1 MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING (this “MOU” or this “Agreement”) is executed effective as of _________, 2023 by and among the City of Richmond, a municipal corporation (“City”), _______________, a California limited partnership (“Developer”), Novin Development Corporation, a __________ corporation (“Novin”) and Insight Housing, a ________ nonprofit public benefit corporation (“Insight Housing”). City, Developer, Novin, and Insight are collectively referred to herein as the “Parties.”
RECITALS
WHEREAS, pursuant to California Health and Safety Code Sections 50675.1.3 and 50675.1.4, the California Department of Housing and Community Development (“HCD”) operates the Homekey Program as part of an ongoing statewide effort to sustain and rapidly expand housing for persons experiencing homelessness or at risk of homelessness; WHEREAS, the City has identified transitioning homeless residents into permanent housing as one of its highest priorities;
WHEREAS, the Developer is an experienced affordable housing real estate developer with the capability of planning, designing, engineering, financing, marketing, developing, owning and operating permanent supportive housing in a fashion that could achieve the City’s objective of providing a permanent supportive housing project;
WHEREAS, the City and Developer identified the Motel 6 located at 425 24th Street (the “Motel”) as a site that is desirable for the permanent housing conversion contemplated by the Home key;
WHEREAS, Novin is [Developer’s managing general partner] and has executed a letter of intent addressing terms for the acquisition of the Motel;
WHEREAS, the City and the Developer intend to submit a joint application for Homekey funds in an amount not to exceed _________________ ($________) to finance the acquisition and rehabilitation of the Motel and its conversion into 49 units of permanent supportive housing and one manager’s unit (the “Project”);
WHEREAS, the Parties wish to enter into this MOU to set forth certain responsibilities of the Parties;
NOW, THEREFORE, in consideration of the recitals and mutual covenants and conditions contained in this MOU, the Parties agree as follows:
2 1. Cooperation; Compliance with Homekey Requirements. The Parties agree to encourage the highest possible degree of cooperation between their respective representatives with regard to the Project, including but not limited to, acting in good faith to ensure transparency, mutual success, and liability prevention, acquire, rehabilitate, and maintain the Motel, and provide services to the residents. The Parties agree to coordinate their resources and efforts to timely rehabilitate and manage the Motel and provide supportive services for residents of the Motel, all in accordance with the statute, regulations, program guidelines, notice of funding availability requirements, and HCD documents addressing the requirements of the Homekey Program (all of the foregoing, collectively, the “Homekey Requirements”).
2. Schedule of Performance. The Schedule of Performance attached hereto as Exhibit A, (“Schedule of Performance”) outlines the responsibilities of the Parties. Further detail regarding such responsibilities will be set forth in funding agreements, regulatory agreements, and such other documentation as City or HCD may determine are necessary. The Schedule of Performance outlines specific responsibilities of City, Novin, and Insight Housing.
3. Developer Responsibilities. Contingent upon receipt of an adequate award of Homekey funds, Developer shall undertake the following activities:
(a) Purchase the Motel using a combination of Homekey funds, private financing, and funds awarded by the City.
(b) Undertake any environmental review required under the California Environmental Quality Act (CEQA) or the National Environmental Policy Act (NEPA). (c) Collaborate with the City to obtain funding to offset or reimburse the City for City financial contributions to the Project.
(d) Provide a development schedule, including project milestones, that meets Homekey Requirements. Developer shall be liable for any loss of grant funds that result from failure to achieve these milestones or any other deadlines, to the extent that the failure is within the Developer’s reasonable control. The City shall bear no liability for any failure of the Developer to meet any applicable deadlines with respect to the acquisition, rehabilitation, or operation of the Project.
(e) Prepare and implement a scope of work necessary to convert the Motel to permanent affordable supportive housing and create safe and habitable living spaces, consistent with the following requirements:
i. The scope of work shall be based upon a Physical/Capital Needs Assessment and Phase I environmental report commissioned by the Developer as part of the Project development budget and shall include all work necessary to rehabilitate the Motel to create safe and habitable living spaces, on a site that is environmentally clean per findings of Phase I environmental report and completion of needed remediation, including but not limited to certified abatement of lead and asbestos, if any, in the motel, 3 and removal or abatement of contaminants as required by the findings of the Phase I report.
ii. Developer is responsible for causing plans and specifications for the Project to be prepared by a licensed architect, obtaining City Building Department approval of such plans, obtaining all necessary permits, including without limitation, building permits, and for payment of all costs associated therewith, including, without limitation, all required fees charged by permitting agencies. iii. Developer is responsible for all construction/rehabilitation costs, including any cost overruns exceeding contingencies.
iv. Developer shall comply with all applicable City, State, and federal regulations associated with the financing provided for the Project, including without limitation, all applicable requirements pertaining to relocation of residents, local hire and the payment of prevailing wages.
v. The scope of work shall include, without limitation, installation of kitchenettes in each housing unit, upgrades to meet ADA and fire and life safety standards within the units and the building, and in the parking lot area, and shall include the development of a supportive service delivery space of approximately ____ square feet.
(f) Own, manage and operate the Motel as permanent affordable housing for the benefit of acutely low-, extremely low- and low-income residents.
i. The Project shall be operated consistent with the principles of Housing First.
The Contra Costa County Coordinated Entry System (CES) will be the source for client referrals for so long as the Project is funded by sources requiring participation in CES.
ii. Developer shall provide on-site security during construction, and as appropriate and determined by the Parties after completion of rehabilitation.
iii. Developer shall ensure that the Project will remain affordable for a minimum period of 55 years from the close of escrow for construction financing, and the Project will be subject to deed restrictions to that effect. The terms and conditions governing such obligation shall be set forth in a Regulatory Agreement and such other documentation as City, HCD, or other funding agencies may require.
4. City Responsibilities. Contingent upon receipt of an adequate award of Homekey funds, the City shall perform the following activities, as more particularly set forth in funding agreements and any other necessary and appropriate documentation:
(a) Provide $___________ in funding to provide Project development and operating subsidies using funds from the City’s Affordable Housing Fund, Low and Moderate-Income Housing Asset Fund, or other resources; provided however, the Parties agree that the City’s 4 funding obligation may be reduced if housing vouchers or other sources of subsidy are made available for the Project.
(b) Pass on all Homekey funds awarded for the Project to the Developer to support Project rehabilitation and operations in accordance with Homekey Requirements.
(c) Act as the lead applicant, if required by HCD or any government organization, to any NOFA, application, or grant funding opportunity related to the Homekey program.
(d) Cooperate with Developer to secure rental subsidies to support the operation of the Project that may include, without limitation, Veteran Affairs Supportive Housing (VASH) and Section 8 Housing Choice Vouchers.
(e) Retain a construction cost estimation third party consultant to review, negotiate and approve a final construction cost Schedule of Values to be incorporated in a Construction Contract for the Project. The City construction cost estimator-approved Schedule of Values shall control, and limit, spending on each line item through construction completion. The City construction cost estimator shall review and approve all construction draw requests from the Developer/Contractor, and in so doing shall assure all draw requests, with industry standard retentions on each draw held to Project certified completion.
(f) Establish a Capitalized Operating Reserve for the Project to manage both Homekey and City contributions to cover operating deficits (Capitalized Operating Reserve – COR). City shall review and approve any and all Developer requests for reimbursement of operating losses, documented by supporting receipts. Neither operating costs or tenant services expenses paid for by the Contra Costa County Department of Health, or any other third party, shall be eligible for reimbursement from the COR.
5. Responsibilities of Insight Housing. Insight Housing shall act as the services provider and property manager of the Project. Contingent upon an adequate award of Homekey funds, Insight will provide the following services and such other services as shall be specified in a management plan or other agreement approved by the Parties:
(a) Preparation of Project operating budgets.
(b) Preparation of annual income and expenditure reports. (c) Preparation and implementation of a Project Supportive Services Plan that is consistent with the core components of Housing First, and that addresses case management services, tenant and participant engagement, and other Homekey Requirements. (d) Development and implementation of a staffing plan that meets the needs of the target population.
(e) Participation in Statewide HDIS/HMIS.
5 6. Indemnification and Insurance. To the fullest extent permitted by law, Developer and Novin, jointly and severally, shall indemnify, defend, and hold harmless City and its elected and officials, officers, agents, employees, consultants and volunteers (individually, an “Indemnitee,” and collectively the “Indemnitees”), from and against any and all liability, loss, damage, claims, expenses (including, without limitation, attorneys’ fees, expert witness fees, and fees and costs of litigation or arbitration) (all of the foregoing, collectively, “Claims”) of every nature arising out of or in connection with the acts or omissions of Developer, Novin or Insight Housing and their respective officers, agents, representatives, employees, subcontractors and suppliers, in bidding or performing any work undertaken pursuant to this MOU or in failing to comply with any obligation of Developer, Novin, or Insight Housing under this MOU, except to the extent any such Claim is caused by the active negligence, sole negligence, or willful misconduct of an Indemnitee. This indemnity requirement applies to any Claim arising from alleged defects in the content or manner of submission of any bids associated with this MOU. Developer’s or Novin’s, failure or refusal to timely accept a tender of defense pursuant to this MOU will be deemed a material breach of this MOU. City will timely notify Developer, Novin and Insight Housing upon receipt of any third-party claim relating to this MOU. The indemnity obligations under this Section will survive the expiration or any early termination of the MOU.
The Parties recognize and acknowledge that additional agreements, including without limitation, agreements for Project funding, development, and management will contain additional terms relating to indemnification and insurance that may augment or supersede the provisions set forth in this Section.
7. Amendments. Any alterations, modifications, or amendments to this MOU shall only be valid when reduced to writing, duly signed and approved by the authorized representative of the Parties. The Parties recognize and acknowledge that HCD may require modifications to this MOU if Homekey Program funds are awarded.
8. Contingent upon Homekey Funding. With the exception of the provisions of Section 6 hereof, the actions required of the Parties set forth in this MOU are contingent upon HCD approval of an award of Homekey funds for the Project. If HCD does not award Homekey funds for the Project, this MOU shall be of no force or effect and shall be deemed terminated. In the case of a partial Homekey award, the Parties agree to review the financial feasibility of the Project, and collectively determine whether the Project can move forward.
9. Assignment. Novin and Insight Housing may assign their respective separate rights, obligations, and duties contemplated under this MOU to their respective controlled affiliates or subsidiaries, and may form one or more jointly-controlled or jointly-owned special purpose entities as may be required for Project financing or other purposes related to the execution of the obligations of Developer under this MOU, so long as such assignment or creation of special purposes entities do no substantively change the obligations of the Developer or the rights of the City. This MOU may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts shall together constitute one and the same instrument. The parties shall be entitled to sign and transmit an electronic signature of this MOU (whether by facsimile, PDF or other email transmission), which shall be binding on the party whose name is contained therein. Each party providing an electronic signature agrees to promptly execute and deliver to the other party an original signed MOU upon request. 6 10. Miscellaneous Provisions.
10.3 Notices. Except as otherwise specified herein, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered upon receipt if delivery is confirmed by a return receipt; or (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service.
City:
Developer:
Novin:
Insight Housing:
.
10.4 Further Assurances. The Parties shall execute, acknowledge and deliver to the other such other documents and instruments, and take such other actions, as may be reasonably necessary to carry out the intent of this Agreement.
10.5 Parties Not Co-Venturers; Independent Contractor; No Agency Relationship.
Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another. The relationship of the Parties shall not be construed as a joint venture, equity venture, partnership or any other relationship. City neither undertakes nor assumes any responsibility or duty to the other Parties (except as expressly provided in this Agreement) or to any third party with respect to the Project. Developer, Novin, and Insight Housing and their respective employees are not employees of City but rather are, and shall always be considered independent contractors. Furthermore, Developer, Novin, Insight Housing, and their respective employees shall at no time pretend to be or hold themselves out as employees or agents of City. Except as City may specify in writing, neither Developer, Novin, nor Insight Housing shall have any authority to act as an agent of City or to bind City to any obligation.
10.6 Action by the City. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by the City is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or 7 taken by the City’s City Manager or by any person who shall have been designated by the City Manager, without further approval by the City Council.
10.7 Non-Liability of City and County Officials, Employees and Agents. No member, official, employee or agent of the City shall be personally liable to Developer, Novin, or Insight Housing, or any successor in interest, in the event of any default or breach by the City, or for any amount of money which may become due to any such Parties or their successors or for any obligation of City under this Agreement.
10.8 Headings; Construction; Statutory References. The headings of the sections and paragraphs of this Agreement are for convenience only and shall not be used to interpret this Agreement. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party. All references in this Agreement to particular statutes, regulations, ordinances or resolutions of the United States, the State of California, or the City of Richmond shall be deemed to include the same statute, regulation, ordinance or resolution as hereafter amended or renumbered, or if repealed, to such other provisions as may thereafter govern the same subject.
10.9 Time is of the Essence. Time is of the essence in the performance of this Agreement.
10.10 Governing Law; Venue. This Agreement shall be construed in accordance with the laws of the State of California without regard to principles of conflicts of law. Any action to enforce or interpret this Agreement shall be filed and heard in the Superior Court of Contra Costa County, California or in the Federal District Court for the Northern District of California.
10.11 Attorneys' Fees and Costs . If any legal or administrative acti on is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover all reasonable attorneys' fees and costs incurred in such action.
10.12 Severability. If any provision of this Agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired thereby.
10.13 Entire Agreement; Exhibits. This Agreement contains the entire agreement of Parties with respect to the subject matter hereof, and supersedes all prior oral or written agreements between the Parties with respect thereto. Exhibit A, attached hereto is incorporated herein by this reference.
10.14 Survival. The indemnification obligations set forth in Section 6, shall survive the expiration or termination of this Agreement.
10.15 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement.
SIGNATURES ON FOLLOWING PAGE
8 IN WITNESS WHEREOF, the Parties have executed this MOU as of the date first written above.
[signature blocks to be added]
City:
Developer:
Novin:
Insight Housing:
3 9
Exhibit A
SCHEDULE OF PERFORMANCE
Schedule of Performance - Roles and Responsibilities
Activity Lead/Co-Lead
City Novin
Development
Corporation
Insight Housing Estimated
Completion
Date
Authorizing Resolutions X X X
MOUs, Partnership/Participant Agreements
X X X
Site Control Timeline X
Site Selection/Evaluation - Appraisal, Physical
Needs Assessment, Environmental Site Assessment,
Preliminary Title Report, Environmental Testing (i.e.
lead, asbestos, mold, etc.)
X
Site Selection Acquisition Purchase and Sale
Agreement, Purchase Docs, Escrow Docs, Deed
Restrictions, etc.
X
Site Control
Letter of Intent, Exclusive Negotiating Agreement,
Ground Lease, etc.
X
Entitlements/Permits - Land Use Entitlements,
Conditional Use, Variances, etc.
X
Construction/Design Drawings -Building, Fire, other
Permits/Approvals, as required.
X
Revised Development Budget - Update TDC from
finalized Design Plans, Bid Analysis and Demo
X
10 Schedule of Performance - Roles and Responsibilities (cont.) Activity Lead/Co-Lead
City Novin
Development
Corporation
Insight Housing Estimated
Completion
Date
Financing Plan - Construction and Perm X
Construction Contractor Procurement - Contractor
Bidding, Improvement Management
X
Construction Contract Approval X
Demolition and Remediation (based upon Enviro
testing results)
X
Construction
Commencement and Management
X
Supportive Services Plan - Development and
Design of services to be provided on site and
through referral.
X
Community Outreach
X
Property Management - Development of overall
Management Plan.
X
Construction Completion Date
X
Date of Occupancy
X
X
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