HomeMy WebLinkAboutRES 2022-084RESOLUTION NO. 2022-84
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT APPROVING A “DISPOSITION, DEVELOPMENT AND LOAN
AGREEMENT” REGARDING “PALM VILLAS AT MILLENNIUM” AMONG
THE CITY, AS SELLER, THE PALM DESERT HOUSING AUTHORITY, AS
LENDER, AND PALM COMMUNITIES, A CALIFORNIA CORPORATION,
AS BUYER/ BORROWER/DEVELOPER, IN CONNECTION WITH
APPROXIMATELY 10.49 ACRES OF PROPERTY OWNED BY THE CITY,
AND TAKING RELATED ACTIONS
RECITALS:
A. The City of Palm Desert (“City”) owns that approximately ten and half (10.49) acre
site located in the City of Palm Desert as more particularly described in Exhibit A to the
form of Disposition, Development and Loan Agreement (“DDLA”). by and among the City,
the Palm Desert Housing Authority (“Authority”) and Palm Communit ies (“Developer”)
attached hereto as Exhibit “A” (the “Property”). The DDLA contemplates that City shall
process a Parcel Map to divide the Property into a Phase I Parcel and Parcel II Parcel.
B. The Property has been declared exempt surplus land by the City Council of the
City under Government Code Section 54221(f)(1)(A) and the City Council has concluded,
based on the Developer's site plan and proposed affordability, that the proposed Project
(described below) meets the affordability and design requirements of Government Code
Section 37364. The California Department of Housing and Community Development has
confirmed such exemption in writing.
C. The City and the Developer entered into an Exclusive Negotiating Agreement (the
"ENA") on July 15, 2022, to negotiate the terms and the conditions for the development
of the Property.
D. The DDLA contemplates that the Developer construct, in two phases, two hundred
forty-one (241) units of housing, two hundred thirty-nine (239) of which shall be made
available to and occupied by low-income households and extremely low-income
households, and two (2) of which shall be on-site manager’s units; however, under the
terms of the DDLA, it is possible that the Developer would only acquire the Phase I Parcel
and complete the Phase I development described below.
E. The DDLA contemplates that the Developer shall construct one hundred twenty-
one (121) units on the Phase I Parcel, with one hundred twenty (120) of the units restricted
to Extremely-Low Income Households and Low Income Households, at affordable rents,
and the other unit used as an on-site manager’s unit.
F. The DDLA contemplates, assuming that the Developer acquires the Phase II
Parcel, that the Developer shall construct one hundred twenty (120) units on the Phase
II Parcel, with one hundred nineteen (119) of the units restricted to Extremely-Low Income
Households and Low Income Households, at affordable rents, and the other unit used as
an on-site manager’s unit.
Resolution No 2022-84 Page 2
G. The DDLA contemplates that, concurrently with the conveyance of the Phase I
Parcel to the Developer, the Developer and City shall grant to each other reciprocal
recorded easements over the Phase I and Phase II Parcels for ingress and egress, and
that in such recorded easement(s), the Developer grants the City and any subsequent
owner of the Phase II Parcel reasonable rights to use the Phase I common area facilities
upon the completion of the Phase II Development (the "Phase I and Phase II Access
Easement").
H. The DDLA contemplates that, concurrently with the conveyance of the Phase I
Parcel to the Developer, the City shall grant (i) an easement over Parcel 9, an adjacent
City-owned parcel, to allow ingress and egress to the Phase I Parcel through the Phase
II Parcel; and (ii) an access easement over Parcel 9 to allow the Developer and the Phase
II Parcel owner to clear any accumulated sand adjacent to a future boundary wall
between Phase I and a Phase II.
J. Developer has applied for and received a density bonus (including reduced parking
and increased density) for both the Phase I Development and the Phase II Development
pursuant to City Resolution No. 2022-24.
K. The City has determined in City Resolution 2022-24 that the proposed project does
not require additional review under the California Environmenta l Quality Act.
L. The City Council desires to adopt this Resolution to approve the Developer’s
purchase of the Property from the City pursuant to the Disposition, Development and
Loan Agreement by and among the City, the Developer and the Palm Desert Hou sing
Authority, as lender, attached hereto as Exhibit “A” (the “DDLA”), including the Housing
Agreements for Phase I and Phase II attached thereto (as exhibits) which constitute
density bonus agreements, for purchase prices of $1,970,539 for the Phase I Pa rcel and
$1,464,461 for the Phase II Parcel, subject to the conditions to closing and closing
deadlines in the DDLA and the post-closing deadlines for construction.
M. The DDLA requires as a condition to each closing of a sale of a Phase that the
Authority make the applicable secured residual receipts loan for each phase described in
the DDLA; each such secured loan is to provide that failure to comply with the Schedule
of Performance attached to the DDLA shall be a default under the applicable loan.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm
Desert as follows:
SECTION 1. The above recitals are true and correct and are a substantive part of
this Resolution.
SECTION 2. In accordance with Government Code Section 37364, the City
Council hereby finds that the Property can be used to provide housing affordable to
persons and families of low or moderate income and that this use is in the City’s best
interests.
Resolution No 2022-84 Page 3
SECTION 3. The DDLA in the form attached hereto as Exhibit “A” is hereby
approved. The City Manager of the City is hereby authorized to execute and deliver the
DDLA, for and in the name of the City, in substantially such form, with changes therein as
the City Manager may approve (such approval to be conclusively evidenced by the
execution and delivery thereof).
SECTION 4. The members of the City Council and the officers and staff of the City
are hereby authorized, jointly and severally, to take any other such actions as they deem
necessary or proper to effectuate the purposes of this Resolution and the DDLA, and all
actions previously taken are hereby ratified and confirmed. The City Manager of the City
is authorized to execute, deliver and record, on behalf of the Authority, all documents
contemplated by the DDLA.
SECTION 5. The City Clerk shall certify to the adoption of this Resolution and the
same shall take effect and be in force.
ADOPTED ON OCTOBER 13, 2022.
JAN C. HARNIK
MAYOR
ATTEST:
ANTHONY J. MEJIA
CITY CLERK
Anthony Mejia (Oct 25, 2022 10:55 PDT)
Resolution No 2022-84 Page 4
I, Anthony J. Mejia, City Clerk of the City of Palm Desert, hereby certify that
Resolution No. 2022-84 is a full, true, and correct copy, and was duly adopted at a regular
meeting of the City Council of the City of Palm Desert on October 13, 2022, by the
following vote:
AYES: JONATHAN, KELLY, NESTANDE, AND HARNIK
NOES: NONE
ABSENT: QUINTANILLA
ABSTAIN: NONE
RECUSED: NONE
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of Palm Desert, California, on ________________.
ANTHONY J. MEJIA
CITY CLERK
Anthony Mejia (Oct 25, 2022 10:55 PDT)
Oct 25, 2022
EXHIBIT “A”
FORM OF DDLA
(Attached.)
1046\101\3359065.8
DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT
AMONG
CITY OF PALM DESERT
PALM DESERT HOUSING AUTHORITY
AND
PALM COMMUNITIES
(PALM VILLAS AT MILLENNIUM)
TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS AND EXHIBITS ................................................................ 3
Section 1.1 Definitions................................................................................................. 3
Section 1.2 Exhibits. .................................................................................................... 8
ARTICLE 2. PREDISPOSITION CONDITIONS FOR CONVEYANCE
OF EACH PHASE ........................................................................................ 9
Section 2.1 Conditions Precedent to Disposition of Property. ..................................... 9
Section 2.2 City Approvals. ......................................................................................... 9
Section 2.3 Parcel Map. ............................................................................................... 9
Section 2.4 Financing................................................................................................... 9
Section 2.5 Permits. ..................................................................................................... 9
Section 2.6 Tax Credits. ............................................................................................... 9
Section 2.7 Loan Closings. .......................................................................................... 9
Section 2.8 Construction Plans. ................................................................................. 10
Section 2.9 Construction Contract. ............................................................................ 10
Section 2.10 Cost Estimate. ......................................................................................... 10
Section 2.11 Construction Bonds. ................................................................................ 10
Section 2.12 Developer Organizational Documents. ................................................... 11
Section 2.13 Authority Loan. ....................................................................................... 11
Section 2.14 Tax Credit Equity. ................................................................................... 11
Section 2.15 City Easements. ....................................................................................... 11
Section 2.16 Phase II Conveyance. .............................................................................. 11
Section 2.17 HCD Confirmation of Exemption. .......................................................... 11
Section 2.18 AHAP. ..................................................................................................... 11
Section 2.19 Title Report. ............................................................................................ 11
TABLE OF CONTENTS
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ARTICLE 3. DISPOSITION OF PROPERTY ............................................................... 12
Section 3.1 Conveyance of Phase I Parcel and Phase II Parcel. ................................ 12
Section 3.2 Purchase Prices. ...................................................................................... 12
Section 3.3 Deposit. ................................................................................................... 12
Section 3.4 Opening Escrow. ..................................................................................... 13
Section 3.5 Close of Escrow. ..................................................................................... 13
Section 3.6 Costs of Escrow and Closing. ................................................................. 14
Section 3.7 Condition of Title. ................................................................................... 14
Section 3.8 Condition of Property. ............................................................................ 15
ARTICLE 4. CONSTRUCTION OF DEVELOPMENT ............................................... 17
Section 4.1 Construction and Operation Consistent with Agreements. ..................... 17
Section 4.2 Commencement of Development. .......................................................... 18
Section 4.3 Completion of the Development. ............................................................ 18
Section 4.4 Equal Opportunity. .................................................................................. 18
Section 4.5 Construction Under Laws. ...................................................................... 18
Section 4.6 Progress Report. ...................................................................................... 18
Section 4.7 Construction Responsibilities. ................................................................ 18
Section 4.8 Mechanics Liens, Stop Notices, and Notices of Completion. ................. 19
Section 4.9 Inspections. ............................................................................................. 19
Section 4.10 Records. .................................................................................................. 19
Section 4.11 Certificate of Completion. ...................................................................... 20
ARTICLE 5. AUTHORITY LOAN PROVISIONS ....................................................... 20
Section 5.1 Authority Loan. ....................................................................................... 20
Section 5.2 Use of Authority Loan. ........................................................................... 20
TABLE OF CONTENTS
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Section 5.3 Delivery of Promissory Notes; Recording of Housing
Agreements; Deeds of Trust; Notices of Restrictions. ............................ 20
Section 5.4 Term of the Authority Loan. ................................................................... 21
Section 5.5 Interest; Payments. .................................................................................. 21
Section 5.6 Disbursement of Authority Loans. .......................................................... 21
Section 5.7 Repayment Schedule. .............................................................................. 22
Section 5.8 Reports and Accounting of Residual Receipts. ....................................... 22
Section 5.9 Non-Recourse. ........................................................................................ 23
ARTICLE 6. ONGOING DEVELOPER OBLIGATIONS ........................................... 23
Section 6.1 Applicability. .......................................................................................... 23
Section 6.2 Use of Development. .............................................................................. 23
Section 6.3 Maintenance. ........................................................................................... 24
Section 6.4 Taxes and Assessments. .......................................................................... 24
Section 6.5 Mandatory Language in All Subsequent Deeds, Leases and
Contracts. ................................................................................................ 25
Section 6.6 Management Agent. ................................................................................ 26
Section 6.7 Insurance Requirements. ......................................................................... 27
Section 6.8 Audits. ..................................................................................................... 30
ARTICLE 7. ASSIGNMENTS AND TRANSFERS ....................................................... 30
Section 7.1 Definitions............................................................................................... 30
Section 7.2 Purpose of Restrictions on Transfer. ....................................................... 31
Section 7.3 Prohibited Transfers. ............................................................................... 31
Section 7.4 Permitted Transfers. ................................................................................ 31
Section 7.5 Other Transfers with City Consent. ........................................................ 32
Section 7.6 Termination of Limitations on Transfers. ............................................... 32
TABLE OF CONTENTS
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ARTICLE 8. DEFAULT AND REMEDIES ................................................................... 32
Section 8.1 General Applicability. ............................................................................. 32
Section 8.2 Fault of City. ........................................................................................... 33
Section 8.3 Fault of Authority. .................................................................................. 33
Section 8.4 Fault of Developer. ................................................................................. 33
Section 8.5 Notice and Cure Period Regarding City/Authority Defaults. ................. 34
Section 8.6 Remedies. ................................................................................................ 35
Section 8.7 Rights of Mortgagees. ............................................................................. 35
Section 8.8 Remedies Cumulative. ............................................................................ 36
ARTICLE 9. SECURITY FINANCING AND RIGHTS OF HOLDERS .................... 36
Section 9.1 No Encumbrances Except for Development Purposes. .......................... 36
Section 9.2 Holder Not Obligated to Construct. ........................................................ 36
Section 9.3 Notice of Default and Right to Cure. ...................................................... 36
Section 9.4 Failure of Holder to Complete Development. ......................................... 37
Section 9.5 Right of Cure........................................................................................... 37
Section 9.6 Right of City to Satisfy Other Liens. ...................................................... 37
Section 9.7 Holder to be Notified. ............................................................................. 37
Section 9.8 Estoppel Certificates. .............................................................................. 37
ARTICLE 10. GENERAL PROVISIONS ......................................................................... 38
Section 10.1 Notices, Demands and Communications. ............................................... 38
Section 10.2 Non-Liability of Officials, Employees and Agents. ............................... 38
Section 10.3 Forced Delay. .......................................................................................... 38
Section 10.4 Inspection of Books and Records. .......................................................... 39
Section 10.5 Title of Parts and Sections. ..................................................................... 39
TABLE OF CONTENTS
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Section 10.6 No Third-Party Beneficiaries. ................................................................. 39
Section 10.7 Applicable Law. ...................................................................................... 39
Section 10.8 No Brokers. ............................................................................................. 39
Section 10.9 Legal Actions. ......................................................................................... 39
Section 10.10 Severability. ............................................................................................ 39
Section 10.11 Binding Upon Successors. ...................................................................... 40
Section 10.12 Reserved. ................................................................................................. 40
Section 10.13 Parties Not Co-Venturers. ....................................................................... 40
Section 10.14 Discretion Retained by City. ................................................................... 40
Section 10.15 Time of the Essence. ............................................................................... 40
Section 10.16 Representation and Warranties of Developer. ........................................ 40
Section 10.17 Entire Understanding of the Parties. ....................................................... 41
Section 10.18 Amendments. .......................................................................................... 41
Section 10.19 Approvals. ............................................................................................... 41
Section 10.20 Counterparts; Multiple Originals. ........................................................... 41
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1046\101\3359065.8
DISPOSITION, DEVELOPMENT, AND LOAN AGREEMENT
(Palm Villas at Millennium)
This DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT (the "Agreement")
is dated as of ______, 2022, and is entered into by and among the CITY OF PALM DESERT, a
municipal corporation (the "City"), the PALM DESERT HOUSING AUTHORITY, a public body
corporate and politic (the "Authority") and PALM COMMUNITIES, a California corporation (the
"Developer"), each individually a "Party" and collectively the "Parties," with reference to the
following facts, understandings and intentions of the Parties:
RECITALS
A. Defined terms used but not defined in these recitals are as defined in Article 1 of
this Agreement.
B. The City owns that approximately ten and one-half (10.49) acre site located in the
City of Palm Desert as more particularly described in Exhibit A (the “Property”). The City intends
to process a Parcel Map to divide the Property into the Phase I Parcel and Parcel II Parcel.
C. The Property has been declared exempt surplus land by the City Council of the City
under Government Code Section 54221(f)(1)(A) and has concluded based on the Developer's site
plan and proposed affordability that proposed Development meets the affordability and design
requirements of Government Code Section 37364. The California Department of Housing and
Community Development has confirmed such exemption in writing.
D. The City and the Developer entered into an Exclusive Negotiating Agreement (the
"ENA") on July 15, 2022, to negotiate the terms and the conditions for the development of the
Development on the Property. In accordance with the ENA, the City and Developer have
concluded that it is best to subdivide the Property into two parcels: the Phase I Parcel, as described
on Exhibit A-1, and the Phase II Parcel, as described on Exhibit A-2; the Property will be legally
subdivided prior to Closing as set forth herein.
E. The Developer intends to construct in two phases at least two hundred forty-one
(241) units of housing, two hundred thirty-nine (239) of which shall be made available to and
occupied by low-income households, very low-income households, and extremely low-income
households, and two (2) of which shall be on-site manager’s units.
F. The Developer intends to construct at least one hundred twenty-one (121) units on
the Phase I Parcel, with one hundred twenty (120) of the units restricted to Extremely-Low
Households, Very-Low Income Households and Low Income Households, at affordable rents, and
the other unit used as an on-site manager’s unit. The Phase I Development will be composed of
one, two and three bedroom units.
G. The Developer intends to construct at least one hundred twenty (120) units on the
Phase II Parcel, with one hundred nineteen (119) of the units restricted to Extremely-Low
Households, Very-Low Income Households and Low Income Households, at affordable rents, and
the other unit used as an on-site manager’s unit. The Phase II Development will also be composed
of one, two and three bedroom units.
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H. To effectuate this purpose, the City will convey the Property to the Developer in
two phases, subject to the terms and conditions of this Agreement.
I. To assist the Developer in acquiring the Phase I Parcel from the City and to develop
the Phase I Development, the Authority intends to make a loan to the Developer in the amount of
Six Million Dollars ($6,000,000.00), subject to the terms and conditions of this Agreement. To
assist the Developer in acquiring the Phase II Parcel from the City and to develop the Phase II
Development, the Authority intends to make a loan to the Developer in the amount not less than
Seven Hundred Fifty-Five Thousand Dollars ($755,000.00), subject to the terms and conditions of
this Agreement.
J. The Authority intends to enter into an agreement with the Developer's construction
lender for the Phase I Development providing that the construction lender will disburse the
remaining proceeds of the Authority's loan following the Close of Escrow to the construction
lender for the payment of construction costs of the Phase I Development. The agreement will
provide that the Authority Loan funds will be disbursed pari passu with the construction lender's
loan. The construction lender shall not have a security interest in such Authority funds.
K. Concurrently with the conveyance of the Phase I Parcel to the Developer, the
Developer and City intend to grant to each other reciprocal easements over the Phase I and Phase
II Parcel for ingress and egress. The Developer also intends to grant the Phase II Parcel owner
reasonable rights to use the Phase I Development's common area facilities upon the completion of
the Phase II Development (the "Phase I and Phase II Access Easement"). The Parties intend that
the Phase I and Phase II Access Easement will include a provision that the Phase I and Phase II
Access Easement may be amended by the Parties if the City intends to convey the Phase II Parcel
to a party that is not affiliated with the Developer.
L. Concurrently with the conveyance of the Phase I Parcel to the Developer, the City
intends to grant (i) an easement over the Parcel 9, an adjacent City-owned parcel, to allow ingress
and egress to the Phase I Parcel through the Phase II Parcel (the "Parcel 9 Easement"); and (ii) an
access easement over Parcel 9 to allow the Developer and the Phase II Parcel owner to clear any
accumulated sand against the Phase I and the Phase II boundary wall (the "Maintenance
Easement").
M. The City has determined that the Developer has the necessary expertise, skill and
ability to carry out the commitments set forth in this Agreement and that this Agreement is in the
best interests of, and will materially contribute to the implementation of, the City's affordable
housing goals through the development of the Property.
N. Developer has applied for and received a density bonus (including reduced parking
and increased density) for both the Phase I Development and the Phase II Development.
In consideration of the foregoing, and the mutual terms and conditions herein, the Parties
agree as follows:
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AGREEMENT
The foregoing recitals are hereby incorporated by reference and made part of this
Agreement.
ARTICLE 1.
DEFINITIONS AND EXHIBITS
Section 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement,
the following definitions apply throughout this Agreement.
(a) "Affordable Units" means the Two Hundred Thirty-Nine (239) Units
restricted by the Housing Agreements to be developed on the Property to be occupied by
Extremely-Low, Very-Low and Low-Income Households and to be available at affordable rent as
defined in accordance with Health & Safety Code Section 50053.
(b) "Annual Financial Statement" means for any calendar year: (i) the financial
statement of operating expenses and revenues for a Phase, prepared at the Developer’s expense,
by an independent certified accountant reasonably acceptable to the Authority, and showing the
Residual Receipts for the applicable calendar year; (ii) sufficient back-up data to support the
revenues and expenses claimed on the statement; and (iii) such additional information reasonably
requested by the Authority, all of which shall form the basis for determining Residual Receipts.
(c) "Approved Financing" means the loans, equity, and other financing
obtained by the Developer for the purpose of financing the costs of the Development that are
approved by the City and consistent with the Financing Proposal.
(d) "Approved Plans" means all designs for the Development approved by the
City in conjunction with the City Approvals prior to or concurrent with the Effective Date.
(e) "Authority" is defined in the introductory paragraph of this Agreement.
(f) "Authority Loans" or “Authority Loan”, as applicable, mean the loans by
the City to the Developer in an amount not to exceed Six Million Dollars ($6,000,000.00), to pay
the acquisition and development costs for the Phase I Development and a loan in an amount of
Seven Hundred Fifty-Five Thousand Dollars ($755,000.00) to pay acquisition costs for the Phase
II Development.
(g) "Building Permit" means the building permit and all other ministerial
construction permits required from the City to construct the Development..
(h) "Certificate of Completion" is defined in Section 4.11.
(i) "Certificate of Occupancy" means a final certificate of occupancy issued by
the City for the Development, or equivalent final inspection.
(j) City" is defined in the introductory paragraph of this Agreement.
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(k) "City/Authority Documents" means, collectively, this Agreement, the
Promissory Notes, the Deed of Trusts, the Housing Agreements, the Notice of Restrictions for
each phase of the Development and any other documents executed by the City and/or the Authority
and Developer.
(l) "City Approvals" means the permits and entitlements issued by the City to
allow for the commencement of construction for the respective Phase.
(m) "City Event of Default" is defined in Section 8.3.
(n) "Close of Escrow" means the date on which a fee interest in each of the
Phase I Parcel and the Phase II Parcel is conveyed to the Developer, as appropriate.
(o) "Construction Plans" means the final construction plans for the construction
of the Development as approved by the City in accordance with Section 2.5.
(p) "Control" means the power to direct the day-to-day management
responsibilities for the activities of Developer, and, with respect to a limited liability company,
means the: (1) managing member or members; or (2) the right to exercise, directly or indirectly,
more than fifty percent (50%) of the voting rights attributable to the limited liability company.
(q) “Declaration of Default" is defined in Section 8.5.
(r) “Deeds of Trust” shall mean the deeds of trust, assignment of rents, and
security agreement placed on the Developer’s interest in the Phase I Parcel and Phase II Parcel, as
security for the Authority Loans by the Developer as trustor with the Authority as beneficiary, as
well as any amendments to, modifications of, and restatements of said deed of trusts, in the forms
attached hereto as Exhibit F.
(s) "Defaulting Party" is defined in Section 8.5.
(t) "Density Bonus Agreement" shall mean the Density Bonus Agreement for
each Phase in the form attached hereto as Exhibits D-1 and D-2
(u) "Deposit" is defined in Section 3.3.
(v) "Developer" has the meaning in the introductory paragraph of this
Agreement.
(w) "Developer Event of Default" is defined in Section 8.4.
(x) "Development" means the development of at least two hundred forty-one
(241) apartment units to be developed on the Property.
(y) "Effective Date" shall mean the later of: (i) the date the Developer has
executed this Agreement; (ii) the date the Authority has executed this Agreement and (iii) the date
the City has executed this Agreement.
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(z) "ENA" is defined in Recital C.
(aa) "Escrow" means the escrow opened with the Title Company to accomplish
the transfer of Phase I and Phase II, respectively, from the City to the Developer.
(bb) “Extremely Low Income” means a household with an income that does not
exceed the qualifying limits for extremely low-income households, adjusted for actual household
size, for Riverside County, as published and periodically updated by HCD under Section 50106 of
the California Health and Safety Code, or successor provision.
(cc) "Financing Proposal" means the Developer's initial proposal for financing
the acquisition of the Property and the construction of the Development, including an estimate of
the sources and uses of funds, which is attached hereto as Exhibit K.
(dd) "Grading Permit" means the permit to commence grading on the Phase I
Parcel and the permit for the Phase II Parcel.
(ee) "Hazardous Materials" means any substance, material, or waste which is:
(1) defined as a "hazardous waste", "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "pollutant" or any other terms comparable to the
foregoing terms under any provision of California law or federal law; (2) petroleum; (3) asbestos;
(4) polychlorinated biphenyls; (5) radioactive materials; (6) MTBE; or (7) determined by
California, federal or local government authority to be capable of posing a risk of injury to health,
safety or property. Without limiting the foregoing, Hazardous Materials means and includes any
substance or material defined or designated as hazardous or toxic waste, hazardous or toxic
material, a hazardous, toxic or radioactive substance, or other similar term, by any Hazardous
Materials Laws including any federal, state or local environmental statute, regulation or ordinance
presently in effect that may be promulgated in the future, as such statutes, regulations and
ordinances may be amended from time to time.
(ff) The term "Hazardous Materials" does not include: (1) construction
materials, gardening materials, household products, office supply products or janitorial supply
products customarily used in the construction or maintenance, of residential developments, or
typically used in office or residential activities; or (2) certain substances which may contain
chemicals listed by the State of California under California Health and Safety Code Sections
25249.8 et seq., which substances are commonly used by a significant portion of the population
living within the region of the Development, including, but not limited to, alcoholic beverages,
aspirin, tobacco products, nutrasweet and saccharine, so long as such materials and substances are
stored, used and disposed of in compliance with all applicable Hazardous Materials Laws.
(gg) "Hazardous Materials Laws" means all federal, state, and local laws,
ordinances, regulations, orders and directives pertaining to Hazardous Materials in, on or under
the Development or any portion thereof.
(hh) "Housing Agreements" or “Housing Agreement”, as applicable, means the
Housing Agreements between the Developer and the Authority in the form of Exhibit H that will
be recorded against the Developer's fee interest in the Phase I Parcel and Phase II Parcel and all
improvements thereon, and will restrict the household income levels for occupancy of the Units
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thereon to Extremely Low, Very-Low and Low Income Households and will restrict the rent to
affordable rent.
(ii) "Low Income Household" means a household with an income that does not
exceed the qualifying limits for lower income households, adjusted for actual household size, for
Riverside County, as published and periodically updated by HCD under Section 50079.5 of the
California Health and Safety Code, or successor provision.
(jj) "Maintenance Easement" means an easement over Parcel 9 prepared by the
Developer and approved by the City granting the Developer and the Phase II Parcel owner the
right of access to clear sand from the outside of the Phase I Wall and the Phase II Wall abutting
the Maintenance Easement area, substantially in the form of Exhibit B-3.
(kk) “Notices of Restrictions” or “Notice of Restrictions”, as applicable, shall
mean the Notices of Affordability Restrictions in the form attached hereto as Exhibit G, which are
to be recorded against the Phase I Parcel and the Phase II Parcel upon the closing of the sales
thereof.
(ll) "Notice of Default" is defined in Section 8.5.
(mm) "Official Records" means the official land records of Riverside County.
(nn) "Parcel" means either the Phase I Parcel or the Phase II Parcel, as the context
requires.
(oo) "Parcel Map" means the Parcel Map prepared by the Developer and
approved by the City subdividing the Property into the two Phases and recorded in the Official
Records of the County of Riverside with any recording costs paid by the Developer.
(pp) "Parcel 9" means the City-owned parcel abutting the Phase I Parcel and the
Phase II Parcel described in Exhibit A-3.
(qq) "Parcel 9 Easement" means the easement for ingress and egress of over a
portion of Parcel 9 prepared by the Developer and approved by the City benefiting Parcel I and
granting the right to the Developer to improve the easement with street improvements,
substantially in the form of Exhibit B-2.
(rr) "Parties" means collectively the City, the Authority and the Developer and
the term Party refers to each of them individually.
(ss) "Phase" shall mean the Phase I Development or the Phase II Development,
as the context requires.
(tt) "Phase I Development" means the development of at least one hundred
twenty-one (121) units of housing, required offsite infrastructure improvements and parking
constructed on the Phase I Parcel, all as more fully set forth in the Scope of Development.
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(uu) "Phase II Development" means the development of at least one hundred
twenty (120) units of housing, required offsite infrastructure improvements and parking
constructed on the Phase II Parcel, all as more fully set forth in the Scope of Development.
(vv) "Parcel I and Parcel II Access Easement" means the reciprocal easement
prepared by the Developer and approved by the City for ingress and egress of over Parcel I and
Parcel II and granting the Phase II Parcel owner the right of reasonable access to the Phase I
Development common facilities, substantially in the form of Exhibit B-1.
(ww) "Phase I Parcel" means the property generally described in Exhibit A-1.
(xx) "Phase II Parcel" means the property generally described in Exhibit A-2.
(yy) "Promissory Notes" or “Promissory Note”, as applicable, shall mean the
promissory notes that will evidence the Developer's obligation to repay the applicable Authority
Loan for a Phase as set forth in this Agreement, and shall be in the form of Exhibit E. Each Phase
of the Development will have its own Promissory Note and shall not be cross-collateralized.
(zz) "Property" means the property generally described in the legal description
attached as Exhibit A, consisting of the Phase I Parcel and the Phase II Parcel.
(aaa) "Residual Receipts" in a particular calendar year for a Phase shall mean the
cash (without regard to the source) derived from the operation of such Phase of the Development
minus the following for that Phase, determined on a cash basis: (i) all real estate and personal
property taxes and assessments, insurance premiums and reasonable costs of maintenance,
operation and management incurred by the Developer in connection with the operation and
maintenance, (ii) property management fees not to exceed four and one-half percent (4.5%) of the
gross revenue of the Phase, (iii) the costs of servicing the senior construction loan/financing (and
any approved refinancing thereof) and other sources of permitted financing; (iv) amounts
necessary to maintain a guaranty or other form of security or bond for an operation reserve account,
(v) amounts deposited into a replacement initially capitalized reserve account in the minimum sum
of Three Hundred Twenty-Five Dollars ($325.00) per unit per annum, (vi) the repayment of any
amounts loaned by the Developer for material development costs which costs were not reasonably
foreseeable, (vii) deferred developer fees (viii) a limited partner monitoring fee in the annual
amount of Five Thousand Dollars ($5000.00) per year unless fully paid a permanent loan
conversion; (ix) a managing general partner fee in the annual amount of Fifteen Thousand Dollars
($15,000.00), increasing three percent (3%) annually; and (xi) an administrative general partner
fee in the annual amount of Ten Thousand Dollars ($10,000.00), increasing three percent (3%)
annually. In no event shall depreciation/amortization be deducted from cash revenues. Residual
Receipts shall be determined by Developer and Authority on a cash basis without regard to any
carry-over profit or loss from any prior calendar year, and shall be determined annually, on or
before June 1st for the preceding calendar year. Any deferred developer fee, limited partner
monitoring fee, managing general partner fee, and administrative general partner fee may not
accrue interest.
(bbb) "Schedule of Performance" means the schedule attached as Exhibit C
setting forth the schedule for the Developer's acquisition and development of the Phase I Parcel
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and the acquisition and development of the Phase II Parcel and the construction of the Phase I
Development and the Phase II Development and other deadlines.
(ccc) Scope of Development shall mean the description of the Development,
including a basic site plan, which will serve as a basis for the Developer's application for the City
Approvals. The Scope of Development is attached to this Agreement as Exhibit I.
(ddd) "Security Financing Interest" means a mortgage, deed of trust, or other
reasonable method of security encumbering the Developer's fee interest in the Phase I Parcel and
the Phase II Parcel that: (i) meets the requirements of this Agreement; and (ii) secures any
construction or permanent loan shown on the Financing Proposal, or any refinancing approved by
the Authority.
(eee) “TCAC” means the California Tax Credit Allocation Committee.
(fff) “TCAC Regulatory Agreement” means the regulatory agreement entered
into between the Developer and TCAC regulating the affordability of each Phase to be recorded
as an encumbrance on the Property.
(ggg) "Title Company" means First American Title Company, or such other title
company as the Parties may mutually select.
(hhh) "Title Report" is defined in Section 2.19.
(iii) "Transfer" has the meaning set forth in Section 7.1.
(jjj) "Unit" means one of the residential units to be constructed on the Property.
(kkk) "Very Low Income Household" means a household with an income that
does not exceed the qualifying limits for very low income households, adjusted for actual
household size, for Riverside County, as published and periodically updated by HCD under
Section 50105 of the California Health and Safety Code, or successor provision.
Section 1.2 Exhibits. The following exhibits are attached to and incorporated in this
Agreement:
Exhibit A: Legal Description of the Property
Exhibit A-1: Depiction of Phase I Parcel
Exhibit A-2: Depiction of Phase II Parcel
Exhibit A-3: Depiction of Parcel 9
Exhibit B-1: Phase I and Phase II Access Easement
Exhibit B-2: Parcel 9 Easement
Exhibit B-3: Maintenance Easement
Exhibit C: Form of Grant Deed
Exhibit D-1: Form of Phase I Density Bonus Agreement
Exhibit D-2: Form of Phase II Density Bonus Agreement
Exhibit E: Forms of Promissory Note
Exhibit F: Form of Deed of Trust
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Exhibit G-1: Form of Phase I Notice of Affordability Restrictions
Exhibit G-2: Forms of Phase II Notice of Affordability Restrictions
Exhibit H-1: Form of Phase I Housing Agreement
Exhibit H-2: Form of Phase II Housing Agreement
Exhibit I: Scope of Development
Exhibit J: Schedule of Performance
Exhibit K-1: Financing Plan – Phase I
Exhibit K-2: Financing Plan – Phase II
ARTICLE 2.
PREDISPOSITION CONDITIONS FOR
CONVEYANCE OF EACH PHASE
Section 2.1 Conditions Precedent to Disposition of Property. The requirements set forth
in this Article 2 are conditions precedent to the City's obligation to convey a Phase to the
Developer. The City has no obligation to convey a Phase to the Developer unless the conditions
precedent set forth in this Article 2 have been satisfied in the manner set forth below and within
the timeframe set forth in the Schedule of Performance. The closing of the conveyance of the
Phase I Parcel must occur on or before June 30, 2024 (or either party who is not in default may
terminate this Agreement by written notice to the other). The closing of the conveyance of the
Phase II Parcel must occur on or before June 30, 2025 (or either party who is not in default may
terminate this Agreement by written notice to the other).
Section 2.2 City Approvals. Prior to or concurrently with the conveyance of a Phase,
the Developer has obtained the City Approvals for the Phase and the Developer has paid the
required fees to the City and posted the required improvement bonds.
Section 2.3 Parcel Map. The Parcel Map subdividing the Property into the Phase I
Parcel and the Phase II Parcel has been approved by the City, in its absolute discretion, and the
Developer; the Parcel Map has been recorded prior to the Close of Escrow for the conveyance of
Phase I; and the Developer has paid the costs related to recording the Parcel Map and has agreed
to comply with any conditions of approval related to the Parcel Map.
Section 2.4 Financing. The financing listed in the Financing Proposal shown in Exhibit
C for the appropriate Phase is ready to close concurrently with the Close of Escrow for the Phase.
Section 2.5 Permits. The City has issued a Ready to Issue letter regarding the Building
Permit and the Developer has paid the Building Permit fee prior to or concurrently with the
applicable Close of Escrow.
Section 2.6 Tax Credits. The tax credits necessary to help finance the applicable
development shall have been awarded, and Developer shall have provided evidence thereof to
City, together with reasonable evidence that tax credit investors shall have legally committed to
provide equity funds sufficient to pay all development costs not being paid with loans/debt.
Section 2.7 Loan Closings. All loans necessary to finance costs in the City-approved
revised Financing Proposal/Plan shall have closed (or shall close concurrently with the applicable
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Close of Escrow) such that the lenders are conditionally obligated to disburse their loan funds (so
that the applicable development can be completed), and copies of the applicable loan documents
(or drafts that are final in all material respects) shall have been provided to City.
Section 2.8 Construction Plans. The Developer shall prepare construction plans for the
construction of the development of each Phase. The final construction plans for the development
of each submitted by the Developer for City approval shall consist of all construction
documentation upon which the Developer and its contractors shall rely in building the Phase I
Development and the Phase II Development. Such construction plans shall include (without
limitation) final architectural drawings, landscaping plans and specifications, final elevations,
building plans and specifications (also known as "working drawings"). The construction plans
shall be based upon the Approved Plans and shall not materially deviate from them without the
written consent of the City.
(a) As set forth in Section 10.14, the Developer acknowledges that execution
of this Agreement by the City does not constitute approval by the City of any required permits and
in no way limits the discretion of the City in the permit approval process.
(b) As part of the Developer's application for a Building Permit, the City shall
also have the right to review and approve the proposed construction plans for conformance with
the Approved Plans and the other commitments made by the Developer to the City. The Developer
acknowledges that the City's right to review and approve the proposed construction plans as
allowed by this paragraph is in addition to, and shall not be limited by, the City's obligation to
review the Developer's proposed construction plans for consistency with applicable building and
construction code requirements.
As approved, these construction plans for the applicable component of the Development shall be
referred to as the "Construction Plans".
Section 2.9 Construction Contract. Developer shall have delivered to City a copy of an
executed Guaranteed Maximum Price or Stipulated Sum construction contract for the applicable
Phase, which shows a development cost consistent with the revised Financing Proposal/Plan and
equity and debt funds committed to the applicable development
Section 2.10 Cost Estimate. The Developer's construction lender has shared its
construction cost estimate with the City or, in the alternative, if the construction lender is unwilling
to share its cost estimate, the City has obtained an independent cost estimate at the Developer's
cost to confirm the reasonableness of the construction costs.
Section 2.11 Construction Bonds. At least seven (7) days prior to Close of Escrow, the
Developer shall deliver to the City forms of one (1) labor and material bond and one (1)
performance bond for the Development issued by a reputable insurance company licensed to do
business in California, and named in the current list of "Surety Companies Acceptable on Federal
Bonds" as published in the Federal Register by the Audit Staff Bureau of Accounts, U.S. Treasury
Department, and reasonably acceptable to the City, each in a penal sum of not less than one
hundred percent (100%) of the scheduled cost of construction of the Phase for the City's review
and approval. The bonds shall name the City as co-obligee. Upon receipt by the City of the
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proposed payment and performance bonds, the City shall promptly review such bonds and approve
them if they satisfy the criteria set forth above and include any other modification reasonably
requested by the City. If the payment and performance bonds are not approved by the City, the
City shall set forth in writing and notify the Developer of the City's reasons for withholding such
approval. The Developer shall thereafter submit revised payment and performance bonds for City
approval, which approval shall be granted or denied in five (5) business days in accordance with
the criteria and procedures set forth above.
Section 2.12 Developer Organizational Documents. The Developer has provided the
Developer organizational documents to the City for its review and the City has approved the
documents.
Section 2.13 Authority Loan. The Authority is ready to make the applicable Authority
Loan in the amount necessary to acquire the Phase I Parcel or Phase II Parcel, as appropriate, and
the Developer shall have delivered the applicable City/Authority Documents, duly executed, to the
Authority.
Section 2.14 Tax Credit Equity. The City has approved the Developer's proposed uses of
any tax credit equity paid as of the Close of Escrow to the Developer.
Section 2.15 City Easements. The Developer and City have agreed upon the final forms
of the Phase I and Phase II Access Easement, the Parcel 9 Easement and the Maintenance
Easement.
Section 2.16 Phase II Conveyance. As a condition to the Close of Escrow for the Phase
II Parcel only, the Close of Escrow for the Phase I Parcel shall have occurred, and Developer shall
not be in default under this DDLA or the Authority loan relating to the Phase I Parcel.
Section 2.17 HCD Confirmation of Exemption. The City has received confirmation that
the conveyance of the Property complies with the procedures of the Surplus Land Act (Gov't Code
Section 54220 et seq.).
Section 2.18 AHAP. The Developer and the Authority have entered into an Agreement
to Enter into a Housing Assistance Payments Contract.
Section 2.19 Title Report. The Developer has ordered a title report (the "Title Report")
from the Title Company within five (5) business days following the Effective Date of this
Agreement and promptly provided a copy of the Title Report to the City. The City and the
Developer have approved the title report for the Property within sixty (60) days following the
Effective Date. If the Parties do not agree on the Title Report within the sixty (60) day period,
either Party may terminate this Agreement, unless the Developer waives the requirement in this
Section 2.19. In the event the Agreement is terminated pursuant to this Section 2.19, the Deposit
shall be returned to the Developer and neither Party shall have any rights against or liability to the
other except those provisions of this Agreement that recite that they survive termination of this
Agreement.
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ARTICLE 3.
DISPOSITION OF PROPERTY
Section 3.1 Conveyance of Phase I Parcel and Phase II Parcel. Subject to the
satisfaction of the conditions to closing set forth above (which apply to each Phase, except as noted
in Section 2.15), the City will sell to the Developer, and the Developer will purchase from the City,
the Property under the terms, covenants, and conditions of this Agreement.
Section 3.2 Purchase Prices. The Purchase Price for the Phase I Parcel shall be One
Million Nine Hundred Sixty-Five Thousand Five Hundred Thirty-Nine Dollars ($1,965,539.00).
The Purchase Price for the Phase II Parcel shall be One Million Four Hundred Fifty-Nine Thousand
Four Hundred Sixty-One Dollars ($1,459,461.00).
Section 3.3 Deposit.
(a) Within fifteen (15) days following the Effective Date, Developer shall
deposit Twenty Thousand Dollars ($20,000.00) into Escrow as a good faith deposit for the
acquisition of the Phase I Parcel (the "Phase I Deposit"). Upon the Close of Escrow for Phase I,
the Phase I Deposit shall be applied to the Purchase Price. If this Agreement is terminated at no
fault to the Developer, the Phase I Deposit shall be immediately refunded to the Developer upon
the date the Agreement is terminated. Concurrently with the Close of Escrow for Phase I Parcel,
the Developer shall deposit Twenty Thousand Dollars ($20,000.00) into a Phase II Escrow as a
good faith deposit for the acquisition of the Phase II Parcel (the "Phase II Deposit"). Upon the
Close of Escrow for Phase II, the Phase I Deposit shall be applied to the Purchase Price. If this
Agreement is terminated at no fault to the Developer, the Phase II Deposit shall be immediately
refunded to the Developer upon the date the Agreement is terminated. The Phase I Deposit and
the Phase II Deposit shall constitute liquidated damages pursuant to Section 3.3(b).
(b) BUYER ACKNOWLEDGES THAT BY ENTERING INTO THIS
AGREEMENT, SELLER MAY REMOVE THE PROPERTY FROM THE ACTIVE REAL
ESTATE MARKET AND THUS SUSTAIN MISSED OPPORTUNITIES AND EXTENDED
CARRYING COSTS, AS WELL AS OTHER DAMAGES. IN THE EVENT THAT THE
ESCROW AND THIS TRANSACTION FAIL TO CLOSE AS A RESULT OF THE DEFAULT
OF BUYER IN THE PERFORMANCE OF ITS MATERIAL OBLIGATIONS UNDER THIS
AGREEMENT, BUYER AND SELLER AGREE THAT SELLER WILL SUSTAIN THESE
AND OTHER DAMAGES, AND THAT SELLER'S ACTUAL DAMAGES WOULD BE
IMPRACTICABLE OR EXTREMELY DIFFICULT TO DETERMINE. THE PARTIES
THEREFORE AGREE THAT IN THE EVENT THAT ESCROW AND THIS TRANSACTION
FAIL TO CLOSE AS A RESULT OF A MATERIAL DEFAULT OF BUYER, AND SELLER IS
READY, WILLING AND ABLE TO PERFORM ITS OBLIGATIONS HEREUNDER, SELLER,
AS SELLER'S SOLE AND EXCLUSIVE REMEDY, IS ENTITLED TO LIQUIDATED
DAMAGES IN THE AMOUNT OF THE INITIAL DEPOSIT THERETOFORE MADE. IN THE
EVENT ESCROW FAILS TO CLOSE SOLELY AS A RESULT OF BUYER'S MATERIAL
DEFAULT AND SELLER IS READY, WILLING AND ABLE TO PERFORM ITS
OBLIGATIONS HEREUNDER, THEN (A) THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF BUYER AND SELLER HEREUNDER AND THE ESCROW CREATED
HEREBY SHALL TERMINATE, AND (B) ESCROW AGENT SHALL, AND IS HEREBY
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AUTHORIZED AND INSTRUCTED TO, RETURN PROMPTLY TO BUYER AND SELLER
ALL DOCUMENTS AND INSTRUMENTS TO THE PARTIES WHO DEPOSITED THE
SAME. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT
INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA
CIVIL CODE SECTIONS 3275 OR 3369 BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE
SECTIONS 1671, 1676 AND 1677. SELLER HEREBY WAIVES THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 3389. SELLER AND BUYER ACKNOWLEDGE
THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTIO
3.3(b) , AND BY THEIR INITIALS IMMEDIATELY BELOW, AGREE TO BE BOUND BY
ITS TERMS.
SELLERS' INITIALS:
__________________________
BUYER'S INITIALS
_________________
Section 3.4 Opening Escrow. To accomplish the transfer of the Phase I Parcel and the
Phase II Parcel from the City to the Developer, the Parties will promptly establish an escrow for
each transfer with the Title Company after the Effective Date. The Parties will execute and deliver
reasonable written instructions to the Title Company to accomplish the terms hereof, which
instructions must be consistent with this Agreement.
Section 3.5 Close of Escrow. The Close of Escrow shall occur within thirty (30) days
after the Developer has met all of the closing conditions as set forth in Article 2 above for a
particular Parcel, but in no event shall the Close of Escrow occur later than June 30, 2024, for the
Phase I Parcel, and in no event shall the Close of Escrow for the Phase II Parcel occur later than
June 30, 2025.
(a) At the Close of Escrow, the City shall convey a fee interest in the applicable
Parcel to the Developer by the delivery of a Grant Deed in the form set forth in the attached Exhibit
C.
(b) At the Close of Escrow, the Developer has executed and delivered to
Escrow the Phase I and Phase II Access Easement, the Parcel 9 Easement and the Maintenance
Easement.
(c) Developer’s obligation to proceed with the acquisition of the Property from
the City pursuant to the terms of this Agreement is subject to the fulfillment or waiver by
Developer of each and all of the conditions precedent described below (“Developer Conditions
Precedent”). The Developer Conditions Precedent are solely for the benefit of the Developer and
shall be fulfilled or waived within the time periods provided for herein, and in any event, no later
than the date specified in the Schedule of Performance.
(1) There exists no condition, event or act which would constitute a
breach or default under this Agreement, the City Documents, the Development Approvals, or
under any other project financing agreements or contracts related to the Development, or which,
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upon the giving of notice or the passage of time, or both, would constitute such a breach or default
by the City.
(2) Subject to payment of the applicable fees, City shall be ready to
issue the building permit(s) necessary for the Developer to Commence Construction of the
Development.
(3) The Title Company shall, upon payment of Title Company’s
regularly scheduled premium, be irrevocably committed to issue an owner’s title policy upon
recordation of the applicable Grant Deed insuring Developer’s interest in the Property, subject
only to the exceptions in Section 3.7 below.
(4) The Parcel Map has been approved by the City and the Developer
and has been recorded or is ready to be recorded currently with the Close of Escrow in the Official
Records of Riverside County.
(5) There shall be an absence of any condemnation, environmental or
other pending governmental or any type of administrative or legal proceedings with respect to the
Property which would materially and adversely affect Developer’s intended uses of the Property
or the value of the Property.
(6) The City has executed and delivered to Escrow (x) the Phase I and
Phase II Access Easement, (y) the Parcel 9 Easement and (z) the Maintenance Easement.
(7) The City has executed and delivered to Escrow applicable Housing
Agreement and Notice of Affordability Restrictions, duly executed and acknowledged.
(8) There shall not have occurred between the Effective Date and the
Closing a material adverse change to the physical condition of the Property.
(9) There is no existing, pending or threatened litigation, suit, action or
proceeding before any court or administrative agency affecting the City or the Developer or the
Property that would, if adversely determined, materially adversely affect the Development or the
Developer's or the City's ability to perform their obligations under this Agreement or the
Developers' ability to develop and operate the Development.
Section 3.6 Costs of Escrow and Closing. The Developer must pay the cost of title
insurance, transfer tax, Title Company document preparation, recordation fees, and the escrow fees
of the Title Company, if any, and any additional costs to close the escrow. The costs borne by the
Developer are in addition to the Purchase Prices of the Parcels.
Section 3.7 Condition of Title. Upon the Close of Escrow for each Phase, the Developer
will take title subject to all title exceptions in the Title Report and all other liens, encumbrances,
clouds and conditions, rights of occupancy or possession, except:
(a) applicable building and zoning laws and regulations;
(b) The conditions and easements on the Parcel Map;
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(c) the Phase I and Phase II Access Easement;
(d) the applicable Housing Agreement;
(e) the applicable Density Bonus Agreement;
(f) the applicable Deed of Trust and Notice of Restrictions;
(g) any lien for current taxes and assessments or taxes and assessments accruing
subsequent to Close of Escrow;
(h) the liens of any Approved Financing (approved by the City);
(i) any other matters created by or with the consent of Developer.
Section 3.8 Condition of Property.
(a) City Information. In fulfillment of the purposes of Health and Safety Code
Section 25359.7(a), to the City's Current Actual Knowledge, no release of Hazardous Materials
has come to be located on or beneath the Property except as previously disclosed by the City to
the Developer. During the Negotiating Period, as defined in the ENA, the Developer completed
all due diligence activities, including but not limited to a physical adequacy determination of the
Property, and may not terminate this Agreement as a result of the purported physical unsuitability
of the Property. As used in this Agreement, the phrase "to the City's Current Actual Knowledge"
and words of similar import shall mean the actual knowledge of the City Manager (the "City
Representative"), on behalf of the City, as of the Effective Date, without any duty of separate
inquiry and investigation. The City represents and warrants that the City Representative is that
person affiliated with the City most knowledgeable regarding the ownership and operation of the
Property. Developer hereby agrees that the foregoing person shall not have or incur any personal
liability for the breach of any representation or warranty in this Agreement, and that Developer's
sole remedy for any such breach shall be against the City.
(b) "As is" Conveyance. Prior to the effective date, the Developer was provided
the opportunity to investigate the Property and has approved the physical condition of the Property.
The Developer specifically acknowledges and agrees that the City is selling each Phase of the
Property to the Developer and the Developer is buying each Phase of the Property from the City
(and all thereon) on an "as is with all faults" basis and that the Developer is not relying on any
representations or warranties of any kind whatsoever, express (except as expressly set forth in this
agreement) or implied, from the City as to any matters concerning the Property, including without
limitation: (1) the quality, nature, adequacy and physical condition of the Property (including,
without limitation, topography, climate, air, water rights, water, gas, electricity, utility services,
grading, drainage, sewers, access to public roads and related conditions); (2) the quality, nature,
adequacy, and physical condition of soils, geology, and groundwater; (3) the existence, quality,
nature, adequacy and physical condition of utilities serving the Property; (4) the development
potential of the Property, and the Property's use, habitability, merchantability, or fitness,
suitability, value or adequacy of the Property for any particular purpose; (5) public or private
restrictions on the use of the Property; (6) the compliance of the Property or its operation with any
applicable codes, laws, regulations, statutes, ordinances, covenants, conditions and restrictions of
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any governmental or quasi-governmental entity or of any other person or entity; (7) the presence
or absence of hazardous materials on, under or about the Property or the adjoining or neighboring
property; and (8) the condition of title to the Property. The Developer affirms that the Developer
has not relied on the skill or judgment of the City or any of its agents, employees or contractors to
select or furnish the Property for any particular purpose, and that the City makes no warranty that
the Property is fit for any particular purpose. The Developer acknowledges that it shall use its
independent judgment and make its own determination as to the scope and breadth of its due
diligence investigation which it shall make relative to the Property and shall rely upon its own
investigation of the physical, environmental, economic, and legal condition of the Property
(including, without limitation, whether the Property is located in any area which is designated as
a special flood hazard area, dam failure inundation area, earthquake fault zone, seismic hazard
zone, high fire severity area or wildland fire area, by any federal, state or local agency). The
Developer undertakes and assumes all risks associated with all matters pertaining to the Property's
location in any area designated as a special flood hazard area, dam failure inundation area,
earthquake fault zone, seismic hazard zone, high fire severity area or wildland fire area by any
federal, state or local agency.
(c) Survival. The terms and conditions of this Section expressly survive the
Close of Escrow. The City is not liable or bound in any manner by any oral or written statements,
representations, or information pertaining to the Property furnished by any contractor, agent,
employee, servant, or other person. The Developer acknowledges that the lease price will reflect
the "as is" nature of this sale and any faults, liabilities, defects, or other adverse matters that may
be associated with the Property. The Developer has fully reviewed the disclaimers and waivers
set forth in this Agreement with the Developer's counsel and understands the significance and
effect thereof.
(d) Acknowledgment. The Developer acknowledges and agrees that: (1) to the
extent required to be operative, the disclaimers of warranties contained in this Section are
"conspicuous" disclaimers for purposes of all applicable laws and other legal requirements; and
(2) the disclaimers and other agreements set forth in such sections are an integral part of this
Agreement, that the lease price will be adjusted to reflect the same and that the City would not
have agreed to lease the Property to the Developer without the disclaimers and other agreements
set forth in this Section.
(e) Developer's Release. The Developer, on behalf of itself and anyone
claiming by, through or under the Developer hereby waives its right to recover from and fully and
irrevocably releases the City and the Authority, and City Council members, Authority board
members and the officers, directors, representatives, consultants, employees and agents of City
and/or Authority (the "Released Parties") from any and all claims, responsibility, and/or liability
that the Developer may have or hereafter acquire against any of the Released Parties for any costs,
loss, liability, damage, expenses, demand, action or cause of action arising from or related to:
(1) the condition (including any construction defects, errors, omissions or other conditions, latent
or otherwise), valuation, salability or utility of the Property, or its suitability for any purpose
whatsoever; (2) any presence of Hazardous Materials; and (3) any information furnished by the
Released Parties under or in connection with this Agreement.
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(f) Scope of Release. The release set forth in Section 3.7(e) above includes
claims of which the Developer is presently unaware or which the Developer does not presently
suspect to exist which, if known by the Developer, would materially affect the Developer's release
of the Released Parties. The Developer specifically waives the provision of any statute or principle
of law that provides otherwise. In this connection and to the extent permitted by law, the
Developer agrees, represents and warrants that the Developer realizes and acknowledges that
factual matters now unknown to the Developer may have given or may hereafter give rise to causes
of action, claims, demands, debts, controversies, damages, costs, losses and expenses which are
presently unknown, unanticipated and unsuspected, and the Developer further agrees, represents
and warrants that the waivers and releases herein have been negotiated and agreed upon in light of
that realization and that the Developer nevertheless hereby intends to release, discharge and acquit
the Released Parties from any such unknown causes of action, claims, demands, debts,
controversies, damages, costs, losses and expenses. Accordingly, the Developer, on behalf of itself
and anyone claiming by, through or under the Developer, hereby assumes the above-mentioned
risks and hereby expressly waives any right the Developer and anyone claiming by, through or
under the Developer, may have under Section 1542 of the California Civil Code, which reads as
follows:
"A general release does not extend to claims which the creditor
or released party does not know or suspect to exist in his or her
favor at the time of executing the release, which if known by him
or her must have materially affected his or her settlement with
the debtor or released party."
Developer's Initials: __________
Notwithstanding the foregoing, this release does not apply to, nor will the City be released from,
the City's actual fraud or misrepresentation.
ARTICLE 4.
CONSTRUCTION OF DEVELOPMENT
Section 4.1 Construction and Operation Consistent with Agreements. Unless modified
by operation of Section 4.2, the Development must be constructed in accordance with the Scope
of Development, the Construction Plans and the terms and conditions of the Approved Plans and
the City Approvals. The Developer shall comply with all standards and requirements for
construction, use, operation, maintenance, management and encumbrance of the Development
which are set forth in this Agreement and the City Approvals. As between the City and the
Developer, the Developer shall be solely responsible for all costs necessary for the construction
and operation of the Development, including, but not limited to, any construction cost overruns.
Developer shall defend, indemnify and hold City harmless from and against any and all
claims, liabilities, damages, losses, costs and expenses arising directly or indirectly from or relating
to any allegations that City is liable for failure by Developer to pay prevailing wages and/or comply
with California Labor Code Sections 1720 et seq. (The foregoing is not an admission by Developer
or City that prevailing wages are required in connection with any development on either Phase.)
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Section 4.2 Commencement of Development. The Developer must commence
construction of the Phase I Development no later than the date set forth in the Schedule of
Performance and in no event more than thirty (30) days after Close of Escrow for the Phase I
Parcel. The Developer must commence construction of the Phase II Development no later than
the date set forth in the Schedule of Performance and in no event more than thirty (30) days after
Close of Escrow for the Phase II Parcel. For purposes of this Section 4.2, commencement of
construction means the commencement of grading of the Phase.
Section 4.3 Completion of the Development. Subject to Section 10.3 below, the
Developer must diligently prosecute to completion the construction of each Phase no later the date
set forth in the Schedule of Performance
Section 4.4 Equal Opportunity. During the construction of the Development, the
Developer, and its successors, assigns, and subcontractors must not discriminate against any
employee or applicant for employment in connection with the construction of the Development on
any basis listed in Section 12940 of the Government Code. Each of the following activities must
be conducted in a non-discriminatory manner: hiring; upgrading; demotion and transfers;
recruitment and recruitment advertising; layoff and termination; rate of pay and other forms of
compensation; and selection for training including apprenticeship.
Section 4.5 Construction Under Laws.
(a) Compliance with Project Documents. Developer shall construct the
Development in conformance with the Approved Plans, Approved Financing, and Financing
Proposal and consistent with the City Approvals. Developer shall notify the City in a timely
manner of any changes in the work required to be performed under this Agreement, including any
additions, changes, or deletions to the plans and specifications approved by the City.
(b) Compliance with Laws. Developer shall cause all construction work to be
performed in compliance with, without limitation: (1) all applicable laws, ordinances, rules and
regulations of federal, state, county or municipal governments or agencies now in force or that
may be enacted hereafter, including without limitation state prevailing wages pursuant to Labor
Code Section 1770 et seq., and the regulations pursuant thereto, if applicable; (2) all applicable
federal and state accessibility requirements; and (3) all directions, rules and regulations of any fire
marshal, health officer, building inspector, or other officer of every governmental agency now
having or hereafter acquiring jurisdiction. The work shall proceed only after procurement of each
permit, license, or other authorization that may be required by any governmental agency having
jurisdiction, and Developer shall be responsible to the City for the procurement and maintenance
thereof, as may be required of Developer and all entities engaged in work on the construction.
Section 4.6 Progress Report. Until such time as the Developer has completed
construction of the Development, as evidenced by the Certificate of Completion, the Developer
must provide the City with quarterly progress reports regarding the status of the construction of
the Development.
Section 4.7 Construction Responsibilities.
(a) The Developer shall comply with the Schedule of Performance.
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(b) The Developer is solely responsible for all aspects of the Developer's
conduct in connection with the Development, including but not limited to the quality and suitability
of the Construction Plans, the supervision of construction work, and the qualifications, financial
condition, and performance of all architects, engineers, contractors, subcontractors, suppliers,
consultants, and property managers. Any review or inspection undertaken by the City with
reference to the Development is solely for the purpose of determining whether the Developer is
properly discharging its obligations to the City and should not be relied upon by the Developer or
by any third parties as a warranty or representation by the City as to the quality of the design or
construction of the Development.
Section 4.8 Mechanics Liens, Stop Notices, and Notices of Completion.
(a) If any claim of lien is filed against the Property or the Development or a
stop notice is served on any lender or other third party in connection with the Development, then
the Developer must, within twenty (20) days after such filing or service, either pay and fully
discharge or cause the Developer's contractor to pay and fully discharge, the lien or stop notice,
effect the release of such lien or stop notice by delivering to the City a surety bond from a surety
reasonably acceptable to the City in sufficient form and amount, or provide the City with other
assurance reasonably satisfactory to the City that the claim of lien or stop notice will be paid or
discharged.
(b) If the Developer fails to discharge any lien, encumbrance, charge, or claim
in the manner required in this Section or obtain a surety bond, then in addition to any other right
or remedy, the City may (but is under no obligation to) discharge such lien, encumbrance, charge,
or claim at the Developer's expense. Alternatively, the City may require the Developer to
immediately deposit with the City the amount necessary to satisfy such lien or claim and any costs,
pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is
adversely determined against the Developer.
(c) The Developer must file a valid notice of cessation or notice of completion
upon cessation of construction of the Development for a continuous period of thirty (30) days or
more and take all other reasonable steps to forestall the assertion of claims of lien against the
Property or the Development. The Developer authorizes the City, but without any obligation, to
record any notices of completion or cessation of labor, or any other notice that the City deems
necessary or desirable to protect its interest in the Development and Property.
Section 4.9 Inspections. The Developer must permit and facilitate, and require its
contractors to permit and facilitate, observation and inspection at the Development by the City and
the Authority during business hours with reasonable notice.
Section 4.10 Records.
(a) The Developer must maintain complete, accurate, and current records
pertaining to the Development for a period of seven (7) years after the creation of such records,
and permit any duly authorized representative of the City to inspect and copy records during
regular business days/hours. Records must be kept accurate and current, and shall be kept at
Developer's corporate office at 100 Pacifica, Suite 203, Irvine, California. Upon reasonable written
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notice from the City requesting to review specified Developer records, the Developer shall deliver
the records to the City's offices within fifteen (15) days following the City's request.
(b) The City will notify the Developer of any records it deems insufficient. The
Developer will have thirty (30) days after delivery of such a notice to correct any deficiency in the
records specified by the City in such notice, or if a period longer than thirty (30) days is reasonably
necessary to correct the deficiency, then the Developer must begin to correct the deficiency within
thirty (30) days and complete the correction of the deficiency as soon as reasonably possible.
Section 4.11 Certificate of Completion. Promptly after completing the Development in
accordance with those provisions of this Agreement that relate solely to the obligations of
Developer to construct the Development (including the dates for beginning and completion
thereof), the City will provide a Certificate of Completion so certifying (the "Certificate of
Completion"). The Certificate of Completion will be the conclusive determination that certain
covenants in this Agreement with respect to the obligations of the Developer to construct the
Development (excluding the Developer's compliance with Section 4.6) and the dates for the
beginning and completion thereof have been met. The Certificate of Completion shall be in such
form as will enable such certificate to be recorded in the Official Records. The Certificate of
Completion will not constitute evidence of compliance with or satisfaction of any obligation of the
Developer to: (a) any holder of a Security Financing Interest. The Certificate of Completion may
not be deemed a notice of completion under the California Civil Code.
ARTICLE 5.
AUTHORITY LOAN PROVISIONS
Section 5.1 Authority Loan. Subject to the terms and conditions set forth in this
Agreement, the Authority shall make a loan to the Developer for the Phase I Development in the
original principal amount of Six Million Dollars ($6,000,000.00) and a loan for the Phase II
Development in the original principal amount of not less than Seven Hundred Fifty-Five Thousand
Dollars ($755,000.00. The Authority Loan shall be evidenced by two promissory notes: (a) a
Promissory Note for the Phase I Development executed by Developer in favor of City in the
amount Six Million Dollars ($6,000,000.00) and secured by the Deed of Trust executed by the
Developer as trustor in favor of the City as beneficiary and recorded against the Developer’s fee
interest in the Phase I Parcel and (b) a Promissory Note for the Phase II Development executed by
Developer in favor of City in the amount not less than Seven Hundred Fifty-Five Thousand Dollars
($755,000.00) and secured by the Deed of Trust executed by the Developer as trustor in favor of
the City as beneficiary and recorded against the Developer’s fee interest in the Phase II Parcel.
Section 5.2 Use of Authority Loan. The proceeds of the Authority Loans shall be used
to fund the acquisition of the Parcels and the payment of fees and costs reasonably approved by
the City related to the development of Phase I and Phase II.
Section 5.3 Delivery of Promissory Notes; Recording of Housing Agreements; Deeds
of Trust; Notices of Restrictions. Prior to the Close of Escrow and in accordance with the Schedule
of Performance, the City shall cause escrow holder shall first record the Subdivision Map. Upon
and as a condition to the Close of Escrow for a Parcel, the escrow holder shall first record the
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applicable grant deed, and then the applicable Housing Agreement and Density Bonus Agreement
for that Phase, the applicable Notice of Restrictions and then the applicable Deed of Trust for the
applicable Agency Loan (with no intervening recordings). The Housing Agreement and Notice of
Restrictions shall remain in full force and effect for fifty-five (55) years after the issuance of the
final Certificate of Occupancy for the Development on the applicable Phase, regardless of any
repayment of the applicable Authority Loan following a Developer Event of Default or otherwise.
The Executive Director of the Authority shall have the authority to execute reasonable
subordination agreements subordinating the Authority Deed of Trust for a Phase to the deeds of
trust securing other construction and permanent financing, provided copies of the senior loan
documents shall have been provided for the City's reasonable review.
Section 5.4 Term of the Authority Loan. Unless sooner due under the terms of the
applicable Note, all principal and interest on the applicable Authority Loan shall be due upon the
earliest of:
(a) a Transfer of any portion of the applicable collateral Property or the
Developer’s interest in such Property other than a Transfer permitted or approved by the Authority
as provided in Section 10.6;
(b) the occurrence of a Developer Event of Default for which the Authority
exercises its right to cause the Authority Loan indebtedness to become immediately due and
payable, or
(c) a default under the Housing Agreement which has not been cured within the
time periods specified therein.
(d) Fifty-five (55) years from the date of the applicable final Certificate of
Occupancy.
Section 5.5 Interest; Payments. Simple interest at three percent (3%) per annum shall
accrue on the outstanding principal amount of the applicable Authority Loan except in a Developer
Event of Default, whereupon interest shall accrue from and after the date of the applicable
Promissory Note until paid at the rate of ten percent (10%) or the highest rate permitted by law.
Payments shall be structured as residual receipts payments over the course of the applicable
Authority Loan and shall first be applied to interest then to principal.
Section 5.6 Disbursement of Authority Loans.
(a) Disbursement of Authority Loan for Phase I. The Authority shall deposit
into Escrow the Phase I loan in the amount of Six Million Dollars ($6,000,000.00). The Phase I
funds shall be disbursed by escrow holder to pay the Phase I Purchase Price and to pay other Phase
I predevelopment costs outstanding as of the date of the Close of Escrow for Phase I. The
remaining balance of the Authority's Phase I loan shall be disbursed to the Phase I construction
lender to be disbursed by construction lender in accordance with the agreement between the City
and the construction lender.
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(b) Disbursement of Authority Loan for Phase II. The City shall deposit into
Escrow the Phase II loan in the amount of not less than Seven Hundred Fifty-Five Thousand
Dollars ($755,000.00). The Phase II funds shall be disbursed by escrow holder to pay the Phase
II Purchase Price and to pay other Phase II development cost outstanding as of the date of the
Close of Escrow Phase II.
Section 5.7 Repayment Schedule. The Authority Loan shall be repaid as follows:
(a) Payments. Commencing on the first June 1st following the completion of
the Phase, and on each June 1st thereafter until the Promissory Note is paid in full, the Developer
shall make repayments of the applicable Authority Loan from fifty percent (50%) of Residual
Receipts. The Authority will share the fifty percent (50%) of Residual Receipts payment with the
other public entities providing loans to the Developer for the respective Phase. The Authority's
percentage share of fifty percent (50%) of Residual Receipts shall be equal to the percentage
derived by dividing the Authority loan amount by the combined total of the Authority Loan and
the other public entity loans committed to the Developer. The Developer shall provide the
Authority, within one hundred eighty (180) days following the end of each calendar year, an
Annual Financial Statement showing the actual income and expenditures with respect to the
Development for the immediately preceding calendar year. Payments made shall be credited first
against accrued interest and then against outstanding principal.
(b) Payment in Full. All principal and interest, if any, on the applicable
Authority Loan shall, at the option of the Authority, be due and payable upon the earliest of: (1) a
Transfer other than a Transfer permitted or approved by the Authority as provided in Article 7
below; (2) the occurrence of an Event of Default for which the Authority exercises its right to
cause the applicable Authority Loan indebtedness to become immediately due and payable; or (3)
the maturity date of the applicable Promissory Note.
(c) Prepayment. The Developer shall have the right to prepay the Authority
Loan at any time.
Section 5.8 Reports and Accounting of Residual Receipts.
(a) Audited Financial Statement. In connection with the annual repayment of
the Authority Loan, the Developer shall furnish to the Authority an Annual Financial Statement.
(b) Books and Records. The Developer shall keep and maintain full, complete
and appropriate books, record and accounts relating to the Development, including all such books,
records and accounts necessary or prudent to evidence and substantiate in full detail the
Developer's calculation of Residual Receipts, at the Developer's corporate office currently at 100
Pacifica, Suite 203 in the City of Irvine. Books, records and accounts relating to the Developer's
compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept
and maintained in accordance with generally accepted accounting principles consistently applied
and shall be consistent with requirements of this Agreement which provide for the calculation of
Residual Receipts on a cash basis. All such books, records, and accounts shall be open to and
available for inspection by the Authority, its auditors or other authorized representatives at
reasonable intervals during normal business hours on reasonable prior notice to the Developer.
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Copies of all tax returns and other reports that the Developer may be required to furnish any
governmental agency shall at all reasonable times be open for inspection by the Authority at the
place that the books, records and accounts of the Developer are kept. The Developer shall preserve
records on which any statement of Residual Receipts is based for a period of not less than five (5)
years after such statement is rendered.
Section 5.9 Non-Recourse.
Following recordation of the applicable Deed of Trust, and except as provided below, the
Developer shall not have any direct or indirect personal liability for payment of the principal of,
or interest on, the applicable Authority Loan or the performance of the covenants of the Developer
under the applicable Deed of Trust. The sole recourse of the Authority with respect to the principal
of, or interest on, the applicable Promissory Note and defaults by the Developer in the performance
of its covenants under the applicable Deed of Trust shall be to the property described in such Deed
of Trust; provided, however, that nothing contained in the foregoing limitation of liability shall:
(a) limit or impair the enforcement against all such security for the applicable Promissory Note of
all the rights and remedies of the Authority thereunder; or (b) be deemed in any way to impair the
right of the Authority to assert the unpaid principal amount of the applicable Promissory Note as
demand for money within the meaning and intendment of Section 431.70 of the California Code
of Civil Procedure or any successor provision thereto.
The foregoing limitation of liability is intended to apply only to the obligation for the
repayment of the principal of, and payment of interest on the applicable Promissory Note, except
as hereafter set forth; nothing contained herein is intended to relieve the Developer of personal
liability for (1) fraud or willful misrepresentation; (2) the failure to pay taxes, assessments or other
charges (which are not contested by Developer in good faith) which may create liens on the
Property or Phase that are payable or applicable prior to any foreclosure under the applicable Deed
of Trust (to the full extent of such taxes, assessments or other charges); (3) the Developer’s
indemnification obligations under this Agreement; (4) misappropriation of any rents, security
deposits, insurance proceeds, condemnation awards or any other proceeds derived from the
collateral security and (5) payment to the Authority of any rental income or other income arising
with respect to the Property received by the Developer after the Authority has given notice to the
Developer of the occurrence of an Event of Default, subject to the rights of any lender providing
a loan secured by the Property to which Authority has subordinated the Deed of Trust.
ARTICLE 6.
ONGOING DEVELOPER OBLIGATIONS
Section 6.1 Applicability. The conditions and obligations set forth in this Article 6
apply throughout the term of the Regulatory Agreement, unless a different period of applicability
is specified for a particular condition or obligation.
Section 6.2 Use of Development. The Developer hereby agrees that, for the entire
Term, the Development will be used and continuously operated only as affordable housing in
accordance with all applicable requirements of the California Community Redevelopment Law
(the "Law"), including, but not limited to, the requirement that such housing be provided to
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households described in Section 50079.5 of the Law, at rents not exceeding the amounts set forth
in Section 50053(b)(3). In the event of any conflict between the terms of this Agreement and the
Regulatory Agreement, the Developer shall comply with the stricter requirement. In addition, the
Developer shall comply with the TCAC Regulatory Agreement (each while they are in effect) all
other applicable laws, statutes, and regulations governing the Development, including, but not
limited to affordability restrictions of all other public entities encumbering the Phase and the
applicable requirements of Code Section 42, and all TCAC regulations, for such time that the
Development is subject to such regulations.
Section 6.3 Maintenance.
(a) The Developer agrees to maintain all interior and exterior portions of the
Development, including landscaping, of the Development in first-class condition and repair and in
a sanitary condition (and, as to landscaping, in a healthy condition, subject to any restrictions on
water use) and all applicable laws, rules, ordinances, orders, and regulations of all federal, state,
municipal, and other governmental agencies and bodies having or claiming jurisdiction and all
their respective departments, bureaus, and officials.
(b) The Developer acknowledges the great emphasis the City places on quality
maintenance to protect its investment and to provide quality affordable and market-rate housing
for area residents. In addition, the Developer must keep the Development free from all graffiti,
and any accumulation of shopping carts, debris or waste material. The Developer must promptly
make all repairs and replacements necessary to keep the Development in first-class condition and
repair and promptly eliminate all graffiti and replace dead and diseased plants and landscaping
with comparable approved materials.
(c) In the event that the Developer breaches any of the covenants contained in
this Section and such default continues for a period of seven (7) days after written notice from the
City with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days
after written notice from the City with respect to landscaping and building maintenance, then the
City, in addition to whatever other remedy it may have at law or in equity, will have the right to
enter upon the Property and perform or cause to be performed all such acts and work necessary to
cure the default. Under such right of entry, the City will be permitted (but is not required) to enter
upon the Property and perform all acts and work necessary to protect, maintain, and preserve the
Development and landscaped areas on the Property, and Developer shall reimburse City for the
costs thereof and a ten percent (10%) administrative charge within ten (10) days after written
demand with evidence of the costs.
Section 6.4 Taxes and Assessments. The Developer must pay all real and personal
property taxes, assessments and charges and all franchise, income, employment, social security
benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and
in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to
the Property; provided, however, that the Developer has the right to contest in good faith, any such
taxes, assessments, or charges. In the event the Developer exercises its right to contest any tax,
assessment, or charge against it, the Developer, on final determination of the proceeding or contest,
must immediately pay or discharge any decision or judgment rendered against it, together with all
costs, charges and interest.
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Section 6.5 Mandatory Language in All Subsequent Deeds, Leases and Contracts.
(a) Basic Requirement. The Developer may not restrict the rental, sale, lease,
sublease, transfer, use, occupancy, tenure, or enjoyment of the Development on any basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code. Developer or any person
claiming under or through the Developer may 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 in the Development. The
foregoing covenant runs with the land.
(b) Provisions in Conveyance Documents. All deeds, leases or contracts made
or entered into by Developer, and its successor and assigns permitted under this Agreement, as to
any portion of the Property must contain therein the following language:
(1) In Deeds:
"(1) Grantee herein covenants by and for itself, its successors and
assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of any basis listed in
subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955
and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the property herein conveyed, nor shall the grantee or any person claiming
under or through the grantee, establish or permit any practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees or vendees in the property herein conveyed. The foregoing covenant shall
run with the land.
(2) Notwithstanding paragraph (1), with respect to familial
status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph
(1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code,
relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil
Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to
paragraph (1)."
(2) In Leases:
"(1) Lessee herein covenants by and for itself, its successors and
assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of any basis listed in
subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in
Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955
and Section 12955.2 of the Government Code in the leasing, subleasing, transferring, use,
occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee or any person
claiming under or through the lessee, establish or permit any such practice or practices of
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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.
(2) Notwithstanding paragraph (1), with respect to familial
status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph
(1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code,
relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil
Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to
paragraph (1)."
(3) In Contracts:
"(1) There shall be no discrimination against or segregation of,
any person or group of persons on account of any basis listed in subdivision (a) and (d) of Section
12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision
(m) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government
Code in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property nor
shall the transferee or any person claiming under or through the transferee establish or permit any
such practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land.
(2) Notwithstanding paragraph (1), with respect to familial
status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph
(1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code,
relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil
Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to
paragraph (1)."
Section 6.6 Management Agent.
(a) The Developer shall manage or cause the Development to be managed in a
prudent and business-like manner, consistent with good property management standards for other
comparable high quality, well-managed affordable rental housing projects in the City of Palm
Desert. The Developer shall be responsible for all repair and maintenance functions of the
Development, including ordinary maintenance and replacement of capital items. The Developer
shall ensure maintenance of units and common areas in accordance with local health, building and
housing codes. Developer may contract with an experienced property management company or
property manager, to operate and maintain the Development (“Property Manager”). The Property
Management contract shall be subject to prior written approval by the City and shall contain a
provision allowing the Developer, with the approval of the lenders and the California Tax
Allocation Committee, to terminate the contract without penalty upon no more than thirty (30)
days' notice.
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(b) The Developer will develop a management plan and deliver a copy thereof
to City as a condition to the closing of each Phase (a "Property Management Plan"). The Property
Management Plan shall include the following:
(1) The role and responsibility of the Developer and its delegation of
authority, if any, to the Property Manager;
(2) Personnel policy and staffing arrangements, including ongoing
training of staff in best practices for serving the Project tenants;
(3) Plans and procedures for publicizing and achieving early and
continued occupancy;
(4) Procedures for determining tenant eligibility, and selecting tenants,
and for certifying and annually recertifying household status, income and size;
(5) Plans for carrying out an effective maintenance and repair program;
(6) Rent collection policies and procedures;
(7) Plans for enhancing tenant-management relations;
(8) Appeal and grievance procedures;
(9) Description of how service staff and property management staff will
work together to prevent evictions and to facilitate the implementation of reasonable
accommodation policies.
(c) Upon a determination by the City that the Property Manager has failed to
operate the Development in accordance with the Management Plan, the City shall provide written
notice to the Developer specifying the Property Manager's breach of the Management Plan and
providing the Developer at least thirty (30) days to cure the specified breach. Within thirty (30)
days the Developer must either use good faith efforts to cure the breach or, if such cure is of the
nature to take longer than thirty (30) days, the Developer shall commence the cure during the thirty
(30) day period and complete the cure by the conclusion of one hundred eighty (180) days the
Developer's receipt of the City's notice, or in such other time period as the parties may mutually
agree. If the Developer has failed to cure the breach of the Management Plan by the expiration of
the relevant cure period, the City may immediately provide a written notice to the Developer
requiring that the Developer promptly terminate the existing Property Manager and contract with
an alternative qualified management agent to operate the Project, each with the approval of the
lenders and the California Tax Allocation Committee, or to make such other arrangements as the
City deems reasonably necessary to ensure performance of the functions and obligations set forth
in the applicable Property Management Plan.
Section 6.7 Insurance Requirements.
(a) Required Coverage. The Developer must maintain and keep in force, at the
Developer's sole cost and expense, the following insurance applicable to the Development:
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(1) Workers' Compensation insurance, as required by the State of
California and consistent with statutory limits, and Employers' Liability coverage, with limits not
less than One Million Dollars ($1,000,000) each accident for bodily injury or disease.
(2) Commercial General Liability insurance with limits not less than
One Million Dollars ($1,000,000) each occurrence and Five Million Dollars ($5,000,000)
aggregate combined single limit for Bodily Injury and Property Damage, including coverages for
Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed
Operations. Products and Completed Operations coverage must be obtained no later than
completion of construction of the Development. The Developer shall cause the Developer's
general contractor to maintain Commercial General Liability insurance with limits not less than
Two Million Dollars ($2,000,000) each occurrence and Four Million Dollars ($4,000,000)
aggregate combined single limit for Bodily Injury and Property Damage, including coverages for
Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed
Operations.
(3) Commercial Automobile Liability insurance with limits not less
than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury
and Property Damage, including coverages for owned, non-owned and hired vehicles, as
applicable; provided, however, that if the Developer does not own or lease vehicles, or operate any
non-owned vehicles for purposes of this Agreement, then no automobile liability insurance will be
required and both Parties to this Agreement must initial this provision signifying same.
(4) Professional liability insurance in an amount not less than One
Million Dollars ($1,000,000) each occurrence and Two Million Dollars ($2,000,000) aggregate
policy limit. Developer may meet this requirement by requiring any design professional retained
by the Developer or general contractor to maintain professional liability insurance in the minimum
amounts specified in this subsection.
(5) Builders' risk insurance during the course of construction (and upon
completion of construction, property insurance) covering the Development and covering all risks
of loss, excluding earthquake and including flood (if required), for one hundred percent (100%) of
the replacement value, with deductible, if any, acceptable to the City.
(b) Subcontractor's Insurance. Developer must require and verify that all
subcontractors and agents working on the Development maintain Workers' Compensation
insurance meeting all the requirements stated in this Section, and Developer must ensure that City
and the Authority are both additional insureds on insurance required from subcontractors as
described in subsection (c)(2) of this Section.
(c) General Requirements.
(1) Except for professional liability, the required insurance must be
provided under an occurrence form, and the Developer must maintain such coverage continuously
throughout the Term. Should any of the required insurance be provided under a form of coverage
that includes an annual aggregate limit or provides that claims investigation or legal defense costs
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be included in such annual aggregate limit, such annual aggregate limit must be three (3) times the
occurrence limits specified above.
(2) All Commercial General Liability, Commercial Automobile
Liability and Property insurance policies (including builders' risk) must be endorsed to name as
additional insureds the City, the Authority and their elected officials, officers, directors,
representatives, consultants, employees, and agents. The endorsement must include liability
arising out of work or operations performed by or on behalf of Developer including materials,
parts, or equipment furnished in connection with such work or operations and automobiles owned,
leased, hired or borrowed by or on behalf of Developer. For commercial general liability, the
policy must be endorsed with a form at least as broad as ISO form CG 20 10 11 85 or both CG 20
10 and CG 20 37 forms if later revisions used.
(3) Developer's insurance must be primary to any other insurance
(including self-insurance) available to the City or the Authority (including elected officials,
officers, directors, representatives, consultants, employees, and agents) with respect to any claim
arising out of this Agreement. Any insurance maintained by the City or Authority shall be excess
of the Developer's insurance and shall not contribute with it.
(4) No policy shall be canceled, limited, or allowed to expire without
renewal until after thirty (30) days written notice has been given to the City and Authority by first
class mail.
(5) Insurance is to be placed with insurers with a current A.M. Best's
rating of no less than A:VII, unless otherwise acceptable to the Entity. Exception may be made
for the State Compensation Insurance Fund when not specifically rated.
(d) Deductibles. Any deductibles or self-insured retentions must be declared to
and approved by City. At the option of City, either:
(1) Developer must reduce or eliminate such deductibles or self-insured
retentions as respects the City and its elected officials, officers, directors, representatives,
consultants, employees, and agents; or,
(2) Developer must provide a financial guarantee satisfactory to City
guaranteeing payment of losses and related investigations, claim administration, and defense
expenses.
(e) Subrogation Waiver. Developer hereby grants to City and the Authority a
waiver of any right to subrogation which any insurer of Developer may acquire against the City
by virtue of the payment of any loss under such insurance. Developer agrees to obtain any
endorsement that may be necessary to effect this waiver of subrogation. The Workers'
Compensation policy must be endorsed with a waiver of subrogation in favor of City for all work
performed by Developer, its employees, agents, and subcontractors. This provision applies
regardless of whether or not the City or Authority has requested or received a waiver of subrogation
endorsement from the insurer.
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(f) Certificates of Insurance. As a condition to the Close of Escrow for each
Phase, the Developer must provide certificates of insurance, in form and with insurers reasonably
acceptable to the City, evidencing compliance with the requirements of this Section, and must
provide complete copies of such insurance policies, including endorsements as required by this
Section. However, failure to obtain the required documents before the work beginning shall not
waive Developer's obligation to provide them. City reserves the right to require complete, certified
copies of all required insurance policies, including endorsements, required by these specifications,
at any time.
(g) Additional Coverage. Developer may carry, at its own expense, any
additional insurance it deems necessary or prudent. If Developer maintains higher levels than the
minimums shown above, City requires and shall be entitled to coverage for the higher limits
maintained by Developer. Any available insurance proceeds in excess of the specified minimum
levels of insurance and coverage shall be available to the City.
Section 6.8 Audits. The Developer must make available for examination at reasonable
intervals and during normal business hours to the Authority and the City all books, accounts,
reports, files, and other papers or property with respect to all matters covered by this Agreement,
and permit the Authority and the City to audit, examine, and make excerpts or transcripts from
such records, and such records shall be kept at 100 Pacifica, Suite 203 in the City of Irvine. The
Authority and the City may make audits of such records.
ARTICLE 7.
ASSIGNMENTS AND TRANSFERS
Section 7.1 Definitions. As used in this Article 7, the term "Transfer" means:
(a) Any total or partial sale, assignment or conveyance, or any trust or power,
or any transfer in any other mode or form, of or with respect to this Agreement or of the
Development or any part thereof or any interest therein or any contract or agreement to do any of
the same;
(b) Any total or partial sale, assignment or conveyance, or any trust or power,
or any transfer in any other mode or form, of or with respect to any ownership interest in Developer
or any contract or agreement to do any of the same;
(c) Any merger, consolidation, sale or lease of all or substantially all of the
assets of the Developer; or
(d) The leasing of part or all of the Development thereon; provided, however,
that leasing of the Units included within the Development to tenant occupants in accordance with
the Regulatory Agreement or the leasing of the Commercial Space in the Development in
accordance with this Agreement shall not be deemed a Transfer for purposes of this Article 7.
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Section 7.2 Purpose of Restrictions on Transfer.
(a) This Agreement is entered into solely for the purpose of the development
and operation of the Development and its subsequent use in accordance with the terms hereof. The
Developer recognizes that the qualifications and identity of Developer are of particular concern to
the City, in view of:
(1) The importance of the redevelopment of the Property to the general
welfare of the community;
(2) The land acquisition assistance and other public aids that have been
made available by law and by the government for the purpose of making such redevelopment
possible;
(3) The reliance by the City upon the unique qualifications and ability
of the Developer to serve as the catalyst for development of the Property;
(4) The fact that a change in ownership or Control of the Developer, or
of a substantial part thereof, or any other act or transaction involving or resulting in a significant
change in ownership or with respect to the identity of the parties in Control of the Developer is for
practical purposes a transfer or disposition of the Property;
(5) The fact that the Property is not to be acquired or used for
speculation, but only for development and operation by the Developer in accordance with this
Agreement and the Regulatory Agreement; and
(b) The Developer further recognizes that it is because of such qualifications
and identity that the City is entering into this Agreement with the Developer and that Transfers are
permitted only as provided in this Agreement.
Section 7.3 Prohibited Transfers. Any Transfer made in contravention of this Section
and is void and are deemed to be a Developer Event of Default under this Agreement whether or
not the Developer knew of or participated in such Transfer. Except for permitted Transfers
described in Section 7.4, no Transfer shall be permitted in the absence of specific written
agreement by the City, and, unless approved by the City in writing, no Transfer or assignment will
be deemed to relieve the Developer or any other party from any obligations under this Agreement.
Section 7.4 Permitted Transfers. Notwithstanding the provisions of Section 7.3, the
following Transfers are permitted and are hereby approved by the City without further review.
Any consent by the City under this Section 7.4 shall constitute the consent of the Authority:
(a) Notwithstanding the provisions of Section 7.3, the following Transfers shall
be permitted and are hereby approved by the City:
(1) Any Transfer creating a Security Financing Interest permitted
pursuant to the approved Financing Proposal;
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(2) Any Transfer of an entire Phase to a limited partnership in which the
Developer or an entity Controlled by the Developer is the administrative general partner of such
limited partnership (provided City shall have been given a copy of the limited partnership, and
copies of the organizational documents of the general partner).
(3) The Transfer of an entire Phase to a nonprofit managing general
partner pursuant to a right of first refusal agreement given by a limited partnership owner of the
Phase.
(4) The Transfer of an entire Phase to the administrative general partner
pursuant to an option agreement given by a limited partnership owner of the Phase.
(5) The admission of a tax credit investor limited partner to Developer,
and any subsequent transfer of investor limited partner interest thereafter.
(6) Any Transfer directly resulting from the foreclosure of a Security
Financing Interest or the granting of a deed in lieu of foreclosure of a Security Financing Interest
or as otherwise permitted under Article;
(7) The leasing of residential units within the Development in
accordance with the applicable Housing Agreement;
(8) The granting of reasonable easements or permits to facilitate the
Development of the Property.
Section 7.5 Other Transfers with City Consent.
(a) Any Transfers not permitted under Section 7.4 shall require the prior written
approval of the City Manager.
(b) No Transfer of this Agreement permitted under this Section will be effective
unless, at the time of the Transfer, the transferor and transferee enter into and records an
assignment and assumption agreement in a form reasonably approved by the City Manager.
Section 7.6 Termination of Limitations on Transfers. The limitations on Transfers set
forth in this Article 7 shall apply with respect to the Property or a Phase until issuance by the City
of a Certificate of Completion for the Phase.
ARTICLE 8.
DEFAULT AND REMEDIES
Section 8.1 General Applicability. The provisions of this Article 8 govern the Parties'
remedies for breach or failure of this Agreement. If a closing condition does not occur, then either
Party shall not be obligated to convey or accept the applicable parcel, may terminate the obligation
to convey/accept and the Deposit shall be returned to the Developer; however, the foregoing does
not relieve a party from the implied covenant of good faith and fair dealing (with the understanding
that such implied covenant does not apply to the City acting in its governmental capacity). .
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Section 8.2 Fault of City. Each of the following events, if uncured after expiration of
the applicable cure period in constitutes a "City Event of Default":
(a) The City, without good cause, fails to sell the Property to the Developer in
the manner set forth in Article 3 and the Developer is otherwise entitled by this Agreement to such
conveyance; or
(b) The City breaches any other material provision of this Agreement which is
materially adverse to Developer.
Section 8.3 Fault of Authority. Each of the following events, if uncured after expiration
of the applicable cure period, constitutes an "Authority Event of Default":
(a) The Authority, without good cause, fails to disburse the Authority Loan to
the Developer in the manner set forth in Article 5 and the Developer is otherwise entitled by this
Agreement to the disbursement; or
(b) The Authority breaches any other material provision of this Agreement
which is materially adverse to Developer.
Section 8.4 Fault of Developer. Each of the following events, if uncured after
expiration of the applicable cure period, constitutes a "Developer Event of Default":
(a) The Developer fails to exercise good faith and diligent efforts to satisfy,
within the time and in the manner set forth in Article 3, one or more of the conditions precedent to
the City's obligation to convey the Property to the Developer;
(b) The Developer refuses to accept conveyance from the City of the Property
within the time periods and under the terms set forth in Article 3 and fails to cure the default within
thirty (30) days after notice of default from City or Authority;
(c) The Developer fails to construct the Development in violation of Article 4
cure the default within thirty (30) days after notice of default from City or Authority;
(d) The Developer fails to comply with any construction deadlines in the
Schedule of Performance.
(e) Any default by the Developer under the Housing Agreement shall also be a
Developer Event of Default under this Agreement and the Authority Loan Documents, subject to
any required notice and cure period under the Housing Agreement;
(f) A Transfer occurs, either voluntarily or involuntarily, in violation of
Article 7;
(g) Any representation or warranty contained in this Agreement or in any
application, financial statement, certificate, or report submitted to the City in connection with this
Agreement proves to have been incorrect in any material and adverse respect when made;
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(h) A court having jurisdiction makes or enters any decree or order:
(1) adjudging the Developer to be bankrupt or insolvent; (2) approving as properly filed a petition
seeking reorganization of the Developer, or seeking any arrangement for the Developer, under the
bankruptcy law or any other applicable debtor's relief law or statute of the United States or any
state or other jurisdiction; (3) appointing a receiver, trustee, liquidator, or assignee of the
Developer, in bankruptcy or insolvency or for any of their properties; or (4) directing the winding
up or liquidation of the Developer, if any such decree or order described in clauses (1) to (4),
inclusive, continued unstayed or undischarged for a period of ninety (90) days unless a lesser time
period is permitted for cure under any other mortgage on the Property, in which event such lesser
time period will apply under this subsection (i) as well; or the Developer, admits in writing its
inability to pay its debts as they fall due or voluntarily submits to or files a petition seeking any
decree or order of the nature described in clauses (1) to (4), inclusive;
(i) The Developer assigns its assets for the benefit of its creditors or suffered a
sequestration or attachment of or execution on any substantial part of its property, unless the
property so assigned, sequestered, attached or executed upon have been returned or released within
ninety (90) days after such event (unless a lesser time period is permitted for cure under any other
mortgage on the Property, in which event such lesser time period will apply under this subsection
as well) or prior to sooner sale under such sequestration, attachment, or execution;
(j) The Developer voluntarily suspends its business or, the Developer is
dissolved or terminated;
(k) There occurs any default declared by any entity under any loan document
to which City or Authority is not a party/beneficiary, and which is related to any loans secured by
a deed of trust on the Development or any such deed of trust or any regulatory agreement recorded
against the Property (other than the Housing Agreement), after the expiration of applicable cure
periods in the applicable documents; or
(l) The Developer breaches any other provision of this Agreement and fails to
cure the default within thirty (30) days after notice of default from City or Authority, or the
Developer breaches any other provision of any Authority Loan Documents and fails to cure the
same within: (a) the cure period in the Authority Loan Documents, if any applicable to the default;
or (b) if no cure period applies, and the default is not included/described in the preceding
subsections, then Developer fails to cure the default within thirty (30) days after written notice
from Authority.
Section 8.5 Notice and Cure Period Regarding City/Authority Defaults.
(a) Before initiating any action for relief against City or Authority for an
alleged breach of this Agreement, Developer must deliver to City or Authority, as applicable, a
written notice of breach specifying all of the reasons for the allegation of default with reasonable
particularity. Within thirty (30) days, City or Authority (as applicable) must either: (1) use good
faith efforts to cure the breach or, if such cure is of the nature to take longer than thirty (30) days,
to follow the procedures specified in subsection (b) below; or (2) if in the determination of the City
or Authority, the event does not constitute a breach of this Agreement, the City or Authority, as
applicable, within thirty (30) days of receipt of the Notice of Default, must deliver to Developer a
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notice which sets forth with reasonable particularity the reasons that a default has not occurred.
Failure to respond within the thirty (30) day period may not be deemed an admission of the default.
(b) If the City or Authority, as applicable, believes that the Default cannot
practically be cured within the thirty (30)-day period, it shall not be in Default provided that:
(1) the cure is commenced during the thirty (30) day period after receipt of the Notice of Default;
(2) within the thirty (30) day period, the Defaulting Party provides a schedule to Developer for
cure, ; and (3) the cure is thereafter diligently prosecuted to completion, and City or Authority as
applicable uses good faith efforts to comply with the schedule.
Section 8.6 Remedies.
(a) City Remedies. With respect to an uncured Developer Event of Default, the
City shall be entitled to take any or all of the following remedies:
(1) Terminating this Agreement by giving written notice to the
Developer; provided, however, that the City's remedies under this Article 8 and the indemnification
provisions of this Agreement survive such termination. If the City elects to terminate this
Agreement, the provisions of this Agreement that are specified to survive such termination shall
remain in full force and effect.
(2) Prosecuting an action for damages (excluding specific performance,
punitive damages and indirect consequential damages); or seeking any other remedy available at
law or in equity (excluding punitive damages and indirect consequential damages).
(b) Developer Remedies. With respect to an uncured City Event of Default or
Authority Event of Default, the Developer shall be entitled to take any or all of the following
remedies:
(1) Terminating this Agreement by giving written notice to the
Developer; provided, however, that the Developer's remedies under this Article 8 and the
indemnification provisions of this Agreement survive such termination. If the Developer elects to
terminate this Agreement, the provisions of this Agreement that are specified to survive such
termination shall remain in full force and effect.
(2) Prosecuting an action for damages (excluding specific performance,
punitive damages, lost profits and indirect consequential damages); or seeking any other remedy
available at law or in equity (excluding punitive damages and indirect consequential damages).
(c) Authority Remedies. With respect to an uncured Developer Event of
Default as to a Phase, the Authority shall be entitled to exercise any or all remedies permitted at
law or in equity, and any remedies under the Promissory Note and Deed of Trust for that Phase
(including acceleration of the applicable loan).
Section 8.7 Rights of Mortgagees. Any rights of the City or Authority under this Article
8 will not defeat, limit or render invalid any Security Financing Interest permitted by this
Agreement or any rights provided for in this Agreement for the protection of holders of Security
Financing Interests.
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Section 8.8 Remedies Cumulative. No right, power, or remedy given to the City by the
terms of this Agreement is intended to be exclusive of any other right, power, or remedy; and each
and every such right, power, or remedy will be cumulative and in addition to every other right,
power, or remedy given by the terms of any such instrument, or by any statute or otherwise.
Neither the failure nor any delay to exercise any such rights and remedies will operate as a waiver
thereof, nor will any single or partial exercise of any such right or remedy preclude any other or
further exercise of such right or remedy, or any other right or remedy.
ARTICLE 9.
SECURITY FINANCING AND RIGHTS OF HOLDERS
Section 9.1 No Encumbrances Except for Development Purposes. Notwithstanding any
other provision of this Agreement, mortgages and deeds of trust, or any other reasonable method
of security are permitted to be placed upon the Developer's fee interest in the Property, but only
for the purpose of securing loans approved by the City under the approved Financing Proposal.
Mortgages, deeds of trust, or other reasonable security instruments securing loans approved by the
City under the approved Financing Proposal are each referred to as a "Security Financing Interest."
The words "mortgage" and "deed of trust" as used in this Agreement include all other appropriate
modes of financing real estate acquisition, construction, and land development.
Section 9.2 Holder Not Obligated to Construct. The holder of any Security Financing
Interest authorized by this Agreement is not obligated to construct or complete any Development
or to guarantee such construction or completion; nor will any covenant or any other provision in
conveyances from the City to the Developer evidencing the realty comprising the Property or any
part thereof be construed so to obligate such holder. However, no such holder shall devote the
Property or any portion thereof to any uses, or to construct any Development thereon, other than
the Development provided for or authorized by this Agreement and the Housing Agreement.
Section 9.3 Notice of Default and Right to Cure. Whenever the City under its rights set
forth in Article 8 of this Agreement delivers any notice or demand to the Developer with respect
to the commencement, completion, or cessation of the construction of the Development, the City
will at the same time deliver to each holder of record of any Security Financing Interest creating a
lien upon the Developer's fee interest in the Property or any portion thereof, and the Investor, a
copy of such notice or demand provided City shall have been given written notice of its address
for notice by the Developer. Each such holder (insofar as the rights of the City are concerned) has
the right, but not the obligation, at its option, within ninety (90) days after the delivery of the
notice, to cure or remedy or commence to cure or remedy any such default or breach affecting the
Property which is subject to the lien of the Security Financing Interest held by such holder and to
add the cost thereof to the security interest debt and the lien on its security interest. Nothing
contained in this Agreement is deemed to permit or authorize such holder to undertake or continue
the construction or completion of the Development (beyond the extent necessary to conserve or
protect such Development or construction already made) without first having expressly assumed
in writing the Developer's obligations to the City relating to such Development under this
Agreement under an assignment and assumption agreement prepared by the City and recordable
among the Official Records (the "Security Financing Interest Assignment"). The holder in that
event must agree to complete, in the manner provided in this Agreement (or as may be amended
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by the Security Financing Interest Assignment; provided, however, the City is under no obligation
to extend the dates for performance set forth in this Agreement), the Development to which the
lien or title of such holder relates. Any such holder properly completing such Development under
this paragraph must assume all rights and obligations of Developer under this Agreement and will
be entitled, upon completion and written request made to the City, to a Certificate of Completion
from the City.
Section 9.4 Failure of Holder to Complete Development. In any case where six (6)
months after default by the Developer in completion of construction of the Development under
this Agreement, the holder of record of any Security Financing Interest, having first exercised its
option to construct under the Security Financing Interest Assignment, has not proceeded diligently
with construction (as reasonably determined by the City), the City and Authority must be afforded
those rights against such holder it would otherwise have against Developer under this Agreement.
Section 9.5 Right of Cure. In the event of a default or breach by the Developer of a
Security Financing Interest prior to the completion of the Development, and the holder has not
exercised its option to complete the Development on the Property, the City or Authority may cure
the default, prior to the completion of any foreclosure. In such event the City or Authority as
applicable will be entitled to reimbursement from the Developer of all costs and expenses incurred
bin curing the default. The City will also be entitled to a lien upon the Property or any portion
thereof to the extent of such costs and disbursements, or in the case of the Authority, the
Developer’s obligation to reimburse for costs and disbursements shall be included in the
obligations secured by the applicable Deed of Trust. The City agrees that such lien will be
subordinate to any Security Financing Interest, and the City will execute from time to time any
and all documentation reasonably requested by Developer to effect such subordination.
Section 9.6 Right of City to Satisfy Other Liens. After the conveyance of title to the
Property or any portion thereof and after the Developer has had a reasonable time to challenge,
cure or satisfy any liens or encumbrances on the Property or any portion thereof, the City will have
the right to satisfy any such lien or encumbrances; provided, however, that nothing in this
Agreement will require the Developer to pay or make provision for the payment of any tax,
assessment, lien or charge so long as the Developer in good faith may contest the validity or
amount therein and so long as such delay in payment is not subject the Property or any portion
thereof to forfeiture or sale.
Section 9.7 Holder to be Notified. The Developer will insert each term contained in
this Article 9 into each Security Financing Interest or will procure acknowledgement of such terms
by each prospective holder of a Security Financing Interest prior to its coming into any security
right or interest in the Property or portion thereof.
Section 9.8 Estoppel Certificates. Any Party may at any time, and from time to time,
deliver written notice to another Party requesting such other party to certify in writing that, to the
knowledge of the certifying Party: (a) this Agreement is in full force and effect and a binding
obligation of the Parties; (b) this Agreement has not been amended or modified either orally or in
writing, or if so amended, identifying the amendments; and (c) the requesting Party is not in default
in the performance of its obligations under this Agreement, or if in default, the notice shall describe
the nature and amount of any such default. A Party receiving a request shall execute and return
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such certificate within fifteen (15) days following receipt of the request. The City Manager is
authorized to execute any estoppel certificate requested by the Developer on behalf of the City.
The Authority's Executive Director is authorized to execute any estoppel certificate requested by
the Developer on behalf of the Authority.
ARTICLE 10.
GENERAL PROVISIONS
Section 10.1 Notices, Demands and Communications. Formal notices, demands, and
communications between the City and the Developer will be sufficiently given if, and not be
deemed given unless, dispatched by registered or certified mail, postage prepaid, return receipt
requested, or delivered by reputable overnight delivery service, to the principal office of the City
and the Developer as follows:
City and Authority: City of Palm Desert/Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, CA 92260
Attn: Housing Division
Developer: Palm Communities
100 Pacifica, Suite 203
Irvine, CA 92618
Attn: President
Such written notices, demands and communications may be sent in the same manner to such other
addresses as the affected Party may from time to time designate by notice as provided in this
Section.
Section 10.2 Non-Liability of Officials, Employees and Agents. No City Council
members, or Authority board members, or any of the officers, directors, representatives,
consultants, employees and agents of the City or Authority may be personally liable to the
Developer, or any successor in interest, in the event of any default or breach by the City or
Authority or for any amount which may become due to the Developer or successor or on any
obligation under the terms of this Agreement. Absent fraud or willful misconduct by the
responsible party, no members, officers, directors, representatives, consultants, employees and
agents of the Developer may be personally liable to the City or Authority, or any successor in
interest, in the event of any default or breach by the Developer or for any amount which may
become due to the City or Authority or successor or on any obligation under the terms of this
Agreement.
Section 10.3 Forced Delay. In addition to specific provisions of this Agreement, any
Party hereunder shall not be deemed to be in default with respect to a construction
obligation/deadline where delays or defaults are due to war; insurrection; strikes; lock-outs; riots;
floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine
restrictions; freight embargoes; lack of transportation; governmental restrictions or priority (except
for restrictions or priorities established by the Party required to perform the action required under
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this Agreement); unusually severe weather; inability to secure necessary labor, materials or tools;
acts or the failure to act of any public or governmental agency or entity (except that acts or the
failure to act of a Party shall not excuse performance by such Party, including without limitation
the Developer's inability to obtain financing for the Development or the economic infeasibility of
the Development) ("Force Majeure"). An extension of time for Force Majeure shall only be for
the period of the enforced delay, which period shall commence to run from the time of the
notification of the delay by the Party requesting the extension to the other Party. The Party
requesting an extension of time under this Section 10.3 shall give notice promptly following
knowledge of the delay to the other Party. If, however, notice by the Party claiming such extension
is sent to the other Party more than thirty (30) days after knowledge of the commencement of the
delay, the period shall commence to run upon the earlier of (i) thirty (30) days prior to the giving
of such notice or (ii) the date that the other Party received knowledge of the events giving rise to
the delay.
Section 10.4 Inspection of Books and Records. Upon request, the Developer must permit
the City and Authority to inspect at reasonable times and on a confidential basis those books,
records and all other documents of the Developer necessary to determine Developer's compliance
with the terms of this Agreement.
Section 10.5 Title of Parts and Sections. Any titles of the articles, sections or subsections
of this Agreement are inserted for convenience of reference only and should be disregarded in
construing or interpreting any part of its provision.
Section 10.6 No Third-Party Beneficiaries. There are no third party beneficiaries to this
Agreement.
Section 10.7 Applicable Law. This Agreement must be interpreted under and under the
laws of the State of California. Venue shall be Riverside County.
Section 10.8 No Brokers. Each Party represents to the other that it has not had any
contact or dealings regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who can claim a right to
a commission or finder's fee. If any broker or finder makes a claim for a commission or finder's
fee based upon a contact, dealings, or communications, the Party through whom the broker or
finder makes this claim must indemnify, defend with counsel of the indemnified Party's choice,
and hold the indemnified Party harmless from all expense, loss, damage and claims, including the
indemnified Party's reasonable attorneys' fees, if necessary, arising out of the broker's or finder's
claim. The provisions of this Section survive expiration of the Term or other termination of this
Agreement and will remain in full force and effect.
Section 10.9 Legal Actions. In the event any legal action is commenced to interpret or
to enforce the terms of this Agreement or to collect damages as a result of any breach thereof, each
Party shall bear their own attorneys' fees and no attorneys' fees may be awarded to the Party
prevailing in the action.
Section 10.10 Severability. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the
40
1046\101\3359065.8
remainder of the provisions will continue in full force and effect unless the rights and obligations
of the Parties have been materially altered or abridged by such invalidation, voiding or
unenforceability.
Section 10.11 Binding Upon Successors. This Agreement is binding upon and inures to
the benefit of the heirs, administrators, executors, successors in interest and assigns of each of the
Parties hereto, except that there may be no Transfer of any interest by any of the Parties hereto
except under the terms of this Agreement. Any reference in this Agreement to a specifically named
Party is deemed to apply to any successor, heir, administrator, executor or assignee of such Party
who has acquired an interest in compliance with the terms of this Agreement, or under law.
Section 10.12 Reserved.
Section 10.13 Parties Not Co-Venturers. Nothing in this Agreement is intended to or does
establish the Parties as partners, co-venturers, or principal and agent with one another.
Section 10.14 Discretion Retained by City. The City's execution of this Agreement does
not constitute approval by the City and in no way limits the discretion or any governmental rights
or powers of the City in the permit and approval process in connection with construction of the
Development.
Section 10.15 Time of the Essence. In all matters under this Agreement, the Parties agree
that time is of the essence.
Section 10.16 Representation and Warranties of Developer. The Developer hereby
represents and warrants to the City and Authority as follows:
(a) Organization. The Developer is a duly organized, validly existing
corporation, is in good standing under the laws of the State of California and has the power and
authority to own its property and carry on its business as now being conducted.
(b) Authority of Developer. The Developer has full power and authority to
execute and deliver this Agreement and to perform and observe the terms and provisions of all of
the above.
(c) Authority of Persons Executing Documents. This Agreement and all other
documents or instruments executed and delivered, or to be executed and delivered, under this
Agreement have been executed and delivered by persons who are duly authorized to execute and
deliver the same for and on behalf of Developer, and all actions required under the Developer's
organizational documents and applicable governing law for the authorization, execution, delivery
and performance of this Agreement and all other documents or instruments executed and delivered,
or to be executed and delivered, under this Agreement, have been duly taken.
(d) Valid Binding Agreements. This Agreement and all other documents or
instruments which have been executed and delivered under or in connection with this Agreement
constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal,
valid and binding obligations of the Developer enforceable against it in accordance with their
respective terms.
41
1046\101\3359065.8
(e) No Breach of Law or Agreement. Neither the execution nor delivery of this
Agreement or of any other documents or instruments executed and delivered, or to be executed or
delivered, under this Agreement, nor the performance of any provision, condition, covenant or
other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation,
or any judgment, decree or order of any court, City Council, commission or agency whatsoever
binding on the Developer, or any provision of the organizational documents of the Developer, or
will conflict with or constitute a breach of or a default under any agreement to which the Developer
is a party.
Section 10.17 Entire Understanding of the Parties. This Agreement constitutes the entire
understanding and agreement of the Parties. All prior discussions, understandings and written
agreements are superseded by this Agreement.
Section 10.18 Amendments. The Parties can amend this Agreement only by means of a
writing executed by the Developer, the Authority and the City.
Section 10.19 Approvals. Whenever this Agreement permits City approval, consent, or
waiver, to be authorized by the City Manager, the City Manager's signature shall constitute the
approval, consent, or waiver of the City, without further authorization required from the City
Council unless required by law or the terms of this Agreement. Whenever this Agreement permits
Authority approval, consent, or waiver, to be authorized by the Authority's Executive Director, the
Authority's Executive Director signature shall constitute the approval, consent, or waiver of the
Authority, without further authorization required from the Authority's governing board unless
required by law or the terms of this Agreement.
Section 10.20 Counterparts; Multiple Originals. This Agreement may be executed in
counterparts, each of which is deemed to be an original.
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The City, the Authority and the Developer are signing this Agreement as of the Effective Date.
CITY:
CITY OF PALM DESERT,
a municipal corporation
By:
Name: L. Todd Hileman
Title: City Manager
DEVELOPER:
PALM COMMUNITIES, a California
corporation
By:
Name: Danavon L. Horn
Title: President
APPROVED AS TO FORM:
Richard, Watson & Gerson
By: __________________
Special Counsel
AUTHORITY:
PALM DESERT HOUSING AUTHORITY
By:
Name: L. Todd Hileman
Title: Executive Director
APPROVED AS TO FORM:
Richard, Watson & Gerson
By: _____________________________
Special Counsel
A-1- -
1046\101\3359065.8
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The land referred to is situated in the City of Palm Desert, State of California, and is described as
follows:
THOSE PORTIONS OF PARCEL 8 AND PARCEL 9 OF PARCEL MAP NO. 36792, IN THE.
CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS
SHOWN BY MAP ON FILE IN BOOK 239 OF PARCEL MAPS, PAGES 9 THROUGH 15,
INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY
DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID PARCEL 8; THENCE ALONG THE
SOUTH LINE OF SAID PARCEL 9, SOUTH 89°56'08" WEST 72.55 FEET TO A LINE THAT
IS PARALLEL WITH AND DISTANT EASTERLY 138.45 FEET, MEASURED AT RIGHT
ANGLES, FROM THE EAST RIGHT OF WAY LINE OF DINAH SHORE DRIVE, AS SHOWN
ON SAID PARCEL MAP NO. 36792; THENCE LEAVING SAID SOUTH LINE AND ALONG
SAID PARALLEL LINE, NORTH 0°00'00" EAST 31711 FEET; THENCE NORTH 90°00'00"
EAST 65.55 FEET TO A LINE THAT IS PARALLEL WITH AND DISTANT WESTERLY 7.00
FEET, MEASURED AT RIGHT ANGLES FROM THE WEST LINE OF SAID PARCEL 8;
THENCE NORTH 0°00'00" EAST 102.00 FEET ALONG LAST SAID PARALLEL LINE TO A
LINE THAT IS PARALLEL WITH AND DISTANT NORTHERLY 1,00 FEET; MEASURED
AT RIGHT ANGLES, FROM THE NORTH LINE OF SAID PARCEL 8; THENCE NORTH
90°00'00" EAST 275.69 FEET ALONG LAST SAID PARALLEL LINE TO AN
INTERSECTION WITH THE NORTHWESTERLY PROLONGATION OF THE
NORTHEASTERLY LINE OF SAID PARCEL 8; THENCE SOUTH 68°15'29" EAST 409,78
FEET ALONG SAID NORTHWESTERLY PROLONGATION AND SAID
NORTHEASTERLY LINE OF PARCEL 8 TO A TANGENT CURVE, CONCAVE
SOUTHWESTERLY HAVING A RADIUS OF 1445.00 FEET; THENCE SOUTHEASTERLY
ALONG SAID CURVE AND SAID NORTHEASTERLY LINE OF PARCEL 8 AN ARC
LENGTH OF 535.73 FEET, THROUGH A CENTRAL ANGLE OF 21°14'32" TO A NON-
TANGENT LINE, SAID NON- TANGENT LINE BEING PARALLEL WITH AND DISTANT
WESTERLY 36.00 FEET, MEASURED AT RIGHT ANGLES, FROM THE MOST EASTERLY
LINE OF SAID PARCEL 8; THENCE LEAVING SAID NORTHEASTERLY LINE OF
PARCEL 8, ALONG LAST SAID PARALLEL LINE, SOUTH 07°03'09" EAST 105.97 FEET
TO A POINT ON THE SOUTHEASTERLY LINE OF SAID PARCEL 8, BEING A NON-
TANGENT CURVE, CONCAVE SOUTHEASTERLY HAVING A RADIUS OF 73.00 FEET,
A RADIAL LINE TO SAID POINT BEARS NORTH 36°36'07" WEST; THENCE ALONG THE
SOUTHEASTERLY LINE OF SAID PARCEL 8 THE FOLLOWING FIVE (5) COURSES,.
SOUTHERLY ALONG SAID NON-TANGENT CURVE AN ARC LENGTH OF 28.61 FEET,
THROUGH A CENTRAL ANGLE OF 22°27'11" TO THE BEGINNING OF A REVERSE
CURVE, CONCAVE NORTHWESTERLY HAVING A RADIUS OF 60.00 FEET; A LINE
RADIAL TO SAID BEGINNING OF CURVE BEARS SOUTH 59°03'18" EAST; THENCE
SOUTHWESTERLY LONG LAST SAID CURVE AN ARC LENGTH OF 38.39 FEET
THROUGH A CENTRAL ANGLE OF 36°39'18" TO THE BEGINNING OF A REVERSE
CURVE, CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 336.00 FEET; A LINE
A-2-
1046\101\3359065.8
RADIAL TO LAST SAID BEGINNING OF CURVE BEARS NORTH 22°24'00" WEST;
THENCE SOUTHEASTERLY ALONG LAST SAID CURVE AN ARC LENGTH OF 120.80
FEET; THROUGH A CENTRAL ANGLE OF 20°36'00"; THENCE SOUTH 47°00'00" WEST
102.69 FEET; THENCE NORTH 89°13'34" WEST 25.84 FEET TO THE BEGINNING OF A
NON-TANGENT CURVE, CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 1075.00
FEET, A LINE RADIAL TO SAID BE-GINNING OF CURVE BEARS NORTH 44°07'38"
EAST; THENCE ALONG THE SOUTHERLY LINE OF SAID PARCEL 8 THE FOLLOWING
TWO (2) COURSES NORTHWESTERLY ALONG LAST SAID CURVE AN ARC LENGTH
OF 829.14 FEET; THROUGH A CENTRAL ANGLE OF 44°11'30"; THENCE SOUTH
89°56'08" WEST 112.85 FEET TO SAID SOUTHWEST CORNER OF PARCEL 8 AND THE
POINT OF BEGINNING.
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EXHIBIT A-1
LEGAL DESCRIPTION OF PHASE I PARCEL
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1046\101\3359065.8
EXHIBIT A-2
LEGAL DESCRIPTION OF PHASE II PARCEL
A-3–1 1046\101\3359065.8
EXHIBIT A-3
LEGAL DESCRIPTION OF PARCEL 9
B-1–1 1046\101\3359065.8
EXHIBIT B-1
PHASE II EASEMENT
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EXHIBIT B-2
PARCEL 9 EASEMENT
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EXHIBIT B-3
MAINTENANCE EASEMENT
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EXHIBIT C
FORM OF GRANT DEED
GRANT DEED
RECORDING REQUESTED BY:
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Attention: Housing Division
AFTER RECORDATION MAIL TO AND
MAIL TAX STATEMENTS TO:
Palm Desert Palm Villas Partners LP
100 Pacifica, Suite 203
Irvine, CA 92618
Attn: President
______________________________________________________________________
SPACE ABOVE THIS LINE FOR RECORDER’S USE
APN# ________________
THE UNDERSIGNED GRANTOR(S) DECLARE(S):
Documentary Transfer Tax is $___________City Transfer Tax is $0
computed on full value of property conveyed, or
computed on full value less value of liens and/or encumbrances remaining at time of sale,
Unincorporated Area [___], County of Riverside
EXEMPT FROM BUILDING HOMES AND JOBS ACTS FEE PER GOVERNMENT CODE
27388.1(a)(2)
GRANT DEED
For valuable consideration, the receipt of which is hereby acknowledged,
City of Palm Desert, a municipal corporation (herein called "Grantor") grants to Palm Desert Palm
Villas Partners LP, a California limited partnership (herein called "Grantee"), the real property located at
__________________________ in the City of Palm Desert, CA (the "Property"), as legally described in
the document attached hereto, labeled Exhibit A, and incorporated herein by this reference, together with
all of Grantor’s right, title and interest in and to all easements, privileges and rights appurtenant to the
Property, subject to (a) all non-delinquent real property taxes, (b) all non-delinquent special assessments, if
any, (c) all other liens, leases, easements, encumbrances, covenants, conditions, restrictions and other
matters of record, and (d) all matters affecting the status of title that would be revealed by an accurate
survey of the subject property. Grantor disclaims any and all express or implied warranties regarding the
Property other than the implied warranties stated in Section 1113 of the California Civil Code.
C–2
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1. The Property is conveyed subject to the Disposition Development and Loan Agreement dated as of
____________, 2022, by and between Grantor and Palm Communities, predecessor in interest to Grantee,
(the "Agreement"). The Agreement shall apply to this Grant Deed only until the termination of the
Agreement by its terms and thereafter shall have no further force or effect by reference in this Grant Deed.
2. Grantee herein covenants by and for itself, its successors and assigns that there shall be no
discrimination against or segregation of a person or of a group of persons on account of race, color, religion,
creed, national origin, ancestry, disability (actual or perceived), medical condition, age, source of income,
familial status, marital status, domestic partner status, sex, sexual preference/orientation, Acquired Immune
Deficiency Syndrome (AIDS) – acquired or perceived, or any additional basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the
Government Code, as such provisions may be amended from time to time, in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the Property herein conveyed nor shall the Grantee 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, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees, vendees, or employees in the Property herein conveyed. The foregoing
covenant shall run with the land.
All deeds, leases or other real property conveyance contracts entered into by the Grantee on or after
the date of this Grant Deed as to any portion of the Property shall contain the following language:
(a) In Deeds:
"Grantee herein covenants by and for itself, its successors and assigns that there
shall be no discrimination against or segregation of a person or of a group of persons
on account of race, color, religion, creed, national origin, ancestry, disability (actual
or perceived), medical condition, age, source of income, familial status, marital
status, domestic partner status, sex, sexual preference/orientation, Acquired
Immune Deficiency Syndrome (AIDS) – acquired or perceived, or any additional
basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as
those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph
(1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government
Code, as such provisions may be amended from time to time, in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the property herein
conveyed nor shall the grantee 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, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees, vendees, or employees in the property herein
conveyed. The foregoing covenant shall run with the land."
(b) In Leases:
"The lessee herein covenants by and for the lessee and lessee's heirs, personal
representatives and assigns and all persons claiming under or through the lessee that
his lease is made subject to the condition that there shall be no discrimination
against or segregation of any person or of a group of persons on account of race,
color, religion, creed, national origin, ancestry, disability (actual or perceived),
medical condition, age, source of income, familial status, marital status, domestic
partner status, sex, sexual preference/orientation, Acquired Immune Deficiency
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Syndrome (AIDS) – acquired or perceived, or any additional basis listed in
subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, as
such provisions may be amended from time to time, in the leasing, subleasing,
transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall
the lessee 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, vendees, or employees in the land herein leased."
(c) In Contracts:
"There shall be no discrimination against or segregation of any person or group of
persons on account of race, color, religion, creed, national origin, ancestry,
disability (actual or perceived), medical condition, age, source of income, familial
status, marital status, domestic partner status, sex, sexual preference/orientation,
Acquired Immune Deficiency Syndrome (AIDS) – acquired or perceived, or any
additional basis listed in subdivision (a) or (d) of Section 12955 of the Government
Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the
Government Code, as such provisions may be amended from time to time, in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property
nor shall the transferee or any person claiming under or through the transferee
establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees, vendees, or employees of the land."
3. The covenants contained in this Grant Deed shall be construed as covenants running with
the land.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Grantor has caused this Grant Deed to be executed by its
duly authorized representative.
Executed as of the __ day of _______________, 202_
CITY
CITY OF PALM DESERT
a municipal corporation
By: __________________________
Mayor
Dated: __________________________
ATTEST:
By: __________________________
_____________, City Clerk
Dated: __________________________
Dated: __________________________
C–5
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EXHIBIT A
LEGAL DESCRIPTION OF LAND
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LOS
ANGELES, IN THE COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AND IS
DESCRIBED AS FOLLOWS:
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A notary public or other officer completing this certificate
verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of ____________________
County of ___________________
On _______________________ before me, _ __________________, notary public personally
appeared
_____ _____________ __________________, who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct
WITNESS my hand and official seal.
D–1 1046\101\3359065.8
EXHIBIT D
FORM OF DENSITY BONUS AGREEMENTS
D-1–1 1046\101\3359065.8
Exhibit D-1
D-1–2 1046\101\3359065.8
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D-1–4 1046\101\3359065.8
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D-2–1 1046\101\3359065.8
Exhibit D-2
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EXHIBIT E
FORMS OF PROMISSORY NOTE
SECURED PROMISSORY NOTE
(Phase I)
__________, 2023 $6,000,000.00
Palm Desert, California
FOR VALUE RECEIVED, the undersigned, Palm Desert Palm Villas Partners LP, a California
limited partnership (“Maker” or “Developer”), having its principal place of business at 100
Pacifica, Suite 203, Irvine, CA 92618 promises to pay to the order of the PALM DESERT
HOUSING AUTHORITY (“Payee”), at 73-510 Fred Waring Drive, Palm Desert, CA 92260, Attn:
_____________________, or at such other place as the holder of this Note from time to time may
designate in writing, the principal sum of Six Million Dollars ($6,000,000.00) (the “Principal
Amount”), together with interest on the unpaid principal amount disbursed under this promissory
note (“Note”) from time to time outstanding at the “Applicable Interest Rate,” as defined below,
in lawful money of the United States of America. This Note is being delivered, and the loans
evidenced hereby are being made, pursuant to the terms of a Disposition, Development and Loan
Agreement between Developer and Payee (“DDLA”). All capitalized terms used herein which are
not separately defined herein shall have the meanings set forth therefor in the DDLA.
As of the date of this Note, the One Million Nine Hundred Seventy Thousand Five Hundred Thirty-
Nine Dollars ($1,970,539.00) principal has been disbursed to the City of Palm Desert as a purchase
money loan to Maker for its acquisition from the City of the property encumbered by the deed of
trust securing this Note (the “Property”). The remainder of the Principal Amount shall be
disbursed as a construction loan as described in Section 5.6 of the DDLA. “Applicable Interest
Rate” means three percent (3%) per annum, simple interest, except that amounts not paid when
due shall accrue interest from the date due until the date paid at the lesser of: (i) ten percent (10%)
per annum, simple interest, or (ii) the maximum rate permitted by applicable law.
1. Payments. Payments under this Note shall be due and payable as follows: ____
percent of Residual Receipts, as defined in the DDLA, from the Development on the Property for
each calendar year shall be paid to Payee on an annual basis on June 1st the first anniversary of
issuance of a final certificate of occupancy for such Development , and each June 1st thereafter
(with respect to the Residual Receipts for the preceding calendar year, until all outstanding
principal and accrued interest under this Note has been paid in full. Payments shall first be applied
to accrued interest, then to remaining outstanding principal. In addition, the entire amount of
outstanding principal and accrued interest and any additional amounts which become owing
hereunder shall be paid by Maker to Payee as of the earliest of: (i) an Event of Default by Maker
under the DDLA (including, without limitation, an uncured default under the Housing Agreement
for the Property, any uncured default under any other loan provided by Maker to Payee or any
affiliate of Payee, and any uncured default under any other Housing Agreement following the
expiration of any applicable cure period executed by Payee or any affiliate of Payee in connection
with the remainder of the Property described in the DDLA); (ii) as provided in Section 4 below;
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or (iii) fifty-five (55) years after the date a final certificate of occupancy is issued for the
Development on the Property (the “Maturity Date”).
2. Secured by Deed of Trust. Repayment of this Note is secured by a deed of trust
(the “Deed of Trust”) executed by Maker for the benefit of Payee encumbering the Property
described in the Deed of Trust on which a portion of the Development described in the DDLA is
to be developed/constructed.
3. Prepayment. Maker shall have the right to prepay amounts owing under this Note
at any time, without premium.
4. Due on Sale or Encumbrance. In the event of any transfer of the Property, or any
portion thereof or interest therein, not permitted by the DDLA or approved in writing by Payee,
Payee shall have the absolute right at its option, without prior demand or notice, to declare all sums
secured hereby immediately due and payable. Failure of Payee to exercise the option to declare
all sums secured hereby immediately due and payable upon a Transfer will not constitute waiver
of the right to exercise this option in the event of any subsequent Transfer.
5. Miscellaneous.
(a) Governing Law. All questions with respect to the construction of this Note
and the rights and liabilities of the parties to this Note shall be governed by the laws of the State
of California.
(b) Attorneys’ Fees.
(i) Maker shall reimburse Payee for all reasonable attorneys’ fees, costs
and expenses, incurred by Payee in connection with the enforcement of Payee’s rights under this
Note, including, without limitation, reasonable attorneys’ fees, costs and expenses for trial,
appellate proceedings, out-of-court negotiations, workouts and settlements or for enforcement of
rights under any state or federal statute, including, without limitation, reasonable attorneys’ fees,
costs and expenses incurred to protect Payee’s security and attorneys’ fees, costs and expenses
incurred in bankruptcy and insolvency proceedings such as (but not limited to) seeking relief from
stay in a bankruptcy proceeding. The term “expenses” means any expenses incurred by Payee in
connection with any of the out-of-court, or state, federal or bankruptcy proceedings referred to
above, including, without limitation, the fees and expenses of any appraisers, consultants and
expert witnesses retained or consulted by Payee in connection with any such proceeding.
(ii) Payee shall also be entitled to its attorneys’ fees, costs and expenses
incurred in any post-judgment proceedings to collect and enforce the judgment. This provision is
separate and several and shall survive the merger of this Note into any judgment on this Note.
(c) Entire Agreement. This Note, the DDLA, the Deed of Trust and the
Housing Agreement required by the DDLA, [Density Bonus Agreement?] and the other documents
described in the DDLA constitute the entire agreement and understanding between and among the
parties in respect of the subject matter of such agreements and supersede all prior agreements and
understandings with respect to such subject matter, whether oral or written.
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(d) Time of the Essence. Time is of the essence with respect to every provision
hereof.
(e) Waivers by Maker. Maker waives: presentment; demand; notice of
dishonor; notice of default or delinquency; notice of acceleration; notice of protest and
nonpayment; notice of costs, expenses or losses and interest thereon; and diligence in taking any
action to collect any sums arising under this Note or in any proceeding against any of the rights or
interests in or to properties securing payment of this Note.
(f) Non-waivers. No previous waiver and no failure or delay by Maker in
acting with respect to the terms of this Note, the DDLA the Deed of Trust or any Housing
Agreement, shall constitute a waiver of any breach, default, or failure of condition under any of
them. A waiver of any term must be made in writing and shall be limited to the express written
terms of such waiver.
(g) Non-Recourse. Repayment of this Note and all other obligations of
Borrower hereunder, under the DDLA, Housing Agreement or Deed of Trust shall be a non-
recourse obligation of Borrower, such that the general partner of Maker shall not have any personal
obligation to make any payments or perform any other obligations of Maker.
(h) Cure by Limited Partner(s). Payee hereby agrees that any cure of any
default made or tendered by Maker’s limited partner (whose name and notice address is as set forth
below in this Section 5(h)) shall be deemed to be a cure by Maker and shall be accepted or rejected
on the same basis as if made or tendered by Maker.
Investor Limited Partner Name and Notice Address:
______________________
MAKER:
Palm Desert Palm Villas Partners
a California limited partnership
By:
Print Name:
Title:
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EXHIBIT F
FORMS OF DEED OF TRUST
RECORDING REQUESTED BY,
AND WHEN RECORDED MAIL TO:
Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, CA 92260
Attn: _______________
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST AND ASSIGNMENT OF RENTS
THIS DEED OF TRUST AND ASSIGNMENT OF RENTS (this “Deed of Trust”) is dated
as of _________, 2023, and is executed by PALM DESERT PALM VILLAS PARTNERS LP, a
California limited partnership (“Trustor”), in favor of FIRST AMERICAN TITLE COMPANY,
as “Trustee,” for the benefit of the PALM DESERT HOUSING AUTHORITY (“Beneficiary”).
Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE IN TRUST,
WITH POWER OF SALE, that certain land in the City of Palm Desert, Riverside County,
California, described on Exhibit “A” attached hereto;
TOGETHER WITH the rents, issues and profits thereof and all leases and rental agreements
related thereto, SUBJECT, HOWEVER, to the right, power, and authority hereinafter given to
Trustor to collect and apply such rents, issues, and profits;
TOGETHER WITH all buildings and improvements of every kind and description now or
hereafter erected or placed thereon, and all fixtures, including but not limited to all gas and electric
fixtures, engines and machinery, radiators, heaters, furnaces, heating equipment, laundry
equipment, steam and hot water boilers, stoves, ranges, elevators and motors, bath tubs, sinks,
water closets, basins, pipes, faucets and other plumbing and heating fixtures, mantels, cabinets,
refrigerating plant and refrigerators, whether mechanical or otherwise, cooking apparatus and
appurtenances, and all shades, awnings, screens, blinds and other furnishings, it being hereby
agreed that all such fixtures and furnishings shall to the extent permitted by law be deemed to be
permanently affixed to and a part of the realty;
TOGETHER WITH all building materials and equipment now or hereafter delivered to the
premises and intended to be installed therein;
TOGETHER WITH all articles of personal property owned by the Trustor now or hereafter
attached to or used in and about the building or buildings now erected or hereafter to be erected on
the lands described which are necessary to the complete and comfortable use and occupancy of
such building or buildings for the purposes for which they were or are to be erected, including all
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other goods and chattels and personal property as are ever used or furnished in operating a building,
or the activities conducted therein, similar to the one herein described and referred to, and all
renewals or replacements thereof or articles in substitution therefor, whether or not the same are,
or shall be attached to the building or buildings in any manner.
All of the foregoing, together with the real property, is herein referred to as the “Property.”
For the purpose of securing (a) payment of the indebtedness evidenced by that certain promissory
note (the “Note”) of substantially even date herewith, in the stated principal sum of Six Million
Dollars ($6,000,000.00), executed by Trustor, as maker, in favor of Beneficiary, as payee, and all
amendments thereof; and (b) sums owing by Trustor to Beneficiary under this Deed of Trust.
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(1) That it shall faithfully perform each and every covenant contained in the Note, the
Disposition, Development and Loan Agreement (“Loan Agreement”) between Trustor and
Beneficiary dated substantially concurrently herewith and the Housing Agreement and
other documents described therein. Upon an Event Default under (and as defined in) the
Loan Agreement, Beneficiary may accelerate the loan evidenced by the Note, and if not
paid, may exercise any and all remedies permitted by law, including foreclosure of this
Deed of Trust.
(2) To appear in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses,
including cost of evidence of title and attorneys’ fees in a reasonable sum, in any such
action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought
by Beneficiary to foreclose this Deed of Trust.
(3) To pay at least ten (10) calendar days before delinquency all property taxes and
assessments and any other taxes affecting the Property, including assessments on
appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on
the Property or any part thereof, which appear to be prior or superior hereto (provided,
however, that Trustor may dispute in good faith any such tax or assessment after posting
bond on same).
(4) That should Trustor fail to make any payment or to do any act as herein provided,
then Beneficiary, without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligation hereof may: make or do the
same in such manner and to such extent as either may deem necessary to protect the
security hereof, Beneficiary or Trustee being authorized to enter upon the Property for
such purposes with written notice to Trustor; appear in and defend any action or
proceeding purporting to affect the security hereof or the rights or powers of Beneficiary
or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which
in the judgment of either appears to be prior or superior hereto; and, in exercising any
such powers, pay necessary expenses, employ counsel and pay its reasonable fees.
(5) To pay immediately and without demand all sums so expended by Beneficiary
hereunder, or under the Maintenance Agreement, in accordance with the terms thereof.
(6) The Trustor further covenants that it will not voluntarily create, suffer, or permit to
be created against the Property any lien or liens except for deeds of trust securing
financing used to pay for construction of the Project, as defined in the Loan Agreement (or
securing refinancing of such construction loans) and further that it will keep and maintain
the Property free from the claims of all persons supplying labor or materials which will
enter into the construction of any and all buildings now being erected or to be erected on
the Property, or will cause the release of or will provide a bond against any such liens
within ten (10) days of the attachment of the lien or liens.
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(7) That any award of damages in connection with any condemnation for public use of
or injury to the Property or any part thereof is hereby assigned and shall be paid to
Beneficiary who may apply or release such moneys it receives in the same manner and with
the same effect as above provided for disposition of proceeds of fire or other insurance.
(8) That by accepting payment of any sum secured hereby after its due date,
Beneficiary does not waive its right either to require prompt payment when due of all other
sums so secured or to declare default for failure so to pay.
(9) That at any time or from time to time, without liability therefor and without notice,
upon written request of Beneficiary, and without affecting the personal liability of any
person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of
the Property; consent to the making of any map or plat thereof; join in granting any
easement thereon; or join in any extension agreement or any agreement subordinating the
lien or charge hereof.
(10) That upon written request of Beneficiary stating that all sums secured hereby have
been paid or forgiven by Beneficiary, and upon surrender of the Note to Trustee for
cancellation and retention and upon payment of its fees, Trustee shall reconvey, without
warranty, the Property then held hereunder. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such
reconveyance may be described as “the person or persons legally entitled thereto.”
(11) That Trustor hereby absolutely and unconditionally assigns and transfers to
Beneficiary all the rents, income and profits of the Property encumbered hereby, and
hereby give to and confer upon Beneficiary the right, power and authority to collect such
rent, income, and profits, and Trustor irrevocably appoints Beneficiary Trustor’s true and
lawful attorney at the option of Beneficiary, at any time, to give receipts, releases and
satisfactions and to sue, either in the name of Trustor or in the name of Beneficiary, for all
income, and apply the same to the indebtedness secured hereby; provided, however, so long
as no default by Trustor in the payment of any indebtedness secured hereby shall exist and
be continuing beyond any applicable cure period expressly provided therein, then, Trustor
shall have the right to collect all rent, income and profits from the Property and to retain,
use and enjoy the same. Upon any such default, Beneficiary may at any time without
notice, either in person, by agent, or by a receiver to be appointed by a court, and without
regard to the adequacy of any security for the indebtedness hereby secured, enter upon and
take possession of the Property or any part thereof, in its own name sue for or otherwise
collect such rents, issues and profits, including those past due and unpaid, and apply the
same, less costs and expenses of operation and collection, including reasonable attorney’s
fees, upon any indebtedness secured hereby, and in such order as Beneficiary may
determine. The entering upon and taking possession of the Property, the collection of such
rents, issues and profits and the application thereof as aforesaid, shall not cure or waive
any default or notice of default hereunder or invalidate any act done pursuant to such
notice.
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(12) That upon a Default by Trustor under the Loan Agreement (after all notice and
cure periods have elapsed), Beneficiary may declare all sums secured hereby immediately
due and payable by delivery to Trustee of written declaration of default and demand for
sale and of written notice of default and election to cause to be sold the Property, which
notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee
this Deed of Trust, the Note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of
the notice of default, and notice of sale having been given as then required by law, Trustee,
without demand on Trustor, shall sell the Property at the time and place fixed by it in the
notice of sale, either as a whole or in separate parcels, and in such order as it may
determine, at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. Trustee may postpone sale of all or any portion of the
Property by public announcement at such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement at the time fixed by the
preceding postponement. Trustee shall deliver to such purchaser its deed conveying the
Property so sold, but without any covenant or warranty, express or implied. The recitals in
such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at
the sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence
of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums
expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by
law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to
the person or persons legally entitled thereto.
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(13) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may
from time to time, by instrument in writing, substitute a successor or successors to any
Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary
and duly acknowledged and recorded in the office of the recorder of the county or counties
where the Property is situated, shall be conclusive proof of proper substitution of such
successor Trustee or Trustees, who shall, without conveyance from the Trustee
predecessor, succeed to all its title estate, rights, powers and duties. The instrument must
contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and
page where this Deed of Trust is recorded and the name and address of the new Trustee.
(14) That this Deed of Trust applies to, inures to the benefit of, and binds all parties
hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns.
The term Beneficiary shall mean the owner and holder, including pledgees, of the Note,
whether or not named as Beneficiary herein. In this Deed of Trust, whenever the context
so requires, the masculine gender includes the feminine and/or neuter, and the singular
number includes the plural.
(15) If Trustor shall sell, convey, hypothecate, transfer, encumber or alienate the
Property, or any part thereof, or any interest therein, or any interest in Trustor is
transferred, or Trustor shall be divested of title or any interest in the Property in any
manner or way, whether voluntarily or involuntarily, without the prior written consent of
the Beneficiary being first had and obtained (if and to the extent such consent is required
in the Loan Agreement or if the failure to get such consent would be an Event of Default
under the Loan Agreement), or if an Event of Default by Trustor shall occur under the
Loan Agreement, then Beneficiary shall have the right, at its option, to declare any
indebtedness or obligations secured hereby, irrespective of the maturity date specified in
any note evidencing the same, immediately due and payable.
(16) That Trustor shall promptly pay when due the payments of interest, principal, and
all other charges accruing under any superior or prior trust deed, mortgage, or other
instrument encumbering the Property. Beneficiary shall have the right, but not the
obligation, to cure any defaults on any superior or prior deed of trust or promissory note
secured thereby and upon curing such default Trustor shall immediately reimburse
Beneficiary for all costs and expenses incurred thereby, together with interest thereon at
the maximum legal rate permitted to be charged by non-exempt lenders under the State of
California, and Trustor’s failure to pay such amount on demand shall be a breach hereof.
Trustor’s breach or default of any covenant or condition of any superior or prior trust
deed, mortgage or other instrument encumbering the Property shall be a default under this
Deed of Trust, whereupon Beneficiary shall have the right to declare all sums under the
Note secured hereby immediately due and payable as provided in the Note.
(17) The undersigned Trustor requests that a copy of any Notice of Default and of any
Notice of Sale hereunder (and any other notices hereunder) be mailed to it at its address for
notices in the Loan Agreement.
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(18) Trustor shall not commit waste with respect to the Property.
(19) Any notices, requests or approvals given under this Deed of Trust from one party to
another must be in writing and may be personally delivered; or deposited with the United
States Postal Service, postage prepaid, for delivery by registered or certified mail, return
receipt requested; or sent by next business day delivery service such as FedEx, to the
following address:
If to Borrower: Palm Desert Palm Villas Partners LP,
a California limited partnership
100 Pacifica, Suite 203
Irvine, CA 92618
Attn:
If to Beneficiary: Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, CA 92260
Either party may change its address for notice by giving written notice of its change of address to
the other party. Notices are considered delivered on the date received if given next business day
delivery service and three (3) business days after mailing if sent by United States Postal Service
registered or certified mail. If a notice is sent by registered or certified mail and receipt is rejected
it shall be considered delivered on the date delivery was attempted by the United States Postal
Service.
(20) Beneficiary acknowledges that Trustor and the California Tax Credit Allocation
Committee have or intend to enter into, or concurrently with the execution and delivery of
the Loan Documents are entering into, a Regulatory Agreement (the “TCAC Regulatory
Agreement”), which constitutes the extended low-income housing commitment described in
Section 42(h)(6)(B) of the Internal Revenue Code, as amended (the “Code”). Beneficiary
acknowledges and agrees that, in the event of a foreclosure of its interest under the Deed of
Trust or delivery by the Trustor of a deed in lieu thereof (collectively, a “Foreclosure”), the
following rule contained in Section 42(h)(6)(E)(ii) of the Code shall apply: For a period of
three (3) years from the date of Foreclosure, with respect to any unit that had been
regulated by the TCAC Regulatory Agreement, (i) none of the eligible tenants occupying
those units at the time of Foreclosure may be evicted or their tenancy terminated (other
than for good cause, including but not limited to, the tenants’ ineligibility pursuant to
Section 42 of the Code), (ii) nor may any rent be increased except as otherwise permitted
under Section 42 of the Code.
TRUSTOR:
Palm Desert Palm Villas Partners LP
a California limited partnership
F-8-
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By:
Name:
Title:
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State of California )
County of ______ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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EXHIBIT "A"
DESCRIPTION OF LAND
Real property in the City of Palm Desert, County of Riverside, State of California, described as
follows:
[PHASE I LEGAL DESCRIPTION TO BE PROVIDED.]
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EXHIBIT G-1
FORM OF PHASE I NOTICE OF AFFORDABILITY RESTRICTIONS
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EXHIBIT G-2
FORMS OF PHASE II NOTICE OF AFFORDABILITY RESTRICTIONS
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EXHIBIT H-1
FORM OF PHASE I HOUSING AGREEMENT
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EXHIBIT H-2
FORM OF PHASE II HOUSING AGREEMENT
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EXHIBIT I
SCOPE OF DEVELOPMENT
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EXHIBIT J
SCHEDULE OF PERFORMANCE
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EXHIBIT K-1
FINANCING PLAN – PHASE I
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EXHIBIT K-2
FINANCING PLAN – PHASE II
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