HomeMy WebLinkAboutHA34970 - 1.83 Acres - APN 622-020-096PALM DESERT HOUSING AUTHORITY
STAFF REPORT
REQUEST: APPROVAL OF A GROUND LEASE AND REGULATORY
AGREEMENT WITH ALLIED AFFORDABLE HOUSING, LLC FOR
THE PROPERTY LOCATED BEHIND THE DESERT ARC FACILITY
OF APPROXIMATELY 1.83 ACRES KNOWN AS APN 622-020-096
SUBMITTED BY: Janet M. Moore, Director of Housing
DATE: January 14, 2016
CONTENTS: Draft Ground Lease
Draft Regulatory Agreement
Notice of Public Hearing dated December 21, 2015
Proposed Arc Village Project Description
Letter of Commitment from Desert Arc
Map of the Site
Recommendation
That the Authority Board,
1) Conduct a public hearing and accept testimony of the proposed project for
the vacant property known as APN 622-020-096 to Allied Affordable
Housing, LLC for the purpose of providing affordable housing for low income
households that may include persons with special needs; and
2) Following public testimony, close the public hearing; and
By Minute Motion,
3) Approve a Ground Lease and Regulatory Agreement with Allied Affordable
Housing, LLC, substantially as to form, for the property located behind
Desert ARC, of approximately 1.83 acres, known as APN 622-020-096 for
the purpose of obtaining funding for the development of a 36 unit affordable
community that will include accessibility for residents with special needs; and
4) Authorize legal counsel to finalize the Ground Lease and Regulatory
Agreement; and
5) Authorize the Chairman and/or the Executive Director to execute any
documents consistent with the actions taken herewith.
Executive Summary
Allied Affordable Housing, LLC ("Allied") is interested in developing a 36 unit affordable
housing project for adults with special needs, including developmental disabilities, in Palm
Desert. Due to the proximity of this property to the Desert Arc facility, Allied desires to
lease the property behind Desert Arc for this purpose. The property is currently owned by
Staff Report
Approval of Ground Lease-APN 622-020-096
January 14, 2016
Page 2
the Palm Desert Housing Authority ("Authority") and Allied is requesting that the Authority
enter into a long-term lease (of at least 55 years plus an option to extend for an additional
20 years) in order to leverage their applications for project funding.
Discussion
In 2011, the former Palm Desert Redevelopment Agency ("Agency") acquired the subject
property for affordable housing. The idea was to expand Las Serenas, a 150 unit senior
affordable community located immediately to the East. Las Serenas was owned at that
time by the Agency and operated by the Authority. With the elimination of redevelopment,
both properties were approved to be transferred to the Authority for the purpose of
continuing the operations of Las Serenas as affordable housing and adding additional
affordable units on the vacant parcel. Funding for an expansion was eliminated when the
former Redevelopment Agency was dissolved and monies derived from housing activities
is very limited for senior households based on our current projects and portfolio ratios.
Access to the site continues to be an issue. The allowed access is through Desert ARC,
however, Desert ARC has continually expressed their concerns over the safety of allowing
routine traffic through their facility parking lots and driveways. The proposed development
will have limited traffic and parking needs as many of the intended residents do not drive.
Due to the type of community this will be, Desert ARC has embraced the idea and has
indicated to Authority staff their willingness to be partners with Allied.
Allied is proposing a 36 unit affordable rental project for adults with special needs including
developmental disabilities. They will work in cooperation with Desert ARC's daily activities
while adding the option of providing housing to some of their clients. Allied intends to apply
for tax credits and may potentially issue bonds to construct the units. Depending on the
type of funding, Allied is proposing to provide units to tenants below sixty (60%) percent of
the area median income. In order to begin the process, they must show that they have site
control. Allied has provided a draft lease and regulatory agreement for this purpose. Staff
and legal counsel are reviewing the documents and will finalize once the specific
requirements are determined. Allied has requested a 75 year lease so that they could
recapitalize their debt and reduce long-term costs after 10-15 years. Staff suggests that
we follow the law requiring 55 years affordability and provide Allied an option of a 20 year
extension once the property has been operational for ten (10) years.
A Notice of a public hearing on the proposed vacant property was published once a week
for two successive weeks in the Desert Sun.
Staff believes that based on the proximity to Desert Arc and its clients, this is the best use
for the site. Access to the site will be coordinated through Desert Arc with a secondary (fire
access) through the shared wall with Las Serenas. Staff therefore recommends that the
Housing Authority Board, hold a public hearing on the proposed project for the vacant
property and approve the draft Ground Lease and Regulatory Agreement, substantially as
to form and authorize legal counsel to finalize and the Chairman and/or Executive Director
to execute any documents needed to allow Allied to begin applying for funding to facilitate
this project.
G \IIOUSING`PATTY I-EOWNIM\STAFF REPORTUIOUSING AUTHORITY\DESERT ARC 1-14-16\SR DESERT ARC PROPERTY I-14-16 DOC
Staff Report
Approval of Ground Lease-APN 622-020-096
January 14, 2016
Page 3
Fiscal Analysis
The fiscal impact of this project should be minimal. The Authority will enter into a Tong -term
lease with Allied for $1 per year for seventy-five (75) years. The cost per unit to the
Authority if you use the original cost of the land is $28,000 per unit or about 11 % of what a
unit would cost the Authority to build. Allied will construct and operate the facility without
additional Authority funding. The Authority will be able to count the units toward affordable
housing production in the extremely low, very low and low income categories.
Submitted by:
M. Moore, Director of Housing
royal:
hn M. Wohlmuth, Executive Director
Finance Department:
�aul S. Gibson, Director of Finance
[4)16\1/C.,(.7-1, ,BY HOUSG AUTH 5-C
VERIFIED BY:
Original on file with City Clerk's Office
toe l9,r,,ct e
* Approved the staff recommendation, including
55-year term, recognizing that an extension
provision may or may not be included in the
final document.
G \HOUSING\PATTY LEONUMM\STAFF REPORT\HOUSING AUTHORITY\DESERT ARC 1-I4-16\SR DESERT ARC PROPERTY 1-14-16 DOC
GROUND LEASE
by and between
THE PALM DESERT HOUSING AUTHORITY,
Landlord,
and
ALLIED AFFORDABLE HOUSING, LLC,
Lessee.
1302\04\ 1253427.1
TABLE OF CONTENTS
ARTICLE 1 FUNDAMENTAL INFORMATION 1
1.1 LANDLORD 1
1.2 LESSEE 1
1.3 EFFECTIVE DATE 2
1.4 LEASE COMMENCEMENT DATE 2
1.5 THE PREMISES 2
1.6 TERM 2
1.7 LANDLORD'S ADDRESS FOR NOTICES 2
1.8 LESSEE'S ADDRESS FOR NOTICES 2
1.9 LESSEE'S RENT 3
ARTICLE 2 TERMS AND PROVISIONS 3
2.1 AGREEMENT TO LEASE 3
2.2 ACCEPTANCE OF PROPERTY 3
2.3 AS -IS CONVEYANCE 3
2.4 TERM 4
2.5 RENT 5
2.6 USE 6
2.7 COMPLIANCE WITH LAW 7
2.8 SPRINGING OBLIGATIONS UPON LEASE COMMENCEMENT 7
2.9 CONSTRUCTION 7
2.10 TAXES 8
2.11 CHANGE IN CONTROL OF LESSEE, ASSIGNMENT AND SUBLETTING 9
2.12 HOLD HARMLESS 10
2.13 OWNERSHIP OF PROPERTY DURING TERM AND UPON EXPIRATION
OR TERMINATION OF LEASE 11
Table of Contents (continued)
Page
2.14 SUBROGATION 12
2.15 INDEMNIFICATION AND INSURANCE 12
2.16 UTILITIES 14
2.17 HOLDING OVER 15
2.18 [RESERVED' 15
2.19 DAMAGE, RECONSTRUCTION 15
2.20 DEFAULT 16
2.21 EMINENT DOMAIN 17
2.22 HAZARDOUS MATERIALS 19
2.23 RIGHTS OF LEASEHOLD MORTGAGEES 22
2.24 RESTRICTION ON ENCUMBRANCE BY LANDLORD 27
2.25 QUIET ENJOYMENT 27
2.26 GENERAL PROVISIONS 27
EXHIBIT A -
EXHIBIT B -
EXHIBIT C -
EXHIBIT D -
EXHIBIT E -
ATTACHMENTS
LEGAL DESCRIPTION
MEMORANDUM OF LEASE
CONSTRUCTION SCHEDULE
DEVELOPMENT BUDGET
REGULATORY AGREEMENT
GROUND LEASE
This GROUND LEASE (this "Lease") is entered into effective as of January , 2016
(the "Effective Date"), by and between the PALM DESERT HOUSING AUTHORITY, a public
body, corporate and politic, as landlord ("Landlord" or "Authority") and ALLIED
AFFORDABLE HOUSING, LLC, a California limited liability company, and its permitted
successors and assigns, as lessee (collectively, the "Lessee"), who agree as follows:
RECITALS
A. WHEREAS, the Landlord is the owner of that certain real property located in City
of Palm Desert, California ("City") and described in the legal description attached hereto as
Exhibit A and incorporated herein by this reference (the "Property");
B. WHEREAS, the Landlord desires to lease the Property to Lessee and have Lessee
develop, own, construct, manage and operate an affordable housing development consisting of
thirty-six (36) residential units and related amenities (collectively, the "Improvements") for the
purpose of providing quality affordable housing for low-income households with persons with
special needs pursuant to the terms of that certain Regulatory Agreement and Declaration of
Restrictive Covenants by and between the City and Lessee, the form of which is attached hereto
as Exhibit E (the "Regulatory Agreement") to be recorded on the Property on or prior to the
Lease Commencement Date;
NOW, THEREFORE, in consideration of the foregoing, payment by the Lessee of $10.00
to the Landlord on the Effective Date, and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by both parties, the Landlord and Lessee agree as
follows:
ARTICLE 1
FUNDAMENTAL INFORMATION
1.1 LANDLORD: All references to "Landlord" and "Authority" shall mean the Palm
Desert Housing Authority, a public body, corporate and politic, and any political subdivision
thereof.
1.2 LESSEE: All references in this Lease to the "Lessee" shall mean and refer to
Allied Affordable Housing, LLC, a California limited liability company, its successors or
assigns, and upon assignment to the Tax Credit Partnership as contemplated in Section 2.1 1.1
hereof, "Lessee" shall mean the Tax Credit Partnership.
1.3 LEASE EFFECTIVE DATE: The Effective Date of this Lease shall be the date
set forth above. This Lease shall be in full force and effect and a valid, enforceable and binding
obligation of the parties hereto, and the Authority acknowledges and agrees that Lessee shall be
permitted to submit this Lease to any and all public agencies, including, but not limited to the
California Tax Credit Allocation Committee, California Debt Limit Allocation Committee,
California Department of Housing and Community Development, or the federal Department of
Housing and Urban Development, and any other debt and equity financing partners in connection
with the construction and permanent financing of the Improvements; provided, however, Lessee
shall have no right to possess the Property and commence construction of the Improvements
thereon unless and until the occurrence of the Lease Commencement Date (as defined in Section
1.4 below).
1.4 LEASE COMMENCEMENT DATE: Notwithstanding the Effective Date set
forth above, the commencement date for possession by Lessee of the Property shall commence
upon the later of the following: (i) a reservation of federal low-income housing tax credits from
the California Tax Credit Allocation Committee ("CTCAC") for the Property; (ii) the
assignment by Allied Affordable Housing, LLC, as original "Lessee" hereunder to the Tax
Credit Partnership (as defined in Section 2.11.1 hereof) and the admission of the Tax Credit
Investor (as defined in Section 2.11 hereof) as a partner (or member) in the Partnership pursuant
to terms and conditions of an agreement of limited partnership or operating agreement of the
Partnership (the "Partnership Agreement"), an executed copy of which shall be delivered to the
Authority; (iii) receipt of any and all commitments for the construction and permanent financing
of the Improvements as set forth in the Precise Plan Application approved by the Lessor; and (iv)
recordation of the Regulatory Agreement attached hereto as Exhibit E in the official land records
of the County of Riverside, California (the later of is referred to herein as the "Lease
Commencement Date"). Lessee shall deliver to the Authority written notice of the Lease
Commencement Date, together with the agreements, documents and instruments evidencing
compliance with the conditions precedent to the Lease Commencement Date.
1.5 THE LEASED PREMISES: The Property leased hereunder (also referred to
herein as the "Leased Premises") is described in Recital A, above. The Property is identified
pursuant to the legal description attached hereto as Exhibit A.
1.6 TERM: The Term of this Lease is set forth in Section 2.4, below.
1.7 LANDLORD'S ADDRESS FOR NOTICES:
The Palm Desert Housing Authority
73-510 Fred Waring Drive
Palm Desert, CA 92260-2578
Attention: Janet Moore, Director of Housing
With a copy to:
Richards, Watson & Gershon
355 South Grand Avenue, 40th Floor
Los Angeles, California 90071
William L. Strausz
1.8 LESSEE'S ADDRESS FOR NOTICES:
Allied Affordable Housing, LLC
409 Santa Monica Boulevard, Suite E
Santa Monica, CA 90401
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Attention: Chuck O'Neal
Facsimile No.: (310) 394-3030
With a copy to:
Hobson Bernardino + Davis LLP
Ernst & Young Plaza
725 S. Figueroa St., Suite 3230
Los Angeles, CA 90017
Attention: Jason A. Hobson, Esq.
Fax No.: (213) 235-9191
Email: jhobson@hbdlegal.com
And a copy to the Tax Credit Investor (and if more than one entity, to each entity,
and copy to their respective counsel identified therein) to the address set forth in
the Partnership Agreement.
1.9 LESSEE'S RENT: Lessee shall pay as rent for the Property an annual amount as
provided in Section 2.4 below.
ARTICLE 2
TERMS AND PROVISIONS
2.1 AGREEMENT TO LEASE:
2.1.1 Landlord hereby leases the Property to Lessee, and Lessee hereby leases
the Property from Landlord, subject to the provisions and conditions set forth herein. Possession
of the Property shall commence on the Lease Commencement Date, unless earlier terminated.
2.2 ACCEPTANCE OF PROPERTY:
2.2.1 Landlord makes no representations, expressed or implied, with respect to
the legality, fitness, or desirability of the Property for Lessee's intended use. If Lessee desires to
do so prior to the Lease Commencement Date, Lessee shall have the right to enter onto the
Property for purposes of conducting its own investigation, to its satisfaction, with respect to any
matters affecting Lessee's ability to use the Property for Lessee's intended use or the financing
thereof.
2.3 AS -IS CONVEYANCE:
(a) Condition of Leased Premises. This Lease is made "AS IS," with
no warranties or representations by the Landlord concerning the condition of the Leased
Premises or Improvements, including the presence or absence of any Hazardous Materials.
Lessee hereby agrees and acknowledges that except in the event of any fraud, misrepresentation,
or withholding of information by Landlord: (i) neither Landlord, nor anyone acting for or on
3
behalf of Landlord, has made any representation, statement, warranty or promise to Lessee
concerning the development potential or condition of the Leased Premises or Improvements; (ii)
in entering into this Lease, Lessee has not relied on any representation, statement or warranty of
Landlord, or anyone acting for or on behalf of Landlord, other than as may expressly be
contained in writing in this Lease; (iii) all matters concerning the Leased Premises and
Improvements have been or shall be independently verified by Lessee and that Lessee shall
purchase or lease the Leased Premises and Improvements on Lessee's own prior examination
thereof; and (iv) THAT LESSEE IS LEASING THE LEASED PREMISES IN AN "AS IS"
PHYSICAL CONDITION AND IN AN "AS IS" STATE OF REPAIR.
(b) General Release. Subject to Section 2.3(a) above, Lessee and its
owners, employees, agents, assigns and successors agree that upon the Lease Commencement
Date, Lessee shall be deemed conclusively to have released and discharged Landlord and its
agents, employees, trustees, assigns and successors, from any and all damages, losses, demands,
claims, debts, liabilities, obligations, causes of action and rights, whether known or unknown, by
Lessee regarding the Leased Premises and Improvements, including, but not limited to, the
environmental condition of the Leased Premises and Improvements.
(c) Waiver of Civil Code § 1542. Lessee agrees that, with respect to
the General Release contained in Section 2.3(b) above, the General Release extends to all matters
regarding the Leased Premises and Improvements, whether or not claimed or suspected, to and
including the date of execution hereof, and constitutes a waiver of each and all the provisions of
the California Civil Code § 1542, which reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Lessee herein acknowledges that the effect and import of the provisions of Civil Code
§ 1542 have been explained to it by its own counsel. Lessee understands and acknowledges the
significance and the consequence of such specific waiver of unknown claims and hereby
assumes full responsibility for any injuries, damages, losses or liabilities that it may hereinafter
incur from the waiver of these unknown claims.
2.4 TERM:
2.4.1 Term. The Lease term (the "Term") shall commence on the Lease
Commencement Date and shall continue years, unless earlier terminated in accordance
with this Lease. Lessee shall have the right to extend the Term for an additional years upon
the 10`h anniversary of the issuance of the last Certificate of Occupancy for the Improvements.
2.4.2 Authority's Right to Terminate. If, on the second (2nd) anniversary of
the Effective Date, Lessee has failed to obtain financing commitments for the construction and
4
permanent financing for the Improvements in substantial accordance with the Development
Budget to be attached hereto upon the Lease Commencement Date as Exhibit D, the terms of
which are hereby incorporated by this reference, Landlord may terminate this Lease by providing
ninety (90) days written notice to Lessee. The Development Budget may be amended,
supplemented or restated in its entirety upon the mutual agreement of the parties.
2.4.3 Possession and Right to Construct Improvements. The Lessee shall,
pursuant to the terms of this Lease, have exclusive possession of and right to construct the
Improvements, subject to any and all required planning, zoning and building approvals,
beginning on the Lease Commencement Date and until the termination of the Term.
2.4.4 Termination Upon a Default. Subject to the notice and cure provisions
of Sections 2.20 and 2.23 below, Landlord may terminate this Lease by giving written notice of
termination to Lessee in the event of any default under this Lease that is not cured within the
applicable cure period. In such event, Landlord shall retain any and all Rent paid by Lessee to
Landlord as a measure of damages; provided, however, nothing herein shall limit any other
remedies, including damages, available to Landlord in accordance with the terms and provisions
of this Lease.
2.4.5 Surrender Upon Termination. Upon the termination or expiration of this
Lease, Lessee shall immediately surrender possession of the Property and Improvements to
Landlord and shall not allow delay in said transfer of possession for any reason. Subject to the
damage and reconstruction provisions of Section 2.19, and as further provided in Section 2.13
below, Lessee shall upon the expiration or sooner termination of this Lease surrender the
Property and the Improvements to Landlord in good and clean condition, ordinary wear and tear
excepted, including any buildings, structures, improvements or additions located on the Property.
All personal property not removed by Lessee, shall, without compensation to Lessee, then
become Landlord's property, free and clear of all claims to or against them by Lessee or any
third person, firm or entity.
2.5 RENT:
2.5.1 Base Rent. The Base Rent payable for each Lease Year (the "Base
Rent") shall be in the amount of One Dollar ($ l .00) annually. On the Lease Commencement
Date, Lessee shall make a capitalized Base Rent payment to Landlord in the total amount of
Dollars ($_) for the -year term of the Lease. If any extensions are
approved during the Lease term, the difference in the Base Rent and the "Adjusted Base Rent"
shall be paid within 90 days of the executed extension.
2.5.2 Additional Rents. In addition to the Base Rent, any and all of the
payments that Lessee is required to make hereunder to or for the benefit of Landlord shall be
deemed to be "Additional Rents." All such Additional Rents shall be payable in accordance with
the provisions of the Sections of this Lease specifying the payment of such Additional Rents.
The Base Rent and Additional Rents payable hereunder shall be deemed "Rents" reserved by
Landlord, and any remedies now or hereafter given to Landlord under the laws of the State of
California for collection of the Rents shall exist in favor of Landlord, in addition to any and all
other remedies specified in this Lease.
5
2.5.3 Payment of Rent. At Lease expiration or sooner termination, all Rent
accrued but not paid shall be due and payable to Landlord.
2.5.4 Miscellaneous. All payments of Rent shall be made to Landlord as they
become due in lawful money of the United States of America in cash or by corporate check
drawn on sufficient available funds, at such place as is designated herein by Landlord for the
receipt of notices or such other place as shall be designated to Lessee by Landlord in writing
from time to time.
2.6 USE:
2.6.1 Lessee shall, throughout the Term, use the Property for the development,
construction, operation, marketing for lease and leasing of the Improvements, and such other
uses as are reasonably and customarily attendant to such uses, in compliance with the Regulatory
Agreement, this Lease, and any and all other restrictive covenants entered into by the Lessee, and
this Lease. Further, Lessee agrees:
(i) not to use the Leased Premises for any disorderly or
unlawful purpose;
(ii) to use its best commercially reasonable efforts to prevent
any action by any tenants from committing or maintaining any nuisance or unlawful conduct on
or about the Leased Premises;
(iii) to use its best commercially reasonable efforts to prevent
any action by any tenant that would cause Lessee to violate any of the covenants and conditions
of this Lease with respect to the Improvements;
(iv) upon notice from Landlord, to take reasonable action, if
necessary, to abate any action by any tenant that would cause Lessee to violate this Lease; and
(v) subject to the rights of tenants, to permit Landlord and its
agents upon not less than forty-eight (48) hours written notice to inspect the Leased Premises or
any part thereof at any reasonable time during the Term.
2.6.2 Lessee shall use the Improvements on the Property in accordance with
the terms and conditions of the Regulatory Agreement.
(i) Except as otherwise in compliance with applicable local,
federal or state laws, Lessee shall not discriminate against, or segregate any person or group of
persons on the grounds of race, color, creed, religion, sex, sexual orientation, marital status,
national origin, ancestry, disability, medical condition, age, familial status, or source of income
in the lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Leased Premises nor
shall Lessee, or any person claiming under or through 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, subtenants, sublessees or vendees of the Leased
Premises. Lessee shall otherwise comply with all applicable local, state, and federal laws
concerning discrimination. The foregoing covenant shall run with the land.
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(ii) Landlord shall be entitled to invoke any remedies available
at law or in equity to redress any breach of Subsection (i) or to compel compliance therewith by
Lessee.
2.6.3 Lessee shall not cause, maintain, or permit any nuisance or waste in, on,
or about the Property.
2.7 COMPLIANCE WITH LAW:
2.7.1 Lessee shall not use the Property or permit anything to be done in or
about the Property which will in any way conflict with any applicable law, statute, ordinance, or
governmental rule, regulation or requirement now in force or which may hereafter be enacted or
promulgated.
2.7.2 The judgment of any court of competent jurisdiction or the admission of
Lessee in any action against Lessee, whether Landlord be a party thereto or not, that Lessee has
violated any law, statute, ordinance, or governmental rule, regulation, or requirement, shall be
conclusive of that fact as between Landlord and Lessee.
2.8 SPRINGING OBLIGATIONS UPON LEASE COMMENCEMENT:
2.8.1 Notwithstanding any provision to the contrary in this Lease, the Lessee
shall have no obligation to perform any covenant, pay any amounts, nor incur any liability under
the following Sections of this Lease unless and until the occurrence of the Lease Commencement
Date: Sections 2.3, 2.46, 2.5, 2.6, 2.9 (except 2.9(i) and (ii) therein), 2.10, 2.12, 2.13, 2.14, 2.15,
2.16, 2.19, 2.20, 2.21, 2.22, 2.23 and 2.24.
2.9 CONSTRUCTION:
2.9.1 The Lessee shall have the following duties and obligations with respect
to the construction of the Improvements:
(i) Lessee shall obtain a reservation of federal and/or state
low-income housing tax credits ("Tax Credits") from the California Tax Credit Allocating
Committee, and such other financing commitments for the construction and permanent financing
of the Improvements as set forth in the Development Budget to be attached hereto upon the
Lease Commencement Date.
(ii) Lessee shall process and obtain all necessary permits,
approvals, and entitlements in connection with the construction of the Improvements.
(iii) Lessee shall cause the Improvements to be constructed in
accordance with the plans and specifications approved by the Authority's planning and building
department(s), and pursuant to the construction schedule to be attached hereto upon the Lease
Commencement Date as Exhibit C, which construction schedule approved by the Tax Credit
Investor shall be deemed approved by the parties hereto, and subject to amendment with written
approval of the Landlord.
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(iv) Lessee shall cause the Improvements to be constructed in
compliance with all applicable permits and laws, including, without limitation, laws pertaining to
applicable zoning, conditional use permits, regulations, and ordinances, and permits obtained for
the construction work.
(v) During the construction of the Improvements, Lessee shall
not discriminate on the basis of race, color, creed, religion, age, sex, sexual orientation, marital
status, national origin, ancestry, or disability in the hiring, firing, promoting, or demoting of any
person engaged in the construction work.
(vi) If any claim of lien is filed against the Property or a stop
notice is served on the Landlord or any other lender or other third party in connection with the
Improvements, then Lessee shall, within twenty (20) business days after such filing or service,
Lessee shall either pay and fully discharge the lien or stop notice, effect the release of such lien
or stop notice by delivering to the Landlord a surety bond in sufficient form and amount, or
provide the Landlord with other assurance satisfactory to the Landlord that the claim of lien or
stop notice will be paid or discharged.
(vii) If Lessee fails to discharge any lien, encumbrance, charge,
or claim in the manner required in this Section, then in addition to any other right or remedy, the
Landlord may (but is under no obligation to) discharge such lien, encumbrance, charge, or claim
at Lessee's expense. Alternately, the Landlord may require Lessee to immediately deposit with
the Landlord the amount necessary to satisfy such lien or claim and any costs, pending resolution
thereof. The Landlord may use such deposit to satisfy any claim or lien that is adversely
determined against Lessee.
(viii) Lessee shall file a valid notice of cessation or notice of
completion upon cessation of construction work on the Improvements 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. Lessee authorizes the Landlord, but the Landlord has no obligation, to
record any notices of completion or cessation of labor, or any other notice that the Landlord
deems necessary or desirable to protect its interest in the Development and Property.
(ix) Lessee shall permit and facilitate, and shall require its
contractors to permit and facilitate, observation and inspection at the Development by the
Landlord and by public authorities during reasonable business hours for the purposes of
determining compliance with this Agreement.
2.9.2 Lessee shall, without cost or expense to the Landlord, (a) keep and
maintain any Improvements on the Property in good and safe order, condition and repair; and
(b) undertake such maintenance of the Property from time to time as may be reasonable and
customary under the circumstances.
2.10 TAXES:
2.10.1 Lessee shall, during the entire Lease Term, at its own cost and expense,
pay the public officers charged with their collection, as the same become due and before any
fine, penalty, interest, or other charge may be added to them for nonpayment, all real estate
8
taxes, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any
kind and nature, made, assessed, levied, or imposed upon, or due and payable in connection with,
or which become a lien upon, the Property, the Improvements, or any part of the Property or
Improvements, or upon the Lessee's leasehold interest in the Property pursuant to this Lease, as
well as assessments for sidewalks, streets, sewers, water, or any other public improvements and
any other improvements or benefits which shall, during the Lease Term, be made, assessed,
levied, or imposed upon or become due and payable in connection with, or a lien upon, the
Property, the Improvements, or any part of the Property or Improvements, or upon the Lessee's
leasehold interest in the Property pursuant to this Lease. The Lessee acknowledges that,
pursuant to Revenue and Taxation Code Section 107.6, the Lessee's leasehold interest in the
Property created pursuant to this Lease may be subject to the payment of property taxes levied
against the Lessee's leasehold interest and the Lessee shall be responsible for the payment of all
such property taxes, if applicable. In the event the Improvements or any possessory interest with
respect thereto, should at any time be subject to ad valorem taxes or privilege taxes levied,
assessed or imposed on such property, the Lessee shall pay taxes upon the assessed value of the
entire Property and the Improvements thereon and not merely upon the assessed value of its
leasehold interest, as provided in California Health and Safety Code Section 33673. The Lessee
shall pay to the Landlord as Additional Rent the difference between the amount of tax levied and
the amount of tax the Lessee would be obligated to pay if the tax had been determined in the
manner specified in California Health and Safety Code Section 33673. Such Additional Rent
shall be paid on or before the date or dates such taxes are due.
2.10.2 Lessee shall have the right, by appropriate proceedings, to protest or
contest in good faith any assessment or re -assessment of taxes, any special assessment, or the
validity of any taxes or of any change in assessment or tax rate; provided, however, prior to any
such challenge Lessee must either (a) pay the taxes alleged to be due in their entirety and seek a
refund from the appropriate authority, or (b) post bond in an amount sufficient to insure full
payment of the taxes.
2.10.3 To the extent applicable, during the term of the Lease, Lessee shall pay
any and all personal property taxes assessed against equipment, trade fixtures, inventory, or other
personal property located in, on, or about the Property and the Improvements. Lessee shall
indemnify, defend, and hold Landlord and the Property harmless from and against any such
personal property taxes.
2.10.4 Notwithstanding anything to the contrary contained herein, Lessee may
seek, qualify, apply for, and attain a real estate property tax exemption under California Revenue
and Taxation Code Section 214(g) with respect to the Land and Improvements without the
payment of any additional fees or concessions to Landlord under this Lease.
2.11 CHANGE IN CONTROL OF LESSEE, ASSIGNMENT AND SUBLETTING:
2.11.1 The qualifications and identities of Lessee and its principals are of
particular concern to the Landlord. It is because of those qualifications and identity that the
Landlord has entered into this Lease with Lessee. Except as otherwise permitted by this Lease,
including, without limitation, Section 2.23, below, neither Lessee nor its managing member or
general partners shall assign all or any part of their interests in Lessee or their rights pursuant to
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this Lease to any other entity without the prior written approval of the Landlord, which approval
shall not be unreasonably withheld. Notwithstanding the foregoing, Lessee may, without the
prior written consent of Landlord, assign its interests under this Lease to a limited partnership or
limited liability company (the "Tax Credit Partnership") in which (a) Lessee or an affiliate
thereof has a controlling interest and is the principal manager, general partner (managing
member), or officer with authority to bind the Tax Credit Partnership, and (b) a tax credit
investor or tax credit syndicator (each a "Tax Credit Investor") is admitted as a limited partner
(or non -managing member) in connection with the allocation of the federal and/or state low-
income housing tax credits reserved to the Tax Credit Partnership and allocated to the Tax Credit
Investor in consideration of a capital contribution to the Tax Credit Partnership. Notice of such
assignment shall be given to Landlord at least five (5) days before the effective date of such
assignment.
2.11.2 Lessee shall have the right from time to time to enter into subleases or
rental agreements with tenants for occupancy of the Improvements and the Property in
compliance with the Regulatory Agreement without the need to obtain approval of Landlord.
2.11.3 Except as provided in this Section 2.11, in Section 2.23 below, or in the
Regulatory Agreement, the Lessee shall have no right to transfer, assign, sublease, convey or
encumber its interests in the Property (all, a "Transfer") without the express prior written
consent of Landlord. Consent by Landlord to one such Transfer shall not be deemed to be
consent to any subsequent Transfer. Any Transfer not approved by Landlord or not deemed
approved pursuant to the terms of this Lease shall be void and shall constitute a breach of this
Lease. To the extent that Landlord's prior written consent to a Transfer is required, pursuant to
this Lease, Lessee agrees to obtain approval and consent of Landlord prior to requesting any
consent required by any third party, including, but not limited to, any Permitted Leasehold
Mortgagee.
2.11.4 Lessee shall have the right to transfer its interests in this Lease and the
Property to an entity that assumes the rights and obligations of Lessee as the result of a
reorganization or similar event, subject to Landlord approval of the documentation effectuating
such reorganization or similar event, which approval shall not be unreasonably withheld.
2.11.5 Notwithstanding anything to the contrary contained in this Lease, any
transfer of non -managing membership or limited partnership interests in Lessee, either directly
or indirectly, in whole or in part, shall not constitute a default under this Lease and shall not
require Landlord's consent. Further, and notwithstanding anything to the contrary contained in
this Lease, the removal of any managing member or general partner of Lessee by a non -
managing member or limited partner of Lessee for cause pursuant to Lessee's operating
agreement or partnership agreement shall not constitute a default under this Lease and shall not
require Landlord's consent, provided, however, that any replacement managing member or
general partner shall be subject to Landlord's consent, which consent shall not be unreasonably
withheld or delayed.
2.12 HOLD HARMLESS:
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2.12.1 Indemnifications. Notwithstanding any other provision of this Lease to
the contrary, Lessee hereby agrees to indemnify, protect, hold harmless and defend (by counsel
reasonably satisfactory to Landlord) Landlord, its council members, officers, commissioners,
agents and employees from and against any and all claims, losses, damages, liabilities, fines,
penalties, charges, administrative and judicial proceedings and orders, judgments, remedial
action requirements, enforcement actions of any kind, and all costs and expenses incurred in
connection therewith, including, but not limited to, reasonable attorneys' fees and expenses
(collectively "claims"), arising from or relating to the Property, Lessee's obligations under this
Lease, and the construction, rehabilitation or operations of the Improvements, except to the
extent caused by the gross negligence or willful misconduct of Landlord, or any of its council
members, commissioners, officers, agents or employees.
In addition, if any contractor or subcontractor which performed any construction work for
Lessee or Lessee's affiliates on the Improvements shall assert any claim against Landlord on
account of any damage alleged to have been caused by reason of acts of negligence of Lessee or
Lessee's affiliates, their members, partners, officers, directors, affiliates, agents or employees, or
their construction contractors, Lessee shall defend at its own expense any suit based upon such
claim; and if any judgment or claim against Landlord shall be allowed, Lessee shall pay or cause
to be paid or satisfied such judgment or claim and pay all costs and expenses in connection
therewith.
This indemnity shall survive the termination of this Lease. In the event any Permitted Leasehold
Mortgagee becomes the Lessee under this Lease or becomes a lessee under any new lease
permitted hereunder, the Permitted Leasehold Mortgagee shall be liable only for the indemnity
obligations of Lessee under this Lease or a new lease first accruing or arising after the time that
the Permitted Leasehold Mortgagee first becomes lessee under this Lease or such new lease (the
"Leasehold Transfer Date"), and Allied Affordable Housing LLC shall remain liable for the
indemnity obligations of Lessee under this Lease for the period before the Leasehold Transfer
Date.
2.13 OWNERSHIP OF PROPERTY DURING TERM AND UPON EXPIRATION
OR TERMINATION OF LEASE:
2.13.1 During the Term of this Lease, the Improvements, including all
buildings, structures, fixtures, additions and improvements located on the Property (other than
personal property owned by Landlord or others) shall be owned in fee by Lessee (including, but
not limited to, the Tax Credit Partnership, as an assignee from the original Lessee hereunder
prior to or simultaneously with the Lease Commencement Date). The parties hereto agree that
Lessee shall bear all risk of loss with respect to the Improvements and that the benefits and
burdens of ownership of the Improvements are vested in Lessee. Lessee shall at all times be the
owner of the Improvements for federal and state tax purposes.
2.13.2 Purchase Option. At any time during the term of this Lease, if Lessee is
in good standing and no default has occurred and is continuing, Lessee may make a request to
Landlord to purchase the Land at fair market value, which value shall be a third -party appraiser
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mutually approved by Lessee and Landlord. Lessee shall pay for all costs of the appraisal.
Landlord shall respond within 180 days of the request by the Lessee.
2.13.3 Upon expiration or termination of this Lease, if Lessee has not exercised
its right to extend the Lease pursuant to Section 2.4.1 or made a request to purchase pursuant to
Section 2.13.2, ownership of the Improvements, including all buildings, structures, fixtures,
additions, equipment, other improvements, any security deposits then held by Lessee (upon
delivery of which, Landlord shall assume all obligations to subtenants with respect thereto), any
reserve accounts associated with the Improvements, and any other real property whatsoever
located on the Property shall revert to the Landlord, without compensation to Lessee, and be
surrendered to Landlord with the Property, but not including personal property or property which
is permitted to be removed from the Property by Lessee or other owner; provided, however that
Lessee shall repair any physical damage to the Improvements or the Property caused by the
removal of personal property.
2.13.4 Upon termination of this Lease, whether by expiration of the Term or
otherwise, the Improvements and all personal property not removed by Lessee, shall then
become the property of Landlord, free and clear of all liens, mortgages, encumbrances, or claims
to or against them by Lessee or any third person, firm or entity. Lessee agrees to execute, at the
request of Landlord upon Lease termination, a quitclaim deed of the Improvements to Landlord
to be recorded at Landlord's option and any other documents that may be reasonably required by
Landlord or Landlord's title company to provide Landlord title to the Property and the
Improvements free and clear of all monetary liens and free and clear of other encumbrances not
caused or agreed to by Landlord.
2.14 SUBROGATION:
2.14.1 Neither Landlord nor Lessee shall be liable to the other or to any
insurance company (by way of subrogation or otherwise) insuring the other party for any loss or
damage to any building, structure, or other tangible property, or any resulting loss of income, or
losses under worker's compensation laws and benefits (even though such loss or damage might
have been occasioned by the negligence of such party, its agents, or employees), if any such loss
or damage is covered by insurance benefiting the party suffering the loss or damage. Landlord
and Lessee hereby mutually release each other from liability and waive all rights to recover
against each other or against officers, employees, agents or representatives of each other for any
loss or damage to any person or property caused by or resulting from risks insured against under
any insurance policies carried by the parties; provided, however, this paragraph shall be
inapplicable if it would have the effect, but only to the extent that it would have the effect, of
invalidating any insurance coverage of Landlord or Lessee. The parties shall, to the extent
available, cause each insurance policy obtained hereunder to provide a waiver of subrogation
except as otherwise permitted herein.
2.15 INSURANCE:
During the Term of this Lease, and for any required thereafter as set forth below, the
Lessee shall purchase and maintain in full force and effect, at no cost to the Landlord, the
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following insurance policies, all of which shall be provided by companies and/or agencies
approved to do business in the State of California_
2.15.1 Leased Premises Insurance. "All risk" insurance covering all risks of
physical loss or damage to any of the Improvements, with liability limits of not less than one
hundred percent (100%) of the "full replacement value" thereof, which insurance shall be
provided by Lessee on the Lease Commencement Date. Such policies shall be broad form and
shall include, but shall not be limited to, coverage for fire, extended coverage, vandalism,
malicious mischief and storm. Perils customarily excluded from all risk insurance, e.g.,
earthquake and flood, may be excluded. The term "full replacement value" shall exclude the cost
of excavation, foundations and footings. The amount of such insurance shall be adjusted by an
updated replacement cost evaluation by the insurer or its designee not more than once every five
(5) years after construction during the Term, if requested in writing by Landlord.
2.15.2 General Liability Insurance. Commercial general liability and
automobile liability insurance, covering loss or damage resulting from accidents or occurrences
on or about or in connection with the Improvements or any work, matters or things under, or in
connection with, or related to this Lease, with personal injury, death and property damage
combined single limit liability of not less than One Million Dollars ($1,000,000) for general
liability and One Million Dollars ($1,000,000) for automobile liability for each accident or
occurrence and an aggregate limit of not less than Two Million Dollars ($2,000,000) for general
liability, and an aggregate limit of not less than Ten Million Dollars ($10,000,000) for umbrella
and excess liability. Coverage under any such comprehensive policy shall be broad form and
shall include, but shall not be limited to, operations, contractual, elevators, owner's and
contractor's protective, products and completed operations, and the use of all owned, non -owned
and hired vehicles.
2.15.3 Workers' Compensation Insurance. In the event Lessee has employees,
Lessee shall carry or cause to be carried Workers' Compensation insurance with limits as
required by the State of California and Employer's Liability limits of One Million Dollars
($1,000,000) for bodily injury by accident and One Million Dollars ($1,000,000) per person and
in the annual aggregate for bodily injury by disease covering all persons employed by Lessee in
connection with the Improvements and with respect to whom death, bodily injury, or sickness
insurance claims could be asserted against Landlord or Landlord.
2.15.4 Builders' Risk Insurance. In the event that any new capital improvements
are required to the Improvements, during the course of any alteration, construction or
reconstruction of such new capital improvements, the cost of which exceeds Fifty Thousand
Dollars ($50,000) (escalating at three percent (3%) per year), Lessee shall provide builders' risk
insurance for not less than the value of the construction contract, combined single limit for
bodily injury or property damage insuring the interests of Landlord, Lessee and any contractors
and subcontractors, including the aforementioned parties being named as insureds Policy must
include: (1) coverage for any ensuing loss from faulty workmanship, Nonconforming Work,
omission or deficiency in design or specifications; (2) coverage against machinery accidents and
operational testing; (3) coverage for removal of debris, and insuring the buildings, structures,
machinery, equipment, materials, facilities, fixtures and all other properties constituting a part of
the project; (4) transit coverage, including ocean marine coverage (unless insured by the
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supplier), with sub -limits sufficient to insure the full replacement value of any key equipment
item; and (5) coverage with sub -limits sufficient to insure the full replacement value of any
property or equipment stored either on or off the site. Such insurance shall be on a form
acceptable to Landlord to ensure adequacy of terms and sublimits.
2.15.5
2.15.6 General Requirements. All policies described in Section 2.15.1 shall
include Landlord and Lessee, together with Mortgagees, as named additional insureds, as their
respective interests may appear. All policies described in Section 2.15.1 shall contain (a) the
agreement of the insurer to give Landlord and Mortgagees, as applicable, at least thirty (30) days'
notice prior to cancellation (including, without limitation, for non-payment of premium) or any
material change in said policies; (b) an agreement that such policies are primary and
non-contributing with any insurance that may be carried by Landlord; (c) a provision that no act
or omission of Lessee shall affect or limit the obligation of the insurance carrier to pay the
amount of any loss sustained; (d) a waiver by the insurer of all rights of subrogation against
Landlord and its authorized parties in connection with any loss or damage thereby insured
against; and (e) terms providing that any loss covered by such insurance may be adjusted with
Landlord and Lessee, but shall be payable to the holder of a Mortgage, who shall agree to receive
and disburse all proceeds of such insurance, subject to the duty of Lessee to repair or restore, as
set forth in Section 2.19 hereto; (f) all subcontractor's shall be included as additional insureds
under the primary contractor's policies, or the contractor shall be responsible for causing
subcontractors to purchase the appropriate insurance in compliance with the terms of these
Insurance Requirements, including adding the Landlord and Lessee as additional insured parties
to the subcontractor's policies.
2.15.7 Evidence of Insurance. Certificates of insurance for all insurance
required to be maintained by Lessee shall be furnished by Lessee to Landlord on or before the
Lease Commencement Date of this Lease. Landlord reserves the right to require complete,
certified copies of all required insurance policies, including endorsements demonstrating the
coverage required by this Lease at any time.
2.15.8 Failure to Maintain. If Lessee fails to maintain such insurance,
Landlord, at its election, may procure such insurance as may be necessary to comply with the
above requirements (but shall not be obligated to procure same), and Lessee agrees to repay to
Landlord as Additional Rent the cost of such insurance.
2.15.9 Acceptability of Insurers. Insurance is to be placed with insurers with a
current A.M. Best's rating of no less than A: VII or such other rating as may be acceptable to
Landlord.
2.16 UTILITIES:
During the Term of this Lease, Lessee shall make all arrangements for and pay for all
services and utilities to the Property.
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2.17 HOLDING OVER:
In the event Lessee fails to vacate the Property and fulfill all of its obligations hereunder
at the end of the Term, Lessee shall be liable for all damages incurred by Landlord by reason of
the inability to deliver possession of the Property or any portion thereof to any other person.
(a) Surrender of Leased Premises. Lessee covenants that upon any
termination of this Lease, whether by lapse of time or because of any of the conditions or
provisions contained herein, Lessee will peaceably and quietly yield and surrender possession of
the Leased Premises to Landlord. The foregoing, however, will be subject to the rights of tenants
or others in possession pursuant to tenant leases with Lessee, provided that such tenants are not
in default thereunder and attorn to Landlord as their Landlord. An action of forcible detainer
shall lie if Lessee holds over after a demand for possession is made by Landlord.
(b) No Right to Possession after Termination. Lessee has no right to
retain possession of the Leased Premises or any part thereof beyond the expiration or earlier
termination of this Lease. Any holding over by Lessee (or any successor -in -interest to Lessee)
after the expiration or earlier termination of this Lease shall be construed to be a tenancy at
sufferance on all of the terms and conditions set forth herein to the extent not inconsistent with a
tenancy at sufferance. Acceptance by Landlord of rent or any other sum payable hereunder after
such expiration or earlier termination shall not result in an extension or renewal of this Lease. If
Lessee fails to surrender the Leased Premises upon the expiration or earlier termination of this
Lease, Lessee shall indemnify, defend and hold harmless Landlord from and against all loss,
damage, cost, liability or expense (including, without limitation, attorneys' fees and expenses)
resulting from or relating to such failure to surrender the Leased Premises including, without
limitation, any claim made by any succeeding lessee.
2.18 [RESERVED]:
2.19 DAMAGE, RECONSTRUCTION:
2.19.1 In the event the Property is damaged by fire or other perils covered by
extended coverage insurance, Lessee shall use all available insurance proceeds to repair or
rebuild the Improvements, unless Lessee and Lessor agree that such repair or rebuilding is not
economically feasible, and this Lease shall remain in full force and effect. In the event that
Lessee and Lessor agree that repair or rebuilding the Improvements is not economically feasible,
Landlord may elect to terminate the Lease and Landlord shall be entitled to any and all insurance
proceeds received by Lessee as a result of such damage (plus an additional amount equal to
Lessee's applicable deductible maintained by Lessee with respect to such insurance policy).
2.19.2 Lessee shall not be entitled to any compensation or damages from
Landlord for loss of the use of the whole or any part of the Property, Lessee's personal property,
or any inconvenience or annoyance occasioned by such damage, repair, reconstruction, or
restoration. Lessee waives the provisions of California Civil Code Sections 1932(2) and 1933(4)
with respect to any destruction of the Property.
2.19.3 Notwithstanding anything contained in this Section 2.19 to the contrary,
any rights of Landlord under this Section 2.19, including, without limitation, any right to
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terminate this Lease, shall be expressly subject to the rights of any Permitted Leasehold
Mortgagee and to the terms and conditions of any Permitted Leasehold Mortgage.
2.20 DEFAULT:
2.20.1 Subject to Force Majeure delay, the failure by either the Landlord or
Lessee to observe or perform any covenants, conditions, or provisions of this Lease or
Regulatory Agreement to be observed or performed by such party shall constitute a default and
breach of this Lease. The party in default must immediately commence to cure, correct or
remedy such breach and shall complete such cure, correction or remedy with reasonable
diligence, and during any period of curing shall not be in default, so long as it endeavors to
complete such cure, correction or remedy with reasonable diligence, and provided such cure,
correction or remedy is completed within the applicable time period set forth herein after receipt
of written notice.
2.20.2 If a monetary event of default occurs, prior to exercising any remedies
hereunder, the complaining party shall give the party in default written notice of such default.
The party in default shall have a period of thirty (30) calendar days after such notice is received
or deemed received within which to cure the default prior to exercise of remedies by the
complaining party.
2.20.3 If a non -monetary event of default occurs, prior to exercising any
remedies hereunder, the complaining party shall give party in default written notice of such
default. If the default is reasonably capable of being cured within thirty (30) calendar days after
such notice is received or deemed received, the party in default shall have such period to effect a
cure prior to exercise of remedies by the complaining party. If the default is such that it is not
reasonably capable of being cured within thirty (30) days, and the party in default (i) initiates
corrective action within said period, and (ii) diligently, continually, and in good faith works to
effect a cure as soon as possible, then the party in default shall have such additional time as is
reasonably necessary to cure the default prior to exercise of any remedies by the complaining
party, but in no event more than ninety (90) business days from the date of written notice of
default, unless additional time is agreed to by Landlord and Lessee.
2.20.4 If Lessee fails to take corrective action or cure the default within the time
period described in Section 2.20.3 above, Landlord shall give Lessee and, as provided in Section
2.20.5, below, all non -managing members or limited partners of Lessee notice thereof,
whereupon, subject to the terms of Lessee's operating or partnership agreement, any non -
managing member or limited partner of Lessee may remove and replace the managing member
or general partner with a substitute managing member or general partner approved in writing by
Landlord, such approval not to be unreasonably withheld, who shall effect a cure within a
reasonable time thereafter in accordance with the foregoing provisions. Landlord agrees to
accept cures tendered by a non -managing member or limited partner of Lessee within the cure
periods provided in this Agreement or within the time periods provided in Civil Code Section
2924c, whichever is longer. Additionally, in the event the non -managing members or limited
partners of Lessee are precluded from curing a non -monetary default due to an inability to
remove the managing member or general partner as a result of a bankruptcy, injunction, or
similar proceeding by or against Lessee or its managing member or general partner, Landlord
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agrees to forbear from terminating this Lease during the period during which the non -managing
members or limited partners of Lessee are so precluded from acting, not to exceed 180 days,
provided such non -managing members or limited partners are otherwise in compliance with the
foregoing provisions. In no event shall the injured party be precluded from exercising remedies
if its security becomes or is about to become materially jeopardized by any failure to cure a
default.
2.20.5 After Lessee gives written notice to Landlord that an investor non -
managing member or limited partner has been admitted to the Lessee as a non -managing member
or limited partner, Landlord shall send to the non -managing member or limited partner a copy of
all notices of default and all other notices that Landlord sends to Lessee. In addition, Landlord
shall send to any Permitted Leasehold Mortgagee, as defined in Section 2.23.1(c), a copy of all
notices of default and all other notices that Landlord sends to Lessee as provided in Section
2.23.5(b) below.
2.20.6 If any default or breach is not cured by the party in default within the
respective period of time provided in this Section 2.20, then the complaining party shall be
entitled to exercise any and all rights or remedies which may be available at law or in equity,
including terminating this Lease. Any and all rights or remedies available to the parties shall be
cumulative, and not alternative.
2.20.7 Mediation. Any controversies between Landlord and Lessee regarding
the construction or application of this Lease, and claims arising out of this Lease or its breach,
shall be submitted to mediation within thirty (30) days of the written request by one party after
the written notice of that request on the other party.
(a) The parties may agree on one mediator. If they cannot agree on
one mediator, the party demanding mediation shall request that the Superior Court of Riverside
County appoint a mediator. The mediation meeting shall not exceed one (1) day of eight (8)
hours. The parties may agree to extend the time allowed for mediation under this Lease.
(b) The costs of mediation shall be borne by the parties equally.
(c) Mediation under this Section is a condition precedent to filing an
action in any court.
2.21 EMINENT DOMAIN:
2.21.1 Total Taking. If, at any time during the Term of this Lease, there shall
be a total taking or a constructive total taking of the fee title to the Property and Improvements in
condemnation proceedings or by any right of eminent domain, this Lease shall terminate on the
date of such taking and the rent and other charges payable by Lessee under this Lease shall be
apportioned and paid to the date of such taking. For the purposes of this Section, the term "a
constructive total taking" shall mean a taking of such scope that the untaken portion of the
Property and Improvements is insufficient to permit the restoration of the existing Improvements
so as to constitute a complete, economical project.
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2.21.2 Distribution of Proceeds in the Event of a Total Taking. In the event of
any such total taking or constructive total taking and the termination of this Lease, the award or
awards for such taking, less the costs of the determination and collection of the amount of the
award or awards ("Condemnation Proceeds"), shall be distributed as follows:
(a) Each Permitted Leasehold Mortgagee shall first be entitled to as
much of the Condemnation Proceeds as shall be necessary to repay its Permitted Leasehold
Mortgage (with all such proceeds being allocated to the Permitted Leasehold Mortgagees in
order of their respective lien priority (first to last)).
(b) Landlord shall be entitled to receive and retain as its own property,
and Lessee hereby assigns to Landlord, such remaining portion of the Condemnation Proceeds as
shall equal the fair market value of the Landlord's interest in the Property as encumbered by this
Lease including any untaken portion of the Property, and including Landlord's reversionary
interest in the Improvements.
(c) Lessee shall then be entitled to receive, and Landlord hereby
assigns to Lessee, the balance of the Condemnation Proceeds, if any.
2.21.3 Partial Taking. In the event of a taking which is less than a total taking
or constructive total taking (a "Partial Taking"), this Lease shall not terminate or be affected in
any way, and the Condemnation Proceeds shall first be paid to the Permitted Leasehold
Mortgagees as provided in Section 2.20.2, above, but only to the extent Permitted Leasehold
Mortgagees security is impaired, and then Landlord shall be entitled to receive and retain as its
own property, that portion of the remaining Condemnation Proceeds applicable to the Property as
encumbered by this Lease, equal to the fair market value of the portion of the Landlord's interest
in the Property as encumbered by this Lease so taken, including Landlord's reversionary interest
in the Improvements ("Landlord's Proceeds"). Lessee shall then be entitled to receive the
balance of the Condemnation Proceeds ("Lessee's Proceeds") and the same shall be payable,
and Landlord hereby so assigns the same, in trust to Lessee for application by Lessee to the cost
of restoring, repairing, replacing or rebuilding the Improvements.
2.21.4 Distribution of Proceeds in the Event of a Partial Taking. Subject to
Section 2.21.6, below, in the event of a partial taking, Lessee, at its sole cost and expense, shall
proceed with due diligence to restore, repair, replace or rebuild the remaining part of the
Improvements to substantially its former condition or with such changes or alterations
reasonably necessary so as to constitute a complete, rentable project.
2.21.5 Partial Termination in the Event of a Partial Taking. In the event of a
partial taking, this Lease shall terminate as to the portion of the Property so taken and the rent
payable for the balance of the Term of this Lease shall be reduced by a sum equivalent to the
portion of the Property taken, such reduction to be effective as of the date of Landlord's receipt
of such Condemnation Proceeds. Until the amount of the reduction of the rent shall have been
determined, Lessee shall continue to pay to Landlord the rent provided for in Section 2.4, above.
2.21.6 Temporary Taking. If, at any time during the Term, the whole or any
part of the Property, the leasehold thereof, or the Improvements shall be taken in condemnation
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proceedings or by any right of eminent domain for temporary use or occupancy (a "Temporary
Taking") the foregoing provisions of this Section 2.21 shall not apply and Lessee shall continue
to pay, in the manner at the times specified in this Lease, the full amounts of the rent and other
charges payable by Lessee under this Lease, and, except only to the extent that Lessee may be
prevented from so doing pursuant to the terms of the order of the condemning authority. Lessee
shall perform and observe all of the other terms, covenants, conditions and obligations of this
Lease upon the part of Lessee to be performed and observed, as though such taking had not
occurred. In the event of any such Temporary Taking, Lessee shall be entitled to receive the
entire amount of the Condemnation Proceeds made for such taking, whether paid by way of
damages, rent or otherwise unless such period of temporary use or occupancy shall extend
beyond the termination of this Lease, in which case the Condemnation Proceeds shall be
apportioned between Landlord and Lessee as of the date of termination of this Lease. Lessee
covenants that, upon the expiration of any such period of temporary use or occupancy during the
Term, it will, at its sole cost and expense, restore the Improvements, as nearly as may be
reasonably possible, to the condition in which the same was immediately prior to such taking,
wear and tear during such temporary use or occupancy excepted. To the extent that Landlord
receives any portion of the Condemnation Proceeds as compensation for the cost of restoration or
repair of the Improvements, Landlord shall, upon restoration of the Improvements by Lessee as
provided above, pay such sum to Lessee. Any portion of the Condemnation Proceeds received
by Lessee as compensation for the cost of restoration of the Improvements shall, if such period
of temporary use or occupancy shall extend beyond the Term of this Lease, be paid to Landlord
on the date of termination of this Lease.
2.22 HAZARDOUS MATERIALS:
2.22.1 Definitions.
(a) Hazardous Materials or Hazardous Substances: Any oil or any
fraction thereof or petroleum products or "hazardous substance" as defined in Section 101(14) of
CERCLA (42 U.S.C. Section 9601(14) or Section 25281(h) or 25316 of the California Health
and Safety Code at such time; any "hazardous waste," "infectious waste" or "hazardous
material" as defined in Section 25117, 25117.5 or 25501(j) of the California Health and Safety
Code at such time; any other waste, substance or material designated or regulated in any way as
"toxic" or "hazardous" in the RCRA (42 U.S.C. Section 6901 et seq.), CERCLA Federal Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), Safe Drinking Water Act (42 U.S.C.
Section 300(f) et seq.), Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), Clean Air
Act (42 U.S.C. Section 7401 et seq.), California Health and Safety Code (Section 25100 et seq.,
Section 39000 et seq.), or California Water Code (Section 13000 et seq.), at such time; and any
additional wastes, substances or material which at such time are classified, considered or
regulated as hazardous or toxic under any other present or future environmental or other similar
laws relating to the Leased Premises, but excluding any substances or materials used in the
construction, development, maintenance or operation of the Improvements, so long as the same
are used in accordance with all applicable laws.
(b) Hazardous Materials Law: All federal, state, and local laws,
ordinances, regulations, orders and directives pertaining to Hazardous Materials in, on or under
the Leased Premises or any portion thereof.
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2.22.2 Certain Covenants and Agreements. The Lessee hereby covenants and
agrees that:
(a) The Lessee shall not knowingly permit the Property or any portion
thereof to be a site for the use, generation, treatment, manufacture, storage, disposal or
transportation of Hazardous Materials or otherwise knowingly permit the presence of Hazardous
Materials in, on or under the Property in violation of any applicable law;
(b) The Lessee shall keep and maintain the Property and each portion
thereof in compliance with, and shall not cause or permit the Property or any portion thereof to
be in violation of, any Hazardous Materials Laws;
(c) Upon receiving actual knowledge of the same the Lessee shall
immediately advise the Landlord in writing of:
(i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened against the Lessee or the
Property pursuant to any applicable Hazardous Materials Laws;
(ii) any and all claims made or threatened by any third party
against the Lessee or the Property relating to damage, contribution, cost recovery, compensation,
loss or injury resulting from any Hazardous Materials (the matters set forth in the foregoing
clause (i) and this clause (ii) are hereinafter referred to as "Hazardous Materials Claims");
(iii) the presence of any Hazardous Materials in, on or under the
Property in such quantities which require reporting to a government agency; or
(iv) the Lessee's discovery of any occurrence or condition on
any real property adjoining or in the vicinity of the Leased Premises classified as "borderzone
property" under the provisions of California Health and Safety Code, Sections 25220 et seq., or
any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on
the ownership, occupancy, transferability or use of the Property under any Hazardous Materials
Laws.
If the Landlord reasonably determines that the Lessee is not adequately responding to a
Hazardous Material Claim or any condition in clauses (i) and (ii) above, the Landlord shall have
the right to join and participate in, as a party if it so elects, any legal proceedings or actions
initiated in connection with any such Hazardous Materials Claims and to have its reasonable
attorney's fees in connection therewith paid by the Lessee.
(d) Without the Landlord's prior written consent, which shall not be
unreasonably withheld or delayed, the Lessee shall not take any remedial action in response to
the presence of any Hazardous Materials on, under, or about the Property (other than in
emergency situations or as required by governmental agencies having jurisdiction), nor enter into
any settlement agreement, consent decree, or other compromise in respect to any Hazardous
Materials Claims.
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2.22.3 Indemnity. Without limiting the generality of the indemnification set
forth in Section 2.12 above, the Lessee hereby agrees to indemnify, protect, hold harmless and
defend (by counsel reasonably satisfactory to the Landlord) the Landlord, its councilmembers,
commissioners, officers, agents, successors, assigns and employees (the "Indemnitees") from
and against any and all claims, losses, damages, liabilities, fines, penalties, charges,
administrative and judicial proceedings and orders, judgments, remedial action requirements,
enforcement actions of any kind, and all costs and expenses incurred in connection therewith
(including, but not limited to, attorney's fees and expenses), arising directly or indirectly, in
whole or in part, out of:
(a) The failure of the Lessee or any other person or entity to comply
with any Hazardous Materials Law relating in any way whatsoever to the handling, treatment,
presence, removal, storage, decontamination, cleanup, transportation or disposal of Hazardous
Materials into, on, under or from the Property;
(b) Any release or discharge of any Hazardous Materials into, on,
under or from the Property, whenever occurring, or the presence in, on, or under the Property of
any Hazardous Materials; or
(c) Any activity or omission of activity carried on or undertaken on or
off the Property that is related to the Lessee or the Former Owner occupying or present on the
Property, in connection with the handling, treatment, removal, storage, decontamination,
cleanup, transport or disposal of any Hazardous Materials located or present on or under the
Property. The Lessee's indemnity obligations as they pertain to activities occurring off the
Property shall only extend to activities performed by or arising from activities performed by the
Lessee or any employees, agents, contractors or subcontractors of the Lessee or the Former
Owner.
The foregoing indemnity shall further apply to any residual contamination on or under
the Development, or affecting any natural resources, and to any contamination of any property or
natural resources arising in connection with the generation, use, handling, treatment, storage,
transport or disposal of any such Hazardous Materials, and irrespective of whether any of such
activities were or will be undertaken in accordance with Hazardous Materials Laws. The
provisions of this subsection shall survive expiration of the Term or other termination of this
Lease, and shall remain in full force and effect. This indemnity obligation shall not extend to
any claim arising solely from the Landlord's gross negligence or willful misconduct.
Notwithstanding the foregoing, in the event that the U.S. Department of Housing and
Urban Development ("HUD") acquires ownership of the Improvements through foreclosure or
by deed -in -lieu of foreclosure, HUD shall not have any indemnification obligations under this
Section.
2.22.4 No Limitation. The Lessee hereby acknowledges and agrees that the
Lessee's duties, obligations and liabilities under this Lease, including, without limitation, under
subsection (b) above, are in no way limited or otherwise affected by any information the
Landlord may have concerning the Development and/or the presence on the Development of any
21
Hazardous Materials, whether the Landlord obtained such information from the Lessee or from
its own investigations.
2.22.5 Lessee shall not keep any trash, garbage, waste, or other refuse on the
Property except in sanitary containers and shall regularly and frequently remove the same from
the Property. Lessee shall keep all incinerators, containers, and other equipment used for the
storage or disposal of such matter in a clean and sanitary condition.
2.23 RIGHTS OF LEASEHOLD MORTGAGEES:
2.23.1 DEFINITIONS.
(a) For purposes of this Lease, the term "mortgage" shall include
whatever security instruments are used in the locale of the Property, such as, without limitation,
deeds of trust, security deeds, and conditional deeds. The term "mortgage" shall also include any
instruments required in connection with a sale -leaseback transaction. The term "mortgagee" shall
include the holder of the secured position under each of the foregoing types of instruments,
including but not limited to the beneficiary under a deed of trust, the secured party under a
security agreement and the lessor in a sale -leaseback transaction.
(b) For purposes of this Lease, the term "Leasehold Mortgage"
means a conveyance of a security interest in this Lease and all of Lessee's interests in the
Property (collectively referred to as "Lessee's Leasehold Interests") to a lender (a "Leasehold
Mortgagee") or the conveyance of Lessee's Leasehold Interests to the Leasehold Mortgagee or
its assignee in connection with a foreclosure or a deed in lieu of foreclosure of such loan.
(c) For purposes of this Lease, the terms "Permitted Leasehold
Mortgage" and "Permitted Leasehold Mortgagee" shall mean, respectively, a Leasehold
Mortgage and a Leasehold Mortgagee, approved in writing by Landlord.
2.23.2 RIGHT TO ENCUMBER. At any time and from time to time during the
Term, notwithstanding anything contained in this Lease to the contrary, including, without
limitation, Section 2.11 above, Lessee shall have the right to enter into a Leasehold Mortgage
upon and subject to each and all of the following terms and conditions, subject to the reasonable
consent of Landlord which consent shall not be unreasonably withheld. Lessee shall provide to
Landlord a written request for Landlord's approval of any Leasehold Mortgage, along with
copies of proposed loan documents, no fewer than 45 days prior to the effective date of such
Leasehold Mortgage. Landlord shall use its best efforts to respond in writing no later than 15
days from the date of Lessee's written request (and receipt of proposed loan documents).
(a) The Leasehold Mortgage shall cover all of Lessee's interest in the
Lease, the Property and the Improvements and shall cover no interest in any other real property
other than Lessee's.
(b) The Leasehold Mortgage shall be without subordination of the fee
simple title of the Property.
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(c) No such Leasehold Mortgage shall be binding upon Landlord in
the enforcement of its rights and remedies herein, unless and until Lessee (or a Leasehold
Mortgagee) delivers or causes to be delivered to Landlord a certified copy of the fully executed
original Leasehold Mortgage bearing the date and recording information and a certified copy of
the original note secured by the Leasehold Mortgage, together with written notice of the address
of the Leasehold Mortgagee to which notices may be sent. In the event of an assignment of such
Leasehold Mortgage, such assignment shall not be binding upon Landlord unless and until a
certified copy thereof, bearing the date and recording information together with written notice of
the address of the assignee thereof to which notices may be sent, have been delivered to
Landlord.
(d) A Leasehold Mortgage is to be originated only by a Qualified
Lender. For the purposes hereof, the term "Qualified Lender" shall consist of:
(i) the mortgagee of any purchase money financing of a
Permitted Transfer or other Transfer approved by Landlord; or
(ii) any public agency and/or lending institutions authorized
under applicable California or federal law to make mortgage loans and not under any order or
judgment of any court or administrative authority restricting or impairing its operation as a
lender
(iii) any company engaged in the ordinary course of business as
a lender with a net worth of not less than $50,000,000, which is duly licensed or registered (if
legally required) with any regulatory agency having jurisdiction over its operation, and is not
under any order or judgment of any court or administrative authority restricting or impairing its
operation as a lender, including, without limitation, the following: a real estate investment trust;
an educational institution; a pension, retirement or welfare fund; a charity; or an endowment
fund or foundation authorized to make loans in the State of California.
Landlord acknowledges that the identity and nature of lending institutions change over time, and
agrees that Landlord's approval of any proposed mortgage lender that is not a "Qualified
Lender" as defined in this paragraph shall not be unreasonably withheld, conditioned or delayed.
(e) All rights acquired by the Leasehold Mortgagee under the
Leasehold Mortgage shall be subject to each and all of the covenants, conditions and restrictions
set forth in this Lease, and to all rights of Landlord hereunder. Except as otherwise set forth in
this Lease, Landlord shall not be deemed to waive any covenants, conditions and restrictions
contained in this Lease by reason of Lessee's grant of a Leasehold Mortgage. Notwithstanding
any foreclosure of any Leasehold Mortgage, Lessee shall remain liable for the performance of all
of the terms, covenants and conditions of this Lease which by the terms hereof are to be carried
out and performed by Lessee.
(f) No extension, nor modification, change or amendment to a
material financing term of a Leasehold Mortgage shall be effective, or binding upon Landlord,
unless and until approved by Landlord, which approval shall be granted so long as such
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extension or material modification, change or amendment satisfies the applicable requirements of
paragraphs (a) through (f), above.
2.23.3 LANDLORD'S RIGHT TO CURE DEFAULTS. In the event of a
default or breach by Lessee of any Permitted Leasehold Mortgage, Lessee and Permitted
Leasehold Mortgagee shall be obligated to provide notice to Landlord of such breach, and
Landlord shall have the right to cure the default. In such event, Landlord shall be entitled to
reimbursement by Lessee of all costs and expenses incurred by Landlord in curing the default,
with interest at the highest rate permitted by law, as Additional Rents (collectively, "Landlord's
Cure Payments"), provided in the event of a subsequent foreclosure of a Permitted Leasehold
Mortgage, the party acquiring the Lessee's Leasehold Interests shall not be obligated to pay
Landlord any of Landlord's Cure Payments, provided further that Lessee shall continue to be
personally liable to repay Landlord any Landlord's Cure Payments.
2.23.4 RIGHTS OF PERMITTED LEASEHOLD MORTGAGEE: If Lessee
and/or Lessee's successors and assigns (including, but not limited to, any sublessee of Lessee)
shall mortgage its interest in this Lease and the Lessee's Leasehold Interests, or any part or parts
thereof as permitted by this Section, the following provisions shall apply:
(a) No Amendment. There shall be no amendment or modification of
this Lease either by unilateral action of Landlord or Lessee, or by joint action of Landlord and
Lessee without the prior consent in writing of any Permitted Leasehold Mortgagee.
(b) Right to Notice of Default. Landlord shall, upon serving Lessee
with any notice of default, simultaneously serve a copy of the notice of default upon any
Permitted Leasehold Mortgagee.
(c) Right to Cure. Any Permitted Leasehold Mortgagee shall have the
right, but not the obligation, at any time prior to termination of this Lease, to pay all of the rents
due hereunder, to effect any insurance, to pay any taxes or assessments, to make any repairs or
improvements, to do any other act or thing required of Lessee hereunder, and to do any act or
thing which may be necessary and proper to be done in the performance and observance of the
agreements, covenants and conditions hereof to prevent termination of this Lease. Any
Permitted Leasehold Mortgagee and its agents and contractors shall have full access to the
Property for purposes of accomplishing any of the foregoing. Any of the foregoing done by any
Permitted Leasehold Mortgagee shall be as effective to prevent a termination of this Lease as the
same would have been if done by Lessee.
(d) Additional Cure Period. Anything contained in this Lease
notwithstanding, if any default shall occur which, pursuant to any provision of this Lease,
purportedly entitles Landlord to terminate this Lease, Landlord shall not be entitled to terminate
this Lease as to any Permitted Leasehold Mortgagee, nor to disturb the right of possession of any
subtenant of Lessee, and the notice shall be rendered void as to such parties, if the Permitted
Leasehold Mortgagee, within sixty (60) days after expiration of the period within which Lessee
was permitted to cure the default (but in no event later than ninety (90) days after receipt by the
Leasehold Mortgagee of the notice of default referred to in paragraph 2.23.5(b), above), shall
both:
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(i) either (1) cure the default if the same can be cured by the
Leasehold Mortgagee or its receiver, including by the expenditure of money, or (2) if the default
or breach is not so curable, commence, or cause any trustee under the relevant Permitted
Leasehold Mortgage to commence, and thereafter to diligently pursue to completion, a cure of
such default, including, without limitation, a foreclosure of the relevant Permitted Leasehold
Mortgage; and
(ii) perform or cause the performance of all of the covenants
and conditions of Lessee under this Lease able to be performed by the Leasehold Mortgagee or
its receiver, including by the expenditure of money until such time as the leasehold shall be sold
upon foreclosure pursuant to the relevant Permitted Leasehold Mortgage, or shall be released or
reconveyed thereunder, or shall be transferred upon judicial foreclosure or by deed or assignment
in lieu of foreclosure.
(e) Condition of Termination. Any right of Landlord to terminate this
Lease as the result of the occurrence of any default shall be subject to, and conditioned upon: (1)
Landlord having first given to each Permitted Leasehold Mortgagee written notice of the default
as required under Section 2.23.5(b) above; and (2) each Permitted Leasehold Mortgagee having
failed to remedy such default or acquire Lessee's leasehold estate hereunder or commence
foreclosure or other appropriate proceedings in the nature thereof as set forth in Section
2.23.5.(d) above.
(f) Suspension of Cure Period. If any Permitted Leasehold Mortgagee
is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings in
the nature thereof by any process or injunction issued by any court, or by reason of any action by
any court having jurisdiction of any bankruptcy or insolvency proceeding involving Lessee, the
times specified in paragraph (d) above, for commencing or prosecuting foreclosure or other
proceedings shall be extended for the period of the prohibition, so long as the Permitted
Leasehold Mortgagee shall have fully cured any default of Lessee under this Lease and shall
continue to cause compliance with other Lease terms as and when required, subject to any
applicable notice and grace periods.
(g) Loss Payable Endorsement. Landlord and Lessee agree that the
name of the Permitted Leasehold Mortgage shall, at its request, be added to the "Loss Payable
Endorsement" of any and all insurance policies required to be carried by Lessee under this Lease,
and any insurance proceeds are to be applied in the manner specified in the relevant Permitted
Leasehold Mortgage.
(h) No Consent Required to Foreclosure. Notwithstanding anything
contained in this Lease to the contrary, foreclosure of any Permitted Leasehold Mortgage, or any
sale thereunder, whether by judicial proceedings or by virtue of any power contained in the
Permitted Leasehold Mortgage, or any conveyance of the Lessee's Leasehold Interests hereunder
from Lessee to any Leasehold Mortgagee or its designee through, or in lieu of, foreclosure or
other appropriate proceedings in the nature thereof, shall not require the consent of Landlord or
constitute a breach of any provision of or a default under this Lease, and upon such foreclosure,
sale or conveyance, Landlord shall recognize in writing the purchaser or other transferee referred
to in the preceding sentence in connection therewith as the Lessee hereunder.
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(i) Foreclosure and Termination of Regulatory Agreement. In the
event that the foreclosure of the Permitted Leasehold Mortgage results in a termination of the
Regulatory Agreement and such Regulatory Agreement is not reinstated by the Leasehold
Mortgagee in its capacity as Lessee hereunder and the Improvements cease to be operated as
affordable housing for low-income households with special needs (e.g., developmental
disabilities) as required under the Regulatory Agreement, Leasehold Mortgagee acknowledges
and agrees that, as a condition to Landlord's acceptance of Leasehold Mortgagee as the Lessee
under this Lease, Leasehold Mortgagee shall be obligated to pay to Landlord a fair market rent as
Rents under this Lease. As used in this section, the fair market rent of the Lease, shall mean (1)
the agreed upon rent of the Lease, as jointly determined by Leasehold Mortgagee and Landlord,
or if such agreed rent amount cannot be determined within 30 days of termination of the
Regulatory Agreement, the (2) appraised fair market rent of the leasehold interest under this
Lease, appraised as market rate housing. Any such appraisal shall be made by a licensed
appraiser who is a member of the Master Appraiser Institute and who has experience in the
geographic area in which the Improvements are located. The licensed appraiser shall be selected
by Leasehold Mortgagee from a list of three appraisers identified by Landlord.
(j) Proceeds of Insurance and Condemnation. The proceeds from any
insurance policies or arising from a condemnation award to Lessee shall be paid to and held by
the Permitted Leasehold Mortgagee of highest priority and distributed pursuant to the provisions
of the relevant Permitted Leasehold Mortgage, and the Permitted Leasehold Mortgagee may
reserve the right to apply to the mortgagee debt (in the order of priority) all, or any part, of the
proceeds not used to repair or restore the Property and the Improvements.
(k) Notice of Proceedings. The parties hereto shall give to any
Permitted Leasehold Mortgagee notice of any arbitration proceedings or condemnation
proceedings involving Lessee's Leasehold Interests, or of any pending adjustment of insurance
claims, and any Permitted Leasehold Mortgagee shall have the right to intervene therein and
shall be made a party to such proceedings. The parties hereto do hereby consent to such
intervention. In the event that any Permitted Leasehold Mortgagee shall not elect to intervene or
become a party to the proceedings, that Permitted Leasehold Mortgagee shall receive notice and
a copy of any award or decision made in connection therewith.
(1) Further Protections. Landlord and Lessee shall cooperate in
adding to this Lease, by suitable amendment from time to time, any provision which may be
reasonably requested by any proposed Permitted Leasehold Mortgagee for the purpose of
implementing the mortgagee -protection provisions contained in this and allowing such Permitted
Leasehold Mortgagee reasonable means to protect or preserve the lien of its Leasehold Mortgage
upon the occurrence of a default under the terms of this Lease. Landlord and Lessee each agree
to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement
necessary to effect any such amendment; provided, however, that no such amendment shall in
any way affect the Term or rent under this Lease or rent and occupancy restrictions under the
Regulatory Agreement unless agreed to by Landlord in its sole and absolute discretion, nor
otherwise in any material respect adversely affect any rights of Landlord under this Lease.
(m) Additional Agreement. Landlord shall, upon request, execute,
acknowledge and deliver to a Permitted Leasehold Mortgagee, an agreement prepared by such
26
Permitted Leasehold Mortgagee and reviewed by Landlord at the sole cost and expense of
Lessee, in form satisfactory to such Permitted Leasehold Mortgagee, among Landlord, Lessee
and the Permitted Leasehold Mortgagee, agreeing to all of the provisions of this Lease.
2.23.5 NOTICE. If Lessee and/or Lessee's successors and assigns shall
mortgage its interest in this Lease or the Lessee's Leasehold Interests, or any part or parts
thereof, Lessee shall send or cause to be sent to Landlord a true copy thereof, together with
written notice specifying the name and address of the Leasehold Mortgagee(s) and the pertinent
recording data with respect to such Leasehold Mortgage(s).
2.23.6 APPROVAL OF MODIFICATIONS. Landlord shall approve reasonable
modifications to the terms of this Lease which are reasonably requested by a proposed Leasehold
Mortgagee as a condition of financing contemplated by the Regulatory Agreement and this
Lease, and which the Landlord determines, in his sole discretion, will not adversely affect
Landlord's rights.
2.24 RESTRICTION ON ENCUMBRANCE BY LANDLORD:
2.24.1 Landlord shall not mortgage or otherwise encumber its interest in the
Property (referred to as a "Fee Mortgage") without the prior written consent of Lessee. Any Fee
Mortgage, including amendments thereto, shall be subordinated to this Lease and shall, in the
event of a foreclosure of the Fee Mortgage, be obligated to recognize the rights of Lessee under
this Lease, and the holder of any Fee Mortgage shall be obligated to execute, acknowledge and
deliver to Lessee a statement confirming such subordination from time -to -time.
2.25 OUIET ENJOYMENT:
Absent an uncured default by Lessee, Landlord agrees not to disturb the possession,
interest or quiet enjoyment of Lessee in the Property for any reason, or in a manner which would
materially adversely affect any Permitted Leasehold Mortgage.
2.26 GENERAL PROVISIONS:
2.26.1 The waiver by either party of any term, covenant, or condition herein
contained shall not be a waiver of such term, covenant, or condition on any subsequent breach.
2.26.2 All notices and demands which may or are to be required or permitted to
be given by either party to the other hereunder shall be in writing. All notices and demands shall
be sent by United States Mail, postage prepaid, to the address for each party set forth in Section 1
of this Lease. All notices shall be deemed to be served upon personal delivery or two (2) days
after mailing in the manner required by this Section.
2.26.3 Time is of the essence of this Lease and each and all of its provisions in
which performance is a factor.
2.26.4 The covenants and conditions herein contained, subject to the provisions
as to assignment, apply to and bind the heirs, successors, executors, administrators, and assigns
of the parties hereto.
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2.26.5 In addition to specific provisions of this Lease, performance by either
party hereunder shall not be deemed to be in default where delays or defaults are due to war,
insurrection, floods, earthquakes, fires, casualties, Acts of God, epidemics, quarantine
restrictions, governmental restrictions or priority, unusually severe weather, inability to secure
necessary labor, materials or tools, acts of the other party, acts or failure to act of the Authority
or any other public or governmental Landlord or entity or any other causes beyond the control or
without the fault of the party claiming an extension of time to perform. An extension of time for
any such cause shall be for the period of the enforced delay and shall commence to run from the
time of the commencement of the cause, if notice by the party claiming such extension is sent to
the other party within thirty (30) days of knowledge of the commencement of the cause. Times
of performance under this Lease may also be extended in writing by mutual agreement of the
parties.
2.26.6 If any action or proceeding is brought by either party against the other
under this Lease, the prevailing party shall be entitled to recover all costs and expenses,
including the fees of its attorney in such action or proceeding. This provision shall also apply to
any post judgment action by either party, including without limitation efforts to enforce a
judgment.
2.26.7 Any provision of this Lease which shall prove to be invalid, void, or
illegal shall in no way affect, impair, or invalidate any other provision hereof and such other
provisions shall remain in full force and effect.
2.26.8 No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or in equity.
2.26.9 This Lease shall be governed by the laws of the State of California.
Proper venue for any action shall be in Riverside County, California.
2.26.10 Nothing contained in this Lease shall be deemed or construed as creating
a partnership, joint venture, or any other relationship between the parties hereto, or cause
Landlord to be responsible in any way for the debts or obligations of Lessee, or any other party.
2.26.11 This Lease and the Regulatory Agreement, including any document or
instrument incorporated herein by reference, contain complete and final expressions of the
agreement between Landlord and Lessee, and there are no promises, representations, agreements,
warranties, or inducements either express or implied other than as are set forth in this Lease and
the Regulatory Agreement. Any and all previous discussions or agreements between Landlord
and Lessee with respect to the premises, whether oral or written, are superseded by this Lease
and the Regulatory Agreement.
2.26.12 No amendment, change, or addition to, or waiver of termination of, this
Lease or any part hereof shall be valid unless in writing and signed by both Landlord and Lessee.
2.26.13 The provisions of this Lease shall be interpreted in a reasonable manner
to effect the purpose and intent of the parties to this Lease.
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2.26.14 Concurrently with the execution of this Lease, the Parties shall execute
and record a Memorandum of Ground Lease, substantially in the form attached to this Lease as
Exhibit B.
2.26.15 This Lease may be simultaneously executed in multiple counterparts, all
of which shall constitute one and the same instrument, and each of which shall be deemed to be
an original.
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IN WITNESS WHEREOF, the Landlord and the Lessee have signed this Agreement as
of the dates set opposite their signatures.
APPROVED AS TO FORM:
By:
LANDLORD:
PALM DESERT HOUSING AUTHORITY,
a public body, corporate and politic
By:
Name:
Title:
[Signatures continue on next page.]
30
LESSEE:
ALLIED AFFORDABLE HOUSING, LLC,
a California limited liability company
By:
Name:
Title:
31
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Palm Desert, County of Riverside, State of California,
described as follows:
APN:
EXHIBIT B
MEMORANDUM OF LEASE
[Behind this Page.]
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
PALM DESERT HOUSING AUTHORITY
73-510 Fred Waring Drive
Palm Desert, CA 92260-2578
Attention:
MAIL TAX STATEMENTS TO:
c/o Allied Affordable Housing, LLC
409 Santa Monica Boulevard, Suite E
Santa Monica, CA 90401
SPACE ABOVE THIS LINE FOR RECORDER'S USE
Documentary Transfer Tax
Not Shown per Revenue and
Taxation Code Sections 11932-11933.
MEMORANDUM OF GROUND LEASE
OFFICIAL BUSINESS
Document entitled to free
recording per Government
Code Section 27383
This Memorandum of Ground Lease (this "Memorandum") is made effective as of
_, 2015, between the PALM DESERT HOUSING AUTHORITY, a public
body, corporate and politic("Landlord"), and , a
("Lessee"), who agree as follows
1. Concurrently herewith, Landlord and Lessee have entered into that certain
Ground Lease (the "Lease") dated on or about the date hereof with respect to the real property
(the "Property") described as set forth in Exhibit A attached hereto and incorporated herein by
this reference. Pursuant to the Lease, Landlord hereby leases the Property to Lessee and Lessee
hereby accepts tenancy of the Property from Landlord for a term (the "Term") commencing on
the Lease Commencement Date (as defined therein) and continuing for seventy-five (75) years
after the Lease Commencement Date.
2. The provisions of the Lease to be performed by Lessee, whether affirmative or
negative in nature, are intended to and shall bind Lessee and its successors and assigns at any
time, and shall inure to the benefit of Landlord and its successors and assigns.
3. The provisions of the Lease to be performed by Landlord, whether affirmative or
negative in nature, are intended to and shall bind Landlord and its successors and assigns at any
time, and shall inure to the benefit of Lessee and its successors and assigns.
4. This Memorandum is prepared for the purpose of recordation only and it in no
way modifies the provisions of the Lease.
5. Reference is hereby made to the entire Lease for any and all purposes. A true
copy of the Lease is on file in the office of the Landlord, at its offices located at 73-510 Fred
Waring Drive, Palm Desert, CA 92260-2578.
[Signatures begin on the following page.]
IN WITNESS WHEREOF, Landlord and Lessee have caused their duly authorized
representatives to execute this Memorandum effective as of the date first set forth above.
LANDLORD:
PALM DESERT HOUSING AUTHORITY,
a public body, corporate and politic
By:
Name:
Its:
APPROVED AS TO FORM:
Name:
Its:
ACKNOWLEDGMENT
A notary public or other officer completing this certificate
verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of )
On before me,
(insert name and title of the officer)
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)
[Signatures continue on next page.]
LESSEE:
ALLIED AFFORDABLE HOUSING, LLC,
a California limited liability company
By:
Name:
Its:
ACKNOWLEDGMENT
A notary public or other officer completing this certificate
verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of
On before me,
(insert name and title of the officer)
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)
EXHIBIT A
TO MEMORANDUM OF GROUND LEASE
LEGAL DESCRIPTION
Real property in the City of Palm Desert, County of Riverside, State of California, described as follows:
APN:
EXHIBIT C
CONSTRUCTION SCHEDULE
To be attached hereto upon the occurrence of the Lease Commencement Date.
EXHIBIT D
DEVELOPMENT BUDGET
EXHIBIT E
REGULATORY AGREEMENT
RECORDING REQUESTED BY and
WHEN RECORDED RETURN TO:
PALM DESERT HOUSING AUTHORITY
73-510 Fred Waring Drive
Palm Desert, CA 92260-2578
Attention: Janet Moore, Director of Housing
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
By and Among
THE PALM DESERT HOUSING AUTHORITY
and
ALLIED AFFORDABLE HOUSING, LLC
a California limited liability company
Dated as of [Date of Lease Commencement Date]
Relating to
ARC VILLAGE
Palm Desert, California 92260
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE
COVENANTS (as may be hereafter supplemented and amended from time to time, this
"Regulatory Agreement") is made and entered into as of [Date of Lease Commencement Date],
by and among the PALM DESERT HOUSING AUTHORITY (together with any successor to
its rights, duties and obligations, the "Authority") and ALLIED AFFORDABLE HOUSING,
LLC, a limited liability company duly formed, validly existing and in good standing under the
laws of the State of California (together with any successor to its rights, duties and obligations
hereunder and as owner of the Project identified herein, the "Owner").
WITNESSETH:
WHEREAS, the Authority is the fee owner of the real property described in EXHIBIT A
attached hereto and incorporated herein by this reference (the "Land"), and has leased the Land
to the Owner pursuant to that certain Ground Lease dated as of January _, 2016 by and between
the Authority and the Owner (the "Ground Lease"); and
WHEREAS, the Owner is the owner of the residential rental building and related
improvements located on the Land (the "Project." and collectively with the Land, the
"Property");
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Authority and the Owner hereby agree as follows:
Section 1. Definitions and Interpretation. Unless the context otherwise requires, the
capitalized terms used herein shall have the respective meanings assigned to them in the recitals
hereto, in this Section 1, or in the Deed of Trust
"Actual Household Size" shall mean the actual number of persons in the applicable
household.
"Affordable Rent" shall mean rent calculated pursuant to Health and Safety Code Section
50053.
"Area Median Income" means the median gross yearly income adjusted for Actual
Household Size (to qualify residents) or Assumed Household Size (to calculate rents), as
applicable, in the County of Riverside, California, as determined and published from time to time
pursuant to Health and Safety Code Section 50093 by the State of California Department of
Housing and Community Development. In the event that such income determinations are no
longer published, or are not updated for a period of at least eighteen (18) months, the Authority
shall provide the Owner with other income determinations which are reasonably similar with
respect to methods of calculation to those previously published by the State of California
Department of Housing and Community Development such as those published by the United
States Department of Housing and Urban Development.
1
"Assumed Household Size" shall have the meaning set forth in Section 2(b). The
definition is utilized to calculate affordable Rent and is not intended to be a limit on the number
of persons occupying a unit. Assumed Household Size shall also mean `adjusted for family size
appropriate to the unit' defined in Health and Safety Code Section 50052.5(h).
"Authority" means the Palm Desert Housing Authority, California.
"County" means the County of Riverside, California.
"Gross Income" means the gross income of a person (together with the gross income of
all persons who intend to reside with such person in one residential unit) as calculated in the
manner prescribed under Section 8 of the Housing Act.
"Health and Safety Code" shall mean the State of California Health and Safety Codes.
"Housing Act" means the United States Housing Act of 1937 (U.S.C. Section 1437(f)), as
amended, or its successor.
"Owner" has the meaning given in the introductory paragraph hereof.
"Project" means the residential apartment complex consisting of 36 residential units and
related improvements to be constructed by Owner on the real property described in EXHIBIT A
hereto, consisting of those facilities, structures, buildings, fixtures or equipment situated thereon,
as it may at any time exist. The Project shall include shall include _ 1-bedroom units, _ 2-
bedroom units and 3-bedroom units.
"Regulatory Agreement" means this Regulatory Agreement and Declaration of
Restrictive Covenants, as it may be supplemented and amended from time to time.
"Rent" shall mean the total charges for a Unit for the following: use and occupancy of
the Unit and land and associated facilities, including parking; any separately charged fees or
service charges assessed by the Owner which are required of all residents, other than security
deposits; the cost of an adequate level of service for utilities paid by the resident, including
garbage collection, sewer, water, electricity, gas and other heating cooking and refrigeration fuel
but not cable or telephone service; any other interest, taxes, fees or charges for use of the land or
associated facilities and assessed by a public or private entity other than the Owner, and paid by
the tenants.
"Term" shall mean the term of this Agreement, which shall commence on the date of this
Agreement and shall expire on the anniversary of the date of recordation of this
Agreement.
"Transfer" means the conveyance, assignment, sale or other disposition of all or any
portion of the Project or ownership interest in Owner; and shall also include, without limitation
to the foregoing, the following: (1) an installment sales agreement wherein the Owner agrees to
sell the Project or any part thereof for a price to be paid in installments; and (2) an agreement by
the Owner leasing all or a substantial part of the Project to one or more persons or entities
pursuant to a single or related transactions.
2
"Units" shall mean the rental units to be constructed by the Owner of the Project.
Unless the context clearly requires otherwise, as used in this Regulatory Agreement,
words of any gender shall be construed to include each other gender when appropriate and words
of the singular number shall be construed to include the plural number, and vice versa, when
appropriate. This Regulatory Agreement and all the terms and provisions hereof shall be
construed to effectuate the purposes set forth herein and to sustain the validity hereof.
The titles and headings of the sections of this Regulatory Agreement have been inserted
for convenience of reference only, and are not to be considered a part hereof and shall not in any
way modify or restrict any of the terms or provisions hereof or be considered or given any effect
in construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any
question of intent shall arise.
Section 2. Residential Rental Project.
(a) All of the units in the Project will be available for rental on a continuous basis to
members of the general public. The Owner will not give preference to any particular class or
group in renting the dwelling units in the Project, except to the extent that dwelling units are
required to be leased or rented in the following manner and as otherwise permitted by law:
All units (excluding any manager's unit) shall be rented to tenants whose
household Gross Income, Adjusted for Actual Household Size, is at or below
sixty percent (60%) of the Area Median Income. The tenant -paid portion of
Rent on these Units shall not exceed an Affordable Rent.
ii. All units (excluding any manager's unit) shall be given rental preference to
households that consist of at least one individual with special needs (e.g., a
developmental disability)..
iii. One unit may be designated as a manager's unit and occupied by on -site
personnel whose household Gross Income shall not be subject to any
limitations.
(b) In calculating the allowable Rent for the Units, the following Assumed Household
Sizes shall be utilized, provided that the Development receives an allocation of Low Income
Housing Tax Credits, otherwise Assumed Household Size shall be determined pursuant to the
terms of Health and Safety Code Section 50052.5(h):
Number of Bedrooms Assumed Household Size
One 2
Two 3
Three 4
(c) Income Certification. The Owner will obtain, and complete, as a condition to
initial occupancy and with respect to new residents, maintain on file annually thereafter, income
3
certifications from each resident renting any of the units (other than units set aside for on -site
personnel). The Owner shall make a good faith effort to verify that the income provided by an
applicant or occupying household in an income certification is accurate by taking two or more of
the following steps as a part of the verification process: (1) obtain a minimum of the three (3)
most current pay stubs for all adults age eighteen (18) or older; (2) obtain an income tax return
for the most recent tax year; (3) conduct a credit agency or similar search; (4) obtain the three (3)
most current savings and checking account bank statements; (5) obtain an income verification
form from the applicant's current employer; (6) obtain an income verification form from the
Social Security Administration and/or the California Department of Social Services if the
applicant receives assistance from either of such agencies; or (7) if the applicant is unemployed
and has no such tax return, obtain another form of independent verification. Copies of resident
income certifications shall be available to the Authority upon request.
(d) The Owner shall continuously use the Project only for the construction,
development, operation, marketing for lease and leasing of the Project, and such other uses as are
reasonably and customarily attendant to such uses, subject to this Regulatory Agreement and any
and all other restrictive covenants entered into by the Owner. Further, the Owner agrees:
i. not to use the Project for any disorderly or unlawful purpose;
ii. to use best efforts to prevent any action by any tenants from committing or
maintaining any nuisance or unlawful conduct on or about the Project;
iii. to use best efforts to prevent any action by any tenant that would cause the
Owner to violate any of the covenants and conditions of this Regulatory Agreement with respect
to the Project;
iv. to take reasonable action, if necessary, to abate any action by any tenant that
would cause the Owner to violate this Regulatory Agreement; and
v. subject to the rights of tenants, to permit the Authority and its agents upon not
less than forty-eight (48) hours written notice to inspect the Project or any part thereof at any
reasonable time during the term of this Regulatory Agreement.
Section 3. Requirements of the Authority. In addition to other requirements set forth
herein, the Owner hereby agrees that all tenant lists, applications and waiting lists relating to the
Project shall at all times be kept separate and identifiable from in a reasonable condition for
proper audit and subject to examination during business hours by representatives of the
Authority upon reasonable advance notice to the Owner.
Section 4. Project Management and Maintenance.
(a) Management Responsibilities. The Owner is responsible for all management
functions with respect to the Project, including without limitation the selection of residents,
certification and recertification of household size and income, evictions, collection of rents and
deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital
items, and security. The Authority shall have no responsibility over management of the Project.
4
The Owner shall retain a property management company with experience in managing similarly -
situated, affordable housing projects to perform its management duties hereunder.
(b) Property Maintenance.
i. The Owner agrees, for the entire Term of this Regulatory Agreement, to
maintain all interior and exterior improvements, including landscaping, on the Project in good
condition and repair (and, as to landscaping, in a healthy condition) and in accordance with all
applicable laws, rules, ordinances, orders and regulations of all federal, state, county, municipal,
and other governmental agencies and bodies having or claiming jurisdiction and all their
respective departments, bureaus, and officials, and in accordance with the following maintenance
conditions:
1. Landscaping. Following the installation of permanent landscaping, the
Owner agrees to have landscape maintenance performed on a regular and
recurring basis, including replacement of dead or diseased plants with
comparable plants. Owner agrees to adequately water the landscaping on
the Property in order to maintain the landscaping in compliance with
Authority and Water District policies. All landscaping on the Property
shall be properly maintained.
2. Yard Area. No yard areas on the Property shall be left unmaintained,
including:
(i) broken or discarded furniture, appliances and other,
household equipment stored in yard areas for a period exceeding
one (1) week;
(ii) packing boxes, lumber trash, dirt and other debris in areas
visible from public property or neighboring properties; and
(iii) vehicles parked or stored in other than approved parking
areas.
3. Building. No buildings located on the Property may be left in an
unmaintained condition so that any of the following exist:
(i)
violations of state law, uniform codes, or Authority
ordinances;
(ii) conditions that constitute an unsightly appearance that
materially detracts from the aesthetics or value of the
Property or constitutes a private or public nuisance;
(iii) broken windows;
(iv) graffiti; and
5
(v) conditions constituting hazards and/or inviting trespassers,
or malicious mischief.
4. Sidewalks. The Owner shall maintain, repair, and replace as
necessary all private sidewalks adjacent to the Project.
ii. The Authority places prime importance on quality maintenance to ensure
that the Project is not allowed to deteriorate due to below -average maintenance. Normal wear
and tear of the Project will be acceptable to the Authority assuming the Owner agrees to provide
all necessary improvements to assure the Project is maintained in good condition. The Owner
shall make all repairs and replacements necessary to keep the improvements in good condition
and repair.
iii. In the event that the Owner breaches any of the covenants contained in
this Section 4 and such default continues for a period of thirty (30) days after written notice from
the Authority with respect to aesthetics and general maintenance or sixty (60) days after written
notice from the Authority with respect to landscaping and building improvements, then the
Authority, in addition to whatever other remedy it may have at law or in equity, shall 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. Pursuant to such right of entry, the Authority shall be permitted
(but is not required) to enter upon the Property and perform all acts and work necessary to
protect, maintain, and preserve the improvements and landscaped areas on the Property, and to
attach a lien on the Property, or to assess the Property, in the amount of the expenditures arising
from such acts and work of protection, maintenance, and preservation by the Authority and/or
costs of such cure, including a ten percent (10%) administrative charge, which amount shall be
promptly paid by the Owner to the Authority upon demand.
(c) Safety Conditions.
i. The Owner acknowledges that the Authority places a prime importance on
the security of Authority -assisted projects and the safety of the residents and surrounding
community. The Owner agrees to implement and maintain throughout the Term the following
security measures in the Project:
1. to maintain adequate lighting in parking areas and pathways; and
2. provide added security for every entry door of a residential unit
(e.g., dead bolt).
(d) Right to Inspect. The Authority shall have the right to perform an on -site
inspection of the Project at least one (1) time per year upon forty-eight hours (48) prior written
notice and subject to the rights of tenant's under their leases. The Owner agrees to cooperate in
such inspection.
Section 5. Operation of the Project.
The Owner shall pay all real and personal property taxes (to the extent the Owner is not exempt),
assessments, if any, and charges and all franchise, income, and other taxes assessed against it, or
6
payable by it, at such times and in such manner as to prevent any penalty from accruing, or any
line or charge from attaching to the Property; provided, however, that the Owner shall have the
right to contest in good faith, any such taxes, assessments, or charges. In the event the Owner
exercises its right to contest any tax, assessment, or charge against it, the Owner, on final
determination of the proceeding or contest, shall immediately pay or discharge any decision or
judgment rendered against it, together with all costs, charges and interest. Notwithstanding
anything to the contrary contained herein, the Owner may seek, qualify, apply for, and attain a
real estate property exemption under California Revenue and Taxation Code Section 214(g) with
respect to the Property.
Section 6. Term. This Regulatory Agreement and all and several of the terms hereof
shall become effective upon its execution and delivery, and shall remain in full force and effect
for the period provided herein and shall terminate at the earlier to occur of (i) the expiration of
the Term, or (ii) expiration or termination of the Ground Lease.
In the event this Regulatory Agreement is terminated due to foreclosure of a deed of trust
in prior lien position, this Regulatory Agreement shall be reinstated upon the Owner or any
affiliate of Owner reestablishing title to the Project. Notwithstanding any other provision of this
Regulatory Agreement, this Regulatory Agreement may be terminated upon agreement by the
Authority and the Owner. Upon the termination of the terms of this Regulatory Agreement, the
parties hereto agree to execute, deliver and record appropriate instruments of release and
discharge of the terms hereof; provided, however, that the execution and delivery of such
instruments shall not be necessary or a prerequisite to the termination of this Regulatory
Agreement in accordance with its terms. Notwithstanding any other provision of this
Agreement, no foreclosure of Owner's interest in the Property or termination of this Regulatory
Agreement shall operate to terminate or amend any land use entitlements or land use restrictions
(including housing affordability restrictions contained in such entitlements or restrictions)
applicable to the Project.
Section 7. Nondiscrimination.
(a) All of the units shall be available for occupancy on a continuous basis to members
of the general public who are income eligible and a preference to those that have special needs
(e.g., a developmental disability). The Owner shall not give preference to any particular class or
group of persons in renting the units, except to persons with special needs and qualifying income
or are otherwise permitted by law.
(b) There shall be no discrimination against or segregation of any person or group of
persons, on account of any 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,
in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises
herein leased nor shall the lessee himself or herself, or any person claiming under or through him
or her, establish or permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees,
subtenants, or vendees in the premises herein leased.
7
(c) Notwithstanding the preceding paragraph, with respect to familial status, the
preceding paragraph shall not be construed to apply to housing for older persons, as defined in
Section 12955.9 of the Government Code. With respect to familial status, nothing in the
preceding paragraph 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 the preceding paragraph.
(d) The provisions of this Section 7 shall run with the land and survive termination of
this Regulatory Agreement.
Section 8. Covenants to Run With the Land. The Owner hereby subjects the Project to
the covenants, reservations and restrictions set forth in this Regulatory Agreement. The
Authority and the Owner hereby declare their express intent that the covenants, reservations and
restrictions set forth herein shall be deemed covenants running with the land and shall pass to
and be binding upon the Owner's successors in title to the Project; provided, however, that on the
termination of this Regulatory Agreement or the Ground Lease said covenants, reservations and
restrictions shall expire. Each and every contract, deed or other instrument hereafter executed
covering or conveying the Project or any portion thereof shall conclusively be held to have been
executed, delivered and accepted subject to such covenants, reservations and restrictions,
regardless of whether such covenants, reservations and restrictions are set forth in such contract,
deed or other instruments.
Section 9. Burden and Benefit. The Authority and the Owner hereby declare their
understanding and intent that the burdens of the covenants set forth herein touch and concern the
land in that the Owner's legal interest in the Project is rendered less valuable thereby. The
Authority and the Owner hereby further declare their understanding and intent that the benefits
of such covenants touch and concern the land by enhancing and increasing the enjoyment and
use of the Project by low income tenants, the intended beneficiaries of such covenants,
reservations and restrictions.
Section 10. Uniformity; Common Plan. The covenants, reservations and restrictions
hereof shall apply uniformly to the entire Project to establish and carry out a common plan for
the use of the site on which the Project is located.
Section 11. Default; Enforcement. If the Owner defaults in the performance or
observance of any covenant, agreement or obligation of the Owner set forth in this Regulatory
Agreement, and if such default remains uncured for a period of 90 days after notice thereof shall
have been given by the Authority to the Owner, then the Authority may declare an "Event of
Default" to have occurred hereunder. The Authority agrees to provide copies of any notices of
default given to the Owner hereunder to the Owner's limited partners.
Following the declaration of an Event of Default hereunder, the Authority may take any
one or more of the following steps, in addition to all other remedies provided by law or equity:
(i) by mandamus or other suit, action or proceeding at law or in equity,
including injunctive relief, require the Owner to perform its obligations and covenants hereunder
8
or enjoin any acts or things that may be unlawful or in violation of the rights of the Authority
hereunder;
(ii) have access to and inspect, examine and make copies of all of the books
and records of the Owner pertaining to the Project;
(iii) take such other action at law or in equity as may appear necessary or
desirable to enforce the obligations, covenants and agreements of the Owner hereunder; and
(iv) any remedies for Events of Default under the Ground Lease.
The Owner hereby agrees that specific enforcement of the Owner's agreements contained
herein is the only means by which the Authority may fully obtain the benefits of this Regulatory
Agreement made by the Owner herein, and the Owner therefore agrees to the imposition of the
remedy of specific performance against it in the case of any Event of Default by the Owner
hereunder.
All reasonable fees, costs and expenses (including reasonable attorney's fees) of the
Authority incurred in taking any action pursuant to this section shall be the sole responsibility of
the Owner; provided, however, that in the event that any action arises hereunder in which the
Owner and the Authority are adversaries, the prevailing party, if any, shall be entitled to recover
legal fees and costs from the other party.
The Authority agrees to accept any cure of default by the Owner hereunder tendered by a
limited partner of the Owner on the same basis as any cure tendered by the Owner.
Section 12. Amendments; Waivers.
(a) This Regulatory Agreement may be amended only by a written instrument
executed by the parties hereto or their successors in title, and duly recorded in the real property
records of the County.
(b) Any waiver of, or consent to, any condition under this Regulatory Agreement
must be expressly made in writing.
Section 13. Severability. If any provision of this Regulatory Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof
shall not in any way be affected or impaired thereby.
Section 14. Multiple Countervarts. This Regulatory Agreement may be simultaneously
executed in multiple counterparts, all of which shall constitute one and the same instrument, and
each of which shall be deemed to be an original.
Section 15. Binding on Successors. This Regulatory Agreement shall bind, and the
benefits thereof shall inure to, the respective parties hereto, their legal representatives, executors,
administrators, successors and assigns; provided, however, that the Owner may not assign this
Regulatory Agreement, or any of its obligations hereunder, voluntarily or by operation of law,
without the prior approval of the Authority, which approval shall not be unreasonably withheld.
9
Except as expressly provided herein, this Regulatory Agreement shall be for the exclusive
benefit of the parties hereto and shall not confer any rights upon any third party. In the event the
Owner transfers title, possession or control of the Project to a third party, the Owner covenants to
require as a condition of transfer that such third party agrees to be bound by and to operate the
Project in accordance with this Regulatory Agreement. The Authority is deemed to be the
beneficiary of such conditions and agreements with the right to enforce them against any such
third party.
[Remainder of Page Intentionally Left Blank]
10
IN WITNESS WHEREOF, the Authority and the Owner have executed this
Regulatory Agreement by their duly authorized representatives, all as of the date first above
written.
APPROVED AS TO FORM:
By:
Authority Attorney
AUTHORITY:
PALM DESERT HOUSING
AUTHORITY
By:
Name:
Title:
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of )
On before me,
(insert name and title of the officer)
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)
[Additional Signatures Follow]
13898223.14
[Owner's Signature Page to Regulatory Agreement]
OWNER:
[Tax Credit Partnership or Allied Affordable Housing, LLC, a California limited liability
company]
By:
Name:
Title:
ACKNOWLEDGMENT
A notary public or other officer completing this certificate
verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of )
On before me,
(insert name and title of the officer)
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)
13898223.14
EXHIBIT A
DESCRIPTION OF REAL PROPERTY
THE LAND SITUATED IN THE STATE OF CALIFORNIA COUNTY OF RIVERSIDE,
CITY OF PALM DESERT AND IS DESCRIBED AS FOLLOWS:
NOTICE OF A PUBLIC HEARING
OF THE PALM DESERT HOUSING AUTHORITY
REGARDING A GROUND LEASE AND REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS FOR APPROXIMATELY 1.83
ACRES OF VACANT PROPERTY
NOTICE IS HEREBY GIVEN that the Palm Desert Housing Authority (the
"Authority") will hold a Public Hearing to consider the approval of the DRAFT
Ground Lease and Regulatory Agreement and Declaration of Restrictive
Covenants (the "Lease and Regulatory Agreement") by and between the
Authority, as Landlord, Allied Affordable Housing, LLC, as Lessee. The
Regulatory Agreement and Lease pertains to approximately 1.83 acres of vacant
property known as APN 622-020-096 located behind the Desert ARC facility for
the purpose of providing 36 units of affordable housing for low-income
households that may include persons with special needs.
Said Public Hearing will be held as follows:
DATE: Thursday, January 14, 2016
TIME: 4:00 P.M.
PLACE: City of Palm Desert Council Chambers
City Hall
73-510 Fred Waring Drive
Palm Desert, California 92260
A copy of the Lease and Regulatory Agreement is available for public inspection
and copying at a cost not to exceed the cost of duplication, at the Office of the
City Clerk, 73-510 Fred Waring Drive, Palm Desert, Califomia 92260. All
interested persons wishing to be heard on the matter may be present and be
heard. Any written communications should be addressed to the Authority
Secretary.
Dated: December 21, 2015
RAC E D. KLASSE ISECRETAR
PALM DESERT HOUSING AUTHORITY
(760) 346-0611
G'1C4yCI t\Glona Sanchez\LEGAL NOTICESIPH 01142016 - Ground Lease 1.83 Acres APN 622.020-096 Doc
Sanchez, Gloria
From: Email, TDS-Legals <legals@thedesertsun.com>
Sent: Monday, December 21, 2015 1:26 PM
To: Sanchez, Gloria
Subject: RE: Legal Notice - PH 01/14/2016 Ground Lease & Agmt 1.83 Acres - APN
622-020-096
Good Afternoon,
\d rei eiV ed (1nd n ill publish on date(s) requested.
Charlene Moeller I Customer Care Representative / Legals
The Desert Sun Media Group
750 N. Gene Autry Trail, Palm Springs, CA 92262
t 760.778,4578 I f 760.778.4528 e: Iegals(cr�thedesertsun.com
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From: gsanchez@citvofpalmdesert.org[mailto:gsanchez@citvofoalmdesert.orel
Sent: Monday, December 21, 2015 12:40 PM
To: Email, TDS-Legals <legals@thedesertsun.com>
Cc: imoore@citvofpalmdesert.org; igonzales@citvofpalmdesert.org; pleon@citvofnalmdesert.org;
rklassen@cityofpalmdesert.org; gmendoza@citvofpalmdesert.org; rmunoz@citvofpalmdesert.org
Subject: Legal Notice - PH 01/14/2016 - Ground Lease & Agmt 1.83 Acres - APN 622-020-096
Good morning, Charlene!!
PLEASE PUBLISH THE FOLLOWING:
LEGAL NOTICE
Notice of Public Hearing of the Palm Desert Housing Authority Regarding a Ground Lease and
Regulatory Agreement and Declaration of Restrictive Covenants for Approximately 1.83 Acres of
Vacant Property
TWICE IN THE DESERT SUN
Thursday, December 31, 2015
Thursday, January 7, 2016
If you have any questions or need additional information, please don't hesitate to contact our office.
1
Arc Village
73-255 Country Club Drive
Palm Desert, CA 92260
Project Description
Arc Village entails the development of a 36-unit affordable housing property located in Palm
Desert, which is in the Coachella Valley of Riverside County, California. This project is a
collaborative effort between the City of Palm Desert, Desert Arc, Synergy CDC, Foundation for
Affordable Housing and Allied Argenta. The goals of this development include:
• To develop 36 units of affordable housing in the Coachella Valley;
• To provide affordable housing options for individuals with developmental disabilities;
• To build high quality, energy efficient 1- and 2- bedroom units with common areas and
community space for all residents to enjoy, and;
• To leverage services, amenities, and opportunities already available for at -risk
populations.
Allied Argenta, LLC, the project sponsor and developer, has an extensive background in
affordable multifamily acquisitions, finance, operations, construction and community
development. Allied has also been focusing on an initiative to develop housing for adults with
developmental disabilities in collaboration with key stakeholders.
Desert Arc, project partner and supportive services provider, is one of the largest and oldest
non-profit organizations in the Coachella Valley. Founded in 1959 by parents of adult children
with developmental disabilities, Desert Arc today serves over 600 adults with disabilities such as
Autism, Cerebral Palsy, Down Syndrome, Epilepsy as well as other behavioral and medical
conditions. Desert Arc's mission is to "Enhance the quality of life and create opportunities for
people with disabilities."
Property Description
Arc Village is a 36-unit project that will be constructed within a 1.83 acre parcel in Palm Desert,
CA. The development will consist of a mix of one -bedroom, and two -bedroom garden -style
units and will have a clubhouse with offices, a fitness center, community kitchen and dining
room, computer room, as well as room for arts and social gatherings. It will also include other
outdoor recreational facilities such as sport court, swimming pool, fitness track, laundry
facilities, barbecue area, and approximately 36 parking spaces. The unit mix will be as follows:
# units % units Unit SF
1-bed/1 bath 32 89 550
2-bed/2 bath 4 11 700
Arc Village —Project Description
TOTAL: 36 100% 20,400
Site and Neighborhood
Arc Village will be located in Palm Desert, Riverside County, in the Coachella Valley. It is in a
primarily residential area, with quick access to commercial properties and amenities such as
schools, banks, restaurants, places of worship, retail and grocery stores, and medical centers.
Within walking distance is Plaza de Monterey Shopping Center with a Sherman's Deli & Bakery,
Bristol Farms and a Starbucks Coffee, and Albertson's across the street.
The property also sits immediately behind Desert Arc's offices and service facilities, which
provides work training, employment opportunities, adult day care, supported living services,
behavior management classes, transportation and other supportive services onsite. This
property will complement the services Desert Arc provides it's over 600 clients. Furthermore,
the property is 3 miles away from the College of the Desert Community College and Civic Center
Park.
The area also provides several recreational opportunities and healthcare services in the area. In
addition to many medical service providers, Eisenhower Medical Center is a mile away. There
are also numerous recreational facilities in the areas as well as several Country Clubs.
There is also a bus stop on the corner of Country Club Drive and Monterrey Avenue that
connects Line 32 to other routes throughout the area. In addition, Desert Arc has its own
accessible fleet of vans, buses and cars that may be used for residents' transportation.
Proposed Development
Allied Argenta and its partners proposes the development of Arc Village. The total anticipated
hard cost is $7.17 million, or about $187,234 per unit. One bedroom units are estimated to be
550 square feet, 2-bedroom units 700 square feet with approximately 6,000 square feet in
common area/community space. The Team is currently working on a site plan to define a
precise layout as well as amenities that will be offered. Please see an outline of the Vision for
Arc Village below.
To comply with federal accessibility requirements all public spaces will be made accessible for
those with mobility impairments.
Target Resident Population / Relocation
All of the units will be available to households with incomes at or below 40% of area median
income which, in 2015, is $17,400 for an individual. Arc Village will work with Desert Arc and
the Riverside Regional Center and Housing Authority to qualify residents into the Section 8
voucher program. Allied will incorporate the special needs preference into its Tenant Selection
Plan, which will be finalized prior to financial closing.
No relocation will be required as a new construction project.
Last updated 9.8.15 Page 2 of 7
Arc Village —Project Description
Development and Support Services Team
Allied Argenta, LLC
The Allied Argenta family of companies has extensive experience with Low Income Housing Tax
Credit (LIHTC) properties and is focused on the acquisition of multifamily housing to create
affordable housing communities where people of moderate resources can make a home. Allied
works closely with its partners to develop value added solutions matching the unique property
characteristics and intended housing goals of the project.
The Leadership Team for Allied Argenta has an extensive background in multifamily acquisitions,
finance, operations, construction and rehabilitation, and community development.
Allied Argenta's leadership team has:
• In the past three years, provided affordable housing to over 3,000 low-income residents
• Completed Over $1 Billion in Real Estate Transactions;
• Completed Transactions in Over 12 Different States;
• Financed Over $300 Million in Multifamily Projects;
• Secured Tax Exempt Bond Financing on Over 50 Projects;
• Underwritten over 150 Tax Credit Properties Resulting in Over $800 Million in Equity
Investments;
• Worked directly with over 10 Housing Authorities developing financing strategies to meet
their capital needs; and,
• Has secured millions of dollars in federal, state and foundation grants.
In 2013, the Allied team committed to developing caring communities for adults with complex
language, learning, and cognitive disabilities. These communities would provide residents with
safe, quality, affordable housing and an environment where residents may thrive and further
develop their social and independent living skills. We feel that in order to provide such housing
we need to partner with other agencies willing to assist Allied in developing a safe and active
living environment for our residents which is why Allied, Desert Arc and the City of Palm Desert
have joined forces to move this project forward.
Synergy Community Development Corporation, LLC: Co -developer (4% tax credits)
Synergy CDC (Synergy), based in Los Angeles, California, is a recognized 501(c)3 charitable and
nonprofit comprised of experienced affordable housing professionals and construction
specialists actively engaged in the development and preservation of affordable housing across
the United States for very -low, low- and moderate -income families. Synergy routinely
collaborates with for -profit developers, other non-profit organizations, financing partners,
community stakeholders, and state & local agencies resulting a greater, combined impact on
the development and preservation of affordable housing than when groups act alone. As such,
the Synergy team provides tactical development and project assistance when and where
necessary in a project, complementing the respective strengths and expertise of the other
organizations and project team members. It is through these partnerships that Synergy's
Last updated 9.8.15 Page 3 of 7
Arc Village —Project Description
tactical development and project assistance ensures the long-term success of very -low, low -
and moderate -income housing projects in our communities.
With this, Synergy provides effective development services, strategic partnerships and synergistic,
social services to community residents."
Foundation for Affordable Housing: Co -developer (9% tax credits)
Foundation for Affordable Housing (FFAH) is a tax-exempt 501(c)(3) public benefit nonprofit
corporation that creates safe, comfortable, high -quality, affordable homes that enrich the lives
of its residents and add stability to the surrounding community. With expertise, experience, and
care, we ease the burden of State, County, and Local Housing Authorities through the
construction, acquisition, and operation of low-income and senior housing. Their goal is to use
years of experience to make the process as straightforward as possible. By focusing on the
profitability and sustainability of each of their projects, they have been able to build safe and
comfortable housing for those who need it most.
FFAH works with a select network of developers who are leaders in the affordable housing
industry. They own and manage over 64 family properties and 39 senior properties, 96% of them
are California projects.
Desert Arc: Support Services Partner
Desert Arc is one of the largest and oldest non-profit organizations in the Coachella Valley.
Founded by parents of developmentally disabled adult children in 1959, Desert Arc today
serves 600+ adults with disabilities such as autism, cerebral palsy, Down syndrome, epilepsy
and other behavioral and medical conditions. Desert Arc's mission is to "Enhance the quality of
life and create opportunities for people with disabilities."
Desert Arc's main campus is on Country Club Drive just east of Monterey in Palm Desert. There
are two additional facilities — a satellite campus in Yucca Valley serving the Hi -Desert with 100
clients and 30 staff, and a new Recycling Center in Indio with 30 clients employed on a full-time
basis. Desert Arc's clients come from all over the Coachella Valley and the Hi -Desert extending
for certain services from Corona to Blythe, over to Temecula and Hemet, up to Yucca Valley,
Joshua Tree and Twenty -Nine Palms. To accommodate its clients, Desert Arc operates a large
transportation system including 24 large buses and 18 vans providing door-to-door service for
its clients on a daily basis as well as transportation to and from job sites and outings for social
relation activities.
With an overall staff of 250 dedicated personnel, Desert Arc provides vocational training and
employment opportunities as well as a year-round program of sports, art & music, outings and
social activities for its disabled clients. Desert Arc clients are primarily trained for landscaping,
janitorial, kitchen and recycling tasks. Clients work off -site in work teams at Eisenhower
Medical Center, Desert Regional Medical Center, JFK Memorial Hospital, Hi -Desert Medical
Center, Ernie Ball Guitar Strings, Sunnylands, all eight city parks in Yucca Valley, various other
Last updated 9.8.15 Page 4 of 7
Arc Village —Project Description
maintenance and landscaping sites around the community, restaurants, supermarkets and
retail stores too. With greater training and ability, clients are placed as Individual Placements
(IPs) with employers such as Mario's Italian Cafe restaurants, Carl's Jr, Applebee's, Home Depot,
Walmart, Lowe's, etc. With a large industrial kitchen and dining room at its Palm Desert
campus, Desert Arc trains 15-20 clients in kitchen skills so that they can obtain Food Handler's
cards to find employment at restaurants, hotels, and country clubs in the area.
Desert Arc clients are all 18 years of age or older. They are referred to Desert Arc by the Inland
Regional Center or the Department of Rehabilitation. Usually people with disabilities are held
in public high schools until they reach the age of 22 in California. Then they are referred to the
Regional Center where they are assessed and then referred to the appropriate service provider
like Desert Arc in their home communities. Desert Arc does its own assessment to assure that
the prospective clients are suitable for one of Desert Arc's fourteen client services. Once
accepted at Desert Arc, the clients can choose which activities they want to participate in on a
voluntary basis, which skills they would like to (and can) learn, to become employable in a skill
either onsite (like fulfillment and distribution for major customers such as Wells Fargo Bank and
Time Warner Cable), or in the outside community in paid work in landscaping, maintenance,
kitchen or recycling activities.
Project Financing / Schedule
The proposed project financing for Arc Village is equity from the sale of 9% Low Income Housing
Tax Credits; Supportive Housing Multifamily Housing Program funds, City of Palm Desert land
donation, Federal Home Loan Bank AHP and/or other form of subordinate gap financing; and
deferred developer fees. The total development cost is approximately $7.17 million, or about
$187,234 per unit.
Considering the financing schedule we anticipate to go after 9% tax credits March 2016, with an
estimated closing date of October 2016, with construction completion in July 2017.
#
Last updated 9.8.15 Page 5 of 7
Partners for Arc Village Special Needs Affordable Housing Project
Allied has assembled several teams for this project. One team will support Allied with the physical
development and financial sustainability of the project. The second team will provide services for low-
income tenants with developmental disabilities. Partners for each team are identified on the following
two pages:
Project Development Team
• Allied Argenta Real Estate Partners (Allied) is the project manager and co -developer with Synergy
and/or Foundation for Affordable Housing. Allied will be working with the team to manage all
financing and development for this project.
• Synergy Community Development Corporation is the co -developer for project. It will provide
design support during the development phase and service coordination for the residents along with
project management once the project is completed.
• Foundation for Affordable Housing is the co -developer for project. It will provide design support
during the development phase and will file the tax credit exemption.
• City of Palm Desert —The City of Palm Desert will be donating the land or providing a 99 year lease
for the development of this project.
• LivingHomes is the architectural and design firm for the prefabricated housing units.
• PDF Architects is one of the architectural firms completing the architectural designs for Arc Village's
common areas and community space.
• Kirk Saunders Architect is one of the architectural firms completing the architectural designs for Arc
Village's common areas and community space.
• Argenta Construction Group, 'IC is serving as the General Contractor for the construction of the Arc
Village project.
• XXXXX is conducting the Phase I environmental review required by CTCAC and other funding
agencies, as well as a follow-on environmental assessment for the Low Income Housing Tax Credits,
required as part of the project.
• XXXX is conducting the appraisal(s).
• Karen Bracher/Novogradac will conduct a feasibility study to assess the competitiveness of the
project for 9% low income housing tax credits as well as other alternative financing as well as assist
with any applications.
• Other partnerships, to be developed as the project proceeds, will include recruitment of a property
management company, a tax credit syndicator (either an intermediary organization such as
Enterprise Community Partners or a lending institution) and gap loans obtained through
intermediary organizations or lenders.
Last updated 9.3.15 Page 1 of 2
Support Services Team
• Desert Arc will provide vocational training, supportive services and referrals for their residents. It
will provide transportation and recreational activities for residents interested in those activities and
services. In addition, it will assess, train and help place residents in employment opportunities.
• Riverside County Housing Authority —The team will reach out to County of Riverside Housing
Authority has committed to refer clients of its housing Choice Voucher waiting list to the project.
• Riverside Regional Center will provide tenant referrals.
• XXXX Fair Housing Council will provide fair housing education training for both Arc Village staff
and the property managers who will be working to place clients in the new rental housing units.
In addition, XXXX will provide fair housing literature and referrals on fair housing issues to
tenants of the proposed housing. All services will be provided free of charge.
• XXXXX Health Services —Provide residents with on -site skilled nursing and health home -aide
services, as well as support services such as attendant care, homemaking, personal care, and
respite.
Last updated 9.3.15 Page 2 of 2
Arc Village —Project Description
Arc Village
73-255 Country Club Drive
Palm Desert, CA 92260
Location Map
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Last updated 9.8.15 Page 6 of 7
Arc Village —Project Description
DesertArc Apartments
73-255 Country Club Drive
Palm Desert, CA 92260
Aerial Photo
Last updated 9.8.15 Page 7 of 7
September 9, 2015
Chuck O'Neal, Principal
Allied Argenta, LLC
409 Santa Monica Blvd, Suite 2E
Santa Monica, CA 90401
Desert Arc
OPPORTUNITIES FOR PEOPLE WITH DISABILITIES
RE: Letter of Commitment for Arc Village Development
Dear Mr. O'Neal:
Desert Arc is committed to being an active service partner for Allied Argenta and its Arc Village project
which will create 36 units of affordable housing for adults with developmental disabilities.
Desert Arc is one of the largest and oldest non-profit organizations in the Coachella Valley. Founded in
1959 by parents of adult children with developmental disabilities, Desert Arc today serves over 600
adults with disabilities such as autism, cerebral palsy, Down syndrome, and epilepsy, as well as other
behavioral and medical conditions. Desert Arc's mission is to "Enhance the quality of life and create
opportunities for people with disabilities." We believe that quality, affordable housing is a necessary
building block toward development and independence for adults with developmental disabilities. Arc
Village will help us address the need our clients have for affordable housing. At this time we have over
100 individuals on a waiting list for independent living options.
As part of our commitment to Arc Village, Desert Arc will provide the following services to residents of
this special needs housing project.
• Vocational Training: Our staff will provide training and assistance for each of the 36 clients.
• Physical Activity and Exercise: Our staff will provide weekly fitness classes.
• Healthy Meal Preparation: Our staff will provide training and assistance with nutrition and
meal preparation for the 36 tenants. Furthermore, these services will be available throughout
the year.
In addition, we will be working with Allied Argenta and the development team throughout all stages of
development providing input on design, amenities, and services. If you have any questions you can
reach me at 310-308-6986, Email: mgblumberg@gmail.com
Mitch Blumberg
Senior Vice President
7 3- 2 5 5 Country Club Drive • Palm Desert, CA 9 2 2 6 0
Phone (760) 3 4 6 1 6 1 1 • Toll Free (8 8 8) 7 7 1 - 7 7 8 4 • Fax (760)7 7 3- 0 9 3 3
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ARC VILLAGE-73-255 COUNTRY CLUB, P.D.
CONST. DOCUMENTS SEPTEMBER 10, 2015 I
Locator Map
Date:
4/2012
VICINITY MAP