CITY OF RICHMOND
Sanctuary Citv Compliance Statement
The undersigned, an authorized agent of_ (hereafter
" Contractor "), has had an opportunity to review the requirements of City of Richmond Ordinance 12-18 (hereafter " Sanctuary City Contracting Ordinance " or "SCCO"). Contractor understands and agrees that the City may choose with whom it will maintain business relations and may refrain from contracting with any person or entity that provides Data Broker or Extreme Vetting services to the U.S. Immigration and Customs Enforcement Division of the United States Department of Homeland Security ("ICE"). Contractor understands the meaning of the following terms used in the SCCO:
a. "Data Broker" means either of the following:
i. The collection of information, including personal information about consumers, from a wide variety of sources for the purposes of reselling such information to their customers, which include both private-sector business and government agencies;
ii. The aggregation of data that was collected for another purpose from that for which it is ultimately used.
b. "Extreme Vetting" means data mining, threat modeling, predictive risk analysis, or other similar services."
Contractor understands that it is not eligible to receive or retain a City contract if at the time the Contract is executed, or at any time during the term of the Contract, it provides Data Broker or Extreme Vetting services to ICE.
Contractor further understands and agrees that Contractor' s failure to comply with the SCCO shall constitute a material default of the Contract and the City Manager may terminate the Contract and bar Contractor from bidding on future contracts with the City for five (5) years from the effective date of the contract termination.
By executing this Statement, Contractor certifies that it complies with the requirements of the SCCO and that if at any time during the term of the Contract it ceases to comply, Contractor will promptly notiiy the City Manager in writing.
Any person or entity who knowingly or willingly supplies false information in violation of the SCCO shall be guilty of a misdemeanor and subject to a $1,000 fme.
Based on the foregoing, the undersigned declares under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this _day of_, 20_, at _, California.
Printed Name: Title:
Signed: Date:
Business Entity:
Vendor SCCO Compliance Statement (Augt2020)Page 184 of 625 Submitted by CSG Advisors
September 16, 2022
41 Perimeter Center East, Suite 615
Atlanta, GA 30346-1976
415.956.2454
415.956.2875
PROPOSAL TO PROVIDE
ON-CALL FINANCIAL
AND ECONOMIC ANALYSES
FOR THE
CITY OF
RICHMOND
COMMUNITY
DEVELOPMENT
DEPARTMENT
HOUSING DIVISION
HELPING CLIENTS NAVIGATE
UNCHARTERED WATERS
COVER LETTER ..................................................................................3 FIRM PROFILE ....................................................................................4 EXPERIENCE AND KNOWLEDGE ........................................6 APPROACH ...........................................................................................9 REFERENCES ....................................................................................16 KEY STAFF ...........................................................................................17 COST PROPOSAL .........................................................................32 FORMS .................................................................................................34
TABLE OF CONTENTS
Proposal for On-Call Financial and Economic Analyses
3 ROPOSAL TO PROVIDE
ON-CALL FINANCIAL AND ECONOMIC ANALYSES
SEPTEMBER 16, 2022
Jesus Morales
The City of Richmond
Housing Manager
450 Civic Center Plaza
Richmond, CA 94804
Dear Mr.Morales.,
We are pleased to submit this quote to assist the City of Richmond. We believe we are the ideal partner to help the City of Richmond preserve, protect, and produce the affordable housing its residents need.
Multifamily Finance. As a leading financial advisor for affordable housing bonds nationally, CSG has advised on hundreds of affordable multifamily transactions during its 40-year history (216 since 2019 alone). As a result, we have worked with all manner of federal, state, and local financing sources, including a variety of taxable and tax-exempt bond structures, 4% and 9% LIHTC, Section 8, HOME, CDBG, No Place Like Home, AHSC, Joe Serna, redevelopment agency funds, local housing trust funds, and numerous others. Over the years, CSG has been entrusted with some of the largest, most complex multifamily financings in the country and has, in many cases, helped develop the programs that finance such transactions.
Program Development and Implementation. A significant portion of our work is dedicated to helping governments develop and implement programs like the one The City of Richmond is proposing. Over the years, we’ve completed countless strategic financial plans, resource allocation studies, capital adequacy studies, program designs, policies, and procedures for our clients. In fact, since 2015, CSG staff have helped create or improve dozens of affordable housing financing and subsidy programs, including preservation loan programs.
Local and National Experience. As specialists in affordable housing finance with deep connections to the Bay Area as well as experience assisting state and local agencies across the country, CSG develops programs that are informed by national best practices but sensitive to local challenges and opportunities. In additional to their work with national clients, our San Francisco-based staff have decades of experience helping Bay-Area governments design programs and execute transactions to finance affordable housing.
Our Overall Approach. Our approach to program development involves a highly collaborative, data-driven process with a strong focus on successful long-term implementation. CSG works to engage key stakeholders early on and keep them engaged throughout the project. We establish clear goals and objectives, maintain strong cadence of communications, and develop work product through an iterative process of drafts and comments.
We base our recommendations regarding program structure on real-world data and industry best-practices, relying not only on our extensive experience developing programs for other agencies but also on systematic analysis of similar programs across the country. Finally, CSG works hard to ensure that programs are not only well-designed but are also implementable given the current structure of the agency and sustainable in the long term despite any future changes in the number, or experience level, of staff.
We thank you for the opportunity to discuss our qualifications and approach above and in the attached proposal materials. We are excited by the prospect of working with your team on this project and look forward to next steps in the selection process.
Sincerely,
41 Perimeter Center East, Suite 615, Atlanta, GA 30346-1976 | WWW.CSGADVISORS.COM
NICOLE GRAHAM, PRINCIPAL
CSG ADVISORS INCORPORATED
P: 415.430.7655 | F: 415.956.2875 | E: [email protected]
ADAM CRAY, VICE PRESIDENT
CSG ADVISORS INCORPORATED
415-830-8895 | [email protected]
FIRM PROFILE
Proposal for On-Call Financial and Economic Analyses
5 CSG Advisors has provided financial and economic consulting services to public agency clients throughout the country since 1982. We are a national, full-service, independent financial advisor that assists public finance clients in the design, financing, and implementation of affordable housing, urban redevelopment, and economic development initiatives.
CSG currently has 14 senior professional staff and 5 junior professional staff located in four offices: Atlanta, Los Angeles, New York, and San Francisco (please see the cover letter for our primary contact information).
SERVICES AND CLIENTS
CSG provides a wide range of financial
advisory, program design, and real
estate services to state and local
public agencies—including public
housing authorities, local housing
departments, and housing finance
agencies—throughout the U.S. Over
the years, we have advised 29 state
housing finance agencies and more
than half of America’s 50 largest cities.
NATIONAL LEADERSHIP AND
LOCAL EXPERIENCE
We have been the #1 financial
advisor for affordable housing for
19 of the last 20 years, 1 and we advise
on some of the most complex
development negotiations and
mixed-use projects in the country.
Since inception, the firm has served
as financial advisor for bond issues
totaling more than $110 billion. 2 In
addition to their work with national
clients, our San Francisco-based staff
have decades of experience helping
Bay-Area governments design
programs and execute transactions
to finance affordable housing. To
date, they’ve worked with 33 local
government clients across all 9
Bay-Area counties on hundreds of
separate projects.
MULTIFAMILY FINANCE EXPERIENCE
Since 2019 alone, CSG has served as
financial advisor on 216 affordable
multifamily housing financings
totaling more than $5.5 billion in par
value. These transactions combined
bond financing with a wide variety of
federal, state, and local subsidies and
other funding sources. We are also
experts in structuring transactions
that pair these sources with Low-
Income Housing Tax Credits (LIHTC).
We’ve structured hundreds of LIHTC
transactions, including the 3 largest
partnerships in the history of the
program: for NYCHA, Puerto Rico
Public Housing Authority, and San
Francisco Housing Authority. Because
of our independence and experience,
CSG was also selected to serve as
the Resolution Trust Corporation’s
national financial advisor for all tax-
exempt assets and as HUD’s first
national expediter for its largest and
most troubled HOPE VI projects.
FOCUS ON STRATEGIC PLANNING
AND PROGRAM DEVELOPMENT
CSG is unique among financial
advisors in working as extensively
on strategic planning and program
development as on bond financings.
In fact, approximately half of our
work is dedicated to designing
real estate and financial strategies,
programs, analyses, and disposition
approaches for public agencies. In
recent years, we’ve helped create
new affordable housing financing
programs or improve existing policies
and procedures for dozens of clients—
including agencies throughout
California in cities such as Anaheim,
Los Angeles, Sacramento, San
Bernadino, San Diego, San Francisco,
and Santa Cruz.
PHA EXPERIENCE
CSG is a national leader in serving
public housing authorities in their
modernization and redevelopment
efforts. We serve as financial advisor to
the housing authorities of Charlotte,
Delaware, Indianapolis, Los Angeles,
New York City, Philadelphia, Phoenix,
Portland, Puerto Rico, Richmond,
Sacramento, San Francisco, Santa
Clara County, Seattle, Tacoma, the U.S.
Virgin Islands, and many others on an
extraordinarily wide range of projects
and programs.
SECURITIES QUALIFICATIONS
CSG is a municipal advisory firm
registered with the SEC and MSRB.
All principals, and many of our
professional staff members, hold
the MSRB Series 50 qualification
required to advise municipal
entities on securities issuance and
investment matters (see attached
resumes for details).
INDEPENDENCE
CSG does not underwrite or sell
securities or provide services to
investment bankers. We act solely as
financial advisor and/or consultant
in providing advice to our clients.
We do not intend to engage any
subcontractors for this project.
FIRM INTRODUCTION
INDUSTRY LEADERSHIP
CSG has advised 29 state housing
finance agencies and more than
half of America’s 50 largest cities
1 by dollar volume of issuances, according to Thomson Reuters 2 This includes predecessor firms Caine Gressel Midgley Slater and CGMS Inc.
PREVIOUSLY RELATED
EXPERIENCE
Proposal for On-Call Financial and Economic Analyses
7 RELEVANT EXPERIENCE AND KNOWLEDGE
As described above, CSG is one of the nation’s top financial advisor for housing bond issuances and has unparalleled experience developing programs and executing transactions to finance affordable multifamily housing. We believe the frequency with which we bring multifamily issues to market (weekly on average) gives us a unique understanding of market conditions and allows us to provide cutting edge guidance to our clients—on both transactional and programmatic issues.
TRANSACTIONAL EXPERIENCE
In terms of transactions, in just the past
two years, our multifamily advisory
experience includes:
— 60 projects combining a bond issue
and public agency gap debt, wherein
we typically work with the public
agency lender on loan conditions and
repayment terms, prepare the term
sheet for the junior debt, and respond
to issues and concerns from the credit
enhancer on the senior debt.
— Over $400 million of multifamily and
nonprofit bond refundings, extending
the term of affordability, increasing
net income for the bond issuer, and
reducing rates for the projects.
— Extensive work on financings backed
by public housing authority RAD
revenues, as well as many financings
with additional first-mortgage
funding backed by Project-Based
Vouchers.
— Numerous FHA-insured and Fannie
Mae/Freddie Mac credit-enhanced
transactions.
— 82 direct purchases totaling nearly
$1.7 billion with a wide array of major
banks and structures.
— 35 transactions with nonprofit/public
agency owners or general partners.
Given the number of multifamily
transactions we’ve closed over the years,
CSG has experience with hundreds of
distinct federal, state, and local funding
sources. From Section 8, HOME, and
CDBG to No Place Like Home, AHSC,
and Joe Serna to RDA funds and local
housing trust fund dollars—CSG has
worked with them all.
PROGRAMMATIC EXPERIENCE
In addition to advising on transactions,
approximately half of our work is
dedicated to strategic planning and
program design for public agencies.
Over the years, we’ve completed
countless strategic financial plans,
resource allocation studies, capital
adequacy studies, program designs,
policies, and procedures for our clients.
Our experience developing loan
programs, in particular, is measured
in dozens of projects over decades.
In the 1980’s, our firm was built
on creating home improvement
loan programs for cities across the
country. In the 90’s, we developed
San Francisco’s Downpayment
Assistance Loan Program, which has
since become a national model. In
the early 2000’s, we designed the
long-term funding mechanisms for
the District of Columbia’s affordable
housing trust fund, which continue
to be the primary tools for covering
funding gaps in affordable multifamily
projects in the District. Just this year, we
worked extensively with the California
State Treasurer’s Office and leaders
in the legislature to design a shared
appreciation loan program, called
“California Dream for All,” which will
provide 20% of the purchase price of
a home for first-time homebuyers
across California. The program—which
is modeled on work we’ve done for San
Francisco and, more recently, Alameda
County—is a revolving investment fund
that will initially provide $1 billion a year
for such loans and could ultimately help
150,000 families buy homes.
Agency/Location Project Name/Description Contract Value (Approximate)
Alameda, County of (CA) Developed programs to deploy $580 million of G.O. bond proceeds for affordable housing $40,000
Anaheim, City of (CA)
Developed multifamily financing programs and related
policies/procedures; Developed bond/loan program
applications
$35,000
Cook County, Housing Authority
of (IL)
Developed multifamily bond program and related
policies/procedures $60,000
District of Columbia Office of the
Deputy Mayor for Planning and
Economic Development
Developed and updated (as recently as 2020) strategy for New Communities Initiative, which seeks to revitalize
severely distressed subsidized housing and redevelop
neighborhoods into vibrant mixed-income communities
$114,000
Hartford, Housing Authority
of the City of (CT)*
Developed multifamily bond program and related policies/ procedures $50,000
Proposal for On-Call Financial and Economic Analyses
8 Los Angeles County Development
Authority (CA)
Developed multifamily bond program and related policies/ procedures; Conducted bond trainings for staff; Assisted with drafting of subordinate funding guidelines/NOFA and underwriting of applications
$35,000
Los Angeles, Housing Authority
of the City of (CA)
Developed multifamily bond program and related
policies/procedures; Conducted bond trainings for staff $20,000 Los Angeles, Housing Authority
of the County of (CA)
Developed multifamily bond program and related policies/ procedures; Conducted bond trainings for staff $20,000
Monterey, Housing Authority
of the County of (CA)
Developed multifamily bond program and related policies/ procedures $30,000
Puerto Rico Housing Finance Agency Designed strategy to deploy tax credits, tax-exempt bonds, and subsidy for 2019 hurricane recovery effort $25,000
Sacramento Housing and
Redevelopment Authority (CA)*
Developed multifamily bond program and related policies/ procedures; Developed asset management policies/proce-
dures
$50,000
San Bernadino, Housing Authority o
f the County of (CA)
Developed multifamily bond program and related policies/ procedures $25,000
San Diego Housing Commission Developed multifamily bond program and related policies/ procedures $25,000
San Francisco, City and County
of (CA)
Designed Preservation and Seismic Safety Loan Program;
Developed Multifamily Securities Program Manual;
Drafted NOFA’s for multiple subsidy programs
N/A**
Virgin Islands Housing Authority
(USVI)*
Developed multifamily bond/loan program and related
policies/procedures $123,0000
Virginia Housing Development
Authority
Completed comprehensive analysis of the state’s
affordable multifamily housing construction/permanent
loan program
$25,000
* Project where proposed Project Manager (Tanya Dempsey) was sole or lead advisor ** Work completed by City employee now working for CSG (Adam Cray) The following is additional detail regarding the projects shown in bold typeface in the table above, each of which is similar in nature and scope to the work outlined in the RFP.
Alameda County. CSG helped Alameda
County Department of Housing and
Community Development create the
programs and budget for Measure A, a
$580 million general obligation bond
issue for affordable housing that passed
in November 2016. As a key part of this
work, CSG helped design the program
features and develop the detailed term
sheets related to $50 million for the
County’s shared appreciation down-
payment assistance loan program,
over $100 million for gap loans for
multifamily housing, $50 million for
supportive housing, and $50 million
for preservation efforts. CSG outlined
approaches, eligibility requirements
and preferences, type and amount
of assistance, existing programs that
could provide model documents and
be adapted for Alameda County, and
repayment terms. CSG also helped
develop an administrative model that
minimized impact on limited County
staff, together with an administrative
budget for the program and how to
fund it. CSG also advised on the use of
taxable general obligation bonds to fund
the programs in order to meet federal
tax rules, and then served as co-financial
advisor on the initial $240 million series
of bonds in March of 2018.
Housing Authority of the City of Los
Angeles. CSG worked with HACLA to
develop and document the policies
and procedures applicable to all HACLA
conduit bond issuances for affordable
multifamily housing. The resulting 30-
page document covered issues such as
project eligibility, bond type, transaction
type, legal requirements, closing
requirements, fees and expenses, and
issuance timetables. CSG has also
conducted trainings for HACLA staff
explaining the basics of bond financing
and key policies and procedures related
to HACLA revenue bond issuances.
Virginia Housing Development
Authority. Earlier this year, CSG
conducted a comprehensive analysis of
Virginia Housing’s affordable multifamily
housing construction/permanent
loan program. This analysis included
a comparison of key program terms
to those of 5 other lending programs
available to developers in Virginia. It
also involved modeling the true all-
in financing costs a developer could
expect to pay under each of the 6
programs given 24 common borrowing
scenarios. As a result, Virginia Housing
was able to gauge the competitiveness
of its program based on total actual cost
rather than quoted interest rates.
APPROACH
Proposal for On-Call Financial and Economic Analyses
10 PROJECT APPROACH
Our approach to program development involves a highly collaborative, data-driven process with a strong focus on successful long-term implementation. CSG works to engage key stakeholders early on and keep them engaged throughout the project. We establish clear goals and objectives, maintain strong cadence of communications, and develop work product through an iterative process of drafts and comments.. We base our recommendations regarding program structure on real-world data and industry best-practices, relying not only on our extensive experience developing programs for other agencies but also on systematic analysis of similar programs across the country. Finally, CSG works hard to ensure that programs are not only well- designed but are also implementable given the current structure of the agency and sustainable in the long term despite any future changes in the number, or experience level, of staff.
The sections below outline our proposed process for approaching development of both the Preservation Program and the new-construction NOFA projects. Depending on the City’s needs and priorities, these projects could be completed concurrently or consecutively.
A. PROJECT INITIATION
The initiation phase is important for CSG to learn about the agency, including its overarching goals and the context underlying these projects. Typically, we would work with staff to identify the critical stakeholders and influencers of this work, identify contacts and establish a cadence of meetings or communication approaches, and request and collect documentation and data.
Activities in this phase include the following:
✔ Kick-off meeting with City staff to review background information and deliverables
✔ Identify key stakeholders
✔ Schedule interview with stakeholders
✔ Determine ongoing meeting or call schedule
✔ Determine communication approaches
✔ Create and finalize a work plan and schedule with staff Deliverable: Finalized work plan
B. CONDUCT RESEARCH & ANALYSIS
CSG will research and summarize similar programs and prepare a comprehensive matrix of terms for City of Richmond . This research is important to provide options and explore different trade-offs for the agency related to both projects. Activities in this phase include the following::
✔ Identify best practices from similarly situated agencies ✔ Conduct interviews with those involved
✔ Research City programs, policies, procedures, and staffing levels and conduct interviews
✔ Gather and review data on affordable housing preservation and production to date and discuss with staff the type of future preservation/production activity to be incentivized
✔ Interview those who will be impacted by the new program and NOFA responses
✔ Synthesize data collected
Deliverable: Written summary of the information gathered, Matrix of similar programmatic terms, Risk assessment for programmatic decisions
OCTOBER JANUARY MARCH MAY JUNE JULY
LAUNCH
Project
Initiation
Prepare
Drafts
Prepare for
Launch of
New Processes
Meetings and
Process Related
Tasks
Conduct
Research &
Analysis
Complete Final
Written
Processes
Provide Support
for Launch
Proposal for On-Call Financial and Economic Analyses
11 C. PREPARE DRAFTS
Based on the information gathered, CSG will create working drafts of key Preservation Program and NOFA documents.
Activities in this phase include the following::
✔ Finalize broad conceptual framework for Preservation Program and NOFA
✔ For both programs, outline process workflow from start to finish, including outreach, application documents, evaluation, award process, and reporting/monitoring
✔ Prepare detailed outlines of Preservation Program term sheet and guidelines and NOFA for review/comments by staff
✔ Prepare full draft Preservation Program term sheet and guidelines and NOFA for review/comments by staff
Deliverable: Draft(s) of Process work flow documents for both projects, Term sheet and program guidelines for Preservation Program, NOFA document
D. COMPLETE FINAL WRITTEN PROCESSES
After finalizing the conceptual framework and completing/ vetting drafts of the primary deliverables for both projects, CSG would work with staff in an iterative process to finalize these key documents (including any public facing forms/exhibits) as well as internal forms, guidance documents, and any ancillary items.
Activities in this phase include the following:
✔ Meetings with key stakeholders
✔ Revision of documents as necessary
✔ Preparation of final Preservation Program guidelines and term sheet
✔ Preparation of final NOFA and exhibits
✔ Preparation of evaluation documents for internal staff ✔ Preparation of training materials for internal staff ✔ Preparation of reporting dashboards
✔ Preparation of development pipeline documents
Deliverable: Final Documents
E. PREPARE FOR LAUNCH OF NEW PROCESSES
CSG will assist on all aspects of the launch. This includes:
✔ Meetings with key stakeholders
✔ Preparation of copy for web pages and email communications describing the launch and soliciting participation
✔ Setting dates for launch of both processes with City staff ✔ Ensuring staff is trained, as needed
Deliverable: Web/email copy, Staff confirmation of readiness F. PROVIDE SUPPORT FOR LAUNCH
CSG will provide any support needed for the launch, including:
✔ Frequent check-ins with staff to ensure the launch is going smoothly and answer any technical/programmatic questions that may arise
✔ Assistance with programmatic reporting and evaluation ✔ Troubleshooting and document/program revisions as
necessary
Deliverable: Staff support and recommendations
G. MEETINGS AND PROCESS RELATED TASKS
CSG will meet either in person or virtually as needed throughout the project. We anticipate weekly meetings with staff
to ensure forward progress.
H. ON-GOING SUPPORT
CSG is committed to providing ongoing support to the
City to ensure the long-term success of the new Preservation Program and selection/funding of the most impactful
projects under the NOFA. We’ve allocated 30 hours for
this purpose in our initial estimate but will stand ready to provide support for these projects (on an hourly basis, initially at the rates described in the budget) in the future.
PROJECT
DESCRIPTIONS
Proposal for On-Call Financial and Economic Analyses
13 CITY OF FAIRFIELD (FHSD)
During CSG’s working relationship
with FHSD, CSG drafted and finalized
a Housing Trust Fund Ordinance for
City Council Approval on behalf of the
Fairfield Housing Services Department,
totaling an anticipated $2.042M in
additional funding for affordable
development in the City of Fairfield.
To properly prepare the City with
the necessary Housing Trust Fund
management and oversight tools
for prospective developments, CSG
assisted in preparing comprehensive
Lending and Mortgage Revenue
Bond Policies, acting as an integral
component of the City of Fairfield’s
mission to develop a robust portfolio
of affordable housing addressing a
spectrum of targeted populations. CSG
additionally provided underwriting
guidance on the pursuit of Sam Yeto,
a potential development of for-sale
affordable housing which, according
to CSG’s assessment, required market
interest analysis to ensure viable
project funding and partnerships for
sound feasibility of the project. At the
portfolio level, CSG drafted a project
underwriting template designed to
evaluate all proposed developments
identified by FHSD and is continually
evaluating active projects on an
ongoing basis.
LOS ANGELES COMMUNITY DEVELOPMENT
AUTHORITY (LACDA)
PROJECT MANAGEMENT ASSISTANCE
CSG provides support to the LACDA
(the “bond issuer”) during various
stages of affordable housing
development, ranging from the pre-
application to the issuance phases of
development. CSG assists LACDA by
attending calls on behalf of LACDA,
providing support to the Bond Analyst
on staff, assisting in CDLAC application
review, providing capacity support.
ASSISTANCE ON UNDERWRITING
AND PROCESS DOCUMENTATION
In addition to the bond program,
LACDA has a subordinate loan program
(“NOFA”). Projects that receive NOFA
funds from LACDA are required to
use LACDA as the bond issuer when
applying to the California Debt Limit
Allocation Committee (“CDLAC”). CSG
has incorporated LACDA’s NOFA loan
underwriting review into LACDA’s
bond underwriting review processes in
order to increase the bond program’s
capacity. CSG has also assisted in the
creation of internal fact sheet, term
sheet, CDLAC review templates, bond
issuance timelines, and improved bond
procedures for the bond analyst’s use.
BOND TRAINING
CSG has held multiple trainings for the
LACDA bond and NOFA staff. The goal
of these trainings is to improve staff’s
understanding of the general bond
issuance process, as well as clarify their
internal bond practices.
BOND MANUAL
CSG is assisting LACDA in creating
a comprehensive Bond Manual
to provide internal guidance and
information related to LACDA’s mission,
policies, and practices.
CITY OF PHOENIX HOUSING DEPARTMENT (PHD)
CSG Advisors has assisted the City of
Phoenix Housing Department (which
is the public housing authority) in all
aspects of its multiple HOPE VI awards
and other redevelopment projects
stretching back to 2003. CSG advised
on the 611-unit Matthew Henson
Homes HOPE VI revitalization where
we devised the initial master financing
plan for the redevelopment and
recommended phasing the project
over five phases to maximize financing
leverage. Our detailed development
budgets and financing models were
used to refine the revitalization plan
and secure HUD approvals.
CSG was also responsible for helping
the City design and conduct the
selection process for a master
developer for the site, after which we
helped negotiate the terms of the
development agreement.
Once the third-party developer
McCormack Baron Salazar was hired,
CSG focused on ensuring the financial
feasibility of the project and securing
the remaining HUD approvals. CSG
worked closely with the City and the
developer to ensure that all costs were
reflected in the budgets, that the
costs were conservatively estimated
and were within HUD safe harbor
limits, and that the budgets met other
requirements such as the state’s tax
credit underwriting standards. CSG
also monitored proposed sources of
funds to ensure they were achievable
and fit properly within the overall
Proposal for On-Call Financial and Economic Analyses
14 financial structure, and helped identify
and evaluate funding strategies to fill
remaining financing gaps.
CSG helped with additional
refinements to the Revitalization Plan
and getting related HUD approval.
We also assisted with the Demolition
and Disposition Plan and the Site
Acquisition Proposal to HUD, and
helped secure those approvals. As the
four individual rental phases of the
project were developed, we assisted
with each Mixed Finance proposal and
related communications with HUD.
All four rental phases are now fully
completed and operating.
Currently, CSG is assisting PHD
develop strategies to ensure financial
sustainability for both its Section 8 and
Public Housing Programs through
the administration of a survey to
benchmark key costs and identify
drivers of those costs.
SACRAMENTO HOUSING AND
REDEVELOPMENT AUTHORITY (SHRA)
PORTFOLIO STRATEGY
CSG recently assisted SHRA in
preparing the analysis and making
recommendations related to a RAD
and Section 8 conversion strategy
and preservation approach for the
Department for Development. Our work
included a specific recommendation for
each of SHRA’s 334 developments, based
on a financial analysis we conducted
about the ideal approach for each
site, which may range from minimal
modernization to full redevelopment and
replacement. As part of this work, CSG
evaluated supportable debt at various
operating expense levels, and identifying
the optimal development candidates
under several scenarios, including: 1)
unleveraged rehab to address 5-year PNA
needs; 2) unleveraged rehab to address
5-year PNA needs; 3) acquisition/rehab
leveraged with 4% tax credits to address
immediate PNA needs; and 4) acquisition/
rehab leveraged with 4% tax credits to
address full PNA needs. CSG assisted with
SHRA’s RAD applications and has advised
on RAD strategy since submission.
RAD CONVERSION STRATEGY
In 2015, CSG prepared a RAD feasibility
study for two properties, totaling 164
units. CSG ran multiple scenarios to
evaluate the costs and benefits of
converting public housing units to
Section 8 under the RAD program.
These scenarios included utilizing
4% Low Income Tax Credits, 9% Low
Income Tax Credits, tenant protection
vouchers, and varying levels of
acquisition cost and rehabilitation
need. CSG has not yet submitted RAD
applications for these projects.
SECTION 18 APPLICATIONS
In 2019, CSG helped SHRA prepare and
submit Section 18 Applications for their
216 scattered sites properties. CSG drafted
two separate Section 18 Applications
– one for 64 Scattered Sites properties
located under the County of Sacramento
Housing Authority’s ownership, and one
for the 152 Scattered Sites properties
located under the City of Sacramento
Housing Authority’s ownership. CSG
assisted with the application timing and
management, drafting narratives, and
maintaining a checklist of items needed
for submission. The application was
submitted in August of 2019 and was
approved in February of 2020.
RAD PILOT
CSG served as development, financial and
RAD consultant to SHRA for its first RAD
project. RAD Pilot is comprised of 120+
units, which were converted to RAD and
rehabbed with 4% LIHTC equity and debt.
CSG assisted SHRA in the preparation of
the 4% Low Income Housing Tax Credit
application and additional soft financing.
The project closed in July 2020.
CENTRAL CITY 1 DEAL STRUCTURING
CSG assisted in the pre-development
planning and deal structuring of
Central City 1, in support of the Housing
of the City of Sacramento’s (HACS)
goal of fully rehabilitating its Central
City properties. CSG identified which
properties should be paired to make
the most sense financially and ease of
property management. For Central City
1, those properties included EdgeWater
and Capitol Terrace, two high rises in
downtown Sacramento.
The current development plan is a 192-
unit transaction consisting of (192) 1-br for
Proposal for On-Call Financial and Economic Analyses
15 HOUSING AUTHORITY OF THE CITY OF LOS ANGELES (HACLA)
MAJOR REDEVELOPMENT EFFORTS
CSG advised HACLA on its Aliso Village
and New Dana Strand redevelopment
projects. Creating and maintaining
parallel financing models in order
to easily assess potential impacts to
the agency of deal terms and other
changes proposed by the developer.
We also assisted HACLA in developing
alternative financing strategies to
maximize the use of tax credits and
other funding sources, and to minimize
the contributions needed from
HACLA. For the Aliso Village project,
CSG prepared the RFQ for tax credit
investors, analyzed investor responses,
and staffed the selection committee
when it made its decision. For the
New Dana Strand project, CSG has
identified strategies to maximize both
the financial return to HACLA and the
number of ACC units constructed. We
have advised HACLA in its negotiations
with developers at each stage of this
project, and have secured concessions
based on our parallel financial analysis.
CSG is currently assisting HACLA with
its Jordan Downs redevelopment, a
10-phase redevelopment involving the
complete redesign of existing streets
and infrastructure, retail, office and
residential development.
CAPITAL SPENDING PLAN
CSG also prepared a 25-year Capital
Spending Plan for HACLA that would
finance improvements at all of the
agency’s public housing sites by
leveraging federal funds with state,
local, and private funding sources. The
25-year strategy will be implemented
with substantial City cooperation
and will ultimately include a
combination of Section 18 disposition,
Section 8 and RAD conversion, new
construction and rehab, and a mix of
residential and other uses.
RAD CONVERSION STRATEGY
CSG prepared a 25-year Capital Spending
Plan for HACLA that would finance
improvements for the agency’s entire
public housing portfolio by leveraging
federal funds with state, local, and private
funding sources. The 25-year strategy will
be implemented with substantial City
cooperation and will ultimately include
a combination of Section 18 disposition,
Section 8 and RAD conversion, new
construction and rehab, and a mix of
residential and other uses.
PROPERTY ACQUISITION
CSG Advisors complied a number of pro
formas as a part of HACLA’s application
for the Homekey program to transform
hotels/motels into housing for the
homeless. CSG created alternate funding
scenarios for properties that HACLA
could acquire as a part of this project.
CSG also provided underwriting analysis
for a potential property acquisition for
workforce housing, Eton Warner. This
analysis included an evaluation of rental
income, potential operations that could
be supported, and determining the
benefits of purchasing vs. leasing the
property.
JORDAN DOWNS- RAD
IMPLEMENTATION
CSG is currently advising HACLA
on its RAD Implementation. CSG
is providing project management
support to HACLA for Jordan Downs
Phase 1a and 1b, which will convert 70
units. Support for this project includes
creating development timelines;
organizing and leading weekly and
daily calls with team including other
consultants and development team
members; finalizing the RCNA,
preparing the financing template,
conducting the site and neighborhood
review, drafting documents for
FHEO and other documents for
HUD financing plan; and reviewing
documents for consistency and
compliance with the HUD rules.
HACLA closed the first phase in March
2017, the second phase is expected
to close in Q1 of 2021. CSG has closed
4 phases, which is about 450 units.
Two phases or 250 units have been
completely built and are occupied.
Jordan Downs Project
Jordan Downs Phase 1aJordan Downs Phase 1b
REFERENCES
FAIRFIELD HOUSING
AUTHORITY
1000 Webster Stree,
Fairfield, CA 94533
CONTACT
LaTanna Jones
Housing Services Director
(707) 428-7647
[email protected]
LOS ANGELES COUNTY
DEVELOPMENT AUTHORITY
700 W. Main St.,
Alhambra, CA 91801
CONTACT
Matt Lust
Manager Finance &
Development Unit
(626) 586-1809
[email protected]
SACRAMENTO HOUSING AND
REDEVELOPMENT AUTHORITY
801 12th Street
Sacramento, CA 95814
CONTACT
Mark Hamilton
Asst. Director of Public Housing
(916) 442-3718
[email protected]
NICOLE GRAHAM, PRINCIPAL
TANYA DEMPSEY, PRINCIPAL
JOHN HAMILTON, PRINCIPAL
TIFFANI BARLETTA, SENIOR VICE PRESIDENT
WILLIAM DREISBACH, SENIOR VICE PRESIDENT
ADAM CRAY, VICE PRESIDENT
ZULEKA A. FRASER, VICE PRESIDENT
ABIGAIL PICK, SENIOR ASSOCIATE
MADELEINE SINGER, ASSOCIATE
DANE SKAAR, JUNIOR ASSOCIATE
CYNTHIA LEWIS, JUNIOR ASSOCIATE
JULIANA ZATZ-WATKINS, JUNIOR ASSOCIATE
MEREDITH FLUG, TEAM MANAGER
KEY STAFF
Proposal for On-Call Financial and Economic Analyses
18 ZULEKA FRASER
Vice President
ADAM CRAY
Vice President
Delivering the highest quality work product for our clients is of the utmost importance to CSG. In order to ensure that our work consistently meets or exceeds the expectations of our clients, CSG employs seasoned professionals who are committed to helping our public agency clients achieve their goals for the benefit of the people they serve.
KEY STAFF
At CSG, we use a
whole-team approach
to staffing our client
assignments, assuring:
— Full coverage at all times from
knowledgeable senior professionals
Senior staff acts as back-up to the
Project Manager in order to provide
timely, substantive responses to any
questions or issues.
— In-depth, complementary expertise
on all aspects of housing finance
Because we have specialized in
housing finance for many years, the
individuals assembled bring extensive
knowledge of each facet involved:
housing bonds, pro forma feasibility,
terms of city assistance, development
planning, program design, tax credits,
real estate issues, local funding, etc.
— Quality Assurance & Cost Control
CSG is committed to providing
excellent customer service on time
and within budget. We do this by
peer reviewing assignments and
employing a firm manager that
ensures that costs come in below or
within budget.
To further control for high quality
products, CSG’s quality control plan relies
on peer review. All of the assignments
are discussed and reviewed by the
CSG team as a group once a week. As
assignments are completed, these
are distributed among the team and
reviewed before being provided to clients.
CSG will also confer with staff on a periodic
basis to obtain feedback on our work
product and process, and ensure that we
are satisfying client expectations. CSG will
use this information to calibrate its work
going forward to ensure that we continue
to provide the highest quality service and
work product to our public agency clients.
Our quality control process has been very
successful in our work with other clients,
as demonstrated by the longevity of our
clients, many of which have worked with
CSG for over 10 years.
Group
discussion
of scope of
work
Work
conducted
and
completed
Work
transmitted
to Public
Agencies
Monthly
review with
Public
Agencies
Work Peer
Reviewed
ORGANIZATIONAL CHART
WILL DREISBACH
Senior Vice President
JULIANA ZATZ-
WATKINS
Junior Associate
NICOLE GRAHAM
Principal
(Project Manager)
TIFFANI BARLETTA
Senior Vice President
JOHN HAMILTON
Principal
MEREDITH FLUG
Team Manager
Housing Strategies
GroupTANYA DEMPSEY
Principal
CYNTHIA LEWIS
Junior Associate
DANE SKAAR
Junior Associate
MADELEINE SINGER
Associate
ABIGAIL PICK
Senior Associate
Proposal for On-Call Financial and Economic Analyses
19 NICOLE GRAHAM
PRINCIPAL
[email protected]
(415) 430-7655
STRATEGIC & LONG-TERM PLANNING
Nicole’s work is guided by her philosophy that scarce public resources should be leveraged to the greatest extent feasible to ensure that clients receive maximum return on their investment. Toward this end, she works to optimize financing for her projects through both a thorough underwriting of projects (particularly from third-party developers) to identify possible savings, as well as rigorous competition among potential lenders and investors to ensure maximum value to the project. She also works to help clients stay on schedule to avoid cost overruns and other hiccups that would impact their projects and strategic goals.
STRUCTURING TRANSACTIONS
Nicole has advised on over $2 billion in affordable housing financings, including a $900 million financing for the New York City Housing Authority – one of the largest Low Income Housing Tax Credits (“LIHTC”) transactions in history – as well as a $600 million HUD Capital Fund borrowing for the same client. She has advised on other transactions as small as $5 million or as large as $100 million. In addition to housing financings, which have benefited over 25,000 low-income housing units, Nicole has also advised clients on non- residential borrowings to finance office and school buildings.
PREPARING LONG-TERM STRATEGIES
Nicole has helped several clients develop comprehensive strategies to address entire agency portfolios and specific operating concerns such as those confronting public housing authorities. Nicole has helped prepare comprehensive strategies for the authorities of Detroit, Gary, Los Angeles, Minneapolis, New Orleans, New York, Puerto Rico, Sacramento, and the Virgin Islands.
INTEGRATING PROGRAMS
Nicole’s work has focused on integrating deeply subsidized housing (including RAD, PBV, and traditional public housing) with standard LIHTC and market rate units as well as homeownership components to achieve financially feasible mixed-income developments. She is experienced with a range of HUD housing programs as well as FHA lending products and a variety of funding sources such as HOME, CDBG, Section 202, USDA, AHP and a range of state and local sources.
CLIENTS
Nicole leads the firm’s work with several of the largest housing authorities in the country, including New York City, Puerto Rico, and Philadelphia. She also manages CSG’s engagements with housing agencies in Cambridge, Detroit, Gary, Los Angeles, Oakland, Phoenix, Sacramento, Shreveport, the Virgin Islands, and Washington DC.
PRIOR WORK
Prior to joining CSG, Nicole worked for Economic and Planning Systems in California and Urban Partners Consulting in Pennsylvania, advising dozens of public agencies on a wide variety of affordable housing, financial feasibility, and economic impact studies and analyses. Nicole also has experience in the public sector as a policy advisor to the City Council of Oakland, CA.
EDUCATION
Nicole holds a Bachelor of Arts degree in Political Science from UC Berkeley, and a Master of Arts degree in Public Affairs and Urban and Regional Planning from Princeton University.
Nicole Graham, a Principal of CSG
Advisors, offers 18 years of experience
advising housing agencies on
how to optimize financing for the
development and operation of
affordable housing. Since joining
CSG in 2003, Ms. Graham has focused
her practice on helping public
agencies finance deeply subsidized
and mixed-income housing
developments, and preparing long-
term financial strategies to assist
agencies in addressing the capital
needs of large housing portfolios
over many years.
Proposal for On-Call Financial and Economic Analyses
20 Tanya Dempsey will be the lead
team member. Tanya Dempsey,
a Principal of CSG Advisors,
offers 14 years of public sector
experience. Since joining CSG in
2015, Ms. Dempsey has focused
her practice on advising housing
authorities on Strategic & Long
Term Planning, Real Estate
Transactions, Financial Impact
of Operations and Management,
Development Advising &
Transaction Services. Specifically,
she has advised on RAD process,
operational improvements,
portfolio analysis and structuring
affordable housing transactions
including 4% Low Income
Housing Tax Credits, Tax Exempt
Bonds & Conventional Financing
& other Federal Mortgage options.
Ms. Dempsey is deeply committed
to providing affordable housing
and ensuring that HAs have the
necessary tools to exist for many
years into the future.
TANYA DEMPSEY
PRINCIPAL
[email protected]
(646) 269-6322
STRATEGIC & LONG-TERM PLANNING
Tanya has helped several clients develop comprehensive strategies to address entire agency portfolios and specific operating concerns such as those confronting public housing authorities. Tanya has helped prepare comprehensive strategies for the authorities of Minneapolis, Hartford, Delaware and Philadelphia.
STRUCTURING TRANSACTIONS
Tanya has advised on over $50 million in affordable housing financings. These transactions include 4% Tax Credit Financing coupled with RAD vouchers & other soft funds. In total, Tanya has generated about $2 million in developer fee for her public housing clients.
OPERATIONS & OPERATIONAL REVIEW
Tanya was the Interim Chief Financial Officer at the Indianapolis Housing Agency from 2015-2016. In that capacity, she led the Agency effort to transition its entire portfolio under RAD. Major accomplishments include the creation of dashboards for management reviews, development of Board reporting, forecasting models & development of a cash positive annual budget.
Additionally, Tanya has consulted to many agencies such as Cambridge, Philadelphia, Minneapolis, Indianapolis & Phoenix on strategies to reduce operating expenses and central office expenses. This typically results in a reduction of about 15-20% in annual savings.
DEVELOPMENT ADVISING
Tanya has extensive experience on RAD transactions including but not limited to, Transfer of Assistance projects, RAD Blend (75/25), RAD with PBV, RAD with de minimus units, RAD with Reserves & RAD with LIHTC. To date, she has closed almost 3,000 units over 40 projects. In addition, she has conducted dozens of RAD feasibility studies for agencies, nationwide, submitted dozens of RAD applications.
PRIOR WORK
Before joining CSG Advisors, Tanya worked for the New York City Housing Authority, the nation’s largest public housing authority, having served as its Senior Director of Strategy and Program Development and as NYCHA’s Director of Budget and Financial Planning. Tanya helped manage portions of NYCHA’s historic “federalization” project – one of the largest tax credit transactions in the country – as well as the agency’s $700 million Capital Fund borrowing. In these capacities, Tanya evaluated the transactions from an overall financial and agency perspective. Tanya also led NYCHA’s Choice Neighborhoods program and built strategic relationships with sister agencies, funders, residents, and other partners as part of the CNI planning grant implementation and CNI implementation grant application process.
EDUCATION
Tanya holds a Bachelor of Arts degree in Environmental Studies from Denison University, and a Master of Public Policy degree from American University.
Proposal for On-Call Financial and Economic Analyses
21 JOHN HAMILTON
PRINCIPAL
[email protected]
(415) 956-2454
The types of assignments that are typical of his work at CSG include complex multifamily bond financings -- including HOPE VI transactions using 4% tax credits, single family bond structuring and program analysis, and structuring 9% tax credit housing transactions. He readily analyzes project financings involving funds such as HOME, redevelopment set-aside, FHA insured loans, Section 8, capital grant borrowings, low- income housing tax credits, local housing trust fund, monies, and AHP. These financings have included public, negotiated sales and private placements; credit enhanced and non- credit enhanced; security types including direct-pay and standby letters of credit, bond insurance, mortgage- backed securities, whole-loan; real-estate backed and HUD capital funds.
Mr. Hamilton brings comprehensive knowledge of tax-exempt bond financing for multifamily and single family housing, low-income housing tax credits (both 4% and 9%), and real estate underwriting. Mr. Hamilton not only assists issuers in structuring and issuing individual financings, but also in analyzing the intersections between real estate underwriting and transaction structuring. He has provided numerous services to issuers, including:
— structuring affordable housing developments to use Low Income Housing Tax Credit (LIHTC) syndication proceeds (both 4% and 9%); — developing bond issuance policies, performing default refunding analysis; — evaluation of potential acquisition and rehabilitation projects; — feasibility analyses for public agency subordinate loans and workouts; — evaluation of expiring Section 8 projects; and
— structuring over $100 million of HOPE VI financings for the Los Angeles, New Orleans, Richmond and San Francisco Housing Authorities.
Mr. Hamilton holds a Masters in City Planning from the University of California, Berkeley and Bachelor of Arts and Bachelor of Music degrees from Oberlin College.
Mr. Hamilton has, since 1994,
specialized in analyzing the financial
feasibility of real estate developments
involving affordable housing,
and in analyzing and structuring
financings involving public and
private financing. Mr. Hamilton has
served as financial advisor on more
than 20 single family transactions
and 100 multifamily transactions,
with total respective par amounts of
$300 million and $1 billion, including
financings for the City of Los Angeles,
San Francisco, San Diego, Santa Ana,
and Phoenix, AZ. These financings
have included public, negotiated
sales and private placements; credit
enhanced and non-credit enhanced;
security types including direct-
pay and standby letters of credit,
bond insurance, mortgage-backed
securities, whole-loan; real-estate
backed and HUD capital funds.
Proposal for On-Call Financial and Economic Analyses
22 Tiffani Barletta, a Vice President
of CSG Advisors, advises public
housing agencies on affordable
housing policies and initiatives.
Tiffani offers 14 years of consulting
experience. Since joining CSG
in 2015, Tiffani has focused her
practice on Development Advising,
predominately helping public
housing agencies navigate the U.S.
Department of Housing and Urban
Development’s Rental Assistance
Demonstration (RAD) program.
Tiffani is guided by her passion for
preserving and creating affordable
housing and improving resident
opportunities.
TIFFANI BARLETTA
SENIOR VICE PRESIDENT
[email protected]
(646) 269-6322
DEVELOPMENT ADVISING
Tiffani manages RAD projects from inception to closing. She has worked on over forty RAD transactions across the country, advising housing authorities on RAD components from application submission to closing.
She has submitted RAD applications for over 63,000 units and closed over two dozen RAD transactions. Tiffani has experience with various RAD elements including Transfers of Assistance, de minimis reductions, changes in unit configurations, and delayed HAP contracts. Through the RAD program, Tiffani has assisted housing authorities in converting over 1,800 public housing units to the Section 8 Project-Based Vouchers (PBV) and Project Based Rental Assistance (PBRA) programs. These RAD transactions have involved a wide range of complex financing, including 4% and 9% Low Income Housing Tax Credits (LIHTC), conventional and FHA insured mortgages.
Tiffani has closed affordable multi-family housing projects involving scattered sites, replacement units, and build first strategies. She has closed two dozen Low Income Housing Tax Credit projects. Tiffani has successfully prepared LIHTC and Tax-Exempt Bond applications for housing authorities throughout the country. Tiffani worked on the first application under the Section 22 Streamlined Voluntary Conversion notice 2019-05. She has also assisted with Choice Neighborhoods initiative applications.
CLIENTS
Tiffani advises some of the largest housing authorities in the country, including Philadelphia. She manages projects throughout the country, including housing agencies in California, Colorado, Delaware, Florida, and Michigan.
PRIOR WORK
Prior to joining CSG, Tiffani worked for nine years at NERA Economic Consulting where she assisted with a variety of projects in the Securities & Finance, Mass Torts & Product Liability, White Collar, and Labor practices.
EDUCATION
Tiffani holds a Bachelor of Arts degree in Environmental Studies, with a concentration in Economics, from Denison University and a Juris Doctor degree from Touro Law School.
Proposal for On-Call Financial and Economic Analyses
23 Will Dreisbach, a Vice President
of CSG Advisors, offers five years
of experience advising housing
authorities on optimizing operations
of public housing with the
purpose of improving financing
opportunities. Since joining
CSG in 2015, Will has focused on
helping public agencies reduce
operating costs, improve property
management efficiencies, and
increase opportunities to transform
their portfolio using long-term
financial strategies.
Will’s work is guided by the
philosophy of maximizing existing
resources to ensure that clients
are able to pursue their optimal
opportunities at minimal cost.
Toward this end, Will aims to look
at developing strategic plans, to
find the best long-term direction
to maximize resources and further
organizational goals. In addition,
Will looks at all aspects of operating
expenses, with the end result of
improving operating efficiencies
and improving the terms of debt
raised for agencies.
WILLIAM DREISBACH
SENIOR VICE PRESIDENT
[email protected]
(646) 258-0193
STRATEGIC AND LONG-TERM PLANNING
Will has advised clients on developing comprehensive strategies to leverage existing resources to finance portfolio transformations, improve existing portfolio, and further organizational goals. Will has worked with public housing agencies to refine development goals, assess long-term financial stability, and develop a roadmap, in conjunction with PHA staff, to accomplish their goals.
REAL ESTATE TRANSACTIONS, FINANCIAL ADVISORY SERVICES
Will assists in structuring transactions for public housing units through either new construction or rehabilitation. He has experience underwriting with multiple sources of financing, including, but not limited to, tax credits, RAD, PBV, ACC, bond debt and conventional debt financing.
He has prepared underwriting models for over a dozen transactions and helped create underwriting guidelines to ensure that third party developers are conforming to PHAs standards. This ensures that PHA is providing the lowest amount of funding needed. He also has experience in working on Low Income Housing Tax Credit applications and is familiar with the Qualified Allocation Plans nationwide.
OPERATIONS AND FINANCIAL MANAGEMENT
Will analyzes operational costs for housing authorities to improve efficiencies and create opportunities for increased leveraging of debt. Will has helped identify areas for increased productivity that lead to expense reductions of approximately 20%. Additionally, he has created pathways for improving and continuing performance by crafting management oversight tools, developing strategies for staff deployment, and utilizing cost-benefit analysis to drive decision-making.
CLIENTS
Will has worked with several housing authorities throughout the country, including Philadelphia, NYCHA, Sacramento, Newark, DE, Hartford, San Joaquin, Delaware State, Cambridge, Los Angeles, Phoenix, Minneapolis, Indianapolis, Orlando, and Washington D.C.
PRIOR WORK
Prior to joining CSG, Will worked for the New York City Housing Authority, conducting quantitative analysis of personnel, maintenance, and financial planning, while monitoring grants and analyzing spending trends of each property within New York City. Will also worked in multiple international development projects, including community development banking, Internet connectivity, and economic development to reduce poverty among vulnerable populations in underserved areas. In addition, Will has five years of active duty service in the United States Army, including the Logistics Captains Career Course.
EDUCATION
Will holds a Bachelor of Arts degree in Political Science from Binghamton University, and a Master of International Affairs in Economic and Political Development from Columbia University.
Proposal for On-Call Financial and Economic Analyses
24 ADAM CRAY
VICE PRESIDENT
[email protected]
(415) 830-8895
— 15 years of affordable housing and public finance experience. Joined CSG in 2022.
— Most recently Vice President of Community Development Banking at Bank of America, providing debt and tax-credit equity financing for affordable housing.
— Began public finance career as a credit analyst at Standard and Poor’s, assessing the credit quality of state and local housing finance agencies, public housing authorities, parity bond indentures, and more than 100 affordable housing and structured-finance transactions.
— At S&P, lead analyst on issuer credit ratings and/or parity indenture ratings for HFAs in Nebraska, Nevada, South Dakota, Utah, and Tennessee; Served on credit committees and as a secondary analyst for many others.
— Managed San Francisco’s affordable housing bond program, including issuance of $2.8 billion in revenue bonds, oversight of tax- exempt financing for the RAD Program, and design of the city’s $260 million general obligation-backed preservation loan program. — Led the City’s strategic planning and policy development process for the multifamily bond program and drafted the City’s multifamily bond program manual.
— Extensive experience as a consultant and researcher focusing on housing and urban policy issues; Past clients include Berkeley Program on Housing and Urban Policy, California Homebuilding Foundation, Center for Resource Efficient Communities, Fisher Center for Real Estate and Urban Economics, and HUD.
— As a member of the Legislative Committee, and former member of the Board of Directors, for the National Association of Local Housing Finance Agencies (NALHFA), helped develop several policy initiatives and served as a subject-matter expert before federal agencies, on Capitol Hill, and at the White House.
— Currently pursuing the requirements to become a registered municipal advisor.
EDUCATION:
— Emory University, JD.
— University of California-Berkeley, MPP.
— Florida State University, BA.
Proposal for On-Call Financial and Economic Analyses
25 Zuleka Fraser, a Vice President
with CSG Advisors, has five years of
experience in Affordable Housing
Finance and over two years of
experience working with Public
Housing Authorities. Zuleka joined
CSG Advisors in 2019 and has
applied her experience and financial
skills to help public agencies achieve
redevelopment goals through the
Rental Assistance Demonstration
(RAD) Program, Section 22 Voluntary
Streamline conversion, and the
Low-Income Housing Tax credit
programs (LIHTC).
Zuleka’s work is guided by her
promise to do the utmost best in
her capacity as her contribution to
continuing to create opportunities
for affordable housing.
ZULEKA A. FRASER
VICE PRESIDENT
[email protected]
(786) 355-0256
STRATEGIC & LONG-TERM PLANNING
Zuleka has participated in policy and strategic planning efforts for competitive funding rounds and has used that experience to assist in developing comprehensive strategies for clients focused on their specific goals beyond repositioning.
REAL ESTATE TRANSACTIONS, FINANCIAL ADVISORY SERVICES
Zuleka assists in structuring real estate transaction deals with Public Housing Authorities’ goals in mind. Zuleka has a wealth of experience underwriting various financing sources including, Bond Financing, LIHTC, Conventional Debt, and Soft Funding through the HOME Investment program. Additionally, she is also familiar with HUD’s mixed financed processes, subsidy layering review, and Choice Neighborhoods Program.
Drawing from her experience, Zuleka underwrites to optimize transactions for Public Housing Authorities. She ensures that Public Housing Authorities contributions are minimized, maximum debt is leveraged, and soft funding sources are exhausted based on relevant underwriting criteria. Zuleka is also familiar with Qualified Allocation Plans (QAP) across the country and has experience with financial modeling. She also assists in evaluation of lender and investor comparison to provide optimal benefits to the projects.
DEVELOPMENT ADVISING
Zuleka focuses her development advising work on LIHTC applications, helping clients navigate the RAD conversion process, and Section 22 Voluntary Streamline Conversion process. She helps facilitate application completion and submission for HUD review. Zuleka also has experience in managing projects, reviewing third party reports, and due diligence review processes.
OPERATIONS AND FINANCIAL MANAGEMENT
Zuleka optimizes cost efficiency and effectiveness through analyzing operational costs for projects and housing authorities by performing central office analysis and operations analysis.
WORK
Prior to joining CSG Advisors, Zuleka served as Director of Underwriting and Managed the RAD Program and Conversion process at the City of Atlanta Housing Authority. She also worked at Georgia Department of Community Affairs (DCA) Housing Finance Agency, underwriting LIHTC applications (9% and 4%), HOME Loans and NHTF applications, and managed the 4% LIHTC Bond Program, including creating processes and policies issued in the Agency’s QAP.
EDUCATION
Zuleka has a Bachelor of Science degree in International Studies and a Master’s degree (MBA) in Business Administration. Zuleka is a designated Housing Credit Certified Professional (HCCP), and also holds certificates in the following programs: Rental Assistance Demonstration (RAD) Certification – Essential RAD Overview & Managing RAD Project Based Voucher (PBV), Georgia Technology Authority - Basics of Managing Projects (July 2017), Real Estate Institute of Canada (REIC) in Mortgage Underwriting and Risk Assessment, Credit & Electronic Underwriting (2012).
Proposal for On-Call Financial and Economic Analyses
26 Abigail’s commitment to maintaining and expanding affordable housing is built on the philosophy that the country’s current affordable housing stock should be fully utilized while also advancing new construction when possible.
Her work centers on these opportunities by ensuring that Public Housing Authorities have access to additional funds through HUD programs (RAD, Section 18) and innovative transaction structures.
ABIGAIL PICK
SENIOR ASSOCIATE
[email protected]
(617) 877-1008
PRIOR WORK
Abigail has helped to develop a tax credit application for an affordable housing developer and assisted in evaluating new housing development proposals at the New York City Department of Housing Preservation and Development. Most recently, she managed an $8 million grant portfolio to improve the lives of vulnerable populations in New York City.
DEVELOPMENT ADVISING
In her current role, Abigail has prepared RAD applications, RAD financing plans, Section 18 demolition and disposition application and tax credit applications. She provides project management support for their real estate transactions.
CLIENTS
Abigail works on transactions for several housing authorities across the country, including Minneapolis, Hartford, & Housing Authority of San Joaquin.
EDUCATION
Abigail has a Bachelor of Arts in Urban Design and Architecture Studies from New York University and a Master of Urban Planning from New York University’s Wagner School of Public Service.
Abigail Pick is a Senior Associate
at CSG Advisors with over 5 years
of experience in community
development and grant making.
Since joining CSG in 2019,
Abigail’s practice has focused on
Development Advising.
Proposal for On-Call Financial and Economic Analyses
27 MADELEINE SINGER
ASSOCIATE
[email protected]
(617) 877-1008
Madeleine Singer is an Associate at CSG Advisors. She joined the firm’s public housing practice in the fall of 2019 and has one year of experience.
Madeleine focuses on Development Advisory and Financial Analysis support for the Housing Development Strategies group. Madeleine is passionate about helping communities create and sustain affordable housing for those in need.
DEVELOPMENT ADVISING
Since joining CSG, Madeleine has focused her practice on project management of multiple projects, assisting on the implementation of RAD and Section 18/Section 22 requirements, and financial structures of transactions. She is currently working on multiple RAD Transactions and Section 18 Applications.
REAL ESTATE TRANSACTIONS, FINANCIAL ADVISORY SERVICES
In addition to development advisory services, Madeleine supports the team in executing financial feasibility analyses and transaction structuring.
CLIENTS
Madeleine assists public housing authorities across the country, including Philadelphia, Delaware, Sacramento, Atlanta, Home Forward and Tacoma.
PRIOR WORK
Prior to joining CSG, Madeleine worked in affordable housing financial advising, focusing on market research and analysis for private and non- profit clients. She also worked with non-profit organizations focusing on public health and education for children of low-income families.
EDUCATION
Madeleine has a Bachelor of Arts in Economics from Vassar College with a focus in quantitative statistical analysis.
Proposal for On-Call Financial and Economic Analyses
28 Cynthia Lewis is a Junior Associate at CSG Advisors. She joined the firm’s public housing practice in the fall of 2021 and has 6 months of experience.
Cynthia focuses on Development Advisory, Asset Management, Financial Analysis, and Project Management support for the Housing Development Strategies group.
DEVELOPMENT ADVISING
Since joining CSG, Cynthia has primarily on assisting in the project management of LIHTC transactions, RAD and Section 18 applications, as well as No Place Like Home Transactions.
CLIENTS
Cynthia assists public housing authorities across the country, including New York, Chicago, and Los Angeles among other clients.
PRIOR WORK
Prior to joining CSG, Cynthia served as a Corporate Real Estate Intern for Siemens Gamesa Renewable Energy S.A., a global technology leader in the renewable energy industry- specifically in the development, manufacturing, installation, and maintenance of wind turbines. Through this all-encompassing role, Cynthia gained experience in facility management, commercial leasing, and international business.
As a Research Analyst for Cushman & Wakefield, Cynthia worked to monitor and analyze databases for the Orlando and Jacksonville office and industrial markets. Through this experience Cynthia learned how to effectively read a market and capitalize of the analysis of trends in the market.
While an undergraduate at University of Central Florida, Cynthia completed an immersive degree program covering Commercial Estate development and investment, commercial real estate finance, as well as general aspects of business. Through this program, Cynthia received Level 1 and 2 certifications in Real Estate Financial Modeling (REFM). Moreover, Cynthia participated in the 2020 NAIOP Collegiate Case Competition placing second. This was an intercollegiate competition where student use creates a full development plan for a prime site in Central Florida using skills learned in coursework and present it to panel of industry professionals.
EDUCATION
Cynthia holds has a Bachelor of Science in Business Administration (B.S.B.A) in Real Estate from University of Central Florida with a concentration in Commercial Real Estate Development, Investment, and Adaptive Reuse.
CYNTHIA LEWIS
JUNIOR ASSOCIATE
[email protected]
(727) 678-1068
Proposal for On-Call Financial and Economic Analyses
29 Dane Skaar is a Junior Associate at CSG Advisors. He joined the firm’s public housing practice in the fall of 2021 and has 6 months of experience.
Dane focuses on Project Management, Development Advisory and Financial Analysis support for the Housing Development Strategies group. Dane holds a personal passion and investment in real estate and property development as a means of creating sustainable full-service neighborhoods serving as communities for residents across the spectrum of income level, housing, and economic development needs.
DEVELOPMENT ADVISING
Since joining CSG, Dane has focused his practice on project management consulting of multiple projects including LIHTC transactions, assisting on the implementation of RAD and Section 18 requirements, and financial analysis of transactions.
CLIENTS
Dane assists public housing authorities across the country, including Philadelphia, Delaware, Minneapolis, the greater Chicagoland region, Portland, and Los Angeles among other clients.
PRIOR WORK
Prior to joining CSG, Dane served as a Property Support Specialist for Property Solutions and Services, Inc, an affordable housing property management company in partnership with local agencies such as Twin Cities Housing Development Corporation, Minnesota Housing, and Minneapolis-based nonprofit developer Urban Homeworks, Inc. Through his floating management role, Dane developed a capacity to assist with inequities at the community level and how families benefit from financial counseling, educational coaching, and other resources centered around strengthening capital beyond stable housing. This opportunity enabled him to demonstrate through a variety of management responsibilities how vital the integration of community resources is for communities coming from less capital to advance themselves in personal goals and maintain livable stability.
As legislative intern in the Wisconsin State Legislature, Dane developed a nuanced background in policy through regularly assisting legislative staff in tracking and research of legislative bills, press releases and lobbying through the fall 2017 Legislative Session. Paired with on-site affordable housing property management experience, this has allowed Dane to refine his knowledge base of HUD and other public agencies’ roles in affordable housing development and community revitalization.
While an undergraduate at University of Wisconsin Madison, Dane pursued a variety of community development and urban planning focused courses.
Past analyses include a census data report of Milwaukee WI’s housing market in terms of residential segregation and concentrated poverty by property value and income level as well as an overarching course project assessing the impact of High Rise Development on the feasibility and potential for expanding affordable housing models in Madison WI’s central business and University districts.
EDUCATION
Dane holds has a Bachelor of Arts in Sociology from University of Wisconsin-Madison with a concentration in Community and Urban Development.
DANE SKAAR
JUNIOR ASSOCIATE
[email protected]
(608) 658-2323
Proposal for On-Call Financial and Economic Analyses
30 Juliana Zatz-Watkins is a Junior Associate at CSG Advisors. She joined the firm’s public housing practice in the summer of 2021. Juliana focuses on Development Advisory and Financial Analysis support for the Housing Development Strategies group. Juliana is dedicated to improving the stock of affordable housing throughout the country.
DEVELOPMENT ADVISING
Since joining CSG, Juliana has focused her practice on project management of RAD/Section 18 applications, and financial structures of transactions. She is currently working on multiple RAD and Section 18 Applications. She also provides project management support for Low Income Housing Tax Credit applications, as well as Construction & Permanent Loan closings.
REAL ESTATE TRANSACTIONS, FINANCIAL ADVISORY SERVICES
In addition to development advisory services, Juliana supports the team in executing financial feasibility analyses and transaction structuring.
CLIENTS
Juliana assists public housing authorities across the country, including Chicago, Marin, Mission First, New York, Sacramento, and San Joaquin, as well as the Los Angeles County Development Authority.
PRIOR WORK
Prior to joining CSG, Juliana worked as an affordable housing financial consultant, focusing on project management of 4% & 9% LIHTC applications and due diligence for Construction Loan closings for developers in California.
EDUCATION
Juliana has a Bachelor of Arts in Economics from the University of California, Santa Cruz.
JULIANA ZATZ-WATKINS
JUNIOR ASSOCIATE
[email protected]
(530) 219-1390
Proposal for On-Call Financial and Economic Analyses
31 Meredith Flug serves as our Team Manager. She has been a dedicated public servant for the City of New York her entire career–focused on fair marketing and admission processes within affordable housing. She is dedicated to providing an infrastructure to CSG that ensures successful growth so that CSG can continue to provide these services for years to come.
Since joining CSG in 2020, she has assisted on the creation of internal databases and dashboards.
PRIOR WORK
Prior to joining CSG, Meredith spent 14 years at New York City’s Department of Housing Preservation and Development, where she oversaw the administrative and compliance portion of the Mitchell-Lama Housing Program.
Meredith brings with her the experience of having worked in New York City government for 25 years, not only at HPD, but at The Board of Elections where she served as the Secretary to the Commissioners of Elections and the NYC Council as an Administrative and Training Manager. Additionally, Meredith has served as Deputy Executive Director for The Foundation for Ethnic Understanding, as well as a Government Relations Specialist for a Lobbying Firm.
EDUCATION
Meredith holds a Bachelor’s degree in Human Services from the University of Phoenix.
MEREDITH FLUG
TEAM MANAGER
[email protected]
(617) 877-1008
COST PROPOSAL
Proposal for On-Call Financial and Economic Analyses
33 COST PROPOSAL – NARRATIVE
For each of its engagements, CSG is dedicated to understanding the client’s policies and objectives to ensure that our advisory work integrates with and furthers the client’s needs and policy goals. CSG also provides detailed analysis – both numerical and descriptive – of issues, structures, value and pitfalls of any particular approach. Our approach is to break a problem or set of issues into component parts to expose each individually as well as their interrelationships. Such an approach often yields new understanding to the client – and is often suggestive of potential courses of action. Given a set of issues and identified constraints, CSG is adept at providing appropriate, creative solutions that maximize client goals and objectives while minimizing financial (and programmatic) risk.
We firmly believe that our approach
– which focuses on vetting multiple
potential structures and strategies to
arrive at the one that maximizes external
resources and minimizes public agency
funding –leaves our clients in a superior
financial position than when we began.
In fact, as a team, we evaluate our own
performance in part as a measure of the
additional funding that we have saved
our clients, which might include:
—
Identif
ying and securing additional
funding sources,
—
In
creasing returns through a highly
competitive solicitation process and
shrewd negotiating,
—
Maximizin
g borrowing capacity and
tax credit equity through detailed
comparisons and bidding approach,
—
Eliminatin
g funding gaps by pushing
developers to defer more fee and/or
return, and
—
Identif
ying cost reductions in
development and operating budgets.
EXAMPLES WHERE CSG HAS
PROVIDED SUBSTANTIAL BENEFITS
TO CLIENTS:
We have had several clients recognize
the degree to which we save them
money and they view our services as a
way to reduce costs overall.
—
C
SG has brought this experience
to bear several times for NYCHA,
including securing $6 million in post-
closing structuring savings as part of
the Federalization transaction, and
negotiating for higher cash flow splits
in both the Betances and Brooklyn
RAD/Section 18 transactions.
—
In th
e District of Columbia, we
identified several approaches
for stricter underwriting and
programmatic improvements that
could reduce the District’s financial
contribution by more than 50% for
selected projects..
—
In In
dianapolis, our work helped to
develop Insight, an instrumentality
of IHA, and create $4M in developer
fee in unrestricted funds.
CSG is also committed to developing internal staff capacity for our clients through the ongoing transfer of knowledge and training for client teams. Through this process, we often find that our billings for individual clients drop in subsequent years as client staff become increasingly competent in running basic financing scenarios, and CSG’s role evolves to higher-level review and structuring for more complicated and innovative financing transactions.
Hourly
Rate
Principal $335
Senior Vice President $290
Vice President $280
Senior Associate $255
Associate $230
Junior Associate $195
Management $100
Our hourly rates are subject increase
of 3% per position each year,
beginning January 1, 2023
FORMS
CITY OF MCHMOND
Sanctuary City Compliance Statement
The undersigned, an authorized agent of_ (hereafter"Contractor"), has had an opportunity to review the requirements of City of Richmond Ordinance 12-18 (hereafter " Sanctuary City Contracting Ordinance " or "SCCO"). Contractor understands and agrees that the City may choose with whom it will maintain business relations and may refrain from contracting with any person or entity that provides Data Broker or Extreme Vetting services to the US. Immigration and Customs Enforcement Division of the United States Department of Homeland Security ("ICE"). Contractor understands the meaning of the following terms used in the SCCO:
a. " Data Broker" means either of the followmg:
i. The collection of information, including personal information about consumers, from a wide variety of sources for the purposes of reselling such information to their customers, which include both private-sector business and government agencies;
ii. The aggregation of data that was collected for another purpose from that for which it is ultimately used.
b. "Extreme Vetting" means data mining, threat modeling, predictive risk analysis, or other similar services."
Contractor understands that it is not eligible to receive or retain a City contract if at the time the Contract is executed, or at any time during the term of the Contract, it provides Data Broker or Extreme Vetting services to ICE.
Contractor further understands and agrees that Contractor' s failure to comply with the SCCO shall constitute a material default of the Contract and the City Manager may terminate the Contract and bar Contractor from bidding on future contracts with the City for five (5) years from the effective date of the contract termination.
By executing this Statement, Contractor certifies that it complies with the requirements of the SCCO and that if at any time during the term of the Contract it ceases to comply, Contractor will promptly notify the City Manager in writing.
Any person or entity who knowingly or willingly supplies false information in violation of the SCCO shall be guilty of a misdemeanor and subject to a $1,000 fine.
Based on the foregoing, the undersigned declares under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this _day of_, 20_, at _, California.
Printed Name: _Title:
Signed: _Date:
Business Entity:
Vendor SCCO Compliance Statement (Augt2020)
CSG Advisors Incorporated
Nicole Graham Principal
12th September 22 San Francisco
September 12, 2022
CSG Advisors Incorporated
CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYYY)
12/07/2021
THISCERTIFICATEISISSUEDASAMATTEROFINFORMATIONONLYANDCONFERSNORIGHTSUPONTHECERTIFICATEHOLDER.
THISCERTIFICATEDOESNOTAFFIRMATIVELYORNEGATIVELYAMEND,EXTENDORALTERTHECOVERAGEAFFORDEDBYTHE POLICIESBELOW.THISCERTIFICATEOFINSURANCEDOESNOTCONSTITUTEACONTRACTBETWEENTHEISSUINGINSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.
IMPORTANT:IfthecertificateholderisanADDITIONALINSURED,thepolicy(ies)mustbeendorsed.IfSUBROGATIONISWAIVED, subjecttothetermsandconditionsofthepolicy,certainpoliciesmayrequireanendorsement.Astatementonthiscertificatedoesnot confer rights to the certificate holder in lieu of such endorsement(s).
PRODUCER
EDGEWOOD PARTNERS INS CENTER/PHS
20263847
The Hartford Business Service Center
3600 Wiseman Blvd
San Antonio, TX 78251
CONTACT
NAME:
PHONE
(A/C, No, Ext):
(866) 467-8730 FAX
(A/C, No):
(888) 443-6112
E-MAIL
ADDRESS:
INSURER(S) AFFORDING COVERAGE NAIC#
INSURED
CSG ADVISORS, INC.
41 PERIMETER CTR E STE 615
ATLANTAGA30346-1976
INSURER A : Sentinel Insurance Company Ltd. 11000
INSURER B : Hartford Fire and Its P&C Affiliates 00914 INSURER C :
INSURER D:
INSURER E :
INSURER F :
COVERAGES CERTIFICATE NUMBER: REVISION NUMBER:
THISISTOCERTIFYTHATTHEPOLICIESOFINSURANCELISTEDBELOWHAVEBEENISSUEDTOTHEINSUREDNAMEDABOVEFORTHEPOLICYPERIOD INDICATED.NOTWITHSTANDINGANYREQUIREMENT,TERMORCONDITIONOFANYCONTRACTOROTHERDOCUMENTWITHRESPECTTOWHICHTHIS
CERTIFICATEMAYBEISSUEDORMAYPERTAIN,THEINSURANCEAFFORDEDBYTHEPOLICIESDESCRIBEDHEREINISSUBJECTTOALLTHE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
INSR
LTR TYPE OF INSURANCE ADDL
INSR
SUBR
WVD
POLICY NUMBER POLICY EFF
(MM/DD/YYYY)
POLICY EXP
(MM/DD/Y YYY) LIMITS
A
COMMERCIAL GENERAL LIABILITY
20 SBA AK8033 01/01/202201/01/2023
EACH OCCURRENCE $2,000,000
CLAIMS-MADEXOCCUR DAMAGE TO RENTED
PREMISES (Ea occurrence) $1,000,000
XGeneral Liability MED EXP (Any one person) $10,000
PERSONAL & ADV INJURY $2,000,000
GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $4,000,000
POLICY PRO-
JECT XLOC PRODUCTS - COMP/OP AGG $4,000,000
OTHER:
A
AUTOMOBILE LIABILITY
20 SBA AK8033 01/01/202201/01/2023
COMBINED SINGLE LIMIT
(Ea accident) $2,000,000
ANY AUTO BODILY INJURY (Per person)
ALL OWNED
AUTOS
SCHEDULED
AUTOS BODILY INJURY (Per accident)
XHIRED
AUTOS XNON-OWNED
AUTOS
PROPERTY DAMAGE
(Per accident)
A
XUMBRELLA LIAB
EXCESS LIAB
XOCCUR
CLAIMS-
MADE 20 SBA AK8033 01/01/202201/01/2023
EACH OCCURRENCE $2,000,000
AGGREGATE $2,000,000
DEDXRETENTION$ 10,000
B
WORKERS COMPENSATION
AND EMPLOYERS' LIABILITY
ANY
PROPRIETOR/PARTNER/EXECUTIVE
OFFICER/MEMBER EXCLUDED?
(Mandatory in NH)
If yes, describe under
DESCRIPTION OF OPERATIONS below
N/ A 20 WBC AF1KN9 01/01/202201/01/2023
XPER
STATUTE
OTH-
ER
Y/N E.L. EACH ACCIDENT $1,000,000
E.L. DISEASE -EA EMPLOYEE $1,000,000
E.L. DISEASE - POLICY LIMIT $1,000,000
AEMPLOYEE BENEFITS
LIABILITY
20 SBA AK8033 01/01/202201/01/2023 Each Claim Limit
Aggregate Limit
$2,000,000
$4,000,000
DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES(ACORD 101, Additional Remarks Schedule, may be attached if more space is required) Those usual to the Insured's Operations.
CERTIFICATE HOLDER CANCELLATION
For Informational Purposes
41 PERIMETER CTR E STE 615
ATLANTA GA 30346-1976
SHOULDANYOFTHEABOVEDESCRIBEDPOLICIESBECANCELLED
BEFORETHEEXPIRATIONDATETHEREOF,NOTICEWILLBEDELIVERED
IN ACCORDANCE WITH THE POLICY PROVISIONS.
AUTHORIZED REPRESENTATIVE
© 1988-2015 ACORD CORPORATION. All rights reserved.
ACORD 25 (2016/03) The ACORD name and logo are registered marks of ACORD
DAVID PAUL ROSEN & ASSOCIATES
DEVELOPMENT, FINANCE AND POLICY ADVISORS
Quote and Qualifications to Provide On Call Development Economic and Financial Analysis Services
City of Richmond September 16, 2022
City of Richmond September 16, 2022 Quote to Provide Development Economic and Financial Analysis Service 1 Quote and Qualifications to Provide On Call Development Economic and Financial Analysis Services PREPARED FOR: Jesus Morales City of Richmond Housing Department [email protected] PREPARED BY: David Paul Rosen & Associates David Rosen, Principal 3527 Mt. Diablo Blvd, #361 Lafayette, CA 94549 510-451-2552 [email protected] www.draconsultants.com Nora Lake-Brown, Principal 3941 Hendrix Street Irvine, CA 92614 949-559-5650 [email protected] www.draconsultants.com
City of Richmond September 16, 2022 Quote to Provide Development Economic and Financial Analysis Service 2 Table of Contents 1. Cover Letter 2. Firm Qualifications ............................................................................ 1 3. Resumes of Staff Assigned to the Project ............................................ 2 4. Representative Project Experience ..................................................... 4 Richmond Housing Authority Development Advisory ........................ 4 Oakland Multifamily Underwriting and Asset Management ............... 5 Pasadena Concord Apartments .......................................................... 5 Denver Multifamily Underwriting and Loan Production ..................... 6 Emeryville Affordable Housing Developer Selection .......................... 7 5. References ......................................................................................... 8 6. Cost Information ................................................................................ 9
Dear Jesus: David Paul Rosen & Associates (DRA) is pleased to present the Richmond with our quote and qualifications to provide on-call real estate development economic and financial analyses related to real property negotiations All substantive services will be performed by DRA Principals. David Paul Rosen, Ph.D., Founder and Principal of DRA, is an internationally recognized authority in the fields of affordable housing finance, policy, land use, analysis, negotiation, lending and investment strategic planning, redevelopment and energy efficiency/renewable energy. Nora Lake-Brown, Principal of DRA’s Irvine office, has more than 35 years of experience in the analysis of real estate markets, local economies and financial feasibility, and has served as managing Principal advising more than sixty communities on affordable housing economic, policy and strategic planning studies. We look forward to this opportunity to continue serving the City of Richmond. Sincerely,
Nora Lake-Brown Principal
City of Richmond September 16, 2022 Quote to Provide On Call Economic and Financial Analysis Services 1
1. Firm Qualifications Founded in 1980, David Paul Rosen & Associates (DRA) is a nationally recognized public interest consulting firm with offices in the San Francisco Bay Area and Irvine, California. DRA specializes in financial and development advisory services for affordable housing. DRA Principals have advised on more than $10 billion in low income housing finance and projects. development representing more than 100,000 units. DRA's track record covers a wide range of renter and owner housing, mixed-use and commercial real estate transactions. DRA has advised on projects using many layers of financing provided by both the private and public sectors. DRA has a sophisticated understanding of complex financial transactions and structuring, as well as the real estate business acumen to best support all forms of affordable housing financing. We are expert in Low Income Housing Tax Credits (LIHTC), tax-exempt bonds, mixed-finance and mixed-income HOPE VI projects, ACC and PFS contracts, RAD, Vouchers, GSE debt structures, FHA, Ginnie Mae, private mortgage insurance and custom made credit enhancement programs, construction, permanent and mezzanine financing, property tax abatements, HUD programs and tax rules regarding credits, depreciation and capital gains. Significantly, DRA has long-established relationships with many affordable housing professionals and financial institutions worldwide. We are able to tap into those resources to validate or challenge interpretations and assumptions. These relationships include lenders, investors, syndicators, underwriters, developers, government-sponsored enterprises, and others who have extensive experience in affordable housing finance and development DRA’s clients include federal, state, and local government agencies, non-profit and for-profit developers, corporations, foundations, professional associations and research organizations in 45 states, and more than 300 cities and counties. Our current and former municipal and housing authority clients include San Luis Obispo, Los Angeles, Oakland, Pasadena, San Diego, San Jose, CA; Seattle, WA; Portland, OR; Denver, CO; Chicago, IL; Cambridge, MA; Richmond, VA; Chapel Hill, NC; as well as scores of small and mid-sized jurisdictions. DRA has worked with its public and private clients to improve their underwriting, asset and financial management systems to better ensure that the policy goals
City of Richmond September 16, 2022 Quote to Provide On Call Economic and Financial Analysis Services 2 and/or business objectives of these entities are met over the long term. The quality of risk management is a direct function of the quality of the entity's underwriting practices, loan policies, loan approval processes, asset and financial management systems. DRA helps its clients create underwriting guidelines, review the appropriateness of current guidelines, and revise such guidelines in the context of past experience, current market conditions and developer capabilities. 2. Resumes of Staff Assigned to the Project All substantive services for this assignment will be performed by David Paul Rosen and Nora Lake-Brown. Both Ms. Lake-Brown and Mr. Rosen will be available to City staff throughout the contract period. Brief resumes for Mr. Rosen and Ms. Lake-Brown are provided below. David Paul Rosen David Paul Rosen, Ph.D., is founder and Principal of David Paul Rosen & Associates (DRA), a 38-year old financial and development consulting firm with expertise in capital formation strategies for affordable housing and community economic development. DRA’s clients include federal agencies, the United States Congress, state and local agencies and legislative bodies, corporations, non-profit organizations and foundations. Dr. Rosen is nationally recognized in the field of affordable housing finance, policy, land use, analysis, negotiation, lending and investment strategic planning. He has personally advised on more than $3.0 billion in development finance. Dr. Rosen is responsible for some of the more important innovations in affordable housing development policy. He originated the concept of state housing trust funds, now in place in 47 states. These funds are a permanently dedicated, annually renewable source of capital for the production and preservation of affordable housing. He helped lead the efforts in the mid-1980s in California to negotiate with major money center banks under the Community Reinvestment Act (CRA) to make multi-billion dollar commitments to affordable housing development lending and investment. Dr. Rosen served as the inaugural Chairman of the California Organized Investment Network (COIN) Investment Advisory Board for the California Department of Insurance. Dr. Rosen led this first of its kind organization to develop an investment policy that encourages insurance companies to increase capital for affordable housing and neighborhood revitalization. Dr. Rosen has advised more than 60 California jurisdictions on the economic analysis, design and adoption of inclusionary housing land use policies, programs and
City of Richmond September 16, 2022 Quote to Provide On Call Economic and Financial Analysis Services 3 innovations. Dr. Rosen was the lead consultant to the City of Oakland creating the Community Alliance for Syndicated Housing, now Merritt Community Capital, and has also served as a lead consultant to the Federal Home Loan Bank of Atlanta (Bank) in its dealings with FHA, Ginnie Mae and Freddie Mac. He advised the Bank’s Chief Executive Officer and the Board of Directors on a wide range of community economic development and affordable housing initiatives throughout the nine state region of the Bank. Dr. Rosen has led federal research efforts on tax and financial policy for affordable housing. He has briefed White House and senior Administration officials at a dozen federal agencies. He has advised HUD, FHA, Ginnie Mae, the Federal Home Loan Bank system, the Federal Housing Finance Agency, Freddie Mac, the World Bank and the International Finance Corporation on housing finance policy. Education Bachelor of Arts, Political Science, Columbia University, 1972 Doctor of Philosophy, Public Policy, Union Institute, 1983 Nora Lake-Brown Nora Lake-Brown, Principal of DRA’s Irvine office, has more than 30 years of experience in the analysis of real estate markets, local economies and financial feasibility. She has performed fiscal impact assessments for more than 75 government agencies and 25 private developers statewide. She has served as financial consultant on more than $3.5 billion of affordable and market-rate housing, commercial, industrial and mixed-use real estate transactions and financings. Ms. Lake-Brown is a nationally recognized authority on land value recapture, using residual land value analysis to quantify the land value increment associated with government actions, such as rezoning, land use changes, and the provision of development incentives, so that a portion of the value can be recaptured for public benefit. Ms. Lake-Brown has assisted scores of cities with the preparation of residential market analyses, affordable housing needs assessments, affordability gap analyses and comprehensive housing strategies. She has analyzed inclusionary housing programs for local governments, identifying mitigations that can partially offset the costs of compliance. She has created computerized financial models to quantify the affordability cost of inclusionary housing requirements and the economic value of potential offsets
City of Richmond September 16, 2022 Quote to Provide On Call Economic and Financial Analysis Services 4 and non-cash incentive measures. Ms. Lake-Brown is acknowledged as one of the leading real estate economists dedicated to affordable housing development, transactions, finance and public policy in California. Ms. Lake-Brown’s technical excellence, clear insight, and extensive track record in real estate and affordable housing development finance provide concise and expert analysis in an easily understandable format. Ms. Lake-Brown provides asset management, portfolio overview and analysis, as well as strategic, business and financial planning for nonprofit organizations and public agencies active in the affordable housing development and finance. Ms. Lake-Brown served as the principal investigator on inclusionary housing analyses for major cities across the country including Los Angeles, San Diego, San Jose, Seattle, Portland, Denver and Cambridge. Education B.A., Economics, With Honors, University of California, Santa Cruz, 1981 B.A., Environmental Studies, University of California, Santa Cruz, 1981 M.A., City and Regional Planning, Kennedy School of Government, Harvard University, 1983 3. Representative Project Experience Examples of recent DRA experience in the last five years are provided below. All consulting services on these projects were performed by Nora Lake-Brown and David Rosen. Richmond Housing Authority DRA serves as development and financial advisor to the Richmond Housing Authority on its public housing and affordable housing inventory. To improve their financial viability and long-term sustainability, RHA has embarked on an analysis of repositioning options and recommendations for its Public Housing and Housing Choice Voucher (HCV) Programs. The goal of the repositioning effort is to develop financial structures that eliminate current operating shortfalls, improve the living conditions of residents, revitalize and/or redevelop RHA housing assets, put in place long-term sustainable financial repositioning of each asset, and bring each asset up to modern standards of design, energy efficiency, resident amenities and quality of construction.
City of Richmond September 16, 2022 Quote to Provide On Call Economic and Financial Analysis Services 5 DRA is advising RHA on its transitioning of public housing projects using RAD, Section 18 and Section 30 disposition processes. DRA is currently advising RHA on five different properties in different stages of the disposition process, involving the acquisition/rehabilitation of existing buildings and new construction to increase the density on existing development sites. DRA assists RHA in drafting RFPs and RFQs for redevelopment of the sites and the evaluation and due diligence on submitted developer proposals, financial plans and pro formas. DRA advises RHA on negotiation of deal terms with the developers for Exclusive Negotiation Agreements and Loan, Disposition and Development Agreement. DRA assists RHA in successfully navigating the HUD disposition process and achieving the goals and schedule of its Public Housing Recovery and Sustainability (PHARS) Agreement with HUD. City of Oakland Multifamily Underwriting and Asset Management The City of Oakland Housing and Community Development engaged DRA to provide continuing consulting services regarding asset management and underwriting of the City’s affordable multifamily rental and homeownership programs and portfolios. DRA has completed an assessment of the City’s asset management, underwriting, loan production and documentation policies, processes, systems and functions for its affordable multifamily rental housing program and portfolio. Specific tasks under this engagement included preparation of affordable multifamily housing loan underwriting guidelines; creation of an Excel-based financial model to assist City staff in analyzing the feasibility or proposed multifamily projects and determining the reasonableness of requested subsidies from the City; revising the City’s Notices of Funding Availability for both new construction and acquisition/rehabilitation projects to best reflect the City’s policies and priorities; and preparing a five-year capital plan outlining proposed City financial expenditures on affordable housing. DRA continues to provide on-call policy and analytical services to the City of Oakland for both its affordable multifamily and affordable homeownership programs. Pasadena Concord Apartments DRA advised the City of Pasadena on Retirement Housing Foundation’s (“RHF’s”) proposal to acquire from the City the 149-unit HUD-financed affordable senior housing property located at 275 E. Cordova Street, known as the Concord Apartments. DRA reviewed extensive information and documents on the history and current status of the transaction and the property.
City of Richmond September 16, 2022 Quote to Provide On Call Economic and Financial Analysis Services 6 The Concord Apartments (“Project) is situated on land owned by the City, conveyed to RHF Housing, Inc., pursuant to a Ground Lease. RHF Housing, Inc., currently owns the improvements, but it must convey the improvements to the City upon expiration or termination of the Ground Lease. The Pasadena Fire and Police Retirement System (“FPRS”) owns a 93% beneficial interest in the Concord asset. DRA conducted a site visit of the Concord Apartments and met with RHF representatives. DRA also analyzed the feasibility of the RHF proposal, including the appropriateness of the proposed property sales costs, rehabilitation and other hard construction costs, other soft development costs, operating costs, reserves, rent revenue, financing, HUD-related assumptions, and other assumptions used by RHF. DRA reviewed lender debt and equity proposals to maximize debt and equity proceeds. DRA reviewed revisions to the HAP contract, HUD rent study and other documents and advised the City on the HUD closing process. DRA assisted the City in negotiations with RHF for the sale of the property and evaluating additional financial analyses to the City, resulting in estimated cash sale proceeds at $16 million to the City and FPRS at closing along with ongoing residual receipts loan payments to the City on a $10 million Seller Loan. Denver Affordable Multifamily Housing Program Asset Management and Loan Production DRA served as advisor to the City of Denver on asset management of the City’s affordable multifamily rental housing program which includes nearly 3,000 units created through the City’s inclusionary housing program and through investment of local funds. Denver engaged DRA to conduct an assessment of the City’s asset management, underwriting, loan production and documentation processes, systems and functions for its affordable multifamily rental housing program and portfolio. DRA’s work products and recommendations included: • An underwriting manual containing the City’s affordable multifamily housing underwriting policies and guidelines. DRA compiled the City’s existing policies, prepared recommendations, and collaborated with City staff to prepare a final underwriting manual. • Interviews with a series of cities with comparable multifamily affordable housing portfolios regarding their housing organization, staffing levels, and loan approval process for affordable housing asset management and housing loan production. DRA compared the staffing levels and process in other cities with those in the City of Denver.
City of Richmond September 16, 2022 Quote to Provide On Call Economic and Financial Analysis Services 7 • Recommended changes to the City’s loan agreement, covenant (regulatory agreement) and other affordable multifamily documents. • A five-year capital plan that projects funding and expenditures for the City’s affordable multifamily rental housing loan program on an annual basis. • An Excel-based financial model that allows management to analyze any prospective combination of financing sources for the preservation and rehabilitation of at-risk rental housing, including Section 221d3, 236, 221d4, expiring Section 8 or other expiring use projects, including Year 15 LIHTC projects or others. • Provision of development and financial consulting services for project underwriting and financial evaluation on and ongoing basis upon written direction from housing staff. Emeryville Affordable Housing Developer Selection and Analysis DRA was retained by the City of Emeryville to assist with the selection of a development team to develop up to 340 affordable and/or market-rate residential units on a 2-acre keystone site across from the Public Market in downtown Emeryville. DRA drafted the developer Request for Proposals with City review and input. DRA is currently assisting the City to review developer proposals including: 1) review of developer corporate financial statements to assess the developers’ financial capacity to carry out the project; 2) review of audited financial statements for comparable projects to assess the developers’ ability to operate affordable rental projects successfully and in accordance with lender and investor requirements; and 3) a review of proposed project pro formas to evaluate the feasibility of the proposed financing plan and realistic assessment of the site’s competitiveness for leveraged financing sources.
City of Richmond September 16, 2022 Quote to Provide On Call Economic and Financial Analysis Services 8
4. References DRA provides the following references. Each of the projects are described above. 1. Pasadena Concord Apartments Jim Wong Senior Project Manager City of Pasadena Housing Department 649 N. Fair Oaks, 2nd Floor Pasadena, CA 91105 [email protected] 626-744-8316 2. Richmond Housing Authority Development and Financial Advisory Nannette Beacham Executive Director Richmond Housing Authority 450 Civic Center Plaza, 2nd Floor Richmond, CA 94804 Office: 510-621-1300 Mobile: 510-648-9074 [email protected] 3. City of Emeryville Developer Selection and Analysis Chad Smalley Economic and Development and Housing Manager City of Emeryville 133 Park Ave. Emeryville, CA 94608 (510) 596-4355 [email protected]
City of Richmond September 16, 2022 Quote to Provide On Call Economic and Financial Analysis Services 9
5. Cost Information DRA will provide services on a time and expense basis using the billing rates summarized in Attachment A. DRA will commit to holding its 2022 Professional Rates throughout the term of the contract. Attachment A 2022 Professional Fee and Expense Reimbursement Schedule Principal I $375 Principal II $345 Data Entry, Word Processing, Administrative Assistance and Accounting $125 The following costs are reimbursable expenses with supporting receipts: • Mileage at the equivalent of the then current federal mileage reimbursement rate; tolls • Round-trip coach airfare, as mutually agreed by client and consultant • Ground expenses: rental cars, parking, cabs and other • Meals and lodging • Long-distance telephone charges, facsimile charges and expedited courier service • Copying and production charges • Data service charges • Supplies, as required for deliverables. A 1.75% per month surcharge will be added to any invoice that is unpaid 30 days after the original date of the invoice. DRA may increase its Professional Fees on January 1, 2021, and will notify its clients in writing of this change.
SUBMISSION FOR ON-CALL FINANCIAL AND
ECONOMICS ANALYSIS TO:
THE HOUSING DIVISION OF THE CITY OF
RICHMOND
Submitted by:
Land Econ Group
One Sansome Street, Suite 3500
San Francisco, CA 94104
September 14, 2022
2 September 14, 2022 Mr. Jesus Morales Housing Division Community Development Department City of Richmond 440 Civic Center Plaza Richmond, CA 94804 RE: Response to the City’s Request for Quotes for On-call Financial and Economic Analysis Service Dear Mr. Morales: The Land Econ Group (LEG) is pleased to respond to the Housing Division’s RFQ with this attached submission. As you and other Richmond staff are well aware, we have been providing exactly this type of service to the City and the Port of Richmond for a couple of years now. LEG is able to offer senior level expertise, prompt response times and reasonable hourly rates. We recently completed a number of assignments and have the capacity to serve the Housing Division going forward. Our 2022 hourly billing rates are attached: William “Bill” Lee, Senior Economist $195 Tanya Chiranakhon, Planning Economist $135 These rates are adjusted on a calendar year basis to reflect inflationary cost increases. We look forward to the opportunity to serve the Housing Division of the City of Richmond. Respectfully submitted, William W. Lee Senior Partner
3 Table of Contents TABLE OF CONTENTS 3 A. COMPANY PROFILE AND KEY PERSONNEL 4 B. SELECTED CLIENT LIST 5 C. DETAILED RESUMES OF PROJECT STAFF 6 D. RELEVANT PROJECTS 10 E. REFERENCES 14
4 A. COMPANY PROFILE AND KEY PERSONNEL Land Econ Group LLC is a land planning and development economics consulting firm. The firm’s primary services include real estate market analysis, financial feasibility evaluation, fiscal impact analysis and economic impact evaluation for land development projects, station area plans, community plans, specific plans and general plans. LEG was formed to serve planning and urban design firms, municipalities, transportation authorities, other governmental entities, property owners, real estate developers and foreign governments. The firm is well equipped to negotiate real estate deals on behalf of public agencies, property owners and developers because of its detailed financial modeling capabilities. The firm is a certified DBE by the SFMTA under the California Unified Certification Program (CUCP) and is also a SBE, WBE and MBE. Land Econ Group LLC is a two-member limited liability corporation that operates as a professional services partnership.
William "Bill" Lee Senior Partner
Tanya Chiranakhon Managing Partner One Sansome Street, Suite 3500 San Francisco, CA 94104 Office: (415) 851-9328 Mobile: (510) 301 6698 [email protected] One Sansome Street, Suite 3500 San Francisco, CA 94104 Office: (415) 851-9328 Mobile: (415) 283-8517 [email protected]
5 B. SELECTED CLIENT LIST Land Econ Group partners have provided services to the following selected clients during their careers. Planning and Urban Design Firms AECOM Airbnb Crandall Arambula Dyett & Bhatia Field Paoli Gruen Associates HOK Kimley Horn Associates LMN Architects Lyft MIG Parsons Brinkerhoff Perkins+Will Sasaki Associates Skidmore, Owings & Merrill (SOM) SWA Group Wallace Roberts & Todd (WRT) Zimmer Gunsul Frasca Architects (ZGF) Real Estate Development Firms The Bixby Company Catellus Centex Homes LCOR Lend Lease Development Rimland Pacific Pine Street Associates The Irvine Company Wilson Meany Sullivan Cities / Urban Renewal Agencies Albuquerque NM Dallas TX Fremont CA Hayward CA Irvine CA Lincoln NE Long Beach CA Los Angeles CA Milpitas CA Oakland CA Phoenix AZ Portland OR Richardson TX Salt Lake City UT San Diego CA Santa Barbara CA Scottsdale AZ Seattle WA Vancouver BC Westminster CO Bay Area Cities and Agencies Hercules Berkeley Piedmont Los Altos Los Gatos Sunnyvale Mountain View Palo Alto Milpitas San Carlos Redwood City Foster City San Mateo Burlingame South San Francisco Daly City San Jose Santa Clara San Francisco Transportation Agencies Arizona DOT Bay Area Rapid Transit District (BART) Caltrans Dallas Area Rapid Transit (DART) Gold Line Development Authority Idaho DOT King County Washington DOT Nevada DOT Port of Richmond Portland Metro Portland Trimet Santa Clara VTA Utah DOT High Speed Rail Agencies Australia Government Department of Infrastructure and Transport California High Speed Rail Authority Korean National Railroad Taiwan Department of Transportation High Speed Rail Bureau Colleges and Universities Cal State Monterey Bay Cal State Sacramento Santa Clara University UC Davis UC Santa Cruz UC San Diego
6 C. DETAILED RESUMES OF PROJECT STAFF William “Bill” Lee - Senior Partner Mr. Lee has been in land planning economics and economic development consulting since the 1970s and was the Managing Principal of Economics Research Associates’ (ERA) San Francisco Office for 15 years. ERA was the largest and most experienced land economics consulting firm in the United States at the time of its sale to AECOM in 2007. He was with AECOM Economics from 2007 until 2012 before forming the Land Econ Group. During over four decades of practice, he has specialized in services to local government agencies, land planning/urban design firms, property owners, real estate developers and transportation agencies. Mr. Lee received his BS degree from Stanford University, with a major in economics and a minor in mathematics, and his MBA degree from Columbia University and also attended the Graduate School of City Planning at Columbia. Mr. Lee’s practice focuses on the economics of community development and transit oriented development. During his decades of practice, he has created multiple Excel Financial Models to analyze real estate development feasibility and has used this model for redevelopment negotiations, testing of project financial feasibility based on schematic concepts, valuating public agency properties, and for comparing planning or urban design alternatives. Some of the key projects where he served as project manager or lead principal are listed below: • Terminal 1 DDA Negotiations including Financial and Fiscal Analyses – City of Richmond • Richmond Marina Lease Turnover Review – City of Richmond • Opinion of Market Rate Lease of 1324 Canal Street to Rigger’s Loft Winery – City of Richmond • Opinion of Lease Negotiation Issues with Richmond Grown – City of Richmond • Terminal 3 Long-Term Lease Negotiation – Port of Richmond • Redwood City and San Mateo County Property Exchange Negotiations – City of Redwood City • Redwood City Downtown Core Property Disposition Negotiation Support – City of Redwood City • Three Way Negotiations for Parking Replacement and Joint Development at Pleasant Hill BART Station - BART • Market And Financial Analysis as Input to Estimating Developer Community Benefits Contribution for Four Stations Along The Exposition LRT Line - City of Los Angeles Department of City Planning • Downtown San Mateo Specific Plan Market and Development Alternatives Plus Financial Analysis of Community Benefits Exaction – City of San Mateo • Detailed Financial Modeling of Development Alternatives and Negotiations with California High Speed Rail Authority – Millbrae Serra Station Development LLC
7 • Downtown and CalTrain Station Area Market Analysis and Development Strategy – City of Burlingame • Market and Financial Evaluation for Multiple Planning Assignments – City of San Carlos • Downtown Mountain View Financial Analysis of Including Retail Space into City Parking Structure – City of Mountain View • Hotel Market and Financial Feasibility Analysis at Stanford Shopping Center – City of Palo Alto • Fiscal and Vitality Evaluation of Visioning Alternatives – City of Los Altos • Market Analysis and Implementation Assessment for the Diridon Station Specific Plan – City of San Jose • Market and Joint Development Financial Analysis for six Santa Clara County BART extension stations including Milpitas, Alum Rock, Berryessa, Downtown San Jose, Diridon and Santa Clara Stations – Santa Clara County Valley Transportation Authority (VTA). • Market and Disposition Financial Analysis for 15 potential surplus properties in Santa Clara County - Santa Clara County General Services Administration (GSA). • Financial Modeling to Assist with Redevelopment Negotiations for Disposition of Former Civic Center Properties – City of Hayward • Transit Area Specific Plan Market and Fiscal Analysis – City of Milpitas • Financial Modeling of Urban Design Alternatives for Downtown – City of Hercules • Development of Prototype Financial Model for Redevelopment Disposition Negotiations – City of West Sacramento • Comprehensive Housing Development Strategy for West Campus – UC Davis • Economic Impact of the University – Santa Clara University • South Hayward Bay Area Rapid Transit (BART) Station Area Form Base Code and Specific Plan Market and Fiscal Evaluation – City of Hayward • Mission Boulevard Revitalization Strategy and Fiscal Evaluation for Specific Plan – City of Hayward • Market Analysis and Long Term Planning Strategy for Ten Central Portland Retail Districts – City of Portland Planning Bureau • Economic Revitalization Strategy for Vancouver BC Chinatown – City of Vancouver Canada • San Francisco Chinatown Revitalization Strategy – Chinatown Community Development Corporation
8 Tanya Chiranakhon, AICP, LEED AP - Managing Partner Ms. Chiranakhon conducts research and analysis for a variety of economic and real estate development projects across the U.S. and Asia. Her expertise includes market studies, development programming, feasibility analysis, fiscal assessment and economic impact assessments. Ms. Chiranakhon was with Economics Research Associates (ERA) and then AECOM Economics from 2007 through 2011. She also has an in-depth understanding of physical planning. Prior to joining ERA, Ms. Chiranakhon worked as an Urban Planner/Designer in San Francisco and Hong Kong with HOK, and as a designer with various architecture firms. Ms. Chiranakhon holds a Master’s in Urban Planning from Harvard University, where she concentrated in real estate and urban development. She received a BA in Architecture from the University of California Berkeley. Ms. Chiranakhon served as a Mayoral appointee to the San Francisco Planning Department’s Eastern Neighborhoods Citizen Advisory Committee from April 2014 to June 2015. Ms. Chiranakhon is a certified planner, LEED accredited professional and a Young Leader of the Urban Land Institute. She is proficient in Mandarin and familiar with Thai and Cantonese. Some of her selected projects are highlighted below. Strategic Planning and Economic Development • Downtown San Mateo Specific Plan (San Mateo, CA) – Assessed future market conditions addressing residential, retail and restaurant, office and hotel uses. The market analysis guided alternative development scenarios that were then evaluated for feasibility and fiscal impact. • Downtown Los Altos Vision Plan Economics (Los Altos, CA) – Conducted a survey of downtown business owners and operators and integrated results with market and demographic trends analysis to formulate economic strategies and development scenarios for downtown Los Altos. • El Camino Real Corridor Specific Plan (Sunnyvale, CA) – Evaluated demographic and economic trends and projected future population and employment characteristics to assess future market conditions. Assisted in evalutation of alternative development scenarios and development of implementation and financing strategy. • Downtown Livermore Market Analysis (Livermore, CA) – Analyzed historic demographic and economic trends and estimated projections of residential, office and retail space in downtown Livermore. • Manteca Retail and Restaurant Opportunities Study (Manteca, CA) – Conducted local and regional market and demographic analysis, including a citywide public survey, to identify future retail and restaurant opportunities in the rapidly growing city of Manteca. • San Benito General Plan Update Economic Analysis (San Benito, CA) – Examined demographic and economic trends and generated long-range market demand and growth forecasts. Conducted fiscal impact analysis related to expected development and growth within San Benito County.
9 • Vancouver Chinatown Economic Revitalization Action Plan (Vancouver, BC, Canada) – Developed action strategies to improve the economic vitality and create a viable plan for the revitalization of Vancouver Chinatown. Analyzed economic conditions and conducted a public workshop, survey of businesses and interviews with stakeholders to assess cultural and historic assets in the community. • Westminster Colorado Comp Plan Update Market Analysis – Prepared real estate market assessments for the city as a whole and for six focus areas including three commuter rail stations. • Downtown Portland Retail Strategy Analysis (Portland, OR) – Conducted analysis of current and future retail market capacity in Central Portland and its subdistricts. This study included economic and demographic analysis, research on national downtown trends and best practices in downtown retail development. • Downtown Douglas Redevelopment Plan (Douglas, AZ) – Prepared an economic development strategy for a historic border town. Interviewed key stakeholders and evaluated the competitive environment and positioning of the historic downtown. • Barrio Logan Economics Analysis (San Diego, CA) – Analyzed real estate market pressures driving change in this near downtown neighborhood of San Diego. Conducted fiscal impact analysis of Community Plan land use alternatives. Transit/Transportation Projects • California Highspeed Rail Alignment Alternatives Analysis (Merced to Fresno, CA) – Conducted research and analysis of real estate acquisition and relocation costs for three highspeed rail alignment alternatives from Merced to Fresno. Determined the value of loss of urban and rural productivity to evaluate the regional economic impact of each alternative. • Southern Poplar Corridor Rail Crossing Economic Impact Analysis (Shelby County, Tennessee) – Examined travel savings, real estate acquisition, relocation and construction costs to determine the economic impact of new rail crossings on the long-term future of the regional economy and at the local level. • CBD Rail Loop Urban Development Business Case (Auckland, New Zealand) – Conducted detailed case study analysis to examine the impact of rail service on CBD office development over a 20 year period in San Francisco, Portland and San Diego. • Englewood Colorado LRT Station Area Plans – Conducted market research for three light rail stations in Englewood, Colorado.
10 D. RELEVANT PROJECTS Terminal One Developer Negotiations LEG has been assisting the City of Richmond with Terminal One DDA negotiations. The analyses included financial pro forma, fiscal impact modeling, review of developer pro forma and proposed business terms. It also included attendance at numerous staff and City Council meeting. Client: City of Richmond Various Lease Reviews LEG has been assisting City staff and its legal team review a number of leases that are either being amended or are subject to renewal. These included the Alcatraz Tours, Richmond Marina, Richmond Grown, Rigger’s Loft Winey and others. Client: City of Richmond Port of Richmond Terminal 3 Negotiations The Port of Richmond selected a developer for a long-term master lease of Terminal 3. The developer proposed capital investments to facilitate development of this property but required long-term lease control in order to recoup its investment over time. The Port retained the Land Econ Group (LEG) to assist with lease negotiations covering the developer’s return on capital and the Port’s lease escalation and profit participation over time. Client: Port of Richmond Redwood City and San Mateo County Property Exchange Negotiation The City of Redwood City was under time pressure to extend Blomquist Street to enhance access to the new 131-unit townhouse project being developed by a San Francisco developer. In the development agreement, the City gained substantial cost savings in constructing a section of the Blomquist Street Extension, if it was able to deliver the prepared land for the extension before the project opened for sale. The property required for the road extension was owned by San Mateo County and had an operating homeless shelter on it. Redwood City had a larger parcel nearby that it was prepared to exchange for the County parcel. The Land Econ Group was retained by the City to negotiate with San Mateo County to successfully overcome differences in appraised land value, issues related to the homeless shelter and the needs of a recreation boating group with a lease on the City parcel. Client: City of Redwood City
11 Redwood City Land Disposition Negotiation The City of Redwood City was in negotiations with a developer concerning the South Main Mixed-Use Project covering five city blocks in the downtown core. The only remaining parcel to be assembled by the developer was a City owned parcel strategically located at the center of the project that contained a 23-unit apartment building originally intended for below market housing. Because the parcel was critical to development project success, the City was in position to negotiate for a “holdout value premium.” The assemblage adds value to the overall project, but there is the risk that an overly aggressive land value could either render the project unfeasible or erode the quality of project amenities. LEG guided the value negotiation for this land disposition agreement. Client: City of Redwood City Millbrae Serra Station Financial Evaluation and Negotiation Assistance The Land Econ Group worked closely with Millbrae Serra Station LLC on the development of a major and long held piece of property located at the Millbrae BART, CalTrain and High Speed Rail Station. Our work included market analysis for overall project financing, station area retail analysis for the City of Millbrae, detailed financial modeling of alternatives, assessment of the financial impact of proposed City policy actions and proposed property exchange with the California High Speed Rail Authority. The project recently received development approval from the Millbrae City Council. Client: Millbrae Serra Station LLC
12 Pleasant Hill BART Station Joint Development Three Party Negotiation Over a multi-year period, Bill Lee of the Land Econ Group assisted BART in the three way negotiation amongst BART, a private developer and the Contra Costa County Redevelopment Agency addressing the use of BART parking lot, the construction of replacement parking and station area joint development. BART was able to secure full replacement parking plus a share of the long-term land lease revenue from the developer and Redevelopment Agency. Client: BART Downtown San Mateo Market Analysis and Development Strategy Land Econ Group has prepared multiple economics assignments for San Mateo. The current ones include the economics and market analysis for the Downtown Specific Plan and the fiscal evaluation of alternatives for the downtown and the Hillsdale Station Area. Previous assignments include a retail strategy for the downtown, zone change to allow ground floor office use, and market impact of revised inclusionary housing policy. A financial modeling based community benefits policy was part of the LEG Downtown Plan input. Client: City of San Mateo Exposition LRT Line Station Area Market and Financial Analysis for Public Benefit Capacity Mr. Lee served as the senior real estate market economist and financial analyst in the Exposition Line Station Area Specific Plan preparation. He guided the market analysis and provided the financial model to analyze development opportunities induced by the transit investment and proposed up zoning. He then used the model to estimate the financial capacity of new development to carry the cost of community benefit improvements and recommended a set of policies to fund these improvements. The policies were adopted by the City of Los Angeles. Client: City of Los Angeles Department of City Planning
13 Economic Impact of Lyft Services LEG has examined the economic impact of Lyft Ridesharing Services for over 60 metropolitan areas in North America. The impact assessments were based upon Lyft’s internal survey data, and the actual experience in served metropolitan areas was used to project likely impact onto similar metropolitan areas planned for Lyft service. Because of this work, LEG has an unparalleled understanding of how ridesharing services are changing the future form of cities. Client: Lyft
14 E. REFERENCES City of Richmond Client: Ms. Lina Velasco Director Community Development Department 450 Civic Center Plaza Richmond, CA 94804 (510) 620-6841 [email protected] Date: September 2022 Client: Ms. Shasa Curl City Manager 450 Civic Center Plaza Richmond, CA 94804 (510) 412-2091 [email protected] Date: September 2022 City of Redwood City On-Call Real Estate Negotiation Services Client: Mr. Alex Khojikian Director Community Development Department City of Redwood City 1017 Middlefield Road Redwood City, CA 94063 [email protected] Date: 2018 - 2022
COMMUNITY DEVELOPMENT DEPARTMENT
450 CIVIC CENTER PLAZA, RICHMOND, CA 94804 Telephone: (510) 620-6706 Fax: (510) 620-6858
MEMORANDUM
DATE: NOVEMBER 1, 2022
TO: MAYOR AND CITY COUNCIL
FROM: LINA VELASCO, DIRECTOR OF COMMUNITY DEVELOPMENT
JESUS M. MORALES, HOUSING MANAGER
RE: MEMO FOR REQUEST FOR QUOTES FOR ON-CALL FINANCIAL AND
ECONOMIC ANALYSES SERVICES
On September 8, 2022, the Community Development Department solicited a Request for Quotes (RFQ) for on-call financial and economic analyses services to support the Housing Division. The RFQ was sent to three vendors via email as an informal solicitation.
All three vendors responded to the RFQ; Land Econ Group (LEG), David Paul Rosen & Associates (DRA), and CSG Advisors (CSG).
Request for Quotes were sent to the following vendors:
VENDOR EMAIL
Land Econ Group [email protected]
David Paul Rosen & Associates
[email protected];
[email protected]
CSG Advisors [email protected]
The three financial services firms solicited through this RFQ are currently providing similar financial and economic analysis services to the City of Richmond or other local municipalities. These firms are well known in the Bay Area and throughout California. In the case of CSG Advisors, they have a national presence with offices throughout major cities in the United States. All three firms are highly experienced around financial and economic analysis as it relates to proposed market rate and affordable single family and multi-family housing developments, commercial, and mixed-use development projects.
Two of the firms, LEG and DRA are currently providing financial consulting services to the city on three major development projects; Terminal One, 12th and Macdonald, and Miraflores. CSG has previously provided similar services to the Richmond Housing
Authority. New city staff has also worked with CSG on other proposed mixed income multifamily residential developments in another jurisdiction.
LEG’s and DRA’s familiarity and current work with city staff on the above referenced major developments makes it important to maintain the consistent analysis and background developed on these projects over the past several months.
Approving these firms, LEG and DRA, for on call financial and economic services would provide a seamless continuation of services currently being provided for major proposed developments and adding another firm (CSG) that can be ready to provide additional support for these or any other major developments in the planning pipeline. Having these highly experienced firms on call will allow for timely and well thought out financial and economic analysis on complex development proposals.
Each service contract will be for an amount not-to-exceed $50,000 over one year, November 1, 2022, through October 31, 2023, with an option to extend the contracts for one additional year.
November 1, 2022
Community Development
DATE: November 1, 2022
TO: Mayor Butt and Members of the City Council
FROM:
Lina Velasco, Director of Community Development
Jesus Morales, Housing Manager
Subject:
Terraces Subordination Agreement
FINANCIAL IMPACT: There is no fiscal impact to the General Fund related to the execution of the Subordination and Intercreditor Agreement.
PREVIOUS COUNCIL
ACTION:
December 19, 2017
STATEMENT OF THE
ISSUE:
The Housing Division is requesting the City Council
authorize the City Manager to execute the Subordination and Intercreditor Agreement by and between the city of
Richmond, a California municipal corporation and Citibank, N.A. a national banking association, and acknowledged by Richmond Nevin Associates, a California limited partnership.
Failure to execute the subordination and intercreditor
agreement could result in a default of the loan agreement between the developer Richmond Nevin Associates and the lender Citibank, N.A.
RECOMMENDED
ACTION:
AUTHORIZE the City Manager to execute the Subordination and Intercreditor Agreement by and between the city of
Richmond, a California municipal corporation and Citibank, N.A. a national banking association, and acknowledged by Richmond Nevin Associates, a California limited partnership and make any changes to the Subordination and
Intercreditor Agreement that may be needed.– Community
Development Department (Lina Velasco/Jesus Morales 510- 620-6649).
AGENDA
REPORT
November 1, 2022
DISCUSSION:
On December 19th 2017, the City Council authorized the City Manager to negotiate the deferral of up to $1.2 million in project impact fees to offset development costs and facilitate construction of a 271-unit affordable multifamily apartment community on Nevin Avenue. The purpose of the fee deferral was to help close a potential construction funding gap that could occur because of the passage of a proposed tax federal tax reform bill. The exact amount and term of the proposed deferral would be determined after further review of the developer’s pro forma financial estimate.
Upon a review of the developers pro forma including other funding sources for this project the city agreed to defer $500,000 in certain city impact fees payable over a term of 40 years. Per the Fee Deferral Loan Agreement and the Fee Deferral Loan Note the outstanding principal balance of the note will bear simple interest at the rate of 3% per annum commencing on the earlier of (a) permanent loan conversion or (b) the 3rd anniversary of the project construction loan closing until the note is paid in full. The term of the note shall commence upon the date of issuance of certificates of occupancy for the project and shall expire upon the 40th anniversary of such date. The certificates of occupancy for both buildings, 2100 and 2200 Nevin Avenue, were issued on June 10, 2021. Until the original principal amount of the note and interest accrued thereon is repaid in full the developer shall make annual payments to the city of a sum equal to the amount of residual receipts (as defined in the loan agreement) to which developer is entitled in accordance with section 2.3 (a) of the loan agreement.
The Fee Deferral Loan Agreement and the Deed of Trust and Security Agreement both state that the city acknowledges that the city loan will be subordinate to a senior lien, in this case the conversion of the construction loan into the permanent loan.
A subordination agreement is an agreement that acknowledges that one party's interest or claim is superior to another in case the borrower's assets need to be liquidated to repay debts. This is used when there are one or more lenders that have provided mortgage loans on a property. The "junior" or second debt is referred to as a subordinated debt, in this case the city loan. The debt which has a higher claim to the asset is the senior debt, the Citibank loan. The subordinated party will only collect on a debt owed when and if the obligation to the primary lender has been fully satisfied in the event of foreclosure and liquidation. Subordination agreements also include language regarding notification protocol for each lender in case of a default for any loan and the how the right to cure the default can occur.
The senior lender, Citibank N.A., which provided the construction loan and conversion to the permanent loan, is seeking the cities acquiescence to execute the Subordination and Intercreditor Agreement. Failure to execute this Subordination and Intercreditor Agreement could result in a default of the developer’s loan agreement with the first lienholder which would negatively impact the security of the city’s loan. A default under the senior loan could lead to a foreclosure of the property, the loss of the affordable housing units, and the city’s loan of $500,000.
November 1, 2022
The Richmond Rent Board has notified staff that the developer has not made the required Residential Housing Fee. The fee is charged to all landlords who rent or offer for rent their dwelling unit(s). According to the Richmond Rent Program, as early as December 2018, Rent Program staff members had multiple meetings with AMG officials, including, Mr. Gene Broussard. These multiple meetings were held three years prior to AMG’s dwelling units being offered for rent and the topic of these meetings included compliance with Rent Board Fees and other applicable provisions of the Rent Ordinance. Rent Program staff members explained to AMG that under the Rent Ordinance, AMG is a landlord who is exempt from the Rent Ordinance’s rent control provisions. However, AMG is not exempt from the Just Cause provisions of the Rent Ordinance, as they do not fall under the “Homeowner Protections” provisions of the Rent Ordinance. Thus, AMG would be assessed the lower-tiered Fee. AMG was again reminded of this upcoming assessment in 2020, prior to their units being offered for rent.
In July 2021, when AMG began renting out its units, the Rent Program assessed Rent Board Fee to AMG. Despite every other Low-Income Housing Tax Credit, Section-8, and other rent restricted property meeting their obligation and paying the Rent Board Fee, AMG protested the Rent Board Fee through their counsel. In 2022, Mr. Gevorgian, through his counsel, wrote a letter to the Mayor and the City Council members, contesting the Rent Board Fee. Mr. Gevorgian also attended the City Council meeting where the Council considered the adoption of the Rent Board Fee. Despite AMG and Mr. Gevorgian’s protestations and arguments, the City Council passed the Rent Board Fee with one dissenting vote. To date, AMG owes the Rent Board an amount in excess of $70,000. According to Rent Program staff members, AMG has made no attempts to pay the Fee and has maintained that they will not pay the Fee.
Relative to the provision of project-based vouchers (PBVs) the development received 127 PBVs for seniors at 2100 Nevin (total of 128 units) and 27 PBVs for families at 2200 Nevin (total of 144 units). The development has PBVs on approximately 57% of the total units, 154 / 271, that provide Fair Market Rent subsidy for the various unit types in the development. The unit mix at both developments includes studio units, one bedroom, two bedroom, three bedroom, and four bedroom units.
EFFECTIVE DATE: October 1, 2022
All Other Cities Except Pittsburg:
0-BR 1-BR 2-BR 3-BR 4-BR 5-BR 6-BR 7-BR
PS $1,823 $2,165 $2,645 $3,458 $4,076 $4,687 $5,298 $5,910 % of FMR 109.95% 109.55% 109.98% 109.99% 109.98% 110.00% 109.99% 109.99%
FMR $1,658 $1,969 $2,405 $3,144 $3,706 $4,261 $4,817 $5,373 110% of FMR $1,823 $2,165 $2,645 $3,458 $4,076 $4,687 $5,298 $5,910
The City Attorney confirms that there is a Promissory Note for $500,000 with 3% interest due in 40 years to repay the deferred fees, that payments are supposed to be from
November 1, 2022
”Residual Receipts” under the Loan Agreement and we are not aware when such Residual Receipts may appear, that the Deferred Loan Agreement contemplated subordination of the Agreement to the permanent financing. The City Attorney could find no authority for the City Manager to approve the subordination, so it was referred to the City Council for action. No opinion is expressed as to other matters.
CONCLUSION:
City staff recommends that the City Council authorize the city manager to execute the subordination and intercreditor agreement and make any necessary changes to the Subordination and Intercreditor Agreement to protect the City’s loan security and prevent the potential of a loan default that could lead to a foreclosure of the property, the loss of the affordable housing units including the city’s loan of $500,000.
DOCUMENTS ATTACHED:
Attachment 1 – Subordination and Intercreditor Agreement Attachment 2 – Fee Deferral Loan Agreement
18708408-v3
WHEN RECORDED MAIL TO:
Citibank, N.A.
Transaction and Asset Management Group/Post Closing
Citi Community Capital
8800 Hidden River Parkway
Tampa, Florida 33637
Re: Nevin Apartments Deal ID No. 23913
SUBORDINATION AND INTERCREDITOR AGREEMENT
(Fee Deferral)
Subordination and Intercreditor Agreement (Fee Deferral) Nevin Apartments
SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this
“Agreement”) dated as of June 30, 2022, is made by and between the CITY OF RICHMOND, a California municipal corporation (“Junior Lender ”), and CITIBANK, N. A., a national banking association (“Senior Lender ”) and acknowledged by RICHMOND NEVIN ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP , a California limited partnership (“Borrower”).
RECITALS:
A. Borrower applied to the County of Contra Costa, California, a political subdivision and body corporate and politic of the State of California (“Governmental Lender”), for a loan (the “ Senior Loan ”) for the acquisition, construction, rehabilitation, development, equipping and/or operation of a 271 -unit multifamily res idential project located in the City of Richmond, Contra Costa County, California , known or to be known as Nevin Apartments (the “Property”).
B. The Senior Loan is evidenced by that certain Multifamily Note, dated as of the Closing Date (as defined in the B orrower Loan Agreement) , in the maximum p rincipal amount of $85,000,000 made by Borrower payable to the order of Governmental Lender ( as the same may from time to time be extended, consolidated, substituted for, modified, increased, amended and supplemented, the “Senior Note”) and that certain Borrower Loan Agreement, dated as of December 1, 2017 , by and between Borrower and Governmental Lender (the “ Borrower Loan Agreement”).
C. The Senior Loan is secured by, among other things, that certain Multifamily Deed of Trust, Assignment of R ents, Security Agreement and Fixture Filing , dated as of December 1, 2017, executed by Borrower for the benefit of Governmental Lender (as the same may from time to time be extended, consolidated, substituted for, modified, increas ed, amended and supplemented, “Senior Security Instrument”), which Senior Security Instrument recorded on December 21, 2017 in Contra Costa County, California (“Official Records”), as Instrument No. 2017-9023992400076, encumbers the Property.
D. Borrower requ ested that Senior Lender enter into that certain Funding Loan Agreement, dated as of December 1, 2017 , by and between Governmental Lender and Senior Lender, pursuant to which Senior Lender made a loan to Governmental Lender (the “ Funding Loan”), the proceeds of which were used to make the Senior Loan to Borrower pursuant to the Borrower Loan Agreement.
E. The Senior Note, the Senior Security Instrument and the Borrower Loan Agreement have each been assigned by Governmental Lender to Senior Lender to secure the Funding Loan as evidenced by that certain Assignment of Deed of Trust and Loan Documents, dated as of December 1, 2017, given by Governmental Lender to Senior Lender (the “ Senior Security Instrument Assignment”), which Senior Security Instrument Assignmen t recorded on
Subordination and Intercreditor Agreement (Fee Deferral) 2 Nevin Apartments December 21, 2017 in the Official Records as Instrument No. 2017 -902399250007. The Borrower and Senior Lender have entered into that certain Construction Funding Agreement dated as of December 1, 2017 (the “Construction Funding Agreement”) regarding the manner in which the improvements at the Property will be completed and paid for.
F. Junior Lender made a loan (the “ Junior Loan ”) to Borrower in the original principal amount of $500,000 , which Junior Loa n is evidenced by a certain Fee Deferral L oan Note dated as of December 20, 2017, made by Borrower to Junior Lender (the “ Junior Note”) and secured by, the Junior Security Instrument (as hereinafter defined) encumbering the Property, and will be advanced to Borrower pursuant to that certain Fee De ferral Loan Agreement between Borrower and Junior Lender dated December 20, 2017 (the “Junior Loan Agreement”).
G. As a condition to the making of the Senior Loan, Senior Lender requires that Junior Lender execute and deliver this Agreement prior to the makin g of the Junior Loan and the granting of the Junior Security Instrument by Borrower.
NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the making of the Senior Loan and to induce Senior Lender to consent to the Junior Loan and the Junior Security Instrument, Junior Lender hereby agrees as follows:
1. Definitions. Capitalized terms used but not defined in this Agreement shall have the meanings ascribed thereto in the Senior Security Instrument. As used in this Agreement, the terms set forth below shall have the respective meanings indicated:
“Bankruptcy Proceeding ” means any bankruptcy, reorganization, insolvency, composition, restructuring, dissolutio n, liquidation, receivership, assignment for the benefit of creditors, or custodianship action or proceeding under any federal or state law with respect to Borrower, any guarantor of any of the Senior Indebtedness, any of their respective properties, or any of their respective partners, members, officers, directors, or shareholders. “Casualty” means the occurrence of damage to or loss of any of the Property by fire or other casualty.
“Condemnation” means any proposed or actual condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Property, whether direct or indirect. “Enforcement Action” means any exercise of any of Junior Lender’s remedies under the Junior Security Instrument or any of the other Junior Loan Documents, includ ing, without limitation, any of the following: (i) the acceleration of all or any part of the Junior Indebtedness, (ii) the commencement of any ju dicial or non -judicial action or proceeding to enforce any obligation of Borrower under any of the Junior Loan Documents, collect any monies payable to Borrower or have a receiver appointed to collect any monies payable to Borrower, or foreclose the lien(s) created by the Junior Security Instrument, (iii) the filing or joining in the filing of any involuntary Bank ruptcy Proceeding against Borrower or any person or entity which owns a direct or indirect interest in Borrower, (iv) the advertising of or commencement of any foreclosure or trustee’s sale proceedings, (v) the exercise of any power of sale, (vi) the
Subordination and Intercreditor Agreement (Fee Deferral) 3 Nevin Apartments acceptance of a deed or assignment in lieu of foreclosure or sale, (vii) the collecting of Rents, (viii) the obtaining of or seeking of the appointment of a receiver, (ix) the seeking of default interest, (x) the taking of possession or control of any of the Pr operty, (xi) the commencement of any suit or other legal, administrative, or arbitration proceeding based upon the Junior Note or any other of the Junior Loan Documents, (xii) the exercising of any banker’s lien or rights of set- off or recoupment, or (xiii ) the taking of any other enforcement action against Borrower, any other party liable for any of the Junior Indebtedness or obligated under any of the Junior Loan Documents, or the Property.
“Enforcement Action Notice ” means a written notice from Junior Le nder to Senior Lender, given following a Junior Loan Default and the expiration of any notice or cure periods provided for such Junior Loan Default in the Junior Loan Documents, setting forth in reasonable detail the Enforcement Action proposed to be taken by Junior Lender. “Junior Indebtedness ” means all indebtedness of any kind at any time evidenced or secured by, or arising under, the Junior Loan Documents, whether incurred, arising or accruing before or after the filing of any Bankruptcy Proceeding. “Junior Loan Default ” means any act, failure to act, event, condition, or occurrence which constitutes, or which with the giving of notice or the passage of time, or both, would constitute, an “Event of Default” as defined in the Junior Security Instrument. “Junior Loan Documents ” means, collectively, the Junior Note, the Junior Security Instrument, the Junior Loan Agreement and all other documents evidencing, securing or delivered in connection with the Junior Loan, all of which are listed on Exhibit B attach ed hereto, together with such modifications, amendments and supplements thereto as are approved in writing by Senior Lender prior to their execution.
“Junior Security Instrument ” means that certain Deed of Trust and Security Agreement, dated as of December 20, 2017, made by Borrower for the benefit of Junior Lender, recorded in the Official Records on August 9, 2018 as Instrument No. 2018 -0127118-00, as the same may from time to time be extended, consolidated, substituted for, modified, amended or supplemented upon receipt of the consent of Senior Lender.
“Loan Agreement” means that certain Construction Funding Agreement, dated as of the date hereof, by and between Borrower and Senior Lender relating to the Senior Loan. “Loss Proceeds” means all monies received or to be received under any insurance policy, from any condemning authority, or from any other source, as a result of any Condemnation or Casualty.
“Property” means (i) the land and improvements known or to be known as Nevin Apartments, located in Rich mond, Contra Costa County, State of California , which Property is more particularly described on Exhibit A attached hereto, and (ii) all furniture, fixtures and equipment located at such apartments and other property, accounts, deposits and rights and interests of Borrower encumbered by the Senior Security Instrument and/or the other Senior Loan Documents.
Subordination and Intercreditor Agreement (Fee Deferral) 4 Nevin Apartments “Senior Indebtedness ” means all indebtedness of any kind at any time evidenced or secured by, or arising under, the Senior Loan Documents, whether incurr ed, arising or accruing before or after the filing of any Bankruptcy Proceeding. “Senior Loan Default ” means any act, failure to act, event, condition, or occurrence which constitutes, or which with the giving of notice or the passage of time, or both, wou ld constitute, an “Event of Default” as defined in the Senior Security Instrument. “Senior Loan Documents” means, collectively, the Senior Security Instrument, the Senior Note, the Borrower Loan Agreement , the Senior Security Instrument Assignment, the Loa n Agreement, and all of the other documents, instruments and agreements now or hereafter evidencing, securing or otherwise executed in connection with the Senior Loan, as the same may from time to time be extended, consolidated, substituted for, modified, increased, amended and supplemented in accordance with the provisions of this Agreement.
2. Junior Loan and Junior Loan Documents are Subordinate; Acts by Senior Lender do not Affect Subordination.
(a) Junior Lender hereby covenants and agrees on behalf of itself and its successors and permitted assigns that the Junior Indebtedness is and shall at all times continue to be, subordinate, subject and inferior (in payment and priority) to the prior payment in full of the Senior Indebtedness, and that the liens, rights , payment interests, priority interests and security interests granted to Junior Lender in connection with the Junior Loan and under the Junior Loan Documents are, and are hereby expressly acknowledged to be in all respects and at all times, subject, subor dinate and inferior in all respects to the liens, rights, payment, priority and security interests granted to Senior Lender under the Senior Loan and the Senior Loan Documents and the terms, covenants, conditions, operations and effects thereof.
(b) Except as expressly set forth herein, repayment of the Junior Indebtedness, is and shall be postponed and subordinated to repayment in full of the Senior Loan. Prior to a Senior Loan Default (regardless of whether such Senior Loan Default occurs prior to or during the pendency of a Bankruptcy Proceeding), Junior Lender shall be entitled to receive and retain payments made pursuant to and in accordance with the terms of the Junior Loan Documents; provided, however, that no such payment is made more than ten (10) days in advance of the due date thereof. Junior Lender agrees that from and after such time as it has received from either Senior Lender or Borrower written notice that a Senior Loan Default then exists (which has not been expressly waived in writing by Senior Lender) or otherwise has actual knowledge of such a Senior Loan Default, Junior Lender shall not receive or accept any payments under the Junior Loan. If (i) Junior Lender receives any payment, property, or asset of any kind or in any form on account of the Junior Indebtedness (including, without limitation, any proceeds from any Enforcement Action) after a Senior Loan Default of which Junior Lender has actual knowledge or has been given notice of, or (ii) Junior Lender receives, voluntarily or involuntarily, by operation of law or otherwise, any payment, property, or asset in or in connection with any Bankruptcy Proceeding, such payment, property, or asset will be received and held in trust for Senior Lender. Junior Lender will promptly remit, in kind
Subordination and Intercreditor Agreement (Fee Deferral) 5 Nevin Apartments and properly endorsed as necessary, all such payments, properties, and assets to Senior Lender. Senior Lender shall apply any payment, asset, or property so received from Junior Lender to the Senior Indebtedness in such order, amount (with respect to any a sset or property other than immediately available funds), and manner as Senior Lender shall determine in its sole and absolute discretion.
(c) Without limiting the complete subordination of the Junior Indebtedness to the payment in full of the Senior Indebtedn ess, in any Bankruptcy Proceeding, upon any payment or distribution (whether in cash, property, securities, or otherwise) to creditors (i) the Senior Indebtedness shall first be paid in full in cash before Junior Lender shall be entitled to receive any pay ment or other distribution on account of or in respect of the Junior Indebtedness, and (ii) until all of the Senior Indebtedness is paid in full in cash, any payment or distribution to which Junior Lender would be entitled but for this Agreement (whether in cash, property, or other assets) shall be made to Senior Lender. (d) The subordination of the Junior Indebtedness shall continue in the event that any payment under the Senior Loan Documents (whether by or on behalf of Borrower, as proceeds of security or en forcement of any right of set -off or otherwise) is for any reason repaid or returned to Borrower or its insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law. In such event, the Senior Indebtedness or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding to the extent of any repayment, return, or other action, as if such payment on account of the Senior Indebtedness had not been made. (e) The subordination of the Junior Loan Documents and of the Junior Indebtedness shall apply and continue notwithstanding (i) the actual date and time of execution, delivery, recording, filing or perfection of t he Senior Security Instrument and other Senior Loan Documents and of the Junior Security Instrument and other Junior Loan Documents, and (ii) the availability of any collateral to Senior Lender, including the availability of any collateral other than the Property. (f) By reason of, and without in any way limiting, the full subordination of the Junior Indebtedness and the Junior Loan Documents provided for in this Agreement, all rights and claims of Junior Lender under the Junior Security Instrument or under the Junior Loan Documents in or to the Property or any portion thereof, the proceeds thereof, the Leases thereof, the Rents, issues and profits therefrom, and the Loss Proceeds payable with respect thereto, are expressly subject and subordinate in all respect s to the rights and claims of Senior Lender under the Senior Loan Documents in and to the Property or any portion thereof, the proceeds thereof, the Leases thereof, the Rents, issues and profits therefrom, and the Loss Proceeds payable with respect thereto. (g) If Junior Lender, by indemnification, subrogation or otherwise, shall acquire any lien, estate, right or other interest in any of the Property, that lien, estate, right or other interest shall be fully subject and subordinate to the receipt by Senior Lender of payment in full of the Senior Indebtedness, and to the Senior Loan Documents,
Subordination and Intercreditor Agreement (Fee Deferral) 6 Nevin Apartments to the same extent as the Junior Indebtedness and the Junior Loan Documents are subordinate pursuant to this Agreement.
(h) Reserved.
(i) Junior Lender hereby acknowledges and agr ees that Senior Lender may, without the consent or approval of Junior Lender, agree with Borrower to extend, consolidate, modify, increase or amend any or all the Senior Loan Documents and otherwise act or fail to act with respect to any matter set forth i n any Senior Loan Document (including, without limitation, the exercise of any rights or remedies, waiver, forbearance or delay in enforcing any rights or remedies, the declaration of acceleration, the declaration of defaults or events of default, the rele ase, in whole or in part, of any collateral or other property, and any consent, approval or waiver), and all such extensions, consolidations, modifications, amendments acts and omissions shall not release, impair or otherwise affect Junior Lender’s obligations and agreements hereunder.
3. Junior Lender Agreements.
(a) Without the prior written consent of Senior Lender in each instance, Junior Lender shall not (i) amend, modify, waive, extend, renew or replace any provision of any of the Junior Loan Documents, or ( ii) pledge, assign, transfer, convey, or sell any interest in the Junior Indebtedness or any of the Junior Loan Documents; or (iii) accept any payment on account of the Junior Indebtedness other than a regularly scheduled payment of interest or principal a nd interest made not earlier than ten (10) days prior to the due date thereof; or (iv) take any action which has the effect of increasing the Junior Indebtedness; or (v) appear in, defend or bring any action in connection with the Property; or (vi) take any action concerning environmental matters affecting the Property.
Regardless of any contrary provision in the Junior Loan Documents, Junior Lender shall not collect payments for the purpose of escrowing for any cost or expense related to the Property or for any portion of the Junior Indebtedness. (b) Junior Lender hereby agrees that Senior Lender may, at its option (but without any obligation to do so), at any time (including during the pendency of a Bankruptcy Proceeding), purchase the Junior Loan at par (and without liability for any prepayment premiums or liquidated damages set forth in the Junior Loan Documents).
Such transfer and assignment of the Junior Loan shall be without representation or recourse, except that Junior Lender shall represent that it is t he sole holder of the Junior Loan, that it has authority to assign and convey the Junior Loan Documents, that, to the best of its knowledge, there are no defaults or breaches under the Junior Loan Documents, and as to the total amount then outstanding unde r the Junior Loan. . Junior Lender shall give Senior Lender a concurrent copy of each notice of a Junior Loan Default, Enforcement Action Notice or other material notice given by Junior Lender under the Junior Loan Documents. Notwithstanding any contrary p rovision in the Jun ior Loan Documents, Senior Lender shall have the right, but shall not have any obligation, to cure any Junior Loan Default until ninety (90) days following Senior Lender’s receipt of an Enforcement Action Notice given by Junior Lender as a consequence of the Junior Loan Default. Senior Lender shall not be subrogated to the rights of Junior Lender under
Subordination and Intercreditor Agreement (Fee Deferral) 7 Nevin Apartments the Junior Loan Documents by reason of Senior Lender having cured any Junior Loan Default. However, Junior Lender acknowledges that all amounts advanced or expended by Senior Lender to cure a Junior Loan Default shall be added to and become a part of the Senior Indebtedness pursuant to the terms of the Senior Security Instrument. (c) In the event and to the extent that each of Senior Lender and Junior Lender have under their respective loan documents certain approval or consent rights over the same subject matters (regardless of whether the obligations or rights are identical or substantially identical), Junior Lender agrees that Senior Lender shall exercise such approval rights on behalf of both Senior Lender and Junior Lender, and Junior Lender shall have no right to object to any such action or approval taken by Senior Lender and shall consent thereto and be bound thereby. Without limiting t he generality of the foregoing, Senior Lender shall have all approval, consent and oversight rights in connection with any insurance claims relating to the Property, any decisions regarding the use of insurance proceeds after a casualty loss or condemnatio n awards, the hiring or firing of property managers, or otherwise related in any way to the Property, and Junior Lender shall have no right to object to any such action or approval taken by Senior Lender and shall consent thereto and be bound thereby.
(d) Junior Lender agrees that in any action commenced to enforce the obligation of Borrower to pay any portion of the Junior Indebtedness, the judgment shall not be enforceable personally against Borrower or Borrower’s assets, and the recourse of Junior Lender for the collection of the Junior Indebtedness shall be limited to actions against the Property and the rents, profits, issues, products, and income from the Property.
(e) Junior Lender shall not commence or join with any other creditor in commencing any Bankruptc y Proceeding involving Borrower, and Junior Lender shall not initiate and shall not be a party to any action, motion or request, in a Bankruptcy Proceeding involving any other person or entity, which seeks the consolidation of some or all of the assets of Borrower into such Bankruptcy Proceeding. In the event of any Bankruptcy Proceeding relating to Borrower or the Property or, in the event of any Bankruptcy Proceeding relating to any other person or entity into which (notwithstanding the covenant in the f irst sentence of this clause) the assets or interests of Borrower are consolidated, then in either event, the Senior Loan shall first be paid in full before Junior Lender shall be entitled to receive and retain any payment or distribution in respect to the Junior Loan. Junior Lender agrees that (i) Senior Lender shall receive all payments and distributions of every kind or character in respect of the Junior Loan to which Junior Lender would otherwise be entitled, but for the subordination provisions of thi s Agreement (including without limitation, any payments or distributions during the pendency of a Bankruptcy Proceeding involving Borrower or the Property), and (ii) the subordination of the Junior Loan and the Junior Loan Documents shall not be affected i n any way by Senior Lender electing, under Section 1111(b) of the federal bankruptcy code, to have its claim treated as being a fully secured claim. In addition, Junior Lender hereby covenants and agrees that, in connection with a Bankruptcy Proceeding in volving Borrower, neither Junior Lender nor any of its affiliates shall (i) make or participate in a loan facility to or for the benefit of Borrower on a basis that is senior to or pari passu with
Subordination and Intercreditor Agreement (Fee Deferral) 8 Nevin Apartments the liens and interests held by Senior Lender pursuant to t he Senior Loan Documents, (ii) not vote affirmatively in favor of any plan of reorganization or liquidation unless Senior Lender has also voted affirmatively in favor of such plan, and (iii) not contest the continued accrual of interest on the Senior Indeb tedness, in accordance with and at the rates specified in the Senior Loan Documents, both for periods before and for periods after the commencement of such Bankruptcy Proceedings. Junior Lender shall execute and deliver to Senior Lender powers of attorney, assignments or other instruments as may be requested by Senior Lender in order to enable it to exercise the above -described authority or powers with respect to any or all of the Junior Loan Documents, and to collect and receive any and all payments or di stributions which may be payable or deliverable at any time upon or with respect to any of the Junior L oan Documents to Junior Lender.
(f) Junior Lender covenants and agrees that the effectiveness of this Agreement and the rights of Senior Lender hereunder sha ll be in no way impaired, affected, diminished or released by any renewal or extension of the time of payment of the Senior Loan, by any delay, forbearance, failure, neglect or refusal of Senior Lender in enforcing payment thereof or in enforcing the lien of or attempting to realize upon the Senior Loan Documents or any other security which may have been given or may hereafter be given for the Senior Loan, by any waiver or failure to exercise any right or remedy under the Senior Loan Documents, or by any ot her act or failure to act by Senior Lender. Junior Lender acknowledges that Senior Lender, at its sole option, may release all or any portion of the Property from the lien of the Senior Security Instrument, and may release or waive any guaranty, surety or indemnity providing additional collateral to Senior Lender, and Junior Lender hereby waives any legal or equitable right in respect of marshaling it might have, in connection with any release of all or any portion of the Property by Senior Lender, to requ ire the separate sales of any portion of the Property or to require Senior Lender to exhaust its remedies against any portion of the Property or any other collateral before proceeding against any other portion of the Property or other collateral (including guarantees) for the Senior Loan. Senior Lender may pursue all rights and remedies available to it under the Senior Loan Documents, at law, or in equity, regardless of any Enforcement Action Notice or Enforcement Action by Junior Lender.
At any time or fr om time to time and any number of times, without notice to Junior Lender and without affecting the liability of Junior Lender, (a) the time for payment of the Senior Indebtedness may be extended or the Senior Indebtedness may be renewed in whole or in part ; (b) the time for Borrower’s performance of or compliance with any covenant or agreement contained in the Senior Loan Documents, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived; (c) t he maturity of the Senior Indebtedness may be accelerated as provided in the Senior Loan Documents; (d) any Senior Loan Document may be extended, consolidated, modified or amended by Senior Lender and Borrower in any respect, including, but not limited to, an increase in the principal amount; and (e) any security for the Senior Indebtedness may be modified, exchanged, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Senior Indebtedness. If, after the occurrence of a Senior Loan Default, Senior Lender acquires title to any of the Property pursuant to a mortgage foreclosure conducted in accordance with applicable law, the lien, operation, and effect of the Junior Security Instrument and
Subordination and Intercreditor Agreement (Fee Deferral) 9 Nevin Apartments other Junior Loan Documents automatically shall terminate with respect to such Property upon Senior Lender’s acquisition of title.
(g) Junior Lender acknowledges that it entered into the transactions contemplated by the Junior Loan Documents and made the Junior Loan to Borrower without reliance upon any information or advice from Senior Lender. Junior Lender made its own underwriting analysis in connection with the Junior Loan, its own credit review of Borrower, and investigated all matters pertinent, in Junior Lender’s judgment, to its determination to make the Junior Loan to Borrower. Junior Lender acknowledges that it is a sophisticated, experienced commercial lender, and was represented by competent counsel in connection with this Agreement.
(h) Junior Lender hereby further represents a nd warrants that: (i) Junior Lender is now the owner and holder of the Junior Loan Documents; (ii) the Junior Loan Documents are now in full force and effect; (iii) the Junior Loan Documents have not been modified or amended; (iv) no default or event which , with the passing of time or giving of notice would constitute a default, under the Junior Loan Documents has occurred; (v) the current outstanding principal balance of the Junior Indebtedness is $500,000; (vi) no scheduled monthly payments under the Juni or Loan Documents have been or will be prepaid except with the prior written consent of Senior Lender; (vii) none of the rights of Junior Lender under any of the Junior Loan Documents are subject to the rights of any third parties, by way of subrogation, indemnification or otherwise; and (viii) there are no other Junior Loan Documents other than those listed on Exhibit B hereto.
Borrower further represents and warrants that it has provided to Senior Lender a true, complete, and correct copy of all the Junior Loan Documents. (i) Reserved.
4. Standstill Agreement; Right to Cure Senior Loan Default. (a) Until such time as any of the Senior Indebtedness has been repaid in full and the Senior Security Instrument has been released and discharged, Junior Lender shall not without the prior written consent of Senior Lender, which may be withheld in Senior Lender’s sole and absolute discretion, take any Enforcement Action, including, without limitation, (i) accelerate the Junior Loan, (ii) exercise any of Junior Lender’s remedie s under the Junior Security Instrument or any of the other Junior Loan Documents (including, without limitation, the commencement of any judicial or non -judicial action of proceeding (a) to enforce any obligation of Borrower under any of the Junior Loan Documents, (b) to collect any monies payable to Borrower, (c) to have a receiver appointed to collect any monies payable to Borrower; or (d) to foreclose the lien(s) created by the Junior Security Instrument) or (iii) file or join in the filing of any involuntary Bankruptcy Proceeding against Borrower or any person or entity which owns a direct or indirect interest in Borrower; provided, however, that such limitation on the remedies of Junior Lender shall not derogate or otherwise limit Junior Lender’s rights , following an event of default under the Junior Loan Documents to (a) compute interest on all amounts due and payable under the Junior Loan at the default rate described in the Junior Loan Documents, (b) compute prepayment premiums and late charges, and ( c)
Subordination and Intercreditor Agreement (Fee Deferral) 10 Nevin Apartments enforce against any person, other than Borrower and any guarantors or indemnitors under the Senior Loan Documents, any guaranty of the obligations of Borrower under the Junior Loan.
(b) Senior Lender shall, simultaneously with the sending of any notice of a Senior Loan Default to Borrower, send to Junior Lender a copy of said notice under the Senior Loan Documents; provided, however, failure to do so shall not affect the validity of such notice or any obligation of Borrower to Senior Lender and shall not aff ect the relative priorities between the Senior Loan and the Junior Loan as set forth herein.
Borrower covenants and agrees to forward to Junior Lender, within three (3) business days of Borrower’s receipt thereof, a copy of any notice of a Senior Loan Def ault Borrower receives from Senior Lender.
(c) Junior Lender shall have the right, but shall have no obligation, to cure any Senior Loan Default; provided, if Junior Lender shall elect to cure any such Default, it shall so notify Senior Lender and shall commence and complete such curing within any applicable notice or grace period, if any, as Borrower is permitted by the terms of the Senior Loan Documents to cure such Senior Loan Default. Junior Lender shall not be subrogated to the rights of Senior Lender und er the Senior Loan Documents by reason of Junior Lender having cured any Senior Loan Default. However, Senior Lender acknowledges that, to the extent so provided in the Junior Loan Documents, amounts advanced or expended by Junior Lender to cure a Senior Loan Default may be added to and become a part of the Junior Indebtedness.
(d) Junior Lender agrees that, notwithstanding any contrary provision contained in the Junior Loan Documents, a Senior Loan Default shall not constitute a default under the Junior Loan Documents if no other default occurred under the Junior Loan Documents.
(e) Junior Lender acknowledges that any conveyance or other transfer of title to the Property pursuant to a foreclosure of the Junior Security Instrument (including a conveyance or other transfer of title pursuant to the exercise of a power of sale contained in the Junior Security Instrument), or any deed or assignment in lieu of foreclosure or similar arrangement, shall be subject to the transfer provisions of the Senior Loan Documents; and the p erson (including Junior Lender) who acquires title to the Property pursuant to the foreclosure proceeding (or pursuant to the exercise of a power of sale contained in the Junior Security Instrument) shall not be deemed to be automatically approved by Senior Lender.
5. Insurance. Junior Lender agrees that all original policies of insurance required pursuant to the Senior Security Instrument shall be held by Senior Lender. The preceding sentence shall not preclude Junior Lender from requiring that it be named as a loss payee, as its interest may appear, under all policies of property damage insurance maintained by Borrower with respect to the Property, provided such action does not affect the priority of payment of the proceeds of property damage insurance under the Senior Security Instrument, or that it be named as an additional insured under all policies of liability insurance maintained by Borrower with respect to the Property.
Subordination and Intercreditor Agreement (Fee Deferral) 11 Nevin Apartments
6. Default. Junior Lender and Borrower acknowledge and agree that a default b y either such party under this Agreement shall, at the sole option of Senior Lender, constitute a default under the Senior Loan Documents. Each party hereto acknowledges that in the event any party fails to comply with its obligations hereunder, the other parties shall have all rights available at law and in equity, including the right to obtain specific performance of the obligations of such defaulting party and injunctive relief. No failure or delay on the part of any party hereto in exercising any righ t, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder.
Notwithstanding any contrary provision contained herein, each of Senior Lender and Junior Lender agrees that Equity Investor shall have the right, but shall not have any obligation, to cure any default or event of default hereunder.
7. Enforcement Costs . Borrower and Junior Lender agree to reimburse Senior Lender for any and all costs and expenses (including reasonable attorneys’ fees) incurred by Senior Lender in connection with enforcing its rights against Junior Lender under this Agreement.
8. Notices. Any notice which any party hereto may be required or may desire to give hereunder shall be deemed to have been given and shall be effective only if it is in writing and (i) delivered personally, (ii) mailed, postage prepaid, by United State registered or certified mail, return receipts requested, (iii) delivered by overnight express courier or (iv) sent by telecopier, in each instance addressed as follows:
To Junior Lender: City of Richmond
Community Development – Housing Division
450 Civic Center Plaza, 2nd Floor
Richmond, California 94804
Attention: Kinshasa Curl
If to Senior Lender: Citibank, N.A.
388 Greenwich Street, Trading 4th Floor
New York, New York 10013
Attention: Transaction and Asset Management Group
Re: Nevin Apartments Deal ID No. 23913
Facsimile: (212) 723-8209
With a copy to: Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Re: Nevin Apartments Deal ID No. 23913
Facsimile: (805) 557-0924
With a copy to: Citibank N.A.
c/o Berkadia Commercial Servicing Department
Subordination and Intercreditor Agreement (Fee Deferral) 12 Nevin Apartments 323 Norristown Road, Suite 300
Ambler, Pennsylvania 19002
Attention: Client Relations Manager
Re: Nevin Apartments Deal ID No. 23913
Facsimile: (215) 328-0305
And a copy of any notices
of default sent to:
Citibank, N.A.
388 Greenwich Street, 17th Floor
New York, New York 10013
Attention: General Counsel’s Office
Re: Nevin Apartments Deal ID No. 23913
Facsimile: (646) 291-5754
or at such other addresses or to the attention of such other persons as may from time to time be designated by the party to be addressed by written notice to the other in the manner herein provided. Notices, demands and requests given in the manner aforesaid shall be deemed sufficiently served or given for all purposes hereunder when received or when delivery is refused or when the same are returned to sender for failure to be called for.
9. WAIVER OF TRIAL BY JURY . TO THE MAXIMUM EXTENT
PERMITTED UNDER APPLICABLE LAW, EACH OF THE PARTIES HERETO (A)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN
THE PARTIES THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT
TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL
BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
10. Term. The term of this Agreement shall commence on the date hereof and shall continue until the earliest to occur of the following events: (i) the payment of all of the principal of, interest on and other amounts payable under the Senior Loan Documents; (ii) the payment of all of the principal of, interest on and other amounts payable unde r the Junior Loan Documents, other than by reason of payments which Junior Lender is obligated to remit to Senior Lender pursuant to the terms hereof; (iii) the acquisition by Senior Lender of title to the Property pursuant to a foreclosure, or a deed in l ieu of foreclosure, of (or the exercise of a power of sale contained in) the Senior Security Instrument; or (iv) the acquisition by Junior Lender of title to the Property pursuant to a foreclosure, or a deed in lieu of foreclosure, of (or the exercise of a power of sale contained in) the Junior Security Instrument, but only if such acquisition of title does not violate any of the terms of this Agreement.
Subordination and Intercreditor Agreement (Fee Deferral) 13 Nevin Apartments
11. Miscellaneous.
(a) Junior Lender shall, within ten (10) business days following a request from Senior Lender, provide Senior Lender with a written statement setting forth the then current outstanding principal balance of the Junior Loan, the aggregate accrued and unpaid interest under the Junior Loan, and stating whether, to the knowledge of Junior Lender, any default or event of default exists under the Junior Loan, and containing such other information with respect to the Junior Indebtedness as Senior Lender may require.
Upon notice from Senior Lender from time to time, Junior Lender shall execute and deliver s uch additional instruments and documents, and shall take such actions, as are required by Senior Lender in order to further evidence or effectuate the provisions and intent of this Agreement.
(b) This Agreement shall bind and inure to the benefit of all succes sors and assigns of Junior Lender and Senior Lender. Senior Lender may assign its interest in the Senior Loan Documents without notice to or consent of Junior Lender. Junior Lender may only assign its rights and interests hereunder following the prior wr itten consent of Senior Lender, which consent may be withheld or conditioned in its sole and absolute discretion.
(c) Senior Lender hereby consents to the Junior Loan and the Junior Loan Documents; provided, however, that this Agreement does not constitute an approval by Senior Lender of the terms of the Junior Loan Documents. Junior Lender hereby consents to the Senior Loan and the Senior Loan Documents; provided, however, that this Agreement does not constitute an approval by Junior Lender of the terms of th e Senior Loan Documents.
(d) This Agreement may be executed in multiple counterparts, each of which shall constitute an original document and all of which together shall constitute one agreement.
(e) IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION,
MATTERS OF CONST RUCTION AND PERFORMANCE OF THIS AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER, THIS AGREEMENT HAS
BEEN ENTERED INTO AND DELIVERED IN, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE WHERE
THE PROPERTY IS LOCATED, WITHOUT GIVING EFFECT TO ANY
PRINCIPLES OF CONFLICTS OF LAW.
(f) Time is of the essence in the performance of every covenant and agreement contained in this Agreement.
(g) If any provision or remedy set forth in this Agreement for any reason shall be held to be invalid, i llegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or remedy of this Agreement and this Agreement shall be construed as if such invalid, illegal or unenforceable provision or
Subordination and Intercreditor Agreement (Fee Deferral) 14 Nevin Apartments remedy had never been set forth herein, but only to the extent of such invalidity, illegality or unenforceability.
(h) Each party hereto hereby represents and warrants that this Agreement has been duly authorized, executed and delivered by it and constitutes a legal, valid and binding agreement enforceable in all material respects in accordance with its terms. (i) Borrower hereby acknowledges and consents to the execution of this Agreement, and agrees to be bound by the provisions hereof that are applicable to Borrower. Solely as between Senior Lender and Junior Lender, all of the signatories below hereby agree that to the extent of any conflict between the terms and provisions of this Agreement and the terms and provisions of the Senior Loan Documents and/or the Junior Loan Documents respectively, the terms and provisions of this Agreement shall govern and control. By executing this Agreement in the place provided below, Borrower hereby (i) acknowledges the provisions hereof, (ii) agrees not to take any action inconsistent with Senior Lender’s rights or Junior Lender’s rights under this Agreement, (iii) waives and relinquishes to the maximum extent permitted by law any and all rights, defenses and claims now existing or hereinafter accruing relating to Junior Lender’s forbearance from exercising any rights and remedies pursuant to Section 4 of this Agreement, including, without limitation, any defenses based on the statute of limitations or any equitable defenses, such as laches, and (iv) acknowledges and agrees that (A) t his Agreement is entered into for the sole protection and benefit of Senior Lender and Junior Lender (and their respective successors, assigns and participants), and no other person (including Borrower) shall have any benefits, rights or remedies under or by reason of this Agreement, (B) nothing in this Agreement is intended, or shall be construed to, relieve or discharge the obligations or liabilities of any third party (including Borrower under the Senior Loan Documents and the Junior Loan Documents), (c) neither of them nor any of their affiliates shall be, or be deemed to be, beneficiaries of any of the provisions hereof or have any rights hereunder whatsoever, and (D) no provision of this Agreement is intended to, or shall be construed to, give any such third party (including Borrower) any right subrogating to the rights of, or action against, Senior Lender or Junior Lender.
(j) No amendment, supplement, modification, waiver or termination of this Agreement shall be effective against any party unless such am endment, supplement, modification, waiver or termination is contained in a writing signed by such party. (k) No party other than Senior Lender and Junior Lender (and, solely with respect to the cure rights included in Section 6 hereof, Equity Investor ) shall have any rights under, or be deemed a beneficiary of any of the provisions of, this Agreement. (l) Nothing herein or in any of the Senior Loan Documents or Junior Loan Documents shall be deemed to constitute Senior Lender as a joint venturer or partner of Junior Lender.
12. Reserved.
Subordination and Intercreditor Agreement (Fee Deferral) 15 Nevin Apartments
13. Attached Exhibits.
The following Exhibits are attached to this Agreement and are incorporated by reference herein as if more fully set forth in the text hereof:
Exhibit A – Legal Description
Exhibit B – Junior Loan Documents
Exhibit C – Modifications to Subordination and Intercreditor Agreement The terms of this Agreement are modified and supplemented as set forth in said Exhibits.
To the extent of any conflict or inconsistency between the terms of said Exhibits and the text of this Agreement, the terms of said Exhibits shall be controlling in all respects. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Subordination and Intercreditor Agreement (Fee Deferral) Nevin Apartments S-1
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Subordination and Intercreditor Agreement or caused this Subo rdination and Intercreditor Agreement to be duly executed and delivered by their respective authorized representatives as of the date first set forth above.
JUNIOR LENDER:
CITY OF RICHMOND,
a California municipal corporation
By:
Kinshasa Curl
City Manager
Subordination and Intercreditor Agreement (Fee Deferral) Nevin Apartments Ack-1
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
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 June _ __, 20 22 before me, _______________________ (here insert name and title of the officer), personally appeared Kinshasa Curl who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person act ed, 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)
(signatures follow on subsequent page)
Subordination and Intercreditor Agreement (Fee Deferral) Nevin Apartments S-2
SENIOR LENDER:
CITIBANK, N.A.
By:
Name: Michael Hemmens
Title: Authorized Signatory
Deal ID No. 23913
Subordination and Intercreditor Agreement (Fee Deferral) Nevin Apartments Ack-2
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only t he 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 June ___, 2022, before me, _______________________ (here inser t name and title of the officer), personally appeared Michael Hemmens who proved to me on the basis of satisfactory evidence to be the person whose nam e is subscribed to the within instrument and acknowledged to me that he executed the same in his authoriz ed capacity, and that by h is signature on the instrument the person, or the entity upon behalf of which the person 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)
Subordination and Intercreditor Agreement (Fee Deferral) Nevin Apartments S-3
ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE:
BORROWER:
RICHMOND NEVIN ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP,
a California limited partnership
By: Central Valley Coalition for Affordable
Housing, a California nonprofit public
benefit corporation
Its: Managing General Partner
By:
Name: Christina A. Alley
Title: Chief Executive Officer
By: TPC Holdings VI, LLC, an Idaho limited
liability company, doing business in
California as TPC Idaho Holdings VI, LLC
Its: Administrative General Partner
By:
Name: Caleb Roope
Title: Manager
Subordination and Intercreditor Agreement (Fee Deferral) Nevin Apartments Ack-3
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this cert ificate 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 June ___, 20 22, before me, ____________ ___________ (here insert name and title of the officer), personally appeared Christina A. Alley who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that she execut ed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person 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)
Subordination and Intercreditor Agreement (Fee Deferral) Nevin Apartments Ack-4
STATE OF IDAHO )
) ss
COUNTY OF ADA )
I hereby certify that on this ___ d ay of June in the year 2022, before me , ______________________, a Notary Public in and for the said County and State, personally appeared Caleb Roope known or identified to me to be Manager of TPC Holdings VI, LLC , an Idaho limited liability company, who being by me duly sworn under oath, did say that he executed the foregoing instrument on behalf of said entity for the use and purpose therein contained.
[SEAL]
Notary Public
My commission expires:
Subordination and Intercreditor Agreement (Fee Deferral) A-1 Nevin Apartments
EXHIBIT A
LEGAL DESCRIPTION
All that certain real property situated in the City of Richmond, County o f Contra Costa, State of California, described as follows:
PARCEL ONE:
Lots 1 thru 10 inclusive and Lots 15 and 16 in Block 103 as shown on the Map entitled, "Amended Map of the City of Richmond" filed March 31, 1905 in Book D of Maps, Page 74, in the Office of the County Recorder of Contra Costa County.
Excepting therefrom all mineral deposits as defined in Section 6407 of the Public Resources Code lying below a depth of 500 feet, without the right of surface entry, as reserved by the State of California in the Quitclaim Deed recorded January 11, 2005, Series No. 2005 -10471, Official Records.
Assessor's Parcel No. 514-080-013
PARCEL TWO:
Lots 1 thru 12 inclusive and Lots 15 thru 17 inclusive in Block 104 as shown on the Map entitled, "Amended Map of t he City of Richmond" filed March 31, 1905 in Book D of Maps,
Excepting therefrom all mineral deposits as defined in Section 6407 of the Public Resources Code lying below a depth of 500 feet, without the right of surface entry, as reserved by the State of California in the Quitclaim Deed recorded January 11, 2005, Series No. 2005 -10471, Official Records.
Assessor‘s Parcel No. 514-090-018
Subordination and Intercreditor Agreement (Fee Deferral) B-1 Nevin Apartments
EXHIBIT B
JUNIOR LOAN DOCUMENTS
1. Junior Note;
2, Junior Loan Agreement;
3. Junior Security Instrument; and
4. Agreement for Issuance of Building Permits and Deferral of Payment of Impact Fees , dated as of December 20, 2017, between Borrower and Junior Lender, recorded in the Official Records on July 19, 2018 as Instrument No. 2018-0114876-00.
Subordination and Intercreditor Agreement (Fee Deferral) C-1 Nevin Apartments
EXHIBIT C
MODIFICATIONS TO
SUBORDINATION AND INTERCREDITOR AGREEMENT
The following modifications are made to the text of the A greement that precedes this Exhibit:
None.
Capitalized terms used and not defin ed herein shall have the respective meanings ascribed to them in the Agreement.
November 1, 2022
Economic Development
DATE: November 1, 2022
TO: Mayor Butt and Members of the City Council
FROM:
Gabino Arredondo, Project Manager
Craig K. Murray, Development Project Manager II
Subject:
Marina Lease Amendment and Assignment
FINANCIAL IMPACT: The City of Richmond would receive $480,000 in property transfer tax.
PREVIOUS COUNCIL
ACTION:
July 1, 2000
STATEMENT OF THE
ISSUE:
City staff is requesting authorization to approve a lease assignment with Safe Harbor Marinas (SHM MBYH, LLC)
for the operation of the Richmond Marina as requested
by the current Marina Operator Richmond Bay Marina,
LLC and as authorized under the Marina Lease. SHM
MBYH, LLC agrees to continuously operate the
Richmond Marina under an amended and restated
Agreement Lease with a balance of 33 years of the
original 55-year term.
RECOMMENDED ACTION:
APPROVE an assignment of Marina Lease to Safe
Harbors Marinas (SHM MBYH, LLC); and APPROVE an
amended and restated Marina Lease between the City of
Richmond and Safe Harbors Marinas (SHM MBYH, LLC)
for the balance of the 55-year original lease term ending June 30, 2055 – City Manager’s Office (Craig Murray
307-8188).
AGENDA
REPORT
November 1, 2022
DISCUSSION:
The original Richmond Marina lease was entered into on July 1, 2000, between the City and Richmond Bay Marina, LLC (“Original Lease”) through negotiations with the City of Richmond and the former Richmond Redevelopment Agency to operate the public operation of the Marina and its facilities. The leased facilities included buildings such as the Harbor Master Building at 1340 Marina Way South, the Boathouse at 2580 Spinnaker Way, boat launch ramp, locker, and washroom facilities, associated parking lots and 850 slip Marina with associated gangways and docks and facilities. At the beginning of the Original Lease term, Richmond Bay Marina, LLC utilized the operator Westrec and then conducted the Richmond Marina operations itself.
On May 23, 2022, Mr. David H. Clark, President of Warmington Capital Marinas, LLC, forwarded a letter to the City Attorney’s Office and City Manager’s Office stating that Richmond Bay Marina, LLC is under contract to sell one-hundred percent (100%) of its leasehold interest to SH Marinas, LLC (Safe Harbor Marinas) and is requesting that the City of Richmond, as Landlord, consent to Richmond Bay Marina, LLC assigning its interest to Safe Harbor Marinas.
Staff from the City Attorney’s Office and the City Manager’s Office conducted a series of meetings with both the proposed Buyer and Seller during the due diligence period that ended on July 10, 2022. During these meetings, there were several discussions regarding the Original Lease. Both the current and proposed operators worked to clarify obsolete and expired provisions in the Original Lease that are reflected in the draft amended and restated lease (“Amended and Restated Lease”). Attorneys from all parties reviewed these proposed modifications and the proposal to consent to Safe Harbor Marinas as the new operator.
Other than several expired or obsolete provisions in the Original Lease, the new Amended and Restated Lease is similar to the Original Lease. The Amended and Restated Lease will allow the Landlord/City to have rights to the launch ramp and up to six (6) boat side-ties at no cost or expense to the Landlord. Richmond’s Police and Fire Boats have slip space in the Marina and the Fire Department has an additional storage container for their operations.
Land Econ Group performed a financial review and analysis of the proposed Marina Lease transfer for the City Manager’s Office. Land Econ Group reviewed the financial status of the proposed new Marina Operator Safe Harbor Marinas and reviewed three marinas it operates in northern California: (1) Ballena Isle Marina in Alameda; (2) Loch Lomond Marina in San Rafael; and (3) Emeryville Marina in Emeryville. This review illustrated that Safe Harbor Marinas has displayed a pattern of making investments to improve facilities and operation. Safe Harbor Marinas was acquired by Sun Communities, a real estate investment trust, for $2.11 billion in September 2020, and acquisition of Richmond Marina appears to be one implementation of this growth strategy. Safe Harbor owns 130 Marinas with nine Marinas in California that it owns or operates, and the
November 1, 2022
economic review notes that Safe Harbor is the largest and most diversified owner and operator in the United States.
The Richmond Marina Lease transfer from Richmond Bay Marina, LLC (Original Tenant) to Safe Harbor Marinas (SHB MBYH, LLC) will transfer at $16 million, and the terms of the Original Lease remain essentially intact. The economic review notes that Richmond’s Property Transfer Tax, Measure H passed in 2018, allowing for $30 for each $1,000 in transaction amount for property transfers over $10 million, will allow for a one-time payment to the City’s General Fund of $480,000 due to the $16 million transfer price. In addition, the Possessory Interest tax on leased public property, would amount to $68,000 per year and exceeds the current tax of just under $60,000 per year based on that formula. The Original Lease requires a base minimum rent of $243,504 per year to be paid to the City, plus the City will continue to receive additional percentage income adjustments for slip, dry boat, building, parking, and other gross income each year.
City staff is requesting approval of an assignment of Marina Lease to SHM MBYH, LLC and to approve an amended and restated Marina Lease between the City of Richmond and SHM MBYH, LLC for the balance of the 55-year original lease term ending June 30, 2055.
DOCUMENTS ATTACHED:
Attachment 1 - Marina Lease – City of Richmond and Richmond Redevelopment Agency and Richmond Bay Marina, LLC July 1, 2000
Attachment 2 - Amended and Restated Marina Lease – City of Richmond and SHM MBYH, LLC October 2022
SF_DOCSI221983.17 [W97]
AGREEI\1ENT OF MARINA LEASE
by and between
the CITY OF RlCHMOND
and
RlCHMOND REDEVELOPI\1ENT AGENCY,
as Landlord,
and
RlCHMOND BAY MARINA, LLC
as Tenant
Dated: July I, 2000
Property:
Richmond Bay Marina
TABLE OF CONTENTS
ARTICLE 1. PROPERTY AND TERM OF LEASE 1
ARTICLE 2. DEFlNITIONS 3
ARTICLE 3. RENT 9
ARTICLE 4. GROSS INCOME AND AUDIT 13
ARTICLE 5. TAXES AND OTHER CHARGES 16
ARTICLE 6. INSURANCE 17
ARTICLE 7. INSURED AND UNINSURED CASUALTY 19
ARTICLE 8. ASSIGNMENT, SUBLETTING, ETC 21
ARTICLE 9. MORTGAGING OF LEASE BY TENANT 24
ARTICLE 10. MAINTENANCE 28
ARTICLE 11. CAPITAL IMPROVEMENTS 31
-------- --~_.,--- --.---'.'------ ------ --------- ,---- .'_.,'_ .•.. _- ARTICLE 12. REQUIREMENTS OF PUBLIC AUTHORITIES AND OF INSURANCE UNDERWRITERS AND POLICIES 32
ARTICLE 13. LANDLORD ACTING IN PROPRIETARY CAPACITY 33
ARTICLE 14. LANDLORD NOT LIABLE FOR INJURY OR DAMAGE 34 ARTICLE 15. INDEMNIFICATION OF LANDLORD 34
ARTICLE 16. LANDLORD'S RIGHT OF ACCESS 35
ARTICLE 17. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS 35 ARTICLE 18. PERMITTED USE 36
ARTICLE 19. DEFAULT, REMEDIES, ETC 37
ARTICLE 20. NOTICES 39
ARTICLE 21. CONDEMNATION 41
ARTICLE 22. IMPROVEMENTS 42
ARTICLE 23. CERTIFICATES BY LANDLORD AND TENANT .43
ARTICLE 24. LANDLORD'S CONSENTS .43
ARTICLE 25. SURRENDER AT END OF TERM : 43
ARTICLE 26. NO ORAL AGREEMENTS 44
ARTICLE 27. QUIET ENJOYMENT .44
ARTICLE 28. EI\TVIRONMENTALPROVISIONS .44
ARTICLE 29. INVALIDITY OF CERTAIN PROVISIONS .48
SF_DOCS\22198J.17 [W97] Page 294 of 625
ARTICLE 30. RECORDING OF MEMORANDUM 48
ARTICLE 31. REPRESENTATIONS A1\1]) WARRANTIES .48
ARTICLE 32. COVENANTS 51
ARTICLE 33. EASEMENTS 54
ARTICLE 34. MISCELLANEOUS 54
11 SF_DOCS1221983.17 [\\'97J Page 295 of 625
MARINA LEASE
This AGREEMENT OF MARINA LEASE ("Lease") is made as ofthis 1st day of July, 2000 (the "Commencement Date"), between the CITY OF RICHMOl\lJ), a municipal corporation of the State of California ("City"), and RICHMOND REDEVELOPMENT AGENCY, a public body corporate and politic ("Agency") (collectively, "Landlord"), and RICHMOND BAY MARINA, LLC, a Delaware limited liability company ("Tenant"). It is hereby mutually covenanted and agreed by and between the Parties hereto that this Lease is made upon the foregoing and upon the agreements, terms, covenants and conditions hereinafter set forth.
ARTICLE 1.
PROPERTY AND TERM OF LEASE
Section 1.01 Property. Landlord does hereby demise and lease to Tenant, and Tenant does hereby lease from Landlord, all of the land described in Exhibit A (and graphically depicted in Exhibit A-I) to this Lease, together with all Improvements and fixtures located thereon and the basin which is a part thereof (collectively, the "Property"). Tenant acknowledges that the Property may be adjusted pursuant to Sections 32.05 and 32.07, and that the Property does not include any mineralintt;re$t~ under th~f1QOLofthe Inner Harbor]2ortion oftht; Prol'erty.
Section 1.02 Term. The Term ofthis Lease shall commence on the Commencement Date, and shall continue until 11:59 P.M. on the date fifty five (55) years after the Commencement Date (''Term'') unless such Term shall be sooner terminated as hereinafter provided.
Section 1.03 Rights and Obligations With Respect To Certain Additional Property. In addition to the leasing of the Property to Tenant under Section 1.01, the Parties agree that this Lease establishes certain rights and obligations with respect to certain real and personal property within and/or adjoining the Property.
(a) Landlord shall continue to control and maintain the breakwater structure and those portions of the riprap, the structural components ofthe riprap shoreline, and the esplanade within or contiguous to the Property, as set forth in Section 10.03. (b) Landlord shall have the right to ingress, egress, and use of portions of the Property, for official use by itself and its invitees at the Marina, as set forth in Sections 18.03 and
18.04. (c) From the Commencement Date until December 31, 2001, or such later date as Landlord in its sole discretion shall establish, the term "Property" shall include an exclusive, revocable license to Tenant to use the area depicted on Exhibit A-I as the "Dryboat Storage Parking Area," for itself and its invitees at the Marina. During the period of Tenant's license to use the Dryboat Storage Parking Area, all the terms ofthis Lease shall be applicable thereto, including but not limited to the income and rent provisions of Articles 3 and 4, the insurance obligations of Article 6, and the maintenance obligations of Article 10, provided, however, that notwithstanding anything to the contrary in Article 8, Tenant shall not have the right to assign, sublicense, or hypothecate the Dryboat Storage Parking Area during the term of Tenant's use of such area.
1 SF_DOCSI22l983.17 [W97J Page 296 of 625
(d) Tenant shall control and maintain all gangways, gang planks and ramps leading from the shore to the floating docks and ties, and associated gates and fencing, and all the terms ofthis Lease shall be applicable thereto, including but not limited to the income and rent provisions of Articles 3 and 4, the insurance obligations of Article 6, and the maintenance obligations of Article 10.
(e) Tenant shall keep those sections of riprap shoreline that are within or contiguous to the Property free and clear of rubbish and litter, as set forth in Section 10.01. (f) Tenant shall keep the Channel Entrance, the Marina Fairway and the access channel between them free of permanent obstruction, and shall maintain an adequate depth in the Marina Fairway as set forth in Section 10.04.
(g) Landlord also hereby grants Tenant a non-exclusive right to use the Channel Entrance, the Marina Fairway and an access route between these two areas for access to the Property, and a non-exclusive right to conduct marina operations in the Marina Fairway, during the Term.
(h) Landlord hereby grants Tenant a non-exclusive easement over and across the walkways, roadways, parking areas and other realproperty which is owned by Landlord and which is depicted on Exhibit A-I as-the "Access Easement Area," for the purpose of allowing Tenant, its sublessees, agents, employees and invitees to obtain access to, and to move and circulate between, the different portions of the Property by pedestrian and vehicular means.
Tenant shall not have the right to alter any portion of the Access Easement Area or to construct any improvements thereon. If, in the course of Tenant's use of the Access Easement Area, any damage is done to grass areas, landscaped areas, paved areas or other real or personal property located in or on the Access Easement Area, then Tenant shall, at Tenant's sole cost and expense, promptly repair any and all such damage as necessary to restore the affected area to the condition that existed immediately prior to the commencement of the activities that resulted in such damage. Tenant shall defend, save harmless and indenmify Landlord from any claim for personal injury or property damage that may at any time occur or arise out of the use by Tenant, its sublessees, agents, employees or invitees of the Access Easement Area or the actions of Tenant, its sublessees, agents, employees or invitees. Landlord retains the right to fully use and enjoy the Access Easement Area, including the right of Landlord to reconfigure the Access Easement Area (including without limitation upon the sale of Parcels G and H in connection with the development of the North Shore, as contemplated by the Accommodation Agreement), to fill over or pave over any portion of the Access Easement Area, to modify the improvements within the Access Easement or to alter the Access Easement Area in any other way, provided that such alterations do not materially interfere with the access rights granted hereunder.
Section 1.04 Certain Ancillary Agreements. Concnrrently with the execution of this Lease, Landlord and Tenant shall execute the following agreements (collectively the "Ancillary Agreements"):
(a) that certain Accommodation Agreement between Landlord, Tenant and Penterra Marina Bay LLC regarding certain parking and related rights and affecting, among other property, Parcels G and H as described on Exhibit A-I;
2 SF_DOCS\221983.17 [W97J Page 297 of 625
(b) that certain Assigmnent Agreement between City and Tenant regarding the Slip Agreements for which City is landlord thereunder; and
(c) that certain Bill of Sale between City and Tenant regarding the Personal Property set forth in Exhibit B.
ARTICLE 2.
DEFINITIONS
The terms defined in this Article shall, for all purposes of this Lease and all agreements supplemental hereto, have the meanings specified below. "Accommodation Agreement" shall have the meaning set forth in Section L04(a). "Accounting Year" shall have the meaning provided in Section 4.11. "Additional Rent" shall have the meaning provided in Section 3.06. "Affiliate" shall mean, for any Person, any Person which directly or indirectly controls, is controlled by or is under common control with, such Person. "Agency" shall mean the Richmond Redevelopment Agency, a public body corporate and politic.
"Ancillary Agreements" shall have the meaning provided in Section 1.04. "Annual Minimum Rent"shall have the meaning provided in Section 3.04(b). "Annual Report" shall have the meaning provided in Section 4.09. "Assignment Agreement" shall have the meaning provided in Section L04(b). "Audits" shall have the meaning provided in Section 4.12. ''Bathvmetric Survey" means the Bathymetric Survey attached to this Lease as Exhibit E.
"Bill of Sale" shall have the meaning set forth in Section 1.04(c). "Boathouse" shall mean the building of approximately 3300 square feet located on the east shore of the Marina, as indicated on Exhibit A-I. . "Building Revenue" shall have the meaning provided in Section 4.0l(c). ''Business Day" shall mean a day of the year on which banks are not required or authorized by law or executive order to close in the State of California. "Channel Entrance" shall mean that area where the Inner Harbor meets San Francisco Bay, at the southwest comer of the Inner Harbor, as indicated on Exhibit A-I. 3 SF_DOCS\221983.17 [W97] Page 298 of 625
"City" shall mean the City of Richmond, a municipal corporation of the State of California.
"City Council" shall have the meaning provided in Section 32.01(b). "Closing Date" and such phrases as "upon the execution of this Lease" or "concurrently herewith" shall be synonymous and shall mean December F{, 2000. "Commencement Date" shall mean July 1, 2000.
"DBAW" shall have the meaning provided in Section 3.01. "Defeased DBAW Loans" shall mean DBAW loan numbers 1 - 5 (inclusive), which are fully paid offby the Initial Payment, and that portion of DBAW loan number 6 which is paid offby the Initial Payment, as shown on Exhibit C-l. "Default" shall mean any condition or event which, with giving of notice or lapse of time or both, would constitute an Event of Default as defmed in Section 19.01. "Dryboat Storage Parking Area" shall mean the area northwest of the Harbormasteri3nilding-and north-of1:he-Ford-AssemblyBuilding; as showlrin-Exhibit-A~l and used as of the Commencement Date for the long-term storage of watercraft, or such other area of the Property as Landlord and Tenant may agree shall serve as an area for the long-term storage of watercraft.
"Environmental Clainr" shall mean any complaint, summons, citation, notice, directive, order, litigation, investigation, judicial or administrative proceeding, judgment, letter or other communication from any governmental authority, or any third party involving any violation of any Environmental Law or any Release of any Hazardous Material. ''Environmental Law" shall mean any federal, state or local law, statute, ordinance or regulation, now or hereafter in effect, and in each case as amended or supplemented from time to time, and any judicial or administrative interpretation thereof, including, without limitation, any judicial or administrative order, consent decree or judgment, relating to the regulation and protection of human health, safety, the environment and natural resources (including, without limitation, ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws shall include without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act, as amended (49 U.S.C. § 180 et seq.) ("HMTA"); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. § 136 et seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.c. § 6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (42 U.S.C. § 2601 et seq.) ("TSCA"); the Clean Air Act as amended (42 U.S.C. § 7401 et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.c. § 1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. § 651 et seq.); and the Safe Drinking WaterAct as amended (42 U.S.C. § 3001 et seq.), and their state and local counterparts or equivalents, all as amended from time to tinre, and any transfer of ownership notification or approval statutes.
4 SF,DOCS\221983.17 [W97] Page 299 of 625
"Environmental Liabilities and Costs" shall mean, collectively, all obligations. losses, liabilities (including strict liability), damages, punitive damages, consequential damages, treble damages, costs and expenses (including, without limitation, all fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any Release or threatened Release of any Hazardous Material, any Remedial Action, any Environmental Claim or any violation of any Environmental Law.
"Environmental Lien" shall mean any lien in favor of any governmental authority for any Environmental Liabilities or Costs.
"Event of Default" shall have the meaning provided in Section 19.01. "Gross Income" shall have the meaning provided in Section 4.01. "Guaranteed Debt Service Rent" shall have the meaning provided in Section 3.09. ''Harbormaster Building" shall mean the building of approximately 3000 square feet located on the west shore of the Marina, as indicated on Exhibit A-I. --- -"Hazardous Nlalerial" shalEnean any -miliilifable explosive, as1:leslos;-radioactive material, hazardous waste, toxic substance or related injurious material whether injurious by itself or in combination with any other material, any substances defined as a "hazardous substance", "hazardous material", or "toxic substance", in CERCLA, HMTA or RCRA, and any substances defined as a "hazardous waste" in Section 25117 of the California Health and Safety Code or as a "hazardous substance" in Section 25316 of the California Health and Safety Code; or in any regulation adopted or publication promulgated pursuant to any Environmental Law. "Improvements" shall mean, collectively, all floating docks and ties, buildings, improvements, structures and fixtures now existing or at any time hereafter erected, constructed, affixed or attached to or placed in or placed upon the Land or the basin, whether ovmed by Tenant or Landlord, or used for or adapted to in any way the use, enjoyment, occupancy and operation of the Land or the buildings, improvements and structures thereon, and any and all alterations, renewals and replacements thereof, additions thereto and substitutes therefor, and shall include but not be limited to the Harborrnaster Building, the Boathouse, and the two (2) restroom buildings existing on the Property as of the Commencement Date, but shall exclude all fixtures (and all personal property and equipment) that is the property of Slip Tenants. "Initial Payment" shall have the meaning provided in Section 3.°1. "Inner Harbor" shall mean the Richmond Inner Harbor as shown on Exhibit A-I. . "Institutional Lender" shall mean (whether acting individually or in a representative, proprietary or fiduciary capacity, or as a general partner, or affiliate of any entity acting in such capacity), a nationally recognized bank, savings bank, investment bank, savings and loan association, commercial bank or trust company, real estate investment trust, or any combination of such entities, which, together with its Affiliates, has a net worth of Five Hundred Million Dollars ($500,000,000) or more. The participation or securitization of a loan by an 5 SF_DOCS\221983.17 [W97J Page 300 of 625
Institutional Lender shall not give rise to any requirement that each lender participating in such participation or securitization itself be an Institutional Lender, so long as (a) at the inception of the loan, the originating agent lender is an Institutional Lender, and (b) at the time of any subsequent assignment of the loan, the assignee and agent lender is an Institutional Lender.
Banc of America Commercial Finance Corporation ("BACFC") shall be deemed an Institutional Lender.
"Land" shall mean the parcels of land described in Exhibit A and graphically depicted in Exhibit A-I.
"Landlord" shall mean Agency and City, whether collectively or individually, and their successors and assigns. Where any provision of this Lease requires Tenant to obtain the consent of Landlord, consent must be obtained from each of Agency and City. Notwithstanding the foregoing, Tenant's obligation to make payments to "Landlord" shall be satisfied by Tenant's payment of such payments to either of Agency or City, provided that written notice of such payment, including the amount of same, is provided to the other Landlord party. The liability of Agency and City for the obligations of Landlord hereunder shall be joint and several, except for any environmental liabilities of Landlord, which, subject to Section 28.06, shall be the sole obligation of Agency.
"Landlord's Agents" shall mean Landlord's agents, officials, employees, contractors, licensees or invitees.
"Landlord's Maintenance Fund" shall have the meaning provided in Section 10.02.
"Landlord's Maintenance Propertv" shall have the meaning provided in Section 10.03.
"Laws" shall mean all applicable laws, statutes, ordinances, resolutions, regulations, proclamations, orders or decrees of any municipal, county, state or federal government or other governmental or regulatory authority with jurisdiction over the Property, or any portion thereof, whether currently in effect or adopted in the future and whether or not in the contemplation of the Parties.
"Lease" shall mean this Agreement of Lease and all amendments made in compliance herewith.
"Leasehold Mortgage" shall mean any mortgage or deed of trust created by Tenant and constituting a lien on the Improvements and the leasehold interest ofTen ant hereunder.
"Leasehold Mortgagee" shall mean an Institutional Lender who is the holder at the time of any Leasehold Mortgage (including the trustee under a deed of trust). "Live Aboards" shall have the meaning provided in Section 32.02. "Losses" shall have the meaning provided in Section 11.02. 6 SF_DOCS\221983.J7 [W97] Page 301 of 625
"Marina" shall be interchangeable with "Property."
"Marina Fairway" shall mean a strip of property within the Remainder Inner Harbor, immediately south of and abutting the Property, of fifty-five (55) feet in width as indicated in Exhibit A-I.
"Minimum Rate" shall mean the minimum amounts required to be charged to Slip Tenants for Slip Rates under California Harbor & Navigation Code § 71.8(a)(5) and (c). "Qther Income" shall have the meaning provided in Section 4.01(e). "Parking Revenue" shall have the meaning provided in Section 4.01(d). "Partial Taking" shall mean a taking, for any public or quasi-public purpose by a lawful power or authority by the exercise of the power of condemnation or by agreement under threat thereof, which does not qualifY as a Total Taking as defmed. "~" shall mean Tenant or Landlord (collectively, "Parties"). "Percentage Rent" shall have the meaning provided in Section 3.03. ''Periodic Rent" shall have the meaning provided in Section 3.02(a). "Person" shall mean a corporation, an association, a partnership, a joint venture, a limited liability company, an association, a joint stock company, an estate, a trust, any other legal entity, or an individual. Without exception to the foregoing, each of Agency, City and Tenant shall be a Person.
"Personal Property" shall mean the personal property identified on Exhibit B. ''Property'' shall mean the Land, the Improvements, and the Personal Property, and shall be interchangeable with "Marina."
"Proposed Sublease" shall have the meaning provided in Section 8.02(b). "Proposed Transfer" shall have the meaning provided in Section 8.02(a). "Quarterly Minimum Rent" shall mean one-fourth (1/4) of Annual Minimum Rent, as provided in Sections 3.03(a) and 3.04(a).
"Quarterly Report" shall have the meaning provided in Section 4.09. "Release" shall mean any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of any Hazardous Material (including without limitation the abandonnient or discarding of any barrel, container or other closed receptacle containing any Hazardous Material) into the indoor or outdoor environment. "Remainder Inner Harbor" shall mean the area within the Richmond Inner Harbor lying beyond the boundaries of the Property, as shown on Exhibit E. 7 SF_DOCS\221983.17 [W97] Page 302 of 625
"Remedial Action" shaH mean aH actions taken to (a) investigate, clean up, remove, remediate, contain, treat, monitor, assess, evaluate or in any other way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a Release or threatened Release of Hazardous Materials so they do not migrate beyond the boundaries of the Property or endanger or threaten to endanger publie health or welfare or the indoor or outdoor environment, (c) perform pre-remedial studies and investigations and post-remedial operation and maintenance activities; or (d) perform any other actions authorized and/or required by CERCLA, RCRA, or any other Environmental Law.
"Remedial Expenditure" shaH have the meaning provided in Section 10.02. "Remedial Schedule" shaH have the meaning provided in Section 10.02. "Rent" shall mean Periodic Rent and Additional Rent, collectively. "Restructured DBAW Loans" shall mean (i) that portion of DBAW loan number 6 which is not paid off and remains outstanding after the application of the Initial Payment, (ii) DBAW loan numbers 7 and 8, no portion of either of which is paid off by the Initial Payment, as shown on Exhibit C-2, and (iii) a new DBAW loan of up to $1,500,000.00 and entered on or before December 31,2000, for purposes of Landlord's ciredging the Channel Entrance.
"Security Deposit" shall have thil meaning provided in Section 3.1O(a). "Slip Agreement" shall mean a lease or a license to a slip at the Marina. "Slip Income" shall have the meaning provided in Section 4.01(a). "Slip Rate" shall mean the then-current schedule of fees charged by Tenant to Slip Tenants for slips at the Marina, as provided in Section 32.01(b). "Slip Tenant" shall mean any Person who occupies a slip at the Marina (including without limitation end-ties and side-ties) subject to a Slip Agreement. "Storage Income" shall have the meaning provided in Section 4.01 (b). "Taxes" shall have the meaning provided in Section 5.01. "Tenant" shall mean Richmond Bay Marina, LLC, a California limited liability company.
"Tenant's Agents" shall mean Tenant's agents, managers, officers, directors, employees, contractors, lessees, licensees and invitees. "Tenant's Estate" shall mean all of Tenant's leasehold interest in the Property under this Lease.
"Term" shall have the meaning provided ill Section 1.02. 8 SF_DOCS\221983.17 [W97] Page 303 of 625
"Total Taking" shall mean the taking of all or substantially all of the Marina for any public or quasi-public purpose by a condenming authority by the exercise of the power of condemnation or by agreement under threat thereof. The phrase "substantially all of the Marina" shall mean such portion of the Marina as, when so taken, would leave a remainder parcel or parcels which, due either to the area so taken or the location of the portiones) so taken in relation to the portiones) not so taken, would not under then existing economic conditions, zoning laws, and building regulations, readily accommodate the economic operation of the Marina, as determined by Tenant in its reasonable discretion.
"Unavoidable Delay" shall mean any delay due to strike, lockout, act of God, inability to obtain labor or materials due to governmental restrictions or other shortages, enemy action, civil commotion, fIre, unavoidable casualty or other similar causes beyond the reasonable control of any Party, provided that (a) as soon as is reasonably practicable, the Party seeking to claim Unavoidable Delay gives the other Party written notice describing the particulars of the Unavoidable Delay event, (b) any resulting suspel1sion of performance is of no greater scope and of no longer duration than is reasonably required by the Unavoidable Delay event, (c) the Party uses commercially reasonable efforts to overcome or rnitigate the effects of such occurrence, and .(d) when the Party is able to resume performance of its obligations under this Lease, such Party shall give the other Party written notice to that effect and shall promptly resume performance under- this Lease. The payment of money shall never be subject to Unavoidable Delay.
ARTICLE 3.
RENT
Section 3.01 Initial Pavrnent. Upon the execution of this Lease, Tenant shall pay to Landlord the sum of Five Million Five Hundred and Twenty-Five Thousand Dollars ($5,525,000.00) (''Initial Payment"). Upon the execution of this Lease, Landlord shall pay Five Million Two Thousand Dollars ($5,002,000) of the Initial Payment to the California Department of Boating and Waterways ("DBA W") for reduction of the outstanding balance(s) of the Defeased DBAW Loans.
Section 3.02 Rent.
(a) Throughout the Term of this Lease, Tenant shall pay Landlord the following (collectively, "Periodic Rent"): (i) Annual Minimum Rent, by paying Quarterly Minimum Rent in advance of each calendar quarter and (ii) Percentage Rent, by paying Percentage Rent in arrears for each calendar quarter. All Rent, whether Annual Minimum Rent payable in advance or Percentage Rent payable in arrears, shall be paid in cash to Landlord at the address set forth in Section 20.03.
(b) Tenant shall pay Periodic Rent as follows:
(i) On or before the fIrst day of each calendar quarter, being the fIrst day of January, April, July and October of each calendar year, Tenant shall pay Quarterly Minimum Rent to Landlord. .
. (ii) Within fIfteen (15) days after the end of each calendar quarter, Tenant shall calculate its Gross Income for such quarter and resulting Percentage Rent for such calendar 9 . SF_DOCS\221983.17 [\\'97] Page 304 of 625
quarter. If the Percentage Rent so calculated for any calendar quarter is higher than the Quarterly Minimum Rent payment made at the start of that calendar quarter, Tenant shall within the same fifteen (15) day period after the end of such calendar quarter pay the difference to Landlord. If Percentage Rent for any calendar quarter is the same as or less than the Quarterly Minimum Rent payment made for such calendar quarter, Tenant shall be under no obligation to pay any additional amount to Landlord for such calendar quarter, except as set forth in Section 3.09, and neither shall Tenant be entitled to any refund or credit based on such underpayment.
(c) In the event that this Lease commences on a date other than the start ofa calendar quarter, or terminates on a date other than the end of a calendar quarter, Tenant's Quarterly Minimum Rent shall be prorated to represent the number of days in such quarter included within the Term ofthis Lease, divided by the number of days in such calendar quarter. (d) The portion of Tenant's first Quarterly Minimum Rent payment applicable to the month of December, 2000, shall be due upon the execution of this Lease. - (e) Gross Income shall be calculated on a receipts, as opposed to an accrual, basis.
Notwithstanding the foregoing, during the fust Accounting Year during the Term, Landlord shall receive credit for sums applicabletoJhe_period_before the-Co=encementDate and Tenant shall receive credit for sums applicable to the period after the Commencement Date. Accordingly, appropriate prorations shall be made with respect to (a) sums received by Landlord prior to the Commencement Date but applicable to the period after the Commencement Date (with the amounts applicable to periods before the Commencement Date being for the account of Landlord and amounts applicable to periods after the Commencement Date being for the account of Tenant) and (b) sums received by Landlord or Tenant after the Commencement Date but applicable to the period before the Commencement Date (with the amounts applicable to periods before the Commencement Date being for the account of Landlord and amounts applicable to periods after the Commencement Date being for the account of Tenant).
Section 3.03 Percentage Rent. Tenant shall pay percentage rent to Landlord based on the following percentages of the categories of Gross Income set forth in Section 4.01 (collectively, "Percentage Rent"):
(i) twenty percent (20%) of Tenant's Slip Income, plus
(ii) twenty-five percent (25%) of Tenant's Dryboat Storage Income, plus (iii) seven percent (7%) of Tenant' s Building Revenue, plus (iv) five percent (5%) of Tenant's Parking Revenue, plus (v) ten percent (10%) of Tenant's Other Income.
Section 3.04 Annual and Ouarterly Minimum Rent.
(a) "Annual Minimum Rent" for each of the first five (5) calendar years of the Term of this Lease, being the calendar years beginning on the Commencement Date and the first, 10 SF_DOCSI22J983.J7 [W97J Page 305 of 625
second, third, and forth anniversaries thereof, shall mean One Hundred Twenty Thousand Dollars ($120,000.00). "Quarterly Minimum Rent" shall always mean one-fourth (1/4) of Annual Minimum Rent.
(b) For each subsequent period of five (5) calendar years of the Term of this Lease (beginning on the fifth anniversary of the Commencement Date), Annual Minimum Rent shall be adjusted as follows: within fifteen (15) days after the end of each such period, Tenant shall calculate the average of the Percentage Rent paid for each of the three irumediately prior Accounting Years, and shall multiply this number by seventy-five percent (75%). If the resulting number is greater than the Annual Minimum Rent for the preceding five-year calendar year period, then Annual Minimum Rent for the new five-year calendar year period shall be increased to such resulting number. If the resulting number is equal to or less than the Annual Minimum Rent for the preceding five-year calendar year period, then Annual Minimum Rent for the new five-year calendar year period shall be the same as the Annual Minimum Rent for the preceding five-year period.
Section 3.05 Annual Rent Reconciliation. If Tenant's Annual Report shows that Tenant has overpaid the Percentage Rent for the immediately preceding Accounting Year, Landlord shall, within fifteen (15) days of its receipt of such Annual Report, either (a) refund the overage to - -----'f-enant-Or-(b)-deduct-the-Overage.from_Tenant's_Qllarterly..Minimum.RenLobligation foUh_e _ following calendar quarter(s), at Landlord's sole discretion. If Tenant's Annual Report shows that Tenant has underpaid the Percentage Rent for that Accounting Year, Tenant shall pay to Landlord such deficiency of Percentage Rent within fifteen (15) days after Landlord's receipt of Tenant's Annual Report.
Section 3.06 Additional Rent. Except as otherwise provided herein, Tenant shall pay and discharge, before delinquency, all of Tenant's costs, each and every expense and obligation of every kind arising from Tenant's tenancy or from Tenant's obligations under this Lease (collectively, "Additional Rent"), so that the Periodic Rent due and payable hereunder shall be absolutely "net" to Landlord.
Section 3.07 Reimbursements. Tenant shall reimburse Landlord upon demand for all costs and expenses, including reasonable attorneys' fees, reasonably paid to or incurred by Landlord in curing any Event of Default or arising out of any indemnity given herein by Tenant to Landlord.
Landlord shall reimburse Tenant upon demand for all costs and expenses, including reasonable attorneys' fees, paid or incurred by Tenant in curing any of Landlord's defaults or arising out of any indemnity given herein by Landlord to Tenant, provided that Landlord has not cured such default within forty-five (45) days (or such longer period as may be provided herein) of receipt of notice of such default from Tenant.
Section 3.08 Taxes. Tenant shall pay all Taxes as further set forth in Article 5. Reference is hereby made to California Revenue and Taxation Code § 107.6, regarding contracts between public entities and private parties that create possessory interests in real property. Tenant acknowledges and understands that this Lease may create a real property possessory interest and on that basis (among others) Tenant may be subject to real property or other taxation. Tenant covenants and agrees to pay any and all taxes (including any possessory interest tax), assessments, and other charges of any description levied or assessed against or on the Property or 11 SF_DOCS\221983.17 [W97] Page 306 of 625
the Tenant's use of the Property or any portion thereof, and any interest thereon, by any governmental agency or entity.
Section 3.09 Guaranteed Debt Service. In addition to its obligation to pay Periodic Rent as set forth in this Section, Tenant shall have an obligation to pay to Landlord, upon notice from Landjord as specified herein, any shortfall between Tenant's total Periodic Rent payments to Landlord during the first two (2) years ofthe Term following the Closing Date and Landlord's debt service obligations to DBAW under the Restructured DBAW Loans, as specified on Exhibit C-2, during such period (such shortfall the "Guaranteed Debt Service Rent"); provided, however, that the Guaranteed Debt Service Rent shall not exceed a total of One Hundred Eighty Thousand Dollars ($180,000) for such two (2) year period. IfLandlord determines that it is owed any Guaranteed Debt Service Rent, Landlord shall provide Tenant with a written demand for payment of the specified amount of Guaranteed Debt Service Rent within fifteen (15) days after each of the first and second anniversaries of the Closing Date. Tenant shall pay the amount specified by Landlord as Guaranteed Debt Service Rent within fifteen (15) days of Tenant's receipt of such written demand. Tenant shall not be liable for any Guaranteed Debt Service Rent in connection with any debt service obligations of Landlord to DBAW incurred on or after the .Closing Date and not part ofthe Restructured DBAW Loans, as specified in Exhibit C-2. --""'S'ectiun-3:1:0 :SS~ect<!urrni!·tvy·lf)~e;rPfQomsil!t.:------------------------- (a) Upon the execution ofthis Lease, Tenant shall provide Landlord with a payment in immediately available funds of Sixty Thousand Dollars ($60,000.00) ("Security Deposit").
The Security Deposit shall be invested in the Local Agency Investment Fund. All interest on the Security Deposit shall accrue for the benefit of Tenant, and shall be added to the Security Deposit at such regular times as may be standard for such investments, but in no instance less frequently than annually nor more frequently than monthly. No trust or fiduciary relationship is created hereby between Landlord and Tenant with respect to the Security Deposit. The funds of the Security Deposit shall at all times be accounted for separately from all other deposits of Landlord, except in the event of Landlord's use of all or a part of the Security Deposit and accrued interest, ifany, as a result of Tenant's breach ofthis Lease. In the event that Landlord uses any portion of the Security Deposit as a result of Tenant's breach, Tenant shall immediately deposit funds sufficient to restore the Security Deposit to the amount existing immediately prior to such Landlord use or withdrawal, as adjusted from time to time for the accrual of interest. (b) If Tenant performs all of its obligations under this Lease, the entire amount of the Security Deposit at the time of termination of this Lease plus accrued interest, if any, or so much thereof as has not been applied by Landlord, shall be returned to Tenant within thirty (30) days following the termination ofthis Lease.
Section 3.11 Late Fee. If any payment due under this Lease is not paid to Landlord within 5 Business Days of when due, a late charge of five percent (5%) of the payment shall be added to the amount outstanding and shall become immediately due and payable to Landlord. An additional charge often percent (10%) per annum on said payment (excluding late charges), or the highest lawful interest rate permissible under state and federal law, whichever is lower, shall be added to the unpaid balance for each additional day that said payment remains unpaid, commencing on the due date.
12 SF,DOCS\221983.17 [W97]
ARTICLE 4.
GROSS INCOME AND AUDIT
Section 4.01 Gross Income. As used in this Lease, the term "Gross Income" shall include all gross income received by Tenant from the Property, including without limitation the following:
(a) Slip Income: All charges levied upon Marina users, whether for cash or credit (but if on credit, Tenant will receive an offset if any portion thereof is not paid) including but not limited to, berthing fees, live-aboard fees charged to Live Aboards, guest docking fees and any penalties levied for delinquent user payments whether levied by Tenant, its agents, sublessees, licensees and/or concessionaires;
(b) Storage Income: All charges levied upon Marina users and all others who store or access boats stored in the Dryboat Storage Parking Area or at any other location on the Property, whether for cash or credit (but if on credit, Tenant will receive an offset if any portion thereof is not paid), and including but not liffiited to periodic fees, rents, maintenance charges, utility charges and any penalties levied for delinquent user payments whether levied by Tenant, its agents, sublessees, licensees and/or concessionaires, and including any income from subleases and/or operating agreements relating to such Dryboat Storage Parking Area or other boat storage ~----- facility-or-facilities-twhetb.er-ifl~additiGIl-tG-{)r-in~plaG8{3f-the-0rigmal-Dry~()at--£t~mge-l'.arking Area);
(c) Building Revenue: All other charges received by Tenant, directly or indirectly, from users of the Marina or of the Improvements (other than parking lots, structures, or facilities), including but not limited to locker fees, storage fees, key fees, office rents and other fees associated with the use of the Harbormaster Building or the Boathouse; (d) Parking Revenue: All charges received by Tenant, directly or indirectly, from users of any parking lot, structure, or facility within the Property, whether existing at the time of the execution of this Lease or constructed during the Term of this Lease; and (e) Other Income: (i) All of Tenant's interest, and limited solely to Tenant's interest, in sums deposited in any coin-operated vending machine or other device maintained on the Property, regardless of the ownership of the machine or device, or whether such sums are removed or counted by Tenant or others; (it) All of Tenant's income from launch fees, haul-out charges, battery charges, pump-outs and other incidental services provided by Tenant; (iii) All of Tenant's incidental sales of goods, wares, products and/or merchandise and the total selling price of all services sold or rendered by Tenant in, on, upon, through or from the Property, whether for cash or credit and if on credit whether or not paid, minus cost of goods sold; (iv)AlI of Tenant's income from any sailing, diving, boating or other schools or clas.seswhich may be established; (v) All of Tenant's payments received from Slip Tenants for utilities and other common area maintenance charges, to the degree such payments exceed the cost to Tenant of such utilities and charges; and (vi) All of Tenant's sales of gasoline, diesel fuel or other fuel from any facilities which may be established for such fuel services if applicable, minus cost of to Tenant of such fuel sold. .
Section 4.02 Exclusions from Gross Income. Gross Income shall not include:
13 SF_DOCS\221983.17 [W97] Page 308 of 625
(a) Sales or excise taxes paid by Tenant to Federal, State, County, or Municipal governments as a direct result of operations under this Lease; (b) Refunds for goods returned, and refundable deposits; (c) Tenant-originated gift certificates (until and unless redeemed); (d) Tenant's transfer of merchandise, furniture, fixtures or equipment not in the ordinary course of business (not including berths which, if removed by Tenant, shall be replaced);
(e) Tenant's donation of merchandise to benefit charitable organizations; (f) Insurance proceeds, except to the extent such proceeds derive from business interruption or similar insurance that is intended by the Parties to cover Rent payments; (g) Tips and gratuities;
(h) Actual cost to Tenant for utilities and common area maintenance charges which are passed through to Slip Tenants;
------------------
(i) Actual cost to Tenant for collecting fees from and or evicting any Slip Tenant; and
G) Charges paid to financial institutions or other credit card issuers or facilitators in connection with credit card sales.
Section 4.03 Records. Tenant shall keep or cause to be kept true and complete records of all personnel matters and financial transactions conducted in the operation of its business or the perfonnance of this Lease, which records shall be kept in conformance with generally accepted accounting principles. These accounting records must be supported by source documents such as sales slips, cash register tapes, purchase invoices, or other pertinent documents.
Section 4.04 Cash Register. All sales and charges shall be recorded by means of cash registers or other comparable devices which display to the customer the amount of the transaction and automatically issue a receipt. The registers shall be equipped with devices which lock in sales totals and other transaction records, or with counters which are not resettable and which record transaction numbers and sales details. At the beginning and end of each business day, Tenant shall read and record the sales total on each register. Exceptions to the use of cash registers of the type mentioned above must be approved in writing by Landlord.
Section 4.05 Admission Charges. In the event of admission charges or rents, either as a universal practice or for special events, Tenant shall issue serially numbered tickets for each such admission or rent and shall keep an adequate record of said tickets, both issued and unissued.
The admission charges received by Tenant shall be considered Qther Income.
Section 4.06 Slip Agreements. All Slip Agreements of berths or slips to Slip Tenants shall, to the extent practicable, be documented by written leases which, at a mininlum, set forth the tenn 14 SF_DOCS\221983.17 [W97] Page 309 of 625
of such agreement, the Slip Tenant's payment obligations thereunder and the Slip Tenant's name, address, vessel identification and vessel size.
Section 4.07 Location of Records. The financial and accounting records described in this Article 4, including sales slips, cash register tapes, purchase invoices, berth leases and all banki)lg deposit tickets, statements and any other banking records, and all records of sales, excise or luxury taxes paid or payable by Tenant for sales, fees and charges from the operation of the Property, shall be kept and made available at one location in Northern California for a period of at least six (6) years.
Section 4.08 Ouarterly Reporting. Within fifteen (15) days after the end of each calendar quarter, Tenant shall deliver to Landlord a Statement of Operations for such calendar quarter substantially in the form of, and containing the same level of detail as set forth in, Exhibit D, together with Tenant's statement of Periodic Rent, Additional Rent and capital expenditures for such calendar quarter ("Quarterly Report"). The Quarterly Report shall be accompanied by Tenant's payment of Percentage Rent for such calendar quarter.
Section 4.09 Annual Reporting. Within twenty (20) days after the end of each calendar year, Tenant shall, at its own expense, deliver to Landlord a Statement of Operations for such calendar __ _--y~auJl.bstantiall)' in the form of, and containing the same level of detail as set forth in, Exhibit D, together with Tenant's statement of Gross Income, Periodic Rent, Additional Rent and capital expenditures for such calendar year (the "Annual Report").
Section 4.10 Filing. Tenant shall file all statements and reports required under this Article 4 with Landlord. Any and all reports which Tenant is required to provide hereunder shall be prepared in accordance with generally accepted accounting principles and shall be certified as to accuracy by the managing member or executive officer of Tenant.
Section 4.11 Accounting Year. Tenant's "Accounting Year" shall be the calendar year, except for the first Accounting Year which shall begin on the Commencement Date and end on December 31, 2000.. This definition of Accounting Year shall not change unless Landlord specifically approves in writing a different Accounting Year. Landlord shall approve a change in Accounting Year only in the event of undue hardship being placed on either Tenant or Landlord, and not because of mere convenience or inconvenience.
Section 4.12 Landlord Audits. Landlord shall, through its duly authorized agents or representatives, have the right to examine and audit Tenant's accounting records for the purpose of determining the accuracy of the accounting records and the accuracy of all financial and accounting reports prepared or submitted by Tenant under this Article 4 ("Audits"). Within twenty (20) days' afterreceipt of notice by Landlord of any Audit, Tenant shall m3ke its account records available to Landlord and its representatives during normal business hours at the Property. The cost of any Audit shall be borne by Landlord, unless the audit reveals a discrepancy of greater than four percent (4%), in which case Tenant shall be responsible for the costs ofthe Audit. If the annual Gross Income shown by Tenant's Annual Report should be found to be less than the amount of annual Gross Income disclosed by an Audit and such discrepancy affects the amount Tenant owes Landlord, Tenant shall pay any delinquent amount within thirty (30) days after the date on which Landlord mails Tenant a bill therefor. 15 SF_DOCSI221983.17 [W97] Page 310 of 625
ARTICLES.
TAXES AND OTHER CHARGES
Section 5.01 PaYment Responsibility. Tenant shall pay any and all real and personal propert taxes, including, but not limited to, possessory interest taxes, general and special assessments, excis~s, licenses, permit fees and other charges and impositions of every description levied on assessed against the Property, Tenant's personal property, or any portion thereof, or Tenants w of the Property or any portion thereof ("Taxes"). Tenant shall make all such payments directly to the charging authority when due and payable and at least ten (10) Business Days prior to delinquency, subject, however, to Tenant's right to challenge or protest any Tax. With respect to real property taxes and assessments levied on or assessed against the Property for which Landlord receives the tax bill directly from the taxing authority, Tenant shall reimburse Landlord for payment of such sums within ten (10) Business Days after demand from Landlord.
Notwithstanding the foregoing, Tenant shall not be liable for any real property tax increase under Proposition 13 resulting from Landlord's sale of the Land or Improvements. Tenant recognizes and understands that this Lease may create a possessory interest subject to property taxation and that Tenant may be subject to the payment of property taxes levied on such interest.
Section 5.02 Utilities. Tenant shall payor caused to be paid, and hold Landlord free and ---~.harmless-frDm,_aILchar.ge&.iorjhc-installation,_conne.ction,Jl1aintenanD_e-.andJ'umishing.oi-.aII _ necessary utilities, utility facilities, and services from and after the Commencement Date, including but not limited to, gas, water, electricity, telephone and telecommunications services, sewage and other public utilities to the Property during the Term of this Lease and for the removal of garbage, rubbish, and weeds from the Property during the Term of this Lease.
Landlord shall cooperate, at Tenant's expense and to the extent it is able, in providing such utilities and services.
Section 5.03 Pro-Rata Taxes. Any Tax on any portion of the Property relating to a fiscal period of the taxing authority, a part of which period is included within the Term of this Lease and a part of which is included in a period of time before the commencement or after the expiration ofthe Term of this Lease, shall (whether or not such Tax shall be assessed, levied, confirmed, imposed upon or in respect of or become a lien upon the Property, or shall become payable, during the Term of this Lease) be apportioned between Landlord and Tenant on a straight-line pro-rata apportionment, provided, however, that if, at the expiration of the Term, Tenant owes Landlord any Rent hereunder, Tenant shall not be entitled to the refund of any such Tax paid by Tenant prior to such expiration, up to the amount of such Rent.
Section 5.04 Contest. Tenant shall have the right, at its sole cost and expense, to contest in good faith the amount or validity, in whole or in part, of any Tax by appropriate proceedings diligently conducted in good faith, provided that (a) Tenant gives Landlord written notice of Tenant's intention to do so at least 30 days prior to delinquency, (b) Tenant diligently prosecutes any such contest, (c) Tenant either pays the full amount of such Tax under protest or posts a bond sufficient in Landlord's reasonable judgment to at all times protect the Property against the iinposition of any lien upon any portion of the Property or this Lease and to effectively stay or prevent any non-judicial or judicial foreclosure of any such lien, and (d) Tenant pays any final judgments relating to any such Tax so contested. Landlord shall, if requested, cooperate with Tenant at any such proceedings at Tenant's sole expense but only if and so long as neither the 16 SF_DOCS\221983.17 [W97] Page 311 of 625
Property nor any part thereof would by reason of such postponement or deferment be in danger of being foreclosed, forfeited or lost. Upon the termination of such proceedings, Tenant shall pay the amount of the Tax or part thereof as fmally determined in such proceedings, the payment of which may have been deferred during the prosecution of such proceedings, together with any costs, fees (including counsel fees), interest, penalties or other liabilities in connection therewith, and upon such payment, Landlord shall return any amount deposited with it with respect to such Tax as aforesaid; provided, however, that Landlord shall, if requested by Tenant, disburse said moneys on deposit with it directly to the imposing authority to whom such Tax is payable. If at any time during the continuance of such proceedings Landlord shall reasonably determine in good faith that the amount deposited as aforesaid insufficient, Tenant shall upon demand, make an additional deposit of such additional sums or other acceptable security as Landlord reasonably may request, and upon failure of Tenant so to do, the amount theretofore deposited may be applied by Landlord to the payment, removal and discharge of such Tax and the interest and penalties in connection therewith and any costs, fees (including counsel fees) or other liability accruing in any such,proceedings, and the balance, if any, shall be returned to Tenant or the deficiency, if any, shall be paid by Tenant to Landlord on demand.
Section 5.05 No Tax Lien Foreclosure. Tenant shall immediately, and in any event prior to foreclosure, discharge by payment or bond any lien for any Taxes payable by Tenant under this ---bease--4mposed-0F-threate-fl€4-te-b~imp(Jsed-upGn-the-P-rGperty-ol'- any-pomon-thereof,ol'-Upon-. -- any equipment or other personal property located on the Property.
Section 5.06 Receipts. Upon Landlord's written request, Tenant shall, within ten (10) days after the date when any Taxes are due and payable, furnish to Landlord official receipts of the appropriate taxing authority or other evidence reasonably satisfactory to Landlord evidencing payment thereof, subject to Tenant's rights to protest and challenge as set forth in this Article 5.
Section 5.07 Closing Costs. Landlord shall pay for the legal description engineering performed prior to the execution ofthis Lease. Tenant shall pay for the survey performed prior to, and title insurance policy provided at the time of, the execution ofthis Lease.
ARTICLE 6.
INSURANCE
Section 6.01 General Provisions. Certificates and Other Requirements. (a) Tenant shall procure and maintain insurance against claims for injuries to persons or damages to the Property which may arise from or in connection with Tenant's operation and use of the Property and Improvements. The cost of such insurance shall be borne by the Tenant. (b) All insurance policies required under this Article 6 shall be satisfactory to Landlord in its reasonable discretion and shall be provided by companies having a Best's rating of "A" or better (and if Best no longer provides such ratings, an equivalent rating). '(c) Tenant shall promptly provide to Landlord and DBAWall certificates of insurance with original endorsements reflecting coverage required by this Article on or before the effective date of the Lease. Upon request, Tenant shall provide Landlord and DBAW with copies of policies.
17 SF.DOCS\221983.17 [W97] Page 312 of 625
(d) All insurance policies required under this Lease shall be in full force and effect on or before the Closing Date. As often as any such policies shall expire or terminate, renewal or additional policies shall be procured and maintained in like manner and to like extent during the term of this Lease. All policies of insurance shall provide the same shall be non-cancelable or subject to reduction in the amounts of coverage without thirty (30) days' written notice to each of Landlord and DBAW.
(e) Any deductible or self-insured retention greater than One Hundred Thousand Dollars ($100,000) must be declared to and shall be subject to the separate approval of each of City and Agency, to be granted by each in its reasonable discretion.
Section 6.02 Workers' Compensation Insurance. Tenant shall, at Tenant's ovm cost and expense, procure and maintain workers' compensation insurance in accordance with the laws of California.
Section 6.03 General Liability Insurance. Tenant shall, at Tenant's own cost and expense, secure and maintain commercial general liability insurance, written on an occurrence basis and naming each of Agency, City and the State of California as additional insureds, insuring Tenant, Tenant's Agents and Tenant's officers and employees against all bodily injury, property damage, j:lersonal injJID', and other loss or liability caused or connected with Tenant's oj:lerationand !1se--- of the Marina undiOrthis Lease in amounts not less than Five Million Dollars ($5,000,000) per injury to or death of one person and, subject to the limitation for the injury or death of one person, of not less than Eight Million Dollars ($8,000,000) for injury to or death of two or more persons as a result of anyone accident or incident. Tenant's insurance coverage shall be primary insurance as respects each of Agency and City and their officers, officials, employees and volunteers. Any insurance or self-insurance maintained by each of Agency and City and their officers, officials, employees or volunteers shall be eXcess of Ten ant's insurance and shall not contribute with it.
Section 6.04 Property Insurance.
(a) Tenant shall, at Tenant's own cost and expense, secure and maintain all risk extended form insurance coverage in an amount equal to 100% of the full replacement cost ofthe Property (including all changes in building code requirements) and Tenant's personal property and covering course of construction exposure and all risks of direct physical loss (including flood, earthquake and materials and supplies used at the site including all changes in code requirement). Any loss payable under any policy described in this Section shall be used to rebuild and/or repair the damaged portions of the Property or Tenant's personal property. The insurer shall waive all rights of subrogation against Landlord. Each of Agency and City shall be named a loss payee on all insurance policies covering casualty losses and builder's risk. (b) Tenant's obligation to secure and maintain earthquake insurance shall be conditioned upon Tenant's ability to obtain such coverage with commercially reasonable prernium cost, as determined by mutual agreement between Landlord and Tenant. If such earthquake insurance coverage should, after diligent effort by Tenant, be unobtainable at such mutually determined commercially reasonable premium cost, then Tenant shall obtain the maximum insurance reasonably obtainable at commercially reasonable premium cost (if any) 18 SF_DOCS\221983.17 [W97) Page 313 of 625
and give notice to Landlord of the extent of Tenant's inability to obtain, in full, the insurance required by this Lease, and in such event, Tenant's obligation to procure and maintain such insurance, to the extent unobtainable, shan be excused. Notwithstanding the foregoing, if at any time Tenant's Mortgagee requires Tenant to carry earthquake insurance in excess of that required by Tenant to be carried pursuant to this Section 6.04, Tenant shan carry such additional earthquake insurance for the benefit of Landlord.
Section 6.05 Business Interruption Insurance. Tenant shan, at Tenant's own cost and expense, procure and maintain during the entire term of this Lease, business interruption insurance to insure that the payments provided for in Article 3 shall be paid to Landlord for a period of up to one (1) year in the event the Property is totany or partially damaged or destroyed so as to render Tenant's business activities at the Marina impossible or impracticable, due to any cause whatsoever, include cause(s) not otherwise required to be insured against under this Lease.
Tenant shall maintain coverage based on the Annual Minimum Rent and Percentage Rent for the then current five-year period, as determined in accordance with Article 3.
Section 6.06 Automobile Insurance. Tenant shall, at Tenant's own cost and expense, secure and maintain during the entire term of this Lease, automobile insurance insuring Tenant and Tenant's employees to an amount not less than One Million Dollars ($1,000,000) combined _.---is:uinlligleJimit-PeLaccillentioLbmlily.inj~and_pmpJ':rty_damage., _ Section 6.07 Landlord's Right to Perform Tenant's Obligations. In the event of Tenant's failure to procure or renew insurance as required by this Section, Landlord may, at its discretion, procure or renew such insurance and pay all premiums in connection therewith and all monies so paid by Landlord shall be repaid by Tenant to Landlord upon demand.
Section 6.08 Waiver of Subrogation. To the extent that Landlord or Tenant purchases any hazard insurance relating to the Property (except workers' compensation insurance), the party purchasing such insurance shall obtain a waiver of subrogation from its insurance carrier, by which the insurance carrier agrees to waive all rights of recovery by way of subrogation against the other parties Lease in connection with any loss covered by such insurance policy.
Section 6.09 Adjustments. The amounts and extent of coverage of property insurance and general liability insurance policies (except workers' compensation insurance) shall be subject to adjustment every five (5) years, based on Landlord's review of such amounts and extent of coverage in consultation with its insurance advisors, and based on customary insurance requirements for facilities of size, value and operation similar to the Property and its improvements.
ARTICLE 7.
INSURED AND UNINSURED CASUALTY
Section 7.01 Repair, Replacement or Reconstruction During the First FortY-Five Years. (a) If, any time on or before December 31,2044, the Property is totally or partially damaged or destroyed from a risk covered by insurance required to be carried by Tenant hereunder, this Lease shall not terminate, and Tenant shaH, within ninety (90) days after the date of such damage or destruction, commence and diligently pursue to completion the repair, 19 SF_DOCSI22\983.17 [\\'97) Page 314 of 625
replacement, or reconstruction of the Property to substantially the same condition as it was in immediately before such damage or destruction, whether or not the insurance proceeds actually received are sufficient to cover the actual cost ofthe repair, replacement, or reconstruction. (b) If, any time on or before December 31, 2044, the Property is totally or partially damaged or destroyed from a risk not covered by insurance required to be carried by Tenant hereunder, Tenant, subject to the remaining provisions of this Section 7.0l(b), shall have the right to terminate this Lease by written notice given to Landlord within ninety (90) days after the date of such damage or destruction, which termination shall be effective thirty (30) days after the ,date of such notice, and Rent and other charges shall be apportioned as of the date of te=ination. Prior to such effective te=ination, Tenant shall remove all debris and rubble, secure the Property from trespassers, provide protections or appropriate warnings to any third parties of any dangerous conditions that may exist on the Property and to protect Landlord from attractive nuisance liability, and put the Property in a safe condition. Thereupon, this Lease shall terminate and the Parties shall have no further obligations to each other excepting those previously accrued but theretofore unsatisfied. Notwithstanding the foregoing, Tenant shall not have the right to te=inate this Lease if (a) the cost of restoration, reconstruction and repair is twenty percent (20%) or less of the replacement cost of the Property prior to such damage or destruction, in which event this Lease shall not terminate, and Tenant shall, within one hundred ----tw.enty-+1.2D;l-day,,-after-the-date-of-such-damage-OLdestruction,-commence_and-diligen1Ly-pursue_~ __~_ to completion the repair, replacement, or reconstruction of the Property to substantially the same condition as it was in immediately before such damage or destruction, whether or not the insurance proceeds actually received (if any) are sufficient to cover the actual cost of the repair, replacement, or reconstruction.
Section 7.02 Insured Losses After the First Forty-Five Years. If, at any time on or after January 1, 2045 the Property is totally or partially damaged or destroyed from a risk covered by insurance required to be carried by Tenant hereunder, this Lease shall not te=inate, and Tenant shall be required to restore, reconstruct and repair the Property, to the extent ofinsurance proceeds received by Tenant.
Section 7.03 Uninsured Losses After the First Forty-Five Years. If, at any time on or after January 1, 2045 the Property is totally or partially damaged or destroyed from any cause not covered by insurance required to be carried by Tenant hereunder, then:
(a) If the cost of such repair and replacement is less than ten percent (10%) of the replacement cost ofthe Property prior to such damage or destruction (or, if the cost of such repairs and restoration is ten percent (10%) or more ofthe replacement cost of the Property prior to such damage or destruction, but Tenant nonetheless, at its sole option, elects within thirty (30) days to restore the Property), then Tenant shall, to the extent permitted by law, and provided that Landlord provides the funds necessary to accomplish the same, perfo= the work required to restore the Property to its condition prior to the damage or destruction, and this Lease shall remain in full force and effect. Subject to Tenant's receipt of such Landlord funds, Tenant shall commence and diligently pursue to completion the repair, replacement or reconstruction of the Property within one hundred twenty (120) days of the date of such damage or destruction.
Should Landlord not provide the requisite funds, Tenant shall have the right to te=inate the Lease.
20 SF_DOCS\221983.17 [W97] Page 315 of 625
(b) In the event that (i) Landlord does not provide the requisite funds referred to in subsection (a) above, or (ii) the cost of such repair and replacement is ten percent (10%) or more of the replacement cost of the Property prior to such damage or destruction and Tenant elects not to restore, Tenant shall have the right to terminate this Lease by written notice given to Landlord within ninety (90) days after the date of such damage or destruction, which termination shall be effective thirty (30) days after the date of such notice, and Rent and other charges shall be apportioned as ofthe date of termination. Prior to such effective termination, Tenant shall remove all debris and rubble, secure the Property from trespassers, provide protection or appropriate warnings to any third parties of any dangerous conditions that may exist on the Property and to protect Landlord from attractive nuisance liability, and put the Property in a safe condition. Thereupon, this Lease shall terminate and the Parties shall have no further obligations to each other excepting those previously accrued but theretofore unsatisfied.
If Tenant terminates this lease under this Article 7, Tenant shall remit to Landlord any c_asualtyinsurance proceeds it receives. All repair, replacement, or reconstruction of the Property pursuant to this Article 7 shall be accomplished pursuant to the requirements of Article II of this Lease
Section 7.04 No Option to Terminate for Insured Casualtv. Except as stated in Section 7.03, Tenant shall have no Ol1tionto terminate this Lease or otherwise be relieved of its oblig>::a:=ti"'o=nc-=t"'o _ restore the Improvements on the Premises where the damage or destruction results from a cause required to be insured against by this Lease. Tenant hereby waives and releases its rights under the provisions ofCalifomia Civil Code §§ 1932(2) and 1933(4), it being the intention of the parties hereto that the express terms of this Lease shall control under any circumstances in which those provisions might otherwise apply.
Section 7.05 Certain Proceeds. Ifin connection with any casualty Landlord receives any insurance or other proceeds which are required to be paid to Tenant, Landlord shall deliver such proceeds to the highest priority Leasehold Mortgagee whose address has been provided to Landlord in accordance with Article 9.
ARTICLE 8.
ASSIGNMENT, SUBLETTING, ETC.
Section 8.01 Tenant's Right to Sublet and Assign.
(a) Tenant may not sel~ assign, transfer, sublease, encumber, conveyor otherwise dispose of the Tenant's interest in this Lease (including, without limitation, an assignment of this Lease Of a subletting of the Property, as an entirety or substantially as an entirety) without the prior written consent of Landlord as set forth in Section 8.03, provided, however; that with respect to Slip Agreements, Tenant shall from time to time (but not less frequently than annually) provide Landlord with its then-current form Slip Agreement, which Landlord shall approve or disapprove in its commercially reasonable discretion and, so long as such standard Slip Agreement has been approved, Tenant need not seek approval for any Slip Agreement that conforms to such then-standard form. In no event shall Tenant have the right, or attempt, to enter into any assignment, transfer, sublease or other transfer agreement which purports to extend any rights to any third party beyond the Term of this Lease. 21 SF_DOCS\221983.17 [W97} Page 316 of 625
(b) Landlord shall have the right to approve or disprove, in its sole discretion, any transaction or series of transactions (i) which would result in the cumulative transfer of more than twenty percent (20%) of any Person's ownership in or control of Tenant, as compared to the ownership structure of Tenant as of the Closing Date, or (ii) which would result in the addition, removal or replacement of one or more general partners or managing members in Tenant if Tenant is a partnership or a limited liability company or comparable entity, provided, however, that Landlord shall not have the right to approve or disapprove any transfer of any membership interest in Richmond Bay Marina, LLC to BACFC, to any subsequent holder ofBACFC's security interest ("Subsequent Holder"), to any affiliate ofBACFC or any Subsequent Holder, or to any Permitted Purchaser, which is made pursuant to the terms of those certain Assignments of Member Interest dated substantially concurrently with the date of the execution of this Lease by and between the members of Richmond Bay Marina, LLC and BACFC.
Section 8.02 Landlord Right of First Refusal. If Tenant proposes to assign, transfer or sublet fifty percent (50%) or more of its interest in this Lease at any time after January I, 2030 (a "Proposed Transfer"), Tenant shall provide Landlord with written notice of such desire and the terms upon which Tenant proposes to consummate the Proposed Transfer. Within ninety (90) days thereafter; Landlord shall provide Tenant with written notification as to whether Landlord will exercise its right of first refusal with respect to the Proposed Transfer, on the same terms as -----sseH{)rth-iR-'I'enant'-s-netiee-(Jfthe-P~BreseB-+Fansfer.-Duffilg_st!eh-Bffiety-t9Gt_Bay-jjeFied",------- Tenant shall make the Property and Tenant's books and records reasonably available for inspection by Landlord and Landlord's Agents and third parties as reasonably requested by Landlord. If Landlord either (i) fails to elect to exercise its right of first refusal within the ninety (90) day period or (ii) gives written notice that it has elected not to exercise its right of first refusal, then Tenant shall be entitled to consummate the Proposed Transfer with a third party, subject to Landlord's approval rights otherwise set forth in this Article 8, and so long as the economic terms upon which Tenant proposes to consummate the Proposed Transfer do not change and the other terms of the Proposed Transfer do not materially change from the terms initially disclosed to Landlord. If, at any time prior to the consummation of the Proposed Transfer, the economic terms upon which Tenant proposes to consummate the Proposed Transfer change or the other terms of the Proposed Transfer materially change from the terms initially disclosed to Landlord, Tenant shall so notifY Landlord and the transaction, as so modified, shall be deemed a new Proposed Transfer subject to the terms of this Section 8.02.
Section 8.03 Landlord Review. Landlord's review of any proposed assignment, transfer, or sublease under this Lease, other than Slip Agreements, shall be made according to the terms of this Section '8.03, as well as the rights set forth in Section 8.02 for Proposed Transfers. (a) Landlord's consent to a proposed assignment, transfer or sublease shall not be unreasonably withheld. In determining whether to grant or withhold consent to a proposed assignment, transfer or sublease, Tenant agrees that it is reasonable for Landlord to consider the any relevant factors. Without limiting the foregoing, Tenant agrees that it is reasonable for Landlord to consider whether:
(i) Tenant has complied with the requirements set forth in Article 8 above; 22 SF_DOCSI221983.17 [W97] Page 317 of 625
(ii) The proposed assignee or subtenant, in Landlord's reasonable judgment, has a sufficient worth, considering the financial responsibility involved; (iii) The prospective assignee or subtenant has the marina management experience necessary to perform Tenant's obligations under this Lease; (iv) Landlord has had prior negative leasing experience with the proposed assignee or subtenant;
(v) The use of the Property by the proposed assignee or subtenant will be identical to the use permitted by this Lease;
(vi) In Landlord's reasonable judgment, the proposed assignee or subtenant is engaged in a business, or the relevant part of the Property will be used in a manner, that is not in keeping with the then current standards of the Property, or that will violate any restrictive or exclusive covenant as to use of the Property or any Law; (vii) The proposed assignee or sublessee assumes in writing all of the obligations of Tenant under the Lease applicable to the portion of the Property affected by the assignment or subletting; or
(viii) Tenant is then in default of any obligation of Tenant under this Lease, and Tenant has defaulted under this Lease on three (3) or more occasions during the twenty-four (24) months preceding the date on which Tenant makes its request. (b) Tenant acknowledges that the time needed for Landlord to review a proposed assignment depends on many factors, including without limitation the complexity of the proposed transaction, the financial and other information submitted for review, and the workload of Landlord's personnel. Notwithstanding the foregoing, Landlord shall act as promptly as goverrunental processes permit in processing and acting upon a requested approval of an assignment of Tenant's interest under this Article 8.
(c) Landlord's decision either to grant or to deny consent to any proposed assignment, transfer or sublease shall not limit or affect Landlord's ability to assess independently subsequently proposed assignments, transfers or subleases. (d) Tenant shall be required to reimburse Landlord for its costs incurred in connection with the proposed assignment, whether or not Landlord ultimately grants its approval to the proposed assignment.
(e) Promptly upon Landlord's demand, Tenant agrees to furnish Landlord ,,,,ith a photostatic copy of each sublease, license and assignment made for space in the Property, including but not limited to Slip Agreements. Landlord shall have no obligation to execute any nondisturbance agreement with any proposed assignee or sublessee not approved by Landlord. (f) Tenant hereby waives any and all rights which it does or may have under California Civil Code § 1995.310 with respect to Landlord's failure to consent to a proposed assignment, transfer or sublease.
23 SF_DOCS\221983.17 [1'/97] Page 318 of 625
Section 8.04 Existing Slip Agreements. City shall execute the Assignment Agreement, pursuant to which City shall assign and transfer to Tenant, and Tenant shall assume, City's interest as landlord under the Slip Agreements (together with all deposits and prepaid rent, if any, held by City) applicable to the Property.
ARTICLE 9.
MORTGAGING OF LEASE BY TENANT
Section 9.01 Tenant's Right to Mortgage Lease.
(a) Upon not less than thirty (30) days written notice to Landlord, Tenant shall have the right, at any time and from time to time, with Landlord's written consent or approval, not to be unreasonably withheld, to mortgage and/or pledge the interest of Tenant under this Lease to one or more Institutional Lenders, provided, however, that Tenant shall not be required to provide notice to Landlord for Tenant's initial loan from BACFC. (b) Tenant agrees to furnish Landlord with a photostatic copy of each such mortgage or pledge. Until such time as Tenant provides Landlord with such a copy, Tenant shall not be able to enforce this Article against the Landlord.
(c) No mortgage anctrorpledge of tD:e interest of I enant unGer tnis tease snal1resuir-- --- in a loan to value ratio of more than seventy percent (70%) without Landlord's prior written approval.
Section 9.02 No Subordination. Landlord's rights in the Property and this Lease, including without limitation Landlord's right to receive Periodic Rent, shall not be subordinated to the rights of any Leasehold Mortgagee. Notwithstanding the foregoing, a Leasehold Mortgagee shall have all of the rights set forth in the Leasehold Mortgage, as approved by Landlord in accordance with this Article 9, to the extent that such rights are not inconsistent with the terms of this Lease, including the right to commence an action against Tenant for the appointment of a receiver and to obtain possession of the Property under and in accordance with the tenns of said Leasehold Mortgage, provided that all obligations of Tenant hereunder shall be kept current, including but not limited to the payment of Periodic Rent and curing of all defaults or Events of Default hereunder.
Section 9.03 Landlord's Covenants. Landlord agrees, for the benefit of the Tenant and of each Leasehold Mortgagee, to comply with the following provisions, all of which shall be binding on the Tenant and each Leasehold Mortgagee, as set forth herein:
(a) Landlord and Tenant shall not enter any agreement of cancellation, surrender, acceptance of surrender or modification of this Lease without the prior written consent of the Leasehold Mortgagee. This Lease shall not merge in the fee of the Property without the prior written consent of such Leasehold Mortgagee.
(b) Landlord, upon serving Tenant any notice or demand under Section 3.09, Section
4.12, Section 5.01, Section 10.05, Article 19 or Section 28.04 ofthis Lease, shall at the same time serve copies of such notice upon each Leasehold Mortgagee that has complied with the provisions of this Article 9, and no such notice or demand shall be deemed to have been served 24 SF_DOCS\221983.17 [W97] Page 319 of 625
unless and until so served upon each such Leasehold Mortgagee. Tenant shall provide the address of each Leasehold Mortgagee to Landlord, and shall be solely responsible for the accuracy thereof. Each such Leasehold Mortgagee shall have the right to remedy the Event of Default, or cause the same to be remedied, within the time allowed to Tenant therefor, plus, in the case of monetary Events of Default, an additional twenty (20) days, and in the case of non monetary Events of Default, an additional forty-five (45) days (unless such failure requires work to be perfo=ed, acts to be done, or conditions to be removed which cannot by their nature reasonably be perfo=ed, done or removed, as the case may be, within such time period, in which case no Event of Default shall be deemed to exist so long as Leasehold Mortgagee shall have commenced curing the same within such time period and shall diligently and continuously prosecute the same to completion), provided that Leasehold Mortgagee (i) expeditiously pursues its remedies as herein described, (ii) continues to pay Percentage Rent and Quarterly Minimum Rent while the cure is pending, and, (iii) continues to perfo= and/or cure all of Tenant's obligations (provided, however, that in no event shall any Leasehold Mortgagee ever be required to cure any default by Tenant under Section 31.03(b».
(c) With respect to those Events of Default the curing of which requires entry upon the Property, then (1) whenever a Leasehold Mortgagee desires to cure an Event of Default, there shall be added to the period otherwise provided to the Leasehold Mortgagee for the cure of the -------B¥6Rt-of-DefauH--th~adffitional-peFi{)Q-l1eedeciby-ihe-LeaseholdMortgagee_in-ihe-=ercise__o,J-f _ reasonable diligence to enter upon the Property, (2) whenever a Leasehold Mortgagee seeks to have a receiver appointed for the interest of the Tenant under this Lease, so as to have the receiver cure such Event of Default, then there shall be added to the period otherwise provided to the Leasehold Mortgagee for the cure of such Event of Default the additional period needed by the Leasehold Mortgagee to effect with reasonable diligence, the appointment of such receiver and the entry by such receiver upon the Property, (3) whenever a Leasehold Mortgagee elects to foreclose upon the interest of the Tenant under this Lease, there shall be added to the period otherwise provided to the Leasehold Mortgagee for the cure of such Event of Default, such additional period as is needed, in the exercise of reasonable diligence, for the effectuation of a private foreclosure sale and (4) whenever a Leasehold Mortgagee is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereofby any process or injunction issued by any court or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Tenant, then there shall be added to the period otherwise provided to the Leasehold Mortgagee for the cure of such Event of Default the additional period needed by the Leasehold Mortgagee to avoid such prohibition, provided, in each case, that Leasehold Mortgagee shall have fully cured any Event of Default in the payment of any monetary obligation and shall continue to pay currently those monetary obligations as and when the same fall due and shall have cured or be in the process of curing all non-monetary Events of Default that are capable of being cured by such Leasehold Mortgagee without possession of the Property (provided, however, that in no event shall any Leasehold Mortgagee ever be required to cure any default by Tenant under Section 31.03(b». Landlord recognizes that each Leasehold Mortgagee has the right to proceed by any or a combination of the courses of action described in clauses (1), (2), (3) and (4) ofthis Section 9.03(c), and, in that event, the Leasehold Mortgagee in question shall be entitled to the maximuro cumulative period allowed by anyone such clause (but not the curoulative period of two or more such clauses added together), so long as such Leasehold Mortgagee is proceeding diligently and in good faith.
For the protection of each Leasehold Mortgagee, it is the intention of the Parties that there shall 25 SF__DOCS\22198J.17 [W97) Page 320 of 625
not be any Event of Default or condition entitling Landlord to terminate this Lease, which is incapable of being cured by a Leasehold Mortgagee upon taking possession of the Property or by any other person who acquires the interest of Tenant hereunder as a result of the foreclosure of a Leasehold Mortgage.
(d) Landlord shall accept perfonnance by, or on behalf of, any Leasehold Mortgagee who has complied with the notice provisions of Section 10.02 as if the same had been perfonned by Tenant. Such acceptance shall not thereby create any additional rights as against Landlord in such Leasehold Mortgagee, nor shall such Leasehold Mortgagee thereby be subrogated to any interest or right of Landlord.
(e) Leasehold Mortgagee shall have the right, to the extent Tenant agrees in writing, to appear in a legal action or proceeding on behalf of Tenant. (f) In the event of conflict between the rights of multiple Leasehold Mortgagees the rights of the respective LeasehoHl Mortgagees shall be determined in the order of priority of their Leasehold Mortgages.
(g) Foreclosure of the Leasehold Mortgage, or any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Leasehold Mortgage, or any conveyance of this Lease illTieu ofloreclosure or tfuougliOtlier appropnate proceedmgs m tlie nature thereof, from Tenant to (1) any Leasehold Mortgagee, (2) any affiliate of any Leasehold Mortgagee (a "Leasehold Mortgagee Affiliate") or (3) any third party which (A) has the marina management experience (either directly or by contract with a manager having such experience) necessary to perfonn Tenant's obligations under this Lease, (B) has a minimum net worth of at least $3,000,000 (as increased by four percent (4%) on January 1 of each calendar year, on a cumulative basis, commencing on January 1, 2002), and (C) and satisfies Landlord's requirements under Sections 8.03(a)(v) and (vii) (a "Pennitted Purchaser"), shall not, in the case of such Leasehold Mortgagee or such Leasehold Mortgagee Affiliate, require the consent of Landlord and shall not, in the case of such Permitted Purchaser, require any further consent of Landlord, or constitute a breach of any provision of, or a default under, this Lease, and upon such foreclosure, sale or conveyance, Landlord shall recognize such Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser, as the case may be, as the Tenant under this Lease.
(h) Landlord agrees that, in the event oftennmation of this Lease by Tenant or any debtor in possession, Landlord will, upon request of Leasehold Mortgagee, enter into a new lease· of the Property with the applicable Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser for the remainder of the Tenn, effective as of the date of such tennination, at the then-applicable Periodic Rentand upon the tenns, provisions, covenants and agreements as contained in this Lease with respect to the remainder of the Tenn, provided:
(i) Said Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser shall make written request upon Landlord for such new lease within thirty (30) days after the date of its'receipt of written notice from Landlord of such tennmation and such written request shall be accompanied by payment to Landlord ofall sums then due Landlord under this Lease up to date oftermination as to which Landlord has previously notified the Leasehold 26 SF_DOCS\221983.17 [W97] Page 321 of 625
Mortgagee. Landlord shal1, within ten (10) Business Days after request from any Leasehold Mortgagee, advise such Leasehold Mortgagee of the amounts then claimed by Landlord to be due under this Lease.
(ii) Said Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser shall pay to Landlord as they become due, Periodic Rent and any other amounts hereunder and, at the time of execution and delivery of said new lease, any and al1 sums which would at the time of execution and delivery thereof, be due pursuant to this Lease but for such termination, and in addition thereto, any expenses, including reasonable attorneys' fees, to which Landlord shall have been subjected to by reason of such Event of Default and termination, less the net income actually collected by Landlord subsequent to the termination of this Lease and prior to execution of the new lease as rental payments; any excess of such net income over the aforesaid sums and expenses shall be applied in payment of the Periodic Rent thereafter becoming due under the new lease.
(iii) Said Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser shan cure al1 past defaults and remedy any other conditions which Tenant under the terminated lease was obligated to perform under the terms of this Lease, whether before or after .the default or execution and delivery of a new lease.
(iv) The Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser shall have the same right, title and interest in and to the Property and Improvements thereon as Tenant had under the terminated lease, to the extent that priority of interest may be preserved by law or by the inclusion in this Lease of the right to obtain such new lease; and, notwithstanding the reference to such new lease as a "new lease" such "new lease" shall be a continuation or extension of this Lease; and in the event that any Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser shall exercise its right to such new lease, . such new lease shall be considered for al1 purposes a continuation or extension of this Lease, . without lapse or break in continuity of Tenant' s interest or of the Term, and the termination from which the right to such neW lease has arisen shall be deemed void ab initio except to the extent of terminating the rights of the then Tenant, transferring all such rights to the Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser electing the new lease, and forming the basis for such election.
(v) Landlord shall assign its interest, if any, in all applicable leases and subleases then in force for all or a portion of the Property to the Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser under the new lease and deliver to said Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser all unapplied security deposits, if any, which were delivered to Landlord and the income thereon. Such assignment shall be effective as of the termination of the terminated lease and all rights of Tenant (sublessor) thereunder shall be transferred to the new tenant.
(i) In the event any Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser becomes the Tenant under this Lease as a result of foreclosure or conveyance in lieu thereof, or under a new lease, as provided herein, such Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser shall be required, as a condition to Landlord's recognition of such party as the Tenant under this Lease, to cure all previous Events 27 SF_DOCS\221983.17 [W97] Page 322 of 625
of Default hereunder (except as set forth in Section 28.09 and except for any previous default under Section 31.03(b)) that are capable of being cured or perfonned by such transferee.
Following such cure, each such party shall be personally liable for the obligations of Ten ant under this Lease or the new lease (as applicable) only insofar as they arise during the period of time that such party remains the beneficial holder of the leasehold estate under this Lease.
G) The name of the Leasehold Mortgagee may be added as a named insured to any insurance carried by Tenant, provided insurance proceeds are first used for repair and restoration, and provided, further, that said addition has no effect upon the rights of Landlord hereunder. (k) Whenever requested in writing by any Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Pennitted Purchaser, Landlord shall, within twenty (20) days after such request, execute, acknowledge and deliver to such Leasehold Mortgagee, Leasehold Mortgagee Affiliate or Permitted Purchaser a certificate certifYing (l) that this Lease is unmodified and in full force and effect (or if there have been modifications, that this Lease is in full force and effect as modified and stating the modifications), (2) the dates, if any, to which the Periodic Rent and Additional Rent and any other sums payable with respect to this Lease have been paid, (3) the Commencement Date and expiration date of the Tenn of this Lease, (4) whether or not to the knowledge of Landlord, there are then existing any Events of Defaults under this Lease (and, if so, specifYing same), (5) whether there are any outstanding notices of Event of Default or termination, and the nature thereof, and (6) if notice of Event of Default has been given, the period remaining for the cure of said Event of Default as then estimated by Landlord. (1) The making of any Leasehold Mortgage shall not, by itself, be deemed to constitute an assignment or transfer of this Lease or of the leasehold estate, nor shall any Leasehold Mortgagee, as such, be deemed to be an assignee or transferee of this Lease or the leasehold estate so as to require such Leasehold Mortgage, as such, to assume the perfonnance of any of the terms, covenants or conditions on the part of Tenant under this Lease to be perfonned. (m) All notices to which any Leasehold Mortgagee shall be entitled under this Article from Landlord shall be sent by certified or registered mail, return receipt requested, and shall be marked LANDLORD'S NOTICE TO LEASEHOLD MORTGAGEE.
(n) Upon request, Landlord agrees to execute, acknowledge and deliver to the Leasehold Mortgagee an agreement, prepared by the Leasehold Mortgagee at Tenant's sole cost and expense, agreeing to the foregoing provisions.
ARTICLE 10.
MAINTENANCE
Section 10.01 Tenant Responsible for Maintenance and Repair. (a) Tenant assumes full and sole responsibility for the condition, operation, repair an~ maintenance and management of the Property, including paved and unpaved ground surfaces and landscaping and the gangways, gangplanks and ramps, whether or not they cross the boundary of the Property, from and after the Co=encement Date. Tenant shall make all repairs, interior and exterior, structural as well as non-structural, ordinary as well as extraordinary, foreseen or unforeseen, which may be necessary to maintain the Property and Improvements at all times in 28 SF_DOCS\221983.17 [W97} Page 323 of 625
as good condition as exists on the Commencement Date or, for those items addressed by Section 10.02, as will exist after the satisfactory completion of the work described in Section lO.02, and in a reasonably clean, safe, attractive and sanitary condition. Tenant's repair, restoration, and maintenance activities shall be performed in a manner consistent with commercially reasonable maintenance at other flIst-class marina facilities in the San Francisco Bay region. Tenant specifically agrees to provide and maintain proper containers for trash and garbage, screened from public view, and to keep the Property (including those sections of riprap shoreline that are within or contiguous to the Property) free and clear of rubbish and litter.
Landlord shall not be responsible for the performance of any repairs, changes or alterations to the Property, nor shall Landlord be liable for any portion of the cost thereof, except for repairs necessitated by the gross negligence or willful misconduct of Landlord or Landlord's Agents after the Commencement Date.
(b) Without limiting Tenant's obligations under this Section 10.01, Tenant shall each year set aside and accrue at least five percent (5%) of that year's annual Gross Income, from all categories, to repair and maintain the Property. Unspent portions of this five percent (5%) shall accumulate with, and not substitute for, the five percent (5%) maintenance set aside for any subsequent year(s). For purposes of this Section 10.01(b), the costs of Tenant's capital improvements and reasonable overhead allocable to same shall qualifYas expenditures for repair and maintenance ofthe Property.
(c) Tenant shall keep and maintain records of all expenditures and accruals pursuant to this Section 10.1 and shall provide reasonable proof of such expenditures and accruals, and lor make Tenant's records of such expenditures and/or accruals, available to Landlord, at Landlord's reasonable request.
Section 10.02 Remedial Schedule and Landlord's Maintenance Fund. (a) Tenant agrees to perform remedial maintenance work identified in a Condition Survey from Concept Marine Associates, Inc. dated March, 1998 (the "Condition Survey") or other repairs and maintenance to the existing docks comprising a portion of the Property as Tenantshall identifYto Landlord and which Landlord shall approve as specified herein. Tenant shall expend at least Five Hundred Twenty-Three Thousand Dollars ($523,000) for such remedial maintenance work ("Remedial Expenditure"). Within sixty (60) days after the Closing Date, Tenant shall provide a list of remedial maintenance activities to which it desires to apply the Remedial Expenditure (the ''Remedial Schedule"). At least eight percent (80%) of the items on the Condition Survey (as determined by cost) shall be included on the Remedial Schedule. (b) Landlord shall have thirty (30) days in which to reject or approve each item on the Remedial Schedule in its reasonable discretion. Failure of Landlord to approve any given remedial maintenance activity on the Remedial Schedule shall be deemed a rejection of such activity. Once Landlord and Tenant have agreed upon the Remedial Schedule, Tenant shall submit plans and specifications to Landlord for the remedial work. Landlord shall use reasonable commercial efforts to approve or disapprove such plans and specifications within thirty (30) days after receipt. If Landlord disapproves such plans and specifications or any portion thereof, Landlord and Tenant shall confer in good faith to reach agreement. Once Landlord and Tenant have agreed on such plans and specifications, Landlord and Tenant shall 29 SF_DOCS\221983.17 [W97] Page 324 of 625
design a mutually satisfactory payment arrangement based upon a typical construction draw arrangement, subject to the terms of this Section 10.02 and pursuant to which Landlord shall disburse progress and final payments to Tenant upon presentation of invoices, receipt of conditional and final lien waivers from Tenant and its contractors or subcontractors, as appropriate, work inspection by Landlord, sign-off by all applicable governmental inspectors and delivery of "as built" drawings for the work.
(c) Landlord has agreed to make available to Tenant Four Hundred Sixty-Three Thousand Dollars ($463,000) ("Landlord's Maintenance Fund") to offset the costs of the Tenant's Remedial Expenditure. Landlord shall not make Landlord's Maintenance Fund available to Tenant until Tenant demonstrates to Landlord that Tenant has already spent at least Sixty Thousand Dollars ($60,000) of Tenant's own Remedial Expenditure funds on the required remedial maintenance work.
(d) If the cost of completing the Remedial Schedule as initially approved is less than the amount of the Remedial Expenditure, Tenant may submit additional Remedial Schedule(s) at any time of its choosing, which lists may include previously rejected remedial maintenance activities, and Landlord shall have thirty (30) days to object to or approve each item on such additional Remedial Schedule(s) in its reasonable discretion, provided that Landlord shall be under no obligation to consider or approve any additional Remedial Schedule(s) provided to it by Tenant more than twelve (12) months after the Closing Date. Any cost of completing the Remedial Schedule that exceeds the amount of Landlord's Maintenance Fund shall be the sole responsibility of Tenant.
(e) Tenant shall use its best cornmercial efforts to complete the work on the approved Remedial Schedule(s) within six (6) months of Landlord's approval of such activity.
Section 10.03 Landlord's Maintenance. Landlord shall, at its sole cost and expense, (1) perform future breakwater repair as necessary; and (2) repair as necessary the riprap and the structural components of the riprap shoreline and the esplanade within and contiguous to the Property (each as shown in Exhibit A-I, and together with all their components, systems, members and features, "Landlord's Maintenance Property"). Landlord's future use and development of Landlord's Maintenance Property shall not materially interfere with Tenant's use of and operations at the Property as such existed on the Commencement Date. The exclusion of Landlord's Maintenance Property from Tenant's repair and maintenance obligations under this Article 10 shall not relieve Tenant from the obligation to repair and restore any damage to Landlord's Maintenance Property caused by Tenant or Tenant's Agents, their use of the Property, or by improvements constructed by or on behalf of Tenant, and Tenant hereby agrees to perform such repair or restoration work at Tenant's sole cost and expense.
Section 10.04 Dredging. To the degree required, as indicated by the Bathymetric Survey, Landlord shall dredge the Channel Entrance by December 15, 2000 to a depth of eleven (11) feet below mean lower low water ("MLLW"). Landlord shall periodically thereafter dredge the Channel Entrance and the access channel to the Marina Fainvay (but not the Marina Fairway) as needed when the floor thereof is less than eight (8) feet below MLLW. Tenant shall have responsibility for dredging the Property and the Marina Fairway to the depths required for the operation of the Marina; provided, however, that Tenant shall never dredge the Property and the 30 SF_DOCSI221983.17 [W97] Page 325 of 625
Marina Fairway beneath the floor levels shown on the Bathymetric Survey without the written consent of Landlord, which Landlord may withhold in its sole discretion.
Section 10.05 Failure to Repair by Tenant. If Tenant defaults in its obligation to make any repairs or replacements as required by this Lease, Landlord may make or arrange for such repairs or replacements, and Tenant shall reimburse Landlord for all costs associated therewith, including but not limited to the cost oflabor, overhead, materials and equipment, together with interest thereon calculated as the highest rate allowed by law or three percent (3%) over the Bank of America prime rate, whichever is lower. Landlord shall provide notice to Tenant on or prior to cornmencing action under this Section 10.05, but shall not be required to wait or to undertake additional delay therefor.
ARTICLE 11.
CAPITAL IMPROVEMENTS
Section 11.01 Capital Improvements. The Parties anticipate that Tenant will from time to time make capital improvements to the Property. Prior to undertaking any material capital improvements, whether mandatory (because .required by Tenant's obligations under this Lease (including without limitation Articles 10 and 12) or voluntary, Tenant shall provide Landlord with detailed plans and specifications for such capital improvements, together with evidence of its contractors' and subcontractors' insurance in conformity with the provisions ofthis Lease.
All capital improvements, whether mandatory or voluntary, shall be subject to, and made in compliance with, the requirements of this Article 11.
Section 11.02 Compliance. All capital improvements by Tenant or Tenant's Agents, whether voluntarily undertaken or undertaken in order to comply with Tenant's obligations under this Lease, shall be made in material compliance with all applicable permits, authorizations, building and zoning laws and with all other Laws, including Environmental Laws. Tenant shall properly dispose of any contaminated soil and other material that is Released from the Property by Tenant or Tenant's Agents as a result of construction thereon. Tenant understands and agrees that Tenant's use of the Property and alterations thereto may require authorizations, approvals or permits from governmental agencies with jurisdiction over the Property. To the extent such approvals or permits are required, Tenant shall be solely responsible for obtaining any and all such regulatory approvals, including without limitation any regulatory approvals required to be obtained from City or Agency acting in their respective governmental capacities. Tenant shall bear all costs associated with applying for, obtaining and maintaining any necessary or appropriate regulatory approval(s) and shall be solely responsible for satisfying any and all conditions imposed by regulatory agencies as part of a regulatory approval. Any fines or penalties levied as a result of Tenant's failure to comply with the terms and conditions of any regulatory approval shall be timely and promptly paid and discharged by Tenant, subject to Tenant's rights of appeal thereof, and Landlord shall have no liability, monetary or otherwise, for any such fines or penalties. Tenant shall indemnify, protect, defend and hold harmless forever .
Landlord and Landlord's Ageilts against any and all claims, demands, losses, liabilities, .damages, liens, injuries, penalties, fines, lawsu,itsand other proceedings, judgments and awards, including, without limitation, reasonable attorney and consultant fees (together, "Losses") arising in connection with Tenant's failure to obtain, maintain, or comply in all material respects with the terms and conditions of any regulatory approval, except to the extent that such Losses are 31 SF_DOCS\221983.J7 [W97] Page 326 of 625
caused by the gross negligence or willful misconduct of Landlord or Landlord's Agent. In its proprietary capacity, Landlord shall reasonably cooperate with Tenant with respect to Tenant's obligations under this Section 11.02.
Section 11.03 Landlord's Consent in Proprietary Capacity. Each of Agency and City, in addition to any right they may have to review and approve any capital improvement of Tenant in their governmental capacity, shall have the right to remove and reasonably approve all proposed capital improvements in their proprietary capacity as Landlord under this Lease. Accordingly, Tenant shall be required to obtain Landlord's prior written approval in its proprietary capacity of each capital improvement unless such capital improvement( s) cost less than an aggregate of One Hundred Thousand Dollars ($100,000.00) in a given Accounting Year and could not reasonably be expected to diminish the value ofthe Property.
Section 11.04 Disclaimer. Nothing in this Section shall be construed to obligate Tenant to make such capital improvements or repairs that are the responsibility of Landlord under Section 10.03 . herein.
Section 11.05 Sales and Use Tax. Tenant agrees to inform Landlord as to how it will determine point of sale or use for purposes of collection of California sales and use tax. To the extent legally feasible given Tenant's business operations and to the extent the same will not materially increase Tenant's cost of doing business, Tenant will adopt sales and use tax reporting procedures which will provide the Landlord the greatest benefit from the allocation of the local 1% share of California sales and use taxes. Tenant agrees to designate the City as the qualifying point of sale for all retail sales, and register such with the State of California Board of Equalization; to report properly consumer use tax; to request vendors to cooperate with Landlord with regard to vendor use tax reporting; and to request that qualified construction contractors cooperate with Landlord with regard to job site allocations of sales and use taxes. Tenant shall exercise commercially reasonably efforts to encourage all businesses that perform services or provide products at the site of Tenant's operations to obtain and maintain a Business License from City.
Section 11.06 Financial Ability. Without limiting the other requirements of this Article 11, prior to the commencement of any construction on the Property, Tenant shall provide to Landlord evidence reasonably satisfactory to Landlord of Tenants ability to satisfy the costs of such construction.
ARTICLE 12.
REQUIREMENTS OF PUBLIC AUTHORITIES AND OF INSURANCE
UNDERWRITERS AND POLICIES
Section 12.01 Tenant's Legal Compliance.
(a) Tenant shall at its own cost and expense promptly comply in all material respects with (i) any and all present and future Laws of any present or future federal, state, city, county or other authority having jurisdiction over the Property or any street, avenue or any sidewalk in front thereof or any vault in or under the same, and of any and all of their departments and bureaus, including, but not limited to all Environmental Laws and the terms, conditions and 32 SF_DOCS\221983.17 [W97) Page 327 of 625
requirements ofBCDC Permits Nos. 11-78,25-82, 11-86,6-88, M86-51 and M87-19; (ii) any and all applicable Fire Rating Bureau or other body exercising similar functions affecting the Property or requiring the removal of any encroachment or affecting the maintenance, use or occupation of the Property, whether or not the same involves or requires any structural change or addition in or to the Property, and irrespective of whether or not such changes or additions be required on account of any particular use to which the Property, or any part thereof, may be put by Tenant or Landlord; and (iii) any and all provisions and requirements of any fire, liability or other insurance policy required to be carried by Tenant under the provisions of this Lease. (b) After the Commencement Date, BCDC may require Landlord and Tenant to be co-permittees under any new BCDC permits or any amendments to the BCDC permits specified in Section 12.01(a). Each Party agrees promptly to execute and deliver such further documents and to perform such further acts as may be necessary to allow Tenant to become such a co permittee, provided that Landlord shall not be required to execute and deliver any document or to perform any act which !p.ightresult in (i) the imposition of any material liability or obligation upon Landlord, (ii) any violation of any Law or (iii) any material expansion of any rights of Tenant under this Lease beyond those contemplated by the Parties on the Commencement Date.
Section 12.02 Landlord's Compliance. Landlord shall comply in all material respects with the terms, conditions and requirements ofBCDC Permits Nos. 11-78, 25-82, 11-86, 6-88, M86-51 andM87-19.
Section 12.03 DBAW Approval. Landlord and Tenant acknowledge that the execution of this Lease requires the approval of DBAW, under California Harbors and Navigation Code § 72.
ARTICLE 13.
LANDLORD ACTING IN PROPRIETARY CAPACITY
Section 13.01 Preservation of Landlord's Governmental Capacity. Tenant understands and agrees that each of Agency and City are entering this Lease in their capacity as a property owner with a proprietary interest in the Property and not in their capacity as a governmental or regulatory agency with police powers, and any obligation(s) or restriction(s) imposed by this Lease on Landlord shall be limited to Landlord's proprietary capacity and shall not relate to, constitute a waiver of, supersede or otherwise limit or affect the governmental and regulatory capacities of Landlord, including enacting laws, inspecting structures, reviewing and issuing permits, and all of the other legislative and administrative or enforcement functions pursuant to federal, state and/or local law. Nothing in this Lease shalllim.it in any way Tenant's obligation to obtain any required approvals from City officials, departments, boards or commissions having jurisdiction over the Property, nor shall anything in this Lease be deemed a waiver of any . governmental or regulatory requirements by any City official, department, board or commission.
By entering this Lease, Landlord is in no way modifying or limiting Tenant's obligation to use the Property in accordance with all applicable Laws, as provided in this Lease, or making any representations or warranties, express or implied, regarding its present or future exercise of its governme~tal and regulatory authority with respect to Tenant or the Property. 33 SF_DOCS\221983.1 7 [W97] Page 328 of 625
ARTICLE 14.
LANDLORD NOT LIABLE FOR INJURY OR DAMAGE
.Section 14.01 Limitation on Liability. Landlord shall not in any event whatsoever be liable for any injury or damage to any property or to any person happening, on or after the Commencement Date,on, in or about the Property and its appurtenances, nor for any injury or damage to the Property or to any property belonging to Tenant or any other person which may be caused by any fire, breakage, leakage or defect or by water or rain that may leak into, issue or flow from any part ofthe Property or by the use, misuse or abuse of any ofthe structures, areas of egress or ingress, or which may arise from any other cause whatsoever, except to the extent caused by the gross negligence or willful misconduct of Landlord or Landlord's Agents or their breach of any of its representations andlor obligations hereunder.
ARTICLE 15.
INDEMNIFICATION OF LANDLORD
Section 15.01 Tenant's Indenmification of Landlord. In addition to any other indemnities to Landlord specifically provided in this Lease, Tenant shall indemnify, defend, protect, and save hannless Landlord and Landlord's Agents from and against all liabilities, suits, obligations, fines, d lll1lages, penalties, demands, claims, costs, charges and expenses, including without limitation reasonable fees of attorneys, architects and consultants, which may be imposed upon or incurred by or asserted against Landlord and arising directly or indirectly out of any of the following (except to the extent accrued prior to the Commencement Date or caused by the gross negligence or willful misconduct of Landlord or Landlord's Agent, or Landlord's breach of any of its representations andlor obligations hereunder):
(a) any work, act or event occurring on the Property or any part thereof, or any work, act or event occurring in any area adjacent to the Property and related to the activities of Ten ant or Tenant's Agents;
(b) any use, possession, occupation, alteration, repair, condition, operation, maintenance or management of the Property or any part thereof; (c) any negligence on the part of Tenant or any of Tenant's subtenants, contractors, employees, licensees or invitees;
(d) any lien or claim which may be alleged to have arisen against or on the Property. . under the laws ofthe State of California or of any other governmental authority; (e)
Lease; or
any breach by Tenant of any of its representations andlor obligations under this (f) any failure on the part of Tenant to keep, observe and perform any of the terms, covenants, agreements, provisions, conditions or limitations contained in any Leasehold Mortgage or in any subleases or other contracts or agreements affecting the Property, on Tenants part to be kept, observed or performed.
This Article 15 shall survive the expiration or termination of this Lease. 34 SF_DOCS\221983.17 [W97] Page 329 of 625
ARTICLE 16.
LANDLORD'S RIGHT OF ACCESS
Section 16.01 Access. Landlord, Landlord's Agents, and DBAW shall have the right to enter onto the Property or any portion thereof at all reasonable times and upon not less than 24 hours oral or written notice to Tenant (except in the case of emergency access by Landlord or Landlord's Agents) in order to review the condition of the Property and to perform Landlord's obligations or to exercise Landlord's rights hereunder. An emergency is any event or circumstance which poses an imminent threat to life or property.
Section 16.02 Emergency Access. In the event of emergency access, Landlord shall have the right to enter without notice and shall not be responsible for any damage or injury to any property, nor for the replacement of any such property and any such emergency entry shall not be deemed to be a forcible or unlawful entry onto or a detainer of, the Property, or an eviction, actual or constructive, of Ten ant from the Property or any portion thereof.
Section 16.03 No Liability. Landlord shall not be liable in any manner, and Tenant hereby waives any claims, for any inconvenience, disturbance, loss of business, loss of revenue, loss or profit, nuisance or any other damage arising out of Landlord's entry onto the Property, except damage resulting from the gross negligence or willful misconduct of Landlord or Landlord's agents.
ARTICLE 17.
LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS
Section 17.01 Landlord's Right to Cure Tenant Defaults. If Tenant shall at any time fail to pay any Tax in accordance with the provisions hereof, or to take out, pay for, maintain or deliver any of the insurance policies provided for herein, or shall fail to make any other payment or perform any other act on its part to be made or performed under this Lease, then Landlord, without waiving or releasing Tenant from any obligation of Tenant contained in this Lease, may (but shall be under no obligation to):
(a) pay such Tax payable by Tenant pursuant to the provisions hereof; (b) take out, pay for and maintain any of the insurance policies provided for herein; or
(c) make any other payment or perform any other act on Tenant's part to be made or performed under this Lease. Landlord may, after such notice as is provided for herein, enter upon the Property for the purpose of curing Tenant's defaults and take all such action thereon as may be necessary to effect such cure. .
All sums so paid by Landlord and all costs and expenses incurred by Landlord in connection with the performance of any such act, together with interest thereon at the highest rate allowed by law or five percent (5%) over the Bank of America prime rate, whichever is lower, from the respective dates of Landlord's making of each such payment and giving written notice of same to Tenant, shall be paid by Tenant to Landlord on demand. Any payment or performance by Landlord pursuant to the foregoing provisions ofthis Article shall not be nor be 35 SF_ DOCS\221983. 17 [W97J Page 330 of 625
deemed to be a waiver or release of the default or Event of Default of Tenant with respect thereto or of the right of Landlord to terminate this Lease, institute summary proceedings and/or take such other action as may be permissible hereunder in the event of default or Event of Default by Tenant.
ARTICLE 18.
PERMITTED USE
Section 18.01 Permitted Use. Tenant shall use, operate and manage the Property only and exclusively for the purposes of (i) berthing, fueling, and storing boats; (ii) providing berthing spaces for owners of boats who wish to reside on their boats; (iii) other uses that are generally consistent with waterfront recreation areas; and (iv) providing services related to any the activities described in subsections (i)-(iii), or any other commercially reasonable services arising in connection with operation of the Marina, such as lockers, food, beverage and goods concessionaires, and other services. Other uses, activities and programs must receive the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed.
Tenant shall provide security protections to the Premises at a level at least equal to the level customarily provided at Northern California marinas comparable to the Marina. Nothing in this Section shall be construed as Landlord's permission for uses that require a use permit or other approval by the City, unless such permit or approval is properly obtained.
Section 18.02 Limitations on Use. Tenant shall not use or occupy, nor permit or suffer the Property or any part thereof to be used or occupied for any unlawful, noisy, hazardous or illegal business, use or purpose, or for any business, use or purpose in any way in violation of any present or future Laws. Tenant shall immediately upon the discovery of any such unlawful or illegal use take all reasonable steps, legal and equitable, to compel the discontinuance of such use and to oust and remove any subtenants, occupants, licensees, invitees, or other persons guilty of such unlawful or illegal use.
Section 18.03 Landlord's Use.
(a) Landlord and their officials and employees shall have the right to use, in their official capacity, the boat launch ramp and up to six (6) boat side-ties at no cost or expense to Landlord.
(b) Landlord shall retain for its own use two storage containers located south of the Harbormaster Building, as graphically depicted on Exhibit A-I. Landlord, in its sole discretion, may remove these storage containers or relocate them beyond the Property. Tenant shall also have the right to relocate these storage containers with Landlord's prior approval, which approval shall not be unreasonably withheld.
(c) Landlord and its designees (including without limitation the Marina Bay Neighborhood Council) shall have the continuing right to use the Property, including without limitation the Harbormaster Building, the Boathouse and the docking berths for the Sea ScoutslNorthland Nautical Foundation, for public events and activities (including without limitation public water-related activities) throughout the Term. Tenant shall have the right to charge Landlord or its designees, as appropriate, for such uses and activities at the rates in effect 36 SF.DOCSI221983.17 [W97] Page 331 of 625
on the Commencement Date for the initial three (3) years of the Term. (Without limiting the foregoing, if any such use or activity is free on the Commencement Date, such use or activity shall remain free for the initial three (3) years of the Term.) After the initial three (3) years of the Term, Tenant shall have the right to charge Landlord or its designees, as appropriate, for such uses and activities at such reasonable and non-discriminatory rates as shall be set by Tenant from time to time. Landlord shall deliver a reservation notice to Tenant no less than sixty (60) days in advance of any proposed use or activity by Landlord or its designees. So long as the facility in question has not already been booked for the date and activity requested, Tenant shall use its best commercial efforts to accommodate such reservation.
(d) Landlord shall have the right to keep and maintain its "800 trunk" equipment and antenna at the Harbormaster Building throughout the Term. Tenant may from time to time, if necessary for Tenant's use or maintenance of the Harbormaster Building, request the relocation of this equipment to a different area within the Harbormaster Building or the Property; Landlord may agre()or disagree with this request in its sole and absolute discretion, and if Landlord agrees to relocate the equipment in response to such Tenant request the costs for such relocation shall be borne solely by Tenant.
Section 18.04 Public Use. The general public shall at all times have the right and ability to gain access to the shoreline of San Francisco Bay and the-Marina, as further provided in the BCDC permits applicable to the Property, the Restructured DBAW Loans, and certain Laws ofthe State of California, including California Harbors and Navigation Code § 40.
ARTICLE 19.
DEFAULT, REMEDIES, ETC.
Section 19.01 Event of Default. Each of the following events shall be an ''Event of Default" hereunder:
(a) Any action taken or suffered by Tenant under any insolvency or bankruptcy act, including the appointment of a receiver to take possession of all or substantially all of the assets of Tenant, provided that if such action is not initiated by Tenant, Tenant shall have sixty (60) days in which to terminate, set aside, or dismiss such action; (b) Any general assignment by Tenant on behalf of creditors; (c) Any vacation or abandonment of the Property by Tenant for more than thirty (30) consecutive days, except to the extent such abandonment is caused by Unavoidable Delay or by damage or destruction covered by Section 7.01 or 7.02 of this Lease; (d) Any failure by Tenant to make any scheduled monetary payment where delinquency continues for ten (10) days after the due date of the payment, or any failure by Tenant to make any unscheduled monetary payment to payment where delinquency continues for ten (10) days after Tenant's receipt ofwritten notice of such delinquency from Landlord; or (e) Any failure by Tenant to perform or comply with any other term, covenant, or condition contained in this Lease within thirty (30) days after Tenant's receipt of Landlord's written notice of default; provided, however, that if the default is of such a nature that it cannot 37 SF_DOCS\221983.17 [W97] Page 332 of 625
reasonably be cured within a thirty (30) day period, such failure shall not constitute an Event of Default so long as Tenant, after receiving such notice, begins to cure the default as soon as reasonably possible and diligently continues in good faith to take all steps necessary to complete the cure as soon as reasonably possible; provided further, however, that such default must in all events be finally cured within one-hundred twenty (120) days after Tenant's receipt of Landlord's initial notice of default.
Section 19.02 Termination of Lease. In the event of an occurrence of an Event of Default Landlord may, at its option, terminate this Lease by giving Tenant written notice, and thereupon this Lease shall cease and terminate and Tenant's rights in and to the Property shall also terminate, and Tenant shall quit and surrender possession of the Property; provided, however that such termination shall not relieve Tenant from its obligation to pay any Rent or any other sums then due and payable to Landlord hereunder or from any obligations which survive the expiration or termination of this Lease, and Landlord may recover any such Rent or other sums by any means allowed under applicable Law.
Section 19.03 Landlord's Rights and Remedies. In the event of any Event of Default or breach of this Lease by Tenant, Landlord's obligations under this Lease shall be suspended and Landlord may at any time thereafter, without limiting Landlord in the exercise of any other right or remedy at law or in equity_which Landlord may have (all remedies providedherein being non exclusive and cumulative), do anyone or more of the following:
(a) This Lease shall continue in effect so long as Landlord does not terminate Tenant's right to possession of the Property after a breach of this Lease, and Landlord may enforce all of its rights and remedies, including the right to recover Rent as it becomes due; and (b) Landlord has the remedy described in California Civil Code § 1951.4 (Landlord may continue Lease in effect after Tenant's breach and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations). (c) After notice as provided herein, Landlord may elect to terminate this Lease after the occurrence of any Event of Default and in such case Landlord may declare this Lease and Tenant's right to possession terminated and reenter the leased Property and remove Tenant's property therefrom and store such property for Tenant's account and at Tenant's expense. (d) Ifthis Lease terminates, Landlord shall be entitled to recover from Tenant:
(i) the worth at the time of award ofthe unpaid Rent which had been earned at the time oftermination;
(ii) the worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the arnount of such rental loss that Tenant proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid Rent for the balance oftlie Term after the time of the award exceeds the amount of each such rental loss that the Tenant proves could be reasonably avoided; and 38 SF_DOCS\221983.17 [W97] Page 333 of 625
(iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom. (e) The "worth at the time of award" of the amounts referred to in subsection (i) and (ii) of subdivision (d) shall be computed by allO\vinginterest at the highest rate then allowed by Law. The worth at the time of award of the amount referred to in paragraph (iii) of subsection (d) shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1 %).
Section 19.04 Tenant's Rights and Remedies. If Landlord defaults in the performance of its obligations hereunder, then Tenant shall be entitled to exercise all rights and remedies available to Tenant at law and equity if Landlord has not commenced curing such default within forty-five (45) days after receipt of written notice from Tenant specifying such default.
ARTICLE 20.
NOTICES
.Section 20.01 Definition of Notice. As used in this Lease, notice includes but is not limited to, the communication of notice, request, demand, approval, statement, report, acceptance, consent, waiver and appointment.
Section 20.02 Reguirements. All notices must be in writing, except as otherwise provided in this Lease.
Section 20.03 Delivery. All notices shall be delivered via confirmed facsimile, ovemight courier, by hand delivery or by certified mail, return receipt requested, to the appropriate party at the addresses set forth below. All communications shall be deemed served upon delivery of, or if mailed, upon the first to occur of receipt or the expiration ofthree (3) days after the deposit in the United States Postal Service mail, postage prepaid and addressed to the address specified below or, if transmitted via facsimile, upon electronic confirmation of receipt; provided, however, that non-receipt of any communication as the result of any change of address or facsimile number of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.
Notice To Landlord:
Richmond Redevelopment Agency
330 25th Street
P.O. Box 4046
Richmond, CA 94804 .
Attn: David Thompson, Redevelopment Director
510-307-8140
Fax: 510-307-8149
with a copy to:
39 SF_DOCS\221983.17 [W9J] Page 334 of 625
Office of the City Attorney, City of Richmond
City Hall, Room 330
2600 Barrett Avenue
P.O. Box 4046
Richmond,CA 94804
Attn: Malcolm Hunter, City Attorney
510-620-6509
fax: 510-620-6518
Notice to Tenant:
Richmond Bay Marina, LLC
clo Westrec Marinas
16633 Ventura Blvd. 6th Floor
Encino, CA 91436
Attn: Thomas J. Hogan
818-907-0400
fax: 818-907-1104
Notice to BACFC:
Bane of America Commercial Finance Corporation
187 Danbury Road
Wilton, Connecticut 06897
Attn: Vice President Commercial Real Estate
Bane of America Commercial Finance Corporation
187 Danbury Road
Wilton, Connecticut 06897
Attn: General Counsel
Bane of America Commercial Finance Corporation
400 Northridge Road, Suite 520
Atlanta, Georgia 30350
Notice to Other Institutional Lenders:
See Article 9
Section 20.04 Other Parties. Either Party and any Leasehold Mortgagee or Institutional Lender (including BACFC) may by notice given at any time or from time to time, require subsequent notices to be given to another individual person, whether a Party or an officer or representative, or to a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change.
40 SF_DOCSI221983.17 [W97] Page 335 of 625
ARTICLE 2l.
CONDEMNATION
Section 21.01 Date of Condemnation. The Property or any portion thereof shall be deemed to have been taken or condemned on the earlier of (a) the date on which actual possession of the Property or such portion is acquired by the condemning authority or (b) the date on which title to the Property or such portion vests in such condemning authority.
Section 21.02 Total Taking. If a Total Taking shall occur, then this Lease shall terminate on the date of such taking and the Periodic Rent and other sums and charges herein provided to be paid by Tenant shall be apportioned and paid to the date of such taking. Ifthis Lease terminates as provided in this Section 21.02, each of Landlord and Tenant shall have the right to seek a condemnation award and such award shall be apportioned between Landlord and Tenant under then applicable Law as their interests may appear. The parties to this Lease hereby waive the provisions of Califomia Code of Civil Procedure § 1265.130. This Lease shall not terminate due to Tenant's determination that the taking involves "substantially all of the Marina" without the first priority Leasehold Mortgagee's prior written consent, unless the indebtedness of Tenant to such Leasehold Mortgagee is paid in full.
Section 21.03 Partial Taking ..
(a) If a Partial Taking shall occur, then this Lease shall terminate as to the portiones) so taken but shall remain in effect as to the portiones) not so taken; provided, however, that in such event, each of Landlord and Tenant shall execute any and all documents that may be required in order to facilitate collection of any and all condemnation awards from the condemning authority, but such award shall be apportioned between Landlord and Tenant as follows:
(i) There shall be first paid any and all reasonable fees and expenses incurred by Landlord, and then by Tenant, in connection with the collection of the award(s); (ii) Remaining proceeds, if any, shall be applied to repair, rebuild or restore any remaining part of the Improvements not taken, provided, however, that (a) if so required by either DBAW (as to Landlord's proceeds) or any Leasehold Mortgagee (as to Tenant's proceeds), such funds as may be necessary shall first be applied to the unpaid debts owed to DBAW or such Leasehold Mortgagee(s), as the case may be, followed then by the protection of Improvements as set forth in this Section 21.03(a)(ii) and (b) if required by both DBAW and any Leasehold Mortgagee, such funds as may be necessary shall be applied first to the unpaid debts of DBAW and second to the unpaid debts of such Leasehold Mortgagee(s), respectively, followed then by the protection of Improvements as set forth in this Section 21.03(a)(ii). Tenant shall perform such repair, rebuilding or restoration in accordance with the applicable requirements of this Lease; and
(iii) Remaining proceeds, if any, shall be distributed to Landlord and Tenant as if they were proceeds of a Total Taking.
(b) In the event of a Partial Taking, and from the date thereof, Annual Minimum Rent shall be reduced by a fraction, the numerator of which is the number of slips remaining at the 41 SF_DOCS\221983.17 [W97] Page 336 of 625
Marina following the taking, and the denominator of which is the number of slips existing immediately prior to the date of the Partial Taking, provided, however, at no time shall the Annual Minimum Rent be reduced below Seventy-Five Thousand Dollars ($75,000) per year, and the percentages ofthe categories of Gross Income set forth in Article 3 shall remain the same following any Partial Taking,
Section 21.04 Temporarv Taking. If a temporary taking shall occur with respect to the use or occupancy of the whole or any part of the Marina for a period greater than one hundred and twenty (120) days, for any public or quasi-public purpose by any lawful power or authority, by the exercise of the power of condemnation or by agreement under threat thereof, then Tenant shall, at its option, be entitled to terminate this Lease effective as of the commencement of such temporary taking. If the temporary taking relates to a period of one hundred and twenty (120) days or less, or if Tenant does not elect to terminate this Lease, then all proceeds and awards relating to such temporary taking (to the extent attributable to periods within the Term) shall be paid to Tenant, and Tenant's obligations under this Lease shall not be affected in any way; provided, however, that if such temporary taking shall be for a period extending beyond the expiration of the Term, Landlord shall be entitled to receive such portions thereof attributable to the period after such expiration on a straight-line pro-rata apportionment.
Section.21,05 Other_Governmental Action .. In case of any governmental action not resulting in the taking or condemnation of any portion of the Property but creating a right to compensation therefor, such as the changing of the grade of any street upon which the Property abuts, this Lease shall continue in full force and effect without reduction or abatement of Rent and the award shall be paid to Tenant.
Section 21.06 Certain Proceeds .. Ifin connection with any condemnation or conveyance in lieu thereof Landlord receives any proceeds which are required to be paid to Tenant, Landlord shall deliver such proceeds to the highest priority Leasehold Mortgagee of whose address has been provided to Landlord in accordance \vith Article 9, ARTICLE 22.
IMPROVEMENTS
Section 22,01 Ownership of Improvements. All Improvements located on the Land on the Cornmencement Date shall be the property of Landlord .. Any Improvements erected on the Property by Tenant during the Term shall be the property of Tenant during the Term, but shall become the property of Landlord upon the expiration or sooner termination of this Lease, without Landlord's payment of any consideration therefor. Notwithstanding Landlord's ownership ofthe improvements located on the Land on the Commencement Date, it is the intention of Landlord and Tenantthat Tenant shall have the right to the federal income tax depreciation on all of the Improvements, whether owned by Landlord or Tenant, during the Term.
42 SF_DOCS\221983.17 [W97] Page 337 of 625
ARTICLE 23.
CERTIFICATES BY LANDLORD AND TENANT
Section 23.01 Tenant's Certificate of Lease. Tenant agrees at any time and from time to time upon not less than ten (10) Business Days' prior notice by Landlord to execute, acknowledge and deliver to Landlord, or any other Party specified by Landlord, a statement in writing certifYing that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect as modified and stating the modifications) and the dates to which the Rent, Taxes and other amounts and charges due under this Lease have been paid, and stating whether or not to the best knowledge of Tenant Landlord is in default in the performance of any covenant, agreement or condition contained in this Lease on Landlord's part to be performed. and, if so, specifYing each such default of which Tenant may have knowledge.
Section 23.02 Landlord's Certificate of Lease. Landlord agrees at any time and from time to time upon not less then twenty (20) days' prior notice by Tenant to execute, acknowledge and deliver to Tenant, or any Institutional Lender or other approved Leasehold Mortgagee, a statement in writing certifYing that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect as modified and stating the modifications) and the dates to which the Rent, Taxes and other amounts and charges due --uuder-this-LeaseJJave.been.paid,-and-stating.w.hether.or.not, to_thebes! knowkdge_QfLl!IldLo.nL .
Tenant is in default in the performance of any covenant. agreement or condition contained in this Lease on Tenant's part to be performed, and, if so specifYing each such default of which Landlord may have knowledge.
ARTICLE 24.
LAA'DLORD'S CONSENTS
Section 24.01 Consent Not a Waiver. It is understood and agreed that the granting of any consent by Landlord to Tenant to perform any act of Tenant requiring Landlord's consent under the terms of this Lease, or the failure on the part of Landlord to object to any such action taken by Tenant without Landlord's consent, shall not be deemed a waiver by Landlord of its rights to require such consent for any further similar act by Tenant.
Section 24.02 Reasonable Modifications of Lease. Landlord shall consent to any commercially reasonable modifications of this Lease required by any Leasehold Mortgagees, provided that such modifications do not change the fundamental economic terms of the Lease or, in Landlord's sole opinion, materially adversely affect its interests under this Lease. Where Landlord's consent is so requested, Landlord shall be reasonable in its consideration. Landlord's consent is deemed denied if not given within sixty (60) days of request.
ARTICLE 25.
SURRENDER AT END OF TERM
Section 25.01 Terms of Surrender. On the last day of the Term or upon any earlier termination of this Lease, orupon a re-entry by Landlord upon the Property pursuant to Article 19 hereof, Tenant shall surrender and deliver to Landlord the Property, without any payment or allowance whatever by Landlord, (a) free and clear of all (i) lettings and occupancies other than subleases 43 SF_DOCS\221983.17 [W97) Page 338 of 625
then terminable at the option of Landlord or subleases to which Landlord shall have specifically consented, and (ii) liens and encumbrances other than those, if any, existing at the date hereof or created by Landlord or subsequent owners of the Land, and (b) in good condition and repair, as required by this Lease, ordinary wear and tear excepted. Tenant hereby waives any notice now or hereafter required by law with respect to vacating the Property on any such tennination date.
Tenant hereby waives any claim to relocation benefits available to it under California or federal law as a result of the termination of this Lease.
Section 25.02 Holdover. Tenant shall not holdover after the tennination, revocation or expiration of this Lease without the prior written approval of Landlord, which may be withheld in Landlord's sole discretion. Any unpermitted holdover shall be deemed an extension of this Lease upon a month-to-month basis upon the same terms and conditions as set forth in this Lease as such exist immediately prior to the commencement ofthe holdover period, except that Annual Minimum Rent shall be increased to one hundred twenty five percent (125%) of the Annual Minimum Rent applicable to the immediately preceding Accounting Year. In the event of any unpennitted holdover, Tenant shall be a tenant at sufferance.
ARTICLE 26.
NO ORAL AGREEMENTS
Section 26.01 Integration. This Lease contains the entire understanding of the Parties. Tenant acknowledges that there is no other written or oral understanding between the Parties with respect to the Marina. No modification, amendment, or alteration of this Lease shall be valid unless it is in writing and signed by each of the Parties.
ARTICLE 27.
QUIET ENJOYMENT
Section 27.01 Quiet Enjoyment. Landlord covenants that, if and so long as Tenant shall faithfully perform the agreements, terms, covenants and conditions hereof, Tenant shall and may (subject, however, to the exceptions, reservations, terms and conditions of this Lease) peaceably and quietly have, hold and enjoy the Property for the term hereby granted without disturbance by or from Landlord and free of any encumbrance created or suffered by Landlord, except those to which this Lease is subject and subordinate.
ARTICLE 28.
ENVIRONMENTAL PROVISIONS
Section 28.01 Tenant's Compliance. Tenant, Tenant's Agents and Affiliates shall comply with all Environmental Laws affecting the Property and shall not perform, or suffer or permit to be performed, any acts, or omit or refuse to take any required actions, in violation of Environmental Laws. In addition to the foregoing, Landlord and Tenant agree as follows:
(a) Tenant will not use the Property, nor will Tenant permit the Property to be used, for the purpose of refining, producing, storing, handling, transferring, processing, transporting, generating, manufacturing, treating or disposing of any Hazardous Material except in material compliance with all Environmental Laws and as necessary for the operation of Tenant's business 44 SF_DOCS\221983.17 [W97] Page 339 of 625
(but in no event in excess of that required for the ordinary corrunercial operations of comparable marinas).
(b) Tenant shall comply, and shall cause Tenant's Agents, Affiliates, Slip Tenants and other Persons using or occupying all or a portion of the Property with Tenant's consent or to TenaJ1t's knowledge to comply, with all Environmental Laws affecting the Property and shall notifY Landlord of any Release or any violation of any Environmental Law affecting the Property that is actually known to Tenant. Tenant shall be responsible for all Environmental Liabilities and Costs and all Remedial Actions associated with any Release or threatened Release in, over, on, under or about the Property which occurs after the Commencement Date and which is caused by Tenant or any Tenant Agent, Affiliate, Slip Tenant, or other Person using or occupying all or a portion of the Property. Without limiting the foregoing (but subject to the provisions of this Article 28), Tenant shall be responsible for all Environmental Liabilities and Costs and all Remedial Actions associated with any Release or threatened Release in, over, on, under or about the Property which occurs after the Commencement Date and which is caused by Tenant or any Tenant Agent, Affiliate, Slip Tenant, or other Person using or occupying all or a portion of the Property in the course of Tenant's construction or dredging activities. (c) Except as set forth in Section 28.01(d), Tenant shall have no liability or resRonsibilityjorEnvir0 Ill11entalI,jabilities ~d Costs arising from Hazardous Materials present in, over, on, under or about the Property on or prior to the Commencement bate ("Pre-existing Hazardous Materials"), or the migration or threatened migration of Pre-existing Hazardous Materials within the Property or from the Property onto adjacent or other third-party property, including without limitation any liability or responsibility of Landlord with respect to Pre existing Hazardous Materials under the provisions ofthe Harding Lawson Associates Final . Remedial Action Plan dated as of July 25, 1993, as amended from time to time (the "RAP"). (d) If any disturbance of Pre-existing Hazardous Materials occurs in the course of Tenant's construction or dredging activities (each a "Disturbance of Pre-existing .Hazardous Materials"), or any Environmental Claim arises as a result of a Disturbance of Pre-existing Hazardous Materials which requires Remedial Action or other compliance with Environmental Laws with respect to Pre-existing Hazardous Materials in an area larger than that affected by the Disturbance of Pre-existing Hazardous Materials (each a "Follow-On Claim"), Tenant shall be responsible for such Disturbance of Pre-existing Materials and associated Follow-On Claims as set forth below. If any Disturbance of Pre-existing Materials occurs, Tenant shall immediately notifY Landlord of such occurrence and shall promptly take all necessary Remedial Actions required to contain the Disturbance of Pre-existing Materials and inform Landlord of such actions.
(i) If the Disturbance of Pre-existing Hazardous Materials occurs in connection with Tenant's construction activities on the land portion of the Property, Tenant shall be responsible for all Environmental Liabilities and Costs associated with the Disturbance of Pre-existing Materials and all Follow-On Claims, as set forth in Article 11. (ii) If the Disturbance of Pre-existing Hazardous Materials occurs in connection with Tenant's construction activities in the water portions of the Property, and Tenant has obtained Landlord's prior written consent to such construction activities in accordance with 45 SF_DOCS\221983.17 [W97]