advertise available On-Site Jobs in The Desert Sun, in both English and Spanish, and, if Developer so elects, in similar local newspapers.
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4.11 Certificate of Completion. Following the substantial Completion of Construction of the Project, and upon written request from the Developer for issuance of a Certificate of Completion for the Project, the City shall inspect the Project to determine whether or not the Project has been substantially completed in compliance with this Agreement. If the City determines that the Project is complete and in compliance with this Agreement, the City shall furnish the Developer with a Certificate of Completion for the Project. If the City determines that the Project is not in compliance with this Agreement, the City shall send written notice of each non-conformity to the Developer. Upon issuance of the final certificate of occupancy for the development of the Project, based on the plans submitted by the Developer to the City, the City shall furnish the Developer with a Certificate of Completion for the Project.
4.11.1 The Certificate of Completion, upon issuance, shall be evidence of the City’s conclusive determination of satisfactory substantial completion of the entirety of the Project pursuant to the terms of this Agreement.
4.11.2 The City shall not unreasonably withhold the issuance of a Certificate of Completion. After the recordation of a Certificate of Completion for the Project, any person then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Site improved with the Project shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement regarding construction or installation of the Project except that such person shall be bound by any reservations, covenants, conditions, restrictions and other interests recorded against the Site pursuant to this Agreement.
4.11.3 If the City fails or refuses to issue a Certificate of Completion following written request from the Developer, the City shall, within fifteen (15) calendar days of the Developer’s written request or within three (3) calendar days after the next regular meeting of the City Council, whichever date occurs later, provide the Developer with a written statement setting forth the reasons for the City’s failure or refusal to issue a Certificate of Completion. The statement shall also contain the City’s opinion of the action(s) the Developer must take to obtain a Certificate of Completion from the City. If the reason for the Developer’s failure to complete the Project is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer or other minor building “punch-list” items, the City may issue its Certificate of Completion upon the posting of a bond or irrevocable standby letter of credit by the Developer in a form reasonably acceptable to the City in an amount representing the fair value of the work on the Project remaining to be completed, as reasonably determined by the City. If the City fails to provide such written statement, within the specified time period, the Developer shall be deemed conclusively and without further action of the City to have satisfied the requirements of this Agreement with respect to the Project, as if a Certificate of Completion had been issued by the City pursuant to this Agreement.
4.11.4 A Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the Project, or any parts thereof. A Certificate of Completion shall not be deemed to constitute a notice of completion under Section 3093 of the California Civil Code, nor shall it act to terminate the continuing covenants, restrictions or conditions contained in any instruments recorded against the Site pursuant to this Agreement. A Certificate of Completion is not evidence of the compliance of the Project with any City Item 3B - Page 45
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Requirements or any building code, conditions of approval, land use, zoning or other requirements of the City or any Governmental Agency with jurisdiction over the Site, other than the City.
ARTICLE V
DEVELOPMENT COVENANTS
5.1 Obligation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion of the Site and/or Project, covenants and agrees that there shall be no discrimination against or segregation of any person, or group of persons, on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a “Prohibited Basis”) in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Site. Notwithstanding the preceding sentence, selection of tenants for housing units based on age, physical or mental disability, or medical condition shall not violate this Section if said housing units are funded by a program that requires the selection of tenants based on those characteristics. With respect to familial status, this Section 5.1 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in this Section 5.1 shall be construed to affect Section 51.2, 51.3, 51.4,
51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 5.1.
In connection with its performance under this Agreement, Developer shall not discriminate against any employee or applicant for employment because of a Prohibited Basis. Developer shall ensure that applicants are employed, and that employees are treated during their employment, without regard to any Prohibited Basis. As a condition precedent to City’s lawful capacity to enter this Agreement, and in executing this Agreement, Developer certifies that its actions and omissions hereunder shall not incorporate any discrimination arising from or related to any Prohibited Basis in any Developer activity, including but not limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship; and further, that Developer is in full compliance with the provisions of Palm Springs Municipal Code Section
7.09.040, including without limitation the provision of benefits, relating to non-discrimination in city contracting.
The covenant of this Section 5.15.1 shall run with the land of the Site in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be a covenant set forth in the Grant Deed
5.2 Form of Non-Discrimination and Non-Segregation Clauses. The Developer for itself, its successors and assigns to all or any part or portion of the Site and/or Project, covenants and agrees that:
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5.2.1 All deeds, leases or contracts pertaining to the Site shall contain or be subject to substantially the following non-discrimination or non-segregation covenants:
5.2.1.1 In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.
Notwithstanding the foregoing paragraph, with respect to familial status, paragraph 2.1(a) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to foregoing paragraph. The foregoing paragraph does not prohibit the selection of tenants for housing units based on age, physical or mental disability, or medical condition if said housing units are funded by a program that requires the selection of tenants based on those characteristics. “
5.2.1.2 In leases: “The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sub-lessee, sub-tenants, or vendees in the premises herein leased.
Notwithstanding the foregoing paragraph, with respect to familial status, paragraph 2.1(b) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to foregoing paragraph. The foregoing paragraph does not prohibit the selection of tenants for housing units based on age, physical or mental disability, or medical condition if said housing units are funded by a program that requires the selection of tenants based on those characteristics.” Item 3B - Page 47
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5.2.1.3 In contracts:
“There will be no discrimination against or segregation of any person or group of persons on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property nor will the transferee or any person claiming under or through the transferee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees of the land. Notwithstanding the preceding sentence, selection of tenants for housing units based on age, physical or mental disability, or medical condition shall not violate this provision if said housing units are funded by a program that requires the selection of tenants based on those characteristics;
There shall be no discrimination in the performance of this agreement against any employee or applicant for employment because of actual or perceived race, religion, color, sex, age, marital status, ancestry, national origin (i.e., place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a “prohibited basis”); All applicants for employment shall be employed, and employees shall be treated during their employment, without regard to any prohibited basis; and Performance under this agreement shall not incorporate any discrimination arising from or related to any prohibited basis in any activity, including but not limited to the following:
employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship; and
The parties to this agreement are familiar with and in full compliance with the provisions of Palm Springs Municipal Code Section 7.09.040, including without limitation the provision of benefits, relating to non-discrimination in City contracting.”
5.2.2 The covenant of this Section 5.25.2 shall run with the land of the Site in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.
5.3 Environmental Indemnity of the City by the Developer. The Developer agrees, at its sole cost and expense, to fully indemnify, protect, hold harmless, and defend (with counsel selected by the Developer and reasonably approved by the City) the City and its commissions, agents, attorneys, officers, employees, and authorized representatives (collectively, the “Indemnified Parties”), from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including, without limitation, attorney fees, disbursements and costs of attorneys, environmental consultants and other experts, and all foreseeable and unforeseeable damages or costs of any kind or of any nature whatsoever (collectively, “Environmental Claims”) Item 3B - Page 48
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that may, at any time, be imposed upon, incurred or suffered by, or claimed, asserted or awarded against, the Indemnified Parties, relating to or arising from any of the following “Environmental Matters” existing or occurring during or arising from the Developer’s ownership of the Site or construction or operation of the Project:
5.3.1 The presence of Hazardous Substances on, in, under, from or affecting all or any portion of the Site or the Project.
5.3.2 The storage, holding, handling, release, threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Substances on, in, under, from or affecting the Site or the Project.
5.3.3 The violation of any law, rule, regulation, judgment, order, permit, license, agreement, covenant, restriction, requirement or the like by the Developer, its agents or contractors, relating to or governing in any way Hazardous Substances on, in, under, from or affecting the Site or the Project.
5.3.4 The failure of the Developer, its agents or contractors, to properly complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations, covenants and the like in connection with the Developer’s activities on the Site or regarding the Project.
5.3.5 The implementation and enforcement by the Developer, its agents or contractors of any monitoring, notification or other precautionary measures that may, at any time, become necessary to protect against the release, potential release or discharge of Hazardous Substances on, in, under, from or affecting the Site or the Project.
5.3.6 The failure of the Developer, its agents or contractors, in compliance with all applicable Environmental Laws, to lawfully remove, contain, transport or dispose of any Hazardous Substances existing, stored or generated on, in, under or from the Site or the Project.
5.3.7 Any investigation, inquiry, order, hearing, action or other proceeding by or before any Governmental Agency in connection with any Hazardous Substances on, in, under, from or affecting the Site or the Project or the violation of any Environmental Law relating to the Site or the Project.
5.3.8 The Developer shall pay to the Indemnified Parties all costs and expenses including, without limitation, reasonable attorneys’ fees and costs, incurred by the Indemnified Parties in connection with enforcement of the aforementioned environmental indemnity.
5.3.9 Notwithstanding anything to the contrary in this Section 5.35.3, Developer shall have no obligation to indemnify any of the Indemnified Parties with respect to Environmental Matters or Environmental Claims (i) relating to or arising from Hazardous Substances that were present on the City Property prior to the Close of Escrow, (ii) to the extent relating to or arising from the active negligence or willful misconduct of any of the Indemnified Parties.
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5.4 Insurance. In order to protect the City and its commissions, agents, attorneys, officers, employees and authorized representatives (collectively, “Additional Insureds”) against any and all claims and liability for death, injury, loss and damage resulting from the Developer’s actions in connection with this Agreement, the Site, and the Project, the Developer shall secure and maintain the insurance coverage, described in and required by this Section 5.45.4. The City shall not have any obligation under this Agreement until the Developer provides the required policies and/or certificates evidencing the insurance required by this Section 5.45.4 to the City and the City approves such evidence of insurance. The Developer shall pay any deductibles and selfinsured retentions under all insurance policies issued in satisfaction of the terms of this Agreement.
Developer shall retain all insurance policies as set forth in this Section 5.45.4 until recordation of the Certificate of Completion.
5.4.1 Workers’ Compensation Insurance Requirement. The Developer shall submit written proof that the Developer is insured against liability for workers’ compensation in accordance with the provisions of Section 3700 of the Labor Code. By executing this Agreement, the Developer makes the following certification, required by Section 1861 of the Labor Code:
“I am aware of the provisions of section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of the Agreement.”
The Developer shall require each contractor and sub-contractor performing work on the Project to provide workers’ compensation coverage for all of such contractor’s or sub-contractor’s employees, unless the contractor’s or sub-contractor’s employees are covered by workers’ compensation insurance provided by the Developer. If any class of employees engaged in work or services performed in connection with the Project is not covered by Labor Code Section 3700, the Developer shall provide and/or require each contractor or sub-contractor to provide adequate workers’ compensation insurance covering such employees. Each workers’ compensation policy procured pursuant to this Section 5.4.15.4.1 shall contain a full waiver of subrogation clause in favor of the Additional Insureds.
5.4.2 Liability and Permanent Insurance Requirements.
5.4.2.1 The Developer shall maintain in full force and effect, from the Effective Date until the issuance of the Certificate of Completion, subject to Section 5.4.2.45.4.2.4, the following insurance coverage:
5.4.2.1.1 Commercial General Liability Insurance coverage, including, but not limited to, Premises-Operations, Contractual Liability Insurance (specifically covering all indemnity obligations of the Developer pursuant to this Agreement), ProductsCompleted Operations Hazards, Personal Injury (including bodily injury and death), and Property Damage for liability arising out of the construction of the Project and/or the Developer’s operations concerning the Site or the Project. The commercial general liability insurance coverage shall have Item 3B - Page 50
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minimum limits for Bodily Injury and Property Damage liability of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate.
5.4.2.1.2 Automobile Liability Insurance against claims of Personal Injury (including bodily injury and death) and Property Damage covering all owned, leased, hired and non-owned vehicles used by the Developer with minimum limits for Bodily Injury and Property Damage of ONE MILLION DOLLARS ($1,000,000) combined single limit.
Such insurance shall be provided by a business or commercial vehicle policy.
5.4.2.1.3 If the Developer hires a consultant to provide design services, such as architectural or engineering services in connection with the Project, or any portion of the Project, the Developer shall require each such consultant to provide Professional Liability (Errors and Omissions) Insurance, for liability arising out of, or in connection with, the performance of such design services, with limits of not less than ONE MILLION DOLLARS ($1,000,000).
5.4.2.1.4 Upon acceptance of the Project or any portion thereof, from each contractor, the Developer shall maintain Fire and Extended Coverage Insurance, excluding earthquake coverage, on the Project on a blanket basis or with an agreed amount clause in amounts not less than 100% of the replacement value of all portions of the Project so accepted.
5.4.2.2 During the construction of the Project, the Developer shall require that each contractor performing work on the Project maintain the following insurance coverage, as specified below, at all times during the performance of said work, or the Developer shall provide for such contractors “wrap” coverage, as specified below, at all times during the performance of said work:
5.4.2.2.1 The Developer shall maintain Builder’s Risk
Insurance to be written on an All Risk Completed Value form, in an aggregate amount equal to 100% of the completed insurable value of the Project or portion of the Project on which such contractor is performing work.
5.4.2.2.2 Each general contractor and each sub-contractor shall maintain Commercial General Liability Insurance with limits of not less than ONE MILLION DOLLARS ($1,000,000) per occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate to protect the Developer during the construction of the Project from claims involving bodily injury and/or death and damage to the property of others.
5.4.2.2.3 Each general contractor and each sub-contractor shall maintain Automobile Liability Insurance against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used in the performance of the contractor’s obligations with minimum limits for bodily injury and property damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such coverage can be provided with a combination of commercial automobile liability insurance and an excess or umbrella liability policy. Such automobile liability insurance shall be provided by a business or commercial vehicle policy.
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5.4.2.3 The insurance required in Section 5.4.2.15.4.2.1 and Section
5.4.2.25.4.2.2 above shall include endorsements naming the Additional Insureds as additional insured for liability arising out of this Agreement and any operation related to this Agreement.
5.4.2.4 Any insurance coverage required under this Agreement, with the exception of the Professional Liability (Errors and Omissions) Insurance referenced in Section
5.4.2.1.3 above, shall not be written on a “claims made” basis. The applicable certificate of insurance must clearly provide that the coverage is on an “occurrence” basis. The requirements of this Section 5.4.2.45.4.2.4 shall survive any expiration or termination of this Agreement and the recordation of the Grant Deed and any Certificate of Completion.
5.4.2.5 Receipt by the City of evidence of insurance that does not comply with the above requirements shall not constitute a waiver of the insurance requirements of this Agreement.
5.4.2.6 Subject to Section 5.4.2.45.4.2.4, all of the insurance coverage required under this Section 5.45.4 shall be maintained by the Developer or its contractors, as required by the terms of this Agreement, until the issuance of the Certificate of Completion and shall not be reduced, modified, or canceled without, at least, thirty (30) days prior written notice to the Developer. The Developer shall immediately obtain replacement coverage for any insurance policy that is terminated, canceled, non-renewed, or whose policy limits are exhausted or upon insolvency of the insurer that issued the policy.
5.4.2.7 All insurance to be obtained and maintained by the Developer under this Section 5.45.4 shall be issued by a company or companies listed in the then current “Best’s Key Rating Guide” publication with a minimum of an “A:VII” rating and be admitted to conduct business in the State of California by the State of California Department of Insurance.
5.4.2.8 The City will not accept self-insurance in satisfaction of the insurance requirements of this Section 5.45.4.
5.4.2.9 All insurance obtained and maintained by the Developer in satisfaction of the requirements of this Agreement shall be primary to and not contributing to any insurance maintained by the Additional Insureds.
5.4.2.10 Insurance coverage in the minimum amounts set forth in this Section 5.45.4 shall not be construed to relieve the Developer of any liability, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall it preclude the Additional Insureds from taking such other actions as are available to them under any other provision of this Agreement or otherwise at law.
5.4.3 Failure by the Developer to maintain all insurance coverage required by this Section 5.45.4 in effect shall be an Event of Default by the Developer. The City, at its sole option, may exercise any remedy available to them in connection with such an Event of Default.
Alternatively, the City may, at its sole option, purchase any such required insurance coverage and the City shall be entitled to immediate payment from the Developer for any premiums and associated costs paid by the City for such insurance coverage. Any election by the City to purchase or not to purchase insurance otherwise required to be carried by the Developer shall not relieve the Item 3B - Page 52
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Developer of its obligation to obtain and maintain the insurance coverage required by this Agreement.
ARTICLE VI
PROJECT FINANCING
6.1 Project Financing. Developer shall finance the development of the Project in accordance with the Project Budget. Further, City and Developer agree that the financing of the Project shall comply with all of the following:
6.1.1 Tax Credit Financing. To provide funds for the development and construction of the Project, Developer shall in good faith apply for and obtain an allocation of Tax Credits to finance a portion of the Project Costs. Developer shall use commercially reasonably efforts to submit applications for an allocation of Tax Credits by the first deadline following the Effective Date to submit an application for Tax Credits. If Developer does not receive the allocation of Tax Credits as a result of such application, the Developer agrees to use commercially reasonably efforts to submit applications for an allocation of Tax Credits for the next round of TCAC’s allocation meetings. If Developer does not receive the allocation of Tax Credits as a result of this second application, the Parties agree to meet and confer in good faith for a period of ninety (90) days to determine if a feasible and mutually acceptable alternate arrangement can be made to finance development and construction of the Project, or if there are changes that could be made to the application to enhance the likelihood of a successful application. If no agreement is reached by the Parties within such ninety (90) day period regarding the alternative courses of action described in the preceding sentence, this Agreement may be terminated upon fifteen (15) days’ notice to the other Party. However, if following such meet and confer period and no Party elects to terminate the Agreement, and unless the Parties have agreed to an alternative arrangement to finance the Project, Developer shall use commercially reasonably efforts to submit a third round of applications for an allocation of Tax Credits for the next round of TCAC’s allocation meetings.
If Developer does not receive the allocation of Tax Credits as a result of all three (3) rounds of applications, the Parties agree to meet and confer in good faith for a period of ninety (90) days to determine if a feasible and mutually acceptable alternate arrangement can be made to finance development and construction of the Project. If no agreement is reached by the Parties within such ninety (90) day period regarding the alternative courses of action described in the preceding sentence, this Agreement may be terminated upon fifteen (15) days’ notice to the other Parties.
Any agreement that is reached between the Parties on an alternative financing plan for the Project shall be memorialized in an implementation agreement to this Agreement. If Developer fails to make the required applications to TCAC, then the City or the Developer may terminate this Agreement upon fifteen (15) days’ notice to the other Party. Failure of Developer to obtain Tax Credits shall not constitute an Event of Default under the terms of this Agreement, unless due to the intentional misconduct of Developer.
Notwithstanding any contrary provision in this Section, Developer may submit an application to HCD for an award from the HCD Accelerator Fund in lieu of Tax Credits. In the event Developer obtains an HCD Accelerator Fund award in an amount sufficient to finance the proposed Project, Developer shall not be required to obtain a Tax Credit reservation. In the event the Parties waive Developer’s obligation to obtain a reservation of Tax Credits or an award from Item 3B - Page 53
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the HCD Accelerator Fund in lieu of Tax Credits prior to the Escrow Closing Date, Developer’s failure to receive an allocation of Tax Credits, or Developer’s inability to secure a Housing Accelerator Fund award by June 30, 2023, shall constitute an Event of Default permitting City to exercise its power of termination under Section 7.4 in order for title to the City Property to revert to the City. When applying for an award from the HCD Accelerator Fund, Developer shall be subject to the same limit on application attempts, meet-and-confer process, and grounds for termination applicable to Tax Credits described in this Section.
6.1.2 Other Major Funding Source. Developer may also satisfy its financing obligations under Section 6.1.16.1.1 by applying for funds from another major funding source such as the Multifamily Housing Program (MHP). When applying to anotherWhere the major funding source requires an application, Developer shall be subject to the same limit on application attempts, meet-and-confer process, and grounds for termination applicable to Tax Credits described in Section 6.1.16.1.1. Financing obligations under Section 6.1 may be satisfied by any funding source satisfactory to City.
6.1.3 Permanent LoanAdditional Funding. Prior to the Close of Escrow, Developer shall obtain for the City’s review and approval, which may be withheld or conditioned in City’s reasonable discretion and which shall not be unreasonably delayed, a conditional forward loan commitment for each Permanent Loan.In the event Developer is unable to obtain written award commitments sufficient to finance the proposed Project by the Escrow Closing Date, such additional funding award commitments will become a Post-Closing Condition under Section
3.12_to be satisfied no later than March 1, 2023. By way of example, such post-closing award commitments may include without limitation HCD Supplemental Accelerator funds, Permanent Local Housing Allocation (PLHA) funds, and housing vouchers.
6.1.4 City Financing. City has agreed to provide and Developer has agreed to accept a loan from the City in the amount of Three Million Eight Hundred Thousand Dollars plus an amount equal to the proceeds received by the City from SA Property sale (the “City Loan”) to be used by Developer to undertake predevelopment, development, acquisition, construction, and operation of the Project. The City Loan consists of (a) the City’s share of proceeds from the sale of the SA Property in the amount of Two Hundred Four Thousand Three Hundred Dollars ($204,300) (“SA Property Proceeds”), (b) funds in the amount of Two Million Four Hundred Thousand Dollars ($2,400,000), and (c) the Purchase Price of the City Property in the amount of One Million Four Hundred Thousand Dollars ($1,400,000) (“Land Loan”).
6.1.4.1 HHAP Funds. As a condition of receiving Homeless Housing, Assistance and Prevention (HHAP) Grant Program funds (“HHAP Funds”) from the City, the Developer agrees to use the funds in compliance with the HHAP Grant Program requirements as detailed in the HHAP Agreement with City attached as Exhibit J (“HHAP Agreement”), to satisfy all provisions that are applicable to the Developer as a “subrecipient” or “subgrantee” of HHAP funds (as those terms are used in the HHAP Agreement), and to fully cooperate with the City in meeting its obligations under the HHAP Agreement. For the avoidance of doubt, this Section
6.1.4.16.1.4.1 does not constitute a transfer or assignment of City’s rights, duties, or performance of the HHAP Agreement. Additionally, in accordance with Section 7.57.5 of this Agreement, the Developer shall indemnify, defend with counsel acceptable to the City, and hold the City harmless against any claims arising from Developer’s use of HHAP funds in violation of the terms of the Item 3B - Page 54
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HHAP Agreement or any other agreement between City and Developer governing Developer’s use of HHAP Funds. If the Business, Consumer Services, and Housing Agency exercises a remedy under Section 6 of Exhibit C of the HHAP Agreement to recover some or all of the HHAP Funds from the City for a breach of the HHAP Agreement, and the breach was caused by Developer, Developer shall be responsible for payment of those funds to the City. Pursuant to Section 12 of Exhibit C of the HHAP Agreement, Developer shall (a) perform all work in accordance with Federal, State, and Local housing and building codes, as applicable; (b) maintain at least the minimum State-required worker’s compensation for those who will perform the work or any part of it; (c) maintain, as required by law, unemployment insurance, disability insurance, and liability insurance in amount that is reasonable to compensate any person, firm or corporation who may be injured or damaged by City or Developer in performing the work or any part of it; and (d) agree to include all the terms of the HHAP Agreement in each subcontract.
6.1.4.2 City Loan Disbursement. Upon Developer’s receipt of funding commitments, including but not limited to a reservation of Tax Credits from CTCAC or an award from the HCD Accelerator Fund in lieu of Tax Credits, and written confirmation that Developer will receive No Place Like Home (NPLH) Program funds referenced in Section 3.2.1.33.2.1.3 of this Agreement, City will disburse the Predevelopment Component of Four Hundred Eighty Thousand Dollars ($480,000) of the City Loan to Developer to pay for or reimburse Developer’s predevelopment expenses, including purchase of the SA Property. The Predevelopment Component will not bear interest, will be a nonrecourse loan secured by assignment of the work product prepared with City Loan funds. If Developer does not proceed with the Project, the Predevelopment Component of the City Loan will be forgiven to the extent that Developer has expended or obligated funds for predevelopment expenses, and Developer provides reasonable evidence of the expenditure or obligation of predevelopment expenses and will transfer all of the work product prepared with City Loan funds to City. If Developer does not proceed to develop the Project, to the extent that Developer has received City Loan funds and has not expended or obligated those funds for predevelopment expenses, Developer shall pay those unexpended or unobligated funds to City concurrently with transfer to City of all work product prepared with City Loan funds. The form of City Loan documents applicable to the Predevelopment Component prior to transfer of the City Property, including a Predevelopment, Construction and Permanent Loan Agreement (the “City Loan Agreement”) and a Predevelopment Component Note are attached to this Agreement as Exhibit H.
If Developer proceeds to develop the Project consistent with the Schedule of Performance, Developer shall execute the Note and the City will cancel the Predevelopment Component Note.
The Note will include the Predevelopment Component of Four Hundred Eighty Thousand Dollars ($480,000), the Land Loan of One Million Four Hundred Thousand Dollars ($1,400,000), SA Property Proceeds in the amount of Two Hundred Four Thousand Three Hundred Dollars ($204,300), the HHAP Funds, and other funds from the City for a total loan amount of Four Million Four Million Four Thousand Three Hundred Dollars ($4,004,300). The City Loan will be evidenced by the Note, secured by the Deed of Trust, and subject to the City Regulatory Agreement, which are attached to this Agreement under Exhibit I. Subject to the conditions set forth in the City Loan Agreement, the City will disburse the Development Component funds to Developer as follows: (1) Upon transfer of the City Property, City will disburse One Million Two Hundred Thousand Dollars ($1,200,000); (2) at Close of Escrow the Land Loan for the Purchase Price of One Million Four Thousand Dollars ($1,400,000) will be evidenced by the Developer’s Item 3B - Page 55
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execution of the Note; (3) at Fifty Percent (50%) completion of the Project improvements, City will disburse Six Hundred Thousand Dollars ($600,000) in HHAP funds; (4) upon the City’s issuance of a Certificate of Occupancy for the improvements, City will disburse the remaining One Hundred Twenty Thousand Dollars ($120,000) to the Developer, a portion of which shall be HHAP funds; and (5), provided that Developer has received a reservation of Tax Credits from CTCAC, an award from the HCD Accelerator Fund in lieu of Tax Credits, or funds from an alternative major funding source pursuant to Section 6.1.2, within thirty (30) days after City’s receipt of SA Property Proceeds from the Riverside County Auditor-Controller, City will disburse the City’s proceeds to Developer.
6.2 Project Budget. By its execution of this Agreement, the City has given its approval to the Project Budget, which supersedes the Original Project Budget. While the Project Budget has been prepared based on the best, good faith estimate of Developer of the costs which are likely to be incurred for the Project, the Parties recognize that events and circumstances not currently contemplated, some of which are outside of the control of the Parties, could result in changes in the Project Costs, necessitating changes in the Project Budget. To the extent that Developer is required to make any material changes to the Project Budget, Developer shall immediately submit a revised Project Budget to the City for review and approval, which review and approval shall not be unreasonably withheld, conditioned or delayed, as to the sufficiency of the financing secured by Developer to meet the revised Project Costs. A material change is a change or cumulative changes that causes the total Project Costs, or any line item in the Project Budget with a cost exceeding Fifty Thousand Dollars ($50,000) to increase or decrease by more than ten percent (10%) from what is shown in the Project Budget.
6.3 Only Permitted Exceptions. Developer shall not record and shall not allow to be recorded against the Site any Security Instrument, lien or other encumbrance that is not a Permitted Exception. Developer shall remove or cause to be removed (or provide title insurance in form and substance reasonably acceptable to the City and issued by a title insurance company reasonably acceptable to the City, insuring the priority of the Deed of Trust securing the City Loan as superior to such lien, with such title insurance being in the minimum amount of the outstanding principal and interest under the City Loan plus 125% of the amount of the lien claim or providing a statutory bond resulting in removal of such lien) any non-Permitted Exception made or recorded against the Site or shall assure the complete satisfaction of any such non-Permitted Exception to the satisfaction of the City, in the City’s sole and absolute discretion. The covenants of Developer set forth in this Section regarding the placement of encumbrances on the Site shall run with the land of the Site and bind successive owners of the Site, until recordation (or deemed issuance) of the Certificate of Completion for the Project.
6.4 City Right to Discharge Prohibited Encumbrances. After sixty (60) calendar days’ Notice to Developer of a non-Permitted Exception and provided that Developer has not caused such non-Permitted Exception to be removed (or insured against or bonded against) pursuant to Section 6.36.3, the City shall have the right, but not the obligation, to satisfy or remove any non-Permitted Exception against the Property or the Project and receive reimbursement from Developer for any reasonable amounts paid or incurred in satisfying or removing any such nonPermitted Exception, upon demand. Any reasonable amount expended by the City to discharge a non-Permitted Exception that is not reimbursed to the City by Developer within thirty (30) calendar days following written demand for payment from the City shall accrue interest at an Item 3B - Page 56
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annual rate equal to the lesser of eight percent (8%) per annum or the maximum highest rate of interest allowed by law under the circumstances, until paid in full. Nothing in this Section 6.46.4, though, shall require Developer to pay or make provisions for the payment of any tax, assessment, lien or charge that Developer is in the process of contesting the validity or amount thereof, in good faith, and so long as such contest shall not subject all or any portion of the Site to forfeiture or sale.
6.5 Rights of Lender and City Regarding Permitted Security Instruments.
6.5.1 Notice of Liens. The Developer shall promptly notify the City of any Security Instrument or lien asserted against or attached to all or any portion of the Project or the Site, other than as listed in Section 3.73.7, prior to the date of issuance of a Certificate of Completion for the Project, whether by voluntary act of Developer or otherwise; provided, however, that no notice of filing of preliminary notices or mechanic’s liens need be given by Developer to the City, prior to suit being filed to foreclose any such mechanic’s lien.
6.5.2 Notice of Default to Lenders. Whenever the City delivers any notice of default to Developer under this Agreement, the City shall send a copy of such notice of default to each Lender holding a Permitted Security Instrument of which the City has received notice and a contact address for transmittal of such notices. Each Lender receiving a copy of any such notice of default shall have the right, at its option, to commence the cure or remedy of any default of Developer set forth in such notice and to diligently and continuously proceed with such cure or remedy such default, within the cure period allowed to Developer under this Agreement, plus an additional sixty (60) days. The City shall accept such performance by a Lender with the same force and effect as if furnished by Developer. If such default can only be remedied or cured by the Lender upon obtaining possession of the Site, the City shall allow the Lender an opportunity to obtain possession with diligence and continuity through exercise of remedies under such Lender’s Permitted Security Instrument and to remedy or cure such default within ninety (90) days after obtaining possession of the Site. If the default reasonably requires more than ninety (90) days to cure, however, then the time available to a Lender to cure pursuant to this Section 6.56.5 shall be the reasonable time required to complete such cure, as long as the Lender has commenced the cure of the default within such ninety (90) day period and diligently pursues the cure to completion. During such extension of time, the City shall not terminate this Agreement or exercise other remedies under this Agreement by reason of such default. All Developer specific defaults shall be deemed cured upon Transfer of Developer’s interest in the entire Site to the Lender, its assignee or nominee, pursuant to exercise of remedies under a Permitted Security Instrument. In addition, any Lender properly completing the Project with the consent of the City (pursuant to the process set forth below in this Section 6.5.26.5.2) shall be entitled, upon written request made to the City, to a Certificate of Completion from the City. Nothing contained in this Agreement shall be deemed to permit, authorize or require any Lender to undertake or continue the construction or installation of any portion of the Project (beyond the extent necessary to conserve or protect improvements or construction already made) prior to or after acquiring title to or possession of the entire Site, without expressly assuming Developer’s obligations under this Agreement by written agreement reasonably satisfactory to the City, in which the Lender agrees to complete the Project in the manner provided in this Agreement, subject to time extensions as reasonably required by the Lender. Any Lender desiring to complete the Project must provide the City with evidence reasonably satisfactory to the City that the Lender has the qualifications (or will engage one or Item 3B - Page 57
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more licensed contractor(s) or consultant(s) with such qualifications) and financial capability necessary to perform such obligations.
6.5.3 No Termination of Permitted Security Instruments by Default. An Event of Default by Developer under this Agreement shall not defeat or render invalid the lien of any Permitted Security Instrument made in good faith and for value as to all or any part of the Site, whether or not the Lender is subordinated to this Agreement; but unless otherwise provided in this Agreement, this Agreement shall be binding and effective against any owner of the Site, whose title thereto is acquired pursuant to exercise of remedies under a Permitted Security Instrument or from a person or entity exercising any such remedies.
6.5.4 Lender Rights on Termination or Modification. No termination of this Agreement shall be binding upon a Lender unless the termination occurs after notice to such Lender and such Lender’s failure to cure all then existing defaults under this Agreement (except any Developer specific defaults), pursuant to this Section 6.56.5, or with such Lender’s prior written consent. No modification of this Agreement that materially affects the rights of a Lender shall be binding upon the Lender without its prior written consent.
6.5.5 No Construction Obligation of Lender. A Lender shall in no way be obligated by the provisions of this Agreement to construct or complete the development of the Project or to guarantee such construction or completion, but may do so pursuant to and in accordance with this Section 6.56.5. Nothing in this Agreement shall be deemed to construe, permit, or authorize any Lender to devote all or any portion of the Site to any uses, or to construct any improvements thereon, other than those uses or the Project provided for or authorized by this Agreement.
6.5.6 City Right to Cure Obligations. In the event of a default by Developer under any Permitted Security Instrument, prior to the date of issuance of a Certificate of Completion for the Project, where the Lender has not exercised its option to complete the Project under Section 6.5.36.5.3, the City may cure the default of Developer under the applicable Permitted Security Instrument, but is under no obligation to do so, prior to completion of any sale or foreclosure of all or any portion of the Site under the applicable Permitted Security Instrument.
The City shall be entitled to reimbursement from Developer of all costs and reasonable expenses incurred by the City in curing any default of Developer under any Permitted Security Instrument, under demand. Any amount expended by the City to cure a default of Developer under any Permitted Security Instrument that is not reimbursed to the City, by Developer within thirty (30) calendar days after notice of such amount to Developer, shall accrue interest at an annual rate equal to the lesser of eight percent (8%) per annum or the maximum highest rate of interest allowed by law under the circumstances until paid in full.
6.5.7 Foreclosure of Permitted Security Instrument. Foreclosure of any Permitted Security Instrument, whether by judicial proceedings or by power of sale, or any conveyance by deed in lieu of foreclosure, shall not require the consent of the City or constitute a default under this Agreement.
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6.6 Successor Agency Property Rebate. As part of disbursements made pursuant to Section 6.1.4.26.1.4.2, the City shall remit to Developer the City’s share of sale proceeds from Developer’s purchase of the SA Property.
ARTICLE VII
DEFAULTS, REMEDIES, AND TERMINATION
7.1 Defaults - General. Subject to any extensions of time provided for in this Agreement, failure or delay by any Party to perform any term or provision of this Agreement shall constitute an “Event of Default” under this Agreement; provided, however, that if a Party otherwise in default commences to cure, correct or remedy such default, within thirty (30) calendar days after receipt of written notice from the injured Party specifying such default, and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such Party shall not be deemed to be in default under this Agreement and no Event of Default shall be deemed to have occurred; provided, however, that if the default reasonably requires more than thirty (30) days to cure, then the time available to the Party otherwise in default to cure pursuant to this Section 7.17.1 shall be the reasonable time required to complete such cure, as long as the Party otherwise in default has commenced the cure of the default within such thirty (30) day period and diligently pursues the cure to completion.
Any notice and cure obligation stated herein that cannot be completed within the specified time periods due to insufficient time remaining before the Close of Escrow shall have no effect. All other Events of Default that occur after the Closing Date and before issuance of the Certificate of Completion will be subject to this Section’s notice and cure requirements.
7.1.1 The injured Party shall give written notice of default to the Party in default, specifying the default complained of by the non-defaulting Party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default.
7.1.2 Any failure or delays by any Party in asserting any of their rights and/or remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by any Party in asserting any of its rights and/or remedies shall not deprive that Party of its right to institute and maintain any actions or proceedings that it may reasonably deem necessary to protect, assert or enforce any such rights or remedies.
7.1.3 In addition to other acts or omissions of the Developer that may legally or equitably constitute a default or breach of this Agreement, the occurrence of any of the following specific events, prior to the issuance of a Certificate of Completion for the Project, shall constitute an “Event of Default” under this Agreement and shall not be subject to the notice and cure provisions of Section 7.1:
7.1.3.1 Any material default by the Developer under any Permitted Security Instrument for any purpose or reason that remains uncured following any applicable notice and expiration of any applicable cure period under such Permitted Security Instrument.
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7.1.3.2 Any representation, warranty or disclosure made to the City by the Developer regarding this Agreement or the Project is materially false.
7.1.3.3 There occurs any event of dissolution, reorganization or termination of the Developer that adversely and materially affects the operation or value of the Site or the Project, and such event is not corrected within five (5) business days following written notice of such event from the City to the Developer.
7.1.3.4 The Developer Transfers its interest in this Agreement, the Site, or the Project, or any portion thereof, whether voluntarily or involuntarily or by operation of law, in violation of the terms and conditions of this Agreement and such action is not cured within the period prescribed in Section 8.2.
7.1.3.5 The Developer becomes insolvent or a receiver is appointed to conduct the affairs of the Developer under state or federal law.
7.1.3.6 The Developer’s legal entity status authorized by the Secretary of State of the State of California to transact business in California is suspended or terminated and such event is not corrected within five (5) business days following written notice of such event from the City to Developer.
7.2 DEVELOPER’S ELECTION RE: SPECIFIC ENFORCEMENT OF
AGREEMENT OR WAIVER OF RIGHT TO SPECIFIC PERFORMANCE AND LIMITATION ON RECOVERY OF DAMAGES PRIOR TO CLOSE OF ESCROW. UPON
THE OCCURRENCE OF AN EVENT OF DEFAULT PERTAINING TO THE CONVEYANCE
OF THE PROPERTY BY THE CITY UNDER THIS AGREEMENT PRIOR TO CLOSE OF
ESCROW, THE DEVELOPER SHALL, AS ITS SOLE AND EXCLUSIVE REMEDY, HAVE
THE RIGHT TO EXERCISE ONE OF THE ALTERNATIVE REMEDIES DESCRIBED IN SECTIONS 7.2.17.2.1 AND 7.2.27.2.2. THE DEVELOPER’S ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
7.2.1 WAIVER OF RIGHT TO SPECIFIC PERFORMANCE AND
LIMITATION ON RECOVERY OF DAMAGES. THE DEVELOPER MAY WAIVE THE REMEDIES SET FORTH IN SECTION 7.2.27.2.2 AND MAY CANCEL THE ESCROW PURSUANT TO SECTION 3.103.10, AND UPON CANCELLATION OF THE ESCROW, THE
DEVELOPER SHALL BE RELIEVED OF ANY OBLIGATION UNDER THIS AGREEMENT
TO PURCHASE OR ACCEPT TITLE TO THE PROPERTY AND ANY SUCH ESCROW
CANCELLATION SHALL BE WITHOUT ANY LIABILITY OF THE DEVELOPER TO THE CITY OR ANY OTHER PERSON ARISING FROM SUCH ACTIONS. THE DEVELOPER
SHALL BE LIMITED TO RECOVERING ANY AMOUNTS ACTUALLY EXPENDED BY
THE DEVELOPER IN REASONABLE RELIANCE ON THIS AGREEMENT PRIOR TO THE
DATE OF THE OCCURRENCE OF THE EVENT OF DEFAULT BY THE CITY, NOT TO EXCEED TWENTY-FIVE THOUSAND DOLLARS ($25,000); PROVIDED HOWEVER IF THE EVENT OF DEFAULT IS THE CITY’S FAILURE TO FUND THE CITY LOAN WHEN
DEVELOPER HAS PERFORMED ALL OF ITS OBLIGATIONS THEN REQUIRED TO BE
PERFORMED BY DEVELOPER, THE DEVELOPER SHALL BE ENTITLED TO RECOVER
ITS REASONABLE DOCUMENTED DIRECT COSTS INCURRED FOR THE PROJECT Item 3B - Page 60
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PRIOR TO THE DATE THE EVENT OF DEFAULT OCCURS FROM THE CITY. THE
DEVELOPER WAIVES ANY RIGHT TO RECOVER ANY OTHER SUMS FROM THE CITY
ARISING FROM AN EVENT OF DEFAULT BY THE CITY PRIOR TO THE CLOSE OF ESCROW. THE DEVELOPER ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS SECTION 7.2.17.2.1, WHICH CIVIL CODE SECTION READS AS FOLLOWS:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
THAT THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE AND THAT, IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.”
BY INITIALING BELOW, THE DEVELOPER KNOWINGLY
AND VOLUNTARILY WAIVES THE PROVISIONS OF
SECTION 1542 SOLELY IN CONNECTION WITH THE
WAIVERS AND RELEASES OF THIS SECTION 7.2.17.2.1.
Developer’s Initials
IN CONNECTION WITH THE WAIVERS IN THIS SECTION 7.2.17.2.1, THE
DEVELOPER FURTHER WAIVES THE RIGHT TO RECORD A NOTICE OF PENDENCY
OF ACTION AGAINST ALL OR ANY PORTION OF THE PROPERTY EXCEPT
DEVELOPER MAY RECORD SUCH A NOTICE IN CONNECTION WITH ANY SUIT FOR
SPECIFIC PERFORMANCE PERMITTED HEREUNDER IN THE EVENT DEVELOPER
ELECTS NOT TO WAIVE ITS RIGHT TO SEEK SPECIFIC PERFORMANCE UNDER SECTION 7.2.27.2.2.
7.2.2 SPECIFIC PERFORMANCE. THE DEVELOPER MAY WAIVE
THE REMEDIES SET FORTH IN SECTION 7.2.17.2.1 AND, IN ACCORDANCE WITH CIVIL CODE SECTION 3384, ET SEQ., INSTITUTE AN ACTION AGAINST THE CITY FOR
SPECIFIC PERFORMANCE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT
WHICH WERE TO HAVE BEEN COMPLETED BY THE CITY PRIOR TO THE CLOSE OF ESCROW.
7.3 Legal Actions. Except as otherwise provided by Section 7.1, any Party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy available to that Party under this Agreement or at law or in equity.
Such legal actions must be instituted in the Superior Court of the State of California in and for the County of Riverside, California, in any other appropriate court within the County of Riverside, California. The procedural and substantive laws of the State of California shall govern the interpretation and enforcement of this Agreement, without regard to conflicts of laws principles.
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The Parties acknowledge and agree that this Agreement is entered into, is to be fully performed in and relates to real property located in the City of Palm Springs, County of Riverside, California.
7.4 City Power of Termination Regarding the Property.
7.4.1 The City hereby reserves a power of termination pursuant to Civil Code Sections 885.010, et seq., exercisable by the City, in its sole discretion, upon thirty (30) calendar days written notice to the Developer referencing this Section 7.47.4, to terminate the fee interest of the Developer in the City Property and/or any improvements to the Site and revest such fee title in the City and take possession of all or any portion of such real property and improvements, without compensation to the Developer, upon the occurrence of a Default by the Developer due to Developer’s failure to have received a Certificate of Occupancy by the end of the Term of this Agreement. For avoidance of doubt, no other Default or breach by Developer under this Agreement shall trigger the procedure set forth in this Section 7.47.4. However, Developer’s failure to satisfy a Post-Closing Condition, though not a Default for purposes of this Section 7.4, will require Developer to transfer the Site to City.
7.4.2 The thirty (30) calendar day written notice specified in Section
7.4.17.4.1 shall specify the Default by the Developer triggering the City’s exercise of its power of termination and City shall provide a copy of the written notice to all other lienholders and the limited partner or limited partners of Developer. The City shall proceed with its remedy set forth in Section 7.4.17.4.1 only if the Developer continues in default for a period of sixty (60) calendar days following such notice or, upon commencing to cure such default, fails to diligently and continuously prosecute said cure to satisfactory conclusion.
7.4.3 The rights of the City under this Section 7.47.4 shall be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit:
(a) Each Lien recorded against the Site and specifically authorized by this Agreement as a Permitted Transfer;
(b) Any leases, declarations of covenants, conditions and restrictions, easement agreements or other recorded documents or interests applicable to the Site and specifically authorized by this Agreement as a Permitted Transfer.
7.4.4 Any and all lienholders and Developer’s limited partner or limited partners (other than any limited partner controlled by Developer) shall have the right to cure Developer’s Default that triggers City’s rights under this Section 7.47.4, for an additional sixty (60) calendar days after Developer fails to cure the Default. If cure is not possible within the sixty (60) calendar day period after Developer fails to cure the Default, the performance by lienholders and Developer’s limited partner or limited partners shall be extended in accordance with the provisions of Sections 6.56.5 and/or 7.17.1of this Agreement, as applicable. As part of any cure by a lienholder or Developer’s limited partner or limited partners, removal and replacement of the general partner of Developer pursuant to Section 8.2 is a Permitted Transfer under this Agreement.
7.4.5 Upon the City’s exercise of its power of termination pursuant to this Section 7.47.4, the Developer or its successors or assigns shall convey by grant deed to the City Item 3B - Page 62
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title to the Property, as specified in the City’s notice pursuant to Section 7.4.17.4.1, and all improvements thereon, in accordance with Civil Code Section 1109, as such code section may hereafter be amended, renumbered, replaced or substituted. Such conveyance shall be duly acknowledged by the Developer and a notary in a manner suitable for recordation. The City may enforce its rights pursuant to this Section 7.47.4 by means of an injunctive relief or forfeiture of title action filed in any court of competent jurisdiction.
7.4.6 Upon the revesting in the City of title to the Property, whether by grant deed or court decree, subject to any rights of lienholders or Developer’s limited partner or limited partners, the City shall exercise its reasonable good faith efforts to resell the Property at its then fair market value, as soon and in such manner as the City shall, in its sole discretion, find feasible and consistent with the objectives of the City’s General Plan, to a qualified and responsible person or persons (as reasonably determined by the City) who will assume the Developer’s obligations to begin and/or complete and/or operate that portion of the Project located on the Property, or such other replacement development acceptable to the City, in its sole and absolute discretion. Upon any such resale of the Property (or any portion thereof), the proceeds to the City from such sale shall be applied as follows:
(a) First, to pay any and all amounts required to release/reconvey any Lien recorded against all or any portion of the Property; and (b) Second, to reimburse the City on its own behalf or on behalf of the City for all actual internal and third-party costs and expenses previously or currently incurred by the City related to the Property, the Project, or this Agreement, including, but not limited to, customary and reasonable fees or salaries to third-party personnel engaged in such actions, in connection with the recapture, management and resale of the Property or any part thereof; all taxes, assessments and utility charges paid by the City with respect to the Property or portion thereof; any payment made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations incurred by the Developer with respect to the acquisition of the Property or the construction of the Project; and amounts otherwise owing to the City by the Developer or its successors or assigns pursuant to the terms of this Agreement; and
(c) Third, to the extent that any proceeds from such resale are, thereafter, available, taking into account any prior encumbrances with a claim thereto, to reimburse the Developer, or its successors in interest to the equal to the sum of: (1) the Purchase Price; and (2) the third-party costs actually incurred and paid by the Developer regarding the development of the Project located on the Property, including, but not limited to, pro rata costs of carry, taxes, and other items as set forth in a cost certification to be made by the Developer to the City prior to any such reimbursement, which certification shall be subject to the City’s reasonable approval; provided, Item 3B - Page 63
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however, that the Developer shall not be entitled to reimbursement for any expenses to the extent that such expenses relate to any loans, Liens or other encumbrances that are paid by the City pursuant to the provisions of sub-sections 7.4.6(a) or (b)(b).6(b)(b) above. (d) Any portion of the proceeds from the resale of the Property remaining after the foregoing applications shall be retained by the City as its sole and exclusive property.
7.4.7 IMMEDIATELY FOLLOWING THE THIRTY (30) PERIOD
SPECIFIED IN SECTION 7.4.17.4.1, ABOVE, THE CITY, ITS EMPLOYEES AND AGENTS
SHALL HAVE THE RIGHT TO REENTER AND TAKE POSSESSION OF THE PROPERTY
AND ANY IMPROVEMENTS THEREON, WITHOUT FURTHER NOTICE OR COMPENSATION TO THE DEVELOPER. BY INITIALING BELOW, THE DEVELOPER
HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY
AND ALL RIGHTS THAT THE DEVELOPER MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 791 AND CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1162,
AS THOSE STATUTES MAY BE AMENDED, REPLACED, RENUMBERED OR
SUBSTITUTED, OR UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
Developer’s Initials
7.4.8 THE DEVELOPER ACKNOWLEDGES AND AGREES THAT THE
CITY’S EXERCISE OF ITS POWER OF TERMINATION AND RIGHT OF REENTRY PURSUANT TO THIS SECTION 7.47.4 MAY WORK A FORFEITURE OF THE ESTATE IN
THE DEFAULTED PORTION OF THE PROPERTY CONVEYED TO THE DEVELOPER THROUGH THE GRANT DEED. THE DEVELOPER HEREBY EXPRESSLY WAIVES, TO
THE MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL EQUITABLE AND
LEGAL DEFENSES THAT THE DEVELOPER MAY HAVE TO SUCH FORFEITURE
INCLUDING BUT NOT LIMITED TO THE DEFENSES OF LACHES, WAIVER, ESTOPPEL, SUBSTANTIAL PERFORMANCE OR COMPENSABLE DAMAGES. THE DEVELOPER
FURTHER EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW,
ANY AND ALL RIGHTS AND DEFENSES THAT THE DEVELOPER MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3275 OR ANY OTHER STATUTE OR COMMON LAW PRINCIPLE OF SIMILAR EFFECT. THE DEVELOPER ACKNOWLEDGES THAT
THE TERMS AND CONDITIONS OF THIS AGREEMENT REFLECT THE POSSIBILITY OF FORFEITURE BY VIRTUE OF THE EXERCISE OF THE CITY’S POWER OF TERMINATION PROVIDED IN THIS SECTION 7.47.4 AND FURTHER ACKNOWLEDGE
THAT IT HAS RECEIVED INDEPENDENT AND ADEQUATE CONSIDERATION FOR ITS
WAIVER AND RELINQUISHMENT OF RIGHTS AND REMEDIES PURSUANT TO SECTION 7.4.77.4.7. AND THIS SECTION 7.4.87.4.8.
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Developer’s Initials
7.4.9 The provisions of this Section 7.47.4 shall terminate and expire upon the Completion of Construction.
7.5 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties set forth in this ARTICLE VIIARTICLE VII are non-exclusive and cumulative, and the exercise by any Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party(ies).
7.6 Developer Indemnification of the City. In addition to any other specific indemnification or defense obligations of the Developer set forth in this Agreement, the Developer agrees to indemnify, defend (upon written request by the City and with counsel reasonably acceptable to the City) and hold harmless the Indemnified Parties, from any and all losses, liabilities, charges, damages, claims, liens, causes of action, awards, judgments, costs and expenses, including, but not limited to reasonable attorney’s fees of counsel retained by the Indemnified Parties, expert fees, costs of staff time, and investigation costs, of whatever kind or nature (“Claims”), that are in any manner directly or indirectly caused, occasioned or contributed to in whole or in part, through any act, omission, fault or negligence, whether active or passive, of the Developer or the Developer’s officers, agents, employees, independent contractors or subcontractors of any tier, relating in any manner to this Agreement, any work to be performed by the Developer related to this Agreement, the Property, or the Project, or any authority or obligation exercised or undertaken by the Developer under this Agreement, except to the extent caused by the active negligence or willful misconduct of any of the Indemnified Parties. Without limiting the generality of the foregoing, the Developer’s obligation to indemnify the Indemnified Parties shall include injury or death to any person or persons, damage to any property, regardless of where located, including the property of the Indemnified Parties, any workers’ compensation or prevailing wage determination, claim or suit or any other matter arising from or connected with any goods or materials provided or services or labor performed regarding the Project or the Property on behalf of the Developer by any person or entity.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Incorporation of Recitals. The Recitals of fact set forth preceding this Agreement are true and correct and are incorporated into this Agreement in their entirety by this reference.
8.2 Restrictions on Transfers. The Developer acknowledges that the qualifications and identity of the Developer are of particular importance to the City. The Developer further recognizes and acknowledges that the City has relied and is relying on the specific qualifications and identity of the Developer in entering into this Agreement with the Developer and, as a consequence, Transfers are permitted only as expressly provided in this Agreement. The Item 3B - Page 65
I -
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Developer shall promptly notify the City in writing of any and all changes whatsoever in the identity of the business entities or individuals either comprising or in Control of the Developer, as well as any and all changes in the interest or the degree of Control of the Developer by any such person, of which information the Developer or any of its partners, members or officers are notified or may otherwise have knowledge or information.
8.2.1 Except as expressly permitted in this Agreement, the Developer represents to the City that it has not made and agrees that it will not make or create, or suffer to be made or created, any Transfer other than a Permitted Transfer, either voluntarily, involuntarily or by operation of law, until after the recordation of a Certificate of Completion for the Project subject to the Transfer; provided, however, that the City may approve in its reasonable discretion, Transfers other than Permitted Transfers prior to the recordation of a Certificate of Completion.
In deciding whether to approve or disapprove any proposed Transfer, the City may consider the proposed transferee’s financial strength and the experience of the proposed transferee and its senior management in undertaking and successfully completing projects of a similar type and size as the Project or that portion of the Project proposed to be transferred. Any Transfer made in contravention of this Section 8.28.2 shall be voidable at the election of the City and this Agreement may be terminated by the City or the City may exercise any other remedy available to the City under the terms of this Agreement, provided, however, that (i) the City shall first notify the Developer in writing of its intention to terminate this Agreement or to exercise any other remedy, and (ii) the Developer shall have twenty (20) calendar days following its receipt of such written notice to commence and, thereafter, diligently and continuously proceed to cure the default of the Developer and submit evidence of the initiation and satisfactory completion of such cure to the City, in a form and substance reasonably satisfactory to the City.
8.2.2 The Developer shall provide the City no less than thirty (30) days prior written notice of any proposed Permitted Transfer which the Developer desires to enter into prior to the recordation of a Certificate of Completion for the Project subject to the Transfer, other than a Permitted Transfer for which no notice shall be required. The Developer shall have the burden of demonstrating to the City’s reasonable satisfaction that the proposed Permitted Transfer meets the conditions and requirements of this Agreement with respect to Permitted Transfers.
8.2.3 Anything in this Agreement to the contrary notwithstanding, the restrictions and prohibitions on Transfers contained in this Section 8.28.2 shall terminate upon issuance of a Certificate of Completion for the Project.
8.3 Notices, Demands and Communications Between the Parties. Any and all notices, demands or communications submitted by any Party to another Party pursuant to or as required by this Agreement shall be proper, if in writing and dispatched by messenger for immediate personal delivery, by a nationally recognized overnight courier service that provides a receipt with the time and date of delivery, or by registered or certified United States Mail, postage prepaid, return receipt requested, to the principal office of the City or the Developer, as applicable, as designated in Section 8.3.18.3.1. Such written notices, demands or communications may be sent in the same manner to such other addresses as either Party may from time to time designate.
Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is delivered by personal delivery, on the date of delivery by Item 3B - Page 66
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a nationally recognized overnight courier service or three (3) calendar days after it is placed in the United States Mail, as provided in this Section 8.38.3.
8.3.1 The following are the authorized addresses for the submission of notices, demands or communications to the Parties:
TO DEVELOPER: Aloe Palm Canyon, L.P.
c/o West Hollywood Community Housing
Corporation
7530 Santa Monica Blvd
West Hollywood, CA 90046
Attention: Jesse Slansky, President & CEO (T)
(323) 650-8771
COPY TO: Gubb & Barshay LLP
505 14th Street, Suite 450
Oakland, CA 94612
Attention: Sarah C. PerezNicole Kline
(T) (415) 781-6600 Ext. 4
TO CITY:
COPY TO:
City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
Attn.: City Manager
(T) (760) 322-8362
Best Best & Krieger, LLP
18101 Von Karman Ave, Suite 1000
Irvine, CA 92614
Attention: Elizabeth Wagner Hull
(T) (949) 263-2600
8.4 Conflict of Interest. No member, official or employee of the City, having any conflict of interest, direct or indirect, related to this Agreement, the Property, or the development or operation of the Project shall participate in any decision relating to this Agreement. The Parties represent and warrant that they do not have knowledge of any such conflict of interest.
8.5 Warranty Against Payment of Consideration for Agreement. The Developer 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. Third parties, for the purposes of this Section 8.58.5, shall not include persons to whom fees are paid for professional services, if rendered by attorneys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer.
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8.6 Non-liability of City, Officials and Employees. No member, official or employee of the City shall be personally liable to the Developer, or any successor in interest of the Developer, in the event of any default or breach by the City under this Agreement or for any amount that may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement, except as may arise from the gross negligence or willful acts of such member, official or employee.
8.7 Unavoidable Delay; Extension of Time of Performance. Subject to specific provisions of this Agreement, performance by any Party under this Agreement shall not be deemed, or considered to be, in default where any such default is due to an Unavoidable Delay that is not attributable to the fault of the Party claiming an extension of time to perform. An extension of time for any Unavoidable Delay shall be for the period of the Unavoidable Delay and shall commence to run from the date of occurrence of the Unavoidable Delay, if the Party asserting the existence of the Unavoidable Delay provides the other Party with written notice of the occurrence of the Unavoidable Delay, within thirty (30) days of the commencement of such asserted Unavoidable Delay. Otherwise, the extension of time for an Unavoidable Delay shall commence on the date of receipt of written notice of the occurrence of the Unavoidable Delay by the Party not requesting an extension of time to perform due to such Unavoidable Delay.
8.7.1 The Parties expressly acknowledge and agree that changes in either general economic conditions or changes in the economic assumptions of either of them that may have provided a basis for entering into this Agreement and that occur at any time after the execution of this Agreement, do not constitute an Unavoidable Delay and do not provide any Party with grounds for asserting the existence of an Unavoidable Delay in the performance of any covenant or undertaking arising under this Agreement. Each Party expressly assumes the risk that changes in general economic conditions or changes in such economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the continued performance of such Party under this Agreement.
8.8 Inspection of Books and Records. The City shall have the right at all reasonable times, at the City’s cost and expense, to inspect the books and records of the Developer pertaining to the Site and/or the Project. The Developer shall also have the right at all reasonable times, at the Developer’s sole cost and expense, to inspect the books and records of the City pertaining to the Property and/or the Project, to the extent relevant to the Developer’s obligations under this Agreement. Nothing in this Section 8.88.8 or elsewhere in this Agreement shall, however, constitute a waiver or modification of any right or privilege which any Party may have with respect to any document, statement, or other record, including, without implied limitation, the attorneyclient privilege, the attorney-work product privilege, any privilege arising under any state or federal evidentiary code or rule, or any privilege or exclusionary right arising under any state or federal freedom of information or public records disclosure law.
8.9 Real Estate Commissions. The City shall not be liable for any real estate commissions, brokerage fees or finder fees that may arise from or be related to this Agreement.
The Developer shall pay any fees or commissions or other expenses related to its retention or employment of real estate brokers, agents or other professionals.
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8.10 Binding on Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns.
8.11 Entire Agreement. This Agreement shall be executed in three (3) duplicate originals, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement includes ___ pages (exclusive of signature pages) and ten (10) exhibits, that constitute the entire understanding and agreement of the Parties regarding the Property, the Project, and the other subjects addressed in this Agreement.
8.11.1 This Agreement integrates all of the terms and conditions mentioned in this Agreement or incidental to this Agreement, and supersedes all negotiations or previous agreements between the Parties with respect to the City Property, the Project, and the other subjects addressed in this Agreement.
8.11.2 None of the terms, covenants, agreements or conditions set forth in this Agreement shall be deemed to be merged with any deed conveying title to the City Property and this Agreement shall continue in full force and effect before and after such conveyances.
8.11.3 All waivers of the provisions of this Agreement and all amendments to this Agreement must be in writing and signed by the authorized representative(s) of all Parties.
8.12 Execution of this Agreement. Following execution ofT three (3) originals of this Agreement shall be executed by the authorized representative(s) of the Developer and promptly deliveredy of such originals, thereafter , to the City, accompanied by an official action of the governing body of the Developer authorizing the individuals executing this Agreement on behalf of the Developer to execute and perform this Agreement, in form and substance acceptable to the City, this Agreement shall be subject to the review and approval by the City Council, in its sole and absolute discretion, no later than forty-five (45) calendar days after such date of delivery to the City. If the City has not approved, executed, and delivered an original of this Agreement to the Developer within the foregoing time period, then no provision of this Agreement shall be of any force or effect for any purpose.
8.13 Survival of Indemnity Obligations. All general and specific indemnity and defense obligations of the Parties set forth in this Agreement shall survive the expiration or termination of this Agreement, the execution or recordation of the Grant Deed, and/or the issuance and recordation of any Certificate of Completion.
8.14 Time Declared to be of the Essence. As to the performance of any obligation hereunder as to which time is a component thereof, the performance of such obligation within the time provided is of the essence.
8.15 Approvals. Except as otherwise provided in this Agreement, approvals required of the City or the Developer, or any officers, agents or employees of the City or the Developer, shall not be unreasonably withheld and approval or disapproval shall be given within the time set forth in this Agreement or, if no time is given, within a reasonable time.
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8.16 Further Assurances. The Parties agree to reasonably consider such additional actions or the execution of such other documents as may be reasonably necessary or convenient to the financing, development, and operation of the Project, although nothing in this Section 8.168.16 shall be deemed a representation, guaranty or commitment by any Party to take any action or execute any document.
8.17 City Approvals and Actions. The City Manager shall have the authority, on behalf of the City (to the extent not provided otherwise in this Agreement), to make approvals, issue interpretations, waive provisions, grant extensions of time, approve amendments to this Agreement and changes to the attached exhibits prior to their execution and execute documents, including, without limitation, the Notice of Completion and any documents necessary to implement any changes in the number or affordability of the Qualifying Units (as defined in the Regulatory Agreement), as may be required by TCAC, HCD, an alternative major funding source described in Section 6.1.2, or a Lender of a Senior Loan or Subordinate Loan, so long as such actions do not reduce the length of affordability of the Qualifying Units (as defined in the Regulatory Agreement) or add to the costs incurred or to be incurred by the City as specified herein. The City Manager reserves the right, in his or her sole and absolute discretion, to submit any requested modification, interpretation, amendment or waiver to the City Council if the City Manager reasonably determines or believes that such action could increase the risk, liability or costs to City, or reduce the length of affordability of the Project.
[Signatures on Following Pages]
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SIGNATURE PAGE
TO
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road and Palm Canyon Drive)
CITY:
CITY OF PALM SPRINGS,
a California charter city and municipal
corporation
By
Justin CliftonTeresa Gallavan, Interim
City Manager
ATTEST:
City Clerk
APPROVED AS TO LEGAL FORM:
BEST BEST & KRIEGER LLP
By:
Jeffrey S. Ballinger, City Attorney
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SIGNATURE PAGE
TO
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road and Palm Canyon Drive)
DEVELOPER:
ALOE PALM CANYON, L.P.,
a California limited partnership
By:
Aloe Palm Canyon LLC, a California limited
liability company, its general partner
By:
West Hollywood Community Housing
Corporation, a California nonprofit public benefit
corporation, its sole member/manager
By:
Jesse Slansky, President and CEO
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EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road and Palm Canyon Drive)
ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL A: ASSESSOR’S PARCEL NO: 505-182-010
ALL THAT REAL PROPERTY SITUATED IN THE COACHELLA VALLEY COUNTY
WATER DISTRICT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND PARTICULARLY DESCRIBED AS FOLLOWS:
THAT PORTION OF THE NORTHEAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 10, IN THE TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE
AND MERIDIAN, BY METES AND BOUNDS, COMMENCING AT THE NORTHEAST CORNER OF SAID SECTION 10; THENCE SOUTH 89°51’ WEST, 353 FEET TO THE CENTER LINE OF THE COUNTY HIGHWAY; THENCE SOUTH ON THE CENTER LINE OF THE COUNTY HIGHWAYS, 700.13 FEET;
THENCE SOUTH 89°50’ WEST 30 FEET, TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 89°50’ WEST, 205.88 FEET; THENCE SOUTH 0°10’ EAST, 211.68 FEET; THENCE NORTH 89°50’ EAST 205.30 FEET, MORE OR LESS TO THE WESTERLY LINE OF SAID COUNTY HIGHWAY;
THENCE NORTH ON SAID WESTERLY LINE OF THE COUNTY HIGHWAY, 211.88 FEET MORE OR LESS, TO THE POINT OF BEGINNING.
PARCEL B: (PORTION ASSESSOR’S PARCEL NO. 505-182-004)
LOT 12 IN BLOCK A OF LOS ANGELES PALMAS ESTATES, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGES 15 AND 16 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
PARCEL B1: (PORTION ASSESSOR’S PARCEL NO. 505-182-004)
THAT PORTION OF LOTS 5 AND 6 IN BLOCK A OF LAS PALMAS ESTATES, AS SHOWN BY MAP ON FILE IN BOOK 15, PAGES 15 AND 16 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST EASTERLY CORNER OF SAID LOT 5, BEING ALSO THE MOST NORTHERLY CORNER OF SAID LOT 6;
THENCE SOUTH 89°50’ WEST ALONG THE BOUNDARY LINE OF SAID LOT 5, 35.77 FEET;
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THENCE IN A SOUTHWESTERLY DIRECTION TO A POINT ON THE NORTHERLY LINE OF CAMINO DEL NORTE, 3 FEET SOUTHEASTERLY FROM THE NORTHWESTERLY CORNER OF SAID LOT 6;
THENCE SOUTH ALONG THE EASTERLY LINE OF CAMINO DEL NORTE TO THE SOUTHWESTERLY CORNER OF SAID LOT 6;
THENCE EASTERLY, ALONG THE SOUTHERLY LINE OF SAID LOT 6, TO THE SOUTHEASTERLY CORNER OF SAID LOT;
THENCE NORTHERLY, ALONG THE EASTERLY LINE OF SAID LOT 6, TO THE POINT OF BEGINNING.
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EXHIBIT B
SCOPE OF DEVELOPMENT
Developer intends to develop an affordable housing project called “Aloe Palm Canyon”, a new 2-story residential mixed-use development consisting of 71 dwelling units with a retail component. The proposed project will be located on an approximately 76,230 square-foot vacant site in the City of Palm Springs made up of two parcels, one of which is owned by the City of Palm Springs (APN 505-182-010) and the other by the Successor Agency to the Redevelopment Agency for the City of Palm Springs (APN 505-182-004), which is proposed to be conveyed to the Developer by purchase and sale agreement. The project will include 69 one-bedroom units and two manager’s units. All of the one-bedroom units will be targeted to seniors (over 62 years of age) with incomes ranging from 0% to 80% AMI, with 25 units reserved for seniors who are homeless (up to 20% AMI) and the remaining 44 units for low-income seniors. All units and common spaces will be accessible to residents with and without physical disabilities. The proposed project will include a resident community room and gym on the 6,600 square-foot ground floor, and possible retail space for a restaurant. The community room is intended to be the primary gathering space for residents and will include flexible space for meetings and activities; a demonstration kitchen to offer cooking classes; computer stations; and a flexible library space.
The gym will be furnished with machines and equipment selected to meet the fitness needs of an active senior community. The proposed project will provide private outdoor open space for residents to engage in both active and passive recreational activities. On-site supportive services, including mental health counseling, will be made available to residents. Seventy-one (71) surface parking spaces will be provided for residents, along with guest parking, where solar panel “sheds” may be placed. Additional parking will also be provided, per the City’s parking requirements for restaurant space, provided that the proposal for a restaurant is approved. The development will be built to Leadership in Energy and Environmental Design (LEED) Gold standards.
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EXHIBIT C
SCHEDULE OF PERFORMANCE
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road and Palm Canyon Drive)
# Action Date Action to be
Completed By
1. Effective Date See Section 1.41.4
2. Due Diligence Period commences Effective Date of
Original Agreement.
(See § 1.1.261.1.26.)
43. City to deliver Preliminary Report to DeveloperDeveloper approval of Preliminary Report
As soon as
practicable following
the Effective Date.
(See § 2.52.5.)
5. Developer to deliver Developer’s Title Notice to City Within 30 days following
Developer’s receipt
of the Preliminary
Report from City.
(See § 2.5.)
6. City to deliver City’s Title Notice Response to Developer, if appropriate
Within 20 days
following City’s
receipt of
Developer’s Title
Notice. (See § 2.5.)
7. City to cause the removal of any matter objected to in the Developer’s Title Notice from the Preliminary Report, if City so elects in City’s Title Notice Response
Within 60 days
following
Developer’s receipt
of City’s Title Notice
Response, or another
mutually agreed
upon date. (See §
2.5.)
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# Action Date Action to be
Completed By
8. Parties may cancel Escrow and terminate Agreement, if Developer refuses to accept title after City indicates in its Title Notice Response it will not remove objected to matter(s) from Preliminary Report
Within 10 days
following
Developer’s receipt
of City’s Title Notice
Response. (See §
2.5.)
94. Due Diligence Period ends 5:00 p.m. on the
120th day following
the Original
Effective Date. (See
§ 1.1.261.1.26.)
105. Developer to obtain entitlements Condition to Close of Escrow. (See §
3.2.1.73.2.1.7 and
3.2.2.43.2.2.4.)
116. Developer to receive funding commitments to construct and operate project, including but not limited to TCAC credits, HCD Accelerator Fund award money, and NPLH funds
Condition to Close of
Escrow. (See §
3.2.13.2.1 and
3.2.23.2.2.)
127. Escrow Closing Date On or before 5th
business day
following Escrow
Holder’s receipt of
Parties’ confirmation
of satisfaction or
waiver of all
conditions precedent
to Close of Escrow
or December 31,
2022, whichever
occurs first. (§
1.1.321.1.32.)
138. Developer to commence construction of the Project No later than 30 days after Escrow Closing
Date September 30,
2023. (See §
1.1.631.1.61.)
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# Action Date Action to be
Completed By
149. Developer to complete construction of the Project No later than 24 months from the
Escrow Closing
DateProject
Commencement
Date. (See §
1.1.641.1.62.)
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EXHIBIT D
FORM OF GRANT DEED
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road And Palm Canyon Drive)
[Attached Behind This Page]
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RECORDING REQUESTED BY:
City of Palm Springs
WHEN RECORDED MAIL TO AND MAIL
TAX STATEMENTS TO:
_________________________
________________________
________________________
Attn: ___________________
Exempt from Recording Fees pursuant to
Government Code sections 27383 and 27388.1(a)(2)
SPACE ABOVE FOR RECORDER’S USE ONLY
GRANT DEED
THE UNDERSIGNED GRANTOR(S) DECLARE(S):
Documentary Transfer Tax is $ _______________.;
PART ONE
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, CITY OF PALM SPRINGS, a California charter city and municipal corporation (“Grantor”), hereby grants to Aloe Palm Canyon, L.P., a California limited partnership (“Grantee”), that certain real property located in the City of Palm Springs, County of Riverside, State of California, specifically described in Exhibit “A” attached to this Grant Deed (“Property”) and made a part of this Grant Deed by this reference.
PART TWO
The conveyance of the Property by the Grantor to the Grantee in Part One is subject to the following conditions, covenants and restrictions:
Section 1. Obligation to Refrain from Discrimination. The Grantee for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
1.1 There shall be no discrimination against or segregation of any person, or group of persons, on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), or ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a “Prohibited Basis”) in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of Item 3B - Page 80
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discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Property. Notwithstanding the preceding sentence, selection of tenants for housing units based on age, physical or mental disability, or medical condition shall not violate this Section if said housing units are funded by a program that requires the selection of tenants based on those characteristics. With respect to familial status, this Section shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in this Section shall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section.
1.2 In connection with its performance under the Agreement, Developer shall not discriminate against any employee or applicant for employment because of a Prohibited Basis.
Developer shall ensure that applicants are employed, and that employees are treated during their employment, without regard to any Prohibited Basis. As a condition precedent to City’s lawful capacity to enter the Agreement, and in executing the Agreement, Developer certifies that its actions and omissions thereunder shall not incorporate any discrimination arising from or related to any Prohibited Basis in any Developer activity, including but not limited to the following:
employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship; and further, that Developer is in full compliance with the provisions of Palm Springs Municipal Code Section 7.09.040, including without limitation the provision of benefits, relating to non-discrimination in city contracting.
1.3 The covenant of this Section 1 shall run with the land of the Property in perpetuity and shall be enforceable against the Grantee and its successors and assigns in perpetuity.
Section 2. Form of Non-Discrimination and Non-Segregation Clauses. The Grantee for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
2.1 The Grantee, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition. All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non-discrimination or non-segregation covenants:
(a) In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, Item 3B - Page 81
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gender identity, gender expression, physical or mental disability, or medical condition in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.
Notwithstanding the foregoing paragraph, with respect to familial status, paragraph 2.1(a) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to the foregoing paragraph. The foregoing paragraph does not prohibit the selection of tenants for housing units based on age, physical or mental disability, or medical condition if said housing units are funded by a program that requires the selection of tenants based on those characteristics.”
(b) In leases: “The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sub-lessee, sub-tenants, or vendees in the premises herein leased.
Notwithstanding the foregoing paragraph, with respect to familial status, paragraph 2.1(b) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to the foregoing paragraph. The foregoing paragraph does not prohibit the selection of tenants for housing units based on age, physical or mental disability, or medical condition if said housing units are funded by a program that requires the selection of tenants based on those characteristics.”
(c) In contracts:
“There will be no discrimination against or segregation of any person or group of persons on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), Item 3B - Page 82
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ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property nor will the transferee or any person claiming under or through the transferee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees of the land. Notwithstanding the preceding sentence, selection of tenants for housing units based on age, physical or mental disability, or medical condition shall not violate this provision if said housing units are funded by a program that requires the selection of tenants based on those characteristics;
There shall be no discrimination in the performance of this agreement against any employee or applicant for employment because of actual or perceived race, religion, color, sex, age, marital status, ancestry, national origin (i.e., place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a “prohibited basis”); All applicants for employment shall be employed, and employees shall be treated during their employment, without regard to any prohibited basis; and Performance under this agreement shall not incorporate any discrimination arising from or related to any prohibited basis in any activity, including but not limited to the following:
employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship; and
The parties to this agreement are familiar with and in full compliance with the provisions of Palm Springs Municipal Code Section 7.09.040, including without limitation the provision of benefits, relating to non-discrimination in City contracting.”
2.2 The covenants of this Section 2 shall run with the land of the Site in perpetuity.
Section 3. Satisfaction of Post-Closing Conditions. Grantor’s delivery and Grantee’s acceptance of this Grant Deed herein shall be subject to the express condition that Developer shall satisfy each of the below post-closing conditions (each, a “Post-Closing Condition”) to the satisfaction of City. In the event a Post-Closing Condition is not satisfied, Developer shall transfer ownership of the City Property and SA Property to the City.
3.1 Developer shall submit to the City a copy of the construction contract for the Project in substantially final form (with a copy of the final construction contract being delivered to the City by July 31, 2023);
3.2 Developer shall submit to the City copies of the Construction Financing Documents in substantially final form (with copies of the final Construction Financing Documents being delivered to the City by July 31, 2023);
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3.3 No later than July 31, 2023, the Developer shall submit to the City documents evidencing a commitment from the Lender(s) of all Subordinate Loan(s), if any, to Developer to provide the Subordinate Loan(s);
3.4 [CONDITION 4]
3.5 [CONDITION 5];
The undersigned declares exemption from the recording fee under Government Code Section 27388.1 per Section 27388.1 (a) (2); recorded concurrently in connection with a transfer subject to the imposition of documentary transfer tax. [SIGNATURES ON NEXT PAGE]
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SIGNATURE PAGE TO GRANT DEED
GRANTOR
CITY OF PALM SPRINGS
A California charter city and municipal corporation
By:
Its: City Manager
[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED]
GRANTEE
ALOE PALM CANYON, L.P.,
a California limited partnership
By:
Aloe Palm Canyon LLC, a California limited
liability company, its general partner
By:
West Hollywood Community Housing
Corporation, a California nonprofit public benefit
corporation, its sole member
By:
Jesse Slansky, President and CEO
[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED]
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On this ___ day of ______________, 20__ before me, ,
Notary Public, personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: (Seal)
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On this ___ day of ______________, 20__ before me, ,
Notary Public, personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: (Seal)
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EXHIBIT 1
TO
GRANT DEED
Property Legal Description
ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL A: ASSESSOR’S PARCEL NO: 505-182-010
ALL THAT REAL PROPERTY SITUATED IN THE COACHELLA VALLEY COUNTY
WATER DISTRICT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND PARTICULARLY DESCRIBED AS FOLLOWS:
THAT PORTION OF THE NORTHEAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 10, IN THE TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE
AND MERIDIAN, BY METES AND BOUNDS, COMMENCING AT THE NORTHEAST CORNER OF SAID SECTION 10; THENCE SOUTH 89°51’ WEST, 353 FEET TO THE CENTER LINE OF THE COUNTY HIGHWAY; THENCE SOUTH ON THE CENTER LINE OF THE COUNTY HIGHWAYS, 700.13 FEET;
THENCE SOUTH 89°50’ WEST 30 FEET, TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 89°50’ WEST, 205.88 FEET; THENCE SOUTH 0°10’ EAST, 211.68 FEET; THENCE NORTH 89°50’ EAST 205.30 FEET, MORE OR LESS TO THE WESTERLY LINE OF SAID COUNTY HIGHWAY;
THENCE NORTH ON SAID WESTERLY LINE OF THE COUNTY HIGHWAY, 211.88 FEET MORE OR LESS, TO THE POINT OF BEGINNING.
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EXHIBIT E
FORM NOTICE OF AGREEMENT
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road and Palm Canyon Drive)
[ATTACHED BEHIND THIS PAGE]
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RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, California 92262
Attn: ___________________
Exempt from Recording fee pursuant to Gov’t Code § 27383
NOTICE OF AGREEMENT
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (STEVENS ROAD AND PALM CANYON DRIVE)
TO ALL INTERESTED PERSONS PLEASE TAKE NOTICE that Aloe Palm Canyon, L.P., a California limited partnership (the “Developer”) and the City of Palm Springs, a California charter city and municipal corporation (the “City”) entered into an agreement entitled Affordable Housing Disposition and Development Agreement (Stevens Road and Palm Canyon Drive), dated as of __________ (the “Agreement”). A copy of the Agreement is on file with the City and is available for inspection and copying by interested persons as a public record of the City at the City Clerk’s office located at 3200 East Tahquitz Canyon Way, Palm Springs, California 92262, during the City’s regular business hours.
The Agreement affects the real property described in Exhibit A attached to this Notice of Agreement (the “Property”). The meaning of defined terms, indicated by initial capitalization, used in this Notice of Agreement shall be the same as the meaning ascribed to such terms in the Agreement.
PLEASE TAKE FURTHER NOTICE that the Agreement contains certain development covenants running with the land of the Property and other agreements between the Developer and the City affecting the Property, as set forth below (all section references are to the Agreement):
Section 4.14.1 of the Agreement provides:
4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the benefit of the City, that the Developer shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually Item 3B - Page 90
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agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 4.1 shall run with the land of the Property until the date of recordation of the Certificate of Completion..
Section 5.15.1 of the Agreement provides:
5.1 Obligation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion of the Site and/or Project, covenants and agrees that there shall be no discrimination against or segregation of any person, or group of persons, on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a “Prohibited Basis”) in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Site. Notwithstanding the preceding sentence, selection of tenants for housing units based on age, physical or mental disability, or medical condition shall not violate this Section if said housing units are funded by a program that requires the selection of tenants based on those characteristics. With respect to familial status, this Section 5.1 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in this Section 5.1 shall be construed to affect Section 51.2, 51.3, 51.4,
51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 5.1.
In connection with its performance under this Agreement, Developer shall not discriminate against any employee or applicant for employment because of a Prohibited Basis. Developer shall ensure that applicants are employed, and that employees are treated during their employment, without regard to any Prohibited Basis. As a condition precedent to City’s lawful capacity to enter this Agreement, and in executing this Agreement, Developer certifies that its actions and omissions hereunder shall not incorporate any discrimination arising from or related to any Prohibited Basis in any Developer activity, including but not limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship; and further, that Developer is in full compliance with the provisions of Palm Springs Municipal Code Section
7.09.040, including without limitation the provision of benefits, relating to non-discrimination in city contracting.
The covenant of this Section 5.15.1 shall run with the land of the Site in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be a covenant set forth in the Grant Deed
This NOTICE OF AGREEMENT is dated as of _________________, 20__, and has been executed on behalf of the Developer and the City by and through the signatures of their authorized Item 3B - Page 91
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representative(s) set forth below. This Notice of Agreement may be executed in counterparts and when fully executed each counterpart shall be deemed to be one original instrument. [SIGNATURES ON NEXT PAGE]
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SIGNATURE PAGE TO
NOTICE OF AGREEMENT
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (STEVENS ROAD AND PALM CANYON DRIVE)
Dated: November 23, 2022November 23,
2022November 21, 2022
CITY:
CITY OF PALM SPRINGS, a California
charter city and municipal corporation
By:
City Manager
ATTEST:
City Clerk
APPROVED AS TO LEGAL FORM:
BEST BEST & KRIEGER LLP
By:
City Attorney
DEVELOPER
ALOE PALM CANYON, L.P.,
a California limited partnership
By:
Aloe Palm Canyon LLC, a California limited
liability company, its general partner
By:
West Hollywood Community Housing
Corporation, a California nonprofit public benefit
corporation, its sole member
By:
Jesse Slansky, President and CEO
, LP, a
California limited partnership
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[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED]
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On this ___ day of ______________, 20__ before me, ,
Notary Public, personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: (Seal)
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On this ___ day of ______________, 20__ before me, ,
Notary Public, personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: (Seal)
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EXHIBIT A
TO
NOTICE OF AGREEMENT
Legal Description of Property
ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL A: ASSESSOR’S PARCEL NO: 505-182-010
ALL THAT REAL PROPERTY SITUATED IN THE COACHELLA VALLEY COUNTY
WATER DISTRICT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND PARTICULARLY DESCRIBED AS FOLLOWS:
THAT PORTION OF THE NORTHEAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 10, IN THE TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE
AND MERIDIAN, BY METES AND BOUNDS, COMMENCING AT THE NORTHEAST CORNER OF SAID SECTION 10; THENCE SOUTH 89°51’ WEST, 353 FEET TO THE CENTER LINE OF THE COUNTY HIGHWAY; THENCE SOUTH ON THE CENTER LINE OF THE COUNTY HIGHWAYS, 700.13 FEET;
THENCE SOUTH 89°50’ WEST 30 FEET, TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 89°50’ WEST, 205.88 FEET; THENCE SOUTH 0°10’ EAST, 211.68 FEET; THENCE NORTH 89°50’ EAST 205.30 FEET, MORE OR LESS TO THE WESTERLY LINE OF SAID COUNTY HIGHWAY;
THENCE NORTH ON SAID WESTERLY LINE OF THE COUNTY HIGHWAY, 211.88 FEET MORE OR LESS, TO THE POINT OF BEGINNING.
PARCEL B: (PORTION ASSESSOR’S PARCEL NO. 505-182-004)
LOT 12 IN BLOCK A OF LOS ANGELES PALMAS ESTATES, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGES 15 AND 16 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
PARCEL B1: (PORTION ASSESSOR’S PARCEL NO. 505-182-004)
THAT PORTION OF LOTS 5 AND 6 IN BLOCK A OF LAS PALMAS ESTATES, AS SHOWN BY MAP ON FILE IN BOOK 15, PAGES 15 AND 16 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST EASTERLY CORNER OF SAID LOT 5, BEING ALSO THE MOST NORTHERLY CORNER OF SAID LOT 6;
THENCE SOUTH 89°50’ WEST ALONG THE BOUNDARY LINE OF SAID LOT 5, 35.77 FEET;
THENCE IN A SOUTHWESTERLY DIRECTION TO A POINT ON THE NORTHERLY LINE OF CAMINO DEL NORTE, 3 FEET SOUTHEASTERLY FROM THE NORTHWESTERLY CORNER OF SAID LOT 6;
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THENCE SOUTH ALONG THE EASTERLY LINE OF CAMINO DEL NORTE TO THE SOUTHWESTERLY CORNER OF SAID LOT 6;
THENCE EASTERLY, ALONG THE SOUTHERLY LINE OF SAID LOT 6, TO THE SOUTHEASTERLY CORNER OF SAID LOT;
THENCE NORTHERLY, ALONG THE EASTERLY LINE OF SAID LOT 6, TO THE POINT OF BEGINNING.
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EXHIBIT F
FORM OF OFFICIAL ACTION OF DEVELOPER
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road and Palm Canyon Drive)
The undersigned, all the members and partners of Aloe Palm Canyon, L.P., a California limited partnership, do hereby certify that Aloe Palm Canyon, L.P. will serve as the Developer of Stevens Road and Palm Canyon Drive under the Agreement described below. No consent or approval of any other person is required for the undersigned to make the certifications set forth in this Certificate.
The Developer further certifies that the following named person(s):
Jesse Slansky, President and CEO of West Hollywood Community Housing Corporation, a California nonprofit public benefit corporation, the sole member and general partner of Aloe Palm Canyon, L.P.
is, without any additional or further consent of any person, authorized and empowered for and on behalf of and in the name of the respective entity set forth above to: (1) sign and deliver that certain Affordable Housing Disposition and Development Agreement (Stevens Road and Palm Canyon Drive), dated as of _______, 202___ (“Agreement”), regarding the development of certain real property located in the City of Palm Springs, California, and performance of other obligations of the “Developer” as set forth in the Agreement; (2) sign and deliver all other documents on behalf of the respective entity identified set forth above to be signed or executed in connection with the transactions contemplated in the Agreement; and (3) take all actions on behalf of the respective entity identified above that may be considered necessary to conclude the transactions and complete the development contemplated in the Agreement.
The authority conferred and certified to in this Certificate shall be considered retroactive and any and all acts authorized in this Certificate that were performed before the execution of this Certificate are approved and ratified by each entity identified above. The authority conferred and certified to in this Certificate shall continue in full force and effect until the City Manager or his/her designee receives written notice of the revocation of this Certificate.
The Developer further certifies that the activities covered by the authorities conferred and certified to in this Certificate and the foregoing certifications constitute duly authorized activities of each entity identified above; that these authorities and certifications are now in full force and effect; and that there is no provision in any document under which either of the entities identified above is organized and/or that governs such entity’s continued existence or limits the power of the undersigned to confer the authorities or make the certifications set forth in this Certificate, and that the same are in conformity with the provisions of all such documents.
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Dated: DEVELOPER
ALOE PALM CANYON, L.P.,
a California limited partnership
By:
Aloe Palm Canyon LLC, a California limited
liability company, its general partner
By:
West Hollywood Community Housing
Corporation, a California nonprofit public benefit
corporation, its sole member
By:
Jesse Slansky, President and CEO
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EXHIBIT G
FORM OF CERTIFICATE OF COMPLETION
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (STEVENS ROAD AND PALM CANYON DRIVE)
[ATTACHED BEHIND THIS PAGE]
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RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Aloe Palm Canyon, L.P.
c/o West Hollywood Community Housing
Corporation
7530 Santa Monica Blvd
West Hollywood, CA 90046
Attention: President and CEO
Exempt from Recording fee pursuant to Gov’t Code § 27383
THE CITY OF PALM SPRINGS
CERTIFICATE OF COMPLETION
(Stevens Road and Palm Canyon Drive)
I, __________________, City Manager of the City of Palm Springs (the “City”) certify that:
Section 1. The Project required to be constructed in accordance with that certain Affordable Housing Disposition and Development Agreement (Stevens Road and Palm Canyon Drive), dated _____ (the “Agreement”), between the City and Aloe Palm Canyon, L.P., a California limited partnership (the “Developer”), on that certain real property specifically described in the legal description(s) attached to this Certificate of Completion as Exhibit A (the “Property”), is complete in accordance with the provisions of the Agreement.
This Certificate of Completion constitutes conclusive evidence of the City’s determination of the Developer’s satisfaction of its obligation under the Agreement to construct and install the Project on the Property, including any and all buildings, parking areas, landscaping areas and related improvements necessary to support or meet any requirements applicable to the Project and its use and occupancy on the Project, whether or not such improvements are located on or off the Property or on other property subject to the Agreement. Notwithstanding any provision of this Certificate of Completion, the City may enforce any covenant surviving this Certificate of Completion in accordance with the terms and conditions of the Agreement and the Regulatory Agreement recorded against the Property by the Developer and the City under the Agreement. The Agreement is an official record of the City and a copy of the Agreement may be inspected at the City Clerk’s office located at 3200 E. Tahquitz Canyon Way, Palm Springs, California 92262, during the City’s regular business hours.
DATED AND ISSUED this _____ day of ______________, _____.
CITY OF PALM SPRINGS, a California
charter city and municipal corporation
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On this ___ day of ______________, 20__ before me, ,
Notary Public, personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: (Seal)
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EXHIBIT A
TO
CERTIFICATE OF COMPLETION
Legal Description of the Property
ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL A: ASSESSOR’S PARCEL NO: 505-182-010
ALL THAT REAL PROPERTY SITUATED IN THE COACHELLA VALLEY COUNTY
WATER DISTRICT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND PARTICULARLY DESCRIBED AS FOLLOWS:
THAT PORTION OF THE NORTHEAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 10, IN THE TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE
AND MERIDIAN, BY METES AND BOUNDS, COMMENCING AT THE NORTHEAST CORNER OF SAID SECTION 10; THENCE SOUTH 89°51’ WEST, 353 FEET TO THE CENTER LINE OF THE COUNTY HIGHWAY; THENCE SOUTH ON THE CENTER LINE OF THE COUNTY HIGHWAYS, 700.13 FEET;
THENCE SOUTH 89°50’ WEST 30 FEET, TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 89°50’ WEST, 205.88 FEET; THENCE SOUTH 0°10’ EAST, 211.68 FEET; THENCE NORTH 89°50’ EAST 205.30 FEET, MORE OR LESS TO THE WESTERLY LINE OF SAID COUNTY HIGHWAY;
THENCE NORTH ON SAID WESTERLY LINE OF THE COUNTY HIGHWAY, 211.88 FEET MORE OR LESS, TO THE POINT OF BEGINNING.
PARCEL B: (PORTION ASSESSOR’S PARCEL NO. 505-182-004)
LOT 12 IN BLOCK A OF LOS ANGELES PALMAS ESTATES, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGES 15 AND 16 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
PARCEL B1: (PORTION ASSESSOR’S PARCEL NO. 505-182-004)
THAT PORTION OF LOTS 5 AND 6 IN BLOCK A OF LAS PALMAS ESTATES, AS SHOWN BY MAP ON FILE IN BOOK 15, PAGES 15 AND 16 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST EASTERLY CORNER OF SAID LOT 5, BEING ALSO THE MOST NORTHERLY CORNER OF SAID LOT 6;
THENCE SOUTH 89°50’ WEST ALONG THE BOUNDARY LINE OF SAID LOT 5, 35.77 FEET;
THENCE IN A SOUTHWESTERLY DIRECTION TO A POINT ON THE NORTHERLY LINE OF CAMINO DEL NORTE, 3 FEET SOUTHEASTERLY FROM THE NORTHWESTERLY CORNER OF SAID LOT 6;
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THENCE SOUTH ALONG THE EASTERLY LINE OF CAMINO DEL NORTE TO THE SOUTHWESTERLY CORNER OF SAID LOT 6;
THENCE EASTERLY, ALONG THE SOUTHERLY LINE OF SAID LOT 6, TO THE SOUTHEASTERLY CORNER OF SAID LOT;
THENCE NORTHERLY, ALONG THE EASTERLY LINE OF SAID LOT 6, TO THE POINT OF BEGINNING.
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EXHIBIT H
FORM OF DOCUMENTS FOR PREDEVELOPMENT COMPONENT OF CITY LOAN EXHIBIT H-1
FORM OF LOAN AGREEMENT
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road and Palm Canyon Drive)
[Attached Behind This Page]
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TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS ......................................................................................................... 6 Section 1.1 Definitions.................................................................................................. 6 Section 1.2 List of Exhibits. .......................................................................................... 9 Section 1.3 Recitals. .................................................................................................... 10 ARTICLE 2. PREDEVELOPMENT COMPONENT PROVISIONS ........................................ 10 Section 2.1 Predevelopment Component. ................................................................... 10 Section 2.2 Interest...................................................................................................... 10 Section 2.3 Security. ................................................................................................... 10 Section 2.4 Conditions to Funding.............................................................................. 11 Section 2.5 Repayment of the Predevelopment Component. ..................................... 11 Section 2.6 Termination of Agreement for Infeasibility. ............................................ 12 Section 2.7 Forgiveness of Predevelopment Component in Certain Circumstances. ..................................................................................................... 12 ARTICLE 3. USE OF PREDEVELOPMENT COMPONENT. ................................................. 12 Section 3.1 Borrower Responsibility and Management. ............................................ 12 Section 3.2 Environmental Investigation and Remediation. ....................................... 12 ARTICLE 4. DEVELOPMENT COMPONENT ........................................................................ 13 Section 4.1 Development Component. ....................................................................... 13 Section 4.2 Interest...................................................................................................... 13 Section 4.3 Use of Development Component. ............................................................ 13 Section 4.4 Security. ................................................................................................... 13 Section 4.5 Conditions Precedent to Disbursement. ................................................... 13 Section 4.6 Repayment Schedule. ............................................................................... 14 Section 4.7 Reports and Accounting of Residual Receipts. ........................................ 16 Section 4.8 Prepayment. ............................................................................................. 17 Section 4.9 Non-Recourse. ......................................................................................... 17 ARTICLE 5. CONSTRUCTION OF THE PROJECT ............................................................ 1817 Section 5.1 Financing Plan. .................................................................................... 1817 Section 5.2 Construction Plans and Schedules. .......................................................... 18 Section 5.3 Construction Contract. ............................................................................. 18 Section 5.4 Applicable Land Use Approvals; Building Permits. ................................ 19 Section 5.5 Payment and Performance Bonds. ........................................................... 19 Item 3B - Page 107
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Section 5.6 Construction Pursuant to Plans. ............................................................... 19 Section 5.7 Change in Construction of Improvements. .............................................. 19 Section 5.8 Commencement and Completion of Construction of Improvements. ................................................................................................. 2019 Section 5.9 Equal Opportunity. ................................................................................... 20 Section 5.10 Construction Pursuant to Laws. ............................................................... 20 Section 5.11 Construction Responsibilities. ............................................................. 2120 Section 5.12 Mechanics Liens, Stop Notices, and Notices of Completion. .................. 21 Section 5.13 Inspections. .......................................................................................... 2221 Section 5.14 Records. ................................................................................................... 22 ARTICLE 6. OWNERSHIP, OPERATION AND DISPOSITION OF PROJECT .................... 22 Section 6.1 City Regulatory Agreement. .................................................................... 22 Section 6.2 Restrictions on Transfers and Assignments. ............................................ 22 Section 6.3 Transfers with City Consent. ................................................................... 23 ARTICLE 7. OBLIGATIONS WHICH CONTINUE THROUGH AND BEYOND THE COMPLETION OF CONSTRUCTION ........................................................ 24 Section 7.1 Non-Discrimination. ................................................................................ 24 Section 7.2 Mandatory Language in All Subsequent Deeds, Leases and Contracts. ......................................................................................................... 2524 Section 7.3 Employment Opportunity. ....................................................................... 26 Section 7.4 Hazardous Materials. ............................................................................... 26 ARTICLE 8. APPLICABLE REQUIREMENTS .................................................................... 2928 Section 8.1 Applicable Requirements. .................................................................... 2928 ARTICLE 9. INSURANCE ..................................................................................................... 2928 Section 9.1 Borrower. ............................................................................................. 2928 ARTICLE 10. REPRESENTATIONS AND WARRANTIES ................................................ 3029 Section 10.1 Borrower’s Warranty of Good Standing. ............................................. 3029 ARTICLE 11. DEFAULT ....................................................................................................... 3130 Section 11.1 Default By Borrower. ............................................................................... 31 Section 11.2 Remedies. ............................................................................................. 3332 Section 11.3 Remedies Cumulative. ............................................................................. 33 ARTICLE 12. MISCELLANEOUS ........................................................................................ 3433 Section 12.1 Decision Standards. .............................................................................. 3433 Item 3B - Page 108
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Section 12.2 City Approval....................................................................................... 3433 Section 12.3 Notices. .................................................................................................... 34 Section 12.4 Representatives. ....................................................................................... 35 Section 12.5 Further Assurances................................................................................... 35 Section 12.6 Interpretation and Governing Law. .......................................................... 35 Section 12.7 Severability. ......................................................................................... 3635 Section 12.8 Final Agreement................................................................................... 3635 Section 12.9 Disclaimer of Relationships. .................................................................... 36 Section 12.10 Waivers. ................................................................................................... 36 Section 12.11 Successors. ............................................................................................... 36 Section 12.12 Headings; Exhibits. .................................................................................. 36 Section 12.13 Construction. ............................................................................................ 36 Section 12.14 Cumulative Rights. .............................................................................. 3736 Section 12.15 Time of Performance. .......................................................................... 3736 Section 12.16 Written Instrument. .................................................................................. 37 Section 12.17 Costs and Expenses. ................................................................................. 37 Section 12.18 Indemnification. ....................................................................................... 37 Section 12.19 Counterparts. ........................................................................................ 3837 Item 3B - Page 109
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PREDEVELOPMENT, CONSTRUCTION AND PERMANENT LOAN AGREEMENT This Predevelopment, Construction and Permanent Loan Agreement (this “Agreement”) is entered into as of _________________, 20____ (the “Effective Date”), by and between the CITY OF PALM SPRINGS, a California charter city and municipal corporation (the “City”), and ALOE PALM CANYON, L.P., a California limited partnership (the “Borrower”) (individually a “Party” and collectively, the “Parties”), with reference to the recitals below.
RECITALS
A. These Recitals refer to and utilize certain capitalized terms that are defined in Article I of this Agreement. The Parties intend to refer to those definitions in connection with their use in these Recitals.
B. The Parties have entered into a Disposition and Development Agreement (the “DDA”) dated as of the same date as this AgreementDecember __, 2022. Capitalized terms that are not otherwise defined in this Agreement will have the meaning as defined in the DDA.
C. Pursuant to the DDA, the City has agreed to sell and the Borrower has agreed to buy certain land in the City more particularly described in Exhibit A to this Agreement (the “City Property”), and the Borrower intends to develop an affordable housing development consisting of sixty-nine (69) affordable housing units, a portion of which will be rented in accordance with the terms of the Regulatory Agreement as defined in the DDA, and two (2) one bedroom units as unrestricted manager’s units on the Site (the “Improvements”). The DDA also approved a loan from City to Developer in the total amount of Four Million Four Thousand Three Hundred Dollars ($4,004,300) consisting of a Predevelopment Component of Four Hundred Eighty Thousand Dollars ($480,000) that will convert into a Construction and Permanent Component of Four Million Four Thousand Three Hundred Dollars ($4,004,300) D. The Project is exempt from the California Environmental Quality Act (“CEQA”) as an affordable housing project that meets the criteria found in Sections 15192 and 15194 of the CEQA Guidelines. The City is the “responsible agency” under CEQA with respect to the Project.
E. This Agreement is subject to completion and approval of an Environmental Review in accordance with the National Environmental Policy Act (“NEPA”) and 24 CFR Part 58 by the governmental agency with jurisdiction over Borrower’s proposed Project (the “Responsible Entity”). This Agreement shall be conditioned upon the Responsible Entity’s determination to proceed with, modify or cancel its financial participation in the Project based on the results of the NEPA Environmental Review. This condition shall be deemed to have been satisfied upon the issuance to the Responsible Entity of an Authority to Use Grant Funds by the City, County of Riverside, State of California, Department of Housing & Community Development (“HCD”), U.S.
Department of Housing and Urban Development (“HUD”) or any other local state or federal agency participating in the Project. This condition will apply through the date of receipt by the Borrower of the Authority to Use Grant Funds.
In consideration of the foregoing recitals and underlying promises, which the Parties agree to be good and valuable consideration, the Parties agree as follows:
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ARTICLE 1.
DEFINITIONS
Section 1.1 Definitions.
“Actual Knowledge” will mean, in the case of the Borrower, the actual knowledge of the CEO, Chief Financial Officer, or Vice President for Development of the Borrower and will mean, in the case of City, the actual knowledge of the City Manager (not inclusive of any designee), or the City Planning Director or the Economic Development Director, of the City and in each instance will not impose a duty of investigation by City or Borrower. “Agents” will mean the City Council members, supervisors, directors, officers, employees, agents, successors and assigns of the City.
“Agreement” will mean this Predevelopment, Construction and Permanent Loan Agreement (including all Exhibits attached to and made a part of this Agreement). “Applicable Requirements” will mean Federal, State, and local applicable laws, rules and regulations.
“Architect” will mean an architect licensed to provide architectural services in the State of California that is retained by the Borrower to provide architectural services with respect to the Project.
“Assignment of Work Product” means those certain assignment agreements pursuant to which the Borrower assigns to the City the Borrower’s rights and obligations with respect to certain Predevelopment Component Documents prepared by the Architect, or other Consultants as applicable as security for the Predevelopment Component. “Borrower” will mean Aloe Palm Canyon, L.P., a California limited partnership and its successors and assigns.
“Business Day” will mean a day Monday through Friday, other than City holidays when the City offices are not open for business.
“Certificate of Occupancy” will mean the certificate of occupancy issued by the City for the Project.
“City” will mean the City of Palm Springs, a California charter city and municipal corporation .
“City Council” will mean the City Council of the City.
“City Loan” will mean the loan of Four Million Four Thousand Three Hundred Dollars ($4,004,300) from the City to the Borrower pursuant to the terms of this Agreement. The City Loan consists of the Predevelopment Component and the Development Component.
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“City Loan Documents” will mean, collectively, this Agreement, the Deed of Trust, the Predevelopment Component Note, the Note, the City Regulatory Agreement, the Assignment of Work Product, and any and all other documents executed by the Borrower in favor of the City in connection with the City Loan.
“City Regulatory Agreement” will mean that certain regulatory agreement to be recorded against the Project in accordance with this Agreement.
“Close of Escrow” will mean the transfer of the Site from the City to the Borrower by recordation of the Grant Deed and recordation of the Deed of Trust and City Regulatory Agreement against the Site in connection with the City Loan.
“Consultants” will mean persons or entities other than the Architect that provide services with respect to the Predevelopment Component for the Project. “Construction Contract” will mean the construction contract between the Borrower and the General Contractor for construction of the Improvements. “Construction Plans” will mean the plans and specifications for construction of the Improvements prepared by the Architect and any applicable Consultants. “DDA” will mean the Disposition and Development Agreement between the Parties with the same Effective Date as this Agreement.
“Default Rate” will have the meaning set forth in Section 11.2 “Development Component” will mean the portion of the City Loan in the amount of Three Four Million Four Thousand Three Hundred Dollars ($4,004,300) to be used for development of the Project.
“Effective Date” means the date set forth in the first sentence of this Agreement as the Effective Date of this Agreement.
“Environmental Law” will mean any present or future federal, State or local law, ordinance, rule, regulation, permit, license or binding determination of any governmental authority relating to, imposing liability or standards concerning, or otherwise addressing the environment, health or safety, including, but not limited to: the National Environmental Policy Act, 42 U.S.C. 4321 et seq. (“NEPA”), the Protection and Enhancement of Environmental Quality 24 CFR Part 50, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., (“CERCLA”); the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., (“RCRA”); the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq. (“TOSCA”); the Clean Air Act, 42 U.S.C. Section 7401 et seq.; and the Clean Water Act, 33 U.S.C. Section 1251 et seq., and any so-called “Superfund” or “Superlien” law; the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq. (“OSHA”); the California Environmental Quality Act, as amended, the California Public Resource Code, Section 21000 et seq. (“CEQA”); the State CEQA Guidelines (Calif. Admin. Code Title 14, Section 15000 et seq.) (“CEQA Guidelines”); the Polanco Redevelopment Act, California Health and Safety Code 33459 et seq.; Item 3B - Page 112
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the Carpenter-Presley-Tanner Hazardous Substance Account Act of 1999, California Health and Safety Code Section 25300 et seq.; as each is from time to time amended and later in effect. “Event of Default” will have the meaning set forth in Section 11.1. “Financing Plan” will have the meaning set forth in Section 5.1. “General Contractor” means the general contractor for the Project retained by the Borrower.
“Hazardous Materials” will mean:
(1) “hazardous substances” as defined by CERCLA;
(2) “hazardous wastes” as defined by RCRA;
(3) any hazardous, dangerous or toxic chemical, waste, pollutant, contaminant or substance (“pollutant”) within the meaning of any Environmental Law prohibiting, limited or otherwise regulating the use, exposure, release, emission, discharge, generation, manufacture, sale, transport, handling, storage, treatment, reuse, presence, disposal or recycling of such pollutant; (4) petroleum crude oil or fraction;
(5) any radioactive material, including any source, special nuclear or byproduct material as defined in 42 U.S.C. Section 2011 et seq., and amendments and reauthorizations;
(6) asbestos-containing materials in any form or condition; or (7) polychlorinated biphenyls in any form or condition.
Hazardous Materials will not include commercially reasonable amount of such material used in the ordinary course of construction and/or operation of the Site and the Project which are used and stored in accordance with all applicable Environmental Laws. “Holder” will mean any lender of record, other than the City, holding a deed of trust security and whose name and address shall have been provided by the Borrower to the City. “Improvements” will have the meaning given in Recital C. “LIHTC” means the credit available under Section 42 of the Internal Revenue Code of 1986, as amended.
“Note” will mean the promissory note in the principal amount of Four Million Four Thousand Three Hundred Dollars ($4,004,300) evidencing both the Development Component and the Predevelopment Component, as more particularly described in Article 4, below, and attached to the DDA as Exhibit I-1.
“Parties” will mean the City and the Borrower, collectively.
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“Party” will mean the City or the Borrower, individually. “Predevelopment Component” will mean the activities prior to or at Close of Escrow, including acquisition of the SA Property, that will be funded by a portion of the City Loan in the amount of Four Hundred Eighty Thousand Dollars ($480,000) to be used for Predevelopment Component costs.
“Predevelopment Component Documents” means all reports, surveys, materials, architectural drawings and specifications, approvals, and any other documentation or information related to the Predevelopment Component for the Project obtained by the Borrower and which documents were funded from or reimbursed by the proceeds of the Predevelopment Component. “Predevelopment Component Loan” will mean the portion of the City Loan in the amount of Four Hundred Eighty Thousand Dollars ($480,000) to be used for Predevelopment Component costs.
“Predevelopment Component Note” will mean the promissory note in the amount of Four Hundred Eighty Thousand Dollars ($480,000) evidencing the Predevelopment Component portion of the City Loan, attached to the DDA as Exhibit H-2.
“Prohibited Basis” will have the meaning set forth in Section 7.1. “Project” will mean the Improvements and, following Close of Escrow, the Site. “Proposed Budget” will mean the proposed budget for the Project, attached to this Agreement as Exhibit B.
“Site” means the land consisting of the City Property and the contiguous SA Property, as such term is defined in the DDA, as more particularly described in Exhibit A to this Agreement. “Tax Credit Compliance Period” will mean the fifteen (15) year LIHTC compliance period as defined in Section 42(i) (1) of the Internal Revenue Code. “Term” will mean the term of this Agreement which will commence as of the Effective Date and which will terminate on the earliest of: (i) termination of the DDA because the Borrower determines that the Borrower will not proceed with development of the Project; (ii) the date which is the earlier of fifty-seven (57) years after the Construction Financing converts to a Permanent Loan, as such terms are defined in the DDA; (ii) September 1, 2079; (iii) the full repayment of the City Loan, or (iv) the date of an Event of Default, subject to all applicable notice and cure periods. “Work” is the construction of the Improvements as described in the Construction Contract.
Section 1.2 List of Exhibits.
The following exhibits are incorporated into this Agreement:
Exhibit A Description of the Site
Exhibit B Proposed Budget
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Exhibit C Form of Assignment of Work Product
Section 1.3 Recitals.
The Recitals are incorporated by this reference and made a part of this Agreement.
ARTICLE 2.
PREDEVELOPMENT COMPONENT PROVISIONS
Section 2.1 Predevelopment Component.
Subject to satisfaction of the conditions set forth in Section 2.4, the City will lend to the Borrower the Predevelopment Component in the amount of Four Hundred Eighty Thousand Dollars ($480,000) for funding or reimbursement of Borrower’s predevelopment expenses with respect to the Project. For the avoidance of doubt, predevelopment expenses includes a portion of the purchase price of the SA Property. The Predevelopment Component Loan will be evidenced by the Predevelopment Component Note.
Section 2.2 Interest.
Subject to the provisions of Section 2.2(b) below, the outstanding principal balance of the Predevelopment Component Loan will not bear interest.
Upon the occurrence and during the continuation of an Event of Default, interest on the Predevelopment Component Loan will begin to accrue, as of the date of the Event of Default and continue until such time as the Predevelopment Component Loan funds are repaid in full or the Event of Default is cured, at the Default Rate equal to the lesser of ten percent (10%), compounded annually, or the highest rate permitted by law.
Section 2.3 Security.
As security for the Predevelopment Component Note, and as part of the consideration for entering into this Agreement, the Borrower:
Assigns to the City the Borrower’s rights and obligations with respect to certain Predevelopment Component Documents, pursuant to the terms of the Assignment of Work Product, which will be executed concurrently with this Agreement, or, as applicable upon the Borrower’s execution of a contract with an Architect or Consultant for services in connection with the Predevelopment Component for the Project. The assignment will become effective upon an uncured Event of Default as defined in Section 11.1 below, or upon termination of this Agreement pursuant to this Article 2. Upon: (i) an Event of Default that has not been cured pursuant to this Agreement, or (ii) the termination of this Agreement pursuant to this Article 2 prior to Close of Escrow, the City may use any of the foregoing assigned Predevelopment Component Documents for any purpose for which the Borrower could have used them for development of the Project. The Borrower will cooperate with the City to implement the Assignment of Work Product and immediately deposit with the City for the City’s use all the Predevelopment Component Documents.
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Borrower agrees, that upon the acquisition of the Site by the Borrower, Borrower will execute and record the Deed of Trust against the Site to secure Borrower’s payment of the City Loan.
And the City agrees that, except for an Event of Default by Borrower the Predevelopment Component will be a nonrecourse loan, and the sole recourse of the City with respect to the principal of, and interest on, the Predevelopment Component Note and defaults by Borrower in the performance of its covenants under such note will be to the security described in this Section
2.3. Section 2.4 Conditions to Funding.
The City will fund the Predevelopment Component of Four Hundred Eighty Thousand Dollars ($480,000) upon satisfaction of the following conditions:
There exists no Event of Default nor any act, failure, omission or condition that would constitute an Event of Default under the DDA or this Agreement; Execution by the Borrower, and delivery to the City, of the Predevelopment Component Note and the Assignment of Work Product and the execution of the Assignment of Work Product by the Architect and Consultants;
The Borrower has delivered to the City a copy of the Borrower’s organizational documents and a corporate authorizing resolution authorizing the Borrower’s execution of this Agreement, the Predevelopment Component Note, and the Assignment of Predevelopment Component Documents;
The Borrower has furnished the City with evidence of the insurance coverage meeting the requirements of Article 9 below;
The Borrower has at or before the close of escrow closed a construction loan with a Holder and is in good standing under that construction loan;
The Borrower has furnished the City with evidence that Borrower has received commitments for funding to make the construction and operation of the Project financially feasible consistent with the Project Budget, including, but not limited to, receipt of a Tax Credit reservation for the Project from TCAC, and funding from the No Place Like Home (NPLH) Program, and any other funding source satisfactory to the City; and
The Borrower has submitted a written draw request to the City.
Section 2.5 Repayment of the Predevelopment Component.
(a) Payment in Full. Subject to subsection (b) below, all principal and interest, if any, on the Predevelopment Component will, at the option of the City, be due and payable upon the expiration of the term of the Predevelopment Component Note, or upon occurrence and continuation of an Event of Default that remains uncured after expiration of the applicable cure period.
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(b) Conveyance of Site. If the Borrower proceeds to develop the Project, upon Close of Escrow: (i) the Borrower will execute the Development Component Note which note will include the principal balance of the Predevelopment Component in addition to the Development Component amount and (ii) the Predevelopment Component Note will be marked as “cancelled” and returned to the Borrower.
Section 2.6 Termination of Agreement for Infeasibility.
Provided that there is no occurrence and continuation of an Event of Default under this Agreement or the DDA, and the Borrower has delivered the Predevelopment Component Documents to the City, this Agreement may be terminated by either Party the Borrower under the circumstances set forth below by giving written Notice of such termination to the Cityother Party:
The Borrower does not receive any remaining governmental approvals required or reasonably necessary for the development of the Site; or The determination by the Borrower that any remediation work with respect to Hazardous Materials, or addressing other physical conditions of the Site, or other costs, conditions or requirements of or for the Project are so expensive as to make the Project financially infeasible; The Borrower does not receive commitments of all projected financial assistance or reasonable substitutions necessary to acquire, construct, and operate the Project; or The DDA is terminated by a Partythe Borrower.
Following termination under this Section 2.6 neither Party will have any rights or obligations under this Agreement, except that the provisions of this Agreement that expressly survive such termination will remain in full force and effect.
Section 2.7 Forgiveness of Predevelopment Component in Certain Circumstances.
The City will forgive the Predevelopment Component, mark the Predevelopment Component Note as “cancelled” and return the Predevelopment Component Note to the Borrower, upon termination of this Agreement pursuant to Section 2.6, above, provided that the Borrower deposits the Predevelopment Component Documents with the City.
ARTICLE 3.
USE OF PREDEVELOPMENT COMPONENT.
Section 3.1 Borrower Responsibility and Management.
The Borrower will perform the predevelopment tasks in conformance with all applicable laws and will obtain all necessary permits and approvals of third parties.
Section 3.2 Environmental Investigation and Remediation.
The Borrower will be responsible for the costs of such environmental investigation and any required remediation; provided, however, that if the cost of such remediation is reasonably Item 3B - Page 117
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determined to make the Project economically infeasible, then this Agreement may be terminated pursuant to Section 2.6.
ARTICLE 4.
DEVELOPMENT COMPONENT
Section 4.1 Development Component.
Subject to satisfaction of the conditions set forth in Section 4.5, the City will lend to the Borrower the Development Component in the amount of Four Million Four Thousand Three Hundred Dollars ($4,004,300), including Four Hundred Eighty Thousand Dollars ($480,000) from the Predevelopment Loan that was cancelled, an additional Two Million Four Hundred Thousand Dollars ($2,400,000), the One Million Four Hundred Thousand Dollars ($1,400,000) of the Purchase Price (as defined in the DDA), and Two Hundred Four Thousand Three Hundred Dollars ($204,300) in SA Property Proceeds (as that term is defined in the DDA), for the purposes set forth in Section 4.3.
Section 4.2 Interest.
(a) Subject to the provisions of Section 4.2(b) below, the outstanding principal balance of the City Loan will accrue interest at the rate of three percent (3%) simple interest during the Term of this Agreement. Notwithstanding the foregoing, in the event an investor will require a modification to such interest rate, the Parties will use their best efforts to accommodate any reasonable changes so requested.
(b) In the event of an Event of Default, subject to all applicable notice and cure rights, interest on the City Loan will begin to accrue, as of the date of the Event of Default and continuing until the earlier of such time as the City Loan funds are repaid in full or the Event of Default is cured, at the Default Rate of the lesser of ten percent (10%), compounded annually, or the highest rate permitted by law.
Section 4.3 Use of Development Component.
The Borrower will use the Development Component of the City Loan to pay third party development costs of the Project during the construction phase and as part of the permanent financing of the Project.
Section 4.4 Security.
Borrower will secure its obligation to repay the City Loan, as evidenced by the Note, by executing the Deed of Trust, and recording it as a lien against the Site.
Section 4.5 Conditions Precedent to Disbursement.
The amount of funds to be disbursed pursuant to this Section 4.5 will be Two Million One Hundred Twenty-Four Thousand Three Hundred Dollars ($2,124,300), which will be in addition to the Four Hundred Eighty Thousand Dollars ($480,000) disbursed for the Predevelopment Component and the One Million Four Hundred Thousand Dollars ($1,400,000) for the Purchase Item 3B - Page 118
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Price. The City will fund the Development Component upon satisfaction of the following conditions:
(1) There exists no Event of Default nor any act, failure, omission or condition that would constitute an Event of Default under this Agreement or the DDA (e.g., failure to satisfy a Post-Closing Condition);
(2) Borrower has executed and delivered to City all documents, instruments, and policies required under the City Loan Documents;
(3) A title insurer reasonably acceptable to the City is committed to issuing an ALTA Lender’s Policy of insurance insuring the Deed of Trust in the amount of the City Loan, subject only to such exceptions and exclusions as may be reasonably acceptable to the City, and containing such endorsements as the City may reasonably require; (4) The City Regulatory Agreement and the Deed of Trust have been recorded against the Site in the Office of the Recorder of the County of Riverside; (5) The Borrower has at the close of escrow simultaneously closed a construction loan with a Holder and is in good standing under that construction loan; (6) The City has received copies of labor and material payment bonds and performance bonds as required pursuant to Section 5.5 below; (7) The City has received a written draw request from the Borrower, including certification that the conditions set forth in this Section continue to be satisfied.
Upon satisfaction of the above conditions for each draw, the City will disburse Development Component Loan funds as follows: (1) Upon transfer of the City Property, City will disburse One Million Two Hundred Thousand Dollars ($1,200,000) to fund or reimburse the Borrower for Development Component Expenses; (2) at Close of Escrow the Purchase Price of One Million Four Thousand Dollars ($1,400,000) will be evidenced by the Borrower’s execution of the Note; (3) upon the Architect’s determination that the Work is Fifty Percent (50%) complete, Six Hundred Thousand Dollars ($600,000) in HHAP funds will be disbursed to the Borrower; (4) upon the City’s issuance of a Certificate of Occupancy for the Improvements and Borrower execution of the TCAC Regulatory Agreement, the City will disburse the remaining One Hundred Twenty Thousand Dollars ($120,000) to the Borrower, a portion of which shall be HHAP funds; and (5), provided that Developer has received a reservation of Tax Credits from CTCAC, an award from the HCD Accelerator Fund in lieu of Tax Credits, or funds from an alternative major funding source pursuant to Section 6.1.2 of the DDAprovided that Borrower has received a reservation of LIHTC from TCAC, within thirty (30) days after City’s receipt of SA Property Proceeds (as that term is defined in the DDA) from the Riverside County Auditor-Controller, City will disburse the City’s proceeds to Borrower.
Section 4.6 Repayment Schedule.
Annual Payments. Each year the Borrower will make payments of principal and interest of the City Loan to the City from a percentage of Residual Receipts, defined below, as provided Item 3B - Page 119
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for in the Note. Such annual payments will be due and payable in arrears no later than July 15th of each year with respect to the previous calendar year, commencing on July 15th of the first year after the issuance of a Certificate of Occupancy for the Improvements, and will be accompanied by the Borrower’s report of Residual Receipts (including an independent auditor’s report as set forth in Section 4.7, below). The Borrower will provide the City with any documentation reasonably requested by the City to substantiate the Borrower’s determination of Residual Receipts. Repayments will be credited first to interest, then to principal. Interest that has accrued but for which Residual Receipts are not available in a given year will be deferred to the following year.
Payment in Full. Regardless of the availability of Residual Receipts, all principal and interest on the City Loan will be due upon the earliest of:
(1) a Transfer of the Project other than a Transfer permitted or approved by the City as provided in Article 6:
(2) the occurrence of an Event of Default for which the City exercises its right to cause the City Loan indebtedness to become immediately due and payable, or for which the City Loan indebtedness is automatically specified to become immediately due and payable pursuant to applicable subsections of Article 12 below; or
(3) the earlier of: (i) the fifty-seventh (57th) anniversary date on which the Construction Financing converts to a Permanent Loan, or (ii) September 1, 2079.
Special Definitions.
(1) “Annual Operating Expenses” with respect to a particular calendar year will mean the following costs incurred for operation and maintenance of the Project to the extent that they are consistent with an annual independent audit performed by a certified public accountant, using generally accepted accounting principles: debt service currently due on a non-optional basis (excluding debt service due from Residual Receipts or surplus cash of the Project) on loans associated with development of the Project; property and other taxes and assessments imposed on the Project; premiums for property damage, liability, business interruption, hazardous materials, workers compensation, disability, automobile, and similar insurance required by Holders or investors or typically obtained for similar properties; utility services not paid for directly by tenants, including water, sewer, trash collection, gas, electricity, telephone, cable, and data; maintenance and repair, including but not limited to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial supplies; any annual license or certificate of occupancy fees required for operation of the Project; general administrative expenses including but not limited to advertising and marketing, security services and systems, professional fees for legal, audit, accounting and tax returns; property management fees and reimbursements including on-site manager and staff expenses,; cash deposited into a reserve for capital replacements of the Project; expenditures of casualty insurance proceeds; an annual partnership management fee, or similar fee, paid to the Borrower, in an amount not to exceed Forty Thousand Dollars ($40,000) increasing annually by three percent (3%); an annual fee paid to the investor in an amount not to exceed Twenty Five Thousand Dollars ($25,000) increasing by three percent (3%) per annum (provided, however, such fee will only be Item 3B - Page 120
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payable during the Tax Credit Compliance Period); payment of any previously unpaid portion of the Borrower fee due; an operating reserve in such reasonable amounts as are approved by a Holder or LIHTC investor; extraordinary operating costs approved by a Holder or LIHTC investor; and other ordinary and reasonable operating expenses not listed above. Annual Operating Expenses will not include the following: depreciation, amortization, depletion or other non-cash expenses or any amount expended from a reserve account.
(2) “Gross Revenue” with respect to a particular calendar year will mean all revenue, income, receipts, and other consideration actually received from the operation and leasing of the Project. Gross Revenue will include, but not be limited to: all rents, fees and charges paid by tenants, deposits forfeited by tenants, all cancellation fees, Section 8 housing assistance payments as applicable, price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry machines; the proceeds of business interruption or similar insurance; and condemnation awards for a taking of part or all of the Project for a temporary period. Gross Revenue will not include tenants’ security deposits, loan proceeds, or similar advances.
(3) “Residual Receipts” with respect to a particular calendar year will mean the amount by which Gross Revenue (as defined above) exceeds Annual Operating Expenses (as defined above). To the extent a Holder or LIHTC investor requires a different definition of Residual Receipts, the City and the Borrower will meet and confer regarding any requested revisions to the definition. Any changes to the definition shall be reasonably agreed to by City and Borrower.
Section 4.7 Reports and Accounting of Residual Receipts. (a) Audited Financial Statement. In connection with the annual payments as set forth in Section 4.6, above, within one hundred eighty (180) days of the end of the Borrower’s fiscal year, the Borrower will furnish to the City an audited statement duly certified by an independent firm of certified public accountants, setting forth in reasonable detail the computation and amount of Residual Receipts during the preceding calendar year. (b) Books and Records. In addition to the Borrower’s obligations under Section 5.14, the Borrower will keep and maintain on the Site, or at its principal place of business, complete and appropriate books, records and accounts relating to the Project, including all such books, records and accounts necessary to substantiate the Borrower’s calculation of Residual Receipts. Copies of all books, records and accounts that the Borrower may be required to furnish any governmental agency will at all reasonable times be open for inspection by the City at the place that the books, records and accounts of the Borrower are kept upon prior reasonable notice to the Borrower. The Borrower will preserve records on which any statement of Residual Receipts is based for a period of not less than five (5) years after such statement is rendered, and for any period during which there is an audit undertaken pursuant to subsection (c) below then pending. (c) Audits. The receipt by the City of any statement pursuant to subsection (a) above or any payment by the Borrower or acceptance by the City of any loan repayment for any period will not bind the City as to the correctness of such statement or such payment. Within five (5) years after the receipt of any such statement, the City or any designated agent or employee of the Item 3B - Page 121
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City, will be entitled to audit the Residual Receipts and the books, records, and accounts pertaining to the Residual Receipts. Such audit will be conducted during normal business hours at the principal place of business of the Borrower and other places where records are kept. Immediately after the completion of an audit, the City will deliver a copy of the results of such audit to the Borrower. If it will be determined as a result of such audit that there has been a deficiency in a City Loan repayment to the City, then such deficiency will become immediately due and payable.
If the Borrower’s auditor’s statement for any Project fiscal year will be found to have understated Residual Receipts by more than ten percent (10%), and the City is entitled to any additional City Loan repayment as a result of said understatement, then the Borrower will pay such amount, interest from the date such payment was due at a rate equal to the Default Rate under this Agreement, and, following the Agency’s written request, all of the Agency’s reasonable costs and expenses connected with the audit or review of the Borrower’s accounts and records.
Section 4.8 Prepayment.
The Borrower may pay the principal and any interest due on the City Loan in advance of the time for payment of principal and any interest as provided in this Agreement, without penalty; provided, however, that the Borrower acknowledges that the provisions of the City Regulatory Agreement will be applicable to the Project for the full term of the City Regulatory Agreement, even though the Borrower may have prepaid the City Loan.
Section 4.9 Non-Recourse.
Except as provided below, following recordation of the Deed of Trust, neither the Borrower, nor any general or limited partner of the Borrower, will have any direct or indirect personal liability for payment of the principal of, and interest on, the City Loan or the performance of the covenants of the Borrower under the Deed of Trust. The sole recourse of the City with respect to the principal of, and interest on, the Note and defaults by the Borrower in the performance of its covenants under the Deed of Trust will be to the property described in the Deed of Trust; provided, however, that nothing contained in the foregoing limitation of liability will (a) limit or impair the enforcement against all such security for the Note of all the rights and remedies of the City under the Note, or (b) be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision. The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note and the performance of the Borrower’s obligations under the Deed of Trust, except as set forth in this Agreement; nothing contained in this Section is intended to relieve the Borrower of its obligation to indemnify the City under the provisions of this Agreement or the DDA, or liability for (i) fraud or willful misrepresentation; (ii) the failure to pay taxes, assessments or other charges which may create liens on the Site that are payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other charges); (iii) the misappropriation of any proceeds under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Site.
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ARTICLE 5.
CONSTRUCTION OF THE PROJECT
Section 5.1 Financing Plan.
As of the Effective Date, the City has approved the preliminary Proposed Budget attached to this Agreement as Exhibit B. No later than thirty (30) days before the date of Close of Escrow, the Borrower will submit an updated and revised budget, including commitment letters for all financing set forth in. The City will reasonably approve or disapprove the revised Proposed Budget in writing within ten (10) calendar days of the City’s receipt. Upon City approval, the Borrower’s update to the Proposed Budget will be referred to as the “Financing Plan”. If the Borrower’s update to the Proposed Budget is disapproved by the City, the Borrower will have fifteen (15) calendar days from the date of the Borrower’s receipt of the City’s notice of disapproval to submit a revised Financing Plan. The provisions of this Section relating to time periods for approval, disapproval and resubmission of a proposed Financing Plan will continue to apply until the City has approved the Financing Plan. The Financing Plan will contain, at a minimum:
(1) a proposed development budget for the Improvements; (2) a sources and uses analysis for the period of the construction, including an analysis of subsidized financing necessary from the City, if any, and other public bodies, if any; and
(3) a sources and uses analysis from the date of the origination of the permanent loan, if any, or in the absence of a permanent loan, from the date of the issuance of the Certificate of Occupancy, including an analysis of subsidized financing necessary from the City, if any, and/or other public entities, if any.
Section 5.2 Construction Plans and Schedules.
The Borrower will cause the Architect and any applicable Consultants to prepare Construction Plans for the Project in accordance with the Applicable Requirements.
Section 5.3 Construction Contract.
No later than thirty (30) days before the date of Close of Escrow, the Borrower will submit to the City for its limited approval the proposed Construction Contract(s) for the Improvements.
The City’s review and approval will be limited exclusively to a determination whether (a) the guaranteed maximum construction cost set forth in the Construction Contract is consistent with the approved Proposed Budget or Financing Plan (as applicable); (b) the Construction Contract is with a licensed contractor; and (c) the Construction Contract contains provisions consistent with this Agreement The City’s approval of the Construction Contract will in no way be deemed to constitute approval of or concurrence with any other term or condition of the Construction Contract, and the Borrower will not rely on the City’s approval of the Construction Contract as a representation regarding the enforceability or business advantage of the Construction Contract.
City approval will merely constitute satisfaction of the condition set forth in this Section 5.3.
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Upon receipt by the City of the proposed Construction Contract, the City will promptly review same and approve it within ten (10) Business Days if it satisfies the limited criteria set forth above. If the Construction Contract is not approved by the City, the City will set forth in writing and notify the Borrower of the City’s reasons for withholding such approval. The Borrower will thereafter submit a revised Construction Contract for City approval, which approval will be granted or denied in five (5) days in accordance with the criteria and procedures set forth above.
If the Borrower’s revised Construction Contract is disapproved by the City, the Borrower will have ten (10) calendar days from the date of the Borrower’s receipt of the City’s notice of disapproval to submit a revised Construction Contract. The provisions of this Section relating to time periods for approval, disapproval and resubmission of a proposed Construction Contract will continue to apply until the City has approved the Construction Contract.
Section 5.4 Applicable Land Use Approvals; Building Permits.
The Borrower will obtain all applicable land use approvals, and the building permit necessary for the construction of the Improvements.
Section 5.5 Payment and Performance Bonds.
No later than the date of Close of Escrow, the Borrower will obtain one (1) labor and material bond and one (1) performance bond for construction of the Improvements, each in an amount equal to one hundred percent (100%) of the scheduled cost of construction. Each bond will name the City as co-obligee and will be issued by a reputable insurance company licensed to do business in California.
Section 5.6 Construction Pursuant to Plans.
Unless modified by operation of Section 5.7, the Improvements will be constructed substantially in accordance with the Construction Plans and the terms and conditions of the City’s land use permits and approvals and building permits.
Section 5.7 Change in Construction of Improvements.
If the Borrower desires to make any material change in the Improvements which are not substantially consistent with the Construction Plans, the Borrower will submit the proposed change to the City for its approval. No change which is required for compliance with building codes or other government health and safety regulation will be deemed material. For purposes of Section
5.7, a material change will mean any change which is expected to result in an increase or decrease of more than One Hundred Thousand Dollars ($100,000). If the Improvements, as modified by any such proposed material change, will conform to the requirements of this Agreement, the City will approve the change by notifying the Borrower in writing.
The City will either approve or disapprove a proposed material change within ten(10) Business Days following the City’s receipt of the proposed material change. If rejected within such time period, the previously approved Construction Plans will continue to remain in full force and effect unless the Borrower submits a revised proposed material change for approval by the City. If the City rejects a proposed change, the City will provide the Borrower with the specific reasons for the rejection.
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The approval of changes in the Construction Plans by the City pursuant to this Section 5.7 will be in addition to any approvals required to be obtained from the City pursuant to building permit requirements.
Section 5.8 Commencement and Completion of Construction of Improvements.
Subject to the terms of this Agreement, the Borrower will diligently prosecute to completion the construction of the Improvements.
Section 5.9 Equal Opportunity.
During the construction of the Improvements, the Borrower, the Architect, the Consultants and their successors, assigns and subcontractors will not discriminate against any employee or applicant for employment in connection with the design, construction, or rehabilitation of the Improvements because of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition. Each of the following activities will be conducted in a nondiscriminatory manner: hiring; upgrading; demotion and transfers; recruitment and recruitment advertising; layoff and termination; rate of pay and other forms of compensation; and selection for training including apprenticeship. Nothing in this Section 5.9 shall be deemed to controvert or otherwise limit the applicability of Section 7.1 to this Agreement, the DDA or any duty of Borrower or any party entering a contract with Borrower.
Section 5.10 Construction Pursuant to Laws.
The Borrower will cause all Work performed in connection with the Project to be performed in compliance with the Applicable Requirements.
Borrower will pay and will cause the General Contractor and subcontractors to pay prevailing wages in the construction of the Project as those wages are determined pursuant to California Labor Code Section 1720 et seq., to employ apprentices as required by California Labor Code Sections 1777.5 et seq., and the implementing regulations of the Department of Industrial Relations (the “DIR”). In addition, as applicable, Borrower will cause its General Contractor and subcontractors to do all the following: (1) all calls for bids, bidding materials and the Construction Contract documents for the Project must specify that (A) no contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the Project unless registered with the DIR pursuant to Labor Code Section 1725.5 and 1771.1, and (B) the Project is subject to compliance monitoring and enforcement by the DIR; (2) Borrower shall comply with the project registration requirements under Labor Code Section 1773.3; (3) Borrower will cause its General Contractor and subcontractors to post job site notices, as prescribed by regulation by the DIR; (4) Borrower will cause its General Contractor and subcontractors to maintain payroll records required by Labor Code Sections 1771.4 and 1776 and furnish an electronic version of the certified payroll records directly to the Labor Commissioner, at least monthly in the electronic format prescribed by the Labor Commissioner; and (5) Borrower will cause its General Contractor to comply with hours of labor requirements under Labor Code Sections 1813 and 1815. Borrower will defend (with counsel reasonably acceptable to City) City and its officers, employees, agents or contractors Item 3B - Page 125
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against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity, other than City or its officers, employees, agents or contractors, to pay comply with all applicable state prevailing wage requirements in the performance of this Agreement or the Project and will indemnify and hold City and its officers, employees, agents or contractors harmless against any damages, compensation, fines, penalties or other amounts resulting from the successful prosecution of such claim.
Section 5.11 Construction Responsibilities.
It will be the responsibility of the Borrower to coordinate and schedule the Work to be performed so that commencement and completion of construction will take place in accordance with this Agreement.
The Borrower will be solely responsible for all aspects of the Borrower’s conduct in connection with the Project, including (but not limited to) the quality and suitability of the Construction Plans, the supervision of construction work, and the qualifications, financial condition, and performance of all architects, engineers, contractors, subcontractors, suppliers, consultants, and property managers. Any review or inspection undertaken by the City with reference to the Project is solely for the purpose of determining whether the Borrower is properly discharging its obligations to the City, and should not be relied upon by the Borrower or by any third parties as a warranty or representation by the City as to the quality of the design or construction of the Project.
Section 5.12 Mechanics Liens, Stop Notices, and Notices of Completion.
If any claim of lien is filed against the Site or the Improvements or a stop notice affecting the City Loan is served on the City or any Holder or other third party in connection with the Project, then the Borrower will, within twenty (20) days after such filing or service, either pay and fully discharge or cause the Borrower’s General Contractor to pay and fully discharge, the lien or stop notice, effect the release of such lien or stop notice by delivering to the City a surety bond for an amount equal to the amount claims in the lien or stop notice, or provide the City with other assurance reasonably satisfactory to the City that the claim of lien or stop notice will be paid or discharged.
If the Borrower fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Section or obtain a surety bond, then in addition to any other right or remedy, the City may (but will be under no obligation to) discharge such lien, encumbrance, charge, or claim at the Borrower’s expense. Alternatively, the City may require the Borrower to immediately deposit with the City the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined against the Borrower. The City will have no obligation to fund any portion of the City Loan during such time that a lien encumbers the Site.
The Borrower will file a valid notice of cessation or notice of completion upon cessation of construction of the Project for a continuous period of thirty (30) days or more, and take all other reasonable steps to forestall the assertion of claims of lien against the Site and/or Improvements.
The Borrower authorizes the City, but without any obligation, to record any notices of completion Item 3B - Page 126
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or cessation of labor, or any other notice that the City deems necessary or desirable to protect its interest in the Project and Site.
Section 5.13 Inspections.
The Borrower will permit and facilitate, and will require its General Contractor and subcontractors to permit and facilitate, observation and inspection at the Project by the City and by public authorities during reasonable business hours and upon prior reasonable notice for the purposes of determining compliance with this Agreement.
Section 5.14 Records.
Recordkeeping; Access. The Borrower’s books and records pertaining to its performance under this Agreement will be kept in accordance with generally accepted accounting principles and as required by the Applicable Requirements, and will be retained for at least five (5) years after the City makes final payment to Borrower under this Agreement and all other pending matters are closed. Borrower grants a right of access to the City, any agency providing funds to the City, and any of their authorized representatives, with respect to any books, documents, papers, or other records pertinent to this Agreement in order to make audits, examinations, excerpts, and transcripts, during normal business hours upon reasonable notice. The period of access and examination of the records under this Section relating to (1) litigation or settlements of disputes arising from the performance of this Agreement, or (2) costs and expenses of this Agreement to which the City, any agency providing funds to the City, or any of their duly authorized representatives has taken exception will continue until disposition of such appeals, litigation, claims, or exceptions
Insufficient Records. The City will notify the Borrower of any records it deems insufficient. The Borrower will have thirty (30) calendar days after the receipt of such a notice to correct any deficiency in the records specified by the City in such notice, or if a period longer than thirty (30) days is reasonably necessary to correct the deficiency, then the Borrower will begin to correct the deficiency within thirty (30) days and complete the correction of the deficiency as soon as reasonably possible.
ARTICLE 6.
OWNERSHIP, OPERATION AND DISPOSITION OF PROJECT
Section 6.1 City Regulatory Agreement.
The Project will be subject to the City Regulatory Agreement.
Section 6.2 Restrictions on Transfers and Assignments.
As used in this Section, “Transfer” will mean:
(1) Any total or partial sale, assignment or conveyance, or any transfer in any other mode or form, of or with respect to this Agreement or any aspect of the Project or any part of the Project or any interest in the Project or any contract or agreement to do any of the same; or Item 3B - Page 127
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(2) Any total or partial sale, assignment or conveyance, or any transfer in any other mode or form, of or with respect to any interest in the Borrower, including, but not limited to, any transfer of the interest of a partner or a member of the Borrower, or any contract or agreement to do any of the same; or
(3) Any merger, consolidation, sale or lease of all or substantially all of the assets of Borrower.
Purpose of Restrictions on Transfer. The Borrower recognizes that the qualifications and identity of Borrower are of particular concern to the City, in view of:
(1) The financial assistance and other public aids that have been made available by law and by the government for the purpose of making the Project possible; (2) The reliance by the City upon the qualifications and ability of the Borrower to assure the quality of the use, operation and maintenance deemed critical by the City for the Project.
Prohibited Transfers. Except as expressly permitted in this Agreement, the Borrower represents and agrees that the Borrower has not made or created, and will not make or create or suffer to be made or created, any Transfer, either voluntarily or by operation of law without the prior written approval of the City. Any Transfer made in contravention of this Section will be void and will be deemed to be an Event of Default under this Agreement whether or not the Borrower knew of or participated in such Transfer unless such Transfer is rescinded by the Borrower within thirty (30) days following written notice by the City to the Borrower to rescind such Transfer.
Section 6.3 Transfers with City Consent.
The City may, in its reasonable discretion, approve in writing a Transfer requested by Borrower other than those preapproved Transfers described below. In connection with such request, there will be submitted to the City for review all instruments and other legal documents proposed to affect any such Transfer. If a requested Transfer is approved by the City such approval will be indicated to the Borrower in writing. Such approval will be granted or denied by the City within thirty (30) days of receipt by the City of Borrower’s request for approval of a Transfer.
Failure by the City to approve or disapprove a Borrower request for Transfer within thirty (30) days of receipt by the City will be deemed denial of the Transfer by the City.
Notwithstanding the foregoing, the City approves and consents to the following Transfers:
Assignment of this Agreement and the Project to a limited partnership in which West Hollywood Community Housing Corporation (“WHCHC”) or a limited liability company of which WHCHC is a member acts as a general partner, so long as the limited partnership assumes the Borrower’s rights and obligations under this Agreement and the City Loan Documents and provides the City with a copy of the assignment document.
Grant of the security interests in the Site in accordance with the Financing Plan.
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Future Transfers of the limited partner interest of the Borrower provided that: (i) such Transfers do not affect the timing and amount of the limited partner capital contributions provided for in the Financing Plan; (ii) in subsequent Transfers, a wholly owned affiliate of the initial limited partner retains a membership or partnership interest and serves as a managing member or managing general partner of the successor limited partner; and (iii) in subsequent Transfers the initial limited partner remains liable for all unpaid capital contributions.
In the event the managing general partner of Borrower is removed by the limited partner of Borrower for cause following default under the Borrower’s partnership agreement, the City approves the Transfer of the general partner interest to a nonprofit corporation, exempt from federal income taxation in accordance with Section 501(c)(3) of the Internal Revenue Code, selected by the limited partner.
Transfer of the Project or partnership interests in the Tax Credit Partnership to a general partner or an entity controlled by a general partner of the Tax Credit Partnership after the first ten years of the fifteen year tax credit initial compliance period.
ARTICLE 7.
OBLIGATIONS WHICH CONTINUE THROUGH AND
BEYOND THE COMPLETION OF CONSTRUCTION
Section 7.1 Non-Discrimination.
The Borrower covenants by and for itself and its successors and assigns that there will be no discrimination against or segregation of a person or of a group of persons on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each, a “Prohibited Basis”) in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site or of the Project by the Borrower, nor will the Borrower or any person claiming under or through the Borrower establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees of the Site or of the Project. Notwithstanding the preceding sentence, restrictions on housing units based on age, physical or mental disability, or medical condition shall not violate this Section if said housing units are funded by a program that requires the selection of tenants based on those characteristics. With respect to familial status, nothing in this Section 7.1 shall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 7.1.
Further, the Borrower covenants by and for itself and any successors in interest and assigns that it shall not discriminate against any employee or applicant for employment because of a Prohibited Basis. Borrower also covenants that it shall ensure that applicants for employment are employed, and that employees are treated during their employment, without regard to any prohibited basis. As a condition precedent to City’s lawful capacity to enter the DDA and execute this Agreement, the Borrower has certified to City that its actions and omissions under the DDA Item 3B - Page 129
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shall not incorporate any discrimination arising from or related to any prohibited basis in any Borrower activity, including but not limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship; and further, that Borrower is in full compliance with the provisions of Palm Springs Municipal Code Section
7.09.040, including without limitation the provision of benefits, relating to non-discrimination in City contracting.
Section 7.2 Mandatory Language in All Subsequent Deeds, Leases and Contracts.
All deeds, leases or contracts entered into by the Borrower, on or after the date of execution of this Agreement as to any portion of the Site will contain the following language:
In Deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessee, or vendees in the premises herein conveyed.
Notwithstanding the preceding sentence, selection of tenants for housing units based on age, physical or mental disability, or medical condition shall not violate this Section if said housing units are funded by a program that requires the selection of tenants based on those characteristics.
The foregoing covenants shall run with the land.”
In Leases (except for leases from Borrower to a residential tenant): “The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition , in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sub-lessee, sub-tenants, or vendees in the premises herein leased. Notwithstanding the preceding sentence, selection of tenants for housing units based on age, physical or mental disability, or medical condition shall not violate this Section if said housing units are funded by a program that requires the selection of tenants based on those characteristics.”
In Contracts:
(i) “There will be no discrimination against or segregation of any person or group of persons on account of actual or perceived sex, age, marital status, race, color, Item 3B - Page 130
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religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property nor will the transferee or any person claiming under or through the transferee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees of the land. Notwithstanding the preceding sentence, selection of tenants for housing units based on age, physical or mental disability, or medical condition shall not violate this provision if said housing units are funded by a program that requires the selection of tenants based on those characteristics;
(ii) There shall be no discrimination in the performance of this agreement against any employee or applicant for employment because of actual or perceived race, religion, color, sex, age, marital status, ancestry, national origin (i.e., place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a “prohibited basis”);
(iii) All applicants for employment shall be employed, and employees shall be treated during their employment, without regard to any prohibited basis; and (iv) Performance under this agreement shall not incorporate any discrimination arising from or related to any prohibited basis in any activity, including but not limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship; and (v) The parties to this agreement are familiar with and in full compliance with the provisions of Palm Springs Municipal Code Section 7.09.040, including without limitation the provision of benefits, relating to non-discrimination in City contracting.”
Section 7.3 Employment Opportunity.
During the operation of the Project, there will be no discrimination by the Borrower because of a Prohibited Basis in the hiring, firing, promoting, or demoting of any person engaged in the operation of the Project.
Section 7.4 Hazardous Materials.
Borrower will keep and maintain the Site in compliance with, and will not cause or permit the Site to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions on, under or about the Site including, but not limited to, soil and ground water conditions. Borrower will not use, generate, manufacture, store or dispose of on, under, or about the Site or transport to or from the Site any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including without Item 3B - Page 131
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limitation, any substances defined as or included in the definition of “hazardous substances,” hazardous wastes,” “hazardous materials,” or “toxic substances” under any applicable federal or state laws or regulations (collectively referred to in this Agreement as “Hazardous Materials”) except such of the foregoing as may be customarily used in construction and operation of projects like the Project or kept and used in and about residential property of this type.
Borrower will immediately advise the City in writing if at any time it receives written notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Borrower or the Site pursuant to any applicable Hazardous Materials Law as that term is defined in the DDA; (ii) all claims made or threatened by any third party against Borrower or the Site relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as “Hazardous Materials Claims”); and (iii) Borrower’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Site that could cause the Site or any part thereof to be classified as “border-zone property” (as defined in California Health and Safety Code Section 25117.4) under the provision of California Health and Safety Code, Sections 25220 et seq., or any applicable adopted regulation, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Site under any Hazardous Materials Law.
The City will have the right to defend itself if named as a party or join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys’ fees in connection therewith paid by Borrower. Borrower will indemnify and hold harmless the City and its City Council members, supervisors, directors, officers, employees, agents, successors and assigns (collectively, the “Agents”) from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about the Site including without limitation: (a) all foreseeable consequential damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the Site and the preparation and implementation of any closure, removal, remedial or other required plans; and (c) all reasonable costs and expenses incurred by the City in connection with clauses (a) and (b), including but not limited to reasonable attorneys’ fees and consultants’ fees. This indemnification applies whether or not any government agency has issued a cleanup order. Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision include, but are not limited to: (1) losses attributable to diminution in the value of the Site; (2) loss or restriction of use of rentable space on the Site; (3) adverse effect on the marketing of any rental space on the Site: and (4) penalties and fines levied by, and remedial or enforcement actions of any kind issued by any regulatory agency (including but not limited to the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the Site and surrounding properties). This obligation to indemnify will survive termination of this Agreement. Notwithstanding anything to the contrary contained in this Agreement, the foregoing indemnity will specifically exclude any liability arising from solely the acts or omissions of the City and/or its Agents. In no event will Borrower be liable for a Hazardous Material Claim which arises from ownership or use of the Site prior to Borrower’s acquisition of a leasehold interest in the Site.
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Without the City’s prior written consent, which will not be unreasonably withheld, Borrower will not take any remedial action in response to the presence of any Hazardous Materials on, under or about the Site, or enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in the City’s reasonable judgment, impair the value of the City’s security under this Agreement; provided, however, that the City’s prior consent will not be necessary in the event that the presence of Hazardous Materials on, under, or about the Site either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain the City’s consent before taking such action, provided that in such event Borrower will notify the City as soon as practicable of any action so taken. The City agrees not to withhold its consent, where such consent is required under this Agreement, if (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) Borrower will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii) Borrower establishes to the reasonable satisfaction of the City that there is no reasonable alternative to such remedial action which would result in less impairment of the City’s security under this Agreement; or (iv) the action has been agreed to by the City.
Borrower acknowledges and agrees that (i) this Section is intended as the City’s written request for information (and Borrower’s response) concerning the environmental condition of the Site as required by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this Agreement (together with any indemnity obligation applicable to a breach of any such representation and warranty) with respect to the environmental condition of the Site is intended by the Parties to be an “environmental provision” for purposes of California Code of Civil Procedure Section 736.
In the event that any portion of the Site is determined to be “environmentally impaired” (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an “affected parcel” (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the City’s or the trustee’s rights and remedies under the Deed of Trust, the City may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such environmentally impaired or affected portion of the Site and (2) exercise (i) the rights and remedies of an unsecured creditor, including reduction of its claim against the Borrower to judgment, and (ii) any other rights and remedies permitted by law. For purposes of determining the City’s right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Borrower will be deemed to have willfully permitted or acquiesced in a release or threatened release of Hazardous Materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of Hazardous Materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Site and the Borrower knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. Subject to the limitations set forth in subsection (c) above, all costs and expenses, including (but not limited to) reasonable attorneys’ fees, incurred by the City in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Site is environmentally impaired, plus interest thereon at the lesser of ten percent (10%) and the maximum rate permitted by law, until paid, will be added to the indebtedness secured by the Deed Item 3B - Page 133
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of Trust and will be due and payable to the City upon its demand made at any time following the conclusion of such action.
ARTICLE 8.
APPLICABLE REQUIREMENTS
Section 8.1 Applicable Requirements.
The Borrower will comply with all Applicable Requirements.
ARTICLE 9.
INSURANCE
Section 9.1 Borrower.
Borrower will maintain and keep in force insurance, of the following types if applicable:
Worker’s Compensation insurance to the extent required by law, including Employer’s Liability coverage, with limits not less than One Million Dollars ($1,000,000) each accident. “All Risk” insurance against loss or damage by fire, flood and such other risks and matters, including without limitation, business interruption, rental loss, public liability, and boiler damage and liability. The amount of such insurance will not be less than one hundred percent (100%) of the full replacement value of the Project, including the cost of debris removal, without deduction for depreciation.
Commercial General Liability insurance with limits not less than Two Million Dollars ($2,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed Operations.
Commercial Automobile Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for owned, non-owned and hired vehicles, as applicable; provided, however, that if the Borrower does not own or lease vehicles for purposes of this Agreement, then no automobile insurance will be required.
The required insurance will be provided under an occurrence form, and Borrower will maintain such insurance throughout the Term. Should any of the required insurance be provided under a form of coverage that includes an annual aggregate limit that does not apply separately to this Project or provides that claims investigation or legal defense costs be included in such annual aggregate limit, such annual aggregate limit will be twice the occurrence limits specified above.
Commercial General Liability, Commercial Automobile Liability and Property insurance policies will be endorsed to name as an additional insured the City and its Agents.
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All policies and bonds will be endorsed to provide thirty (30) days prior written notice of cancellation, reduction in coverage, or intent not to renew to the address established for notices to the City.
Each policy will name the City as an additional insured and as a loss payee. Each such policy will be underwritten and issued by companies authorized to do business in California, with Best’s Rating of at least A:VII or better. The Borrower will provide the City with certificates of insurance evidencing the limits and coverages required by this Article.
ARTICLE 10.
REPRESENTATIONS AND WARRANTIES
Section 10.1 Borrower’s Warranty of Good Standing.
The Borrower represents and warrants to the City as follows:
Organization. The Borrower is a duly organized, validly existing entity in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted. The Borrower will provide an opinion to this effect from its counsel at the time of execution of this Agreement.
Authority of the Borrower. The Borrower has full power and authority to execute and deliver this Agreement and to execute and deliver all documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above.
Authority of Persons Executing Documents. This Agreement and all other documents or instruments executed and delivered, or to be 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 the Borrower, and all actions required under the Borrower’s 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, or to be executed and delivered, pursuant to this Agreement, have been duly taken (to the extent such actions are required as of the date of execution and delivery of the above-named documents).
Valid and Binding Agreements. This Agreement and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of the Borrower enforceable against it in accordance with their respective terms, subject to the laws affecting creditors rights and principles of equity.
No Breach of Law or Agreement. To the Borrower’s Actual Knowledge, neither the execution nor delivery of this Agreement or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term of this Agreement, will conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or agency whatsoever binding on the Borrower, or any provision of the organizational documents of the Borrower, or will conflict with or constitute a breach of or a default under any Item 3B - Page 135
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agreement to which the Borrower is a party, or will result in the creation or imposition of any lien upon any assets or property of the Borrower, other than liens established pursuant to or permitted by this Agreement.
Pending Proceedings. To the Borrower’s Actual Knowledge, the Borrower is not in material default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and, to the best of its knowledge, there are no claims, actions, suits or proceedings pending or, threatened against or affecting the Borrower, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to the Borrower, materially affect the Borrower’s ability to repay the City Loan or impair the security to be given to the City pursuant to this Agreement.
ARTICLE 11.
DEFAULT
Section 11.1 Default By Borrower.
Each of the following will constitute an “Event of Default” by Borrower under this Agreement:
Failure to Make Payment. Failure to repay the principal and any interest on the City Loan within fifteen (15) days of receipt of written notice from the City that such payment is due pursuant to the City Loan Documents.
Breach of Covenants. Failure by Borrower to duly perform, comply with, or observe any of the conditions, terms, or covenants of this Agreement or any of the City Loan Documents, and such failure having continued uncured for thirty (30) days after receipt of written notice thereof from the City to the Borrower and to any limited partner of the Borrower that has requested written notice from the City of such failure (“Permitted Limited Partner”) or, if the breach cannot be cured within thirty (30) days, the Borrower will not be in breach so long as Borrower is diligently undertaking to cure such breach and such breach is cured within ninety (90) days; provided, however, that if a different period or notice requirement is specified under any other section of this Article, the specific provisions will control. The Permitted Limited Partner will have thirty (30) additional days to cure a breach beyond the cure periods for the Borrower described in this subsection. If a Permitted Limited Partner cannot cure an Event of Default because the Borrower’s general partner is in bankruptcy and/or because the cure requires removal of the general partner of the Borrower and the Permitted Limited Partner is proceeding diligently to remove the general partner of the Borrower in order to effect a cure of the Event of Default, the cure period will be extended for such reasonable time as is necessary for the Permitted Limited Partner to effect a cure of the Event of Default, but in no event longer than one hundred eighty (180) days after the date of receipt by the Permitted Limited Partner of written notice of Event of Default.
Default Under Other Loans, Regulatory Agreements. A default is declared and any applicable notice and cure period has expired: (i) under any other financing for the Project by the Holder of such financing; or (ii) under any regulatory agreement or contract to which Borrower is a party. Borrower covenants to provide City notice within ten (10) days of receiving notice of a default under any other agreement or contract related to or affecting the Site or Improvements.
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Insolvency. A court having jurisdiction will have made or entered any decree or order (i) adjudging Borrower or Borrower’s general partner, if Borrower is a partnership, or Borrower’s managing member, if Borrower is a limited liability company, to be bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization of Borrower or Borrower’s general partner, if Borrower is a partnership, or Borrower’s managing member, if Borrower is a limited liability company, or seeking any arrangement for Borrower or Borrower’s general partner, if Borrower is a partnership, or Borrower’s managing member, if Borrower is a limited liability company, under the bankruptcy law or any other applicable debtor’s relief law or statute of the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Borrower or Borrower’s general partner, if Borrower is a partnership, or Borrower’s managing member, if Borrower is a limited liability company, in bankruptcy or insolvency or for any of their properties, (iv) directing the winding up or liquidation of Borrower or Borrower’s general partner, if Borrower is a partnership, or Borrower’s managing member, if Borrower is a limited liability company, if any such decree or order described in clauses (i) to (iv), inclusive, will have continued unstayed or undischarged for a period of ninety (90) calendar days; or (v) Borrower or Borrower’s general partner, if Borrower is a partnership, or Borrower’s managing member, if Borrower is a limited liability company, will have admitted in writing its inability to pay its debts as they fall due or will have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence of any of the Events of Default in this paragraph will act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the Note.
Assignment; Attachment. Borrower or Borrower’s general partner, if Borrower is a partnership, or Borrower’s managing member, if Borrower is a limited liability company, will have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon will have been returned or released within ninety (90) calendar days after such event or, if sooner, prior to sale pursuant to such sequestration, attachment, or execution.
The occurrence of any of the Event of Default in this paragraph will act to accelerate automatically, without the need for any action by the County, the indebtedness evidenced by the Note.
Suspension; Termination. Borrower or Borrower’s general partner, if Borrower is a partnership, or Borrower’s managing member, if Borrower is a limited liability company, will have voluntarily suspended its business or, if Borrower is a partnership, the partnership will have been dissolved or terminated, other than a technical termination of the partnership for tax purposes.
Representation or Warranty Incorrect. Any Borrower representation or warranty contained in this Agreement proving to have been incorrect in any material respect when made. After issuance of the Certificate of Occupancy for the Project, Event of Default may be declared under this subsection only if the failure of representation or warranty also has a material adverse effect on the operation of the Project.
Force Majeure Delays; Extension of Times for Performance. All performance deadlines in this Agreement shall be extended to the extent of delays caused beyond the control or without the fault of the Party claiming an extension of time to perform, including, without limitation, the following: war; acts of terrorism; insurrection; strikes; lockouts; labor troubles; inability to procure materials; power failures; riots; floods; earthquakes; fires; other natural disasters; casualties; acts Item 3B - Page 137
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of God; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; governmental moratoria; initiation of condemnation proceedings by any governmental agency; and unreasonable acts or unreasonable failures to act of City or any other public or governmental agency or entity (determined considering the normal processes and response times of the City and such governmental entities, which shall be deemed reasonable and not force majeure delays). Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay only and shall commence to run from the time of the commencement of the cause, and only if notice by the Party claiming such extension is sent to the other Party within thirty (30) days after the commencement of the cause.
Section 11.2 Remedies.
The occurrence of any Event of Default under this Agreement following the expiration of all applicable notice and cure periods will, either at the option of the City or automatically where so specified, relieve the City of any obligation to make or continue the City Loan and will give the City the right to proceed with any and all remedies set forth in this Agreement and the City Loan Documents, including but not limited to the following:
Acceleration of Note. The City will have the right to cause all indebtedness of the Borrower to the City under this Agreement and the Note, together with any accrued interest on the Note, to become immediately due and payable. The Borrower waives all right to presentment, demand, protest or notice of protest or dishonor. The City may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the City as a creditor and/or secured party under the law including the Uniform Commercial Code, including foreclosure under the Deed of Trust. The Borrower will be liable to pay the City on demand all reasonable expenses, costs and fees (including, without limitation, reasonable attorney’s fees and expenses) paid or incurred by the City in connection with the collection of the City Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the City Loan.
Additional Remedies. The City may proceed to protect, exercise and enforce all other remedies provided under the City Loan Documents or by applicable laws.
Right to Cure at Borrower’s Expense. The City will have the right (but not the obligation) to cure any monetary default by Borrower under a loan other than the City Loan. The Borrower agrees to reimburse the City for any funds advanced by the City to cure a monetary default by Borrower upon demand therefor, together with interest thereon at the lesser of the maximum rate permitted by law and ten percent (10%) per annum (the “Default Rate”) from the date of expenditure until the date of reimbursement.
Section 11.3 Remedies Cumulative.
No right, power, or remedy given to the City by the terms of this Agreement or the City Loan Documents is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy will be cumulative and in addition to every other right, power, or remedy given to the City by the terms of any such instrument, or by any statute or otherwise against Borrower and any other person. Neither the failure nor any delay on the part of the City Item 3B - Page 138
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to exercise any such rights and remedies will operate as a waiver thereof, nor will any single or partial exercise by the City of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy.
ARTICLE 12.
MISCELLANEOUS
Section 12.1 Decision Standards.
In any approval, consent or other determination by any Party required under this Agreement, the Party will act reasonably and in good faith.
Section 12.2 City Approval.
Whenever this Agreement calls for City approval, consent, or waiver, the written approval, consent, or waiver of the City Manager or his or her designee will constitute the approval, consent, or waiver of the City, without further authorization required from the City Council (to the extent permissible by the Applicable Requirements). The City authorizes the City Manager or his or her designee to deliver such approvals or consents as are required by this Agreement, or to waive requirements under this Agreement, on behalf of the City. The City Manager or his or her designee is also authorized to approve, on behalf of the City, written requests by Borrower for reasonable extensions of time deadlines set forth in this Agreement. The City will not unreasonably delay in reviewing and approving or disapproving any proposal by Borrower made in connection with this Agreement. Notwithstanding the foregoing, the City Manager may, in his/her discretion, submit any matter to the City Council for their consideration and decision.
Section 12.3 Notices.
Any approval, disapproval, demand, document or other notice (“Notice”), which either Party may desire to give to the other Party under this Agreement must be in writing and may be given by the means described below to the Party to whom the Notice is directed at the address of the Party as set forth below, or at any other address as that Party may later designate by Notice.
If to City, to: City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
Attn: City Manager
and a copy to: City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
Attn: City Attorney
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If to Borrower, to: Aloe Palm Canyon, L.P.
c/o West Hollywood Community Housing Corporation
7530 Santa Monica Blvd
West Hollywood, CA 90046
Attention: Jesse Slansky, President & CEO
(T) (323) 650-8771
with a copy to: Gubb & Barshay LLP
505 14th Street, Suite 450
Oakland, CA 94612
Attention: Sarah C. PerezNicole Kline
(T) (415) 781-6600 Ext. 4
Any written notice, demand or communication sent to the address set forth above or as later provided by a Party shall be deemed effective and received as of the date of delivery, the date delivery was refused, or the date returned as undeliverable if sent by one of the following methods:
(1) personal delivery with a written receipt therefore; (2) certified mail, return receipt requested; or (3) nationally recognized overnight delivery service (i.e., FedEx, UPS, or DHL) with a delivery receipt.
Copies of all notices delivered by the City to Borrower after the Close of Escrow will be delivered to Borrower’s investor limited partner at a notice address to be provided to City in writing.
Section 12.4 Representatives.
To facilitate communication, the Parties to this Agreement will designate a representative with responsibility for the routine administration of each Party’s obligations under this Agreement.
The Parties initially appoint the following as representatives:
City: Jay Virata, Director of Community and Economic Development Borrower: Matt MasonAnup Patel, Director of Real Estate Development & Sergio Rosas, Project Manager
Section 12.5 Further Assurances.
Each Party will execute such other and further documents as may be reasonably necessary or proper for the consummation of the transaction contemplated by this Agreement.
Section 12.6 Interpretation and Governing Law.
This Agreement will not be construed against the Party who prepared it but will be construed as though prepared by both Parties, the Parties agree that any rule of construction (including, but not limited to Civil Code Section 1654, as may be amended from time to time) to the effect that ambiguities are to be resolved against the drafting party will not apply to the interpretation of this Agreement. This Agreement will be construed, interpreted, and governed by Item 3B - Page 140
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the laws of California without regard to the choice of law provisions of California law, with venue in Riverside County.
Section 12.7 Severability.
If any portion of this Agreement is declared by a court of competent jurisdiction to be invalid or unenforceable such portion will be deemed severed from this Agreement and the remaining parts will continue in full force as though such invalid or unenforceable provision had not been part of this Agreement.
Section 12.8 Final Agreement.
Unless otherwise provided in this Agreement, this Agreement constitutes the final understanding and agreement between the Parties with respect to the subject matter of this Agreement and supersedes all prior negotiations, understandings and agreements between the Parties, whether written or oral.
Section 12.9 Disclaimer of Relationships.
Nothing contained in this Agreement will be deemed or construed to create any relationship of third party beneficiary, principal and agent, limited or general partnership, joint venture, or any association or relationship between the Borrower and the City.
Section 12.10 Waivers.
The failure of either Party to insist in any one or more cases upon the strict performance of any of the other Party’s obligations under this Agreement or to exercise any right or remedy contained in this Agreement will not be construed as a waiver or a relinquishment for the future of such obligation, right or remedy. No waiver by either Party of any provision of this Agreement will be deemed to have been made unless set forth in writing and signed by that Party.
Section 12.11 Successors.
The terms, covenants, agreements, provisions, and conditions contained in this Agreement will bind and inure to the benefit of the Parties, their successors and assigns.
Section 12.12 Headings; Exhibits.
The headings in this Agreement are inserted for convenience only and will not be used to define, limit or describe the scope of this Agreement or any of the obligations in this Agreement.
All attachments that are labeled Exhibits are attached to and incorporated in this Agreement by reference to the Exhibits.
Section 12.13 Construction.
Whenever in this Agreement a pronoun is used, it will be construed to represent either the singular or the plural, either the masculine or the feminine, as the case will demand.
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Section 12.14 Cumulative Rights.
Except as expressly limited by the terms of this Agreement, all rights, powers and privileges conferred under this Agreement will be cumulative and not restrictive of those provided at law or in equity.
Section 12.15 Time of Performance.
All performance dates (including cure dates) expire at 5:00 p.m., Palm Springs, California time, on the performance or cure day. A performance date which falls on a Saturday, Sunday or City holiday is deemed extended to the next working day. All periods for performance specified in this Agreement in terms of days will be calendar days, and not Business Days, unless otherwise expressly provided in this Agreement.
Section 12.16 Written Instrument.
Neither this Agreement nor any of its terms may be terminated, amended or modified except by a written instrument executed by the Parties.
Section 12.17 Costs and Expenses.
If either Party fails to perform any of its respective obligations under this Agreement or if any dispute arises between the Parties hereto concerning the meaning or interpretation of any provision of this Agreement, then the defaulting Party or the Party not prevailing in such dispute, as the case may be, will pay any and all costs and expenses incurred by the other Party on account of such default or in enforcing or establishing its rights under this Agreement, including, without limitation, court costs and reasonable attorneys’ fees and costs. Any such attorneys’ fees and costs incurred by either Party in enforcing a judgment in its favor under this Agreement will be recoverable separately from and in addition to any other amount included in such judgment, and such attorneys’ fees and costs obligation is intended to be separate from the other provisions of this Agreement and to survive and not be merged into any such judgment.
Section 12.18 Indemnification.
The Borrower will indemnify, defend and hold harmless the City and its Agents from and against any and all losses, costs, damages, claims, causes of action, demands, suits, liabilities, obligations, judgments and expenses (including reasonable attorney fees and other costs of litigation) arising out of or relating to: (i) Borrower’s activities pursuant to this Agreement (including the Work, and the ownership or operation of the Project); (ii) any breach by Borrower of any provision of this Agreement, except to the extent such claims arise solely from the negligence or willful misconduct of the City and its Agents or (iii) City’s approval of this Agreement or the Project. The Borrower’s liability will not be limited by any provisions or limits of insurance set forth in this Agreement. This indemnification will survive the expiration or termination of this Agreement.
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Section 12.19 Counterparts.
This Agreement may be executed in counterparts, each of which will be deemed original, but all of which, together, will constitute one instrument. [SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE TO PREDEVELOPMENT, CONSTRUCTION AND PERMANENT
LOAN AGREEMENT
IN WITNESS WHEREOF, the Parties have duly executed this Agreement by their duly authorized signatories effective on or as of the Effective Date.
APPROVED AS TO FORM AND
LEGALITY
CITY:
CITY OF PALM SPRINGS, a charter city and
municipal corporation
By:
Justin Clifton, City Manager
BORROWER:
ALOE PALM CANYON, L.P.,
a California limited partnership
By:
Aloe Palm Canyon LLC, a California limited
liability company, its general partner
By:
West Hollywood Community Housing
Corporation, a California nonprofit public benefit
corporation, its sole member/manager
By:
Jesse Slansky, President and CEO
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EXHIBIT H-2
FORM PREDEVELOPMENT PROMISSORY NOTE
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (STEVENS ROAD AND PALM CANYON DRIVE)
[ATTACHED BEHIND THIS PAGE]
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PREDEVELOPMENT COMPONENT PROMISSORY NOTE
(Stevens Road And Palm Canyon Drive)
Principal Amount: $480,000 Date of Note: ______________, 20__ Borrower: Aloe Palm Canyon, L.P., a
California limited partnership
Lender: CITY OF PALM SPRINGS, a
California charter city and municipal
corporation
FOR VALUE RECEIVED, the undersigned Aloe Palm Canyon, L.P., a California limited partnership (“Borrower”), hereby promises to pay to the order of the CITY OF PALM SPRINGS, a California charter city and municipal corporation (“Lender” or “City”), the principal sum of Four Hundred Eighty Thousand Dollars ($480,000) (“Loan”), pursuant to the Loan Agreement (as defined below), at 3200 East Tahquitz Canyon Way, Palm Springs, CA 92262, or at such other place as Lender may designate to Borrower in writing.
1. Borrower’s Obligation; Reference to Agreement. This Predevelopment Component promissory note (“Note”) evidences Borrower’s obligation to pay Lender pursuant to that certain Predevelopment, Construction, and Permanent Loan Agreement, dated ________________, 20____, by and between Borrower and Lender (the “Loan Agreement”), the principal amount of the Loan for the funds loaned to Borrower by Lender for funding or reimbursing Borrower’s predevelopment expenses with respect to the Project. In the event of any conflict between the terms of this Note and the terms of the Loan Agreement, the terms of the Loan Agreement shall control. All words, terms or phrases indicated to be defined words, terms or phrases by initial capitalization in this Note that are not specifically defined in this Note shall have the meaning given to the word, term or phrases in the Loan Agreement.
2. Loan Disbursement. Lender shall disburse the Loan to Borrower in accordance with Section 2.4 of the Loan Agreement.
3. Interest.
3.1 Subject to the provisions of Section 3.2, below, so long as there is no default under the Loan Agreement, this Note, the Deed of Trust, or the Regulatory Agreement, no interest shall accrue under this Note.
3.2 From and after an Event of Default, if an event of default occurs under this Note or any of the City Loan Documents, the entire unpaid principal balance of this Note shall automatically bear an annual interest rate (instead of the rate set forth above) equal to the lesser of: (a) ten percent (10%); compounded annually, or (b) the maximum interest rate allowed by law (“Default Rate”). Such Default Rate shall accrue as of the date of the Event of Default and continue until such time as the Loan funds are repaid in full or the Event of Default is cured.
3.3 Interest shall be computed based on a 365-day year and the actual number of days elapsed.
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4. Term and Repayment Requirements.
4.1 The Term of this Note (the “Term”) shall commence with the date of this Note as first set forth above and shall expire on the earliest of those events immediately set forth below:
4.1.1 Upon Close of Escrow of the conveyance of the Site to Borrower;
4.1.2 The occurrence of an Event of Default for which the City exercises its right to cause the Loan indebtedness to become immediately due and payable, following the continuation of an Event of Default that remains uncured after expiration of the applicable cure period; or
4.1.3 The termination of the Loan Agreement for infeasibility, as set forth in Section 2.6 of the Loan Agreement.
4.2 The repayment of the Loan shall be required as follows:
4.2.1 Subject to Subsections 4.2.2 and 4.2.3, below, all principal and interest, if any, on Loan will, at the option of the City, be due and payable upon the expiration of the Term.
4.2.2 Notwithstanding Section 4.2.1, if the Borrower proceeds to develop the Project, upon Close of Escrow: (i) the Borrower will execute (a) the Development Component Note which note will include the principal balance of the Loan, in addition to the Development Component amount, and (b) the Deed of Trust, and (ii) this Note will be marked as “cancelled” and returned to the Borrower.
4.2.3 Notwithstanding Section 4.2.14.2.1, if the Loan Agreement is terminated for infeasibility, as set forth in Section 2.6 therein, the City will forgive the Loan, mark this Note as “cancelled,” and return this Note to the Borrower, upon termination of the Loan Agreement pursuant to Section 2.6; provided, however, that the Borrower must first deposit the Predevelopment Component Documents with the City.
4.3 All sums due under this Note are payable in lawful money of the United States and the other terms and conditions of this Note and the Deed of Trust.
4.4 All payments on this Note shall be without expense to Lender, and Borrower agrees to pay all costs and expenses, including re-conveyance fees and reasonable attorney’s fees of Lender, incurred in connection with the payment of this Note and the release of any security hereof.
4.5 Notwithstanding any other provision of this Note, or any instrument securing the obligations of Borrower under this Note, if, for any reason whatsoever, the payment of any sums by Borrower pursuant to the terms of this Note would result in the payment of interest which would exceed the amount that Lender may legally charge under the laws of the State of California, then the amount by which payments exceeds the lawful interest rate shall automatically Item 3B - Page 147
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be deducted from the principal balance owing on this Note, so that in no event shall Borrower be obligated under the terms of this Note to pay any interest which would exceed the lawful rate.
5. Application of Payments. Each payment under this Note shall be credited in the following order: (a) costs, fees, charges and advances paid or incurred by Lender under this Note or the Deed of Trust or otherwise payable to Lender by Borrower under this Note or the Deed of Trust, in such order as Lender elects, in Lender’s sole and absolute discretion; (b) accrued interest, if any; and (c) principal due under this Note.
6. Prepayment. The principal and interest under this Note may be prepaid at any time, without penalty; provided, however, that any such prepayment shall have no effect on the application of the Loan Agreement or the City Regulatory Agreement to the Property.
7. Security.
7.1 This Note is secured by an Assignment of Work Product, dated ___________, 20____ (the “Assignment”) wherein Borrower assigned to Lender the Borrower’s rights and obligations with respect to certain Predevelopment Component Documents prepared by the Architect or other Consultants, which shall become effective upon an uncured Event of Default, pursuant to the terms of the Loan Agreement, or upon termination of the Loan Agreement, pursuant to Article 2 thereof. Upon: (i) an Event of Default that has not been cured pursuant to the Loan Agreement, or (ii) the termination of the Loan Agreement pursuant to Article 2 thereof prior to Close of Escrow, the Lender may use any of the foregoing assigned Predevelopment Component Documents for any purpose for which the Borrower could have used them for development of the Project. The Borrower will cooperate with the Lender to implement the Assignment of Work Product and immediately deposit with the Lender for the Lender’s use all the Predevelopment Component Documents.
7.2 Upon the acquisition of the Site by the Borrower, Borrower will execute and record the Deed of Trust against the Site to secure Borrower’s payment of the loan provided under the Development Component Note.
8. Subordination. This Note and the Assignment securing this Note shall not be subject or subordinate to any other interest in the Predevelopment Component Documents.
9. Default.
9.1 Any of the following shall constitute a “Default” under this Note: (a) Borrower’s failure to pay any installment or other sum due under this Note within ten (10) days after Lender delivers written notice to Borrower of such failure; or (b) any breach of any other promise or obligation in this Note, the City Loan Documents (as such term is defined in the Loan Agreement), in the DDA (as such term is defined in the Loan Agreement), or in any other instrument now or hereafter securing the indebtedness evidenced by this Note; provided, however, that Lender has given Borrower thirty (30) days’ notice to Borrower describing the default in reasonable detail in which to cure the Default, and such Default not having been cured within 30 days (or, if a greater amount of time is reasonably necessary to effect a cure, if actions to cure such Default are not undertaken within said 30 day period and pursued with reasonable diligence thereafter).
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9.2 On and following any Default, Lender may, in Lender’s sole and absolute discretion, declare the entire unpaid principal balance, together with all interest thereon, and together with all other sums then payable under this Note, immediately due and payable upon written notice by Lender to Borrower without further demand.
9.3 The failure to exercise the remedy set forth in Subsection 9.2, above, or any other remedy provided by law upon the occurrence of one or more of the foregoing events of Default shall not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other Default. The acceptance by Lender hereof of any payment which is less than the total of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of Lender, except as and to the extent otherwise provided by law.
10. Collection Costs. Borrower agrees to pay the following costs, expenses, and attorney fees paid or incurred by Lender, or adjudged by a court: (a) reasonable costs of collection and costs, expenses, and attorney fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed; (b) reasonable costs, expenses, and attorney fees paid or incurred in connection with representing Lender in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors’ rights and involving this Note; and (c) costs of suit and such sum as the court may adjudge as reasonable attorney fees in any action to enforce or collect payment of this Note or any portion thereof.
11. Waiver.
11.1 Borrower, endorsers, and all other Persons liable or to become liable on this Note waive diligence, presentment, protest, and demand; notice of protest, demand, and dishonor; notice of non-payment of this Note, and all other notices or matters of a like nature. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Lender may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower.
11.2 No extension of time for payment of this Note made by agreement by Lender with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.
11.3 The provisions of this Note and the obligations of Borrower under this Note shall be absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reasons whatsoever.
12. Notice. Any notice required to be provided under this Note shall be given in the manner set forth in Section 12.3 of the Loan Agreement.
13. Forbearance Not a Waiver. If Lender delays in exercising or fails to exercise any of its rights under this Note, that delay or failure shall not constitute a waiver of any Lender rights or of any breach, Default, or failure of condition under this Note. No waiver by Lender of any of Item 3B - Page 149
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its rights or of any such breach, Default, or failure of condition shall be effective, unless the waiver is expressly stated in a writing signed by Lender.
14. Assignment. This Note inures to and binds the heirs, legal representatives, successors, and assigns of Borrower and Lender; provided, however, that Borrower may not assign this Note nor any proceeds of it, nor assign or delegate any of its rights or obligations under this Note, except as otherwise permitted in the Loan Agreement, without Lender’s prior written consent in each instance, which consent may be given, withheld, delayed or conditioned in Lender’s sole and absolute discretion. Lender, in its sole and absolute discretion, may transfer this Note and may sell or assign participations or other interests in all or any part of this Note, all without notice to or the consent of Borrower.
15. Dissolution of Organization. In the event that Maker, or its legally sanctioned and Lender-approved successor terminates or ceases to function within the term of this Note, then, in that event, the outstanding amount due under this Note (including principal or balance of principal and interest) shall be immediately due and payable.
16. Governing Law. This Note shall be construed and enforceable according to the laws of the State of California for all purposes, without application of conflicts or choice of laws principles or statutes.
17. Usury. To the extent that the indebtedness evidenced by this Note is determined not to be exempt from the usury laws of the State of California, all agreements between Borrower and Lender are expressly limited, so that in no event or contingency, whether because of the advancement of the proceeds of this Note, acceleration of maturity of the unpaid principal balance, or otherwise, shall the amount paid or agreed to be paid to Lender for the use, forbearance, or retention of the money to be advanced under this Note exceed the highest lawful rate permissible under applicable usury laws. If, under any circumstances, fulfillment of any provision of this Note or any other agreement pertaining to this Note, after timely performance of such provision is due, shall involve exceeding the limit of validity prescribed by law that a court of competent jurisdiction deems applicable, then, ipso facto, the obligations to be fulfilled shall be reduced to the limit of such validity. If, under any circumstances, Lender shall ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to reduce the unpaid principal balance under this Note and not to pay interest, or, if such excessive interest exceeds the unpaid principal balance under this Note, such excess shall be refunded to Borrower. This provision shall control every other provision of all agreements between Borrower and Lender.
18. Non-Revolving Credit. This Note evidences a non-revolving loan from Lender to Borrower. The accrued and unpaid interest and principal balance owing on this Note at any time may be evidenced by an unpaid balance acknowledgment of Lender on this Note or by the internal accounting records of Lender regarding this Note.
19. Time Is of the Essence. Time is of the essence with respect to all obligations of Borrower under this Note.
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20. Severability. If any provision of this Note, or the application of it to any person or circumstance, is held void, invalid, or unenforceable by a court of competent jurisdiction, the remainder of this Note, and the application of such provision to other persons or circumstances, shall not be affected thereby, the provisions of this Note being severable in any such instance.
21. Non-Recourse. The Loan is nonrecourse, and the sole recourse of the City with respect to the principal of, and interest on, this Note and defaults by Borrower in the performance of its covenants under such note will be to the security described in Section 7 hereof.
22. Amendment or Modification. The terms of this Note may only be amended or modified by a written agreement executed by all of the Parties hereto.
23. Acknowledgment. PRIOR TO SIGNING THIS NOTE, BORROWER HAS READ
AND UNDERSTANDS ALL OF ITS PROVISIONS AND HAS CONSULTED WITH LEGAL COUNSEL OF BORROWER’S INDEPENDENT SELECTION REGARDING BORROWER’S OBLIGATIONS UNDER THIS NOTE. BORROWER UNDERSTANDS AND AGREES THAT THIS NOTE SHALL BE BINDING UPON BORROWER AND BORROWER’S HEIRS, LEGAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS. BORROWER AGREES TO
THE TERMS AND CONDITIONS OF THIS NOTE AND ACKNOWLEDGES RECEIPT OF A COPY OF THIS NOTE.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Note has been duly executed as of the date first set forth above by:
BORROWER:
ALOE PALM CANYON, L.P.,
a California limited partnership
By: Aloe Palm Canyon LLC, a California limited
liability company, its general partner
By: West Hollywood Community Housing
Corporation, a California nonprofit public benefit
corporation, its sole member/manager
By: Jesse Slansky, President and CEO
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EXHIBIT A
TO
PREDEVELOPMENT, CONSTRUCTION AND PERMANENT LOAN AGREEMENT
DESCRIPTION OF THE SITE
The land located in City of Palm Springs, County of Riverside, State of California, described as follows:
LEGAL DESCRIPTION
ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL A: ASSESSOR’S PARCEL NO: 505-182-010
ALL THAT REAL PROPERTY SITUATED IN THE COACHELLA VALLEY COUNTY
WATER DISTRICT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND PARTICULARLY DESCRIBED AS FOLLOWS:
THAT PORTION OF THE NORTHEAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 10, IN THE TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE
AND MERIDIAN, BY METES AND BOUNDS, COMMENCING AT THE NORTHEAST CORNER OF SAID SECTION 10; THENCE SOUTH 89°51’ WEST, 353 FEET TO THE CENTER LINE OF THE COUNTY HIGHWAY; THENCE SOUTH ON THE CENTER LINE OF THE COUNTY HIGHWAYS, 700.13 FEET;
THENCE SOUTH 89°50’ WEST 30 FEET, TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 89°50’ WEST, 205.88 FEET; THENCE SOUTH 0°10’ EAST, 211.68 FEET; THENCE NORTH 89°50’ EAST 205.30 FEET, MORE OR LESS TO THE WESTERLY LINE OF SAID COUNTY HIGHWAY;
THENCE NORTH ON SAID WESTERLY LINE OF THE COUNTY HIGHWAY, 211.88 FEET MORE OR LESS, TO THE POINT OF BEGINNING.
PARCEL B: (PORTION ASSESSOR’S PARCEL NO. 505-182-004)
LOT 12 IN BLOCK A OF LOS ANGELES PALMAS ESTATES, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGES 15 AND 16 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
PARCEL B1: (PORTION ASSESSOR’S PARCEL NO. 505-182-004)
THAT PORTION OF LOTS 5 AND 6 IN BLOCK A OF LAS PALMAS ESTATES, AS SHOWN BY MAP ON FILE IN BOOK 15, PAGES 15 AND 16 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST EASTERLY CORNER OF SAID LOT 5, BEING ALSO THE MOST NORTHERLY CORNER OF SAID LOT 6;
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THENCE SOUTH 89°50’ WEST ALONG THE BOUNDARY LINE OF SAID LOT 5, 35.77 FEET;
THENCE IN A SOUTHWESTERLY DIRECTION TO A POINT ON THE NORTHERLY LINE OF CAMINO DEL NORTE, 3 FEET SOUTHEASTERLY FROM THE NORTHWESTERLY CORNER OF SAID LOT 6;
THENCE SOUTH ALONG THE EASTERLY LINE OF CAMINO DEL NORTE TO THE SOUTHWESTERLY CORNER OF SAID LOT 6;
THENCE EASTERLY, ALONG THE SOUTHERLY LINE OF SAID LOT 6, TO THE SOUTHEASTERLY CORNER OF SAID LOT;
THENCE NORTHERLY, ALONG THE EASTERLY LINE OF SAID LOT 6, TO THE POINT OF BEGINNING.
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EXHIBIT B
TO
PREDEVELOPMENT, CONSTRUCTION AND PERMANENT LOAN AGREEMENT
PROPOSED BUDGET
[Attached Behind This Page]
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EXHIBIT C
TO
PREDEVELOPMENT, CONSTRUCTION AND PERMANENT LOAN AGREEMENT
FORM OF ASSIGNMENT OF WORK PRODUCT
[Attached Behind This Page]
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ASSIGNMENT OF WORK PRODUCT
(Aloe at Palm Canyon)
This Assignment of Work Product (the "Assignment") is entered into as _______ __, 20__ (the "Effective Date"), by and between the City of Palm Springs, a California charter city and municipal corporation (the “City”), Aloe Palm Canyon, L.P., a California limited partnership (the “LP Assignor”) and West Hollywood Community Housing Corporation, a California nonprofit public benefit corporation (the “Developer Assignor”, and, together with the LP Assignor, the "Assignor"), (individually a "Party" and collectively, the "Parties"), with reference to the following facts:
RECITALS
A. Pursuant to the terms of that certain Predevelopment, Construction and Permanent Loan Agreement dated the same date as the Effective Date of this Assignment, by and between the Assignor and the City (the "Loan Agreement"), the Assignor desires to assign to the City, and the City desires to accept from the Assignor, the assignment of the Assignor's right, title, and interest in and under those agreements, contracts and other work product described below and incurred by the Assignor in connection with the Project, as defined in the Loan Agreement.
B. The consent to such assignments by various third parties may be required in the form of consent attached to this Assignment as Schedule 1, (the "Consent").
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises of the Parties and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties mutually agree as follows:
TERMS
1. Assignment by Assignor. Pursuant to Section 2.3 of the Loan Agreement, The Assignor assigns and delegates to the City, and the City accepts from the Assignor, all of the Assignor's right, title, and interest in and obligations under the following:
(a) all architectural designs, construction, engineering and consulting contracts, including any and all amendments, modifications, supplements, addenda and general conditions (collectively, the "Project Agreements") previously or later entered into by the Assignor and any Contractor (as defined below) pertaining to the development of the Project; (b) all plans and specifications, shop drawings, working drawings, reports, studies, amendments, modifications, changes, supplements, general conditions, addenda and work product (collectively, the "Reports, Plans and Specifications") previously or later prepared by the Assignor or any Contractor pertaining to the development of the Project; (c) all land use approvals, conditional use permits, building permits and other governmental entitlements and approvals of any nature obtained for the Project (collectively, the "Government Approvals"); and
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(d) all financing or other applications and all other tangible documents, except those of a proprietary or confidential nature pertaining to the development of the Project ("General Documents").
For purposes of this Assignment, the term "Contractor" means any architect, contractor, engineer, consultant or other person or entity entering into Project Agreements with the Assignor (other than attorney agreements for the provision of legal services) and/or preparing Reports, Plans and Specifications or other documents for the Assignor with respect to the Project. Such Project Agreements, Reports, Plans and Specifications, Government Approvals, and General Documents, will be collectively referred to in this Assignment as the "Collateral Documents". It is intended that all Collateral Documents, whenever produced, be assigned through this Assignment to the City as security for the City Loan, and the applicable Consent executed. The Assignor will periodically provide the City a list of all Collateral Documents.
2. Consent. The Assignor agrees to obtain and deliver to the City, such consents to the assignment of Collateral Documents as may be required by the terms of the Collateral Documents or as otherwise requested by the City in the form attached as Schedule 1. This Assignment and any consents to this Assignment will not relieve the Assignor of the Assignor's obligations under the Collateral Documents.
3. Purpose. This Assignment is made to secure: (i) payment to the City of all sums owing under the Predevelopment Component Note, dated the same date as the Effective Date of this Assignment and made by the Assignor to the order of the City, and any and all additional advances, modifications, extensions, renewals, and amendments of the Predevelopment Component Note; and (ii) payment and performance by the Assignor of all the Assignor's obligations under the Loan Agreement. The Parties acknowledge that Section 2.7 of the Loan Agreement provides for forgiveness of the Predevelopment Component Note in certain circumstances.
4. No Assumption of Obligations. The Assignor agrees that the City does not assume any of the Assignor's obligations or duties under any Collateral Documents, including, but not limited to, the obligation to pay for the preparation of any Collateral Documents. The City will not be responsible for any default, liability or obligation of the Assignor under the Collateral Document occurring prior to the time the City exercises the City's rights under this Assignment.
For purposes of clarity, Assignor shall at all times remain liable for the payment of the preparation of any Collateral Documents assigned to City hereunder. Notwithstanding the foregoing, if, following assignment of the Collateral Documents to the City, City requires or request additional scope of work, studies or actions by the Contractors on the Collateral Documents, the costs of said additional scope of work shall be a City obligation.
5. Attorney-In-Fact. The Assignor irrevocably appoints the City as the Assignor's attorney-in-fact, which power is coupled with an interest, so that the City will have the right to demand, receive, and enforce any and all of the Assignor's rights with respect to the Collateral Documents, and to perform any and all acts in the name of the Assignor or in the name of the City with the same force and effect as if performed by the Assignor in the absence of this Assignment, upon the occurrence of: (i) an Event of Default under the Loan Agreement by the Assignor (after notice and opportunity to cure) or an event which, with notice or the passage of time or both, would Item 3B - Page 158
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constitute an Event of Default under the Loan Agreement, or (ii) any termination of the Loan Agreement. Until such occurrences, the Assignor will be entitled to exercise all rights pertaining to the Collateral Documents.
6. Representations and Warranties. The Assignor represents and warrants to the City that: (i) no previous assignment(s) of the Assignor's right or interest in or to the Collateral Documents has or have been made; (ii) the Assignor has done no act nor omitted to do any act that might prevent the City from exercising any of the rights, powers and privileges conferred by the Collateral Documents; and (iii) the copy of each Collateral Document provided by the Assignor to the City is the complete and entire agreement between the parties to those Collateral Documents in all material respects.
7. Governing Law. This Assignment is governed by the laws of the State of California, except to the extent that federal law preempts the laws of the State of California. The Assignor consents to the jurisdiction of any federal or state court within the State of California having proper venue for the filing and maintenance of any action arising under this Assignment and agrees that the prevailing party in any such action will be entitled, in addition to any other recovery, to reasonable attorneys' fees and costs.
8. Binding Upon Successors and Assigns. This Assignment is binding upon and will inure to the benefit of the heirs, legal representatives, successors-in-interest, and assigns of the Assignor and the City; provided, however, this Section 8 may not be construed and is not intended to waive the restrictions on assignment, sale, transfer, mortgage, pledge, hypothecation, or encumbrance by the Assignor contained in the Loan Agreement.
9. Remedies. In the event of the Assignor's default under this Assignment, the City may exercise all or any one or more of the City's rights and remedies available under this Assignment, at law or in equity. Such rights and remedies will be cumulative and concurrent, and may be enforced separately, successively or together, and the exercise of any particular right or remedy will not in any way prevent the City from exercising any other right or remedy available to the City.
10. Capitalized Terms. Capitalized terms used but not defined in this Assignment have the meanings set forth in the Loan Agreement.
11. Headings. Section headings contained in this Assignment are inserted as a matter of convenience and for ease of reference only and will be disregarded for all other purposes, including the construction or enforcement of this Assignment or any of the provisions of this Assignment.
12. No Agency or Partnership. Nothing contained in this Assignment will constitute the City as a joint venturer, partner or agent of the Assignor, or render the City liable for any debts, obligations, acts, omissions, representations or contracts of the Assignor.
13. Further Assurances. The Assignor will at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all further action that may be reasonably necessary or desirable, or that the City may reasonably request, in order to protect any Item 3B - Page 159
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right or interest granted by this Assignment or to enable the City to exercise and enforce the City's rights and remedies under this Assignment.
14. Termination. This Assignment will terminate, and the security of the City under this Assignment will be released upon the earlier of the Assignor's repayment in full of the City Loan or after termination of the Loan Agreement.
15. Counterparts. This Assignment may be executed in counterparts by the Parties, each of which will be deemed to be an original, and all such counterparts will constitute one and the same instrument.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have duly executed this Assignment by their duly authorized signatories effective as of the Effective Date.
APPROVED AS TO FORM AND
LEGALITY
CITY:
CITY OF PALM SPRINGS, a charter city and
municipal corporation
Jeffrey S. Ballinger, City Attorney By:
Justin CliftonTeresa Gallavan, Interim City
Manager
BORROWER AND DEVELOPER:
ALOE PALM CANYON, L.P.,
a California limited partnership
By: Aloe Palm Canyon LLC, a California limited
liability company, its general partner
By: West Hollywood Community Housing
Corporation, a California nonprofit public benefit
corporation, its sole member/manager
By: Jesse Slansky, President and CEO
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SCHEDULE 1
CONSENT
_________________________, a ____________________ (the "Contractor") consents to the foregoing Assignment, of which this Consent is a part, and acknowledges that at present there exist no unpaid claims presently due to the Contractor, except as disclosed to the City, arising out of the preparation and delivery to the Assignor of the Collateral Documents for which the Contractor is responsible and/or the performance of the Contractor's obligations under any Project Agreement.
The Contractor agrees that if, at any time, the City, pursuant to the City's rights under the Loan Agreement, elects to undertake or cause the completion of any of the Predevelopment Component activities for the Project, and gives the Contractor written notice of such election; then, so long as the Contractor has received, receives, or continues to receive the compensation called for under the applicable Project Agreement, the City may, at the City's option, use and rely on the Collateral Documents for the purposes for which the Collateral Documents were prepared, and the Contractor will continue to perform the Contractor's obligations under the applicable Project Agreement for the benefit and account of the City in the same manner as if performed for the benefit or account of the Assignor in the absence of this Assignment.
The Contractor further agrees that, in the event of a breach by the Assignor of the applicable Project Agreement, or any agreement entered into with the Contractor in connection with the Collateral Documents, so long as the Assignor's interest in the applicable Project Agreement and Collateral Documents is assigned to the City, the Contractor will give written notice to the City.
The City will have thirty (30) days from the receipt of such written notice of default to remedy or cure said default; provided, however, nothing in this Consent will require the City to cure said default or to undertake completion of the Predevelopment Activities. [Signature Page Follows]
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The Contractor warrants and represents that the Contractor has no knowledge of any prior assignment(s) of any interest in either the applicable Project Agreement or the Collateral Documents. Except as otherwise defined in this Consent, the terms used in this Consent will have the meanings given them in the foregoing Assignment or the Loan Agreement, as applicable.
Execution date: ______________________, 20__
Title of Contract: By:
Name:
Its:
Date of Contract:
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EXHIBIT I
FORM OF DOCUMENTS FOR DEVELOPMENT COMPONENT OF CITY LOAN EXHIBIT I-1
FORM OF PROMISSORY NOTE
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road And Palm Canyon Drive)
[Attached Behind This Page]
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PROMISSORY NOTE
(Stevens Road and Palm Canyon Drive)
Principal Amount: $4,004,300 Date of Note: _______________, 20__ Borrower: Aloe Palm Canyon, L.P., a
California limited partnership
Lender: CITY OF PALM SPRINGS, a
California charter city and municipal
corporation
Maturity Date: Fifty-seven (57) years
from the date on which the Construction
Financing converts to the Permanent
Loan
Interest Rate: Three Percent (3%)
FOR VALUE RECEIVED, the undersigned Aloe Palm Canyon, L.P., a California limited partnership (“Borrower”), hereby promises to pay, at the times stated in this Promissory Note (“Note”), to the order of the CITY OF PALM SPRINGS, a California charter city and municipal corporation (“Lender”), the principal sum of Four Million Four Thousand Three Hundred Dollars ($4,004,300) (“Loan”), together with simple interest on the unpaid principal balance of this Note from time to time outstanding at an annual simple rate of one percent (3%) from the date of advance until fully paid at 3200 East Tahquitz Canyon Way, Palm Springs, CA 92262, or at such other place as Lender may designate to Borrower in writing.
1. Reference to Agreement. This Note is made by Borrower to the order of Lender pursuant to that certain Predevelopment, Construction and Permanent Loan Agreement, dated ________________, 20___, by and between Borrower and Lender (the “Loan Agreement”). In the event of any conflict between the terms of this Note and the terms of the Loan Agreement, the terms of the Loan Agreement shall control.
2. Definitions. All words, terms or phrases indicated to be defined words, terms or phrases by initial capitalization in this Note that are not specifically defined in this Note shall have the meaning given to the word, term or phrases in the Loan Agreement. As used in this Note, the following words, phrases and terms shall have the following meaning:
2.1 “Gross Revenue” means and refers to all revenue, income, receipts, and other consideration actually received from the use, operation or occupancy of the Property. “Gross Revenue” shall include, but not be limited to: all rents, fees and charges paid by tenants, as well as other rental subsidy payments received for the Project units, deposits forfeited by tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements resulting in actual income; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Property (or applied toward the cost of recovering such proceeds). “Gross Revenue” shall also include the fair market value of any goods or services provided in consideration for the leasing or other use of any portion of the Property as well as all other revenue, income and receipts of every kind that accrue or are accounted for on an accrual basis in conformity with generally accepted accounting principles. “Gross Revenue” shall not Item 3B - Page 165
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include tenants’ security deposits, loan proceeds, capital contributions or similar advances interest on security deposits and required reserves, sales proceeds, and the proceeds of loans, refinancings, condemnation, insurance claims and partner capital contributions.
2.2 “Property Operating Expenses” means and refers to the following costs actually incurred for operation and maintenance of the Property: (i) the cost of utilities supplied to and used for the Property and payable by Borrower; (ii) the cost of all insurance required for the Property; (iii) real property taxes, if any, and assessment payments; (iv) funds paid toward property management fees in an amount not to exceed six percent (6%) of the annual Gross Revenue; (v) expenses and costs of social programs, if any, paid to third party service providers or any general partner of Borrower providing such service, and compliance/monitoring reporting or related or required by or paid to an investor of the Property; (vi) all other reserves and other amounts required to be paid, in the amount required by the Senior Lender and/or City; (vii) on-site administrative costs (including payroll and payroll taxes and expenses, employee benefits); (viii) maintenance and repair expenses and services (including materials and labor) including charges for public services such as sewer charges, license and permit fees, goods, commodities, materials, equipment, furniture, furnishings, fixtures, painting, cleaning, pest control, gardening, rubbish removal, security services, advertising and promotion, leasing commissions, accounting, audit, tax preparation and legal expenses attributable to the Property which are directly attributable and customarily incurred in the operation of real estate projects similar to the Property; (ix) all scheduled payments of principal and/or interest, late charges and all other payments due the Senior Lender, together with all fees, costs, expenses and related charges payable by Borrower under the terms of the loan documents of the Senior Lender including, without limitation, issuer fees, trustee fees, remarketing fees, and rebate analyst fees, interest rate cap deposits and credit enhancer charges; (xi) any tax credit adjuster payments to the limited partner(s); and (x) partnership management fees and asset management fees payable to the partners of Borrower no to exceed $25,000 per annum (increasing by 3% per annum). “Property Operating Expenses” shall not include the following: advances to the Borrower from its limited partner(s), general partner(s), their affiliate(s) and/or third parties, depreciation, amortization, depletion or other non-cash expenses or any amount expended from a reserve account. The calculation of Property Operating Expenses shall be subject to the reasonable approval of the Lender.
2.3 “Residual Receipts” means and refers to the remainder resulting from Gross Revenue after payment of: (i) Property Operating Expenses; (ii) deferred developer fee payments; and (iii) repayments of any advances previously made to Borrower from its limited partner(s), general partner(s), their affiliate(s) and/or third parties necessary for the rehabilitation or operation of the Property; provided, however, that the interest rate changed on said advances shall not exceed the interest rate for the Loan.
2.4 “Senior Lender” means the holder of any note secured by a deed of trust recorded against the Property which is senior in priority to the deed of trust securing the Loan and any other third party lender to the Borrower as may be permitted pursuant to the Loan Agreement.
3. Loan Disbursement. Lender shall disburse the Loan to Borrower in accordance with Sections 2.4 and 4.5 of the Loan Agreement.
4. Interest.
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4.1 Subject to the provisions of Section 4.2, below, so long as there is no default under the Loan Agreement, this Note, the Deed of Trust, or the City Regulatory Agreement, interest on the unpaid balance of this Note will accrue from the date of disbursement of the Loan at the rate set forth above.
4.2 From and after a Default or the Maturity Date (either according to the terms of this Note or as the result of an acceleration of the then unpaid principal balance under the terms of this Note), if an event of default occurs under this Note or any of the City Loan Documents, the entire unpaid principal balance of this Note shall automatically bear an annual interest rate (instead of the rate set forth above) equal to the lesser of: (a) eight percent (8%); or (b) the maximum interest rate allowed by law (“Default Rate”).
4.3 Interest shall be computed based on a 365-day year and the actual number of days elapsed.
5. Term and Repayment Requirements.
5.1 The Term of this Note (the “Term”) shall commence with the date of this Note as first set forth above and shall expire on the earliest of those events immediately set forth in this Section 5, below.
5.2 Commencing on July 15th of the first year after the issuance of a Certificate of Occupancy for the Improvements, and on or before July 15th of each year thereafter, for the Term of the Loan (“Payment Date”), Borrower shall make payments of principal and interest to Lender equal to Fifty Percent (50%) of the Residual Receipts, unless such other amount is required as a funding condition of the Department Housing and Community Development and is agreed to by the City Manager, for the prior calendar year (or, for the first calendar year, the pro rata share of Residual Receipts), to the extent Residual Receipts exist. Payment(s) shall be credited first against accrued interest and then against outstanding principal and shall be accompanied by a written report by Borrower documenting the calculation of Residual Receipts for the previous calendar year ending September 1. Borrower shall submit to City annual audited project financial statements prior to the Payment Date in addition to any documentation reasonably requested by City to substantiate Borrower’s determination of the Residual Receipts. City shall determine, in its reasonable discretion and based upon the documentation provided pursuant to the preceding sentence, the Residual Receipts payment for that year. If the Fifty Percent (50%) Residual Receipts amount is revised as provided herein, a new Note shall be executed reflecting the revised amount.
5.3 Regardless of the availability of Residual Receipts, any outstanding principal and interest under this Note shall be due and payable from Borrower to Lender upon the earliest of:
5.3.1 a Transfer of the Project other than a Transfer permitted or approved by the City, as provided in Article 6 of the Loan Agreement;
5.3.2 the occurrence of an Event of Default for which the City exercises its right to cause the City Loan indebtedness to become immediately due and payable, or for which Item 3B - Page 167
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the City Loan indebtedness is automatically specified to become immediately due and payable pursuant to applicable subsections of Article 12 below; or
5.3.3 the earlier of: the fifty-seventh (57th) anniversary date from when the Construction Financing converts to a Permanent Loan (as such terms are defined in the DDA), or (ii) September 1, 2079 (collectively, the “Maturity Date”).
5.4 All sums due under this Note are payable in lawful money of the United States and the other terms and conditions of this Note and the Deed of Trust.
5.5 All payments on this Note shall be without expense to Lender, and Borrower agrees to pay all costs and expenses, including re-conveyance fees and reasonable attorney’s fees of Lender, incurred in connection with the payment of this Note and the release of any security hereof.
5.6 Notwithstanding any other provision of this Note, or any instrument securing the obligations of Borrower under this Note, if, for any reason whatsoever, the payment of any sums by Borrower pursuant to the terms of this Note would result in the payment of interest which would exceed the amount that Lender may legally charge under the laws of the State of California, then the amount by which payments exceeds the lawful interest rate shall automatically be deducted from the principal balance owing on this Note, so that in no event shall Borrower be obligated under the terms of this Note to pay any interest which would exceed the lawful rate.
6. Application of Payments. Each payment under this Note shall be credited in the following order: (a) costs, fees, charges and advances paid or incurred by Lender under this Note or the Deed of Trust or otherwise payable to Lender by Borrower under this Note or the Deed of Trust, in such order as Lender elects, in Lender’s sole and absolute discretion; (b) accrued interest; and (c) principal due under this Note.
7. Prepayment. The principal and interest under this Note may be prepaid at any time, without penalty; provided, however, that any such prepayment shall have no effect on the application of the Loan Agreement or the Regulatory Agreement to the Site.
8. Secured by Deed of Trust. This Note is secured by, among other things, that certain Deed of Trust, Assignment of Leases and Rents, Fixture Filing, and Security Agreement (“Deed of Trust”) of even date herewith made by Borrower, as trustor, to Commonwealth Land Title Company, as trustee, for the benefit of Lender, as beneficiary.
9. Subordination. This Note and the Deed of Trust securing this Note shall be subject and subordinate to only the Senior Lender(s), as previously disclosed to Lender by Borrower.
Lender shall execute a subordination agreement in favor of the Senior Lender(s) in forms reasonably requested by such lenders; provided, however, that Lender reserves the right to review, modify and negotiate, in good faith, the terms and conditions of such subordination agreements.
10. Default.
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after Lender delivers written notice to Borrower of such failure (provided that a Default shall not exist if there are no Residual Receipts); or (b) any breach of any other promise or obligation in this Note, the City Loan Documents, as such term is defined in the Loan Agreement, or in any other instrument now or hereafter securing the indebtedness evidenced by this Note; provided, however, that Lender has given Borrower thirty (30) days’ notice to Borrower describing the default in reasonable detail in which to cure the Default, and such Default not having been cured within 30 days (or, if a greater amount of time is reasonably necessary to effect a cure, if actions to cure such Default are not undertaken within said 30 day period and pursued with reasonable diligence thereafter).
10.2 On and following any Default, Lender may, in Lender’s sole and absolute discretion, declare the entire unpaid principal balance, together with all interest thereon, and together with all other sums then payable under this Note, immediately due and payable upon written notice by Lender to Borrower without further demand regardless of the Maturity Date.
10.3 The failure to exercise the remedy set forth in Subsection 10.2, above, or any other remedy provided by law upon the occurrence of one or more of the foregoing events of Default shall not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other Default. The acceptance by Lender hereof of any payment which is less than the total of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of Lender, except as and to the extent otherwise provided by law.
11. Collection Costs. Borrower agrees to pay the following costs, expenses, and attorney fees paid or incurred by Lender, or adjudged by a court: (a) reasonable costs of collection and costs, expenses, and attorney fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed; (b) reasonable costs, expenses, and attorney fees paid or incurred in connection with representing Lender in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors’ rights and involving this Note; and (c) costs of suit and such sum as the court may adjudge as reasonable attorney fees in any action to enforce or collect payment of this Note or any portion thereof.
12. Waiver.
12.1 Borrower, endorsers, and all other Persons liable or to become liable on this Note waive diligence, presentment, protest, and demand; notice of protest, demand, and dishonor; notice of non-payment of this Note, and all other notices or matters of a like nature. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Lender may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower.
12.2 No extension of time for payment of this Note made by agreement by Lender with any Person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.
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12.3 The provisions of this Note and the obligations of Borrower under this Note shall be absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reasons whatsoever.
13. Notice. Any notice required to be provided under this Note shall be given as provided in Section 12.3 of the Loan Agreement.
14. Forbearance Not a Waiver. If Lender delays in exercising or fails to exercise any of its rights under this Note, that delay or failure shall not constitute a waiver of any Lender rights or of any breach, Default, or failure of condition under this Note. No waiver by Lender of any of its rights or of any such breach, Default, or failure of condition shall be effective, unless the waiver is expressly stated in a writing signed by Lender.
15. Assignment. This Note inures to and binds the heirs, legal representatives, successors, and assigns of Borrower and Lender; provided, however, that Borrower may not assign this Note nor any proceeds of it, nor assign or delegate any of its rights or obligations under this Note, except as otherwise permitted in the Agreement, without Lender’s prior written consent in each instance, which consent may be given, withheld, delayed or conditioned in Lender’s sole and absolute discretion. Lender, in its sole and absolute discretion, may transfer this Note and may sell or assign participations or other interests in all or any part of this Note, all without notice to or the consent of Borrower.
16. Dissolution of Organization. In the event that Maker, or its legally sanctioned and Lender-approved successor terminates or ceases to function within the term of this Note, then, in that event, the outstanding amount due under this Note (including principal or balance of principal and interest) shall be immediately due and payable.
17. Governing Law. This Note shall be construed and enforceable according to the laws of the State of California for all purposes, without application of conflicts or choice of laws principles or statutes.
18. Usury. To the extent that the indebtedness evidenced by this Note is determined not to be exempt from the usury laws of the State of California, all agreements between Borrower and Lender are expressly limited, so that in no event or contingency, whether because of the advancement of the proceeds of this Note, acceleration of maturity of the unpaid principal balance, or otherwise, shall the amount paid or agreed to be paid to Lender for the use, forbearance, or retention of the money to be advanced under this Note exceed the highest lawful rate permissible under applicable usury laws. If, under any circumstances, fulfillment of any provision of this Note or any other agreement pertaining to this Note, after timely performance of such provision is due, shall involve exceeding the limit of validity prescribed by law that a court of competent jurisdiction deems applicable, then, ipso facto, the obligations to be fulfilled shall be reduced to the limit of such validity. If, under any circumstances, Lender shall ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to reduce the unpaid principal balance under this Note and not to pay interest, or, if such excessive interest exceeds the unpaid principal balance under this Note, such excess shall be refunded to Borrower. This provision shall control every other provision of all agreements between Borrower and Lender.
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19. Non-Revolving Credit. This Note evidences a non-revolving loan from Lender to Borrower. The accrued and unpaid interest and principal balance owing on this Note at any time may be evidenced by an unpaid balance acknowledgment of Lender on this Note or by the internal accounting records of Lender regarding this Note.
20. Time Is of the Essence. Time is of the essence with respect to all obligations of Borrower under this Note.
21. Severability. If any provision of this Note, or the application of it to any Person or circumstance, is held void, invalid, or unenforceable by a court of competent jurisdiction, the remainder of this Note, and the application of such provision to other Persons or circumstances, shall not be affected thereby, the provisions of this Note being severable in any such instance.
22. Non-Recourse. The sole recourse of the City with respect to the principal of, or interest on, this Note and defaults by Borrower in the performance of its covenants under the Deed of Trust shall be to the property described in the Deed of Trust.
23. Amendment or Modification. The terms of this Note may only be amended or modified by a written agreement executed by all of the parties hereto.
24. Acknowledgment. PRIOR TO SIGNING THIS NOTE, BORROWER HAS READ
AND UNDERSTANDS ALL OF ITS PROVISIONS AND HAS CONSULTED WITH LEGAL COUNSEL OF BORROWER’S INDEPENDENT SELECTION REGARDING BORROWER’S OBLIGATIONS UNDER THIS NOTE. BORROWER UNDERSTANDS AND AGREES THAT THIS NOTE SHALL BE BINDING UPON BORROWER AND BORROWER’S HEIRS, LEGAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS. BORROWER AGREES TO
THE TERMS AND CONDITIONS OF THIS NOTE AND ACKNOWLEDGES RECEIPT OF A COPY OF THIS NOTE.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Note has been duly executed as of the date first set forth above by:
BORROWER:
ALOE PALM CANYON, L.P.,
a California limited partnership
By: Aloe Palm Canyon LLC, a California limited
liability company, its general partner
By: West Hollywood Community Housing
Corporation, a California nonprofit public benefit
corporation, its sole member
By:
Jesse Slansky, President and CEO
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EXHIBIT I-2
FORM DEED OF TRUST
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road And Palm Canyon Drive)
[Attached Behind This Page]
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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Palm Springs
The City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, California 92262
Attn: City Manager
APNs: 505-182-010 & 004 SPACE ABOVE FOR RECORDER’S USE ONLY Exempt From Recording Fee Per
GOVERNMENT CODE § 27383
DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING
(WITH ASSIGNMENT OF RENTS)
(Stevens Road And Palm Canyon Drive)
This Deed of Trust, Security Agreement and Fixture Filing (with Assignment of Rents) (“Deed of Trust”) is dated as of ______________, 20____, by Aloe Palm Canyon, L.P., a California limited partnership, whose address is c/o West Hollywood Community Housing Corporation, 7530 Santa Monica Blvd, West Hollywood, CA 90046 (“Trustor”), to COMMONWEALTH LAND TITLE COMPANY, a California corporation (“Trustee”), for the benefit of the CITY OF PALM SPRINGS, a California charter city and municipal corporation, whose address is 3200 E. Tahquitz Canyon Way, Palm Springs, California 92262 (“Beneficiary”), and is executed to secure that certain Development Promissory Note of even date herewith, in the principal amount of FOUR MILLION FOUR THOUSAND THREE HUNDRED DOLLARS ($4,004,300) (“Note”), executed by Trustor in favor of Beneficiary the provisions of which are incorporated in the Deed of Trust by this reference.
This Deed of Trust is made with respect to that certain Affordable Housing Disposition and Development Agreement (Stevens Road and Palm Canyon Drive), dated _______, 2021, for reference purposes only, between the Trustor’s predecessor-in-interest and the Beneficiary (the “Affordable Housing Agreement”).
Trustor hereby IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to Trustee, its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH RIGHT OF ENTRY AND POSSESSION, the following property (“Trust Estate”):
(a) All of that certain real property in the City of Palm Springs, County of Riverside, State of California, more particularly described in Exhibit “A” attached hereto and by this reference made a part hereof (“Subject Property”); (b) All buildings, structures and other improvements now or in the future located or to be constructed on the Subject Property (APN 505-182-010) and the contiguous real property designated as Assessor’s Parcel Number 505-182-004 (“Improvements”); Item 3B - Page 174
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(c) All tenements, hereditament, appurtenances, privileges, franchises and other rights and interests now or in the future benefitting or otherwise relating to the Subject Property or the Improvements, including easements, rights-of-way and development rights (“Appurtenances”) (Appurtenances, together with the Subject Property and the Improvements, are hereafter collectively referred to as the “Real Property”); (d) Subject to the assignment to Beneficiary set forth in Paragraph 44 below, all rents, issues, income, revenues, royalties and profits now or in the future payable with respect to or otherwise derived from the Trust Estate or the ownership, use, management operation, leasing or occupancy of the Trust Estate, including those past due and unpaid (“Rents”); (e) All present and future right, title and interest of Trustor in and to all inventory, equipment, fixtures and other goods (as those terms are defined in Division 9 of the California Uniform Commercial Code (“UCC”), whether existing now or in the future) located at, upon or about, or affixed or attached to or installed in, the Real Property, or used or to be used in connection with or otherwise relating to the Real Property or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing or occupancy of the Real Property, including furniture, furnishings, machinery, appliances, building materials and supplies, generators, boilers, furnaces, water tanks, heating, ventilating and air conditioning equipment and all other types of tangible personal property of any kind or nature, and all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and substitutions of or to any of such property (“Goods,” and together with the Real Property, collectively the “Property”); and (f) All present and future right, title and interest of Trustor in and to all accounts, general intangibles, chattel paper, deposit accounts, money, instruments and documents (as those terms are defined in the UCC) and all other agreements, obligations, rights and written material (in each case whether existing now or in the future) now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing, occupancy, sale or financing of the Property or any other part of the Trust Estate, including (to the extent applicable to the Property or any other portion of the Trust Estate) (i) permits, approvals and other governmental authorizations, (ii) improvement plans and specifications and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project managers, supervisors, designers, architects, engineers, sales agents, leasing agents, consultants and property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage to, trespass on or taking, condemnation (or conveyance in lieu of condemnation) or public use of any of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits, bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow proceeds, sale proceeds and other rights to the payment of money, trade names, trademarks, goodwill and all other types of intangible personal property of any kind or nature, and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property (collectively, “Intangibles”).
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Trustor further grants to Trustee and Beneficiary, pursuant to the UCC, a security interest in all present and future right, title and interest of Trustor in and to all Goods and Intangibles and all of the Trust Estates described above in which a security interest may be created under the UCC (collectively, the “Personal Property”). This Deed of Trust constitutes a security agreement under the UCC, conveying a security interest in the Personal Property to Trustee and Beneficiary.
Trustee and Beneficiary shall have, in addition to all rights and remedies provided herein, all the rights and remedies of a “secured party” under the UCC and other applicable California law.
Trustor covenants and agrees that this Deed of Trust constitutes a fixture filing under Sections 9313 and 9402(6) of the UCC.
FOR THE PURPOSE OF SECURING, in such order of priority as Beneficiary may elect, the following: (a) payment of the Note, plus any accrued interest; and (b) due, prompt and complete observance, performance and discharge of each and every monetary and non-monetary condition, obligation, covenant and agreement contained herein or contained in the following agreements between Trustor (“Borrower” therein) and Beneficiary (“City” or “Lender” therein), related to the Trust Estate: (i) the Predevelopment, Construction, and Permanent Loan Agreement (the “Loan Agreement”), (ii) the Affordable Housing Agreement, and (iii) the Regulatory Agreement (Stevens Road and Palm Canyon Drive) (“Regulatory Agreement”) all dated on or about the same date hereof. The City Loan Documents, as such term is defined in the Loan Agreement, and this conveyance shall secure any and all extensions, amendments, modifications or renewals thereof, however evidenced.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES:
1. That Trustor shall perform its obligations as set forth in the City Loan Documents at the time and in the manner respectively provided therein;
2. That Trustor shall not permit or suffer the use of any of the Trust Estate for any purpose other than the use for which the same was intended at the time this Deed of Trust was executed;
3. That the City Loan Documents are incorporated in and made a part of this Deed of Trust. Upon default of a Secured Obligation, and after the giving of notice and the expiration of any applicable cure period, subject to the rights of any senior lenders, the Beneficiary, at its option, may declare the whole or part of the indebtedness secured hereby, in accordance with the terms of the Note, to be due and payable. This Deed of Trust shall cover, and the property subject hereto shall include, all property now or hereafter affixed or attached to or incorporated upon the Subject Property in, to or under which Trustor now has or hereafter acquires any right, title or interest, which, to the fullest extent permitted by law, shall be deemed fixtures and a part of the Subject Property. To the extent any of the property subject to this Deed of Trust consists of rights in action or personal property covered by the UCC, this Deed of Trust shall also constitute a security agreement, and Trustor hereby grants to Beneficiary, as secured party, a security interest in such property, including all proceeds thereof, for the purpose of securing the City Loan Documents. In addition, for the purpose of securing the City Loan Documents, Trustor hereby grants to Beneficiary, as secured party, a security interest in all of the property described herein in, to, or under which Trustor now has or hereafter acquires any right, title or interest, whether present, future or contingent, including, but not limited to, all equipment, inventory, accounts, general Item 3B - Page 176
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intangibles, instruments, documents and chattel paper, as those terms are defined in the UCC, and all other personal property of any kind (including, without limitation, money and rights to the payment of money), whether now existing or hereafter created, that are now or at any time hereafter (i) in the possession or control of Trustor in any capacity; (ii) erected upon, attached to or appurtenant to the Subject Property; (iii) located or used on the Subject Property or identified for use on the Subject Property (whether stored on the Subject Property or elsewhere); or (iv) used in connection with, arising from, related to, or associated with the Subject Property or any of the personal property described herein, the construction of any improvements on the Subject Property, the ownership, development, maintenance, management or operation of the Subject Property, the use or enjoyment of the Subject Property or the operation of any business conducted thereon, including, without limitation, all such property described as the Trust Estate hereinabove. The security interests granted in this Paragraph 33 are hereinafter severally and collectively called the “Security Interest”. The Security Interest shall be self-operative with respect to the real property described herein but Trustor shall execute and deliver on demand such additional security agreements, financing statements and other instruments as may be requested in order to impose the Security Interest more specifically upon the real and personal property encumbered hereby.
The Security Interest, at all times, shall be prior to any other interest in the personal property encumbered hereby. Trustor shall act and perform as necessary and shall execute and file all security agreements, financing statements, continuation statements and other documents requested by Beneficiary to establish, maintain and continue the perfected Security Interest. Trustor, on demand, shall promptly pay all costs and expenses of filing and recordation, to ensure the continued priority of the Security Interest. Trustor shall not sell, transfer, assign or otherwise dispose of any personal property encumbered hereby without obtaining the prior written consent of Beneficiary, except that the Trustor may, in the ordinary course of business, replace personal property or dispose of personal property that will not be replaced because of its obsolescence.
Unless Beneficiary then agrees otherwise in writing, all proceeds from any permitted sale or disposition in excess of that required for full replacement shall be paid to Beneficiary to be applied on the Note subject to the rights of any senior lenders. Although proceeds of personal property are covered hereby, this shall not be construed to mean that Beneficiary consents to any sale of such personal property. Upon its recordation in the real property records of Riverside County, this Deed of Trust shall be effective as a financing statement filed as a fixture filing. In addition, a carbon, photostatic or other reproduced copy of this Deed of Trust and/or any financing statement relating hereto shall be sufficient for filing and/or recording as a financing statement;
4. Subject to the rights of any senior lenders, that all rents, profits and income from the property covered by this Deed of Trust are hereby assigned to the Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Trustor so long as no default exists hereunder after the giving of notice and the expiration of any applicable cure period, to collect such rents, profits and income for use in accordance with the provisions of the City Loan Documents;
5. Subject to the rights of any senior lenders, that upon default hereunder or under the aforementioned agreements, and after the giving of notice and the expiration of any applicable cure period, Beneficiary shall be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the property described herein and operate same and collect the rents, profits and income therefrom; Item 3B - Page 177
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6. That Trustor will keep the Improvements insured against loss by fire and such other hazards, casualties, and contingencies as may be required by applicable provisions of the City Loan Documents, and all such insurance shall be evidenced by standard fire and extended coverage insurance policy or policies. Such policies shall be endorsed with standard mortgage clause with loss payable to the Beneficiary and certificates thereof together with copies of original policies, if requested, shall be deposited with the Beneficiary;
7. To pay before delinquency any taxes and assessments affecting the Property; to pay, when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof which appear to be prior or superior hereto; and to pay all costs, fees, and expenses of this trust. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be required to pay and discharge any such tax, assessment charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings, and Trustor has adequate funds to pay any liabilities contested pursuant to this Paragraph 77;
8. As it is provided more specifically in the City Loan Documents, to keep said property in good condition and repair, subject to ordinary wear and tear, casualty and condemnation, not to remove or demolish any buildings hereafter erected thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon (subject to Trustor’s right to contest the validity or applicability of laws or regulations); not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law and/or covenants, conditions and/or restrictions affecting said property; not to permit or suffer any material alteration of or addition to the buildings or improvements hereafter constructed in or upon said property without the consent of the Beneficiary;
9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and reasonable attorney’s fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear;
10. Should Trustor fail, after the giving of notice and the expiration of any applicable cure period, to make any payment or do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Following default, after the giving of notice and the expiration of any applicable cure period, subject to the rights of any senior lenders, Beneficiary or Trustee, being authorized to enter upon said property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest or compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay his reasonable fees;
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11. Beneficiary shall have the right to pay all insurance premiums required by the City Loan Documents when due should Trustor fail to make any required premium payments. All such payments made by the Beneficiary shall be added to the sums secured hereby;
12. To pay immediately and without demand all sums so expended by Beneficiary or Trustee, under permission given under this Deed of Trust, with interest from date of expenditure, at the highest rate of interest permitted by law;
13. That the funds to be advanced hereunder are to be used in accordance with applicable provisions of the City Loan Documents; upon the failure of Trustor to do so, after the giving of notice and the expiration of any applicable cure period, Trustor shall be in default hereunder;
14. Trustor further covenants that it will not voluntarily create, suffer, or permit to be created against the property subject to this Deed of Trust any lien or liens except as authorized by Beneficiary and/or as provided in the City Loan Documents and further that it will keep and maintain the property free from the claims of all persons supplying labor or materials which will enter into the construction of any and all buildings now being erected or to be erected on said premises. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be obligated to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting, provided that Trustor shall, at Beneficiary’s written request, within thirty (30) days after the filing of any claim or lien (but in any event, and without any requirement that Beneficiary must first provide a written request prior to foreclosure) record in the Office of the Recorder of Riverside County, a surety bond in the amount required by law to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary;
15. That any and all improvements made or about to be made upon the premises covered by this Deed of Trust and all plans and specifications, comply with all applicable municipal ordinances and regulations and all other applicable regulations made or promulgated, now or hereafter, by lawful authority, and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office.
IT IS MUTUALLY AGREED THAT:
16. Trustor confirms that if Trustor should sell, enter into a contract of sale, convey, or in any way transfer all or any interest of Trustor in the Real Property encumbered by this Deed of Trust or suffer Trustor’s title or any interest therein to be divested, whether voluntarily or involuntarily, unless the same is a Permitted Transfer as defined in the Affordable Housing Agreement, without the prior written consent of the Beneficiary being first obtained, then subject to the rights of any senior lenders, Beneficiary shall have the right, at Beneficiary’s sole option, to declare all sums payable under the Note secured hereby immediately due and payable in full, irrespective of the maturity date otherwise specified in the Note. No waiver of this right shall be effective unless in writing and signed by the Beneficiary. Consent by the Beneficiary to any one such transaction shall not be deemed a waiver of the right to require such consent to future or successive transactions. Further, upon default under one of the City Loan Documents, and after the giving of notice and the expiration of any applicable cure period provided therein, subject to Item 3B - Page 179
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the rights of any senior lenders, the Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be immediately due and payable in full, irrespective of the maturity date otherwise specified in the Note;
17. As provided more specifically in the City Loan Documents, should the Property or any part thereof be taken or damaged by reason of any public improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner, subject to the rights of any senior lenders, Beneficiary shall be entitled to all compensation, awards, and other payments or relief therefor which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, and shall be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings, or to make any compromise or settlement, in connection with such taking or damage subject to the rights of any senior lenders. All such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting said property, are hereby assigned to Beneficiary subject to the rights of any senior lenders;
18. Notwithstanding Sections 1616 and 1717, in the event that a portion of the Subject Property is taken for a public improvement or pursuant to a condemnation proceeding and the Qualifying Units (as defined in the Regulatory Agreement) remain intact and continue to be owned and operated by Trustor in conformance with the Affordable Housing Agreement and the Regulatory Agreement, Beneficiary shall not declare all sums due and payable under the Note, nor shall the Beneficiary be entitled to any compensation, awards and other payments therefor, provided that such compensation, awards and other payments are used for (1) paying principal and interest owed on the Permanent Loan (as defined in the Affordable Housing Agreement), (2) making improvements to the Property that are approved by Beneficiary, in its reasonable discretion, (3) payment of principal owing under the Note, or (4) another purpose required by any senior lenders. Subject to the rights of any senior lenders, in the event that Trustor receives such compensation, awards or other payments and fails to expend the funds in conformance with any of subsections (1), (2), (3), or (4) of this section within thirty (30) days of receipt of such funds, Trustor shall be in default under this Deed of Trust.
19. Upon default by Trustor in taking any action or in making any payments provided for herein, or in the City Loan Documents, if Trustor shall fail to perform any covenant or agreement in this Deed of Trust within thirty (30) days after written demand therefor by Beneficiary (or, in the event that more than thirty (30) days is reasonably required to cure such default, should Trustor fail to promptly commence such cure within such thirty (30) days, and diligently prosecute same to completion), after the giving of notice and the expiration of any applicable cure period and subject to the rights of any senior lenders, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and of election to cause the property to be sold, which notice Trustee shall cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust. Beneficiary shall also deposit with Trustee this Deed of Trust and all documents evidencing expenditures secured hereby;
20. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Item 3B - Page 180
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subject to the rights of any senior lenders, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its Deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the Deed of any matters of fact shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. The Trustee shall apply the proceeds of sale to payment of (1) the expenses of such sale, together with the reasonable expenses of this trust including therein reasonable Trustee’s fees or attorney’s fees for conducting the sale, and the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee’s Deed; (3) all sums expended under the terms hereof, not then repaid, with accrued interest at the maximum rate allowed by law; (4) all other sums then secured hereby; and (5) the remainder, if any, to the person or persons legally entitled thereto;
21. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Deed of Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the property is situated, shall be conclusive proof of proper appointment of the successor trustee;
22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the fullest extent permissible by law;
23. Upon written request of Beneficiary stating that all sums secured hereby have been paid and all obligations secured hereby have been satisfied, and upon surrender of this Deed of Trust to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters of fact shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as “the person or persons legally entitled thereto”;
24. The trust created hereby is irrevocable by Trustor;
25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term “Beneficiary” shall include not only the original Beneficiary hereunder but also any future successor in interest to Beneficiary. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural.
All obligations of Trustor hereunder are joint and several; Item 3B - Page 181
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26. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law, the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee;
27. The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to it at the address set forth in the Deed of Trust;
28. Trustor agrees at any time and from time to time, within a reasonable time after receipt of a written request from Beneficiary, to furnish to Beneficiary detailed statements in writing of income, rents, profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements, and such other information regarding the premises and their use as may be requested by Beneficiary;
29. Trustor agrees that the obligations secured by this Deed of Trust are made expressly for the purpose of acquiring the Property, completing the construction work necessary to construct a new 71- unit affordable housing development on the Subject Property, including on any surrounding property owned by Trustor, as is more specifically provided in the applicable provisions of the City Loan Documents;
30. As is provided more specifically in the City Loan Documents, the obligations of Trustor thereunder are nonrecourse obligations of the Trustor. The sole recourse of Beneficiary shall be the exercise of its rights against the Property;
31. Notwithstanding specific provisions of this Deed of Trust, non-monetary performance hereunder shall not be deemed to be in default where delays or defaults are due to:
war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to act of the City or any other public or governmental agency or entity (except that any act or failure to act of Beneficiary shall not excuse performance by Beneficiary unless such act or failure to act is allowed or required by law); or any other causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause (a “Force Majeure Delay”) shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other party more than thirty (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Times of performance under this Deed of Trust may also be extended in writing by the Beneficiary and Trustor;
32. If the rights and liens created by this Deed of Trust shall be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the unsecured portion of such obligations shall be completely performed and paid prior to Item 3B - Page 182
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the performance and payment of the remaining and secured portion of the obligations, and all performance and payments made by Trustor shall be considered to have been performed and paid on and applied first to the complete payment of the unsecured portion of the obligations;
33. (a) Subject to the extensions of time set forth in Paragraph 3131, and subject to the further provisions of this Paragraph 33, failure or delay by Trustor to perform any term or provision respectively required to be performed under the City Loan Documents or this Deed of Trust constitutes a default under this Deed of Trust;
(b) Beneficiary shall give written notice of default to Trustor, specifying the default complained of by the Beneficiary. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default; (c) Any failures or delays by Beneficiary in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by Beneficiary in asserting any of its rights and remedies shall not deprive Beneficiary of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies; (d) If an event of default occurs under the terms of this Deed of Trust, prior to exercising any remedies hereunder or thereunder, Beneficiary shall give Trustor written notice of such default. Trustor shall have a reasonable period of time after such notice is given within which to cure the default prior to exercise of remedies by Beneficiary under this Deed of Trust. In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within thirty (30) days after the notice of default is first given; (e) If an event of default occurs under the terms of the City Loan Documents, prior to exercising any remedies hereunder or thereunder, Beneficiary shall give Trustor notice of such default. As is provided more specifically in the City Loan Documents, if the default is reasonably capable of being cured within thirty (30) days, Trustor shall have such period to effect a cure prior to exercise of remedies by the Beneficiary under the City Loan Documents, or this Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (i) initiates corrective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then Trustor shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default.
34. This Deed of Trust shall be subject and subordinate to the terms of that certain extended use agreement executed by the Trustor in connection with the Trustor’s allocation of low-income housing tax credits under Section 42 of the Internal Revenue Code (the “Extended Use Agreement”). If Beneficiary or its successors or assigns (collectively, the “Subsequent Owner”) acquires the Property by foreclosure (or instrument in lieu of foreclosure), then the “extended use period” (as defined in Section 42(h)(6)(D) of the Internal Revenue Code) shall terminate, except for the obligation of the Subsequent Owner to comply with the limitations on evictions, termination of tenancy and increase in rents for the three year period following the Item 3B - Page 183
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Subsequent Owner’s acquisition of the Property, as set forth in Section 42(h)(6)(E)(ii) of the Internal Revenue Code. As provided in the Affordable Housing Agreement, upon request when appropriate, Beneficiary shall execute such documentation as is necessary to subordinate this Deed of Trust to a Senior Loan.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first set forth above.
TRUSTOR:
ALOE PALM CANYON, L.P.,
a California limited partnership
By: Aloe Palm Canyon LLC, a California limited
liability company, its general partner
By: West Hollywood Community Housing
Corporation, a California nonprofit public benefit
corporation, its sole member/manager
By:
Jesse Slansky, President and CEO
[SIGNATURES MUST BE NOTARY ACKNOWLEDGED]
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On this ___ day of ______________, 20__ before me, ,
Notary Public, personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: (Seal)
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EXHIBIT A
TO
DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING
(WITH ASSIGNMENT OF RENTS)
(Stevens Road and Palm Canyon Drive)
Legal Description of Subject Property
ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL A: ASSESSOR’S PARCEL NO: 505-182-010
ALL THAT REAL PROPERTY SITUATED IN THE COACHELLA VALLEY COUNTY
WATER DISTRICT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND PARTICULARLY DESCRIBED AS FOLLOWS:
THAT PORTION OF THE NORTHEAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 10, IN THE TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO BASE
AND MERIDIAN, BY METES AND BOUNDS, COMMENCING AT THE NORTHEAST CORNER OF SAID SECTION 10; THENCE SOUTH 89°51’ WEST, 353 FEET TO THE CENTER LINE OF THE COUNTY HIGHWAY; THENCE SOUTH ON THE CENTER LINE OF THE COUNTY HIGHWAYS, 700.13 FEET;
THENCE SOUTH 89°50’ WEST 30 FEET, TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 89°50’ WEST, 205.88 FEET; THENCE SOUTH 0°10’ EAST, 211.68 FEET; THENCE NORTH 89°50’ EAST 205.30 FEET, MORE OR LESS TO THE WESTERLY LINE OF SAID COUNTY HIGHWAY;
THENCE NORTH ON SAID WESTERLY LINE OF THE COUNTY HIGHWAY, 211.88 FEET MORE OR LESS, TO THE POINT OF BEGINNING.
PARCEL B: (PORTION ASSESSOR’S PARCEL NO. 505-182-004)
LOT 12 IN BLOCK A OF LOS ANGELES PALMAS ESTATES, AS SHOWN BY MAP ON FILE IN BOOK 15 PAGES 15 AND 16 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
PARCEL B1: (PORTION ASSESSOR’S PARCEL NO. 505-182-004)
THAT PORTION OF LOTS 5 AND 6 IN BLOCK A OF LAS PALMAS ESTATES, AS SHOWN BY MAP ON FILE IN BOOK 15, PAGES 15 AND 16 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST EASTERLY CORNER OF SAID LOT 5, BEING ALSO THE MOST NORTHERLY CORNER OF SAID LOT 6;
THENCE SOUTH 89°50’ WEST ALONG THE BOUNDARY LINE OF SAID LOT 5, 35.77 FEET;
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THENCE IN A SOUTHWESTERLY DIRECTION TO A POINT ON THE NORTHERLY LINE OF CAMINO DEL NORTE, 3 FEET SOUTHEASTERLY FROM THE NORTHWESTERLY CORNER OF SAID LOT 6;
THENCE SOUTH ALONG THE EASTERLY LINE OF CAMINO DEL NORTE TO THE SOUTHWESTERLY CORNER OF SAID LOT 6;
THENCE EASTERLY, ALONG THE SOUTHERLY LINE OF SAID LOT 6, TO THE SOUTHEASTERLY CORNER OF SAID LOT;
THENCE NORTHERLY, ALONG THE EASTERLY LINE OF SAID LOT 6, TO THE POINT OF BEGINNING.
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EXHIBIT I-3
FORM OF REGULATORY AGREEMENT
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (Stevens Road And Palm Canyon Drive)
[Attached Behind This Page]
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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Palm Springs
The City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, California 92262
Attn: City manager
APNs: 505-182-010 & 004 SPACE ABOVE FOR RECORDER’S USE ONLY
EXEMPT FROM RECORDING FEE PER
GOVERNMENT CODE § 27383
REGULATORY AGREEMENT
(Stevens Road And Palm Canyon Drive)
by and between
THE CITY OF PALM SPRINGS,
a California Charter City And Municipal Corporation
and
ALOE PALM CANYON, L.P.,
a California Limited Partnership
[DATED AS OF _____________, 20___ for reference purposes only]
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REGULATORY AGREEMENT
(Stevens Road And Palm Canyon Drive)
This REGULATORY AGREEMENT (Stevens Road and Palm Canyon Drive) (“Regulatory Agreement”) is made and entered into as of _______________, 20__, by and between THE CITY OF PALM SPRINGS, a California charter city and municipal corporation (“City”) and Aloe Palm Canyon, L.P., a California limited partnership (“Owner”).
RECITALS
A. The City and the Owner entered into that certain Affordable Housing Disposition and Development Agreement (Stevens Road and Palm Canyon Drive) dated as of ______________, 20____ (the “Affordable Housing Agreement”), which provides that the City will convey to the Owner that certain real property located at located at 1479 N. Palm Canyon Drive, Palm Spring, California, 92262 (APN 505-182-010), more specifically described in Attachment No. 1, incorporated herein by this reference (the “City Property”), subject to the terms and conditions of the Affordable Housing Agreement. Under the Affordable Housing Agreement, the City has agreed to provide financial assistance to the Owner for acquisition of the City Property and the adjoining property owned by the Successor Agency to the Palm Springs Redevelopment Agency (APN 505-182-004), more specifically described in Attachment No. 1, incorporated herein by this reference (“the SA Property”), as well as for constructing thereon a seventy-one (71) unit affordable housing development by Owner (the “Project”). The City Property and SA Property shall together be referred to hereinafter as “the Site.” B. The City and the Owner desire that the Project be operated on the Site as a residential community with residential units made available to Qualified Households at an Affordable Rent as more specifically defined herein. This Regulatory Agreement establishes terms and conditions which govern the operation of the Project.
C. The terms of the Affordable Housing Agreement require that certain covenants and affordability restrictions remain in full force and effect on the Project for a term commencing on the date of recordation of this Regulatory Agreement and continuing for fifty-five (55) years following the recordation of Certificate of Completion as defined herein.
D. The Project is exempt from the voter approval requirement of Section 1 of Article 34 of the California Constitution, pursuant to Health and Safety Code Section 37001.5(a). This Regulatory Agreement is for the development of privately owned housing receiving no ad valorem property tax exemption, other than exemptions granted pursuant to subdivision (f) or (g) of Section 214 of the Revenue and Taxation Code, not fully reimbursed to all taxing entities; and requires not more than forty-nine percent (49%) of the dwelling units be occupied by persons of low income.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND
UNDERTAKINGS SET FORTH HEREIN, AND FOR OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY
ACKNOWLEDGED, THE OWNER AND THE CITY DO HEREBY COVENANT AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS AS FOLLOWS:
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1. Definitions of Certain Terms. AS USED IN THIS REGULATORY
AGREEMENT, THE FOLLOWING WORDS AND TERMS SHALL HAVE THE MEANING AS PROVIDED IN THE RECITALS OR IN THIS SECTION 1, UNLESS THE SPECIFIC
CONTEXT OF USAGE OF A PARTICULAR WORD OR TERM MAY OTHERWISE REQUIRE. ALL INITIALLY CAPITALIZED TERMS USED AND NOT OTHERWISE
DEFINED IN THE RECITALS OR IN THIS SECTION SHALL HAVE THE MEANING ASCRIBED TO SUCH TERM BY THE AFFORDABLE HOUSING AGREEMENT.
1.1 Affordable Rent. In reference to each Qualifying Unit, the maximum rent, with allowance for utilities, for the applicable household income as published by the TCAC annually to qualify for, receive and be in compliance with the applicable program for the Tax Credits. For purposes of the calculation of Affordable Rent “adjusted for household size” shall be the federally-mandated household size assumptions as set forth in federal statutes or regulations for the Tax Credit program.
1.2 AMI. The Area Median Income for Riverside County as published annually by HUD.
1.3 Annual Report. The Certification of Continuing Program Compliance attached to this Regulatory Agreement as Attachment No. 3 and incorporated by this reference or comparable report filed annually by the Owner with TCAC or other governmental agencies.
1.4 Automobile Liability Insurance. Insurance coverage against claims of personal injury (including bodily injury and death) and property damage covering all the Owner owned, leased, hired and non-owned vehicles, with minimum limits for bodily injury and property damage of One Million Dollars ($1,000,000). Such insurance shall be provided by a business or commercial vehicle policy and may be provided through a combination of primary and excess or umbrella policies, all of which shall be subject to pre-approval by the City, which approval shall not be unreasonably withheld, delayed or conditioned.
1.5 Certificate of Completion. The written certification of the City, in substantially the form of Exhibit G attached to the Affordable Housing Agreement, certifying that the Project has been completed in compliance with the terms and conditions of this Regulatory Agreement.
1.6 City Parties. Collectively, the City and its commissions, agents, attorneys, officers, employees, and authorized representatives.
1.7 Extremely Low Income Household. An individual or family whose gross income does not exceed the qualifying limits for extremely low income families, as established and amended from time to time by HUD, pursuant to Section 8 of the United States Housing Act of 1937 or as otherwise determined by the California Department of Housing and Community Development, pursuant to California Health and Safety Code Section 50106.
1.8 HUD. The United States Department of Housing and Urban Development.
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1.9 Income Certification Form. The Certification of Tenant Eligibility attached to this Regulatory Agreement as Attachment No. 2 and incorporated by this reference, or comparable income certification form required by TCAC or other governmental agencies.
1.10 Liability Insurance. Commercial general liability insurance against claims for bodily injury, personal injury, death, or property damage occurring upon, in, or about the Properties, the Project or adjoining streets or passageways, at least as broad as Insurance Services Office Occurrence Form CG0001, with a minimum liability limit of Two Million Dollars ($2,000,000) for any one occurrence and which may be provided through a combination of primary and excess or umbrella insurance policies. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the Project or the general aggregate limit shall be twice the required minimum liability limit for any one occurrence.
1.11 Lower Income Household. An individual or family whose income does not exceed the qualifying limits for lower income families, as established and amended from time to time by HUD, pursuant to Section 8 of the United States Housing Act of 1937 or as otherwise determined by the California Department of Housing and Community Development, pursuant to California Health and Safety Code Section 50079.5.
1.12 Management Agent. A person with significant experience in management of affordable rental housing projects substantially similar to the Project and that is, at the time, managing other financially self-supporting, successful affordable rental housing projects substantially similar to the Project.
1.13 Manager Unit. Either one of the two (2) dwelling units within the Project reserved exclusively for use by an on-site manager employed by the Owner or the Management Agent, as applicable. A Manager Unit shall be rented at market rate.
1.14 Project. The operation of a rental housing project which shall include not less than seventy-one (71) units, thirty-five (35) of which shall be rented to Qualified Households at Affordable Rents, and all related on- and off-site improvements, as more particularly described in the Affordable Housing Agreement.
1.15 Property Insurance. Insurance providing coverage for the Properties and all improvements on or to the Properties against loss, damage, or destruction by fire and other hazards encompassed under the broadest form of property insurance coverage then customarily used for like properties in the County of Riverside, excluding earthquake coverage, in an amount equal to one hundred percent (100%) of the replacement value (without deduction for depreciation) of all improvements comprising the Project (excluding excavations and foundations) and in any event sufficient to avoid co-insurance and with no co-insurance penalty provision, with “ordinance or law” coverage. To the extent customary for like properties in the County of Riverside at the time, such insurance shall include coverage for explosion of steam and pressure boilers and similar apparatus located on the Properties; an “increased cost of construction” endorsement; and an endorsement covering demolition and cost of debris removal, all subject to policy sublimits.
Property Insurance shall also include rental or business interruption insurance in an amount, at Item 3B - Page 192
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least, equal to the average annual gross income from the Project for the preceding three (3) calendar years and providing for a 12-month extended period of indemnity.
1.16 Qualified Households. A household that (1) intends to reside in the Qualifying Unit; (2) is a Senior Household; and (3) whose income does not exceed the maximum income allowable for the subject Qualifying Unit.
1.17 Qualifying Units. The thirty-five(35) units within the Project restricted to occupancy by Qualified Households as set forth in Section 77.
1.18 Senior Household. A household consisting of a person who is 62 years of age or older and any qualified permanent residents, as described in California Civil Code Section
51.3; provided that if the TCAC regulations impose a different definition for senior households, then the definition under the TCAC regulations shall apply.
1.19 Tax Credits. An allocation from TCAC of four percent (4%) or nine percent (9%) federal low income housing tax credits to finance a portion of the costs of the Project, in accordance with Section 42 of the Internal Revenue Code of 1986, as amended, all associated Internal Revenue Service regulations and all associated TCAC regulations.
1.20 TCAC. The California Tax Credit Allocation Committee or its successor in function.
1.21 Term. The period of time following the date of recordation of this Regulatory Agreement, and ending on the fifty-fifth (55th) anniversary of recordation of the Certificate of Completion.
1.22 Very-Low Income Household. An individual or family whose gross income does not exceed the qualifying limits for very low income families, as established and amended from time to time by HUD, pursuant to Section 8 of the United States Housing Act of 1937 or as otherwise determined by the California Department of Housing and Community Development, pursuant to California Health and Safety Code Section 50105.
1.23 Workers Compensation Insurance. Workers compensation insurance complying with the provisions of California law and an employer’s liability insurance policy or endorsement to a liability insurance policy, with a minimum liability limit of One Million Dollars ($1,000,000) per accident for bodily injury or disease, covering all employees of the Owner
2. Reservation of Properties for Affordable Housing. The Owner covenants and agrees to reserve and restrict the Properties for construction of the Project and, thereafter, reserve and restrict use and residential occupancy of the Qualifying Units by households who, at the time of initial occupancy of a Qualifying Unit and continuously thereafter (subject to the other provisions of this Regulatory Agreement), until the end of the Term, are members of a Qualifying Household. Two (2) one-bedroom units within the Project may be used as Manager Units at any given time provided that no Qualifying Unit shall be used as a Manager Unit.
3. Affordable Residential Rental Property Restrictive Covenant. The Owner covenants to and for the benefit of the City that the Owner shall develop, own, manage and operate, Item 3B - Page 193
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or cause the management and operation of, the Project to provide residential rental housing in the Qualifying Units only to Qualifying Households at an Affordable Rent. The Owner hereby confirms and remakes its covenant set forth in Section 4.14.1 of the Affordable Housing Agreement to develop the Properties with the Project and such covenant is incorporated into this Regulatory Agreement in its entirety by this reference. The Owner will not knowingly permit any Qualifying Unit to be used on a transient basis and will not lease or rent any Qualifying Unit for an initial period of less than twelve (12) months. No Qualifying Unit will, at any time, be leased or rented for use as a hotel, motel, time share, dormitory, fraternity house, sorority house, rooming house, hospital, nursing home, sanitary or rest home.
4. Continuous Operation Covenant. The Owner covenants to and for the benefit of the City to cause the Project to be continuously operated, in accordance with the other provisions of this Regulatory Agreement, throughout the Term.
5. Abandonment. The Owner shall not abandon or surrender the operation of all or any part of the Project during the Term, except due to material casualty or condemnation.
6. Supportive Services. West Hollywood Community Housing Corporation, Desert AIDS Project, and/or Riverside Health will provide on-site social services, including but not limited to mental health counseling, service coordination, and case management, to all Qualifying Households. At least one full-time service provider that specializes in formerly homeless households will provide case management services tailored to formerly homeless individuals in the Project’s permanent supportive housing units.
7. Rental of Qualifying Units. The Owner covenants that each Qualifying Unit shall be occupied or available for occupancy by a Qualifying Household at an Affordable Rent on a continuous basis throughout the Term, in accordance with the following tenant income level mix:
7.1 Not less than twenty-five (25) of the Qualifying Units shall be occupied or available for occupancy by Qualifying Households that are Extremely Low Income Households making up to 20% AMI;
7.2 Not less than seven (7) of the Qualifying Units shall be occupied or available for occupancy by Qualifying Households that are Extremely Low Income Households making incomes ranging from 20% AMI to 30% AMI; and
7.3 Not less than three (3) of the Qualifying Units shall be occupied or available for occupancy by Qualifying Households that are Very Low Income Households making incomes ranging from 30% AMI to 50% AMI.
8. Affordable Rent. The monthly rent charged to a Qualifying Household for the occupancy of a Qualifying Unit shall never exceed an Affordable Rent for such Qualifying Unit set forth in Section 6.
8.1 Rent for Qualifying Units may be increased only once per calendar year, based on changes in Area Median Income; provided that the rent for each Qualifying Unit must never exceed an Affordable Rent for the Qualifying Unit as necessary to maintain the tenant income mix specified in Section 77.
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8.2 Determination of Qualifying Household income shall be made by the Owner at the time of initial application by a household for occupancy of a Qualifying Unit. At the time of initial application, the Owner shall require an applicant to complete the Income Certification Form and certify the accuracy of the information provided on such form. On or before March 31 of each calendar year during the Term, the Owner shall require each Qualifying Household occupying a Qualifying Unit to recertify the Qualifying Household’s income on the Income Certification Form. The Owner shall make a good faith effort to verify the accuracy of income information provided in any Income Certification Form by an applicant for occupancy of a Qualifying Unit or by a Qualifying Household occupying a Qualifying Unit, by taking one or more of the following steps, as reasonably required or indicated: (1) obtain an income tax return and copy of each W2 Wage and Earnings Statement for the most recently concluded income tax year; (2) conduct a credit reporting agency or similar search; (3) obtain an income verification form from the applicant’s or the Qualifying Household’s current employer(s); (4) obtain an income verification form from the United States Social Security Administration and/or the California Department of Social Services, if the applicant or the Qualifying Household receives assistance from either of such agencies; or (5) if the applicant or an adult member of a Qualifying Household is unemployed and has no such income tax return, obtain another form of independent verification.
For purposes of this Section 8.28.2, the Owner may conclusively rely upon the evidence of the age of the occupant(s) of a Qualifying Unit as presented in a valid California Driver’s License, other form of identification issued by the State of California or the United States Government, which includes a date of birth. All such verification information shall only be obtained by the Owner after obtaining the applicant’s or the Qualifying Household’s written consent for the release of such information to the Owner. Failure to consent in writing to the release of such income verification information to the Owner may disqualify an applicant for occupancy of a Qualifying Unit or be grounds for termination of Qualifying Household’s occupancy of a Qualifying Unit.
8.3 The Qualifying Units are not specifically assigned to any qualifying income category (i.e., Extremely Low Income Household or Very Low Income Household). The restricted income level of each Qualifying Unit may change as Qualifying Units become vacant, a Qualifying Household tenant’s income changes or other Qualifying Units are occupied by Qualifying Households. In all circumstances, though, the rent for each Qualifying Unit shall be an Affordable Rent for the Qualifying Unit as necessary to maintain the restricted income tenant mix required under Section 77. If, upon any recertification, the income of a previously Qualifying Household exceeds one hundred forty percent (140%) of the qualifying income for a Very Low Income Household, then, if permitted by TCAC, the Owner or Management Agent shall notify such household that its lease for its Qualifying Unit will not be renewed upon the expiration of its lease, unless the household again becomes a Qualifying Household upon recertification prior to the expiration of its lease. In any event, if the income category of a Qualifying Household upon recertification is different from the previous income of the Qualifying Household (e.g., a Very Low Income Household becomes a Lower Income Household or a Lower Income Household becomes an Very Low Income Household; or any similar change in the income of a Qualifying Household tenant of the Project), the Owner or Management Agent shall rent the next available Unit to a Qualifying Household with an income level that will maintain the tenant income level mix set forth in Section 77. To the extent the federal low-income housing tax credit requirements conflict with the requirements in this Section 8.38.3 relative to the continued occupancy by households that do not qualify as Qualifying Households, the federal low-income housing tax credit requirements shall apply in place of the provisions in this Section 8.38.3.
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8.4 The Owner shall maintain on file all Income Certification Forms completed by applicants for occupancy of Qualifying Units and by Qualifying Households that occupied or are occupying Qualifying Units in accordance with Section 77 and shall provide copies of the rent roll and Income Certification Forms to the City for its review and approval within fifteen (15) days following Notice to the Owner.
8.5 The Owner and each Qualifying Household occupying a Qualifying Unit shall permit the City to conduct inspections of the Properties, the Project and each Qualifying Unit, from time-to-time, for purposes of verifying compliance with this Regulatory Agreement, upon fifteen (15) days prior written notice to the Owner.
8.6 The Owner shall submit its first Annual Report to the City on the April 30th immediately following the issuance of the final Certificate of Occupancy for the Project by the City. Thereafter, on each April 30 during the Term, the Owner shall submit an Annual Report to the City. The City shall maintain the confidentiality of the information contained in any Annual Report specifically relating to any particular Qualifying Household occupying a Qualifying Unit, to the extent reasonably allowed by Law, as determined by the City’s general or special counsel.
9. Rent Increases on Loss of Project Based Vouchers. It is anticipated that twenty-five (25) of the Very Low Income Qualifying Units in the Development will receive project-based vouchers through the Housing Authority of the County of Riverside (the “Rental Subsidy”) throughout the Term. If through no fault of the owner, including, without limitation, change in federal law occurs, an action (or inaction) by Congress or any federal or state agency occurs, or a material reduction, termination or nonrenewal of the Rental Subsidy occurs, such that the Rental Subsidy is reduced or is no longer available, Owner shall, in anticipation of such loss in Rental Subsidy, use good faith, commercially reasonable efforts for a period of sixty (60) days, to obtain alternative sources of rental subsidies and shall provide the City weekly progress reports on Owner’s efforts to obtain alternative sources of rental subsidies. If at the end of such sixty (60) day period Owner is unable to secure an alternate source of rental subsidy, notwithstanding Sections 77 and 88 of this Agreement, the Owner may increase the Affordable Rent on one or more of the Very Low Income Qualifying Units, to an Affordable Rent for Lower Income Households, subject to the following requirements:
9.1 Any such Affordable Rent increase must be pursuant to a transition plan approved by the City showing how the Affordable Rent increase will be phased-in, and which Very Low Income Qualifying Units will be subject to the increase, and, if applicable, be consistent with remedial measures set forth in California Code of Regulations Title 4, Division 17, Chapter 1, Section 10337(a)(3) or successor regulation applicable to California’s Federal and State Low Income Housing Tax Credit Program;
9.2 At the time Owner requests an increase in the Rent, Owner shall provide the City with a copy of the proposed Annual Operating Budget showing the impact of the loss or reduction of the Rental Subsidy;
9.3 Any subsequent Affordable Rent increases remain subject to Section 8.18.1 above;
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9.4 The number of Very Low Income Qualifying Units subject to the Affordable Rent increase and the level of Affordable Rent increase may not be greater than the amount reasonably required to ensure that the Project generates sufficient income to cover its operating costs and debt service as shown on the Annual Operating Budget, and as is reasonably necessary to maintain the financial stability of the Project; and
9.5 Owner shall continue to use good faith commercially reasonable efforts to obtain alternative sources of rental subsidies and shall provide the City with annual progress reports on efforts to obtain alternative sources of rental subsidies that would allow the rents on the Very Low Income Units to be reduced back to the Affordable Rents for Very Low Income Households, as contemplated by this Agreement. Upon receipt of any alternative rental subsidies, Owner shall reduce the Rents on the Very Low Income Qualifying Units back to the Affordable Rents for Very Low Income Households as set forth herein, to the extent that the alternative rental subsidies provide sufficient income to cover the operating costs and debt service of the Project as shown on the Annual Operating Budget.
10. The Owner Covenant Regarding Lease of Qualifying Units. The Owner, for itself, its successors and assigns, covenants and agrees that, if any Qualifying Unit is rented or leased during the Term, the rental or lease of the Qualifying Unit shall be accomplished through a written lease agreement and all of the following restrictions shall apply:
10.1 A Qualifying Household shall be the record tenant and only occupant of the Qualifying Unit.
10.2 The lease for each Qualifying Unit shall be for an initial term of not less than twelve (12) months.
10.3 Each lease for a Qualifying Unit shall contain all of the following provisions:
10.3.1 An agreement authorizing the Owner to immediately terminate the tenancy of a Qualifying Household occupying a Qualifying Unit, where one or more members of that Qualifying Household misrepresented any fact material to the qualification of such household as a Qualifying Household;
10.3.2 An agreement providing that each Qualifying Household occupying a Qualifying Unit shall be subject to annual certification or recertification of income as a condition to continued occupancy of the Qualifying Unit;
10.3.3 An agreement providing that each Qualifying Household occupying a Qualifying Unit may be subject to rental increases in accordance with this Regulatory Agreement; and
10.3.4 An agreement providing that the Owner will not discriminate on the basis of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, medical, familial status, source of income, genetic information or receipt of public assistance or housing Item 3B - Page 197
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assistance in connection with rental of a Qualifying Unit, or in connection with the employment or application for employment of persons for operation and management of the Project, and all contracts, applications and leases entered into for such purposes shall contain similar nondiscrimination clauses to such effect.
10.4 The Owner shall not terminate the tenancy or refuse to renew the lease or rental agreement of a Qualifying Household except for: (i) serious or repeated violations of the terms and conditions of the lease; (ii) because the previously Qualifying Household is no longer a Qualifying Household; (iii) for violation of applicable Federal, State, or local law; or (iv) for other good cause. The Owner shall follow all applicable laws in connection with termination of the tenancy of a Qualifying Household or a refusal to renew the lease or rental agreement of a Qualifying Household.
10.5 Tenant Selection Policies and Criteria. The Owner shall adopt written tenant selection policies and criteria that:
10.5.1 are consistent with the purpose of providing affordable rental housing for Qualifying Households at an Affordable Rent;
10.5.2 are reasonably related to tenant eligibility and ability to perform the obligations of the lease for a Qualifying Unit;
10.5.3 give prompt written notice to any rejected applicant of the grounds for rejection;
10.5.4 provide for all of the Qualifying Units to be available for occupancy on a continuous basis to Qualifying Households at an Affordable Rent; and
10.5.5 do not give preference to any particular class or group of persons in leasing or renting the Qualifying Units, except to the extent that a tenant must be a Qualifying Household.
11. Non-Discrimination. All units in the Project shall be available at an Affordable Rent for occupancy on a continuous basis to Qualified Households. Except as provided in Section
10.5.510.5.5, the Owner shall not give preference to any particular class or group of persons in renting the units in the Project. There shall be no discrimination against or segregation of any person or group of persons, on account of actual or perceived sex, age, marital status, race, color, religion, creed, national origin (i.e. place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), ancestry, sexual orientation, gender identity, gender expression, physical or mental disability, medical condition, familial status, source of income, or genetic information in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any Unit. Neither the Owner nor any person claiming under or through the Owner, shall establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of any Unit or in connection with the employment of persons for the operation and management of any Unit, the Project or the Properties. All deeds, leases or contracts made or entered into by the Owner as to the units, the Project or the Properties or any portion thereof, shall contain covenants prohibiting discrimination, as prescribed by this Regulatory Agreement. The Item 3B - Page 198
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Owner shall include a statement in all advertisements, notices and signs for the availability of units in the Project for rent to the effect that the Owner is an Equal Housing Opportunity Provider.
12. Equal Housing Notice. Provide for a statement in all advertisements, notices and signs for the availability of Qualifying Units for lease or rent to the effect that the Owner is an equal housing opportunity provider, and include an equal housing opportunity logotype in all notices, signs and advertisements in print media for the Qualifying Units.
13. Development and Management of the Project.
13.1 Management of Project. The Owner shall be responsible for management of the Project including, without limitation, the selection of Qualified Households, certification and recertification of household size, income, gender and the age of the head of household and relation of head of household to the household, of all Qualified Households, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. The City shall have no responsibility for the management or operation of the Project or the Properties. The Project shall at all times be managed by a Management Agent reasonably acceptable to the City, with demonstrated ability to operate residential rental facilities similar to the Project in a manner that will provide decent, safe, and sanitary housing. For the purposes hereof, if the Owner directly performs the functions of the Management Agent by its employees or by means of a service contract with an entity which is a partner or an affiliate of a partner in the Owner, such Management Agent shall be deemed approved by the City. If the Management Agent is an entity or person other than the Owner, its employees, a partner in the Owner or an entity owned or controlled by a partner of the Owner or which owns and/or controls the Owner, the Owner shall submit for the City’s approval the identity of any proposed Management Agent, together with additional information relevant to the background, experience and financial condition of any proposed Management Agent, as reasonably requested by the City.
If the proposed Management Agent meets the standard for a qualified Management Agent set forth above, the City shall approve the proposed Management Agent by notifying the Owner in writing within thirty (30) days following the Owner’s written request for such approval. Unless the proposed Management Agent is disapproved by the City within thirty (30) days, which disapproval shall state with reasonable specificity the basis for disapproval, it shall be deemed approved.
13.1.1 If the Owner directly performs the functions of the Management Agent by its employees or by means of a service contract with an entity which is a partner or an affiliate of a partner in the Owner and the City determines the Owner has not met its management responsibilities, the City shall have the right to enter the Project, to review relevant documentation to determine if the Owner is acting in a reasonable manner and, subject to approval of the investor limited partner, to require the Owner to hire a third party management company acceptable to the City.