Corporation for Better Housing-2006-07 GROUND LEASE
By and Between
THE CITY OF GRAND TERRACE
CITYILESSOR
and
CORPORATION FOR BETTER HOUSING
LESSEE
DOCSOC'84907MM8610016 Rv.08232005 CONTRACT/ A REE NT
NUMBER --L)
GROUND LEASE
This GROUND LEASE(the "Lease") is made as of Sept. 22nd 2005 by and between
the CITY OF GRAND'I ERRACE, a public body corporate and politic (the "City" or"Lessor"), and
CORPORATION FOR BETTER HOUSING, a California nonprofit affordable housing development
company(the "Developer" or"Lessee").
1. SUBJECT OF LEASE; DEFINITIONS.
The City of Grand 'terrace hereby enters this Lease to further the goals and objectives of the
City and of the City of Grand Terrace Community Redevelopment Agency ("Agency"), to effectuate
the Redevelopment Plan ("Redevelopment Plan") for the Grand Terrace Redevelopment Project (the
"Redevelopment Project"), which was originally adopted on July 15, 1981 _ —by the
City Council of the City of Grand Terrace, and amended on September 22, 2005
by providing for the lease of the"Site" (as hereinafter defined) to Lessee and the development and
operation thereon of certain improvements (the"Improvements"). Concurrently herewith the City of
Grand Ten-ace Community Redevelopment Agency is entering into a Regulatory Agreement to
further the Agency's goals and objectives identified in the Redevelopment Plan.
1.1 Definitions:
"Act" means the Community Redevelopment Law of the State of California, Health and
Safety Code Section 33000, et seq.
"AWiliate" means, when used with respect to a Person, any corporation, partnership,joint
venture, limited liability company, limited liability partnership, trust or individual controlled by,
under common control with, or which controls such Person (the term "control" for these purposes
shall mean the ability, whether by the ownership of shares or other equity interests, by contract or
otherwise, to elect a majority of the directors of a corporation, or to make management decisions on
behalf of, or independently to select to the managing partner or, a partnership,or otherwise to have
the power independently to remove and then select a majority of those individuals exercising
managerial authority over an entity, and control shall be conclusively presumed in the case of the
ownership of 500." or more of the equity interests).
"Affiliated Person" means an entity formed for the purpose of constructing,owning, and
operating the Development, which [] may include tax credit investors as limited partners. It is
contemplated that Corporation for Better Housing will later form a Limited Partnership, wherein
CBFI will be the Managing General Partner and the to-be-identified Tax Credit Investor will be the
Limited Partner. The City hereby agrees to execute the "Assignment and Assumption Agreement"to
allow the formation of the Partnership and syndication of the Project's Tax Credits.
".4 ffordable Rent"shall have the meaning set forth in Health and Safety Code Section 50053.
"Agency"means the City of Grand Terrace Community Redevelopment Agency, a public
body, corporate and politic, exercising governmental functions and powers and organized and
existing under the Community Redevelopment Law of the State of California,and any assignee of or
successor to its rights, powers and responsibilities.
"Agenct-Dishursement Amount"means an amount equal to the sum of Eight Million >:our
Hundred Thousand and no'100 Dollars($8,400,000.00)disbursed through escrow to CBH,pursuant
to an Intercreditor Agreement in a form mutually agreeable to the Agency, City, Lenders, Lessee and
Tax Credit Investors.
".4genct, Executive Director"means the Executive Director of the Agency or his designee.
"Application Deadline" means the date(s) established by CDLAC and TCAC for the
2005!2006 funding rounds.
"Jrva'' means the area HUD identifies as regulating the Project Site.
',,ludilcd Financial Statement"means an audited Financial statement, including without
limitation a profit and loss statement, generated by a third party certified public accountant
acceptable to the City in its reasonable discretion, showing, for the previous Lease Year,on a
monthly basis and in an easily readable format,Gross Revenues, Operating Expenses, Debt Service,
Operating Reserve,Capital Replacement Reserve and Residual Receipts. Said audit shall be
delivered to City on or about May 1 ("Audit Date").
"Basic Concept Drawings"means those certain plans and drawings submitted to and
approved by the City.
"Bond Regulalory Agreement"shall mean the regulatory agreement which it is contemplated
may be required to be recorded against the Site with respect to the issuance of multifamily housing
bonds in the event an allocation is obtained from CDLAC.
"Bond Rides"means Section I03(b) of the Internal Revenue Code, the rules and regulations
applied by CDLAC in connection with the private activity bond allocation or the issuance of bonds
thereunder and as set forth in the Indenture of Trust in connection with the issuance of the Bonds.
"Bonds"means multi-family housing bonds.
"Capital Events" is defined in Section 5.4 hereof.
"Capital Replacement Reserve"means a reserve fund to be established by the Lessee as a
capital reserve in the amount not less than $250.00 per Lease Year per unit (e.g. 250 x 120=
$30,000) (for the first Lease Year), which shall increase from time to time as reasonably required by
the Permanent Lender. The Capital Replacement Reserve is more fully described in Section 10 of
this Lease.
"Certificate of Completion" means the document which evidences the Developer's
satisfactory completion of the Development.
,'CertiJicate of Continuing Program Compliance" means adequate and reasonable
documentation required by the City and/or Agency to ensure Project Compliance.
"Chargeable Reser xe.s"means each of the following, within the respective parameters
therefor set forth in this Lease: (i) Capital Replacement Reserve; and(ii) Operating Reserve.
"City" means the City of Grand Terrace, California,a California municipal corporation.
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"Cio,Administrator" means the City Administrator or Manager of the City or his designee.
"Closing"means the day on which the Closing occurs.
"Conunencement" means the commencement of this Lease.
"Commencement Date"means the date of Construction Loan closing.
"Construction Loan"means the mortgage loans obtained by the Developer from a state
agency or instrumentality or a reputable and established bank, savings and loan association, or other
similar financial institution for financing the development(but not the operation) of the Project, and
reimbursement obligations to approved lenders and Fannie Mae securing credit enhancement
facilities and a Fannie Mae one percent(1" ,) forward commitment deposit fee deed of trust, if the
Bonds are sold publicly.
"County" shall mean the County of San Bernardino, Cali Fornia.
"Dale of Agreement" means the Commencement Date.
"Debt Service"means required debt service payments for the Primary Construction Loan
and/or the Primary Permanent Loan, Deferred Developer fee notes, and Partner loans, including the
funding obligations in respect of all reserves or escrows required thereunder.
"Default"means the failure of a party to perform any action or covenant required by this
Lease within the time periods provided herein following any applicable notice and opportunity to
cure period, as may be set forth herein.
"Design Development Drenvingr" means those plans and drawings to be submitted to City
for its approval.
"Developer"means Corporation for Better Housing.
"Development" means the new senior rental complex, community center, and associated
improvements required to be: (i)constructed by the Developer upon the Site, with related offsite
improvements, as more particularly described in the Scope of Development and (ii) operated as an
affordable housing complex for seniors in conformity with this Lease, the Agency Regulatory
Agreement,TCAC Regulatory Agreement and the Bond Regulatory Agreement.
"Executive Director" means the Executive Director of the Agency or his designee or
delegate.
"T"annie Nlae" means Fannie Mae, a corporation organized and existing under the federal
National Mortgage Association Charter Act, 1 U.S, C. Sections 1716, et seq., and its successors and
assigns.
"Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations,
orders, and decrees of the United States, the state, the County, the City, or any other political
subdivision in which the Site is located, and of any other political subdivision, agency, or
instrumentality exercising jurisdiction over the Developer or the Site.
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"Gross Revenues"means the total rental income and all other revenues or income received
by the Lessee or its successors or assigns in connection with the Project, including without limitation
Housing Rent, laundry charges, parking and storage fees, cable income, and interest earnings, but,
except for any interest earned thereon, does not include (i) the proceeds of the sale of Tax Credits to
Finance the Development or(ii) refinancing proceeds(provided the refinancing is permitted by and is
accomplished in accordance with this Lease or(iii) insurance proceeds which are used to repair or
reconstruct the Project or condemnation proceeds)_
"Ha:ardou,s Materials" means any substance, material, or waste which is or becomes
regulated by any local governmental authority, the County, the State of California, regional
governmental authority, or the United States Government, including, but not limited to, any material
or substance which is (1) defined as a "hazardous waste,""extremely hazardous waste,"or"restricted
hazardous waste" under Section 25115, 25117 or 25122.7,or listed pursuant to Section 25140 of the
California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)),
00 defined as a"hazardous substance"under Section 25316 of the California Health and Safety
Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act),
(iii)defined as a "hazardous material," "hazardous substance," or"hazardous waste" under
Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory), (iv)defined as a"hazardous substance" under
Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7(Underground
Storage of Hazardous Substances), (v)petroleum, (vi) friable asbestos, (vii)polychlorinated
byphenyls, (viii) listed under Article 9 or defined as "hazardous"or"extremely hazardous" pursuant
to Article I I of Title 22 of the California Administrative Code, Division 4, Chapter 20,
(ix)designated as"hazardous substances" pursuant to Section 311 of the Clean Water Act(33 U.S.C.
§ 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation
and Recovery Act,42 U.S.C. § 6901 et seq. (42 U.S.G. § 6903)or(xi) defined as "hazardous
substances" pursuant to Section 101 of the Comprehensive Environmental Response,Compensation,
and Liability Act, 42 U.S.C. § 6901 et seq.
"Housing Authority" means the Housing Authority of the County of San Bernardino.
"Housing Fund" means the Agency's Low and Moderate Income Housing Fund, established
pursuant to Health and Safety Code Section 33334.3.
"Housing Rent" shall mean the total of monthly payments by the tenants of a Housing Unit
for(a) use and occupancy for the Housing Unit and facilities associated therewith, (b) any separately
charged fees or service charges assessed by the Developer which are required of all tenants or the
Housing Units, other than security deposits, (c) a reasonable allowance for utilities not included in
(a) or(b)above, including garbage collection, sewer, water, electricity and gas, as determined by
regulation of the Housing Authority pursuant to 24 CFR Part 813 and (d)possessory interest, taxes or
other fees or charges assessed for the use of the Housing Units and facilities associated therewith by
a public or private entity other than the Developer.
"Housing Units" means the one hundred twenty(I20) individual residential units within the
Development to be constructed and operated by the Developer on the Site, as provided in the Scope
of Development, but excluding therefrom one unit which the Lessee may develop and make available
to an on-site manager.
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"W0" means the United States Department of Housing and Urban Development or its
successor(s).
"Improvements"means all improvements required to be accomplished by the Developer, as
more fully described in the Scope of Development.
"Income Verification" means the Income Verification in the form acceptable to the City,
Agency and Developer.
"Lease"means this Ground Lease, which may also be referred to as the "City Lease."
"Lease )ear" means the period commencing as of Commencement Date and ending as of
December 3 l of that calendar year, then each calendar year thereafter.
"Lossrer Income Household"shall mean a household earning not greater than eighty
percent(80%) of median income for the Area as set forth by regulation of the California Department
of I lousing and Community Development, pursuant to Health and Safety Code Section 50079.5.
"Lower Income Units"means Units available to and occupied by Lower Income Households.
"Median Income"means the median income for the Area as most recently determined by the
Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of
1937, as amended, or, if programs under Section 8 are terminated, Median Income for the Area
determined under the method used by the Secretary prior to such termination.
"Memorandum of Lease"means a form Memorandum of Lease acceptable to all parties to
this transaction,which shall be recorded with the County Recorder at Closing.
"Nei Operating hwome"means Gross Revenues, less Operating Expenses, and further less
Debt Service.
"Notice"shall mean a notice in the form prescribed.
"Operating Expenses" means for any period the sum of the following expenses reasonably
incurred and actually paid during that period, including actual, reasonable and customary costs, fees
and expenses directly attributable to operation, maintenance, taxes and management of the Project,
including, without limitation, the following(all of which are deemed customary and reasonable):
onsite administrative costs(including materials and labor); payments to an operating reserve account;
payments to a replacement reserve account, subject to annual increases by the annual percentage
increase as reasonably determined by the tax credit investor, not to exceed 3.5%per year; painting,
cleaning, repairs and alterations; landscaping; utilities; rubbish removal; certificates,permits and
licenses; sewer charges; costs incurred to third parties in connection with generating laundry charges
(but in no event to exceed the laundry charges); maintenance of the storage facilities; real and
personal property taxes and assessments; insurance; security; advertising,promotion and publicity;
office,janitorial, cleaning and building supplies; the actual and customary salary payable to any on-
site personnel; internet service, cable television, satellite and similar facilities;recreational amenities
supplies,utility charges, services, a property management fee(excluding salaries and benefits
payable to any on-site personnel), not to exceed eight percent(8)%of Gross Income; purchase,
repair, servicing and installation of appliances, equipment, fixtures and furnishings other than from
reserves; and fees and expenses of accountants, attorneys, consultants and other professionals,
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including annual audits and tax return preparation costs payable to a third party; the deferred
Developer's fee; an annual partnership asset fee of Five Thousand Dollars ($5,000), which may be
increased annually by the annual percentage increase in the CPI; an annual asset management fee of
Five Thousand Dollars(55,000), which may be increased annually by the annual percentage increase
in the CPI, but which may only be paid for 15 years following the issuance of a Certificate of
Completion. Notwithstanding the foregoing,Operating Expenses shall not include: (i)non-cash
expenses, including without limitation, depreciation (ii) payments made from insurance or
condemnation proceeds or any costs or expenses paid or reimbursed by others (iii) funds expended
from replacement reserves; (iv) the initial cost of constructing the Improvements, less apprised cost
increases, or any expansion or replacements thereof; (v) any penalties or interest resulting from the
Developer's failure to pay when due any sums that the Developer is obligated to pay to third parties
(e.g., penalties and interest for late payment of real property taxes); (vi)debt service or other
payments in connection with financing_
"Operating Reverve"means a reserve fund to be established by the Lessee as a reserve for
operating expenses in the amount to be determined by the Permanent Lender.
"Partners or Proposed Partners" means Corporation for Better Housing, (Managing General
Partner); Lynx Realty& Management, LLC (Administrative General Partner); and Simpson Housing
Solutions, LLC, (Tax Credit Investor), Limited Partner. The Partners are identified for illustration
only and subject to change with the approval of the City Manager.
"Permanew Laan" means the mortgage loan obtained by the Developer from a state agency
or instrumentality or a reputable and established bank, savings and loan association,or other similar
financial institution, and reimbursement obligations to approved lenders and Fannie Mae securing
credit enhancement facilities and a Fannie Mae one percent(1%) forward commitment deposit fee
deed of trust, if the Bonds are sold publicly. Additionally, the Permanent Loan will include any
Deferred Developer Fee note(s) and any Partner Loans, if either should occur.
"Person" means an individual, estate, trust, partnership, corporation, limited liability
company, limited liability partnership, governmental department or agency or any other entity which
has the legal capacity to own property.
"Prescrihetl Rent Lei}ehe'means rent that is Affordable Rent for households at the following
income levels: (i) forty-seven(47)one-bedroom units and eight(S) two-bedroom units, at or below
fifty percent (501,%) of Area Median Income; and(ii) forty-six (46)one-bedroom units and seven (7)
two-bedroom units, at or below sixty percent(60%)of Area Median Income(less one unrestricted
manager's unit), the balance of the 120 units, (a) ten (10) one bedroom units and (b)two (2) two
bedroom units, shall be rented at market rent and shall not be regulated by HUD, CDLAC, or TCAC
or HCD.
Prrncipa["means Mary Silverstein,on behalf of CBFI; Charles Brumbaugh, on behalf of
Lynx Realty& Management, LLC.
"Project"means the multi-family residential rental housing development located on the Site
to be constructed and operated by the Developer pursuant to this Lease.
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"Property"means real property located in Grand Terrace, California, which real property is
more particularly described in Exhibit"A" attached hereto.
"Property Manager"means the person or organization responsible for the management and
operation of the Project, the reasonable approval of which by the City shall be required, and which
shall initially be The John Stewart Company, or another manager mutually acceptable to the City
and/or Agency and the Lessee.
"Redevelopment Plan"means the Redevelopment Plan for the Redevelopment.Project, as
originally adopted by the City Council of the City and amended from time to time, if any, is
incorporated herein by reference.
"Redevelopment Project"means the Grand Terrace Redevelopment Project, adopted by the
City pursuant to the Redevelopment Plan (as amended through the date of this Lease).
"Regulatory Agreement"shall mean the Regulatory Agreement which is to be recorded
against the Site, in the form satisfactory to all parties.
"Related Entity"means a Principal or an entity in which any interest is held by the
Developer or one or more of the Principals.
"Rent"is One Dollar per year defused in Section 5.2.3 of this Lease.
"Reporting Amounts)"means the sutra of.Fifty Hundred Dollars ($50.00)per unit per year
for each dwelling unit as to which Lessee fails to deliver to Agency, during any Lease Year, a full
and adequate report that conforms to Section 33418 of the California Health and Safety Code.
"Required Covenant Period"shall mean the duration of the affordable housing requirements
which are set forth in this Lease.
"Residual Receipts" for a particular Lease Year means Gross Revenues for the
corresponding Lease Year less (i) Debt Service payments made during such Lease Year on the
Construction Loan or the Permanent Loan, including payments under escrow and reserve provisions
thereunder in amounts not in excess of the amounts due and payable during such month or year(and
not including prepayments), and(ii) the sum of Operating Expenses and, to the extent funded,
Chargeable Fees and Reserves made during the corresponding Lease Year. All calculations of
Residual Receipts shall be made annually, on or before May 1 for the preceding Lease Year, and the
components thereof shall be subject to verification and approval, on an annual basis,based upon
conformity with the terms of the Lease, by the City and/or Agency.
"Schedule of Performance"means the attachment to the Lease entitled"Schedule of
Performance".
"Scope of Development"means that attachment entitled Scope of Development which
describes the scope, amount, and quality of the Development to be constructed by the Developer.
The Scope of Development is subject to revision.
"Seniors"means those persons meeting the qualifications as set forth in the Fair Housing
Act, 42 U.S.C. § 3601, et seq., and 24 CFR 100.300 et seq., and Sections 51.3 and 51.4 of the
California Civil Code, as applicable. At least one occupant for each Unit shall be sixty-two(62)
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years or older and, to the greatest extent permitted by law, all occupants shall be sixty-two(62)years
or older.
"Site or Properly" means that certain real property which is described in the Site Legal
Description and depicted on the Site Map.
"Site Legal Description" means the description of the Site which is attached hereto and
incorporated herein.
"Site Map"means the map of the Site which is attached hereto and incorporated herein.
"True Credit Rules"means Section 42 of the Internal Revenue Code and/or California
Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health
and Safety Code Section 50199, et seq., and the rules and regulations implementing the foregoing.
"Tux Credits"shall mean 4% Low Income Tax Credits granted pursuant to Section 42 of the
Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058,
23610.4 and 23610.5 and California Health and Safety Code Section 50199,et seq.
"TCAC"means the California Tax Credit Allocation Committee.
"Term"or"Terni of the City Lease"means that approximately sixty-five (65) year period as
so described in this Lease. The Term consists of sixty-four(64)complete calendar years plus one
complete or partial year(depending upon the Commencement Date).
"Title Company"means Chicago Title Company or another mutually acceptable title insurer.
"Title PolicY"means the policy of title insurance to be provided to the Developer for its
leasehold interest.
"Title Report"means the preliminary title report for the Site.
"Unit" means each of the one hundred twenty(120) dwelling units required to be developed
by the Developer under this Lease.
"Meryl Lotir Income Household" shall mean a household earning not greater than fifty percent
(50%)of median income for the Area, as set forth by regulation of the California Department of
Housing; and Community Development, pursuant to Health and Safety Code Section 50105.
"Very Lair Income t_'nits" means Units available to and occupied by Very Low Income
Households.
"Year" means a fiscal year beginning as of January I and ending December 31 of the same
calendar year or such other annual period as may be mutually agreed to by City and Lessee.
2. LEASE OF THE SITE.
City, for and in consideration of the Low Income Rents, covenants,and agreements
hereinafter reserved and contained on the part of Lessee to be paid,kept, performed and observed by
Lessee, hereby leases to Lessee, and Lessee hereby leases from City, that certain real property in the
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City of Grand Terrace(the"City") shown on the"Site Map"attached hereto as Exhibit"A"and
incorporated herein by this reference,and having the legal description in the"Site Description"
attached hereto as Exhibit'B" and incorporated herein by this reference(the "Site"). Except as
expressly provided to the contrary in this Lease,reference to the Site is to the described land,
exclusive of any improvements now or hereafter located on the land, notwithstanding that any such
improvements may or shall be construed as affixed to and as constituting part of the real property.
3. LEASE TERIM.
Lessee shall lease the Site from City and City shall lease the Site to Lessee for a term
commencing on (the "Commencement Date")and continuing for a period of
sixty-five (65) years thereafter(the "Term"), unless sooner terminated as provided for herein.
4. USE QE THE SITE.
4.1 Use of the Site. Lessee covenants and agrees for itself, its successors and assigns,
that during the Term,the Lessee shall, by the respective times established therefor in the Schedule of
Performance,commence and complete the Development in conformance with the approved Design
Development Drawings, all applicable laws and, to the extent applicable,and thereafter the Site and
the Improvements shall be devoted to those uses as set forth in the Lease and the Redevelopment
Plan. Lessee shall apply for and obtain all necessary permits, and shall complete the Improvements
as provided. In the event of any inconsistency between this Lease or the Redevelopment Plan, the
most restrictive of the documents shall control.
4.2 Management. Lessee shall manage or cause the Site and the Improvements to be
managed in a prudent and business-like manner,consistent with other newly-constructed rental
housing projects for Seniors, including market rate projects, in San Bernardino County, California,
and in conformity with the Regulatory Agreement.
Lessee has contracted with a management company or manager,which may be an affiliate of
Lessee, to operate and maintain the Site and the Improvements in accordance with the terms of this
Lease(hereinafter"Property Manager" or"Management Company'); the selection and hiring of such
management company was subject to, and the selection of any other manager shall be subject to,
approval by City and/or Agency.
The Lessee shall submit for the approval of the City and Agency a "Management Plan"
which sets forth the duties of the Property Manager.
Lessee shall submit or shall cause its Property Manager to submit to the City and Agency,
and each anniversary thereof, an annual budget for the ongoing operation of the Project. Each of the
Lessee and the Agency shall cause its respective representative(s) to meet during the thirty(30)days
following the receipt of the annual budget to review the budget; such review is without obligation to
either party to propose or agree to any modification of permitted Operating Expenses.
In the event of"Gross Mismanagement"(as that term is defined below)of the Improvements,
City shall have the authority to require that such Gross Mismanagement cease immediately,and
further to require the immediate replacement of the Property Manager if such condition is not
corrected after expiration of sixty(60) days from the date of written notice to all Partners from City.
For purposes of this Lease, the term "Gross Mismanagement" shall mean management of the
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Improvements in a manner which violates the terms and/or intention of this Lease to operate a quality
affordable housing complex, and shall include, but is not limited to, the following;:
Leasing to tenants not in conformity with the Prescribed Income Levels;
Leasing to tenants who are not Seniors;
Allowing the tenants to exceed the prescribed occupancy levels without taking immediate
action to stop such overcrowding;
Under funding the prescribed Capital Replacement or Operating Reserves (Sections 10.8 and
10.9) notwithstanding the generation of cash flow adequate to fully fund such Reserves in
conformity with this Lease prior to the disbursement of Residual Receipts to Lessee;
Failing to timely maintain the Improvements and the Site in accordance with the
Management Plan and the manner prescribed in Section 10;
Failing to submit timely and/or adequate annual Section 33418 reports as required in
Section 6.6;
Fraud or embezzlement of Improvements moneys; and
Repeatedly failing to fully cooperate with the local law and code enforcement office in
maintaining a crime free environment on the Site.
Notwithstanding the above, Lessee shall use its best efforts to correct any defects in
management at the earliest feasible time and, if necessary, to replace the management company prior
to the elapsing of such time period. Further, if General Partner(s) fail to take action,City shall allow
the Limited Partner a reasonable time to remove General Partner and cure the Gross Management.
City and Limited Partner shall meet and agree on an action plan to correct such Gross Management
within 15 days after the General Partner failed to correct the Gross Management and the Default has
occurred hereunder. City agrees to stand still and cooperate with Limited Partner so long as Limited
Partner progresses on the agreed upon action plan. Further, City agrees to provide any and al I notices
of default to the Limited Partner, its assigns or delegates. Limited Partner's cure rights will be more
formally annunciated in the various Project Agreements after the Partnership Agreement is formed
and the Tax Credit Investor(Limited Partner) is identified.
4.3 Only Lawful Uses Permitted. Lessee shall not use the Site or the Improvements for
any purpose that is in violation of any law, ordinance or regulation of any federal, state, county or
local governmental agency, body or entity. Furthermore, Lessee shall not maintain or commit any
nuisance or unlawful conduct(as now or hereafter defined by any applicable statutory or decisional
law) on the Site or the Improvements, or any part thereof:
5. RENT.
5.1 Rent. During each Lease Year during the Term, Rent shall be S1.00 per year.
5.2 Payment of Rent. All rent that becomes due and payable pursuant to this Lease shall
be paid to City at the address of City listed in Section 26.7 or such other place as City may from time
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to time designate by written notice to the Lessee without notice or demand, and without setoff,
counterclaim,abatement,deferment, suspension or deduction.
6. AFFORDABLE HOUSING REQUIREMENTS.
6.1 Number of Affordable Units. Lessee agrees to make available, restrict occupancy
to, and rent one hundred and eight(108) minus the manager's unit (the"Required Affordable Units")
of the one hundred eighty(120) units to be located on the Site (the "Housing Units")to be available
at an Affordable Rent. All Units shall be rented to Seniors, except the manager's unit. Rental ofthe
Required Affordable Units shall conform to the Prescribed Rent Levels.
In the event the Lessee charges rents for one or more of the Required Affordable Units which
exceed Affordable Rent, the Lessee shall promptly, and without necessity of notice or request
therefor by the City, correct such rent. Any penalties arising from the charging of rents which exceed
Affordable Rent shall be paid solely by Lessee.
6.2 Duration of Affordability Requirements. The Housing Units shall be subject to the
requirements of this Section 6 for the Term of this Lease. The duration of this requirement shall be
known as the "Affordability Period."
6.3 Selection of Tenants. Lessee shall be responsible for the selection of tenants for the
Housing Units in compliance with the criteria set forth in this Section 6 of this Lease. Preference
shall be given to tenants who have been displaced by redevelopment activities of City in the
implementation of the Redevelopment Plan.
6.3.1 Senior Housing. Except for the Manager's unit, all of the Housing Units
shall be occupied by Seniors, consistent with all applicable requirements as set forth in the Fair
Housing Act,42 U.S.C. § 3601, et seq., and 24 CrR 100.300 et seq., and Sections 51.3 and 51.4 of
the California Civil Code,as applicable. At least one person per Housing Unit shall be sixty-two
(62) years or older and,to the greatest extent permitted by lacy,all occupants shall be sixty-two(62)
years or older.
6.4 Income of Tenants. Prior to the rental or lease of any Lower Income Unit to a
tenant,and annually thereafter, the Lessee shall submit to City or its designee, at Lessee's expense,a
completed income computation and certification form, in a form to be provided by City. Each tenant
shall be a Very Low Income Household or a Lower Income Household which meets the eligibility
requirements established for the Lower Income Unit, and Lessee shall obtain a certification from
each tenant leasing a Lower Income Unit which substantiates such fact. Lessee shall verify the
income certification of the tenant.
In the event a household's income initially complies with the corresponding income
restriction (for a Very Low Income Household or a Lower Income Household, whichever is
applicable)but the income of such household increases, such increase shall not be deemed to result in
a violation by Lessee of the restrictions of this Lease concerning limitations upon income of
occupants.
It
6.5 Determination of Affordable Rent for the Required Affordable Units. Each
Required Lower Income Unit shall be rented at an"Affordable Rent" to be established as provided
herein:
(a) The maximum monthly rental amount for the Required Lower
Income Units to be rented to Very Low Income Households shall be established at one-twelfth (1/12.)
of thirty percent(309-o)of fifty percent (50%) of San Bernardino County median income for a
household of a size appropriate to the Housing Unit.
(b) The maximum monthly rental amount for the Required Lower
Income Units to be rented to Lower Income Households shall be established at one-twelfth (Ii 12) of
thirty percent(30%)of sixty percent(60%) of San Bernardino County median income for a
household of a size appropriate to the Housing Unit.
"Household size appropriate to the unit," for the purpose of the calculation of rent herein
(and without regard to actual occupancy), shall mean two persons for each one bedroom unit and
three persons for each two bedroom unit. The maximum monthly rental amount of the Housing
Units shall be adjusted annually by the formula set forth above upon the promulgation of revised San
Bernardino County median income figures by regulation of the California Department of Housing
and Community Development. Actual rent charged may be less than such maximum rent.
6.6 Verifications.
(a) Income Verification. Lessee shall verify the income of each
proposed and existing tenant of the Lower Income Units.
(b) Annual Reports. Following the issuance of the Certificate of
Completion, and on or before May 1 of each Lease Year, Lessee shall submit to City or its designee
the reports required pursuant to Health and Safety Code Section 33418,as the same may be amended
from time to time,with each such report to be in the form prescribed by City. Each annual report
shall cover the immediately preceding Lease Year.
In addition,commencing on May 1, in the year after the Project is placed in Service,and
Continuing on each May I thereafter during the'term, the Developer shall submit an Audited
Financial Statement for the previous Lease Year(or portion thereof), including all funds from
whatever source provided to the Lessee or any Related Entity in connection with the Project(Audit
Date). The Audited Financial Statement shall demonstrate ongoing compliance with this Lease,
including without limitation Section 5.2.2 hereof.
The Lessee shall maintain on file each tenant's executed lease and Income Verification and
rental records for the Project and the Lower Income Units. The Lessee shall maintain complete and
accurate records pertaining to the Very Low Income Units, the Lower Income Units,and any other
Units and will permit any duly authorized representative of the City to inspect the books and records
of the Lessee pertaining to the Project, including those records pertaining to the occupancy of the
Very Low Income Units, the Lower Income Units,and any other units. The Lessee shall prepare and
submit to the City annually commencing(April 15, 2007] and continuing throughout the Term,a
Certificate of Continuing Program Compliance. Such documentation shall state for each unit in the
Project the unit size, the rental amount, the number of occupants, and the income of the occupants
and any other information which may be used to determined compliance with the terms of this Lease.
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6.7 Regulatory Agreement. The Lessee shall execute, acknowledge, and deliver to
Agency a "Regulatory Agreement." to be recorded with respect to the Site in the official records of
San Bernardino County, California. The Lessee shall comply with the Regulatory Agreement. The
Regulatory Agreement is subject to notification (which amendment shall have the same priority as
the Regulatory Agreement) to conform to the number of Units regulated by the Bond Regulatory
Agreement if that number is greater than originally provided in the Regulatory Agreement. The
Regulatory Agreement and this Lease shall be construed to be consistent to the greatest feasible
extent. In the event of any express conflict, this Lease shall control over the Regulatory Agreement.
7. UTILITIES AND TAXES.
7.1 Utilities. Lessee shall pay or cause to be paid all utility and related costs for the
Housing Units. Lessor shall pay or cause to be paid all utility and related costs for the community
center.
7.2 Real Estate Taxes. Lessee shall pay or cause to be paid all real estate taxes and
related costs. It is the intent of the parties hereto that the rent provided herein shall be net to City and
that Lessee shall pay the costs, taxes,charges, and expenses against the Housing Units which may
arise or become clue during the Term,and which,except for execution hereof, would or could have
been payable by City.
7.3 Personal Property. Lessee covenants and agrees to pay before delinquency all
personal property taxes, assessments and liens of every kind and nature upon all personalty as may be
owned by Lessee and from time to time situated within the Site and any Improvements.
S. OWNERSHIP OF IMPROVEMENTS,FIXTURES AND FURNISHINGS.
8.1 Ownership During Term. All Improvements constructed on the Site by Lessee as
permitted by this Lease shall, during the Term, be and remain the property of Lessee; provided,
however, that Lessee shall have no right to waste the Improvements, or to destroy, demolish or
remove the Improvements except as otherwise permitted pursuant to this Lease; and provided further
that Lessee's rights and powers with respect to the Improvements are subject to the terms and
limitations of this Lease. City and Lessee covenant for themselves and all persons claiming under or
through them that the Improvements are real property.
8.2 Capital Events. The Lessee shall make payments of Rent to the City. In addition, in
the event of(i) a sale, assignment or transfer of the Development or(ii) the refinancing of the
Development in an amount greater than the outstanding balance of a loan existing as of the time of
such refinancing, the Developer shall treat all such excess proceeds (less 14"'u processing fee)as
Residual Receipts and distribute those Receipts as required. Lessee and Lessor agree that,should a
refinancing occur seventeen years from the Commencement Date,the Parties hereto agree that a
portion or all of the excess proceeds may be used to refurbish the Project, if reasonably necessary,
8.3 Ownership at Termination. Upon termination of this Lease, whether by expiration
of the Term or otherwise, all Improvements, fixtures and furnishings shall, without compensation to
Lessee, then become City's property, as is at the time of the termination of the Lease.
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9. MECHANICS LIENS; FAITHFUL PERFORMANCE.
Lessee shall not suffer or permit any mechanics' or materialmen's liens to be enforced
against the fee simple estate in reversion of City as to the Site and Improvements, nor against
Lessee's leasehold interest therein by reason of work, labor, services or materials supplied or claimed
to have been supplied to Lessee or anyone holding the Site and the Improvements, or any part
thereof, through or under Lessee, and Lessee agrees to defend, indemnify, and hold City, Agency and
their respective officers, officials, employees, agents, and representatives, harmless against such
liens. If any such lien shall at any time be filed against the Site or any Improvements, Lessee shall,
within thirty(30) days after notice to Lessee of the filing thereof, cause the same to be discharged of
record; provided, however, that Lessee shall have the right to contest the amount or validity, in whole
or in part, of any such lien by appropriate proceedings but in such event, Lessee shall notify City and
promptly bond such lien in the manner authorized by law with a responsible surety company
qualified to do business in the State of California or provide other security acceptable to City. Lessee
shall prosecute such proceedings with due diligence. Nothing in this Lease shall be deemed to be,
nor shall be construed in any way to constitute, the consent or request of City, express or implied, by
inference or otherwise, to any person, firm or limited partnership for the performance of any labor or
the furnishing of any materials for any construction, rebuilding, alteration or repair of or to the Site,
the Improvements, or any part thereof. Prior to commencement of construction of the Improvements
on the Site, or any repair or alteration thereto having a cost in excess of S 10,000, Lessee shall give
City not less than thirty(30)days advance notice in writing of intention to begin said activity in order
that non-responsibility notices may be posted and recorded as provided by State and local laws.
10. MAINTENANCE AND REPAIR; CAPITAL REPLACEMENT RESERVE.
Lessee agrees to assume full responsibility for the management, operation and maintenance
of the Improvements and the Site throughout the Term without expense to City, and to perform all
repairs and replacements necessary to maintain and preserve the Improvements and the Site in good
repair, in a neat, clean, safe and orderly condition reasonably satisfactory to City and in compliance
with all applicable laws. Lessee agrees that City shall not be required to perform any maintenance,
repairs or services or to assume any expense in connection with the Improvements and the Site.
Lessee hereby waives all rights to make repairs or to cause any work to be performed at the expense
of City as provided for in Section 1941 and 1942 of the California Civil Code.
The following standards shall be complied with by Lessee and its maintenance staff,
contractors or subcontractors:
(1) Lessee shall maintain the Improvements, including
individual Affordable Units. all common areas, all interior and exterior facades, and
all exterior project site areas, in a safe and sanitary fashion suitable for a high quality,
rental housing project. The Lessee agrees to provide utility services,administrative
services, supplies, contract services, maintenance, maintenance reserves, and
management for the Housing Units including interior tenant spaces, common area
spaces and exterior common areas. The services provided by the Lessee shall
include, but not be limited to, providing all common area electricity,gas, water,
television, cable television, property, fire and liability insurance in the amounts set
forth in this Lease,all property taxes and personal property taxes, any and all
assessments,maintenance and replacement of all exterior landscaping, and all
administration and overhead required for the property manager.
14
(2) Landscape maintenance shall include,but not be
limited to: watering/irrigation; fertilization; mowing, edging, and trimming of grass;
rass;
tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a
healthy, natural appearance and safe road conditions and visibility, and optimum
irrigation coverage; replacement,as needed, of all plant materials;control of weeds in
all planters, shrubs, lawns,ground covers,or other planted areas; and staking for
support of trees.
(3) Clean-up maintenance shall include,but not be limited
to: maintenance of all private paths, parking areas, driveways and other paved areas
in clean and weed-free condition; maintenance of all such areas clear of dirt, mud,
trash,debris or other matter which is unsafe or unsightly; removal of all trash, litter
and other debris from improvements and landscaping prior to mowing;clearance and
cleaning of all areas maintained prior to the end of the day on which the maintenance
operations are performed to ensure that all cuttings, weeds, leaves and other debris
are properly disposed of by maintenance workers.
(4) The Improvements shall be maintained in
conformance and in compliance with the approved construction and architectural
plans and design scheme, as the same may be amended from time to time with the
approval of the City(and Agency, if such approval is required).
(5) All maintenance work shall conform to all applicable
federal and state Occupation Safety and Health Act standards and regulations for the
performance of maintenance.
(6) Any and all chemicals, unhealthful substances, and
pesticides used in and during maintenance shall be applied only by persons in strict
accordance with all governing regulations.
(7) Parking lots, lighting fixtures, trash enclosures, and ail
areas shall be kept free from any accumulation of debris or waste materials by
regularly scheduled maintenance-
(8) Lessee shall, or shall cause the Property Manager to,
set aside in an Operating Reserve, which shall be maintained as a separate interest-
bearing trust account, in an amount as prescribed under the Primary Permanent Loan.
To the extent this Lease requires that an Operating Reserve be funded at a level in
excess of that required under the Primary Permanent Loan, such excess amount shall
be funded by Lessee from Residual Receipts. Lessee shall provide,on not less than
an annual basis, evidence reasonably satisfactory to City of compliance herewith, and
shall thereafter cause such amount to be retained in the Operating Reserve, to cover
shortfalls between Improvements income and actual project operating expenses. The
Operating Reserve shall be replenished to the full amount prior to any further
disbursement of Residual Receipts to the Lessee, Any moneys in such Operating
Reserve which are not expended as of the termination of this Lease shall be treated as
Residual Receipts.
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(9) Lessee shall also,or cause the Property Manager or
permanent lender to, commencing as of the first month following the first anniversary
of the completion of the first Housing Unit(as such completion is evidenced by the
issuance of a certificate of occupancy by the City as to the corresponding building)
set aside the Capital Replacement Reserve. The Capital Replacement Reserve shall
be deposited into a separate interest-bearing trust account. funds in the Capital
Replacement Reserve shall be used for capital replacements to the Improvements'
fixtures and equipment which are normally capitalized under generally accepted
accounting principles. As capital repairs and improvements of the Project become
necessary, the Capital Replacement Reserve shall be the first source of payment
therefor; provided, however, that Lessee may first use other funds for payment with
the prior consent of City, which approval shall not be unreasonably withheld. The
non-availability of funds in the Capital Replacement Reserve does not in any manner
relieve Lessee of the obligation to undertake necessary capital repairs and
improvements and to continue to maintain the Site in the manner prescribed in this
Section 10. Lessee,at its expense, shall submit to City on not less than an annual
basis an accounting for the Capital Replacement Reserve. Any amounts of the
Capital Replacement Reserve in excess of the level of such reserve required by the
Primary Permanent Lender shall be funded from Residual Receipts. Any moneys in
the Capital Replacement Reserve which are not expended as ofthe termination of this
Lease shall be treated as Residual Receipts.
Capital repairs to and replacement of the Improvements shall include only those items with a
long useful life, including without limitation the following:
(b) Appliance replacement;
(e) Hot water heater replacement;
(d) Plumbing fixtures replacement,including tubs and showers,
toilets, lavatories, sinks, faucets;
(e) Air conditioning and heating replacement;
(f) Concrete or Asphalt replacement;
(g) Roofing replacement;
(h) Landscape tree replacement and irrigation pipe and controls
replacement;
(i) Gas line pipe replacement;
6) Lighting fixture replacement;and
(k) Miscellaneous motors and blowers.
16.
H. ENVIRONMENTAL MATTERS.
11.1 Definitions. For the purposes of this Lease, unless the context otherwise specifies or
requires, the following terms shall have the meanings herein specified:
(a) The term "Hazardous Materials" shall mean any substance,
material, or waste which is or becomes regulated by any local governmental authority, the County of
San Bernardino, the State of California, regional governmental authority or the United States
Government, including,but not limited to, any material or substance which is (i) defined as a
"hazardous waste," "extremely hazardous waste,"or"restricted hazardous waste" under
Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and
Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous
substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presley-Tanner Hazardous Substance Account Act), (ill") defined as a "hazardous
material," "hazardous substance,"or"hazardous waste" under Section 25501 of the California Health
and Safety Code, Division 20,Chapter 6.95 (Hazardous Materials Release Response Plans and
Inventory),(iv)defined as a"hazardous substance" under Section 25281 of the California Health and
Safety Code, Division 20, Chapter 6.7(Underground Storage of Hazardous Substances),
(v)petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or
defined as"hazardous"or"extremely hazardous" pursuant to Article I 1 of Title 22 of the California
Administrative Code, Division 4, Chapter 20, (ix) designated as"hazardous substances" pursuant to
Section 311 of the Clean Water Act(33 U.S.C. §1317), (x) defined as a"hazardous waste" pursuant
to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C.
§6903) or(xi) defined as"hazardous substances" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act,42 U.S.C. §9601 et seq.
(b) The term "Hazardous Materials Contamination" shall mean
the contamination (whether presently existing or hereafter occurring) of the improvements, facilities,
soil,groundwater,air or other elements on, in or of the Site by Hazardous Materials,or the
contamination of the buildings, facilities, sail, groundwater,air or other elements on, in or of any
other property as a result of Hazardous Materials at any time(whether before or after the Date of
Lease) emanating from the Site.
(c) The tern "Governmental Requirements" shall mean all past,
present and future laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the
United States, the state, the county, the city, or any other political subdivision in which the Site is
located, and any other state, county, city, political subdivision, agency, instrumentality or other entity
exercising jurisdiction over City, Lessee or the Site.
11.2 Site Evaluation. Lessee assumes any and all responsibility and Liabilities(as
defined in Section 11.3 of this Lease) for all Hazardous Materials Contamination of the Site which
occurs during the Term of this Lease or extension thereof:
11.3 Indemnification; Lessee's Indemnity. Lessee shall save,protect,defend, indemnify
and hold harmless City, Agency and its officers,officials, employees,and agents from and against
any and all liabilities,suits, actions, claims,demands,penalties,damages(including, without
limitation, penalties, fines and monetary sanctions), losses, costs or expenses(including, without
limitation,consultants' fees, investigation and laboratory fees, reasonable attorneys' fees and
remedial and response costs) (the foregoing are hereinafter collectively referred to as "Liabilities")
17
which may now or in the future be incurred or suffered by City and its officers, officials,employees,
or agents by reason of, resulting from, in connection with,or arising in any manner whatsoever as a
direct or indirect result of the presence on or under,or escape, seepage, leakage, spillage,discharge,
emission or release from the Site of any Hazardous Materials or Hazardous Materials Contamination
after the commencement of this Lease, including any Liabilities incurred under any Governmental
Requirements relating to such Hazardous Materials or Hazardous Materials Contamination. Lessee's
obligations under this Section 11.3.1 shall survive the expiration of this Lease and shall not merge
with any grant deed.
11.4 Duty to Prevent Hazardous Material Contamination. Lessee shall take all
necessary precautions to prevent the release of any Hazardous Materials into the environment. Such
precautions shall include compliance with all Governmental Requirements with respect to I•Iazardous
Materials. In addition, Lessee shall install and utilize such equipment and implement and adhere to
such procedures as are consistent with the standards generally applied by apartment complexes in
San Bernardino County, California as respects the disclosure, storage, use, removal,and disposal of
Hazardous Materials.
11.5 Obligation of Lessee to Remediate Premises. Notwithstanding the obligation of
Lessee to indemnify City and Agency pursuant to Section 11.3 of this Lease, Lessee shall,at its sole
cost and expense, promptly take(i) all actions required by any federal, state, regional, or local
governmental agency or political subdivision or any Governmental Requirements and(ii)all actions
necessary to make full economic use of the Site for the purposes contemplated by this Lease, which
requirements or necessity arise from the presence upon, about or beneath the Site of any Hazardous
Materials or Hazardous Materials Contamination no matter when occurring. Such actions shall
include, but not be limited to, the investigation of the environmental condition of the Site, the
preparation of any feasibility studies or reports and the performance of any cleanup,remedial,
removal or restoration work. Lessee shall take all actions necessary to promptly restore the Site to an
environmentally sound condition for the uses contemplated by this Lease,notwithstanding any lesser
standard of remediation allowable under applicable Governmental Requirements.
11.6 Storage or Handling of Hazardous Materials, Lessee,at its sole cost and expense,
shalt comply with all Governmental Requirements for the storage, use,transportation,handling and
disposal of Hazardous Materials on or about the Site. In the event Lessee does store,use, transport,
handle or dispose of any Hazardous Materials, Lessee shall notify City and Agency in writing at least
ten (10) days prior to their first appearance on the Site and Lessee's failure to do so shall constitute a
material default under this Lease. Lessee shall conduct all monitoring activities required or
prescribed by applicable Governmental Requirements, and shall, at its sole cost and expense, comply
with all posting requirements of Proposition 65 or any other similarly enacted Governmental
Requirements. In addition, in the event of any complaint or governmental inquiry, or if otherwise
deemed necessary by City in its reasonable judgment, City may require Lessee, at Lessee's sole cost
and expense, to conduct specific monitoring or testing activities with respect to Hazardous Materials
on the Site. Lessee's monitoring programs shall be in compliance with applicable Governmental
Requirements,and any program related to the specific monitoring of or testing for Hazardous
Materials on the Site,shall be satisfactory to City, in City's reasonable discretion. Lessee shall
further be solely responsible,and shall reimburse City, for all costs and expenses incurred by City
arising out of or connected with the removal, clean-up and/or restoration work and materials
necessary to return the Site and any property adjacent to the Site affected by Hazardous Materials
emanating from the Site to their condition existing at the time of the Lessee's Site Evaluation.
is
Lessee's obligations hereunder shall survive the termination of this Lease and shall not merge with
any grant deed.
11.7 Environmental Inquiries. Lessee shall notify City, and provide to City a copy or
copies, of the following environmental permits, disclosures,applications, entitlements or inquiries
relating to the Site: notices of violation,notices to comply,citations, inquiries,clean-up or
abatement orders,cease and desist orders,reports filed pursuant to self-reporting requirements, and
reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous
Materials and underground tanks, and Lessee shall report to City, as soon as possible after each
incident, any unusual, potentially important incidents.
In the event of release of any Hazardous Materials into the environment, Lessee shall, as
soon as possible after the release, furnish to City a copy of any and all reports relating thereto and
copies of all correspondence with governmental agencies relating to the release. Upon request of
City, Lessee shall furnish to City a copy or copies ofany and all other environmental entitlements or
inquiries relating; to or affecting; the Site including, but not limited to, all permit applications, permits
and reports including,without limitation, those reports and other matters which may be characterized
as confidential.
12. ALTERATION OF INIPROVEMENTS.
Upon completion of the Improvements, Lessee shall not make or permit to be made any
material structural alteration of, addition to or change in the Improvements (which shall be deemed to
be material if the cost or value of such alteration(s) or addition(s) exceeds S 10,000.00 as to any item
or$25,000.00 as all such items are aggregated), nor demolish all or any part of the Improvements
without the prior written consent of City;provided,however, that the foregoing shall not prohibit or
restrict the repair and/or replacement of the Improvements by Lessee in accordance with Section 10
hereof. In requesting such consent Lessee shall submit to City detailed plans and specifications of
the proposed work and an explanation of the need and reasons therefor.
This provision shall not limit or set aside any obligation of Lessee under this Lease to
maintain the Improvements and the Site in a clean and safe condition, including;structural repair and
restoration of damaged Improvements. City shall not be obligated by this Lease to make any
improvements to the Site or to assume any expense therefor.
Lessee shall not commit or suffer to be committed any waste or impairment of the Site or the
Improvements, or any part thereof, except as otherwise permitted pursuant to this Lease. Lessee
agrees to keep the Site and the Improvements clean and clear of refuse and obstructions, and to
dispose of all garbage, trash and rubbish in a manner satisfactory to City.
13. DAMAGE OR DESTRUCTION.
13.1 Obligation to Repair and Restore Damage Due to Casualty Covered by
Insurance. Subject to Section 13.3 below, if the Improvements shall be totally or partially destroyed
or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against by
Lessee, Lessee shall promptly proceed to obtain insurance proceeds and take all steps necessary to
begin reconstruction and, immediately upon receipt of insurance proceeds, to promptly and diligently
commence the repair or replacement of the Improvements to substantially the same condition as the
Improvements are required to be maintained in pursuant to this Lease, whether or not the insurance
19
proceeds are sufficient to cover the actual cost of repair, replacement, or restoration,and Lessee shall
complete the same as soon as possible thereafter so that the Improvements can continue to be
operated and occupied as an affordable housing project in accordance with the Lease. Subject to
Section 26.23, in no event shall the repair, replacement, or restoration period exceed fourteen (14)
months from the date Lessee obtains insurance proceeds unless City or Agency's Executive Director,
in his or her sole and absolute discretion, approves a longer period of time. City shall cooperate with
Lessee, at no expense to City, in obtaining any governmental permits required for the repair,
replacement, or restoration. If, however, the then-existing laws of any other governmental agencies
with jurisdiction over the Site do not permit the repair, replacement, or restoration, Lessee may elect
not to repair, replace, or restore the Improvements by giving notice to City(in which event Lessee
will be entitled to all insurance proceeds but Lessee shall be required to remove all debris from the
Site)or Lessee may reconstruct such other improvements on the Site as are consistent with applicable
land use regulations and approved by the City, Agency,and the other governmental agency or
agencies with jurisdiction. In the event Lessee elects not to repair, replace, or restore and give City
notice of such election as provided herein, this Lease shall terminate.
13.2 Continued Operations. During any period of repair, Lessee shall continue,or cause
the continuation of, the operation of the Improvements on the Site to the extent reasonably
practicable from the standpoint of prudent business management.
13.3 Damage or Destruction Due to Cause Not Required to be Covered by Insurance.
If the Improvements are completely destroyed or substantially damaged by a casualty for which
Lessee is not required to (and has not) insured against, then Lessee shall not be required to repair,
replace, or restore such improvements.
14. SALE,ASSIGNMENT, SUBLEASE OR OTHER TRANSFER.
Except for(a) leases of particular dwelling units to tenants,and (b)the lease of or grant of an
easement or license to the City, or public utility or the like, Lessee shall not sell, assign, sublease,or
otherwise transfer this Lease or any right therein, nor make any total or partial sale, assignment,
sublease, or transfer in any other mode or form of the whole or any part of the Site or the
Improvements(each of which events is referred to in this Lease as an "Assignment"), without prior
written approval of City. Any purported assignment without the prior written consent of City shall
be made null and void and shall confer no rights whatsoever upon any purported assignee or
transferee.
Notwithstanding any other provision of this Lease to the contrary, the City shall not
unreasonably withhold its approval of an assignment of this Lease or conveyance of the Site or
Improvements, or any part thereof, in connection with any of the following:
(a) Any transfers to an entity or entities in which Lessee retains
management and control of the transferee entity or entities, including transfers to allow the entry into
the Partnership by the tax credit investor, Limited Partner.
(b) The conveyance or dedication of any portion of the Site to the
City or other appropriate governmental agency, or the granting of easements or permits to facilitate
construction of the Improvements for public utility access.
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In the event of a proposed assignment by Lessee under subparagraphs (a) through (b),
inclusive, above, Lessee agrees that at least thirty(30) days prior to such assignment it shall give
written notice to City including a request for approval of such assignment and satisfactory evidence
that the assignee has assumed the obligations of this Lease.
Notwithstanding any provision in this Section 14 to the contrary, in no event shall Lessee
make any assignment which would or could be effective beyond the Term without the prior consent
of the City.
15. (INTENTIONALLY OMITTED1
16. INDEMNITY.
During the Term, Lessee agrees that City and Agency, their agents, officers,representatives
and employees, shall not be liable for any claims, liabilities,penalties, fines or for any damage to the
goods, properties or effects of Lessee, its sublessees or representatives, agents, employees, guests,
licensees, invitees, patrons or clientele or of any other person whomsoever, nor for personal injuries
to, or deaths of any persons, whether caused by or resulting from any act or omission of Lessee or its
sublessees or any other person on or about the Site and the Improvements, or in connection with the
operation thereof, or from any defect in the Site or the Improvements, or from any displacement of
tenants or liability for relocation assistance pursuant to Government Code Section 7260, et seq., due
to the acts of Lessee hereunder. Lessee agrees to indemnify and save free and harmless Agency and
City and their authorized agents, officers, representatives and employees against any and all claims,
actions, damages, liability (including reasonable expenses and attorneys' fees) concerning loss of
life, personal injury and/or damage to property arising from or out of any occurrence in, upon or at
the Site and/or the Improvements or the occupancy or use by Lessee of the Site and/or the
Improvements or any part thereof, or arising from or out of Lessee's failure to comply with any
provision of this Lease or otherwise occasioned wholly or in part by any act or omission of Lessee,
its agents, representatives, contractors, employees, servants, customers or licensees. Lessee shall not
be responsible for(and such indemnity shall not apply to) any acts, errors or omissions of Agency,
City, or their respective agents, officers, representatives or employees.
17. INSURANCE.
17.1 Insurance to be Provided by Lessee. During the Term, Lessee, at its sole cost and
expense, shall:
(a) Maintain or cause to be maintained a policy or policies of
insurance against loss or damage to the Improvements of all property of an insurable nature located
upon the Site, resulting from fire, lightning,vandalism, malicious mischief, and such other perils
ordinarily included in extended coverage fire insurance and casualty loss policies.
(b) Maintain or cause to be maintained use and occupancy or
business interruption or rental income insurance against the perils of fire, lighting, vandalism,
malicious mischief, and such other perils ordinarily included in extended coverage fire insurance
policies, in an amount equal to not less than twelve (12) months' gross rental income payable to
Lessee from tenants on the Site, assuming one hundred percent(100%i) occupancy.
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(c) Maintain or cause to be maintained, comprehensive general
liability insurance with respect to the Site and the Improvements and the operations of the Lessee in,
on or about the Site and the Improvements, including, but not limited to, owned and hired motor
vehicle liability, cross liability and severability of interests, personal injury, XC&U, blanket
contractual, owners protective broad form property damage, and product/completed operations
liability coverage in an amount not less than Two Million Dollars($2,000,000),combined single
limit, public liability insurance to protect against loss from liability for damages on account of
personal injury, including death therefrom, suffered or alleged to be suffered by any person or
persons whomsoever on or about the Site and the Improvements, or in connection with the operation
thereof, resulting directly or indirectly from any acts or activities of Lessee or its sublessees, or any
person acting for Lessee, or under their respective control or direction, and also to protect against
loss from liability imposed by law for damages to any property of any person occurring on or about
the Site and the Improvements,or in connection with the operation thereof, caused directly or
indirectly by or from acts or activities of Lessee of its sublessees, or any person acting for Lessee, or
under their respective control or direction. Such property damage and personal injury insurance shall
also provide for and protect against incurring any legal cost in defending claims for alleged loss. The
required amount of insurance shall be subject to increases as Agency may reasonably require from
time to time, but not more frequently than every twenty-four(24) months. In no event shall such
increase or increases exceed the increase during such period in the United States Department of
Labor, Bureau of Labor Statistics,Consumer Price Index for Urban Wage Earners and Clerical
Workers, Subgroup"All Items," in the geographical area applicable to the Bellflower area. Lessee
agrees that provisions of this paragraph as to maintenance of insurance shall not be construed as
limiting in any way the extent to which Lessee may be held responsible for the payment of damages
to persons or property resulting from Lessee's activities, activities of its sublessees or the activities of
any other person or persons for which Lessee is otherwise responsible.
(d) Maintain or cause to be maintained worker's compensation
insurance issued by a responsible carrier authorized under the laws of the State of California to insure
employers against liability for compensation under the workers' compensation laws now in force in
California, or any laws hereafter enacted as an amendment or supplement thereto or in lieu thereof.
Such workers' compensation insurance shall cover all persons employed by Lessee in connection
with the Site and the Improvements and shall cover full liability for compensation under any such act
aforesaid,based upon death or bodily injury claims made by, for on behalf of any person incurring or
suffering injury or death in connection with the Site or the Improvements or the operation thereof by
Lessee.
17.2 Definition of"Full Insurable Value". The terra "Full Insurable Value" as used in
this Section 17 shall mean the actual replacement cost(excluding the cost of excavation, foundation
and footings below the lowest floor and without deduction for depreciation)of the Improvements,
including the cost of construction of the Improvements, architectural and engineering fees,and
inspection and supervision. To ascertain the amount of coverage required, Lessee shall cause the
Full Insurable Value to be determined from time to time by appraisal by the insurer or, if no such
appraisal is available, by an appraiser mutually acceptable to City and Lessee, not less often than
once every three (3) years.
17.3 General Insurance Provisions. All policies of insurance provided for in this
Section 17,except for the workers' compensation insurance, shall name Lessee as the insured and
loss payee and Agency and the City and their respective officers,employees,agents, and
representatives, as additional insureds, as their respective interests may appear_ All property casualty
22
insurance policies shall include the interest of any Lessee's Mortgagee,and may provide that any
loss is payable to Lessee's Mortgagee in which event such policies shall contain standard mortgage
loss payable clauses. Lessee agrees to timely pay all premiums for such insurance and,at its sole
cost and expense, to comply and secure compliance with all insurance requirements necessary for the
maintenance of such insurance. Lessee agrees to submit policies of all insurance required by this
Section 17 of this Lease, or certificates evidencing the existence thereof, to City on or before the
effective date of this Lease, indicating full coverage of the contractual liability imposed by this
Lease. At least thirty(30) days prior to expiration of any such policy, copies of renewal policies, or
certificates evidencing the existence thereof, shall be submitted to City. All policies of insurance
required of Lessee herein shall be issued by insurance companies with a general policy holder's
rating of not less than A and a financial rating of not less that Class XV, as rated in the most current
available "Best's Key Rating Guide". All policies orcertificates of insurance shall also: (i) provide
that such policies shall not be canceled or limited in any manner without at least thirty(30) days prior
written notice to City;and (ii)provide that such coverage is primary and not contributing with any
insurance as may be obtained by City and shall contain a waiver of subrogation for the benefit of the
City and Agency.
Coverage provided hereunder by Lessee shall be primary insurance and not be contributing
with any insurance maintained by Agency or City,and the policy shall contain such an endorsement.
The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of the
City and Agency. None of the above-described policies shall require Developer to meet a deductible
or self-insured retention amount of more than Ten Thousand Dollars ($10,000.00) unless first
approved in writing by the City. All policies shall be written by good and solvent insurers and shall
have a policyholder's rating of A or better in the most recent edition of"Best's Key Rating Guide --
Property and Casualty," The required certificate shall be furnished by Lessee at the time set forth
herein.
17.4 Failure to Maintain Insurance. if Lessee fails or refuses to procure or maintain
insurance as required by this Lease, City shall have the right, at Agency's election,and upon ten(10)
days prior notice to Lessee, to procure and maintain such insurance. The premiums paid by City
shall be treated as added rent due from Lessee, to be paid on the first day of the month following the
date on which the premiums were paid. City shall give prompt notice of the payment of such
premiums, stating the amounts paid and the name of the insured(s).
17.5 Insurance Proceeds Resulting from Loss or Damage to Improvements. All
proceeds of insurance with respect to loss or damage to the Improvements during the term of this
Lease shall be payable, under the provisions of the policy of insurance, to Lessee, and said proceeds
shall constitute a trust fund to be used for the restoration, repair and rebuilding;of the Improvements
in accordance with plans and specifications approved in writing by City. To the extent that such
proceeds exceed the cost of such restoration, repair or rebuilding, then such proceeds shall be
retained by the party that purchased the insurance, Notwithstanding the foregoing, within the period
during which there is an outstanding mortgage upon the improvements,such proceeds shall be
payable in accordance with Section 17.3 of this Lease.
18, EMINENT DOMAIN.
(a) The City agrees that during the Term, provided that this Lease
shall remain in effect, the City shall not exercise eminent domain powers as to the Site or the
Improvements.
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19. OBLIGATION TO REFRAIN FROM DISCRIMINATION.
There shall be no discrimination against or segregation of any person or group of persons,on
account of sex, marital status, race,color, creed,religion, national origin or ancestry in the leasing,
subleasing, transferring, use,occupancy,tenure or enjoyment of the Site and the Improvements, and
Lessee itself or any person claiming under or through it shall not establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees thereof or any
portion thereof, or in the providing of goods, services, facilities, privileges, advantages and
accommodation.
Lessee shall refrain from restricting the rental, sale,or lease of the Site and the
Improvements, or any portion thereof, on the basis of sex, marital status, race, color,creed, religion,
ancestry or national origin of any person. All such leases or contracts shall contain or be subject to
substantially the following nondiscrimination or nonsegregation clauses:
(a) In Leases:
"The lessee herein covenants by and for itself, its heirs, executors, administrators and assigns,
and all persons claiming under or through it,and this lease is made and accepted upon and subject to
the following conditions:
"That there shall be no discrimination against or segregation of any person or group of
persons, on account of sex, marital status, race, color, creed, religion, national origin, or ancestry, in
the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein
leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection, location,
number, use, or occupancy, of tenants, lessees,sublessees, subtenants,or vendees in the premises
herein leased."
(b) In Contracts:
"There small be no discrimination against or segregation of,any person or group of persons
on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee
itself or any person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use of occupancy of
tenants, lessees, subtenants, sublessees or vendees of the premises."
20, NONDISCRIMINATION IN EMPLOYMENT.
Lessee, for itself and its successors and assigns,agrees that during the operation of the
Improvements provided for in this Lease, and during any work of repair or replacement, Lessee shall
not discriminate against any employee or applicant for employment because of race,color, creed,
religion,sex,marital status, physical or mental disability, sexual orientation,ancestry or national
origin,or on the basis of any other category or status not permitted by law.
21. [INTENTIONALLY OMITTED1.
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22. COMPLIANCE WITH LAW.
Lessee agrees,at its sole cost and expense, to comply and secure compliance by all
contractors and tenants of the Site and Improvements with all the requirements now in force, or
which may hereafter be in force, of all municipal,county, state and federal authorities, pertaining to
the Site and the Improvements, as well as operations conducted thereon, and to faithfully observe and
secure compliance by all contractors and tenants of the Site and Improvements with, in the use of the
Site and the Improvements all applicable county and municipal ordinances and state and federal
statutes now in force or which may hereafter be in force, and to pay before delinquency all taxes,
assessments, and fees, if any, assessor levied upon Lessee or the Site or the Improvements, including
the land and any buildings, structures, machines, appliances or other improvements of any nature
whatsoever, erected, installed or maintained by Lessee or by reason of the business or other activities
of Lessee upon or in connection with the Site and the Improvements. Lessee shall use good faith
efforts to prevent tenants from maintaining any nuisance or other unlawful conduct on or about the
Property, and shall take such actions as are reasonably required to abate any such violations by
tenants of the Site and Improvements. The judgment of any court of competent jurisdiction, or the
admission of Lessee or any sublessee or perntittee in any action or proceeding against them,or any of
them, whether City be a party thereto or not, that Lessee, sublessee or permittee has violated any
such ordinance or statute in the use of the Site or the Improvements shall be conclusive of that fact as
between City and Lessee, or such sublessee or permittee. Lessee shall comply with all applicable
laws, regulations, and any applicable labor standards, all of which laws and regulations shall be
deemed to be incorporated herein by reference. Lessee shall comply with the Tax Credit Rules, The
Lease shall further comply with the Bond Rules and the Bond Regulatory Agreement.
23. ENTRY AND INSPECTION.
In addition to and without limitation to such rights as the Agency or City may have as a
matter of law, the City reserves and shall have the right between the hours of 8:00 a.m. and
8:00 p.m., upon twenty-four(24)hours prior notice(except in cases of emergency in which case
entry may be made at any time and without notice)to Lessee by the City, to enter the Site and the
Improvements for the purpose of viewing and ascertaining the condition of the same,or to protect its
interests in the Site and the Improvements or to inspect the operations conducted thereon.
24. RIGHT TO MAINTAIN.
In the event that the entry or inspection by City pursuant to Section 23 hereof discloses that
the Site or the Improvements are not in a decent, safe, and sanitary condition, City shall have the
right, after thirty(30) days written notice to Lessee (except in case of emergency, in which event no
notice shall be necessary), to have any necessary maintenance work done for and at the expense of
Lessee and Lessee hereby agrees to pay promptly any and all costs incurred by City in having such
necessary maintenance work done in order to keep the Site and the Improvements in a decent, safe
and sanitary condition. The rights reserved in this Section shall not create any obligations on City or
increase obligations elsewhere in this Lease imposed on City.
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25. EVENTS OF DEFAULT AND REMEDIES.
25.1 Events of Default by Lessee. The occurrence of any one (1) or more of the
following shall constitute an event of default hereunder.
(a) Lessee shall fail to construct the Improvements in accordance
with the terms and within the times set forth; or
(b) Lessee shall abandon or surrender the Site, or the
Improvements; or
(c) Lessee shall fail or refuse to pay, within ten (10) days of
notice from City that the same is due, any installment of rent or any other sum required by this Lease
to be paid by Lessee; or
(d) Lessee shall fail to pay when due any Capital Events
Payment(s); or
(e) Lessee shall fail to perform any covenant or condition of this
Lease other than as set forth in subparagraphs(a) or(b)above or paragraphs (0, (i) or 6)below, and
any such failure shall not be cured within thirty(30)days following the service on Lessee of
written notice from City specifying the failure complained of, or if it is not practicable to cure or
remedy such failure within such thirty(30) day period, then Lessee shall not be deemed to be in
default if Lessee shall commence such cure within such thirty(30)day period and thereafter
diligently prosecute such cure to completion; or
(f) Subject to any restrictions or limitations placed on City by
applicable laws governing bankruptcy, Lessee's (i) application for,consent to or suffering of the
appointment of a receiver,trustee or liquidator for all or for a substantial portion of its assets;
(ii)making a general assignment for the benefit of creditors; (iii) admitting in writing its inability to
pay its debts or its willingness to be adjudged a bankrupt; (iv)becoming unable to or failing to pay its
debts as they mature; (v) being adjudged a bankrupt; (vi) filing a voluntary petition or suffering an
involuntary petition under any bankruptcy, arrangement, reorganization or insolvency law (unless in
the case of an involuntary petition, the same is dismissed within ninety(90) days of such filing);
(vii) convening a meeting of its creditors or any class thereof for purposes of effecting a moratorium,
extension or composition of its debts; or(viii) suffering or permitting to continue unstayed and in
effect for sixty(60)consecutive days any attachment, levy, execution or seizure of all or a portion of
Lessee's assets or of Lessee's interest in this Lease, or with respect to the Lower Income Units;
(g) Lessee shall charge or accept rent that is in excess of
Affordable Rent; or
(h) Lessee shall charge or accept rent that is in excess of the
Prescribed Rent Levels; or
(i) Lessee shall rent to a tenant, or allow occupancy by a person
or household, that is not a Very Low Income Household or a Lower Income Household; or
(j) Lessee shall rent to a household which does not qualify as
Seniors;
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then, upon notice having been given by City and the failure to cure within sixty(60)of such notice,
such event shall constitute an event of default under this Lease.
Notwithstanding any of the foregoing, any Event of Default shall be stayed upon City
receiving notice from the tax credit investor that the tax credit investor shall take steps necessary to
cure the Event of Default. City will provide notice to the tax credit investor of any and all Event(s)
of Default. Upon receiving same, tax credit investor will propose a plan of action to City to cure the
Event of Default. City will reasonably approve such plan of action and will allow the tax credit
investor reasonable time to effectuate the plan. The Tax Credit Investor's Cure Rights shall be
further annunciated in the to be formed Limited Partnership Agreement. Tire City will be provided
an opportunity to review and comment and approve the Limited Partnership Agreement and will be
bound by its terms as they affect this Lease and other Project Documents.
25.2 Remedies of Lessor.
In the event of any such default as described in Section 25.1 which default has not been
timely cured, Lessor may, at its option:
(1) Correct or cause to be corrected said default and
charge the costs thereof(including costs incurred by City in enforcing this provision)
to the account of Lessee,which charge shall be due and payable within sixty(60)
days after presentation by City of a statement of all or part of said costs;
(2) Correct or cause to be corrected said default and pay
the costs thereof(including costs incurred by City in enforcing this provision) from
the proceeds of any insurance;
(3) Exercise its right to maintain any and all actions at
law or suits in equity to compel Lessee to correct or cause to be corrected said
default;
(4) Have a receiver appointed to take possession of
Lessee's interest in the Site and the Improvements,with power in said receiver to
administer Lessee's interest in the Site and the Improvements, to collect all funds
available to Lessee in connection with its operation and maintenance of the Site and
the Improvements; and to perform all other consistent with Lessee's obligation under
this Lease as the court deems proper;
(5) Maintain and operate the Site and the Improvements,
without terminating this Lease; or
(6) Terminate this Lease by written notice to Lessee of its
intention to do so.
Notwithstanding anything hereinabove to the contrary, City will not exercise any of the
above Remedies without first providing the tax credit investor notice of Default and allowing the tax
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credit investor an opportunity to cure the Event of Default in a reasonable manner, as stated in the to
be formed Limited Partnership Agreement.
25.3 Right of City in the Event of Termination of Lease. Upon termination of this
Lease pursuant to Section 25.2 or Section 15, it shall be lawful for City to re-enter and repossess the
Site and the Improvements and Lessee, in such event, does hereby waive any demand for possession
thereof, and agrees to surrender and deliver the Site and the Improvements peaceably to City
immediately upon such termination in good order, condition and repair, except for reasonable wear
and tear. Lessee agrees that upon such termination, title to all the Improvements on the Site shall
vest in City pursuant to Section $.2.
Even though Lessee has breached the Lease and abandoned the Site, this Lease shall continue
in effect for so long as City does not terminate Lessee's right to possession, and City may enforce all
of its right and remedies under this Lease, including, but not limited to, the right to recover the rent
as it becomes due under this Lease. No ejectment, re-entry or other act by or on behalf of City shall
constitute a termination unless City gives Lessee notice of termination in writing.
Termination of this Lease shall not relieve or release Lessee from any obligation incurred
pursuant to this Lease prior to the date of such termination. Termination of this Lease shall not
relieve Lessee from the obligation to pay any sum due to City or from any claim for damages against
Lessee. City shall not exercise this right without first providing the tax credit investor with notice
and an opportunity to cure.
25.4 Damages. Should City elect to terminate this Lease pursuant to the provisions of this
Section 25, Agency may recover from Lessee, as damages, the following: (a)The worth at the time
of the award of any unpaid rent which had been earned at the time of the termination, plus (b) the
worth at the time of the award of the amount by which the unpaid rent which would have been earned
after termination until the time of the award exceeds the amount of rent loss Lessee proves could
have been reasonably avoided, plus(c) the worth at the time of award of the amount by which the
unpaid rent for the balance of the Term after the time of award exceeds the amount of rent loss that
Lessee proves could be reasonably avoided, plus (d)any other amounts necessary to compensate City
for all the detriment proximately caused by Lessee's failure to perform its obligations under this
Lease or which, in the ordinary course of things, would be likely to result therefrom including, but
not limited to, any costs or expenses incurred by City in(i) retaking possession of the Site and the
Improvements, including reasonable attorneys' fees therefor, (ii) maintaining or preserving the Site
and the Improvements after default, (iii) preparing the Site and the Improvements for reletting to a
new tenant, including repairs or alterations to the Site and the Improvements, (iv) leasing
commissions, or(v)any other costs necessary or appropriate to relet the Site and the Improvements,
plus(e)at City's election,any other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by the law of the State of California.
As used in subparagraphs(a) and (b) above, the `,%North at the time of award" is computed by
allowing interest at the maximum lawful rate. As used in subparagraph (c) above, the "worth at the
time of award" is computed by discounting such amount at the discount rate of the Federal Reserve
Bank situated nearest to the location of the Site at the time of the award plus one percent(M").
Damages under this section shall be waived unless City provides tax credit investor with
notice and an opportunity to cure.
25.5 Rights and Remedies are Cumulative. The remedies provided by this Section 25
are not exclusive and shall be cumulative to all other rights and remedies possessed by City. The
exercise by City of one or more such rights or remedies shall not preclude the exercise by it, at the
same or different times, of any other rights or remedies for the same default or any other default by
Lessee.
26. MISCELLANEOUS.
26.1 Governing Law; Interpretation. The laws of the State of California shall govern
the interpretation and enforcement of this Lease.
This Lease shall be reasonably interpreted in light of its purposes to provide affordable
housing for Seniors and to afford the City those rents and other revenues as are provided for herein.
This Lease shall be interpreted as if jointly prepared by both parties.
This Lease shall be construed as consistent with the Regulatory Agreement to the greatest
extent feasible.
26.2 Legal Actions. In addition to any other rights or remedies, either party may institute
legal action to cure,correct or remedy any default, to recover damages for any default, or to obtain
any other remedy consistent with the purpose of this Lease. Such legal actions must be instituted in
the Superior Court of San Bernardino County, State of California, in any other appropriate court in
that County, or in the Federal District Court in the District of California in which the Site is located.
26.3 Acceptance of Service of Process. In the event that any legal action is commenced
by Lessee against City, service of process on City shall be made by personal service upon the City
Clerk, or in such other manner as may be provided by law.
In the event that any legal action is commenced by City against Lessee, service of process on
Lessee shall be made by personal service upon Lessee or in such other manner as may be provided
by law, and shall be effective whether made within or without the State of California.
26.4 Attorneys' Fees And Court Costs. In the event that either Lessor or Lessee shall
bring or commence an action to enforce the terms and conditions of this Lease or to obtain damages
against the other party arising from any default under or violation of this Lease, then the prevailing
party shall be entitled to and shall be paid reasonable attorneys' fees and court costs therefor in
addition to whatever other relief such prevailing party may be entitled.
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2&5 Financial Statement; Inspection of Books And Records. Lessee shall submit to
the City on an annual basis, not later than May 1,an Audited Financial Statement for the operation of
the Site and Improvements, which is prepared by a certified public accounting firm, including
without limitation the information described in Section 6.6 hereof. In addition, City shall have the
right(at Lessee's office, upon not less than forty-eight(48)hours' notice, and during normal business
hours) to inspect the books and records of Lessee pertaining to the Site as pertinent to the purposes of
this Lease. Lessee also has the right(at City's office, upon not less than forty-eight(49) hours'
notice, and at all reasonable times) to inspect the books and records of City pertaining to the Site as
pertinent to the purposes of this Lease,
26.6 Interest. Any amount due City that is not paid when due shall bear interest from the
date such amount becomes due until it is paid. Interest shall be at a rate equal to the lesser of
E(i) seven percent(7%)]per annum, compounded annually, on the first day of the month such amount
becomes due, and(6) the maximum rate permitted by applicable law.
26.7 Notices. All notices, statements,demands, requests, consents, approvals,
authorizations, offers, agreements, appointments or designations hereunder by either party to the
other shall be in writing and shall be given either by(i) personal service, (ii) delivery by reputable
document delivery service such as Federal Express that provides a receipt showing date and time of
delivery, or(iii)mailing in the United States mail,certified or registered mail,return receipt
requested, postage prepaid, and addressed as follows:
Agency: City of Grand Terrace Community Redevelopment Agency
22795 Barton Rd.
Grand Terrace, CA 92313
Attention: Thomas J. Schwab
with a copy to:
(delivery of which
copy shall not
constitute notice
to Agency) John Harper, Esq.
c/o City of Grand Terrace
22795 Barton Road
Grand Terrace,California 92313
Tel.: (714) 771-7728
Lessee: Corporation for Better Housing
15303 Ventura Blvd. Suite 1100
Sherman Oaks, CA 91403
Attention: Mary Silverstein
Copy to:
The Tax Credit Investor
or to such other address as either party shall later designate for such purposes by written notice to the
other party. Notices shall be deemed effective upon receipt provided that the party to whom notice is
30
being given has notified the other party of its current address,and otherwise upon the earlier of
personal receipt or within seven(7)days after delivery thereof to the address(es)as provided above;
provided, however that refusal to accept delivery after reasonable attempts thereto shall constitute
receipt. Any notices attempted to be delivered to an address from which the receiving party has
moved without notice to the delivering party shall be effective on the third day after the attempted
delivery or deposit in the United States mail,
26.8 Time is of the Essence. Time is of the essence in the performance of the terms and
conditions of this Lease.
26.9 Non-Merger of Fee And Leasehold Estates. If both City's and Lessee's estates in
the Site or the Improvements or both become vested in the same owner, this Lease shall nevertheless
not be destroyed by application of the doctrine of merger except at the express election of City and
Lessee's Mortgagee. The voluntary or other surrender of this Lease by Lessee,or a mutual
cancellation thereof,shall not work:as a merger and shall,at the option of City, terminate all or any
existing sublease or sub€enancies or may, at the option of City, operate as an assignment to City of
any or all such existing subleases or subtenancies.
26.10 Holding Over. The occupancy of the Site after the expiration of the Term of this
Lease shall be construed to be a tenancy from month to month, and all other terms and conditions of
this Lease shall continue in full force and effect.
26.11 Conflict of Interest. No member, official or employee of City shall have any
personal interest, direct or indirect, in this Lease nor shall any such member, official or employee
participate in any decision relating to the Lease which affects his personal interests or the interests of
any limited partnership, partnership or association in which he is directly or indirectly interested.
Lessee warrants that it has not paid or given,and will not pay or give,any third party any
money or other consideration for obtaining this Lease.
26.12 Non-Liability of City Officials And Employees. No member,official,officer,
employee,agent,or representative of City shall be personally liable to Lessee,or any successor in
interest, in the event of any default or breach by City or 1br any amount which may become due to
Lessee or successor or on any obligations under the terms of this Lease.
26.13 Relationship. The relationship between the parties hereto shall at all times be
deemed to be that of landlord and tenant. The parties do not intend nor shall this Lease be deemed to
create a partnership or joint venture.
26.14 Transactions with Affiliates. Lessee shall not have the right to enter into
transactions with subsidiaries, affiliates and other related entities for the purpose of leasing space,
providing cleaning, maintenance and repair services, insurance policies and other purposes related to
the use and development of the Site and the Improvements,without the prior written approval of the
City, which approval shall be given only if the City reasonably concludes that all such costs,charges
and rents are competitive with the costs, charges, rent and other sums which would be paid by or to,
as the case may be, an unrelated third party.
26.15 Waivers And Amendments. All waivers of the provisions of this Lease must be in
writing and signed by the appropriate authorities of City or Lessee. The waiver by City of any
31
breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition, or any subsequent breach of the same or any other term, covenant
or condition herein contained. The subsequent acceptance of rent hereunder by City shall not be
deemed to be a waiver of any preceding breach of Lessee of any term, covenant or condition of this
Lease, regardless of City's knowledge of such preceding breach at the time of acceptance of such
rent. Failure on the part of City to require or exact full and complete compliance with any of the
covenants or conditions of this Lease shall not be construed as in any manner changing the terms
hereof and shall not prevent City from enforcing any provision hereof.
All amendments or modifications hereto must be in writing and signed by the appropriate
authorities of City and Lessee.
The Lessee's mortgagee permitted by this Lease shall not be bound b} any waiver or
amendment to this Lease without Lessee's mortgagee giving its prior written consent.
26.16 Entire Agreement; Duplicate Originals; Counterparts. Except as set forth in
Section 26.16, this Lease sets forth the entire understanding of the parties with respect to Lessee's
ground lease of the Site. This Lease is executed in three (3) duplicate originals and counterparts,
each of which is deemed to be an original. This Lease includes pages and
exhibits, The Exhibits are incorporated by reference
herein.
26.17 Severability. If any provision of this Lease or the application thereof to any person
or circumstances shall be invalid or unenforceable to any extent, the remainder of this Lease and the
application of such provisions to other persons or circumstances shall not be affected thereby and
shall be enforceable to the greatest extent permitted by law.
26.18 Terminology. All personal pronouns used in this lease, whether used in the
masculine, feminine, or neuter gender, shall include all other genders; the singular shall include the
plural, and vice versa. Titles of sections are for convenience only, and neither limit nor amplify the
provisions of the Lease itself.
26.19 Recordation. A short form memorandum of this Lease should be recorded at or
within one (1) day after the time the Lease is executed. The failure to record such Memorandum
shall not affect this Lease.
26.20 Binding Effect. This Lease, and the terms, provisions, promises,covenants and
conditions hereof, shall be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns.
26.21 Estoppel Certificate. Each of the parties shall at any time and from time to time, but
not more frequently than twice during any calendar year, upon not less than twenty(20) days' prior
notice by the other, execute, acknowledge and deliver to such other party a statement in writing
certifying that this Lease is unmodified and is in full force and effect (or if there shall 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 has been paid (which may be based upon the best knowledge of the party
providing the certificate), and stating whether or not to the best knowledge of the signer of such
certificate such other party is in default in performing or observing any provision of this Lease, and,
if in default, specifying each such default of which the signer may have knowledge, and such other
32
matters as such other party may reasonably request, it being intended that any such statement
delivered by Lessee may be relied upon by City or any successor in interest to City or any
prospective mortgagee or encumbrancer thereof, and it being further intended that any such statement
delivered by City may be relied upon by any prospective assignee of Lessee's interest in this Lease or
any prospective mortgagee or encumbrancer thereof. Reliance on any such certificate may not
extend to any default as to which the signer of the certificate shall have had no actual knowledge,
26.22 Force Majeure. The time within which City or Lessee is obligated herein to perform
any obligation hereunder, other than an obligation that may be performed by the payment of money,
shall be extended and the performance excused when the delay is caused by fire, earthquake or other
acts of God, strike, lockout, acts of public enemy, riot, insurrection or other cause beyond the control
of the applicable party.
26.23 Quiet Enjoyment. City does hereby covenant, promise and agree to and with Lessee
that Lessee, for so long as Lessee is not in default hereof, shall and may at all times peaceably and
quietly have, hold, use, occupy and possess the Site throughout the Term.
26.24 City and Agency Approvals and Actions. Whenever a reference is made herein to
an action or approval to be undertaken by City, the Agency Executive Director or his or her designee
is authorized to act on behalf of the City unless specifically provided otherwise or the law otherwise
requires.
26.25 No Third Parties Benefited Excei)t for Agencv and Approved Leasehold
Mortgagee. This Lease is made for the purpose of setting forth rights and obligations of Lessee and
City, and no other person (except for the Agency) shall have any rights hereunder or by reason
hereof. Except for the Agency, and each leasehold mortgagee approved by City, each of which shall
be deemed to be a third party beneficiary of this Lease, there shall be no third party beneficiaries of
this Lease.
33
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed by their
Iawfully authorized officers.
CITY:
THE CITY OF GRAND TERRACE, a public body
corporate and politic
Bv.
ATTEST:
LESSEE:
CORPORATION FOR BETTER HOUSING,
a California nonprofit affordable housing development
company
By:
Mary Silve t in,Executive Vice President
34
Page
LIST OF EXHIBITS
ExhibitA Site Map.............................................................. .. . .... . .......................... Pages
ExhibitB Site Lcgal Description.................................................................................... Pages
Exhibit c Memorandum of Lease............—................................................................... � Pages
Exhibit D Schedille of Performance .........................................................,...................... � Pages
Exhibit E Scope o f Der•elopment.................................... .......................................... Pages
Exhibit F Ground Lease Rider......................... . ......................................................... _._Y Pages
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EXHIBIT B
SITE LEGAL DESCRIPTION
PARCEL A:
PARCEL 4 OF PARCEL MAP NO. 766, IN THE COUNTY OF SAN BERNARDINO, STATE OF
CALIFORNIA,AS PER PLAT RECORDED IN BOOK 7 PAGE 24 OF PARCEL MAPS,
RECORDS OF SAID COUNTY.
PARCEL B:
THE WEST 125 FEET OF LOT 17 MEASURED PARALLEL TO THE WEST LINE OF SAID
LOT, OF VISTA GRANDE TRACT,AS PER PLAT RECORDED IN BOOK 17 OF MAPS, PAGE
10,RECORDS OF SAID COUNTY, EXCEPTING THEREFROM THAT PORTION CONVEYED
TO THE COUNTY OF SAN BERNARDINO BY DEED RECORDED JANUARY 23, 1969 IN
BOOK 7170 PAGE 26 OF OFFICIAL RECORDS.
Exhibit"B"
Page 1 of l
EXHIBIT C
MEMORANDUM OF LEASE
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
CITY OF GRAND TERRACE
22795 Barton Rd.
Grand terrace, CA 92313
coo City Clerk
Exempt from Recording Fec Pursuant to Government
Code Section 27383.
MEMORANDUNNI OF LEASE
THIS MEMORANDUM OF LEASE ("Memorandum") is hereby made as of
September 22, 2005 by and between the CITY OF GRAND TERRACE, a public body,
corporate and politic (the "City" or"Lessor"), and CORPORATION FOR BETTER DOUSING, a
California not for profit company(the"Developer''or"Lessee").
RECITALS
A. City and the Lessee have entered into a ground lease dated as of 09/2 2I , 2005,
for that certain parcel of real property (the "Property") which is legally described in Exhibit"A"
attached hereto and incorporated herein by reference (the ground lease,as amended is hereafter
referred to as the"Lease"). A copy of the Lease is available for public inspection at City's office at
22795 Barton Rd., Grand Terrace, California. The term of the Lease is approximately sixty-five(65)
years-
B. The Lease provides that a short form memorandum of the Lease shall be executed
and recorded in the Official Records of Sun Bernardino County, California.
C. The Lease includes restrictions which limit the rents chargeable, the incomes of
ninety percent (901.1)of the units minus the manager's unit, and which further limit the eligible
renters to "Seniors", except the manager's unit as more fully set forth in the Lease.
D. The Lease provides that Lessee shall pay taxes upon the assessed value of the entire
Property, and not merely a leasehold interest, as provided pursuant to Section 33673 of the California
Flealth and Safety Code.
Exhibit"C',
NOW, THEREFORE,the parties hereto certify as follows:
Agency,pursuant to the Lease, has leased the Property to the Lessee upon the terms and
conditions provided for therein. This Memorandum of Lease is not a complete summary of the
Lease, and shall not be used to interpret the provisions of the Lease.
THE CITY OF GRANT) TERRACE, a public body
corporate and politic
By: -
ATTEST:
Corporation for Better Housing,
a California nonprofit public benefit corporation
Ua
ilve te'
Its: Execu ivef Vice President
Exhibit"C"
EXHIBIT"13"
SCHEDULE OF PERFORMANCE
The following timeline is subject to project approval by City Council by 9/22/05. In the event
the approval occurs later than September 22, a delay of roughly six months for all items will
occur as the next funding cycle will occur in March and April for most of the sources.
Anticipated Development Timeline—
Planning Commission 08/04/05 Approved
Architectural and Site Review
City Council 08/11/05 First Reading
City Council 09/08105 Continued
City Council 09/22/05 Second Reading
AHP Application 09/27/05 Fall Round apps due
Tax-exempt bond Application 09/30/05 Fall Round apps due
LIHTC Application 10/10/05 Fall Round apps due
Construction Loan Close 12/28/05 Subject to award of above.
Relocation of Senior Center January 2006
Permits Issued/Construction February/March 2006
Commences
Pre-leasing Begins November 2006
Construction Complete March 2007
Residential Units
Construction Complete April 2007
Community Center
Construction Complete open June 2007
space/landscaped area
In the event Lessee is not awarded the anticipated funding within one year of City Council
project approval,Agency may terminate said agreement.
EXHIBIT "E"
SCOPE OF DEVELOPMENT
The scope of development shall be consistent with General Plan Amendment GPA-05-01, more
particularly described in Specific Plan SP-05-01,Site and Architectural Review SA 05-14, and
Environmental Assessment E-05-16 and shall be subject to the Conditions of Approval.
Project Description. Lessee intends to develop and operate on the property a one hundred and
twenty(120) unit senior housing project, comprised of one hundred and three(103) one-
bedroom rental units and seventeen (17) two-bedroom rental units, a community center,
consisting of approximately 6,500 square feet; and a landscaped open area, encompassing
roughly four (4) acres.
Project Financing. Lessee shall apply for construction and permanent funding to construct and
operate said improvements. Anticipated funding sources include, but not limited to 1)
construction loan in the form of variable rate tax-exempt bonds that will adjust with the
market during construction and be fixed by means of a rate lock during the permanent period;
2)low income housing tax credits(L1HTC)in the form of 4% credits awarded by the
California Tax Credit Allocation Committee(TCAC); 3)Federal Home Loan Bank(FHLB)
Affordable Housing Program (AHP) fully forgivable grant; and 4)Agency Funds. Lessee may
apply for additional sources of funds if necessary and appropriate. Actual funding amounts
and sources shall be provided to Agency for review and approval prior to loan closing.
Anticipated Source of Funds. The following table contains estimates, subject to change at the
time of actual funding.
Estimated Estimated
Construction Permanent
Tax Exempt Bonds issued by CSCDA $10,500,000 $4,700,000
LIHTC (4%) $200,000 $5,160,000
FHLB AHP $972,000 $972,000
Agency Funds $7,560,000 $8,400,000
Estimated Total $19,232,000 $19,232,000
Funding Applications. Lessee shall submit all applications for funding in good faith and in a
timely manner.
Exhibit"E"
EXHIBIT "F"
GROUND LEASE RIDER
THIS GROUND LEASE RIDER (the "Rider") is attached to and forms a part of that certain
Ground Lease (the "Lease") by and between the City of Grand Terrace, as lessor (the "Landlord")
and Corporation for Better Housing, as lessee (the "Tenant"). All capitalized terms used herein and
not otherwise defined shall have the meanings given that term in the Lease.
I. TENANT'S RIGHT TO MORTGAGE:
1.1 Tenant shalt have the right, with Landlord's prior written consent, %%hich shall not be
unreasonably withheld, conditioned or delayed, to mortgage the Lease and Tenant's leasehold
interest by one or more deeds of trust (each, a '-Leasehold Mortgage"). No foreclosure (or deed or
other transfer in lieu of foreclosure) under any Leasehold Mortgage shall require the consent of the
Landlord under, or constitute a breach or default under, the Lease,.
1.2 If Tenant shall mortgage the Lease and Tenant's leasehold estate hereunder, then
Tenant or the holder(each,a "Leasehold Mortgagee") of such mortgage shall forward to Landlord:
(a) an executed counterpart of the mortgage or mortgages, in form proper for
recording, or, at Tenant's option, a true copy of such mortgage or mortgages; and
(b) a written notice setting forth the name and address of the holder of such
mortgage.
In the event of any assignment of the mortgage or mortgages held by a Leasehold Mortgagee, or
change in its name and/or address, the assignee of the Leasehold Mortgagee shall give written notice
thereof to Landlord, changing the name of the Leasehold Mortgagee and/or the address to which
copies of notices are to be sent,
1.3 Until the time, if any, that each Leasehold Mortgage shall be satisfied of record, or
each Leasehold Mortgagee shall give to Landlord written notice that the Leasehold Mortgage held by
it has been satisfied:
a, no surrender or acceptance of the Demised Premises, or cancellation,
amendment or modification of the Lease, shall be binding upon any Leasehold Mortgagee, or affect
any Leasehold Mortgage, if the same is effectuated without the prior written consent of such
Leasehold Mortgagee;
b. if Landlord shall give any notice of default and/or termination to Tenant
under the Lease, Landlord shall, at the same time and in the same manner, give a copy of such notice
to each Leasehold Mortgagee at the respective address theretofore designated by each of them; and
C. no notice of default and/or termination given by Landlord to Tenant shall be
binding upon, or affect, any Leasehold Mortgagee, unless a copy of such notice shall be given to
such Leasehold Mortgagee.
1.4 Each Leasehold Mortgagee shall be afforded the right, but not the obligation, to
perform any term, covenant, or condition of the Lease to be performed by Tenant, as well as to
F xb,hit't..
remedy any default by Tenant hereunder, and Landlord shall accept such performance by any
Leasehold Mortgagee with the same force and effect as if furnished by Tenant, provided, however,
that the Leasehold Mortgagee shall not thereby or hereby be subrogated to the rights of Landlord.
Additionally, Tenant may delegate irrevocably to any Leasehold Mortgagee(s) the authority to
exercise an) or all of Tenant's rights hereunder, including, but not limited to the right of the
Leasehold Mortgagee to participate (in conjunction with or to the exclusion of Tenant) in any
proceeding, arbitration or settlement involving condemnation or eminent domain affecting Tenant's
leasehold interest in the Demised Premises, but no such delegation shall be binding upon Landlord
unless and until either Tenant or the Leasehold Mortgagee in question shall give to Landlord a true
copy of a written instrument effecting such delegation, in form required for recording. Such
delegation of authority may be effected by the terms of a Leasehold Mortgage itself, in which event
the service upon Landlord of an executed counterpart or certified copy of the Leasehold Mortgage in
accordance with Section 2, together with a written notice specifying the provisions therein that
delegate such authority to such Leasehold Mortgagee, shall be sufficient to give Landlord notice of
such delegation. Any provision of the Lease that gives a Leasehold Mortgagee the privilege of
exercising a particular right of Tenant hereunder on condition that Tenant shall have failed to
exercise such right shall not be deemed to diminish any privilege that any Leasehold Mortgagee may
have, by virtue of a delegation of authority from Tenant, to exercise such right without regard to
whether or not Tenant shall have failed to exercise such right. No foreclosure (or deed or other
transfer of foreclosure) under any Leasehold Mortgage shall require the consent of Landlord under,
or constitute a breach or default under, the Lease.
1.5 1P
(a) Tenant shall default under the provisions of the Lease and Landlord shall give
notice of such default as provided under the provisions of the Lease;
(b) such default shall not be remedied within any applicable grace and/or cure
period pursuant to the provisions of the Lease; and
(c) Landlord, by reason of such default, shall become entitled to (i) re-enter the
Demised Premises or the improvement thereon, or(ii) terminate the Lease or(iii) bring a proceeding
to dispossess Tenant and/or any other occupants of the Demised Premises or improvements thereon,
re-enter the Demised Premises and/or improvements thereon and/or terminate the Lease,
then, before so re-entering the Demised Premises or the improvements, terminating the Lease or
commencing such proceeding, and as a condition precedent thereto, Landlord shall:
(x) give to each Leasehold Mortgagee not less than thirty (30) days
additional written notice as to a monetary default (specifying the amount and description thereof to
the extent then known to Landlord) or default in furnishing any insurance required to be furnished by
Tenant hereunder, or ninety (90) days' additional written notice of any non-monetary default (which
shall specify in detail the nature of such default); and
(y) allow each Leasehold Mortgagee:
(A) such thirty (30) days or ninety (90) days (as the case may be)
within which to cure the default; or
Exhibit'T
(B) if such default is a non-monetary default (other than a default
in furnishing any insurance required to be furnished by Tenant hereunder) and cannot, with the
exercise of due diligence, be cured by such Leasehold Mortgagee within such ninety (90) day period,
then provided:
0) prior to the expiration of such ninety (90) day period,
such Leasehold Mortgagee has delivered to Landlord an instrument in writing duly executed and
acknowledged wherein it agrees to use reasonable efforts to cure such default; and
(ii) such default is susceptible of being cured by
Leasehold Mortgagee and such Leasehold Mortgagee shall, prior to the expiration of such ninety(90)
day period, have commenced curing such default, then such ninety(90) day period shall be extended,
as long as such Leasehold Mortgagee diligently pursues the curing of such default with continuity,
for such period as may be necessary to cure same provided that such period of time shall not be so
extended if to do so would subject Landlord to any criminal or civil liability or the cancellation of
any insurance required to be maintained by Tenant or the inability to obtain any such insurance.
Nothing herein contained shall affect the right of Landlord, upon occurrence of any
subsequent default, to exercise any right or remedy herein reserved to Landlord, subject, however, to
the provisions of this Section.
1.6 lf:
(a) Tenant shall default in the performance or observance of any term, covenant,
or condition of the Lease on Tenant's pan to be performed or observed, other than a term, covenant
or condition requiring the payment of a sum of money; and
(b) such default is of such a nature that the same either:
0) cannot practicably be cured by a Leasehold Mortgagee without taking
possession of the Demised Premises and/or the improvements thereon; or
(ii) is not susceptible of being cured by any Leasehold Mortgagee, then
Landlord shall not:
(x) re-enter the Demised Premises and/or the improvements
thereon or serve a notice of election to terminate the Lease;
(y) bring a proceeding to dispossess Tenant and/or any other
occupants of the Demised Premises or the improvements, re-enter the Demised Premises and/or the
improvements and/or terminate the Lease; or
(z) otherwise terminate the leasehold estate of Tenant hereunder,
If, and for so long as:
(A) a Leasehold Mortgagee shall deliver to Landlord, prior to the date on
which Landlord shall be entitled to give notice of election to terminate the Lease or re-enter the
Demised Premises and/or the improvements, a written instrument, duly executed and acknowledged,
in which the Leasehold Mortgagee agrees that:
6 o-post"F"
(X) it will use reasonable efforts to cure such default to the extent
the same is susceptible of being cured by the Leasehold Mortgagee, nominee or purchaser; and
(Y) if the Lease thereafter is terminated, or Landlord thereafter re-
enters the Demised Premises and/or the improvements prior to the curing of such default, the
Leasehold Mortgagee shall pay to Landlord the cost of curing such default; and
(B) if the default is of such a nature that same cannot practicably be cured
by a Leasehold Mortgagee without taking possession of the Demised Premises and/or the
improvements, a Leasehold Mortgagee shall proceed diligently, subject to any stay in any
proceedings involving the insolvency of Tenant or any other person, to obtain possession of the
Demised Premises and/or the improvements by foreclosure or deed in lieu of foreclosure, and, upon
obtaining such possession, shall promptly cure such default; and
(C) if the default is of such a nature that the same is not susceptible of
being cured by any Leasehold Mortgagee, a Leasehold Mortgagee shall institute foreclosure
proceedings and diligently prosecute the same to completion, subject to any stay in any proceedings
involving the insolvency of Tenant or other proceeding or injunction (unless, in the meantime, the
Leasehold Mortgagee shall acquire Tenant's estate hereunder, either in its own name or through a
nominee, by assignment in lieu of foreclosure).
1.7 No Leasehold Mortgagee shall be required to continue to proceed to obtain
possession, or to continue in possession as mortgagee, of the Demised Premises or the Improvements
pursuant to subsection (b)(B) of Section 6 or to continue to prosecute foreclosure proceedings
pursuant to subsection (b)(C) of Section 6 if and when Tenant's default shall be cured. Nothing
contained in Section 6 shall preclude Landlord from exercising any of its rights or remedies with
respect to any other default by Tenant during any period of Landlord's forbearance under Section 6
but, in such event, if any Leasehold Mortgagee, any nominee thereof, or any purchaser at a
foreclosure sale shall:
(a) acquire title to Tenant's leasehold estate hereunder; and
(b) cure all defaults of Tenant hereunder that are susceptible of being cured by
such Leasehold Mortgagee, nominee or purchaser, as the case may be, then the defaults of any prior
holder of Tenant's leasehold estate hereunder that are not susceptible of being cured by such
Leasehold Mortgagee, nominee or purchaser shall no longer be deemed to be defaults hereunder,
provided, however, that nothing herein shall be deemed to relieve such Leasehold Mortgagee,
nominee or purchaser from the obligation to cure any monetary defaults of Tenant hereunder, as well
as all non-monetary defaults that are susceptible of being cured by such Leasehold Mortgagee.
1.8 If, for any reason, the Lease shall be terminated at the election of Landlord prior to
the Expiration Date, Landlord will, on written request of any Leasehold Mortgagee made within
thirty (30) days of such termination, enter into a new lease of the Demised Premises with such
Leasehold Mortgagee, within thirty (30) days after the receipt of such request, for the remainder of
the term, effective as of the date of such termination, at the rent and additional rent, and upon the
other terms, covenants and conditions herein contained, subject, however, to the rights, if any, of the
parties then in possession of any part of the Demised Premises, provided that such Leasehold
Mortgagee shall:
BMW r
(a) contemporaneously with such written request upon Landlord for such new
lease, pay to Landlord or its attorney the net rent and additional rent due and payable by Tenant
hereunder as of the date of termination of the Lease(which payments shall be specified in reasonable
written detail by Landlord to the Leasehold Mortgagee, and such payments shall be held in escrow
until such time as Tenant submits such new lease of the Demised Premises to such Leasehold
Mortgagee at which time such payment shall be released from escrow and, if held by Landlord's
attorney, shall be paid over to Landlord); and
(b) on or before execution and delivery of said new lease, and as a condition to
the execution and delivery thereof by Landlord;
(i) pay to Landlord:
(x) any and all sums which would have been due under the Lease
but for such termination from the date of termination of the Lease to the date of execution and
delivery of said new lease;and
(y) any reasonable expenses (including, without limitation,
reasonable attorneys' fees, disbursements and court costs) to which Landlord shall have been
subjected by reason of such default;
(ii) perform and observe all the other covenants and conditions herein
contained on Tenant's part to be performed and observed, to the extent that Tenant shall have failed
to perform and observe the same, except that,,
(z) with respect to any default that cannot be cured by a
Leasehold Mortgagee until it obtains possession of the Demised Premises, the Leasehold Mortgagee
shall have a reasonable time, after the Leasehold Mortgagee obtains possession, to cure such default,
provided that such Leasehold Mortgagee shall first agree, in writing, to proceed diligently to remedy
such default after it obtains possession of the Demised Premises, provided, however, that such
extension of time shall not subject Landlord to either civil or criminal liability; and
(aa) in no event shall the Leasehold Mortgagee be required to cure
a default not susceptible of cure by the Leasehold Mortgagee or its nominee or purchaser; and
In the event that more than one Leasehold Mortgagee qualifies to receive a new Iease pursuant to the
terms of this Section, such new lease shall be entered into with the holder of the Leasehold
Mortgagee that is most senior in priority, Upon the execution and delivery of such new lease, any
subleases that may have theretofore been assigned and transferred to Landlord shall thereupon be
assigned and transferred, without recourse by Landlord, to the new tenant; and
(e) return such new lease to Landlord, duly executed and acknowledged, within
ten(10) days after receipt thereof from Landlord.
1.9 Except as otherwise provided in Section 8 of the Lease, the rights hereunder of the
Leasehold Mortgagees shall be exercisable by them in order of priority of lien of their respective
Leasehold Mortgages. The liability of any Leasehold Mortgagee acquiring Tenant's interest
hereunder shall be limited to such Leasehold Mortgagee's then interest in the Demised Premises.
I.I0 No Leasehold Mortgagee shall be liable, as tenant, under the provisions of the Lease
unless and until such time as it becomes, and then only for as long as it remains, the owner of
Tenant's interest hereunder.
1.11 Notwithstanding; anything to the contrary contained in the Lease, all proceeds arising
from any casualty insurance, business interruption insurance, rental loss insurance or similar
insurance policy relating to the Demised Premises and/or any improvements now or hereafter located
thereon, and all proceeds of any award or payment made in connection with any condemnation or
eminent domain proceeding (or deed or other transfer under threat of the same or in Iieu thereof)
involving all or any part of the Demised Premises and/or any improvements now or hereafter located
thereon, shall be paid to the Leasehold Mortgagees for application in accordance with their respective
Leasehold Mortgages.
1.12 Landlord shall, within thirty (30) days after the written request of any Leasehold
Mortgagee:
(a) acknowledge in writing to them, or to any of them, the receipt by Landlord of
any notice or instrument given, sent, or delivered to Landlord pursuant to the provisions of this
Article; and/or
(b) furnish to them, or to any of them, a written statement, duly acknowledged, of
the following items:
0) the amount of net rental and additional rent due, if any;
(ii) whether the fire and other insurance required by the Lease have been
supplied in compliance therewith;
(iii) whether the Lease is unmodified and in full force and effect (or, if
there have been modifications, that the same are in full force and effect as modified and stating the
modifications);
(iv) whether, to the best knowledge and belief of Landlord, Tenant is in
default, specifying the nature of any known default and any pertinent facts with respect thereto; and
(v) whether Landlord has given Tenant any notice of default under the
lease, and if given, whether the default set forth therein remains uncured.
Any such statement shall be for the sole benefit of the Leasehold Mortgagee and shall have no effect,
as an estoppel or otherwise, with respect to any third party,
1.13 In no event shall Landlord terminate the Lease as a result of any failure by Tenant to
pay any Capital Events payments when due (or any failure by any Leasehold Mortgagee to timely
cure any such failure). Furthermore, in no event shall Landlord terminate this Lease as a result of
any default by Tenant under the Regulatory Agreement or the Bond Regulatory Agreement (or any
failure by any Leasehold Mortgagee to timely cure any such failure).
2. Notwithstanding anything to the contrary contained elsewhere herein, upon the acquisition by
any Leasehold Mortgagee of leasehold title to the Demised Premises, whether by foreclosure, deed in
lieu of foreclosure, acceptance of a new lease pursuant to the terms of the Lease or otherwise, the
Exhibit" .
obligation to pay rent under the Lease (or any such new lease), including, without limitation, any past
due rents due under any such lease, shall irrevocably terminate, excepting only in the event
Corporation for Better Housing or an Affiliate thereof shall become owner of the Site (whether of a
leasehold or greater interest).
3. Notwithstanding anything to the contrary contained elsewhere herein, upon the acquisition by
any Leasehold Mortgagee of leasehold title to the Demised Premises, whether by foreclosure, deed in
lieu of foreclosure, acceptance of a new lease pursuant to the terms of the Lease or otherwise, the
restrictions, limitations and obligations set forth in Article 6 of the Lease (or any such new lease)
shall irrevocably terminate, excepting only in the event Corporation for Better Housing or an
Affiliate thereof shall become owner of the Site (whether of a leasehold or greater interest).
4. Notwithstanding anything to the contrary contained elsewhere herein, upon the acquisition by
any Leasehold Mortgagee of leasehold title to the Demised Premises, whether by foreclosure, deed in
lieu of foreclosure, acceptance of a new lease pursuant to the terms of the Lease or otherwise, the
restrictions, limitations and obligations set forth in Article l of this Rider, as incorporated into the
Lease (or any such new lease), shall irrevocably terminate, excepting only in the event Corporation
for Better Housing or an Affiliate thereof shall become owner of the Site (whether of a leasehold or
greater interest).
Lxhlbn"F"
Recording Requested By
and when recorded return to:
The City of Grand Terrace
Community Redevelopment Agency
22795 Barton Rd.
Grand Terrace, CA 92313
Attention: City Clerk
Exempt from recording fees pursuant to Government Code Sec. 6103 and 27383
REGULATORY AGREEMENT
THIS REGULATORY AGREEMENT (this "Agreement'), is entered into as of
Ct:hLI , 2005,by and between CORPORATION FOR BETTER HOUSING (CBH), a
nonprofit affordable development corporation(hereinafter"Owner"), the CITY OF GRAND
TERRACE, a public body, corporate and politic (hereinafter the"City") and the CITY OF
GRAND TERRACE COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate
and politic(hereinafter the"Agency").
RECITALS
A. The City adopted its"Redevelopment Plan"on or about
B. Agency desires to effectuate the provisions of the Housing Element of the General
Plan of the City by providing funds to expand the supply of housing affordable to very low and
lower income people.
C. In an effort to effectuate the provisions of the Housing Element and
Redevelopment Plan ("Plan"), the Agency has agreed to bestow to CBH certain agency funds
necessary to develop the Property as identified in the City of Grand Terrace Ground Lease
Agreement("Lease"). The Legal Description is attached hereto as Exhibit"A".
D. Owner intends to develop and operate on the Property a one hundred and twenty
(120) unit senior housing project, comprised of one hundred and three (103)one-bedroom rental
units and seventeen (17) two-bedroom rental units, ninety percent (90%) of the units will be
leased at very low and low income levels, except one(1)manager's unit, ten percent (10%) of
the units will be leased at market rates; a community center, consisting of approximately 6,500
square feet; and a landscaped area, encompassing roughly four(4) acres.
CONTRACT/AGREEMENT
NUMBER
E. To help finance the development of such improvements, Corporation for Better
Housing(CBH) has applied to Agency for agency funds (hereinafter the"Agency Funds") for
the development of the Property and, pursuant to the terms of this Regulatory Agreement,
Agency has agreed to confer the sum of EIGHT MILLION FOUR HUNDRED THOUSAND
DOLLARS ($$,400,000.00). Said Agency Funds will be evidenced and secured by this
Regulatory Agreement in favor of Agency.
F. The proposed development of the Property will effectuate the Plan.
G. As an inducement to Agency to enter into this Agreement, Owner has agreed to
enter into this Agreement and has consented thereby to be regulated and restricted by Agency as
provided herein.
NOW, THEREFORE, Agency and Owner mutually agree as follows:
1. Recitals. The foregoing recitals are a part of this Agreement.
2. Tenn. The term of this Agreement (the"Term") shall commence on the date
of recordation of this Agreement, and shall continue in full force and effect until the 65th
anniversary of the recordation hereof in the Official Records of the San Bernardino County
Recorder(the"Expiration Date").
3. Remittance. Commencing at the beginning of the first calendar year after the
issuance of a Certificate of Occupancy for the project, Developer shall remit to City on or before
May i of every subsequent calendar year, ninety percent (90%) of all Residual Receipts, as
defined herein, for the preceding calendar year. As an example,remittance of Residual Receipts
for the period ending December 31 shall be due on or before May 1.
4. Nature of Covenants, Reservations and Restrictions.
(a) Owner hereby subjects the Property to the covenants, reservations and
restrictions set forth in this Agreement. During construction and thereafter for the Tenn set forth
in Section 2 hereof, Owner, such successors and assigns shall devote the Property only to the
uses specified in the Lease and this Agreement. Each and every contract,deed or other
instrument hereafter executed covering Owner's interest in the Property, or any portion thereof,
including, without limitation, any leases, shall conclusively be held to have been executed,
delivered and accepted subject to such covenants, reservations and restrictions, regardless of
whether such covenants, reservations and restrictions are set forth in such lease, assignment,
contract, deed or other instruments.
(b) Owner covenants by and for itself, its representatives, its successors
and assigns and every successor in interest to the Property or any part thereof, that during
construction of the improvements on the Property and thereafter Owner shall not use or permit
the use of the Property in violation of the Redevelopment Plan. Owner further covenants and
agrees to comply in all respects with the terms, provisions, and obligations of Owner set forth in
this Agreement. Owner further covenants and agrees for itself, and its successors and its assigns,
that Owner, such successors, and such assignees shall use the Property and every part thereof for
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the construction of the Project and operation of a low income housing project affordable to
persons of very low or lower income, as further provided herein. Owner further covenants and
agrees that upon completion of the project described in this Agreement and Lease and other
agreement by or among the Agency and/or City and CBH as further described in the Scope of
Development, Owner shall maintain the Property (including landscaping) in the manner
consistent with other similar affordable senior housing projects in the greater San Bernardino
area.
5. Use and Rental of the Property. Owner covenants and agrees for itself, its
successors, assignees, and every successor in interest that the units comprising the Project(the
"Units") and the Property shall be restricted as provided in this section for the Tenn set forth in
Section 2 hereof.
(a) Units Restricted to Senior Citizens and/or Persons or Families of Very
Low or Lower Income. All of the Units (except for the manager's unit),but in no event less than
119 Units, shall be rented exclusively to Senior Citizens (as hereinafter defined). 108 (excluding
the Manager's Unit) of the units will be rented to Seniors Citizens who are persons or families of
very low or lower income, in accordance with the table set forth below, and only for use by such
persons or families as their principal residence. Owner shall not permit any transient use, or
permit any commercial use, of the Property except as approved by Agency in writing. Only such
persons or families of very low or lower income (as applicable) shall be entitled to occupy the
Units.
Not less than [55) of the Units shall be rented to very low income senior
households whose incomes do not exceed 50%of area median income
Not less than [53] Units(except for the manager's unit) shall be rented to lower
income senior households whose incomes do not exceed 60%' of area median
income
Occupancy levels will comply with those specified by the State of California Tax Credit
Allocation Committee rules and regulations, and such other regulations as may exist pertaining
to any tax exempt bond financing applicable to the Project. Agency and CBH anticipate that
additional regulatory agreements will be recorded on this Project and will further regulate the
Project.
(b) Maximum Rents. Owner shall rent the Units at a rent that does not
exceed the maximum"affordable rent" (as defined below) (including a reasonable utility
allowance) that may be charged for very low or lower income persons or households under
California Health & Safety Code Section 50053(b) (as amended from time to time), as applicable
for the household occupying the Unit. Owner shall be entitled to increase rents one time per year
to an amount equal to the maximum amount of"affordable rent" (including a reasonable
allowance for utilities) that may be charged for very low or lower income persons under
California Health & Safety Code Section 50053(b) (as amended from time to time), as applicable
to the Unit. Owner shall be allowed to increase the Rent as allowed by State law,but in no case
greater than the area median income(AMI) corresponding to the Unit's Affordable rent.
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(c) Definitions.
(i) "Affordable Rent"means the rent for very Iow or lower
income persons, including a reasonable utility allowance; determined under California Health &
Safety Code Section 50053(b)based upon area median income(adjusted for family size
appropriate for the Unit) for the very low or lower income household, as amended from time to
time.
(ii) "Area median income"or"AMI" shall mean the area
median income for San Bernardino County as published by the Department of Housing and
Community Development pursuant to California Health and Safety Code Section 50093, or the
most closely related successor thereto.
(iii) "Certificate of Completion"means a certificate to be
provided by the Agency to the Developer upon satisfactory completion of the Improvements on
the Property.
(iv) "Debt Service"means the total of the payments of principal
and interest due and actually made by the Developer during a period on a specified loan, and
does not include prepayments.
(v) "Gross Income"means all revenues or income collected by
the Developer or its affiliates, successors or assigns from the Project, including but not limited to
sums paid by all subtenants, licensees and concessionaires. Gross Income shall be determined on
a cash basis during any pertinent or applicable period,but shall not include security deposits until
and unless such security deposits have been forfeited by tenants. Gross Income also includes
laundry income(except such portion retained by the vendor),parking, storage, and income from
operating cable television, recreation facilities, and any other services at the Project. Gross
Income shall not, except for loss of rent insurance proceeds which shall be included, include
insurance or condemnation proceeds, or the proceeds from any sale or refinancing of the Project
or any part thereof.
(vi) "Market Rate Unit"shall mean 12 units (or ten percent of
the units) that shall not be subject to affordability restrictions, such as"Affordable rent" as
defined hereinabove.
(vii) "Operating Expenses"means for any period the sum of the
following expenses reasonably incurred and actually paid during that period, including actual,
reasonable and customary costs, fees and expenses directly attributable to operation,
maintenance, taxes and management of the Project, including, without limitation, the following
(all of which are deemed customary and reasonable): onsite administrative costs (including
materials and labor);payments to an operating reserve account; payments to a replacement
reserve account, subject to annual increases by the annual percentage increase as reasonably
determined by the tax credit investor, not to exceed 3.5%per year; painting, cleaning, repairs and
alterations; landscaping; utilities; rubbish removal; certificates,permits and licenses; sewer
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charges; costs incurred to third parties in connection with generating laundry charges (but in no
event to exceed the laundry charges); maintenance of the storage facilities; real and personal
property taxes and assessments; insurance; security; advertising, promotion and publicity; office,
janitorial, cleaning and building supplies; the actual and customary salary payable to any on-site
personnel; internet service, cable television, satellite and similar facilities; recreational amenities
supplies, utility charges, services, a property management fee (excluding salaries and benefits
payable to any on-site personnel), not to exceed eight percent (8)% of Gross Income; purchase,
repair, servicing and installation of appliances, equipment, fixtures and furnishings other than
from reserves; and fees and expenses of accountants, attorneys, consultants and other
professionals, including annual audits and tax return preparation costs payable to a third party;
and the deferred portion of the Developer's fee; an annual partnership asset fee, which may be
increased annually by the annual percentage increase in the CPI; an annual asset management fee
of Five Thousand Dollars ($5,000), which may be increased annually by the annual percentage
increase in the CPI, but which may only be paid for 15 years following the issuance of a
Certificate of Completion. Notwithstanding the foregoing, Operating Expenses shall not include:
(i)non-cash expenses, including without limitation, depreciation(ii)payments made from
insurance or condemnation proceeds or any costs or expenses paid or reimbursed by others(iii)
funds expended from replacement reserves; (iv) the initial cost of constructing the
Improvements, less apprised cost increases, or any expansion or replacements thereof; (v) any
penalties or interest resulting from the Developer's failure to pay when due any sums that the
Developer is obligated to pay to third parties(e.g., penalties and interest for late payment of real
property taxes); (vi) debt service or other payments in connection with financing.
(viii) "Persons or families of very low or lower income"means
persons whose income do not exceed the amounts set forth in California Health and Safety Code
Sections 50105 (very low income) and 50079.5 (lower income) for persons and families who
have incomes not greater than the applicable percentage of the area median income(adjusted for
family size as appropriate for the Unit) for the applicable very low or lower income categories.
(ix) "Primary Loan"means the construction loan or the
permanent loan obtained by Developer and approved by Agency for the purpose of financing the
cost of constructing the Improvements that is not financed with the Agency Funds.
(x) "Principal residence" means the principal dwelling place a
person uses as such person's usual place of return and occupancy. If a person fails to reside in
and return to such person's unit for at least four(d) days per week for a period of at least nine(9)
months out of any twelve (12) month period, it will be presumed that the Unit is not the principal
residence of that person.
(xi) "Property"means real property located in Grand Terrace,
California, which real property is more particularly described in Exhibit"A"attached hereto.
(xii) "Property Agreements"means this Regulatory Agreement
between Owner and Agency respecting the property and any other Agency or City agreement
regarding the property.
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(xiii) "Residual Receipts"means for any period the amount of
Gross Income for that period, less Operating Expenses and Debt Service on the Primary Loan for
that period.
(xiv) "Senior Citizen" shall mean a person who shall be sixty-
two (62)years of age at the time of leasing of the Unit.
The terms defined in this Subsection 4(c) are further defined in Title 25 of the
California Code of Regulations Section 6910, et seq., as from time to time amended, and any
successor regulations thereto. The terms and provisions of California Health and Safety Code
Sections 50093, 50105, 50079.5, and 50053 and Title 25 of the California Code of Regulations
Section 6910, et seq., as amended, and any successor statutes or regulations thereto, are
incorporated herein by this reference.
6. Rights of Agency. Prior to the rental of any Unit, Owner shall obtain from the
proposed tenant a completed income computation and certification form, in such form as may be
approved by the Executive Director of the Agency, and shall verify the income of the proposed
tenant. Owner shall verify the proposed tenant's income by standard and customary income
verification procedures and practices used for determining eligibility for income qualifying
housing. Agency shall have the continuing right during the Tenn hereof to verify that the
restrictions, limitations and requirements of Section 4 are being complied with and to establish
and/or continue a very low and lower income(as defined in California Health and Safety Code
Section 50093)housing program at the Property.
7. Covenants and Obligations.
(a) Insurance. Owner covenants to keep all improvements from time to
time existing on the Property insured against perils included within the general classifications as
"fire,""extended coverage,""vandalism,""malicious mischief," and "special extended perils,"
and all such insurance shall be evidenced by a standard fire and extended coverage insurance
policy or policies in an amount not less than the full replacement cost of the improvements (not
including the costs of foundation concrete and excavation that would not have to be incurred
upon replacement of the improvements). In addition, Owner shall maintain and have in full
force and effect, during the tern of this Agreement, a"Broad Form Commercial General
Liability" insurance policy in a combined single limit of($2,000,000) Two million dollars. Such
policies shall be endorsed with a standard mortgagee clause listing Agency as loss payee(in the
case of the extended coverage insurance) and an additional insured (in the case of the liability
insurance). A copy of any insurance binders or certificates of insurance shall be provided to
Agency in conjunction with the accounting described in Section 10(b) herein. Said policies shall
provide that they cannot be canceled or terminated without thirty(30) days prior written notice to
Agency. To the extent that the provision hereof are inconsistent with the insurance requirements
of the Agency Loan Documents, the provisions of the Agency Loan Documents shall control.
(b) Compliance with Building and Health and Safety Codes. Owner
covenants that the Property shall be maintained in conformance with applicable health,building,
and safety codes. Owner further covenants that any construction, renovation, repair or
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rehabilitation of the improvements shall be undertaken in compliance with all building codes of
the City of Grand Terrace applicable at the time of such construction, renovation, repair or
rehabilitation.
(c) Obligation to Refrain from Discrimination. Owner covenants that
there shall be no discrimination against any person, or group of persons, on account of sex,
marital status, race, color,religion, creed, national origin or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the Property, or any part thereof, and Owner(or
any person or entity claiming authority under or through Owner) covenants and agrees not to
establish or permit any such practice or practices of discrimination with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants or sublessees of the
Property or any part thereof. Owner also agrees to refrain from any form of discrimination as set
forth above pertaining to deeds, leases or contracts.
(d) Form of Nondiscrimination and Non-segregation Clauses. Owner
covenants that Owner, its successors and assigns, shall refrain from restricting the rental, sale or
lease of the Property, or any portion thereof, in any deed, lease or contract of sale, on the basis of
sex, marital status, race, color, religion, creed., ancestry or national origin of any person. Any
such deed, lease or contract shall contain or be subject to substantially the following
nondiscrimination or nonsegregation clauses:
(i) In deeds: "The grantee herein covenants by and for itself,
his heirs, executors, administrators and assigns, and all persons claiming under or through them,
that there shall be no discrimination against or segregation of, any person or group of persons on
account of sex,marital status, race, color, religion, creed, national origin, or ancestry in the sale,
lease, sublease,transfer, use, occupancy, tenure or enjoyment of the Iand herein conveyed or the
improvements thereon or to be constructed thereon, nor shall the grantee itself or any person
claiming under or through the grantee, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, Iocation, number, use or occupancy
of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed or such
improvements. The foregoing covenants shall run with the land."
(ii) In leases: "The lessee herein covenants by and for himself,
his heirs, executors, administrators and assigns, and all persons claiming under or through him,
and this lease is made and accepted upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or
group of persons on account of sex, marital status,race, color, religion, creed, national
origin or ancestry, in the leasing, subleasing, transferring, use, or enjoyment of the land
herein leased or the improvements thereon or to be constructed thereon, nor shall the
lessee himself, or any person claiming under or through the lessee, establish or permit
any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants
or vendees of the land herein leased or such improvements."
(iii) In contracts of sale: "There shall be no discrimination
against or segregation of, any person, or group of persons on account of sex, marital status, race,
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color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the land or the improvements thereon or to be constructed
thereon, nor shall the transferee himself or any person claiming under or through the transferee,
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the land or such improvements."
(e) Duration of Covenants and Obligations. The covenants and
obligations contained in Sections 6(a) and 6(b) shall remain in effect until the expiration of the
Term provided for in Section 2 hereof, and the covenants against discrimination provided for in
subsections 6(c)) and 6(d) shall remain in perpetuity.
8. Management of the Property
(a) Operation, Maintenance and Repair. Owner shall have full
responsibility for the operation and maintenance of all improvements on the Property throughout
the duration of the Term. Owner shall, upon completion of the Project maintain in the manner of
first class residential rental projects, in a first class, neat, clean, safe and sanitary condition and
repair, the improvements comprising the Project and all landscaping within the public rights of
way which may abut the Property throughout the Term of this Agreement without expense to
Agency, and shall perform all repairs and replacements necessary to maintain and preserve said
improvements and landscaping in a first class, neat, clean, safe, sanitary and healthy condition in
a manner reasonably satisfactory to Agency and in compliance with all applicable laws, and in
compliance with all applicable laws and any and all City and/or Agency agreements with Owner.
The Lessee shall submit for the approval of the City and Agency a management
plan which sets forth the duties of the property manager. The Agency shall have the right to
approve the selection of the property manager(s) for the Project,but such approval will not be
unreasonably withheld.
If the improvements constituting the Project are destroyed or substantially
damaged, Owner shall, subject to any applicable provisions of the Agency Loan Documents,
repair, replace, or restore such improvements. Following any casualty resulting in damage to or
destruction of the Project, the complete work of any reconstruction or replacement shall be at
least equal in value, quality and utility to the condition of the Project or landscaping before the
event giving rise to the work.
(b) Leasing and Occupancy. The leasing and occupancy of the Units shall
be in accordance with the management plan approved by the Agency or its delegate. Any
modifications or changes to the management plan shall be submitted to the Agency for approval.
The management plan shall include the tenant selection criteria, procedures for tenant selection
and the establishment and maintenance of waiting lists, the lease and rental agreement, a copy of
the"House and Ground Rules"adopted for the Property and all policies and procedures to be
used to ensure compliance with the age, income, and any other requirements set forth as
conditions for eligibility or occupancy in the Property and shall be consistent with the terms and
conditions of this Agreement. The Units shall be leased under rental agreements substantially in
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a form approved by the Executive Director of Agency. Any modifications or changes in the
rental agreements shall be submitted to the Executive Director of the Agency for approval.
Agency shall review and approve all policies and procedures established for the
successful management of the Property. Subject to the rights of the occupants of the Units,
Agency shall have the right to perform an annual on-site inspection of the units, common areas
and grounds and to perform an annual tenant file review to ensure that Owner is managing the
Property in accordance with the eligibility requirements set forth herein for occupancy.
(c) Pre-Leasing. Owner shall perform all advertising and related pre-
leasing work as set forth in the approved management plan. Pre-leasing shall be directed to
Grand Terrace residents for the initial 60 days, with a subsequent 30-day period of pre-leasing
directed to Grand Terrace residents, employees, and extended family members. Leasing plan to
be submitted to and approved by Executive Director of Agency.
(d) Annual Budget. Owner shall submit or shall cause its Property
Manager to submit to the Agency's Executive Director on or before November 1, 2007 (the
estimated first year of operation) and each anniversary thereof, an annual budget for the ongoing
operation of the Project for approval by Agency, which will not be unreasonably withheld. At
the Agency's request, delivered within 30 days after receipt of the budget, each of Owner and the
Agency shall cause its respective representative(s) to meet within thirty(30) days following the
receipt of request to review the budget in an effort to resolve any matters not agreed to by the
parties.
(e) Management of Property. Owner shall be completely responsible for
the management, administration and operation of the Property including,but not limited to the
hiring and discharge of employees, salaries and all other related Property expenses, maintenance
and repairs, including capital expenditures, the financial operations of the Property, the rental
and re-rental of the residential units in accordance with the occupancy requirements set forth in
this Agreement and all operational,maintenance and management responsibilities of an owner in
a typical multi-family residential housing project.
(0 Reserves. The Owner will maintain operating and replacement
reserves satisfactory to the Agency and will not withdraw funds from such reserves without the
consent of the Agency, which will not be unreasonably withheld.
(g) Management Agency's Failure to Perform. In the event the
management agency appointed by Owner for management of the Project fails to perform the
obligations imposed upon Owner by this Section 7, such failure shall constitute a default under
Section l I hereof, and if Owner shall fail to cure such default as provided in Section 1 I hereof,
then Agency shall have the right, in addition to any other remedies of Agency, to require Owner,
upon 30 days prior written notice, to appoint a substitute management agency, reasonably
acceptable to both Agency and Owner.
9. Indemnification. Owner shall defend, indemnify, assume all responsibility for
and hold Agency, and its respective elected and appointed officers and employees, harmless
from all costs(including reasonable attorneys' fees and costs), claims, demands, liabilities,or
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judgments for injury or damage to property and injuries to persons, including death, which may
be related to the Property or caused by any of Owner's activities under this Agreement, whether
such activities or performance thereof be by Owner or anyone directly or indirectly employed or
contracted with by Owner and whether such damage shall accrue or be discovered before or after
termination of this Agreement. This indemnity includes,but is not limited to, any repair,
cleanup,remediation, detoxification, or preparation and implementation of any removal,
remedial, response, closure or other plan (regardless of whether undertaken due to governmental
action) concerning any hazardous substance or hazardous wastes including petroleum and its
fractions as defined in the Comprehensive Environmental Response, Compensation and Liability
Act ["CERCLA'; 42 U.S.C. Section 9601, et seq.], the Resource Conservation and Recovery Act
["RCRA'; 42 U.S.C. Section 6901 et seq.] and California Health and Safety Code Section Code
Section 25280 et seq. on the Property or at any place where Owner owns or has control of real
property pursuant to any of Owner's activities under this Agreement. The foregoing indemnity
is intended to operate as an agreement pursuant to Section 107 (e) of CERCLA and California
Health and Safety Code Section 25364 to assure, protect, hold harmless and indemnify Agency
from liability. This indemnity shall survive the termination of this Agreement for any reason.
This indemnity shall not be construed in any way to be a limitation on Owner's indemnity
obligations under the DDA.
10. Compliance with Local, State and Federal Laws. Owner shall carry out the
provisions of this Agreement and own and operate the Project in conformity with all applicable
local, state and federal laws and regulations including, without limitation, all regulations and
conditions of funding with respect to the issuance of the Note(including a regulatory agreement
required in connection with the issuance of the tax credits to Owner), and Housing Set Aside
Funds under Health and Safety Code Section 33334.2 (as amended from time to time).
11. Accounting to Agency.
(a) The books and accounts of the Property shall be kept in conformity
with generally accepted accounting practices.
(b) Owner shall submit to Agency annually, on or before May 1 of each
calendar year("Audit Date"), a report setting forth the rental rate of all Units and the income and
number of known occupants of all Units. The income infonnation required by this Section shall
be supplied by the tenants of the Units in a certified statement on a form from time to time
provided by Agency.
(c) Owner shall provide Agency audited financial statements of the
operations of the Project showing the rents and periods of time each Unit was rented. The first
accounting period for which such statements shall be provided shall end on the last day of the
month in which all of the Units have been initially rented to the first occupants, the accounting
shall be made to Agency within 30 days of such date, but need not be audited. Thereafter,
annual audited financial statements shall be prepared annually for each calendar year, and such
audited financial statements shall be delivered to the Agency by the Audit Date of the following
calendar year.
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(d) Owner shall maintain a complete and accurate rent roll listing of all
Units, with the very low and lower income Units listed separately, including the names of all
tenants, the dates of their tenancies and the amounts of rents and security deposits charged and
collected.
(e) Agency, its agents and employees, shall have the right, after
reasonable notice, to review and inspect, at reasonable times during business hours, the books,
records and accounts of Owner specifically regarding the Property, from and after the date of the
recordation of this Agreement and until the expiration of this Agreement.
(f) Owner shall retain all documents and records pertaining to the rents
charged, income of tenants and all matters relating to Owner's obligations under Section 5 of this
Agreement, for a period of 3 years and shall make them available to Agency on 5 business days'
prior notice, provided however that if the provisions of any federal or state law or regulation
requires a longer period of retention, Owner shall comply with such period or retention.
(g) Agency may conduct audits of the rents charged, income of tenants
and all matters relating to Owner's obligations under this Agreement within 3 years from the
date of the applicable period with respect to which such records relate, and Owner shall
cooperate with the Agency's auditors in conducting the audit. Such audits shall not occur more
frequently than once each fiscal year. Agency shall pay for the costs of the audit unless the audit
reveals that Owner did not materially comply with the provisions of this Agreement, in which
case, Owner shall pay all costs of the audit.
12. Violation of Regulatory Agreement And/or Loan Documents by Owner.
(a) Owner shall perform each and every obligation set forth in this
Agreement between Owner and Agency respecting the Property and any other Agency or City
agreement regarding the Property.
(b) In the event of the violation by Owner of any of the provisions of the
Property Agreements, then Agency shall give written notice thereof to Owner by registered mail
addressed to Owner at the address stated in this Agreement, or to such other address as may have
been designated by Owner. If such violation is not cured to the satisfaction of Agency within the
time period specified in the Property Agreement(or if no period is specified, within 30 days after
the date such notice is received, or if such violation is a non-monetary obligation that cannot
reasonably be cured within such 30 day period, then if Owner fails to commence to cure such
violation within said 30 day period and fails diligently to prosecute such cure to completion as
soon as reasonably possible but, in not event, no later than 3 months after receipt of notice of
such violation), then Agency may without further notice, declare in writing a default under this
Agreement effective on the date of such declaration of default, and upon any such declaration of
default Agency may apply to any court, State or Federal, for specific performance of this
Agreement; for an injunction against any violation by Owner of this Agreement or other Property
Agreement Documents, and for the appointment of a receiver to take over and operate the
Property in accordance with the terms of this Agreement, or for such other relief as may be
appropriate, including without limitation damages, and the cost to Agency in enforcing the terms
of this Agreement(including the reasonable time expended by Agency staff, consultants,
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auditors, attorneys and other personnel involved in such enforcement). Notwithstanding the
above, the Agency will provide actual notice to the Tax Credit Investor and the Tax Credit
Investor will be given an opportunity to cure any and all defaults under this or other Property
Agreement by or among the City and/or Agency and the Owner. Such cure rights will be more
particularly announced in a partnership agreement to be formed at a later date. The City and
Agency will be provided an opportunity to review and comment on the Project's partnership
agreement as it relates to cure rights affecting the City and Agency's Default Rights.
(c) The remedies of Agency herein, or under any other instrument
providing for or evidencing the financial assistance provided herein, are cumulative, and the
exercise of one or more of such remedies shall not be deemed an election of all remedies and
shall not preclude the exercise by Agency of any one or more of its other remedies.
(d) Agency shall provide by mail copies of any notice of any violation to
all other lien holders who have delivered a request therefore to the Agency and have also
recorded a Request for Special Notice in accordance with California Civil Code Section 2924e
(as amended), at the address for notices most recently provided by Owner or such lien holders
for such notices, and such parties shall have the same right to cure Owner's defaults hereunder
on behalf of Owner.
13. General Provisions.
(a) The covenants which have been established pursuant to this
Agreement shall be deemed to be covenants running with the Iand for the benefit of the Project
Area and Agency in carrying out its statutory responsibilities under California Redevelopment
Act(Health and Safety Code Sections 33000 et seq.) to implement the Redevelopment Plan and
to provide for the development of low and moderate income housing in the community. The
covenants hereof shall be binding upon the Property and run for the benefit of the Project Area
and Agency and its successors and assigns, and such covenants shall run in favor of Agency for
the entire period during which such covenants shall be in force and effect, without regard to
whether Agency is or remains an owner of any land or interest therein to which such covenants
relate. Agency is deemed the beneficiary of the terms and provisions of this Agreement and of
the covenants running with the land, for and in its own rights and for the purposes of protecting
the interests of the community and other parties,public or private, in whose favor and for whose
benefit this Agreement and the covenants running with the land have been provided. Only
Agency and its successors in interest may enforce this Agreement; nothing herein is intended to
create any third party beneficiaries to this Agreement, and no person or entity other than Agency
or Owner, and the permitted successors and assigns of either of them, shall be authorized to
enforce the provisions of this Agreement. Not by way of limitation of the foregoing, the tenants
of the Property are not intended to be third party beneficiaries hereunder.
(b) This Agreement and the covenants reservations, restrictions and
agreements contained herein shall be a burden upon the Property and shall bind Owner, its
successors and assigns with respect to the Property. Owner may not assign any of the benefits of
this Agreement, or delegate any of Owner's obligations hereunder,voluntarily or by operation of
law,without the prior written approval of Agency.
REV 08232005
1�
(c) Agency and its successors and assigns, and Owner and its successors
and assigns as holders of any interest in the Property, shall have the right to consent and agree to
changes in, or to eliminate in whole or in part, any of the covenants,reservations and restrictions
contained in this Agreement.
(d) This Agreement represents the entire agreement of the parties hereto
with respect to the subject matter hereof and may not be altered or amended except by writing
executed between the parties to be charged.
(e) In any action between the parties to interpret, enforce, reform, modify,
rescind, or otherwise in connection with any of the terms or provisions of this Agreement, the
prevailing party in the action shall be entitled, in addition to any other relief to which it may be
entitled,reasonable costs and expenses including, without limitation, litigation costs and
reasonable attorneys' fees.
(f) if any term, covenant, condition or provision of this Agreement, or the
application thereof to any circumstance, shall, at any time or to any extent, be determined by a
court of competent jurisdiction to be invalid or unenforceable, then the remainder of this
Agreement, or the application thereof to circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each term, covenant, condition and
provision of this Agreement, shall be valid and enforceable, to the fullest extent permitted by
law.
(g) The use of the plural in this Agreement shall include the singular and
the singular shall include the plural, and the use of one gender shall be deemed to include all
genders.
(h) Time is of the essence hereof.
(i) No waiver by Agency of any breach of or default under this
Agreement shall be deemed to be a waiver of any other or subsequent breach thereof or default
hereunder.
{j) This Agreement and all related documents shall be deemed to be
contracts made and delivered in the State of California and shall be governed and construed and
interpreted in accordance with the laws of said State. Headings and titles herein are for
convenience only and shall not influence any construction or interpretation.
(k) Any notice required to be given hereunder shall be given by certified
or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or
at such other addresses as may be specified in writing by the parties hereto as follows:
If to Agency: City of Grand Terrace Community Redevelopment Agency
22795 Barton Rd.
Grand Terrace, California 92313
Attention: Thomas Schwab
REV 08232005
13
With a copy to: John Harper, Esq. c/o City of Grand Terrace
22795 Barton Road
Grand Terrace, California 92313
Tel.: (714) 771-7728
If to Owner, to: Corporation for Better Housing
15303 Ventura Boulevard, Suite 1100
Sherman Oaks, California 9I403
Attn: Mary Silverstein
Tel: (818) 905-2430
(1) This Agreement may be simultaneously executed in multiple
counterparts, all of which shall constitute one and the same instrument, and each of which shall
be deemed to be an original.
[remainder of this page intentionally left blank]
REV 08232005
14
IN WITNESS WHEREOF, the parties hereto have entered into this Regulatory
Agreement as of the day and year first above written.
CITY OF GRAND TERRACE, a public "Owner" Corporation for Better Housing
body, corporate and politic
By:
Thomas J. Schwab By. Corporation for Better Housing,
a galif4rnia corpo tion, "Owner"
I#S: City Manager _
By.
Mary verstein,
Ex ive Vice President
CITY OF GRAND TERRACE COMMUNITY
REDEVELOPMENT AGENCY, a public body,
corporate and politic
By: �2gd
Thomas J. Schwab
Its: Executive Director
Approved as to Form:
Agency Counsel
By:
Agency Coun el
REV 08232005
l�
EXHIBIT"A"
LEGAL DESCRIPTION
PARCEL A:
PARCEL 4 OF PARCEL MAP NO. 766, IN THE COUNTY OF SAN BERNARDINO, STATE
OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 PAGE 24 OF PARCEL MAPS,
RECORDS OF SAID COUNTY.
PARCEL B:
THE WEST 125 FEET OF LOT 17 MEASURED PARALLEL TO THE WEST LINE OF SAID
LOT, OF VISTA GRANDE TRACT, AS PER PLAT RECORDED IN BOOK 17 OF MAPS,
PAGE 10, RECORDS OF SAID COUNTY, EXCEPTING THEREFROM THAT PORTION
CONVEYED TO THE COUNTY OF SAN BERNARDINO BY DEED RECORDED
JANUARY 23, 1969 IN BOOK 7170 PAGE 26 OF OFFICIAL RECORDS.
REV 08232005
16
State of California }
}
County of �ps
cOn Cc61g-{ , 2005,before me, W. _77d , a Notary
Public,personally appeared /t/arV Si,I Ve-r , personally known to
me(or proved to me on the basis of sa isfactory evidence) to be the person(s)whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature Caeuni"n#F 1344409
Notary Pubiia-Caldorrria
Santa Clara County
(seal) P4Corrvn E*kw Fab24,MM
State of California }
}
County of }
On , 2005,before me, , a Notary
Public, personally appeared , personally known to
me(or proved to me on the basis of satisfactory evidence) to be the person(s)whose name(s)
is!are subscribed to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
(seal)
State of California }
County Of San Bernardino )
On November 15 , 2005,before me,Brenda Stanfill , a Notary
Public,personally appeared Thomas Schwab , personally known to
me(or 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/may executed the
same in his/hcadwk authorized capacity(ice), and that by his/heAherr signature(a) on the
instrument the person($), or the entity upon behalf of which the person($) acted, executed the
instrument.
WITNESS my hand and official seal.
t
Signature C0 n�+lMl P 01413171
Notary arc-caNaroo
San swnwdno CM*
(seal) 16MVC4'am.E>�r11pr�.
State of California }
}
County of San Bernardino )
On November 15 ,2005, before me,Brenda Stanfill , a Notary
Public, personally appeared Thomas Schwab , personally known to
me(or proved to me on the basis of satisfactory evidence) to be the person(a) whose name(q)
is/are subscribed to the within instrument and acknowledged to me that he/sheAhey executed the
same in histhexAbeir authorized capacity(ies), and that by his/hcrAheir signature(s) on the
instrument the person(4), or the entity upon behalf of which the person(}acted, executed the
instrument.
WITNESS my hand and official seal.
Si ature t11 SUMM
I�
COMMUM#1413171
tary No R*ft-caumft
SM fir,Coin
(seal) M Cormn.�AwUS.l=
Recorded in Official Records, County of San Bernardino 1/30/2000
LARRY WALKER 1:00 PM
RaWrdAd at the request of Auditor/Controller — Recorder LMJ
Chicago TOO
629 Chicago Ttlle Company
Free recording in accordance with
Califomia Government Code Doe#: 2006-0065712 Titles: 2 Pages: 7
Section 6103 and 27383 + Fees 0.00
Ts e�x 0.00
Oth
And hen recorded mail to: 1.00
I PPlor sl.e0
City of Grand Terrace
22795 Barton Rd.
Grand Terrace, CA 92313
SPACE ABOVE THIS LINE FOR RECORDER'S USE
I ASSIGNMENT AND ASSUMPTION AGREEMENT
Grand Terrace, California
APN: 0276-461-09
0276-461 -14
This Assignment and Asumptian Agreement (hereinafter, "Agreement") is
entered into as of this — day of 2006, by and between
Corporation for Better Housing, ("GBH")a Califomia nofiprofit public benefit corporation
4 with its principal place of business located at 15303 Ventura Boulevard, Suite 1100,
Sherman Oaks, California. 91403 and the City of Grand Terrace ("City") and the City of
Grand Terrace Community Redevelopment Agency("Agency")with reference to the
following facts:
A. The City of Grand Terrace and the Redevelopment Agency of Grand
Terrace hereby agree to CBH's assignment of the City's land lease and the Agency's
Regulatory Agreement and all other City and Agency project documents relating to this
transaction. Said Assignment will occur from CBH to 22645 Grand Terrace Rd, L.P., a
Califomia Limited Partnership (`Partnership").
B. The City has entered into certain Agreements with CBH for the purpose of
making a Land Lease and the Agency bestowed certain agency funds to CBH in the
amount of Eight Million Four Hundred Thousand and no1100 DOLLARS ($8,400,000.00)
(hereinafter, "Agency Funds") in connection with the development of a senior residential
housing development for low-income persons (hereinafter, the "Improvements") on real
property located in Grand Terrace, California, which real property is more particularly
described in Exhibit"A" attached hereto(hereinafter, the "Property").
C. Pursuant to that certain Ground Lease executed September 22, 2005, by
and between CBH and the City, the Partnership shall be responsible for the construction,
operation and maintenance of the Improvements and shall have fee title to the
Improvements during the term of the Ground Lease, evidenced by that certain
Memorandum of Lease recorded January 19, 2006 as Document
Number 2006-0041146, Official Records of San Bernardino County.
Ibis document is being recorded
CIA— ^ a an accommodation only
J��I Page 1 of 7 and Chicago Title Campsny
l 0ti assumes no yesonsibility for
1\-k S 1D'Q&� K GExrxmm or validity thereof.
D. The Agency Funds are evidenced by a (i)a Regulatory Agreement
(hereinafter, "Regulatory Agreement")dated October 27, 2005, executed by CBH, the
City, and the Agency.
E. The Regulatory Agreement, the Land lease, and all related documents
are referred to as the 'Project Documents". The subject Project Documents will be
subject to that certain Subordination Agreement dated as of the date of the construction
loan documents by and between CBH, the Partnership, the City, the Agency, and
Citibank(West), FSB. "Citibank or Bank", recorded in the Official Records of San
Bernardino County California.
F. As consideration for the lease of the Property, CBH desires to assign to
Partnership and Partnership desires to accept the assignment from CBH of CBH's
obligations with respect to such Property and the Improvements, including the rights,
duties and obligations of CBH under the Project Documents.
G. Partnership desires to release CBH from all obligations in connection with
the Project Documents; and
H. The consent of the City and Agency to the assignment of CBH's
obligations under the Project Documents is required.
NOW THEREFORE, in consideration of the foregoing, of the mutual promises of
the parties hereto and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties mutually agree as follows:
1. Assignment by CBH. CBH hereby assigns to Partnership all of CBH's
rights, duties and obligations under the Project Documents.
2. Acce tance of Assignment. The Partnership hereby accepts the above
assignment and hereby assumes, agrees and undertakes to perform all of the rights,
duties and obligations of CBH under the Project Documents. Any reference to CBH in
the Project Documents described above shall be deemed a reference to Partnership.
Partnership agrees to be bound by the Deed Restriction and obligations set forth in the
Regulatory Agreement.
3. Release of CBH. Partnership hereby releases CBH from all obligations
and duties imposed under the Project Documents.
4. Payment of Obligations. Partnership agrees that all amounts due from
CBH pursuant to the Project Documents shall be paid directly by Partnership.
5. Representations. CBH hereby represents and warrants that it has not
previously assigned, pledged, hypothecated or otherwise transferred any of their rights
under the Project Documents,
6. Effective Date. The assignment set forth above shall be effective as of the
date of this agreement.
Page 2 of 7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CBH:
CORPORATION FOR BETTER HOUSING,
A CALIFORNIA NONPROFIT PUBLIC
BENEFIT CORPORATION
Federal tax ID number 95-4550322
Mary Sil a ein
Execuf a Vice President
Partnership:
22645 Grand Terrace Rd, L.P., a California
Limited Partnership
By: Corporation for Better Housing, a
California nonprofit public benefit
corporation, its Managing General Partner
CA."a-z�--
By:
Mary Sily rs in
Executi ce President
Page 3 of 7
ACCEPTED AND CONSENTED
The City of Grand Terrace hereby consents to the assignment from Corporation for
Better Housing, a California nonprofit public benefit corporation (CBH)to 22645 Grand
Terrace Rd., L.P., a California Limited Partnership, of the Project Documents as set forth
in paragraph E of the Assignment and Assumption Agreement.
Dated as of this / day of 2006
By: <;�� ,<��a
/h0.;705 �c JSc.1�b
Ti#le: C�fy M�►��y e r,
The City of Grand Terrace Community Redevelopment Agency hereby consents to the
assignment from Corporation for Better Housing, a California nonprofit public benefit
corporation (CBH) to 22645 Grand Terrace Rd., L.P., a California Limited Partnership, of
the Project Documents as set forth in paragraph E of the Assignment and Assumption
Agreement.
Dated as of this /7�2(day of , 2006
By: 'c2ia
C1rl?G5 C GJr
Title: F,ram fis ►r�c r
Page 4 of 7
State of California }
County of ILL`D � }
On •.`'.t 20 6,.before me, f rcYa
Notary Public, personalty appeared )r �V n '
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s)on the instrument the person(s), or the entity upon
behalf of which the person(s)acted, executed the instrument.
WITNESS my hand and official seal.
Signature
WE.COCHRAN
COMMb l M*1582115
.! NORRY Puy•cawomfa
(seal) ux Argon couroy
MVC0M'EVVftMay27,
State of California }
}
County of L9�7 }
OnJOY') , 200 , before me (�Cy' e i^ 1��na
Notary Public, personally appeared I E."
personally known to me (or proved to me on thA basis of satisfactory evidence)to be the
person(s)whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s)on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
� c
Signature PAGE E.COCHRAN
Cortw ninon# 1582116
(seal) UM Argon CoLoW �
L!EM.VC*TM9Pk=MW27,2W91
Page 5 of 7
State of California }
County of 5czn 6rrmrdi►}
On -4r7 I f , 2006, before me, _1 dal , a
Notary Public, personally appeared _ 7hor77c-s c h-u)rb
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s)acted, executed the instrument.
WITNESS my hand and official seal.
Signature
(seal)
R TIDD
Commissions 1344409
Notary Public•Galifomia
Sarnia Clara county —
W Cor7M E,InM Feb 24.2WG
State of California }
County of ,,
On . y p—�`f 7:� 2006, before me, % dal , a
Notary Public, personally appeared %ho i"as �,Sc:h wn. b
personally known to me(or proved to me on the basis of satisfactory evidence)to be the
person(s)whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WIT SS my hand and official seal.
Signature
(seal)
R TIDD
VOMYCommission#
Notary public-Cal%miaSanta ClansCounty Corte Feb 24,2MG
Page 6 of 7
• tl
EXHIBIT "A"
SITE LEGAL DESCRIPTION
PARCEL A:
PARCEL 4 OF PARCEL MAP NO. 766, IN THE COUNTY OF SAN
BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK
7 PAGE 24 OF PARCEL MAPS, RECORDS OF SAID COUNTY.
PARCEL B:
THE WEST 125 FEET OF LOT 17 MEASURED PARALLEL TO THE WEST
LINE OF SAID LOT, OF VISTA GRANDE TRACT, AS PER PLAT RECORDED
IN BOOK 17 OF MAPS, PAGE 10, RECORDS OF SAID COUNTY, EXCEPTING
THEREFROM THAT PORTION CONVEYED TO THE COUNTY OF SAN
BERNARDINO BY DEED RECORDED JANUARY 23, 1969 IN BOOK 7170
PAGE 26 OF OFFICIAL RECORDS.
Page 7 of 7
FIRST AMENDMENT TO GROUND LEASE
(Blue Mountain Senior Villas, Grand Terrace,California)
This First Amendment to Ground Lease(this "Amendment"), dated as of August
1, 2008, is entered into by and among the CITY OF GRAND TERRACE, a public body
corporate and politic (the "C '), the CITY OF GRAND TERRACE COMMC]NII'Y
REDEVELOPMENT AGENCY (the"Agency') and 22645 GRAND TERRACE RD.,L.P., a
California limited partnership(the"Lessee"),with respect to the following facts:
WHEREAS,the City and the Agency entered into Ground Lease dated as of September
22, 2005 (the"Lease")with respect to certain real property("Site")with the Corporation for
Better Housing (the"Original Lessee"), and pursuant to that certain Assignment and Assumption
of Ground Lease dated January 17, 2006 executed by and among the City, Agency, the Original
Lessee and the Lessee,the Original Lessee assigned all of its right,title and interest under the
Lease to Lessee. A Memorandum of Ground Lease relating to the Lease was recorded on
January 19,2006,in the Official Records of San Bernardino County as Instrument No. 2206-
0041146;
WHEREAS,the purpose of the Lease was to facilitate and make possible the
development of an affordable,multi-unit senior housing rental project to be known as the Blue
Mountain Senior Villas Apartments ("Improvements');
WHEREAS,the Lease included terms and conditions for the financing, construction, and
operation of the Improvements;
AND WHEREAS, the City/Agency and the Lessee have proposed to each other certain
modifications and additions to the Lease would allow it to more perfectly express the current
terms and conditions for the development,construction and operation of the Improvements;
NOW,THEREFORE, the City,the Agency and the Lessee,mutually agree and covenant
to the following amendments and modifications to the Lease:
AGREEMENT
I. Section 1. Changes to 1.1 Definitions
The following definitions in Lease section 1.1 are amended and restated in their entirety to read:
"Agency Disbursement Amount"means the total amount of all payments from the
Agency to the Lessee as assistance for the development and construction of covenant-
restricted affordable senior housing. These funds will be disbursed in a form and manner
mutually agreeable to the Agency, the City, the Lessee, the project lenders and investors.
"Lease"shall mean the Ground Lease dated as of September 22,2005, as amended by
that Assignment and Assumption of Ground Lease dated January 17,2006, and as further
amended by that certain First Amendment to Ground Lease dated as of August 1,2008;
"Partners"means the Corporation for Better Housing, as general partner of the Lessee
(General Partner); and Alliant Credit Facility, Ltd.,a Florida limited partnership, and
First Amendwert Ic Le2Se - RC!CL' I
Alliant Credit Facility ALP,LLC, a Florida limited liability company,and their
respective successors, assigns and affiliates, as the limited partners of Lessee
(collectively,the"Limited Partners"). The Partners may be changed with the written
approval of the City Manager,which may not be unreasonably withheld;provided,
however, the respective interests of the Limited Partners in Lessee shall be transferable to
any affiliate of Alliant Capital,Ltd.,without the consent of the City. The respective
interests of the Limited Partners in Lessee shall be transferable to a non-affiliate of
Alliant Capital,Ltd. (other than CitiCorp USA,Inc. "CitiCorp"),with the consent of the
City, which consent shall not be unreasonably withheld. City hereby acknowledges that
the respective interests of the Limited Partners in Lessee may be transferred to CitiCorp,
a non-affiliate of Lessee's limited partners, and City hereby consents to the assignment so
long as such assignment provides that CitiCorp accepts the limited partnership interest
and agrees to be bound by the terms of the Partnership Agreement. Further, City hereby
agrees and acknowledges that Lynx Realty&Management,LLC is not a partner of
Lessee. Any and all references to Lynx Realty&Management, LLC as a partner or
"Administrative General Partner"are hereby deleted in their entirety.
The following definition is added to the Lease in Section l.l:
"Partnership Agreement"means that certain Amended and Restated Agreement of
Limited Partnership of the Lessee dated as of August 1, 2008, as the same may be
amended from time to time.
2. Section 2-Lease of the Site.
The following amendment will be made to Section 2 of the Lease:
The existing paragraph,beginning with"City, for and in consideration of the Low
Income Rents..."will be renumbered as section 2.1 Lease of the Site.
The following language will be added to Section 2 of the Lease:
2.2 Agency Disbursement Amount
At the inception of the Lease,the Agency Disbursement Amount was S8,400,000. On
May 11, 2006,the City agreed to increase the Agency Disbursement Amount by an
additional $448,381 to partially offset an increase in the governmental development fees
charged to the Project.
2.3 Amending the Agency Disbursement Amount
From time-to-time, the Agency and the Lessee may find it necessary to change the
Agency Disbursement Amount to offset increases in the costs of materials or labor for the
Project, or unanticipated fees or other expenses. Any requests for changes to the Agency
Disbursement Amount must be made in writing by the Lessee to the City Manager or his
designee, and be accompanied by documentation and analysis that substantiates the need
for the change. The change will be considered approved only subsequent to action by the
City Council, acting as the Agency board, that specifically acknowledges the change and
authorizes an appropriation of funds.
W.,st A'.mendrnent to Lease - Ppge
2.4 Disbursement of Agency Funds
The Lessee may make draws on the Agency's funds, up to a total not to exceed the
Agency Disbursement Amount,on a periodic basis during the planning, construction and
start-up phases of the Project, so long as those draws are not more frequent than monthly.
The draws should be presented in a form, and including documentation, consistent with
industry practices for the submission of a draw request to a commercial lender. The City
and Agency will have ten (10) calendar days to review the draw request and respond with
questions or objections,which must be answered by the Lessee within five(5)working
days. In the absence of any questions, the City and Agency will have a total of thirty
calendar days to disburse the requested draw funds to the Lessee.
3. Section 3- Commencement Of Lease Term. Section 3 of the Lease is hereby amended
with the following:
Commencement of Lease Term. The"Commencement Date" for the Ground
Lease is January 19, 2006
4. Section 8.3-Ownership at Termination. Section 8.3 of the Lease entitled"Ownership
at Termination"will be amended and restated in its entirety with the following:
Upon termination of this Lease,whether by expiration of the Term or otherwise, all
Improvements,fixtures, furnishings and ancillary assets,including the Project's stock in
the water company, shall,without compensation to the Lessee,then become the City's
property, as it is at the time of the termination of the Lease.
5. Section 26.7-Notices. Section 26.7 is hereby amended with the following notice to the
Limited Partners and certain cure rights of the Limited Partners:
"For all purposes of the Lease, the address of the Limited Partners shall be as
follows:
c/o Alliant Capital, Ltd.
340 Royal Poinciana Way, Suite 305
Palm Beach,Florida 33480
Attention: Shawn Horwitz
Telephone: (561) 833-5795
Telecopy: (561) 833-3694
and
c/o Alliant Asset Management, LLC
21600 Oxnard Street, Suite 1200
Woodland Hills, California 91367
Attention: Tony Palaigos,Esq.
Telephone: (818)668-6800
Telecopy: (818)668-2828
Fr9t Lme-idment t,) Lease - Page 3
The Lessee and Limited Partners may change its/their addresses for notice
purposes from time to time by written notice delivered to City in accordance with
the Lease. Further,the following are the cure rights of the Limited Partners under
the Lease.
(a) Monetary Default. If a monetary event of default occurs under the terms
of the Lease,prior to exercising any remedies thereunder,City shall give Lessee
and its Administrative Limited Partner simultaneous written notice of such
default. Lessee shall have a period often(10)days after receipt of such notice, or
such longer period of time as may be set forth in the Lease,to cure the default
prior to exercise of remedies by City under the Lease.
(b) Non-Monetary Default. If a non-monetary event of default occurs under
the terms of the Lease,prior to exercising any remedies thereunder, City shall
give Lessee and its Administrative Limited Partner simultaneous written notice of
such default. If the default is reasonably capable of being cured within thirty(30)
days,Lessee shall have such period to effect a cure prior to exercise of remedies
by City under the Lease, or such longer period of time as may be specified in the
Lease. If the default is such that it is not reasonably capable of being cured within
thirty(30) days(or such longer period if so specified), and if Lessee(a)initiates
corrective action within said period, and(b)diligently,continually, and in good
faith works to effect a cure as soon as possible,then Lessee shall have such
additional time as is reasonably necessary to cure the default prior to the exercise
of any remedies by City."
b. Substitution of New Exhibits
The Lessee has submitted, and the Agency and the City agree to accept as substitutions,new
Exhibit D--Schedule of Performance AMENDED and Exhibit E—Scope of Development
AMENDED. These documents are incorporated into this First Amendment as Attachment 1 and
Attachment 2,respectively.
7. Certifications of City,Agency and Lessee. City,Lessee and the Agency do hereby
acknowledge and agree that concurrently with the execution of this Amendment,certain lenders
and financing partners of Lessee,including,but not limited to the Limited Partners,California
Statewide Communities Development Authority, a joint exercise of powers agency duly
organized and validly existing under the laws of the State of California(referred to herein as
"Issuer")and Citicorp North America,Inc.,a Delaware corporation("Citibank")are making
significant financial investments(in the form of an equity investment with respect to the Limited
Partners, and the extension of credit with respect to the Issuer and Citibank)in reliance upon the
modifications to the Lease as set forth in this Amendment. Further,the City,Agency and Lessee
hereby represent,warrant and certify to the Limited Partners,the Issuer and Citibank, and their
respective successors and assigns,as follows:
First Amendment to lease , i'- e 4
(a) The Ground Lease is in full force and effect and City has not transferred its
interests in the Ground Lease or agreed to do so.
(b) A true and complete copy of the Ground Lease,together with all amendments,
supplements and other modifications thereto (oral or written) is attached as Exhibit A to
an unrecorded original of this Agreement.
(c) The Ground Lease is the only agreement among the City,Agency and Lessee with
respect to the lease or occupancy of the Property.
(d) There are no existing uncured defaults by Lessee under the Ground Lease, nor has
any event occurred which,with the passage of time or the giving of notice or both, would
constitute such a default.
(e) No circumstance presently exists, and no event has occurred,that would prevent
the Ground Lease from becoming effective or would entitle City to terminate the Ground
Lease.
(f) City consents to the admission of the Limited Partners as the new limited partners
of the Lessee.
(g) City has reviewed and approved the Partnership Agreement of Lessee.
8. Entire Amendment; Miscellaneous.
This Amendment, along with the substitution of revised Exhibits D and E,incorporated by
reference herein,sets forth all the changes to the understandings between the parties with respect
to the terms and conditions of the Lease, and shall be effective only after its approval by the City
Council acting as the board of the Agency,and execution in triplicate by the parties. This
Amendment shall bind, and shall inure to the benefit of, the successors and assigns of the parties.
This document may be executed in counterparts with the same force and effect as if the parties
had executed one instrument, and each such counterpart shall constitute an original of the
Ground Lease. This Amendment shall be governed by the laws of the State of California.
[Remainder of page intentionally left blank]
First Arnen*nert to Lease • Pace 5
IN WITNESS WHEREOF,the parties indicate their agreement and hereto have caused this
Amendment to be executed by their lawfully authorized officers.
CITY/AGENCY:
THE CITY OF GRAND TERRACE, a
public body corporate and politic, on behalf
of itself and the CITY OF GRAND
TERRACE CONDAUNITY
REDEVELOPMENT AGENCY
By:
Name:
Title:
ATTEST:
Q4�
LESSEE:
22645 GRAND TERRACE RD.,L.P., a
Califo_ itedApership
By:
Name: PA,,,o
Title:
,-irst Arnendmert io Lease • Pace 6
EX11lBIT A
COPY OF GROUND LEASE AND
ALL PREVIOUS AMENDMENTS ATTACHED HERETO
First Amendment to Leese • 'age ?
&A(_-LbL)LP- U+
LOW AND MODERATE INCOME SENIOR HOUSING
RESIDUAL RECEIPTS SECURITY AGREEMENT
THIS RESIDUAL RECEIPTS SECURITY AGREEMENT("Agreement") is entered into
by and between the City of Grand Terrace, a public body, corporate and politic, (hereinafter the
"City") and the City of Grand Terrace Community Redevelopment Agency, a public body,
corporate politic, (hereinafter the "Agency").
RECITALS
A. In order to effectuate and further the goals and objectives of the City, in
implementing the Housing Element of its General Plan and the Agency in implementing its
Redevelopment Plan, the City, Agency and Corporation for Better Housing, a non-profit
affordable development corporation (hereinafter "CBH") have heretofore entered into a
Regulatory Agreement, dated October 27, 2005, a Ground Lease, dated September 22, 2005, a
First Amendment to Ground Lease, dated August 1, 2008 and an Assignment and Assumption
Agreement, dated January 17, 2006, in order to provide a low and moderate income multi-family
residential rental housing facility to be located on property owned by the City (hereinafter the
"Site").
B. Pursuant to the Regulatory Agreement and the Ground Lease, the City has leased
the Site to CBH in exchange for a rental payment and the payment of Residual Receipts, as
defined in said Regulatory Agreement.
C. As consideration for the performance of the City's obligations under the
Regulatory Agreement and Ground Lease on behalf of the Agency with respect to the Agency's
obligation to provide low and moderate income housing pursuant to its Redevelopment Plan, the
City and Agency desire to enter into this Agreement to secure the annual payment to the City of
sufficient Residual Receipts to compensate the City for its performance under said Regulatory
Agreement and Ground Lease.
NOW THEREFORE, CITY AND AGENCY MUTUALLY AGREE AS
FOLLOWS:
SECTION 1. The foregoing Recitals are true and correct and made a part hereof.
SECTION 2. Term. The Term of this Agreement(the "Term") shall commence as of the date of
the approval, but shall provide for payments as provided herein commencing as of the date of
the Regulatory Agreement.
SECTION 3. Remittance. The Agency hereby agrees to pay to the City annually not to exceed
$300,000 as security for the City's receipt of Residual Receipts.
SECTION 4. All Residual Receipts received by the City from CBH, or its successors, pursuant
to the Regulatory Agreement, shall be credited to the Agency in calculating the annual payment
1
by the Agency. In no case shall the Agency's obligation to the City exceed $300,000. As
indicated herein, this obligation to the City shall commence upon the effective date of the
Regulatory Agreement. To the extent any sums are due and owing as of the date of the execution
of this Agreement, the Parties hereto may agree to reduce or waive such obligation.
Date: February24, 2009 CITY OF GRAND TERRACE
By: 4 f
Maryett erne, Mayor
Dated: February24 , 2009 CITY OF GRAND TERRACE
REDEVELOP AGENCY
By `
Marye Ferre, Mayor
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