HomeMy WebLinkAboutR24030 - DSUSD - Lease Agreement - Preschool Program @ 44-911 Cabrillo Ave (Wallaroo Children's Ctr) Contract No. R24030
PALM DESERT REDEVELOPMENT AGENCY
STAFF REPORT
REQUEST: 1) PUBLIC HEARING PURSUANT TO SECTION 33433 OF THE
HEALTH AND SAFETY CODE
2) APPROVE THE LEASE AGREEMENT BETWEEN DESERT
SANDS UNIFIED SCHOOL DISTRICT AND THE PALM DESERT
REDEVELOPMENT AGENCY FOR THE PURPOSE OF
FACILITATING A PRE-SCHOOL PROGRAM AT THE
WALLAROO CHILDREN'S CENTER
SUBMITTED BY: CATHERINE WALKER, SENIOR MANAGEMENT ANALYST
JANET MOORE, HOUSING AUTHORITY MANAGER
APPLICANT: DESERT SANDS UNIFIED SCHOOL DISTRICT
47-950 DUNE PALMS ROAD
LA QUINTA, CALIFORNIA 92253
DATE: JULY 14, 2005
CONTENTS: LEASE AGREEMENT
DSUSD PROPOSAL
Recommendation:
That the Agency Board open the public hearing and following testimony,
take the following actions:
1. Approve a lease agreement by and between the Desert Sands
Unified School District and the Palm Desert Redevelopment
Agency for the Preschool Program at the Wallaroo Children's
Center; and
2. Authorize Chairman to execute such lease agreement and
necessary documents.
Executive Summary:
The Desert Sands Unified School District has proposed the establishment of a
Preschool Program in the Agency-owned building, located at 44-911 Cabrillo Avenue
(a.k.a. Wallaroo Children's Center). The Program would serve 80 pre-school age
DSUSD at Wallaroo.wpd
Contract No. R24030
Staff Report
Lease Agreement with DSUSD for Head Start Program at Agency-owned Building
Page 2
July 14, 2005
children and their families, who are being displaced from their current facilities. The
School District has received funding from the State to provide for staffing, instructional
material, utility, maintenance, furniture, nutritional meals and snacks for the children
enrolled. The School District will also provide for signage, playground equipment
modification, interior painting, and minor demolition for licensing purposes. The
Redevelopment Agency will bear the cost of some renovation of the facility for code and
safety requirements. The Program is scheduled to begin in September.
Discussion:
The Desert Sands Unified School District Early Childhood Education Program is
requesting support from the Palm Desert Redevelopment Agency to establish a State
Pre-school Program, funded through the California Department of Education, which
would serve 80 pre-school age children and their families. These families are required
to meet the income guidelines, a family of four can make no more than $39,000. The
State Preschool program is a part-time day program which allows for 40 children to
receive services in the morning and another 40 children in the afternoon. They will also
serve 16 Head Start students in the morning, a poverty level program where a family of
four is allowed an income of$19,350.00.
The Abraham Lincoln Elementary School, located in Palm Desert, used to house a
portion of the State Pre-school Program, but was unable to accommodate the program
further because of the tremendous growth of their student body. There is a great need
for this program to be housed in the Palm Desert area as sixty-five percent of the
families in attendance in the Lincoln area are at poverty to low-income level. They have
requested to relocate the 48 funding slots to the Agency-owned building located at
44911 Cabrillo Avenue, Palm Desert California ( Wallaroo Children's Center).
The necessary changes and renovations to the building and play area will include: four
gates, parking lot improvements, ADA ramp entrance, removal of any non-working
appliances and hazardous materials, doors to cover stairwells, landscaping,
replacement of entry front doors, fumigation, paint inside, demolition of partitions inside
the building, and adjust play equipment. These improvements must be addressed in
order to prepare the building for licensing. The School District will perform the painting,
playground equipment adjustment, demolition of partitions, and pay for all signage. The
Agency is prepared to perform the remainder of the renovation, seeing that the building
has been vacant for approximately a year and a half, and must be brought up to Code
and Building and Safety standards.
DSUSD at Wallaroo.wpd
• Contract No. R24030
Staff Report
Lease Agreement with DSUSD for Head Start Program at Agency-owned Building
Page 3
July 14, 2005
DSUSD is currently reviewing the Lease Agreement and has placed the item on the
DSUSD Board's July 19th Agenda. Once the Lease Agreement is approved by both
parties and their respective legal counsels, staff will finalize the Agreement.
Submitted by: Department Head:
*/
Air- . Moore David Yrigoy
Housing Authority Administrator Director of edevelopment/Housing
12-a.(11-C,L Approval:
Catherine Walker, Sr. Management Analyst
Approval: us in McCarthy, AC velopment
Carlos L. Ortega, ecutive Director Paul S. Gibson, Director of Finance
DSUSD at Wallaroo.wpd
Contract No. R24030
LEASE
1. Basic Provisions ("Basic Provisions").
1.1 Parties: This Lease ("Lease"), is dated for reference purposes only July 14,
2005, is entered into by and between the PALM DESERT REDEVELOPMENT
AGENCY, a public body, corporate and politic ("Lessor") and the DESERT SANDS
SCHOOL DISTRICT, an Educational Agency ("Lessee") (collectively the "Parties," or
individually a "Party").
1.2 Premises: That certain land, including the building and all improvements
thereon (collectively, the "Building"), commonly known as 44-911 Cabrillo Avenue,
Palm Desert Ca, 92260 (Wallaroo Children's Center, and located in the County of
Riverside, State of California, and more particularly described on Exhibit "A" attached
hereto.
1.3 Term: Five (5) years, commencing on the date on which Lessor delivers the
Premises to Lessee with the Lessor's Work (defined in Section 1.7 below) substantially
completed ("Commencement Date") and ending five (5) years thereafter ("Expiration
Date"). Upon the request of the Lessor, the Lessee shall acknowledge in writing the
date of such substantial completion and the Commencement Date.
1.4 Base Rent: $1.00 per year ("Base Rent"), payable on the first business day
of
each calendar year commencing in September, 2005.
1.5 Agreed Use: The operation of a childcare center under the auspices of the
Lessee's Pre-School Program.
1.6 Insuring Party: The Lessor is the "Insuring Party" unless otherwise stated
herein.
1.7 Lessor's Work: Lessor shall, at Lessor's cost and expense, make the
improvements and repairs described on Exhibit "B" in accordance with all applicable
laws (the "Lessor's Work").
1.8 Lessee's Work: Lessee shall, at Lessee's cost and expense, make the
improvements and repairs described on Exhibit "C" on or before September 2005, and
in accordance with all applicable laws (the "Lessee's Work").
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants
and conditions set forth in this Lease.
2.2 Condition; Compliance with Laws. Subject to Lessor's completion of the
Lessor's work, Lessee shall lease the Premises in their "AS-IS" condition, without
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representation or warranty, express or implied, and Lessee hereby acknowledges that
except for the Lessor's Work, in no event shall Lessor be obligated to make any
alterations, repairs or improvements to the Premises.
Lessee has made such investigation as it deems necessary with reference to such
matters and assumes all responsibility therefor. In addition, Lessee hereby expressly
acknowledges that Lessee has had full opportunity to inspect the Premises (including,
without limitation the presence/absence of hazardous materials, the condition of fixtures
and equipment, and whether the improvements comply with law). In addition to the
Lessee's Work, Lessee hereby agrees to make any changes to the Premises required
by existing laws or by amendments to existing laws or by new laws. •
3. Possession. Lessor shall not be required to deliver possession of the Premises to
Lessee until Lessee complies with its obligation to provide evidence of insurance under
Paragraph 6, but such failure to provide evidence of insurance shall not extend or delay
the Commencement Date.
4. Use.
4.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use,
and for no other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
occupants of or causes damage to neighboring premises or properties.
4.2 Hazardous Substances.
(a) Definitions. The term "Hazardous Substance" as used in this Lease
shall mean any product, substance, or waste whose presence, use, manufacture,
disposal, transportation, or release, either by itself or in combination with other materials
expected to be on the Premises, is either: (i) potentially injurious to the public health,
safety or welfare, the environment or the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law theory.
Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.
"Reportable Use" shall mean (i) the installation or use of any above or below ground
storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of
a Hazardous Substance that requires a permit from, or with respect to which a report,
notice, registration or business plan is required to be filed with, any governmental
authority, and/or (iii) the presence at the Premises of a Hazardous Substance with
respect to which any Applicable Requirements requires that a notice be given to
persons entering or occupying the Premises or neighboring properties.
(b) Use Requires Consent. Lessee shall not engage in any activity in or
on the Premises, which constitutes a Reportable Use of Hazardous Substances without
the express prior written consent of Lessor and timely compliance (at Lessee's
expense) with all Applicable Requirements. Notwithstanding the foregoing, Lessee may
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use any ordinary and customary materials reasonably required to be used in the normal
course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.)
and common household cleaning materials, so long as such use is in compliance with
all Applicable Requirements, is not a Reportable Use, and does not expose the
Premises or neighboring property to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. In addition, Lessor may condition its consent to
any Reportable Use upon receiving such additional assurances as Lessor reasonably
deems necessary to protect itself, the public, the Premises and/or the environment
against damage, contamination, injury and/or liability, including, but not limited to, the
installation (and removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements).
(c) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or about the
Premises, other than as previously consented to by Lessor, Lessee shall immediately
give written notice of such fact to Lessor, and provide Lessor with a copy of any report,
notice, claim or other documentation which it has concerning the presence of such
Hazardous Substance.
(d) Lessee Remediation. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, comply with all Applicable Requirements and take all investigatory
and/or remedial action reasonably recommended, whether or not formally ordered or
required, for the cleanup of any contamination of, and for the maintenance, security
and/or monitoring of the Premises or neighboring properties, that was caused or
materially contributed to by Lessee, or pertaining to or involving any Hazardous
Substance brought onto the Premises during the term of this Lease, by or for Lessee, or
any third party.
(e) Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and
against any and all loss of rents and/or damages, liabilities, judgments, claims,
expenses, penalties, and attorneys' and consultants' fees arising out of or involving any
Hazardous Substance brought onto the Premises by or for Lessee, or any third party
(provided, however, that Lessee shall have no liability under this Lease with respect to
underground migration of any Hazardous Substance under the Premises from adjacent
properties not caused or contributed to by Lessee). Lessee's obligations shall include,
but not be limited to, the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration or
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.
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(f) Investigations and Remediations. Lessee shall have the
responsibility to pay for any investigations or remediation measures required by
governmental entities having jurisdiction with respect to the existence of Hazardous
Substances on the Premises as a result of Lessee's use (including the Lessee's Work
and the "Alterations", as defined in Paragraph 5.3(a) below) of the Premises.
(g) Lessor Termination Option. If a Hazardous Substance Condition
(see Paragraph 7.1(e)) occurs during the term of this Lease, Lessee shall investigate
and remediate it as required by the Applicable Requirements and this Lease shall
continue in full force and effect.
4.3 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in
Paragraph 27.1) and consultants shall have the right to enter into Premises at any time,
in the case of an emergency, and otherwise at reasonable times after reasonable
notice, for the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. The cost of any such inspections shall be paid
by Lessor, unless a violation of Applicable Requirements, or a Hazardous Substance
Condition (see Paragraph 7.1) is found to exist or be imminent, or the inspection is
requested or ordered by a governmental authority. In such case, Lessee shall upon
request reimburse Lessor for the cost of such inspection, so long as such inspection is
reasonably related to the violation or contamination.
5. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.
5.1 Lessee's Obligations.
(a) In Generat. Subject to the provisions of Paragraph 5.2 (Lessor's
Obligations), 7 (Damage or Destruction), and 12 (Condemnation), Lessee shall, at
Lessee's sole expense, keep the Premises, Utility Installations (intended for Lessee's
exclusive use, no matter where located), Lessee's Work and Alterations in good order,
condition and repair (whether or not the portion of the Premises requiring repairs, or the
means of repairing the same, are reasonably or readily accessible to Lessee, and
whether or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and
exterior), foundations, ceilings, roofs, roof drainage systems, floors, windows, doors,
plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls,
signs, sidewalks and parkways located in, on, or adjacent to the Premises.
Notwithstanding the foregoing, Lessor shall, at Lessor's sole cost and expense, replace
the air conditioning unit if it ceases to function due to age and it is reasonably
determined, by an HVAC engineer retained by Lessor, that the replacement of the unit
is necessary. Lessee, in keeping the Premises in good order, condition and repair, shall
exercise and perform good maintenance practices, specifically including the
procurement and maintenance of the service contracts required by Paragraph 5.1(b)
below. Except as hereinabove provided with respect to the air conditioning unit,
Lessee's obligations shall include restorations, replacements or renewals when
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necessary to keep the Premises and all improvements thereon or a part thereof in good
order, condition and state of repair. Lessee shall, during the term of this Lease, keep the
exterior appearance of the Building in a first-class condition (including, e.q. graffiti
removal) consistent with the exterior appearance of other similar facilities of comparable
age and size in the vicinity, including, when necessary, the exterior repainting of the
Building.
(b) Service Contracts. Lessee shall, at Lessee's sole expense, procure
and maintain contracts, with copies to Lessor, in customary form and substance for, and
with contractors specializing and experienced in the maintenance of the following
equipment and improvements, if any, if and when installed on the Premises: (i) HVAC
equipment, (ii) boiler, and pressure vessels, (iii) fire extinguishing systems, including fire
alarm and/or smoke detection, (iv) landscaping and irrigation systems, (v) roof covering
and drains, (vi) clarifiers (vii) basic utility feed to the perimeter of the Building, and (viii)
any other equipment, if reasonably required by Lessor. However, Lessor reserves the
right, upon notice to Lessee, to procure and maintain any or all of such service
contracts, and if Lessor so elects, Lessee shall reimburse Lessor, upon demand, for the
cost thereof.
(c) Failure to Perform. If Lessee fails to perform Lessee's obligations
under this Paragraph 5.1, Lessor may enter upon the Premises after 10 days' prior
written notice to Lessee (except in the case of an emergency, in which case no notice
shall be required), perform such obligations on Lessee's behalf, and put the Premises in
good order, condition and repair, and Lessee shall promptly pay to Lessor a sum equal
to 115% of the cost thereof.
5.2 Lessor's Obligations. Subject to the provisions of Paragraphs 1.7 (Lessor's
Work), 7 (Damage or Destruction) and 12 (Condemnation), it is intended by the Parties
hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain
the Premises, or the equipment therein, all of which obligations are intended to be that
of the Lessee. It is the intention of the Parties that the terms of this Lease govern the
respective obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to the extent it
is inconsistent with the terms of this Lease.
5.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions. The term "Utility Installations" refers to all floor and
window coverings, air and/or vacuum lines, power panels, electrical distribution, security
and fire protection systems, communication cabling, lighting fixtures, HVAC equipment,
plumbing, and fencing in or on the Premises. The term "Trade Fixtures" shall mean
Lessee's machinery and equipment that can be removed without doing material
damage to the Premises. The term "Alterations" shall mean any modification of the
improvements, other than Utility Installations or Trade Fixtures, whether by addition or
deletion. "Lessee Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor
pursuant to Paragraph 5.4(a).
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(b) Consent. Except for the Lessee's Work, Lessee shall not make any
Alterations or Utility Installations to the Premises without Lessor's prior written consent.
Lessee may, however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as long
as they are not visible from the outside, do not involve puncturing, relocating or
removing the roof or any existing walls, will not affect the electrical, plumbing, HVAC,
and/or life safety systems. Notwithstanding the foregoing, Lessee shall not make or
permit any roof penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval, require
Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or
Utility Installations that Lessee shall desire to make and which require the consent of
the Lessor shall be presented to Lessor in written form with detailed plans. Consent
shall be deemed conditioned upon Lessee's: (i) acquiring all applicable governmental
permits, (ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. The Lessee's Work shall commence and be completed only upon
satisfaction of the conditions in (i), (ii) and (iii) above. Any Alterations or Utility
Installations shall be performed in a workmanlike manner with good and sufficient
materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and
specifications. Lessor may condition its consent upon Lessee providing a completion
bond in an amount equal to 150% of the estimated cost of such Alteration or Utility
Installation.
5.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility Installations made by
Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor
may, at any time, elect in writing to be the owner of all or any specified part of the
Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per
Paragraph 5.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at
the expiration or termination of this Lease, become the property of Lessor and be
surrendered by Lessee with the Premises.
(b) Removal. By delivery to Lessee of written notice from Lessor not
earlier than ninety (90) and not later than thirty (30) days prior to the end of the term of
this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility
Installations be removed by the expiration or termination of this Lease. Lessor may
require the removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent.
(c) Surrender; Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements, parts and
surfaces thereof broom clean and free of debris, and in good operating order, condition
and state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not
include any damage or deterioration that would have been prevented by good
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maintenance practice. Lessee shall repair any damage occasioned by the installation,
maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility
Installations, furnishings, and equipment as well as the removal of any storage tank
installed by or for Lessee. Lessee shall completely remove from the Premises any and
all Hazardous Substances brought onto the Premises by or for Lessee, or any third
party (except Hazardous Substances which were deposited via underground migration
from areas outside of the Premises) even if such removal would require Lessee to
perform or pay for work that exceeds statutory requirements. Trade Fixtures shall
remain the property of Lessee and shall be removed by Lessee. Any personal property
of Lessee not removed on or before the Expiration Date or any earlier termination date
shall be deemed to have been abandoned by Lessee and may be disposed of or
retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the
Premises pursuant to this Paragraph 5.4(c) without the express written consent of
Lessor shall constitute a holdover under the provisions of Paragraph 23 below.
6. Insurance; Indemnity.
6.1 Payment For Insurance. Lessee shall pay for all insurance required under
this Paragraph 6 except to the extent of the cost attributable to liability insurance carried
by Lessor under Paragraph 6.2(b) in excess of $2,000,000 per occurrence. Premiums
for policy periods commencing prior to or extending beyond the Lease term shall be
prorated to correspond to the Lease term. Payment shall be made by Lessee to Lessor
within ten (10) days following receipt of an invoice.
6.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor as an
additional insured against claims for bodily injury, personal injury and property damage
based upon or arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an annual aggregate of not less than $5,000,000, an "Additional
Insured-Managers or Lessors of Premises Endorsement" and contain the "Amendment
of the Pollution Exclusion Endorsement" for damage caused by heat, smoke or fumes
from a hostile fire. The policy shall not contain any intra-insured exclusions as between
insured persons or organizations, but shall include coverage for liability assumed under
this Lease as an "insured contract" for the performance of Lessee's indemnity
obligations under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. The policy must
provide for the payment of defense costs in addition to the coverage amounts stated
therein. All insurance carried by Lessee shall be primary to and not contributory with
any similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.
(b) Carried by Lessor. Lessor may maintain, at its sole cost and expense,
liability insurance as described in Paragraph 6.2(a), in addition to, and not in lieu of, the
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insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.
6.3 Property Insurance — Building and Improvements. The Insuring Party
shall obtain and keep in force a policy or policies in the name of Lessor, with loss
payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement cost of
the Premises, as the same shall exist from time to time, or the amount required by any
Lender, but in no event more than the commercially reasonable and available insurable
value thereof. If Lessor is the Insuring Party, however, Lessee Owned Alterations and
Utility Installations, Trade Fixtures, and Lessee's personal property shall be insured by
Lessee under Paragraph 6.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless required
by a Lender), including coverage for debris removal and the enforcement of any
Applicable Requirements requiring the upgrading, demolition, reconstruction or
replacement of any portion of the Premises as the result of a covered loss. Said policy
or policies shall also contain an agreed valuation provision in lieu of any coinsurance
clause, waiver of subrogation, and inflation guard protection causing an increase in the
annual property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city
nearest to where the Premises are located. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $1,000 per occurrence, and Lessee
shall be liable for such deductible amount in the event of an Insured Loss.
6.4 Lessee's Property.
(a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement cost
coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from
any such insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee shall
provide Lessor with written evidence that such insurance is in force.
(b) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified herein are
adequate to cover Lessee's property, business operations or obligations under this
Lease.
6.5 Insurance Policies. Insurance required herein shall be by companies duly
licensed or admitted to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at least B+,
V, as set forth in the most current issue of"Best's Insurance Guide", or such other rating
as may be required by a Lender. Lessee shall not do or permit to be done anything
which invalidates the required insurance policies. Lessee shall, prior to the
Commencement Date, deliver to Lessor certified copies of policies of such insurance or
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certificates evidencing the existence and amounts of the required insurance. No such
policy shall be cancelable or subject to modification except after 30 days prior written
notice to Lessor. Lessee shall, at least 30 days prior to the expiration of such policies,
furnish Lessor with evidence of renewals or "insurance binders" evidencing renewal
thereof, or Lessor may order such insurance and charge the cost thereof to Lessee,
which amount shall be payable by Lessee to Lessor upon demand. Such policies shall
be for a term of at least one (1) year, or the length of the remaining term of this Lease,
whichever is less. If either Party shall fail to procure and maintain the insurance required
to be carried by it, the other Party may, but shall not be required to, procure and
maintain the same.
6.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their entire
right to recover damages against the other, for loss of or damage to its property arising
out of or incident to the perils required to be insured against herein. The effect of such
releases and waivers is not limited by the amount of insurance carried or required, or by
any deductibles applicable hereto. The Parties agree to have their respective property
damage insurance carriers waive any right to subrogation that such companies may
have against Lessor or Lessee, as the case may be.
6.7 Indemnity. Except for Lessor's gross negligence or willful misconduct,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its
agents, Lessor's master or ground lessor, partners and Lenders, from and against any
and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys' and
consultants' fees, expenses and/or liabilities arising out of, involving, or in connection
with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding
is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have
first paid any such claim in order to be defended or indemnified.
6.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or
damage to the person or goods, wares, merchandise or other property of Lessee,
Lessee's employees, contractors, invitees, customers, or any other person in or about
the Premises, whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or other
defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures,
or from any other cause, whether the said injury or damage results from conditions
arising upon the Premises or upon other portions of the building of which the Premises
are a part, or from other sources or places, and whether caused by Lessor's active
negligence or passive negligence. Notwithstanding Lessor's negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of income or profit therefrom.
7. Damage or Destruction.
7.1 Definitions.
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9
(a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in six (6) months or less from the date of
the damage or destruction. Lessor shall notify Lessee in writing within thirty (30) days
from the date of the damage or destruction as to whether or not the damage is Partial or
Total.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations and Trade
Fixtures, which cannot reasonably be repaired in 6 months or less from the date of the
damage or destruction. Lessor shall.notify Lessee in writing within thirty (30) days from
the date of the damage or destruction as to whether or not the damage is Partial or
Total.
(c) "Insured Loss" shall mean damage or destruction to improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 6.3(a), irrespective of any deductible amounts or coverage limits
involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition existing
immediately prior thereto, including demolition, debris removal and upgrading required
by the operation of Applicable Requirements, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a Hazardous
Substance as defined in Paragraph 4.2(a), in, on, or under the Premises which requires
repair, remediation, or restoration.
7.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage (but
not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility Installations) as
soon as reasonably possible and this Lease shall continue in full force and effect;
provided, however, that Lessee shall, at Lessor's election, make the repair of any
damage or destruction the total cost to repair of which is $10,000 or less, and, in such
event, Lessor shall make any applicable insurance proceeds available to Lessee on a
reasonable basis for that purpose. Notwithstanding the foregoing, if the required
insurance was not in force or the insurance proceeds are not sufficient to effect such
repair, the Insuring Party shall promptly contribute the shortage in proceeds (except as
to the deductible which is Lessee's responsibility) as and when required to complete
said repairs. In the event, however, such shortage was due to the fact that, by reason of
the unique nature of the improvements, full replacement cost insurance coverage was
not commercially reasonable and available, Lessor shall have no obligation to pay for
the shortage in insurance proceeds or to fully restore the unique aspects of the
Premises unless Lessee provides Lessor with the funds to cover same, or adequate
assurance thereof, within ten (10) days following receipt of written notice of such
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10
shortage and request therefor. If Lessor receives said funds or adequate assurance
thereof within said ten (10) day period, the party responsible for making the repairs shall
complete them as soon as reasonably possible and this Lease shall remain in full force
and effect. If such funds or assurance are not received, Lessor may nevertheless elect
by written notice to Lessee within ten (10) days thereafter to: (i) make such restoration
and repair as is commercially reasonable with Lessor paying any shortage in proceeds,
in which case this Lease shall remain in full force and effect, or (ii) have this Lease
terminate thirty (30) days thereafter. Lessee shall not be entitled to reimbursement of
any funds contributed by Lessee to repair any such damage or destruction. Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 7.3,
notwithstanding that there may be some insurance coverage, but the net proceeds of
any such insurance shall be made available for the repairs if made by either Party.
7.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not
an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which
event Lessee shall make the repairs at Lessee's expense), Lessor may either: (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event this
Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage. Such termination shall be effective sixty (60) days
following the date of such notice. In the event Lessor elects to terminate this Lease,
Lessee shall have the right within ten (10) days after receipt of the termination notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of such
damage without reimbursement from Lessor. Lessee shall provide Lessor with said
funds or satisfactory assurance thereof within thirty (30) days after making such
commitment. In such event this Lease shall continue in full force and effect, and Lessor
shall proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.
7.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises
Total Destruction occurs, this Lease shall terminate sixty (60) days following such
Destruction. If the damage or destruction was caused by the negligence or willful
misconduct of Lessee, Lessor shall have the right to recover Lessor's damages from
Lessee, except to the extent actually covered by insurance.
7.5 Lessee's Remedies. If Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair or
restoration within ninety (90) days after such obligation shall accrue, Lessee may, at
any time prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice, of Lessee's election to
terminate this Lease on a date not less than sixty (60) days following the giving of such
notice. If Lessee gives such notice and such repair or restoration is not commenced
within thirty (30) days thereafter, this Lease shall terminate as of the date specified in
said notice. If the repair or restoration is commenced within such thirty (30) days, this
Lease shall continue in full force and effect. "Commence" shall mean either the
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11
unconditional authorization of the preparation of the required plans, or the beginning of
the actual work on the Premises, whichever first occurs.
7.6 Waiver of Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with respect to
the termination of this Lease and hereby waive the provisions of any present or future
statute to the extent inconsistent herewith.
8. Taxes. Unless Lessee is exempt from such taxes, Lessee shall pay, prior to
delinquency, all possessory interest taxes assessed on Lessee's interest under this
Lease, taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property of
Lessee. When possible, Lessee shall cause its Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal property to
be assessed and billed separately from the real property of Lessor. If any of Lessee's
said property shall be assessed with Lessor's real property, Lessee shall pay Lessor the
taxes attributable to Lessee's property within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Lessee's property.
9. Utilities and Services. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the Premises,
together with any taxes thereon. If any such services are not separately metered or
billed to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor,
of all charges jointly metered or billed. Lessor shall not be liable in any respect
whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or
service due to riot, strike, labor dispute, breakdown, accident, repair or other cause
beyond Lessor's reasonable control or in cooperation with governmental request or
directions.
10. Assignment and Subletting.
10.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage or encumber (collectively, "assign or assignment") or sublet all or any part
of Lessee's interest in this Lease or in the Premises without Lessor's prior written
consent, which may be withheld in Lessor's sole and absolute discretion.
(b) An assignment or subletting without consent shall, at Lessor's option,
be a Default curable after notice per Paragraph 11.1(c), or a noncurable Breach without
the necessity of any notice and grace period. If Lessor elects to treat such unapproved
assignment or subletting as a noncurable Breach, Lessor may terminate this Lease.
10.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, no assignment or subletting shall: (i)
be effective without the express written assumption by such assignee or sublessee of
the obligations of Lessee under this Lease, (ii) release Lessee of any obligations
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12
hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the
performance of any other obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the acceptance of
Rent or performance shall constitute a waiver or estoppel of Lessor's right to exercise
its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may proceed
directly against Lessee, any Guarantors or anyone else responsible for the performance
of Lessee's obligations under this Lease, including any assignee or sublessee, without
first exhausting Lessor's remedies against any other person or entity responsible
therefor to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be in
writing, accompanied by information relevant to Lessor's determination as to the
financial and operational responsibility and appropriateness of the proposed assignee or
sublessee, including but not limited to the intended use and/or required modification of
the Premises, if any. Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested.
(f) Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment or entering into such sublease, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the term
of said assignment or sublease, other than such obligations as are contrary to or
inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.
10.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or any part
of the Premises and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest
in all Rent payable on any sublease, and Lessor may collect such Rent and apply same
toward Lessee's obligations under this Lease; provided, however, that until a Breach
shall occur in the performance of Lessee's obligations, Lessee may collect said Rent. In
the event that the amount collected by Lessor exceeds Lessee's obligations any such
excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any
assignment of such sublease, nor by reason of the collection of Rent, be deemed liable
to the sublessee for any failure of Lessee to perform and comply with any of Lessee's
obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any
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13
such sublessee, upon receipt of a written notice from.Lessor stating that a Breach exists
in the performance of Lessee's obligations under this Lease, to pay to Lessor all Rent
due and to become due under the sublease. Sublessee shall rely upon any such notice
from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire
as to whether such Breach exists, notwithstanding any claim from Lessee to the
contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option, require
sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of
the sublessor under such sublease from the time of the exercise of said option to the
expiration of such sublease; provided, however, Lessor shall not be liable for any
prepaid rents or security deposit paid by such sublessee to such sublessor or for any
prior Defaults or Breaches of such sublessor.
(c) Any matter requiring the consent of the sublessor under a sublease
shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee within
the grace period, if any, specified in such notice. The sublessee shall have a right of
reimbursement and offset from and against Lessee for any such Defaults cured by the
sublessee.
11. Default; Breach; Remedies.
11.1 Default; Breach. A "Default" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or Rules and
Regulations under this Lease. A "Breach" is defined as the occurrence of one or more of
the following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:
(a) The vacating of the Premises without providing a commercially
reasonable level of security, or where the coverage of the property insurance described
in Paragraph 6.3 is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.
(b) The failure by Lessee to provide (i) reasonable written evidence of
compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission
of an unauthorized assignment or subletting, (iv) an Estoppel Certificate, (v) a requested
subordination, (vi) any document requested under Paragraph 42, (vii) any other
documentation or information which Lessor may reasonably require of Lessee under the
terms of this Lease, where any such failure continues for a period of ten (10) days
following written notice to Lessee.
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14
(c) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or other than those described in subparagraphs 13.1(a), (b) or
(c), above, where such Default continues for a period of thirty (30) days after written
notice; provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be deemed to be a
Breach if Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
(d) The occurrence of any of the following events: (i) the making of any
general arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor"
as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a
petition filed against Lessee, the same is dismissed within 60 days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where such seizure is not discharged within thirty (30)
days; provided, however, in the event that any provision of this subparagraph (d) is
contrary to any applicable law, such provision shall be of no force or effect, and not
affect the validity of the remaining provisions.
11.2 Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within ten (10) days after written notice (or in case of an emergency, without
notice), Lessor may, at its option, perform such duty or obligation on Lessee's behalf,
including but not limited to the obtaining of reasonably required bonds, insurance
policies, or governmental licenses, permits or approvals. Lessee shall pay to Lessor an
amount equal to 115% of the costs and expenses incurred by Lessor in such
performance upon receipt of an invoice therefor. In the event of a Breach, Lessor may,
with or without further notice or demand, and without limiting Lessor in the exercise of
any right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall immediately
surrender possession to Lessor. In such event Lessor shall be entitled to recover from
Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the
worth at the time of award of the amount by which the unpaid rent which would have
been earned after termination until the time of award exceeds the amount of such rental
loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the term after
the time of award exceeds the amount of such rental loss that the Lessee proves could
be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the
Premises, expenses of reletting, including necessary renovation and alteration of the
Premises, reasonable attorneys' fees, and that portion of any leasing commission paid
by Lessor in connection with this Lease applicable to the unexpired term of this Lease.
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The worth at the time of award of the amount referred to in provision (iii) of the
immediately preceding sentence shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of the District within which the Premises are
located at the time of award plus one percent. Efforts by Lessor to mitigate damages
caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover
damages. If termination of this Lease is obtained through the provisional remedy of
unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid
Rent and damages as are recoverable therein, or Lessor may reserve the right to
recover all or any part thereof in a separate suit. If a notice and grace period required
under Paragraph 11.1 was not previously given, a notice to pay rent or quit, or to
perform or quit given to Lessee under the unlawful detainer statute shall also constitute
the notice required by Paragraph 11.1. In such case, the applicable grace period
required by Paragraph 11.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such grace periods
shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to
the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession and recover the
Rent as it becomes due, in which event Lessee may sublet or assign, subject only to
reasonable limitations. Acts of maintenance, efforts to.relet, and/or the appointment of a
receiver to protect the Lessor's interests, shall not constitute a termination of the
Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under the laws or
judicial decisions of the state wherein the Premises are located. The expiration or
termination of this Lease and/or the termination of Lessee's right to possession shall not
relieve Lessee from liability under any indemnity provisions of this Lease as to matters
occurring or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
11.3 [Intentionally deleted.]
11.4 Interest. Any monetary payment due Lessor hereunder, charges, not
received by Lessor, when due, shall bear interest from the date when due, as to
scheduled payments, or the 31 st day after it was due as to non-scheduled payments.
The interest ("Interest") charged shall be computed at the rate of ten percent (10%) per
annum but shall not exceed the maximum rate allowed by law.
11.5 Breach by Lessor. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required to be
performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no
event be less than thirty (30) days after receipt by Lessor, and any Lender whose name
and address shall have been furnished Lessee in writing for such purpose, of written
notice specifying wherein such obligation of Lessor has not been performed; provided,
however, that if the nature of Lessor's obligation is such that more than thirty (30) days
are reasonably required for its performance, then Lessor shall not be in breach if
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16
performance is commenced within such thirty (30) day period and thereafter diligently
pursued to completion.
12. Condemnation. If the Premises or any portion thereof are taken under the power of
eminent domain or sold under the threat of the exercise of said power (collectively
"Condemnation"), this Lease shall terminate as to the part taken as of the date the
condemning authority takes title or possession, whichever first occurs. If more than 10%
of the Building, or more than 25% of that portion of the Premises not occupied by any
building, is taken by Condemnation, Lessee may, at Lessee's option, to be exercised in
writing within ten (10) days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, within ten (10) days after the condemning
authority shall have taken possession) terminate this Lease as of the date the
condemning authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the Base Rent shall be reduced in
proportion to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether such
award shall be made as compensation for diminution in value of the leasehold, the
value of the part taken, or for severance damages; provided, however, that Lessee shall
be entitled to any compensation for Lessee's relocation expenses, loss of business
goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated
pursuant to the provisions of this Paragraph. All Alterations and Utility Installations
made to the Premises by Lessee, for purposes of Condemnation only, shall be
considered the property of the Lessee and Lessee shall be entitled to any and all
compensation which is payable therefor. In the event that this Lease is not terminated
by reason of the Condemnation, Lessor shall repair any damage to the Premises
caused by such Condemnation.
13. Representations and Indemnities of Broker Relationships. Lessee and Lessor
each represent and warrant to the other that it has had no dealings with any real estate
broker, salesperson or finder in connection with this Lease. Lessee and Lessor do each
hereby agree to indemnify, protect, defend and hold the other harmless from and
against liability for compensation or charges which may be claimed by any such broker,
salesperson, finder or other similar party by reason of any dealings or actions of the
indemnifying Party, including any costs, expenses, attorneys' fees reasonably incurred
with respect thereto.
14. Estoppel Certificates. If Lessor desires to finance, refinance, or sell the Premises,
or any part thereof, Lessee shall deliver to any potential lender or purchaser designated
by Lessor such estoppel statement and financial statements as may be reasonably
required by such lender or purchaser.
15. Definition of Lessor. The term "Lessor" as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises, or, if this is a sublease, of
the Lessee's interest in the prior lease. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon the
Lessor as hereinabove defined.
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16. Severability. The invalidity of any provision of this Lease, as determined by a court
of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
17. Days. Unless otherwise specifically indicated to the contrary, the word "days" as
used in this Lease shall mean and refer to calendar days.
18. Limitation on Liability. The obligations of Lessor under this Lease shall not
constitute personal obligations of Lessor or its board members, directors, officers or
employees, and Lessee shall look to the Premises, and to no other assets of Lessor, for
the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek
recourse against Lessor's board members, directors, officers or employees, or any of
their personal assets for such satisfaction.
19. Time of Essence. Time is of the essence with respect to the performance of all
obligations to be performed or observed by the Parties under this Lease.
20. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and no
other prior or contemporaneous agreement or understanding shall be effective.
21. Notices.
21.1 Notice Requirements. All notices required or permitted by this Lease or
applicable law shall be in writing and may be delivered in person (by hand or by courier)
or may be sent by regular, certified or registered mail or U.S. Postal Service Express
Mail, with postage prepaid, or by facsimile transmission, and shall be deemed
sufficiently given if served in a manner specified in this Paragraph. The addresses noted
adjacent to a Party's signature on this Lease shall be that Party's address for delivery or
mailing of notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee's taking possession of the Premises, the
Premises shall constitute Lessee's address for notice. A copy of all notices to Lessor
shall be concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.
21.2 Date of Notice. Any notice sent by registered or certified mail, return
receipt requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the
notice shall be deemed given 48 hours after the same is addressed as required herein
and mailed with postage prepaid. Notices delivered by United States Express Mail or
overnight courier that guarantee next day delivery shall be deemed given 24 hours after
delivery of the same to the Postal Service or courier. Notices transmitted by facsimile
transmission or similar means shall be deemed delivered upon telephone confirmation
of receipt (confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or legal
holiday, it shall be deemed received on the next business day.
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22. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or
condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or
condition hereof, or of any subsequent Default or Breach by Lessee of the same or of
any other term, covenant or condition hereof. Lessor's consent to, or approval of, any
act shall not be deemed to render unnecessary the obtaining of Lessor's consent to, or
approval of, any subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such consent. The
acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee.
Any payment by Lessee may be accepted by Lessor on account of moneys or damages
due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no force or
effect whatsoever unless specifically agreed to in writing by Lessor at or before the time
of deposit of such payment.
23. No Right To Holdover. Lessee has no right to retain possession of the Premises or
any part thereof beyond the expiration or termination of this Lease. Nothing contained
herein shall be construed as consent by Lessor to any holding over by Lessee.
24. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at law or in
equity.
25. Covenants and Conditions; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions. In
construing this Lease, all headings and titles are for the convenience of the Parties only
and shall not be considered a part of this Lease. Whenever required by the context, the
singular shall include the plural and vice versa. This Lease shall not be construed as if
prepared by one of the Parties, but rather according to its fair meaning as a whole, as if
both Parties had prepared it.
26. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their
personal representatives, successors and assigns and be governed by the laws of.the
State of California. Any litigation between the Parties hereto concerning this Lease shall
be initiated in Riverside County.
27. Subordination; Attornment; Non-Disturbance.
27.1 Subordination. This Lease shall be subject and subordinate to any
existing and any future ground lease, mortgage, deed of trust, or other hypothecation or
security device (collectively, "Security Device"), now or hereafter placed upon the
Premises, to any and all advances made on the security thereof, and to all renewals,
modifications, and extensions thereof. Lessee agrees that the holders of any such
Security Devices (in this Lease together referred to as "Lender") shall have no liability
or obligation to perform any of the obligations of Lessor under this Lease. Any Lender
may elect to have this Lease superior to the lien of its Security Device by giving written
notice thereof to Lessee, whereupon this Lease shall be deemed prior to such Security
Device, notwithstanding the relative dates of the documentation or recordation thereof.
P6402\0001\823970.3
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27.2 Attornment. In the event that Lessor transfers title to the Premises, or
the Premises are acquired by another upon the foreclosure or termination of a Security
Device to which this Lease is subordinated (i) Lessee shall attorn to such new owner,
and upon request, enter into a new lease, containing all of the terms and provisions of
this Lease, with such new owner for the remainder of the term hereof, or, at the election
of such new owner, this Lease shall automatically become a new Lease between
Lessee and such new owner, upon all of the terms and conditions hereof, for the
remainder of the term hereof, and (ii) Lessor shall thereafter be relieved of any further
obligations hereunder and such new owner shall assume all of Lessor's obligations
hereunder, except that such new owner shall not: (a) be liable for any act or omission of
any prior lessor or with respect to events occurring prior to acquisition of ownership; (b)
be subject to any offsets or defenses which Lessee might have against any prior lessor,
(c) be bound by prepayment of more than one month's rent, or (d) be liable for the
return of any security deposit paid to any prior lessor.
27.3 Self-Executing. The agreements contained in this Paragraph 27 shall be
effective without the execution of any further documents; provided, however, that, upon
written request from Lessor or a Lender in connection with a sale, financing or
refinancing of the Premises, Lessee and Lessor shall execute such further writings as
may be reasonably required to separately document any subordination, attornment
and/or Non-Disturbance Agreement provided for herein.
28. Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the
Premises whether founded in tort, contract or equity, or to declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal
thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in
the same suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term, "Prevailing Party" shall include, without
limitation, a Party who substantially obtains or defeats the relief sought, as the case
may be, whether by compromise, settlement, judgment, or the abandonment by the
other Party of its claim or defense. The attorneys' fees award shall not be computed in
accordance with any court fee schedule, but shall be such as to fully reimburse all
attorneys' fees reasonably incurred. In addition, Lessor shall be entitled to attorneys'
fees, costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is subsequently
commenced in connection with such Default or resulting Breach ($200 is a reasonable
minimum per occurrence for such services and consultation).
29. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of an emergency, and
otherwise at reasonable times after reasonable prior notice for the purpose of showing
the same to prospective purchasers, lenders, or tenants, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary or
desirable and the erecting, using and maintaining of utilities, services, pipes and
conduits through the Premises and/or other premises as long as there is no material
adverse effect to Lessee's use of the Premises. All such activities shall be without
abatement of rent or liability to Lessee.
P6402\0001\823970.3
20
30. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon
the Premises without Lessor's prior written consent. Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to permit an auction.
31. Signs. Lessor may place on the Premises ordinary "For Sale" signs at any time and
ordinary "For Lease" signs during the last year of the term hereof. Lessee shall not
place any sign upon the Premises without Lessor's prior written consent. All signs must
comply with all Applicable Requirements.
32. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the
voluntary or other surrender of this Lease by Lessee, the mutual termination or
cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall
automatically terminate any sublease or lesser estate in the Premises; provided,
however, that Lessor may elect to continue any one or all existing subtenancies.
Lessor's failure within ten (10) days following any such event to elect to the contrary by
written notice to the holder of any such lesser interest, shall constitute Lessor's election
to have such event constitute the termination of such interest.
33. Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent shall not
be unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses
(including but not limited to architects', attorneys', engineers' and other consultants'
fees) incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent, including but not limited to consents to an assignment, a subletting or
the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of
an invoice and supporting documentation therefor. Lessor's consent to any act,
assignment or subletting shall not constitute an acknowledgment that no Default or
Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of
any then existing Default or Breach, except as may be otherwise specifically stated in
writing by Lessor at the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the time of
consent of such further or other conditions as are then reasonable with reference to the
particular matter for which consent is being given. In the event that either Party
disagrees with any determination made by the other hereunder and reasonably
requests the reasons for such determination, the determining party shall furnish its
reasons in writing and in reasonable detail within ten (10) business days following such
request.
34. Quiet Possession. Subject to performance by Lessee of all of the covenants,
conditions and provisions on Lessee's part to be observed and performed under this
Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during
the term hereof.
35. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor
hereunder does not include the cost of guard service or other security measures, and
that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all
P6402\0001\823970.3
21
responsibility for the protection of the Premises, Lessee, its agents and invitees and
their property from the acts of third parties.
36. Reservations. Lessor reserves to itself the right, from time to time, to grant, without
the consent or joinder of Lessee, such easements, rights and dedications that Lessor
deems necessary, and to cause the recordation of parcel maps and restrictions, so long
as such easements, rights, dedications, maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents
reasonably requested by Lessor to effectuate any such easement rights, dedication,
map or restrictions.
37. Performance Under Protest. If at any time a dispute shall arise as to any amount
or sum of money to be paid by one Party to the other under the provisions hereof, the
Party against whom the obligation to pay the money is asserted shall have the right to
make payment "under protest" and such payment shall not be regarded as a voluntary
payment and there shall survive the right on the part of said Party to institute suit for
recovery of such sum. If it shall be adjudged that there was no legal obligation on the
part of said Party to pay such sum or any part thereof, said Party shall be entitled to
recover such sum or so much thereof as it was not legally required to pay.
38. Authority; Multiple Parties; Execution.
(a) Each individual executing this Lease on behalf of Lessee represents
and warrants that he or she is duly authorized to execute and deliver this Lease on its
behalf, and Lessee shall deliver to the Lessor satisfactory evidence of such authority.
(b) This Lease may be executed by the Parties in counterparts, each of
which shall be deemed an original and all of which together shall constitute one and the
same instrument.
39. Amendments. This Lease may be modified only in writing, signed by the Parties in
interest at the time of the modification. As long as they do not materially change
Lessee's obligations hereunder, Lessee agrees to make such reasonable non-monetary
modifications to this Lease as may be reasonably required by a Lender in connection
with the obtaining of normal financing or refinancing of the Premises.
40. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE
PROPERTY OR ARISING OUT OF THIS AGREEMENT.
41.Americans with Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent upon Lessee's specific use of the Premises, Lessor
makes no warranty or representation as to whether or not the Premises comply with
ADA or any similar legislation. In the event that Lessee's use of the Premises requires
modifications or additions to the Premises in order to be in ADA compliance, Lessee
agrees to make any such necessary modifications and/or additions at Lessee's
expense.
P6402'0001\.823970.3
22
42. Nondiscrimination. The Lessee herein covenants by and for himself or herself, his
or her heirs, executors, administrators, and assigns, and all persons claiming under or
through him or her, and this lease is made and accepted upon and subject to the
following conditions:
That there shall be no discrimination against or segregation of any person or
group o persons, on account of race, color, creed, religion, sex, marital status, national
origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or
enjoyment of the premises herein leased nor shall the Lessee himself, 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.
43. Memo of Lease. Upon written request by Lessor, Lessee shall execute,
acknowledge and return to Lessor for recording Memorandum of Lease evidencing this
Lease.
ATTENTION: LESSEE SHOULD RETAIN APPROPRIATE CONSULTANTS TO
REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID
INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES,
THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING
SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED
USE.
P6402\0001\823970.3
23
The parties hereto have executed this Lease at the place and on the dates specified
above their respective signatures.
LESSOR: LESSEE:
PALM DESERT REDEVELOPMENT AGENCY, DESERT SANDS SCHOOL DISTRICT,
a public body, corporate and politic a
By: By:
Print Name: Print Name:
Title: Title:
Address: 73-510 Fred Waring Drive Address:
Palm Desert, California 92660
Telephone: (760) 346-0611 Attn:
Facsimile: (760) 341-6372 Telephone:( )
Facsimile:( )
ATTEST:
, Agency Secretary
APPROVED AS TO FORM:
RICHARDS, WATSON & GERSHON,
a professional corporation
By:
P640210001\823970.3
24
Exhibit "A"
LEGAL DESCRIPTION OF THE
LAND COMPRISING PART OF THE PREMISES
THE LAND REFFERED TO HEREIN AS THE "LAND" IS SITUATED IN THE STATE
OF CALIFORNIA, COUNTY OF RIVERSIDE, CITY OF PALM DESERT, AND IS MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
LOTS 10 AND 11 IN BLOCK "C" OF PALMA VILLAGE, UNIT NO.6, IN THE CITY OF
PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY
MAP ON FILE IN BOOK 20, PAGE (S) 81,82, AND 83 INCLUSIVE OF MAPS,
RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
EXCEPTING FROM LOT 11, THAT PORTION GRANTED TO THE COUNTY OF
RIVERSIDE BY DEED RECORDED MAY 11, 1966 AS INSTRUMENT NO. 49650 OF
OFFCIAL RECORDS.
P6402\0001\823970.3
A-1
Exhibit "B"
LESSOR'S WORK
• Four gates at the following locations: south entrance adjacent to Cabrillo, small
gate at walkway entrance for parents north end of parking lot, trash bin enclosure
gates.
• Parking lot improvements including repainting of parking lot lines.
• ADA ramp at parent entrance.
• Removal of all non-working appliances and hazardous materials from the
property.
• Doors to cover stairwells (if licensing analyst asked for removal of existing gates)
• Landscaping for move including: tree trimming, fumigation, woodchip turning,
mowing
• Ensure water heater, Air Conditioning, Heating Units, lights, and plumbing are all
functioning.
• Install new front doors
• Moving air conditioning units behind parent entryway
P64021000]1823970.3
B-1
Exhibit "C"
LESSEE'S WORK
• Tear down partition wall in east classroom near kitchen; possibly tear down the
northeast walls of small office closet to kitchen if licensing requires additional
space.
• Painting for the inside of the building
• Adjustment of playground equipment to meet licensing requirements
• All signage for building and program
P6402'0001\823970.3
C-1
FROM : FAX NO. : Jun. 30 2005 06:02PM P1
Desert Sands Unified School District
Early Childhood Education Programs
Debra Loukatos,ECE Coordinator
47-950 Dune Palms Rd.
La Quanta,CA 92253
(760)771-8775
June 30 ,2005
Catherine Walker
Palm Desert Redevelopment Agency
73-510 Fred Waring Drive
Palm Desert, California 92260
Dear Ms. Walker,
As we have discussed in previous documents and conversations, Desert Sands Unified School
District—Early Childhood Education Programs is interested in leasing the preschool facility located
at 44-911 Cabrillo Avenue in Palm Desert. We have visited the site and determined in order that
the facility will meet the licensing regulations required by the Department of Social Services certain
modifications or improvements need to be made to the building. Attached you will find a list of
required renovations necessary prior to being licensable and a list of items we would be interested
in for the future as funding came available.
Desert Sands Unified School District—Early Childhood Education Programs is funded through
state and federal programs which provide funding primarily programmatic funds. However,we
have access to sufficient funds to support would be the removal of a wall to expand the capacity of
the room, the painting of the interior of the building and the repair of the swing set apparatus to
meet code. In addition, we will seek funding to paint the exterior of the building and signage that
would be of the high quality our district and the city would expect.
We look forward to a long, positive collaboration with the Palm Desert Redevelopment Agency to
support the Palm Desert community to prepare our youngest children and families for entrance into
school. If you have any questions feel free to contact me at(760)771-8775.
Sincerely, d0
At4t4.
/0-)
Debra Loukatos,
ECE Coordinator
REASCO REAL ESTATE ANALYSIS SERVICES CO.
POST OFFICE BOX 2809, PALM DESERT, CALIFORNIA 92261
TEL: (760) 340-1429; FAX: (760) 340-2041
EMAIL: LRWREASCO@AOL.COM
July 7, 2005
Mr. David Yrigoyen Copies to: Mr. Justin McCarthy
Director of Redevelopment Ms Catherine Walker
PALM DESERT REDEVELOPMENT AGENCY
CITY OF PALM DESERT
73-510 Fred Waring Drive
Palm Desert, California 92260
REFERENCE: Proposed Property Lease To Desert Sands School District
SUBJECT: Report Pursuant To Section 33433 Of The California
Health And Safety Code
NOTE 1: This report is based on the terms and conditions of the Lease Agreement Dated
July 1, 2005 between the Palm Desert Redevelopment Agency (the"Agency") and
Desert Sands School District.
Dear Mr. Yrigoyen,
Section 33433 of the California Health and Safety Code stipulates that before any property of the
Agency, acquired directly or indirectly with tax increment funds, is sold or leased (or otherwise
conveyed)for development purposes pursuant to the redevelopment plan, the conveyance shall first be
approved by the legislative body by resolution after public hearing. The property the Agency proposes
to lease to Desert Sands School District falls into the category covered by Section 33433.
MY 33433 REPORTS/"33433 FOR DESERT SANDS LEASE (2)" 07-Jul-05 10:00 AM
REAL ESTATE ANALYSIS SERVICES COMPANY
-PAGE 2 -
July 7, 2005
LETTER TO: Mr. David Yrigoyen
SUBJECT: Report Pursuant To Section 33433 Of The California
Health And Safety Code
We have prepared a comprehensive report, beginning on page three of this letter, which is required in
order to comply with Section 33433. Pursuant to the report, we have concluded that the following
findings can be included in the resolution approving the lease:
FINDING#1: The transaction (the Lease)will assist in the elimination of blight in the Project Area.
FINDING#2: The transaction (the Lease) is consistent with the implementation plan adopted
pursuant to Section 33490 of the California Health and Safety Code.
FINDING#3: The consideration is not less that the Fair Reuse Value, at the use and with the
covenants, conditions and development costs authorized by the Lease.
The rationale for these findings can be found in the report.
•
Sincerely,
Leonard/R. Wolk
Leonard R. Wolk, President
Real Estate Analysis Services Company(REASCO)
MY 33433 REPORTS/"33433 FOR DESERT SANDS LEASE (2)" 07-Jul-05 10:00 AM
REAL ESTATE ANALYSIS SERVICES COMPANY
-PAGE 3 -
Following are the detailed Sections of the report:
SECTION 1 - A summary of the major business points of the proposed Lease Agreement(the"Lease)
between the Palm Desert Redevelopment Agency(the"Lessor")and Desert Sands School District
(the "Lessee")concerning the proposed lease of the property owned by the Lessor, to the Lessee.
Reference is made to the Lease for full particulars of any provision described herein. In the
event of any inconsistency between the provisions herein and the Lease,the Lease shall
control.
A.The Subject Property:
1. The Agency owns fee title to certain improved real property(the"Property") in the City of Palm
Desert(the"City"), located on the northwest corner of Cabrillo Avenue and Alessandro Drive.
The Property is legally described in Exhibit A of the Lease and is comprised of a site area of
approximately 21,300 square feet, improved with a 3,894 square foot building.
B. Basic provisions of the Lease:
1. The lease term shall be five (5)years, commencing on the date the Lessor completes certain
repairs and improvements ("Lessor's Work")1 and delivers the Premises to the Lessee (the
"Commencement Date"), and ending five (5) years thereafter(the "Expiration Date").
2. The base rent shall be$1.00 per year, payable on the first day of each calendar year,
commencing in 2005.
3. The agreed use of the Premises shall be as a child care center under the auspices of the
Lessee's program.
•
A description of Lessor's Work may be found in Exhibit B of the lease,
MY 33433 REPORTS/"33433 FOR DESERT SANDS LEASE (2)" 07-Jul-05 10:00 AM
REAL ESTATE ANALYSIS SERVICES COMPANY
-PAGE 4-
SECTION 1 - A summary of the major business points of the proposed
Lease (continued):
B. Basic provisions of the Lease (continued):
4. Lessor's Work- Lessor shall pay for the repairs and improvements described in Exhibit B
of the Lease.
5. Lessee's work-Lessee shall pay for the repairs and improvements described in Exhibit C
of the Lease.
6. Insurance - Lessor's and Lessee's obligations to obtain and pay for liability insurance and
property insurance on the building and improvements are described in Paragraphs 6 and 7
of the Lease.
C. The premises:
1. Letting - Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises for the term, at the agreed to rental amount and with all the terms, provisions and
conditions set forth in the Lease.
2. Condition and compliance with laws -Subject to Lessor's completion of Lessor's work,
Lessee shall lease the Premises in their"as-is"condition, and Lessee acknowleges that
except for Lessor's Work, in no event shall Lessor be obligated to make any alterations,
repairs or improvements to the Premises. Lessee expressly acknowledges that Lessee has
had full opportunity to inspect the Premises and, in addition to Lessee's work, Lessee hereby
agrees to make any changes to the Premises required by existing laws, or by amendments to
existing laws, or by new laws.
D. Other terms, conditions and provisions of this transaction may be found in the Lease.
MY 33433 REPORTS/"33433 FOR DESERT SANDS LEASE (2)" 07-Jul-05 10:00 AM
REAL ESTATE ANALYSIS SERVICES COMPANY
-PAGE 5 -
SECTION 2 - The cost of the proposed Lease to the Agency:
A. Purchase of the Property:
1. In January, 2005, Agency purchased the Property for the express purpose of implementing this
transaction.The purchase price was$890,000.
B. Lessor's Work:
1. Agency staff estimated the cost of Lessor's Work to be $
C. Therefore, the total cost of the proposed lease is $
SECTION 3 - The estimated value of the interest to be conveyed determined at the
highest and best use permitted under the Redevelopment Plan.
A. Highest and best use for the interest to be conveyed:
1. Pursuant to a recent, independent appraisal, the highest and best use for the Property is as a
child care center.
B. Estimated value at the highest and best use of the interest to be conveyed:
1. Pursuant to the afore-mentioned appraisal, the Property value is $890,000.
Section 4 - The estimated value of the interest to be conveyed (the Lease), determined at the
use, and with the conditions, covenants and development costs required by the Lease
(the "Reuse Value"):
A. The fees for providing Child Care Services and use of the fees:
1. Lessee will collect a nominal fee from its clients for providing the Child Care Services to its
clients. All proceeds from the fees will be used to pay operating costs for the facility.
Therefore, the net income from the Child Care Facility will be $0.00
B.The Reuse Value:
1. Pursuant to the afore-described analysis, the Reuse Value will be $0.00.
MY 33433 REPORTS/"33433 FOR DESERT SANDS LEASE (2)" 07-Jul-05 10:00 AM
•
REAL ESTATE ANALYSIS SERVICES COMPANY
-PAGE 6 -
SECTION 5 - Explanation for the recommended Findings to be included in the resolution
approving the transaction (the Lease):
A. Elimination of blight:
1. The improvements and repairs stipulated by the terms, conditions and provisions of this
transaction will assist in the elimination of blight in the Project Area.
B. The implementation plan:
1. The transaction is consistent with the implementation plan adopted pursuant to Section 33490
of the California Health and Safety Code.
C. The consideration:
1. Either the consideration is not less than the fair market value at its highest and best use in
accordance with the redevelopment plan, or the consideration is not less than the fair reuse
value at the use and with the covenants, conditions and development costs authorized
by the sale.
—�► In this transaction (the Lease), the consideration ($1.00 per year) is not less than the Reuse
Value ($0.00).
Therefore, pursuant to this report, the following Findings can be included in the resolution
approving the lease:
FINDING#1: The transaction (the Lease)will assist in the elimination of blight in the Project Area.
FINDING#2: The transaction (the Lease) is consistent with the implementation plan adopted
pursuant to Section 33490 of the California Health and Safety Code.
FINDING#3: The consideration is not less that the Fair Reuse Value at the use and with the
covenants, conditions and development costs authorized by the transaction (the Lease).
•
MY 33433 REPORTS/"33433 FOR DESERT SANDS LEASE (2)" 07-Jul-05 10:00 AM