HomeMy WebLinkAbout80A - PH AGMT WITH COUNTY OF ORANGE 65 YR GROUND LEASEREQUEST FOR COUNCIL/
HOUSING AUTHORITY
ACTION
CITY COUNCIL MEETING DATE:
FEBRUARY 18, 2020
TITLE:
PUBLIC HEARING - APPROVE A JOINT
POWERS AGREEMENT WITH THE COUNTY
OF ORANGE; APPROVE AN OPTION
AGREEMENT AND SIXTY-FIVE YEAR
GROUND LEASE WITH WASHINGTON
SANTA ANA HOUSING PARTNERS, L.P. FOR
THE DEVELOPMENT OF THE CROSSROADS
AT WASHINGTON PROJECT LOCATED AT
1126 AND 1146 E WASHINGTON AVENUE
(APNS 398-092-13 AND 398-092-14); ADOPT
A RESOLUTION AUTHORIZING THE
ORANGE COUNTY HOUSING AUTHORITY TO
ADMINISTER PROJECT -BASED VOUCHERS
IN SANTA ANA; APPROVE A REGIONAL
HOUSING NEEDS ALLOCATION
AGREEMENT WITH THE COUNTY OF
ORANGE; APPROVE A SUBSTANTIAL
AMENDMENT TO THE NEIGHBORHOOD
STABILIZATION PROGRAM ANNUAL
ACTION PLAN
Is/Kristine Ridge
CITY MANAGER
EXECUTIVE DIRECTOR
CLERK OF COUNCIL USE ONLY:
_••e• 9,
❑
As Recommended
❑
As Amended
❑
Ordinance on 111 Reading
❑
Ordinance on 2n' Reading
❑
Implementing Resolution
❑
Set Public Hearing For
CONTINUED TO
RECOMMENDED ACTION
HOUSING AUTHORITY
1. Authorize the Executive Director of the Housing Authority to enter into a Joint Powers
Agreement with the County of Orange for the joint ownership of the adjacent properties located
at 1126 and 1146 E Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-
092-14) in order to develop the Crossroads at Washington affordable housing project, subject
to approval by the County of Orange Board of Supervisors and Orange County Housing
Authority, and subject to non -substantive changes approved by the Executive Director of the
Housing Authority and Housing Authority General Counsel.
2. Authorize the Executive Director of the Housing Authority to execute an Option Agreement with
Washington Santa Ana Housing Partners, L.P., a California limited partnership formed by The
Related Companies of California LLC and A Community of Friends for the development of the
Crossroads at Washington affordable housing project located at 1126 and 1146 E Washington
Avenue, Santa Ana, CA 92701, (APNs 398-092-13 and 398-092-14), subject to approval by the
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Joint Powers Authority, Ground Lease, and Option Agreement
For the Crossroads at Washington
February 18, 2020
Page 2
County of Orange Board of Supervisors, and subject to non -substantive changes approved by
the Executive Director of the Housing Authority and Housing Authority General Counsel.
3. Authorize the Executive Director of the Housing Authority to execute a joint sixty-five (65) year
Ground Lease with Washington Santa Ana Housing Partners, L.P., a California limited
partnership formed by The Related Companies of California, LLC and A Community of Friends,
for the development of the Crossroads at Washington affordable housing project located at
1126 and 1146 E Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-13 and 398-092-
14), subject to approval by the County of Orange Board of Supervisors, and subject to non -
substantive changes approved by the Executive Director of the Housing Authority and Housing
Authority General Counsel.
4. Adopt a resolution granting consent to the Orange County Housing Authority to administer
project -based vouchers in the City of Santa Ana for the development of the Crossroads at
Washington affordable housing project located at 1126 and 1146 E Washington Avenue, Santa
Ana, CA 92701, (APNs 398-092-13 and 398-092-14).
CITY COUNCIL
1. Authorize the City Manager to execute a Memorandum of Understanding with the County of
Orange regarding the County's and City's Regional Housing Needs Allocation for future
Housing Element planning periods pertaining to development of the Crossroads at Washington
affordable housing project located at 1126 and 1146 E Washington Avenue, Santa Ana, CA
92701, (APNs 398-092-13 and 398-092-14), subject to approval by the County of Orange Board
of Supervisors, and subject to non -substantive changes approved by the City Manager and City
Attorney.
2. Approve a Substantial Amendment to the Neighborhood Stabilization Program Annual Action
Plan in order to reallocate $963,951 in Neighborhood Stabilization Program I, II and III grant
funds to the Crossroads at Washington affordable housing project and authorize its submission
to the United States Department of Housing and Urban Development.
EXECUTIVE SUMMARY
On June 19, 2018, the City Council authorized the Community Development Agency (CDA) to
release a FY 2018-2019 Request for Proposals (RFP # 18-056) to develop affordable rental and
ownership project(s) in the City of Santa Ana. Following this competitive selection process, on July
2, 2019 the City Council authorized the City Manager to execute a pre -commitment letter with The
Related Companies of California ("Related") and A Community of Friends ("ACOF"), collectively
referred to as the "Developer", for $3,971,440 in affordable housing funds for the development of
the Crossroads at Washington affordable housing project located at 1126 and 1146 E Washington
Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14) (the "Project") (Exhibit 1). At
the same meeting, the City Council also authorized the Executive Director of the Housing Authority
to enter into negotiations for the following: 1) a Joint Powers Agreement with the County of Orange
for the County and Housing Authority -owned properties to be joined together as tenants in
common; 2) a sixty-five (65) year ground -lease of the Housing Authority -owned parcel at 1126 E
Washington Avenue that is adjacent to the County -owned parcel; and 3) any other required actions
necessary for the adjacent properties to be merged and then leased to a California limited
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Joint Powers Authority, Ground Lease, and Option Agreement
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February 18, 2020
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partnership formed by the Developer to develop the Project. Following those approvals, staff
began working with the County of Orange and the Developer to negotiate, draft and finalize a Joint
Powers Agreement, a 65-year Ground Lease, an Option Agreement, as well as a Regional Housing
Needs Allocation agreement, and a resolution granting consent to the Orange County Housing
Authority to administer project -based vouchers in the City of Santa Ana.
In general, this action will authorize staff to enter into an agreement with the County of Orange to
join the adjacent properties (Joint Powers Agreement) and then lease the joint property to a
California limited partnership formed by the Developer to develop the Crossroads at Washington
(Option Agreement and 65-year Ground Lease). The action also includes an agreement between
the County and the City to equitably share the number of affordable housing units built in this
Project to meet each agency's mutually respective RHNA requirements. It also includes required
actions involving two sources of financing needed for the Project's capital stack: project -based
vouchers from the Orange County Housing Authority and Neighborhood Stabilization Program
funds remaining from the American Recovery and Reinvestment Act. Together, all of these actions
will fulfill the commitment made by the City Council in the pre -commitment letter to develop the
Project.
PROJECT DESCRIPTION
The Crossroads at Washington will be 100% affordable to households earning no more than 30
percent of Area Median Income (AMI) of which 43 units will be set aside for permanent supportive
housing, with one exempt 2-bedroom manager's unit. The large bedroom units align with the City's
priorities and needs, while the permanent supportive housing units meets the County's priorities.
The unit mix and rent restrictions are as follows:
Bedroom
Size
30%
AMI PSH
30%
AMI
Manager's
Unit
Total Units
Studios
16
16
One -Bedroom
26
26
Two -Bedroom
1
20
1
22
Three -Bedroom
17
17
Four -Bedroom
5
5
TOTAL
43
42
1
86
Related has partnered with ACOF as its non-profit partner for the Project to provide the services
and expertise for serving the permanent supportive housing units. [Any future reference to
"Developer" refers to Washington Santa Ana Housing Partners, L.P., a California limited
partnership formed together by the Developer.] ACOF is one of the most experienced developers
of permanent supportive housing in Los Angeles County and Southern California, with a long track
record of delivering high quality supportive housing for people who were formerly homeless. ACOF
has completed 50 housing developments with supportive housing for homeless individuals and
families.
The Crossroads at Washington will be a new transit -oriented affordable housing community on
2.286 acres located at 1126 and 1146 Washington Avenue, Santa Ana, CA 92701. The site is
currently vacant, and positioned within walking distance from the Santa Ana Regional
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Transportation Center— a key transit hub for not only Orange County, but all of Southern California.
The Project is located on two (2) contiguous undeveloped parcels, one fronting E Washington
Avenue on the northern half of the site (Housing Authority -owned parcel) and one parcel directly
south of the Housing Authority -owned parcel (County -owned parcel). The five original buildings
located on the site were demolished in the 1990s by Caltrans during a freeway -widening project.
As a vacant and undeveloped site, there is an opportunity to create a newly designed site that will
truly meet the needs of the local community. The entire site is designated District Center (DC) in
the City of Santa Ana's 1998 General Plan and zoned Transit Village (TV) in the Transit Zoning
Code.
The Project includes the development of two residential buildings, of which one building will be
subdivided into two (2) residential portions, with 86 units surrounding two interior, landscaped
courtyard/amenity spaces. Developed at an overall density of 37.7 units per acre, there will be 16
studios, 26 one -bedroom units, 22 two -bedroom units, 17 three -bedroom units, and 5 four -bedroom
units. All units will be flat apartments located on the first, second, third, and fourth floors. Currently,
the buildings have been designed to buffer courtyards, open green areas, and the pool area from
highway noise and visual pollution. In addition, a proposed sound wall is being positioned along
the eastern property line adjacent to the US Interstate 5 ramp. Approximately 5,800 square foot of
interior community amenities and leasing offices is designed to accommodate supportive and
management services. The Project also includes approximately 1,060 square feet of community
service retail/commercial space. One vehicular entry point to the site is provided off E Washington
Avenue. The entry point has a small driveway roundabout with deliberate urban greening features,
to reduce vehicle speeds and create a welcoming and aesthetically pleasing entrance and
pickup/drop-off area for pedestrians, bike riders, and motor vehicles alike. Careful consideration
for the character and scale of the surrounding neighborhood and buildings were taken into account,
to ensure that the Project's architecture and massing blends -in with the existing surrounding uses.
The Project proposes a Mission Revival architectural style to complement adjoining neighborhoods
and buildings. In particular, the design is envisioned to complement nearby buildings, similar to the
Santa Ana Regional Transportation Center and the Triada at the Station District Apartments
(developed by Related), which are part of Santa Ana's extensive history of prominent architecture.
Overall, the layout of the buildings and common areas are designed to create several unique areas
to best utilize outdoor space. Outdoor amenities include a pool, tot -lot, dog wash, and a BBQ and
picnic area.
The proposed Site Plan includes approximately 120 surface parking spaces, of which 38 spaces
would be tandem spaces, which will be assigned to the three -bedroom and four -bedroom
apartments, along with some two -bedroom apartments. Residents will not be charged for parking.
As a transit -oriented development, the Project is at the start of the OC Streetcar and directly across
the street from the Santa Ana Regional Transportation Center. A total of 120 parking spaces will
be sufficient for this type of transit -oriented development.
Joint Powers Agreement
The Joint Powers Agreement is between the County of Orange ("County") and the Housing
Authority ("Agency") (Exhibit 2). In its simplest form, the Joint Powers Agreement allows the
Agency and the County to develop their adjacent properties under joint ownership. Consolidating
Joint Powers Authority, Ground Lease, and Option Agreement
For the Crossroads at Washington
February 18, 2020
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ownership of the site retains the integrity of the site plan and does not require a redesign or
complicate the development, permitting or lending processes. The Joint Powers Agreement
authorizes each landowner (the Agency and the County) to execute a "grant deed" (Quitclaim) to
merge the ownership of the parcels into one joint ownership held by the Agency and County
together. The Agreement also conveys an interest in the respective parcels into a jointly held
"tenants in common" ownership structure, with title for the joint property to be held as Tenants in
Common (TIC).
This TIC structure is comprised of an ownership arrangement in which the two jurisdictions jointly
own a single parcel formed from APN Nos. 398-092-13 and 398-092-14, and title will be held
individually to the extent of each party's proportional interest in the combined two parcels. This
TIC ownership structure will simplify the joint 65-year Ground Lease to develop a jointly held
property. The percentage ownership for each landowner is based on the percentage of the current
acreage between the two parcels. Specifically, the Agency's parcel is 1.456 acres and therefore
the Agency will retain a 63.69% undivided interest. The County's parcel is .83 acres and therefore
the County will retain a 36.31 % undivided interest. One 65-year Ground Lease agreement with
both landowners can then be entered into with the Developer for the development of the
Crossroads at Washington.
The following is a list of key items agreed upon in the Joint Powers Agreement:
• Term: the Agreement shall continue in full force and effect until the latter occurrence of the
following events: the termination of the Ground Lease, either through expiration of the
Ground Lease term or rescission of the Lease by the Parties (e.g., termination of Lease due
to default); or Mutual agreement in writing by both the County and Agency.
• Upon satisfaction of the terms and conditions set forth in the Option Agreement, the County
shall quitclaim the County -owned Property to both the County and the Agency to hold the
County -owned Property as tenants -in -common, with the County owning 36.3% undivided
interest and the Agency owning 63.69% undivided interest in the joint property. The Agency
shall also quitclaim the Agency -owned Property to both the Agency and the County to hold
the Agency -owned Property as tenants -in -common with the same ownership interests
above (63.69% and 36.31 %).
• The Agency shall serve as the lead agency for all planning -related administration of the
merger and formation of the joint property.
• Once the joint property is formed, both the County and the Agency waive the right to partition
until the Ground Lease with the Developer terminates.
• The Agency and County shall execute a 65-year Ground Lease with the Developer for the
purposes of completing the Crossroads at Washington.
• The Agency and County agree to cooperate in good faith to submit for approval to the
Southern California Association of Governments ("SCAG"), and to thereafter implement, a
regional housing needs assessment allocation share transfer to reduce the County's
RHNA share for housing built within the City's boundaries.
• Upon termination of the Joint Powers Agreement, the County -owned Property shall be
conveyed back to the County as the sole owner of the County -owned Property and the
Agency -owned Property shall be conveyed back to the Agency as the sole owner of the
Agency -owned Property. The combined parcel will also be subdivided again back to the
Joint Powers Authority, Ground Lease, and Option Agreement
For the Crossroads at Washington
February 18, 2020
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original acreage and proportional interests with the County owning 36.3% undivided interest
and the Agency owning 63.69% undivided interest.
The approval of both the Agency and County shall be required for decisions regarding
management and disposition of the joint property.
The Joint Powers Agreement has been signed by the County to acknowledge their acceptance of
the terms. The Agreement is not considered final until the Agency and County Board of
Supervisors have reviewed and approved the Agreement and the Agreement is executed by all
parties. The approval of the Option Agreement and 65-year Ground Lease is contingent on
approval of the Joint Powers Agreement.
Option Agreement
The Option Agreement is between the County of Orange ("County") and the Housing Authority
("Agency") together as the "Optionor" and Washington Santa Ana Housing Partners, L.P. as the
"Optionee" (Exhibit 3). In its simplest form, the Option Agreement allows the Agency and the
County to enter into the 65-year Ground Lease with the Developer after they meet several
conditions listed in the Option Agreement. The purpose of the Option Agreement is to protect the
County and City from entering into a 65-year Ground Lease with a developer who is not ready and
able to develop the Project. It requires the Developer to meet specific terms and conditions before
their "Option" to enter into the Ground Lease can be exercised.
The following is a list of key items agreed upon in the Option Agreement:
• Term: thirty-six (36) calendar months commencing on February 25, 2020.
• If at any point during the Term the Optionee has failed to act diligently and in good faith to
obtain funding or to plan and permit the Project, the Optionor may terminate the Option
Agreement with fifteen (15) days written notice to Optionee.
• The price of the Option is $36, which shall be paid to Optionor prior to the effective date.
• The Option may not be exercised until the following terms and conditions shall have been
met:
o The Optionee shall submit preliminary plans for the development and use of the site
for the Project for Optionor's approval including a detailed site plan, cost estimate
and construction schedule.
o The California Environmental Quality Act has been fully satisfied.
o The Project is entitled by the City of Santa Ana.
o The Optionee shall submit construction contract documents and cost estimates for
development of the site including complete architectural, landscape and engineering
working drawings; outline unit specifications; construction contract; and construction
schedule.
o The Optionee has received their grading permit from the City.
o The Optionee shall submit satisfactory evidence of Optionee's ability to finance the
cost of the development, assurances of construction completion, and evidence of
insurance coverage.
• Optionee has the right to enter the premises to meet the conditions in the Agreement and is
indemnified from liability.
• At any time during the Term that Optionee shall have performed all conditions as set forth
in the Option Agreement, Optionee may exercise the Option by giving Optionor written
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notice of election to do so, accompanied by properly executed copies of the Lease in
triplicate.
• Failure of Optionee to fully and satisfactorily meet the terms and conditions of the Option
Agreement within the time limits stated shall terminate Optionee's rights.
• Upon execution of this Option Agreement, the Optionee shall execute, acknowledge, and
deliver to Old Republic Title Company (the "Escrow Holder") a quitclaim deed, quitclaiming
all right to title and interest created by the Option Agreement back to the Optionor ("Quitclaim
Deed"). The Quitclaim Deed shall be retained by the Escrow Holder for the duration of the
Option Agreement and Optionor shall be entitled to instruct the Escrow Holder to record the
Quitclaim Deed provided however, that Optionor shall first deliver to Optionee at least five
(5) days' prior to written notice of its intention to authorize Escrow Holder to record the
Quitclaim Deed.
The Option Agreement has been signed by the Developer to acknowledge their acceptance of the
terms. The Agreement is not considered final until the Agency and County Board of Supervisors
have reviewed and approved the Agreement and the Agreement is executed by all parties. The
approval of the Option Agreement is contingent on approval of the Joint Powers Agreement.
Sixty -Five (65) Year Ground Lease
The sixty-five (65) year Ground Lease is between the County of Orange ("County") and the Housing
Authority ("Agency") together as the "Lessor" and the Developer as the "Tenant" (Exhibit 4). In its
simplest form, the Ground Lease binds the Agency and the County into a 65-year Ground Lease
with the Developer to develop the Crossroads at Washington on the jointly owned parcel at 1126
and 1146 E. Washington Ave. The purpose of the Ground Lease is to ground lease the jointly
owned parcel by the County and Agency to the Developer for no more than 65 years from the date
they receive their Certificate of Occupancy. At that point, the base rent described in the Agreement
shall become due and payable.
The following is a list of key items agreed upon in the 65-year Ground Lease:
• Term: sixty-five (65) years, commencing on the Effective Date of the lease, and shall expire
at 12:00 midnight Pacific Standard Time on the 62nd anniversary of the Commencement
Date. The Effective Date is the date when the Tenant takes possession of the property and
starts construction. No more than three years from that date, the Commencement Date is
the date when the Tenant receives their Certificate of Occupancy.
• Tenant accepts the parcel "as -is".
• Tenant shall pay to the County and Agency a base rent in the form of residual receipts in
the Project's cash flow waterfall. The County will receive 33.4% of the available residual
receipts and the Agency will receive 33.3% (the .01 % difference is due to the larger subsidy
provided by the County for the entire Project). The total base rent payable to the Agency is
calculated per the proportional value allocation below. The base rent will accumulate 3%
simple interest beginning on the Effective Date of the Lease:
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Joint Powers Authority, Ground Lease, and Option Agreement
For the Crossroads at Washington
February 18, 2020
Page 8
Address
APN
Size
(Acres)
Size
(SF)
Land
Percentage
Value
Allocation
Agency Owned Site
398-092-14
1.456
63,423
63.69%
$4,108,136
County Owned Site
398-092-13
0.83
36,155
36.31%
$2,341,864
Total
2.286
99,578
100.00%
$6,450,000
• Net refinancing proceeds shall be used to pay any unpaid base rent, net of regular and
reasonable costs and other loans on the Project.
• Triple net rent is required with all costs and expenses of every kind and nature payable by
the tenant.
• Tenant shall pay directly to the taxing authorities all taxes required and utility costs.
• Tenant shall construct and during the entire Term operate, maintain, replace and repair the
improvements upon the property for only the following required uses:
o multifamily affordable housing, and appurtenant improvements, including, without
limitation, parking;
o permanent supportive housing units and related services; and
o related commercial and community -serving uses, as approved by the Lessor.
• The County, Agency and their authorized representatives may enter the premises upon two
(2) business days' prior written notice to Tenant in order to determine whether Tenant is
complying with Tenant's obligations or to enforce any rights given to County or Agency
under the Lease.
• No work for development of the improvements on the site shall be commenced, and no
building or other materials shall be delivered to the premises, until the conditions in the
Option Agreement have been met.
• On a monthly basis, the Tenant shall maintain a reserve fund to pay for the costs of major
replacements, renovations or significant upgrades of or to the Project. The Tenant shall
contribute to a Capital Improvement Fund one percent (1%) of the total rent collected by
Tenant from sub -tenants from the previous month. The Capital Improvemetn Fund can be
satisfied by capital improvement reserves (or replacement reserves) required by Tenant's
Leasehold Mortgagees or Limited Partner.
• Throughout the Term of the Lease, Tenant shall, at Tenant's sole cost and expense, keep
and maintain the premises and any and all Improvements now or hereafter constructed and
installed on the premises in good order, condition and repair.
• In the event the whole or any part of the improvements shall be damaged or destroyed by
fire or other casualty, damage or action of the elements which is fully covered by insurance
required to be carried by Tenant pursuant to the Lease or in fact caused by Tenant, at any
time during the Term, Tenant shall with all due diligence, at Tenant's sole cost and expense,
repair, restore and rebuild the improvements on substantially the same plan and design as
existed immediately prior to such damage or destruction and to substantially the same
condition that existed immediately prior to such damage.
• Tenant will purchase all required insurance at Tenant's expense and provide active
certificates of insurance, including all endorsements required by both the County and
Agency.
• Other terms and conditions binding the Tenant in regards to Condemnation, Subletting,
Default and Remedies under the lease, Holding Over the lease term ($25,000 or $50,000
Joint Powers Authority, Ground Lease, and Option Agreement
For the Crossroads at Washington
February 18, 2020
Page 9
per month charge depending on unit income restrictions), Leasehold Mortgages, and Best
Management Practices.
The 65-Year Ground Lease has been signed by the Developer to acknowledge their acceptance
of the terms. The Lease is not considered final until the Agency and County Board of Supervisors
have reviewed and approved the Agreement, the Optionee exercises their option to enter into the
Lease under the Option Agreement, and the Ground Lease is executed by all parties. The approval
of the 65-year Ground Lease is contingent on approval of the Option Agreement and the Joint
Powers Agreement.
Resolution Granting Consent for Project -Based Vouchers
The Orange County Housing Authority ("OCHA") is recommending an award of forty-three (43)
project -based vouchers the Developer for the development of the Crossroads at Washington.
However, in order for OCHA to administer project -based vouchers in the City of Santa Ana, they
must receive approval from our jurisdiction in the form of a resolution (Exhibit 5). This is because
the OCHA serves the entire County as their jurisdiction and our Housing Authority only serves the
City of Santa Ana as our jurisdiction. Therefore, the resolution grants consent to the OCHA to
administer project -based vouchers in our jurisdiction for the development of the Project.
Regional Housing Needs Allocation Agreement
The Regional Housing Needs Allocation Agreement is between the County of Orange ("County")
and the City (Exhibit 6). In its simplest form, the Agreement gives the County credit for the 43
extremely low-income affordable housing units that they will be financing on their County -owned
parcel. The Agreement is in the form of a Memorandum of Understanding (MOU) regarding the
County's and City's Regional Housing Needs Allocation for future Housing Element planning
periods. The MOU allows for the transfer to the City of Santa Ana of some share of the County's
RHNA allocation obligation for the sixth housing element planning period from 2021-2029.
The following is a list of key items agreed upon in the MOU:
• The Orange County Board of Supervisors approved a loan for the Crossroads at
Washington in the amount of $2,280,701 on February 25, 2020, toward the completion of
43 units within the Project. The Orange County Board of Supervisors, acting as the Board
of Commissioners to the Orange County Housing Authority, also approved the use of 43
Project -Based Housing Choice Vouchers on February 25, 2020, toward the completion of
43 units within the Project.
• Under the Housing Element Law, the City and County must revise the Housing Element of
its general plan utilizing the latest RHNA allocation adopted by SCAG. The next required
revision to the Housing Elements for the City and County is designated as the sixth required
revision by Government Code Section 65588, and is identified by SCAG as the 2021-2029
Housing Element Planning Period.
• The City intends to issue, upon application, residential building permits for construction of
affordable housing on 1126 and 1146 E. Washington Ave. during the 2021-29 Planning
Period, while the housing remains in the City's jurisdiction, in order to satisfy the City's
RHNA allocation obligation for the 2021-29 Planning Period.
o This will give the City eighty-five (85) extremely low-income housing units to meet the
City's RHNA allocation obligation.
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February 18, 2020
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• Starting with the 2021-29 Planning Period (or as that planning period may be adjusted by
SCAG, the Department of Housing and Community Development, or statute), upon SCAG's
adoption of a final RHNA, the County and City shall jointly apply to SCAG to reduce the
County's RHNA allocation of very -low income units by 20 units and to increase the City's
RHNA share of very -low income units by 20 units of the County's original RHNA allocation,
as provided for and in conformance with the requirements of Government Code section
65584.07.
o This will reduce the County's RHNA allocation obligation by twenty (20) very low-
income housing units.
• Accordingly, upon SCAG's approval, the City's share of its RHNA allocation of very -low
income units will increase by 20 units of the County's original allocation and the County's
RHNA allocation of very -low income units shall decrease by 20 units of the County's original
allocation, as allowed under Government Code section 65584.07.
o This will reduce the City's eighty-five (85) extremely low-income housing units that
we would have received toward the City's RHNA allocation obligation by twenty (20)
units. The City would be left with a net of sixty-five (65) extremely low-income
housing units used to meet the City's RHNA allocation obligation.
• In addition, the County and City shall also jointly apply to SCAG to reduce the County's
RHNA allocation of moderate -income units by 22 units and to increase the City's RHNA
share of moderate -income units by 22 units of the County's original RHNA allocation, as
provided for and in conformance with the requirements of Government Code section
65584.07. This is proportional adjustment is necessary to conform with the requirements of
Government Code section 65584.07; specifically, the County must reduce their moderate
income unit obligation proportional to their very -low income unit reduction.
o This will reduce the County's RHNA allocation obligation by twenty-two (22)
moderate -income housing units.
• Upon SCAG's approval, the City's share of its RHNA allocation of moderate -income units
will increase by 22 units of the County's original allocation and the County's RHNA allocation
of moderate -income units shall decrease by 22 units of the County's original allocation, as
allowed under Government Code section 65584.07.
o This will increase the City's RHNA allocation obligation for moderate -income units
by twenty-two (22) units. The City will still have a net of 65 extremely low-income
housing units that were used to meet the City's RHNA allocation obligation as
mentioned above, but the City's moderate -income unit obligation will increase by
twenty-two (22) units.
Although this appears to be an unusual arrangement on its face, it is important to remember that
the County and the City are working together to develop a joint parcel for the two adjacent land
parcels owned by each governmental entity. Each governmental entity on its own would not be
able to build the total number of extremely low-income units that will be built on the combined site
by Related. Therefore, working together the County and the City are able to build more units on
the combined site and reduce the proportionate share of affordable housing units in their respective
RHNA allocation obligations.
Foorlymul
Joint Powers Authority, Ground Lease, and Option Agreement
For the Crossroads at Washington
February 18, 2020
Page 11
Substantial Amendment to the Neighborhood Stabilization Program Action Plan
The City first applied for Neighborhood Stabilization Program ("NSP") funds during the Great
Recession following the approval of the American Recovery and Reinvestment Act by Congress.
With funds remaining from that program, on July 2, 2019 City Council authorized the City Manager
to execute a pre -commitment letter with Related and ACOF for $3,971,440 in affordable housing
funds for the development of the Crossroads at Washington consisting of $963,951 in NSP funds
and $3,007,489 in HOME Investment Partnerships Program funds. In order for the City to commit
and draw down the $963,951 in NSP funds, the United States Department of Housing and Urban
Development ("HUD") requires an amendment to the NSP Annual Action Plan that was most
recently amended by City Council in 2013. The proposed Substantial Amendment applies to NSP
I, II and III and will reallocate funds to a new activity for all three grant sources (Exhibit 7).
Specifically, the City is proposing to: 1) add the Crossroads at Washington affordable housing
project as a new NSP Activity; and 2) reallocate $963,951 in NSP I, II and III funds to the
Crossroads at Washington.
The proposed use of NSP I, II and III funds will allow the City to increase the housing stock and
provide suitable housing for low and moderate -income residents. In particular, the funds will be
used to complete the development of the Crossroads at Washington affordable housing project.
Due to the Project's development costs, the Project requires funding from the NSP Program that
was committed by City Council on July 2. The reallocation and obligation of NSP I, II, and III dollars
to this Project will allow the developer to secure their remaining financing, including Low -Income
Housing Tax Credits, needed to complete the Project.
Next Steps
The Developer is planning to submit a 9% Low -Income Housing Tax Credit application on March
9, 2020 for the development of the Project. Staff are projecting that the Project will be the most
competitive in Orange County. This funding is critical for the Project financing and is a key part of
the Project's path forward. If the Recommended Actions are not approved, the Developer will not
be able to move forward with their application and the Project will not be able to proceed as
planned. After the Developer has secured all of their remaining financing, staff will return to City
Council to request approval of the two sets of loan documents (Loan Agreement, Promissory Note,
Affordability Restictions and Deed of Trust) for the City's investment of $963,951 in NSP funds and
$3,007,489 in HOME Investment Partnerships Program funds.
STRATEGIC PLAN ALIGNMENT
Approval of this item supports the City's efforts to meet Goal # 5 - Community Health, Livability,
Engagement & Sustainability, Objective # 3 (facilitate diverse housing opportunities and support
efforts to preserve and improve the livability of Santa Ana neighborhoods), Strategy C (provide that
Santa Ana residents, employees, artists and veterans receive priority for affordable housing
created under the City's Housing Opportunity Ordinance or with City funding to the extent allowed
under state law).
FISCAL IMPACT
Based on the current financing and Project assumptions provided by the Developer (e.g. rents,
operating expenses, hard debt, vacancies, etc.), the expected amount of the repayment of the
80A-11
Joint Powers Authority, Ground Lease, and Option Agreement
For the Crossroads at Washington
February 18, 2020
Page 12
$4,108,136 Agency's Land Loan repayable through residual receipts over the 65-year Ground
Lease period is $10,886,560 including principal and interest accruing at 3%.
Pursuant to the Ground Lease Section 3.1.2, the Agency Land Loan must be paid back after
payment on the two loans from the City (NSP and HOME). Under the current assumptions,
payment on the Agency's Land Loan will start in Year 45 after the City's two loans are paid back
in full. Note that these projections are subject to change based on actual rents, operating
expenses, hard debt, vacancies, etc.
Steven A. Mendoza
Executive Director
Community Development Agency
APPROVED AS TO FUNDS AND ACCOUNTS:
Kathryn Downs, CPA
Executive Director
Finance and Management Services Agency
Exhibits: 1.
Pre -Commitment Letter with Related and ACOF
2.
Joint Powers Agreement
3.
Option Agreement
4.
65-Year Ground Lease
5.
Resolution Granting Consent for Project -Based Vouchers
6.
Regional Housing Needs Allocation Agreement
7.
Substantial Amendment to the NSP Annual Action Plan
80A-12
Ni"URANCE ti0T RE IUIREO
WORK I14JAY PROCEED
CLERR OF CGUPoC,IL
MAYOR •�'Tr• JUL 2 2 Z�IDqn
Miguel A. Pulido
MAYOR PRO TEM
Juan Villegas
COUNCILMEMBERS
Cecilia Iglesias
David Penaloza
Vicente Sarmiento
Jose Soloric
July 2, 2019
*7:111011I S
CITY OF SANTA ANA
COMMUNITY DEVELOPMENT AGENCY
20 Civic Center Plaza M-25 . P.O. Box 1988
Santa Ana, California 92702
(714)647-5360
w .santa-ana.orc
Liane Takano
Southern California Director
The Related Companies of California
18201 Von Karman Avenue, Suite 900
Irvine, CA 92612
Dora Leong Gallo
Chief Executive Officer
A Community of Friends
3701 Wilshire Blvd., Suite 700
Los Angeles, CA 90010
A-2019-109
CITY MANAGER
Kristine Ridge
CITY ATTORNEY
Sonia R. Carvalho
ACTING CLERK OF THE COUNCIL
Norma Mitre -Ramirez
Re: Crossroads at Washington
1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701
Pre -Commitment Letter for: NSP Loan, HOME Loan, and Lease Agreement
Dear Ms. Takano and Ms. Gallo,
The Related Companies of California and A Community of Friends (collectively referred to
as the "Developer") requested financial assistance in connection with the proposed
development of an eighty-six (86) unit affordable housing complex, with eighty-five (85) units
restricted to extremely -low income households, to be located at 1126 and 1146 E.
Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14) ("Project').
The site consists of two adjacent parcels. The Housing Authority of the City of Santa Ana
("Housing Authority") owns one parcel at 1126 E. Washington Ave. (APN 398-092-14)
totaling approximately 1.43 acres of land area ("Housing Authority Parcel'). The County of
Orange ("County") owns an adjacent parcel (APN 398-092-13) totaling approximately .85
acres of land area ("County Parcel'). The Housing Authority and County will work together
to merge their respective parcels with joint ownership for purposes of master leasing the
parcels to the Developer to construct the Project over a single parcel ("Property").
SANTA ANA CITY COUNCIL
Miguel A. Pulido Juan Villages Vicente Sarmiento a PS al�za� Jose Solaro Vacant Cecilia Iglesias
Mayor Mayor Pro Tem. Ward 5 Ward 1 ar n4 yj� Ward 3 Ward A Ward 6
m@oulidosanfa-an.oro aIvilleoanY s0saa-anaero vsarma ienloQaaola-ana m sanl a r IsolonoAsanta-ana.oro aglesias@santa-anaara
Page 12
The City of Santa Ana ("City") and the Housing Authority have reviewed the Developer's
request for assistance, and at the City Council/Housing Authority meeting on July 2, 2019,
the City Council and Housing Authority Board authorized and approved issuance of this pre -
commitment letter evidencing the preliminary award of (collectively, the "City Assistance'):
- A loan in the maximum amount of $963,951.00 from the Neighborhood
Stabilization Program ("NSP") held by the City for the Project ("NSP Loan');
A loan in the maximum amount of $3,007,489.00 from the HOME Investment
Partnerships Program ("HOME") held by the City for the Project ("HOME Loan");
and,
A 62-year ground lease for the Housing Authority portion of the Property located
at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs: 398-
092-13 and 398-092-14); to be used for development of an eighty-six (86) unit
affordable housing complex, with eighty-five (85) units restricted to extremely -low
income households ("Ground Lease').
This letter shall evidence the City's pre -commitment of the City Assistance to the Developer
for the Project subject to the conditions described below.
NSP and HOME Loans:
The amount of the proposed NSP and HOME Loans has been determined based upon the
City's review of the Developer's request for the receipt of the City Assistance and the
development proforma and projected cash flows for the Project submitted by the Developer
to the City ("Proforma"). The City Manager has authority to approve revised development
proformas and projected cash flows for the Project; provided, however, that the City
Assistance is not increased or extended.
The NSP and HOME Loans shall include the following terms:
• The NSP Loan shall be for a maximum principal amount of $963,951.00, or as much
thereof as is disbursed for hard and soft costs in constructing the Project, provided
from NSP funds.
• The HOME Loan shall be for a maximum principal amount of $3,007,489.00, or as
much thereof as is disbursed for hard and soft costs in constructing the Project,
provided from HOME funds.
• 3% simple interest per annum.
• Repayment from 33.3% of Residual Receipts (pro-rata with payments due in
connection with other financing provided by other public agencies) (after payment of
operating expenses including social services expenses and monitoring fees, debt
service, any deferred developer fee, and partnership fees to be described in the
• l .
iN:N:11:1ifi
Page. 13
Agreement), with 33.4% to the County, and the remaining 33.3% to be disbursed to
the Developer.
Remaining principal and accrued interest due upon the 55th anniversary of the
issuance of Certificate of Occupancy or earlier upon sale, refinancing or default. On
that date, the City and Housing Authority agree to review the performance of the
Property and consider in good faith any reasonable request by Developer to modify
the terns or extend the term of the City Promissory Notes. Additionally, the City will
receive 33.3% of the net proceeds received from any sale or refinancing of the
Project in order to repay any outstanding principal or interest due on the City
Promissory Notes, after payment of outstanding conventional debt and payment in
full of any deferred developer fee and establishment of any reserves and transaction
costs.
• Cost savings from the Project, if any, will be applied first to pay down the NSP and
HOME Loans, subject to compliance with the Tax Credit Allocation Committee
("TCAC") Regulations and California Health and Safety Code, as applicable.
• After all other funding sources have been secured through enforceable funding
commitments, a HOME Subsidy Layering Review is required in order to confirm
the amount of HOME funds committed to the Project.
The HOME Loan shall also require specific HOME designated units in the Project.
Based on a preliminary HOME Cost Allocation Analysis, the City must designate at least
sixteen (16) units in the Project as HOME assisted -units per the following preliminary
unit mix:
• Three (3) studio units;
• Five (5) one -bedroom units;
• Four (4) two -bedroom units;
• Three (3) three -bedroom units; and,
• One (1) four -bedroom unit.
As least 20% of the HOME designated units must be designated as Low HOME units.
This equates to four (4) Low HOME units based on a sixteen (16) unit HOME
requirement. The remainder of the HOME designated units can be restricted as High
HOME units. This is subject to change based on a final HOME Cost Allocation Analysis
to be completed after the HOME Subsidy Layering Review has been performed.
Ground Lease:
The Project will be located on the Property at 1126 and 1146 E. Washington Avenue,
currently owned by the Housing Authority, as well as the adjacent parcel owned by the
County (APNs: 398-092-13 and 398-092-14). The Housing Authority will be working with
the County to draft and negotiate the necessary documents to join ownership so that the
iN:N:11:111iffii
Page 14
Project may be constructed over the combined Property under a master lease with the
Housing Authority and County, as joint owners.
The ground lease payment will be structured as capitalized ground rent payment based
on the appraised fair market value of the Property. The Developer estimates the current
value of the Property at $5,580,000. This figure will need to be confirmed through an
appraisal, but based on the Developer's assessment, the capitalized ground rent
payments are estimated as follows:
• The capitalized ground rent payment for the County parcel is estimated at
$2,500,000; and,
• The capitalized ground rent payments for the Housing Authority parcel is estimated
at $3,080,000.
These amounts will be paid at closing with funds provided by loans made by the City and
County which will be secured by promissory notes on the Property and be repaid through
a share of the Project's Residual Receipts as noted above (i.e., 33.4% to the County and
33.3% to the Housing Authority). This will not be a cash transaction; the closing escrow
statement will show a credit and debit of $3,080,000.
Based on the above, the Housing Authority Board authorized a preliminary award of a 62-
year lease of the Housing Authority portion of the Property to the Developer for the
Project. After Developer secures a commitment from the County for a 62-year lease of
the County portion of the Property, staff will return to the Housing Authority for
consideration of a 62-year Ground Lease Agreement. There will only be one Ground
Lease Agreement that will have all three parties: the County, City (as tenants in common)
and the Developer. The Ground Lease Agreement will require the successful
development of the Project by the Developer.
General Provisions:
The City's obligation to provide the City Assistance to the Project is subject to each of the
following conditions:
Developer must provide proof that it has secured all of its remaining financing for
the development of the Project in the form of enforceable funding commitments,
which may include 9% or 4% Federal Low Income Housing Tax Credits, State
Housing Tax Credits, a loan of affordable housing funds from the County of
Orange, Section 8 project -based vouchers from the Orange County Housing
Authority, or any other funding sources necessary in the Project's capital stack to
close on their financing, before staff will return to the City Council for consideration
of the NSP and HOME Loan Agreements.
• Developer must provide proof that the County has approved or committed to approve
a 62-year ground lease for the County portion of the Property located at 1126 and
1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs: 398-092-13 and 398-
iN:N:11:1ifi
15
092-14) before staff will return to the Housing Authority for consideration of the
Ground Lease Agreement.
• All of the affordable units (less 1 manager's unit) in the Project will be restricted to
extremely low-income households.
• The rent standards for the Project must be in compliance with the strictest of the
standards imposed by TCAC and HOME Program regulations, or other funding
sources contributed to the Project, as applicable.
• All provided funding and Project requirements shall conform to the City's adopted
Affordable Housing Funds Policies and Procedures, unless alternative
requirements are expressly provided in the executed NSP and HOME Loan
Agreements, Ground Lease Agreement, or any other documents related to the
development of the Project.
• Approval of all required entitlements and discretionary actions, to allow the
construction of an 86-unit affordable housing complex to be located at 1126 and 1146
E. Washington Avenue, Santa Ana, CA 92701.
• The City's obligation to provide the NSP Loan and HOME Loan is and shall remain
subjectto all covenants, conditions, and restrictions setforth in the Loan Agreements,
and in particular City's analysis of the available funding sources and development
and operating costs of the Project and the overall economic feasibility of the Project.
• Review and approval of the documents evidencing the NSP Loan and HOME Loan
by the City Council.
• Review and approval of the documents evidencing the Ground Lease by the Housing
Authority and the County.
• Project funding is contingent on the successful execution of a 62-year Ground
Lease Agreement by the Developer with the Housing Authority and County.
• Compliance with California Health and Safety Code and applicable regulations set
forth in Section 34176.
Developer, at its sole cost and expense, will be responsible for securing any and all
permits and discretionary approvals that may be required for the Project by the City,
Housing Authority, County, or any other federal, state, or local governmental entity having
or claiming jurisdiction over the Property or Project. Notably, this pre -commitment letter
shall not obligate the City or any department thereof to approve any application or request
for or take any other action in connection with any planning approval, permit or other
action necessary for the construction, rehabilitation, installation or operation of the
Project.
This pre -commitment letter for the Project will expire on July 2, 2022.
80A-17
W7aily1a
U
If you have any questions or require any additional information regarding this pre -
commitment letter, please contact Judson Brown, Housing Division Manager, by
telephone at (714) 667-2241 or by e-mail at Ibrown (cDsanta-ana.org.
Sincerely,
On behalf of the City of Santa Ana:
Kris ne Ri
dge idge
City Manager
Norma Mitre
Acting Clerk of the Council
On behalf of the Housing Authority of the City of Santa Ana:
Steven A. Mendoza
Housing Authority Executive Director
Attest:
Norma Mitre
Acting Recording Secretary
FOODINFOO
CROSSROADS AT WASHINGTON —JOINT POWERS
AGREEMENT BY AND BETWEEN THE COUNTY OF
ORANGE AND THE HOUSING AUTHORITY OF THE CITY
OF SANTA ANA
This JOINT POWERS AGREEMENT ("Agreement") is entered into by and
between the County of Orange, a political subdivision of the State of California
("County"), and the Housing Authority of the City of Santa Ana, a public body, corporate
and politic ("Agency"), as of , 2020, and is made on the basis of
the following facts, intentions and understandings. County and Agency are at times
individually referred to as "Party" and collectively as "Parties" herein.
RECITALS
A. County and Agency are owners of contiguous parcels of land totaling
approximately 2.28 acres located in Santa Ana, California, comprised of the two
following lots: Assessor's Parcel Number 398-092-14 ("Agency Property"), more
particularly described in Exhibit A; and Assessor's Parcel Number 398-092-13
("County Property"), more particularly described in Exhibit B. The Agency and
County desire to merge these two parcels for the purpose of executing an option
agreement ("Option Agreement") and ground lease ("Lease") for the combined
property to a developer, , L.P., a California limited partnership
("Partnership"), to create an affordable housing project ("Project'). These
properties are collectively depicted in Exhibit C (Pre -Grant Assessor's Parcel
Map) and are referred to collectively as the "Joint Property," which is further
defined, below.
B. All development and use of the Joint Property for the Project shall be subject to
and in conformance with restrictions on the use of the "Joint Property," as that term
is defined by this Agreement.
C. The Parties agree that the development of this Project will promote affordable
housing development that will benefit the public and constitute a significant benefit
to both County and Agency in that the facility is available for use by members of
the general public that meet the affordability income qualifications established for
this Project and the special needs qualifications for the permanent supportive
housing component of the Project.
D The Parties deem it to be to the mutual advantage of the Parties hereto and in the
public interest to treat the above -described County Property and Agency Property
as a single parcel to assist with development of the Project.
E. In order to facilitate development of the Project, the Parties agree to deed their
respective properties entirely into a jointly owned parcel ("Joint Property"), as
described on Exhibit D, attached hereto, to be held as tenants -in -common with
respective interests as follows:
County of Orange, 36.3%, undivided interest
Housing Authority of the City of Santa Ana, 63.7%, undivided interest
FOODIMPO
The Parties agree that these percentages represent the proportional ownership
interests of each party prior to this grant as set forth in Exhibit C (Pre -Grant
Assessor's Parcel Map), which is attached hereto and incorporated herein by
reference.
NOW, THEREFORE, in consideration of mutual interests to facilitate the
development of the Project referenced herein, County and Agency incorporate the
Recitals, above, into this Agreement and further agree as follows:
1. Upon satisfaction of the terms and conditions set forth in the Option
Agreement by the Partnership, the County shall quitclaim the County Property to the
County and the Agency to hold the County Property as tenants -in -common, with the
County owning 36.3% undivided interest and the Agency owning 63.7% undivided interest
in the Joint Property. The quitclaim deed for the County Property is attached hereto as
Exhibit E.
2. Upon satisfaction of the terms and conditions set forth in the Option
Agreement by the Partnership, the Agency shall quitclaim the Agency Property to the
Agency and the County to hold the Agency Property as tenants -in -common, with the
County owning 36.3% undivided interest and the Agency owning 63.7% undivided interest
in the Joint Property. The quitclaim deed for the Agency Property is attached hereto as
Exhibit F. The deeds shall be recorded concurrently. Thereafter, the Housing Authority
of the City of Santa Ana shall merge the Agency Property and County Property to form
the Joint Property, in accordance with this Agreement.
3. The Agency shall serve as the lead agency for all planning related
administration of the merger and formation of the Joint Property. The County shall
coordinate and provide all necessary information it possesses to assist the Agency with
the merger process. The Agency agrees to process and file for record with the County
Recorder the merger of the County Property and Agency Property in compliance with
Article XI of Chapter 34 of the Santa Ana Municipal Code at no cost to the Parties. The
Agency Property and County Property shall merge, resulting in the formation of the Joint
Property, with the County and Agency as tenants -in -common with the County owning a
36.3% undivided interest and the Agency owning a 63.7% undivided interest in the Joint
Property.
4. Once the Joint Property is formed, both Parties waive the right to partition
until the Lease terminates. This Agreement shall serve as a valid written waiver of the
Parties' right to seek any such partition in accordance with California Code of Civil
Procedure section 872.710(b).
5. The Agency and County shall execute the Lease with the Partnership for
the purposes of completing the Project. The Lease is attached hereto as Exhibit G. The
Lease may authorize the Partnership to enter into one or more leasehold mortgage(s),
which may be recorded against the Partnership's leasehold interest only. However, the
Parties agree that the Lease shall not be recorded against the County Property, the
Agency Property, or the Joint Property, though a memorandum of Lease may be recorded
Crossroads at Washington — Joint Pov80X12Dent Page 2
as set forth in the Lease. The recording of any encumbrance on the Joint Property must
be agreed upon, in writing, by both the Agency and the County. The recordation of any
encumbrance on the Joint Property without the requisite written approval shall be null and
void.
6. The Parties agree to cooperate in good faith to submit for approval to the
Southern California Association of Governments ("SCAG"), and to thereafter implement,
a regional housing needs assessment ("RHNA") allocation share transfer to reduce the
County's RHNA share for housing built within Agency boundaries.
7. This Agreement shall continue in full force and effect until the latter
occurrence of the following events:
(a) The termination of the Lease, either through expiration of the Lease
term or rescission of the Lease by the Parties (e.g., termination of Lease due to default);
or
(b) Mutual agreement in writing by both the County and Agency.
8. The Parties agree that they will exercise good faith in carrying out the
purposes of this Agreement, including the adoption of any necessary modifications,
amendments, or clarifying the Parties' rights and duties hereunder.
9. Upon termination of this Agreement, the County Property shall be conveyed
to the County as the sole owner of the County Property and the Agency Property shall be
conveyed to the Agency as the sole owner of the Agency Property. The Agency and
County shall execute quitclaim deeds to effect these conveyances. The quitclaim deeds
for these conveyances shall be in substantially the same form as those attached hereto
as Exhibits H and I.
10. Any and all development, construction, operation, and maintenance of the
Project shall be at no cost to Agency or County, provided that Agency staff shall be
responsible for administering the operation of the Project to insure it is being used in
conformance with this Agreement, use permit(s), and the Lease. The Agency shall serve
as administrator of the Lease with the Partnership and coordinate with the County as
necessary. Each Party shall separately administer their loans, grants or other support
that might be provided to the Project and the Partnership.
11. Use of the Project and all its facilities shall be granted to all persons on an
equal basis. No person shall, on the grounds of race, religious creed, color, national origin,
ancestry, age, physical disability, mental disability, medical condition, including the
medical condition of Acquired Immune Deficiency Syndrome or any condition related
thereto, marital status, sex, sexual orientation or any other impermissible basis under the
law, be excluded from participation in, be denied benefits of, or be subjected to
discrimination under, any program or activity conducted by the Partnership or within
facilities constructed on the Joint Property.
12. Agency shall, to the extent permitted by law, indemnify, defend, and hold
harmless the County and it officers, agents, and employees, from and against any claim,
Crossroads at Washington — Joint Pov8OAq[2,Pent Page 3
action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive
damage, or expense (including, without limitation, attorneys' fees), resulting from, arising
out of, or based upon the negligence or wrongful act or omission of Agency or its City
Council, boards and commissions, officers, agents, volunteers, or employees, in
approving the Lease, approving any final construction plans, specifications, and building
inspections. The Lease shall contain a provision requiring the Partnership to name the
County as an additional insured with respect to any and all operations or activities
conducted by the Partnership from or at the leased premises.
County shall, to the extent permitted by law, indemnify, defend, and hold
harmless the Agency and City of Santa Ana, and its officers, agents, and employees,
from and against any claim, action, suit, proceeding, loss, cost, damage, liability,
deficiency, fine, penalty, punitive damage, or expense (including, without limitation,
attorney's fees), resulting from, arising out of, or based upon the negligence or wrongful
act or omission of County or its Board of Supervisors, committees and commissions,
officers, agents, volunteers, employees, in approving the Lease. The Lease shall contain
a provision requiring the Partnership to name the City of Santa Ana and/or the Agency as
an additional insured with respect to any and all operations or activities conducted by the
Partnership from or at the leased premises.
13. Except as specified in this section 13, all land and improvements on the
Joint Property shall remain the joint property of County and Agency and shall be
maintained and operated for Project purposes consistent with the terms of this Agreement
and the Lease.
If the Joint Property or any portion thereof is taken under the power of eminent
domain or sold under the threat of the exercise of said power (collectively,
"Condemnation"), then this JPA shall terminate as to the part taken only ("Condemned
Property") as of the date the condemning authority takes title or possession, whichever
first occurs. If the Condemnation results in termination of the Lease, then this JPA shall
terminate in accordance with the terms contained herein. Any condemnation award for
Condemned Property that is attributable to the Agency Property shall belong to the
Agency and the condemnation award for Condemned Property that is attributable to the
County Property shall belong to the County. If any of the Condemned Property includes
Improvements, as that term is defined in the Lease, and the Lessor would be entitled to
such condemnation award under the Lease, then the Parties shall divide the
compensation award attributable to the Improvements evenly.
14. All notices pursuant to this Agreement shall be addressed as set forth below
or as either Party may hereafter designate by written notice and shall be sent through
First Class U.S. Mail:
To County: County of Orange
Attn: County Executive Office, Real Estate
333 W. Santa Ana Boulevard, 3'd Floor
Santa Ana, CA 92701
To Agency: Housing Authority of the City of Santa Ana
20 Civic Center Plaza (M-26)
P.O. Box 1988
Crossroads at Washington — Joint PovNX122ent Page 4
Santa Ana, California 92702
Attn: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
15. Standard Provisions.
15.1 Management. Except as otherwise provided in this Agreement, the
approval of both the Agency and County shall be required for decisions regarding
management and disposition of the Joint Property.
15.2 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the County and Agency and their respective heirs, personal
representatives, successors and assigns. Neither Party shall have the right to assign this
Agreement or any interest or right under this Agreement without the prior written consent
of the other Party.
15.3 No Attorneys' Fees. In any action between the Parties to interpret,
enforce, award, modify or rescind any of the terms or provisions of this Agreement, or any
action otherwise commenced or taken in connection with this Agreement, both Parties
shall be responsible for their respective litigation costs and attorneys' fees, except as
provided in Section 12, above, regarding indemnity.
15.4 Jurisdiction and Venue. This Agreement shall be construed under
the laws of the State of California in effect at the time of the signing of this Agreement.
The Parties consent to the jurisdiction of the California courts with venue in County of
Orange.
15.5 Titles and Captions. Titles and captions are for convenience of
reference only and do not define, describe or limit the scope or the intent of this
Agreement or of any of its terms. Reference to section numbers are to sections in this
Agreement, unless expressly stated otherwise.
15.6 Interpretation. As used in this Agreement, masculine, feminine or
neuter gender and the singular or plural number shall each be deemed to include the
others where and when the context so dictates. The word "including" shall be construed
as if followed by the words "without limitation." This Agreement shall be interpreted as
though prepared jointly by both Parties.
15.7 No Waiver. A waiver by either Party of a breach of any of the
covenants, conditions or agreements under this Agreement to be performed by the other
Party shall not be construed as a waiver of any such breach or succeeding breach or of
the same or other covenants, agreements, restrictions or conditions of this Agreement.
15.8 Modifications. Any alteration, change or modification of or to this
Agreement, to become effective, shall be made in writing and in each instance signed on
behalf of each Party.
Crossroads at Washington — Joint PovBOX123ent Page 5
15.9 Severability. If any term, provision, condition or covenant of this
Agreement or its application to any Party or circumstances shall be held, to any extent,
invalid or unenforceable, the remainder of this Agreement, and the application of the term,
provision, condition or covenant to persons or circumstances other than those as to whom
or which it is held invalid or unenforceable, shall not be affected, and shall be valid and
enforceable to the fullest extent permitted by law.
15.10 Cooperation. Each Party agrees to cooperate with the other in the
execution of this Agreement and, in that regard, to sign any and all documents which may
be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of
this Agreement including, but not limited to, releases or additional agreements.
15.11 Counterparts. This Agreement may be signed in multiple
counterparts which, when signed by all Parties, shall constitute a binding agreement.
15.12 Exhibits Incorporated by Reference. The following exhibits and
attachments referred to and/or attached to this Agreement are incorporated in this
Agreement by this reference:
Exhibit A — Legal Description for Agency Property
Exhibit B — Legal Description for County Property
Exhibit C — Pre -Grant Assessor's Parcel Map
Exhibit D — Legal Description of Property (combined property)
Exhibit E — Tenants -in -Common Deed from the County (Quitclaim)
Exhibit F — Tenants -in -Common Deed from the Agency (Quitclaim)
Exhibit G — Proposed Ground Lease
Exhibit H — County Quitclaim
Exhibit I — Agency Quitclaim
[SIGNATURES ON NEXT PAGE]
Crossroads at Washington — Joint PovBOX124ent Page 6
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their respective governing bodies on the dates set forth opposite their
signatures.
COUNTY:
Dated:
APPROVED AS TO FORM:
OFFICE OF COUNTY COUNSEL
ORANGE COUNTY, CALIFORNIA
LIN
Deputy
COUNTY OF ORANGE, a political subdivision
of the State of California
LIN
Name:
Title: Chairwoman, Board of Supervisors
SIGNED AND CERTIFIED THAT A
COPY OF THIS DOCUMENT HAS
BEEN DELIVERED TO THE CHAIRWOMAN
OF THE BOARD PER GC § 25103, RESO. 79-1535
Attest:
ROBIN STIELER
Clerk of the Board of Supervisors
of Orange County, California
Crossroads at Washington — Joint PovNX125ent Page 7
Dated:
M
ATTEST:
M
AGENCY:
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY, a public body,
corporate and politic
By:
Steven A. Mendoza, Executive Director
TO FORM: \/
NERAL %COUNSEL
City Attorney
Daisy Gomez, Clerk of the Council
C"
�0/�j
Crossroads at Washington — Joint Powers Agreement Page 8
80A-26
EXHIBIT A
LEGAL DESCRIPTION FOR AGENCY PROPERTY
Agency Property:
THAT CERTAIN PARCEL OF LAND SITUATED IN THE CITY OF SANTAANA,
COUNTY OF ORANGE, STATE OF CALIFORNIA, BEING THAT PORTION OF
PARCEL 1 OF PARCEL 73035 DESCRIBED IN GRANT DEED RECORDED JULY 24,
1991 AS INSTRUMENT NO. 91-387576 OF OFFICIAL RECORDS IN THE OFFICE OF
THE COUNTY RECORDER OF SAID ORANGE COUNTY, TOGETHER WITH THAT
PORTION OF PARCEL 73034 DESCRIBED IN GRANT DEED RECORDED
NOVEMBER 15, 1991, AS INSTRUMENT NO. 91-626431 OF SAID OFFICIAL
RECORDS, LYING SOUTHWESTERLY AND WESTERLY OF THOSE THREE (3)
COURSE AND THE NORTHWESTERLY EXTENSION OF COURSE THREE (3)
THEREOF, IN THE STATE RIGHT OF WAY AS SHOWN ON A MAP FILED IN BOOK
194, PAGES 28 THROUGH 36 INCLUSIVE OF RECORD OF SURVEYS IN SAID
OFFICE AND SAID COUNTY RECORDER, SAID THREE (3) COURSES BEING
SHOWN ON SHEET 2 OF SAID MAP AS:
1) N21 °00'58"W 286.98';
2) N32°46'23" W 157.90';
3) N25°03'45"W 62.42'.
EXCEPTING THEREFROM THAT PORTION OF ABOVE SAID PARCEL 1, LYING
WITHIN THE LIMITS OF THE WASHINGTON A VENUE CUL-DE-SAC AS SHOWN
ON SAID SHEET 2 OF SAID MAP.
THERE SHALL BE NO ABUTTER'S RIGHTS OF ACCESS APPURTENANT TO THE
ABOVE -DESCRIBED REAL PROPERTY IN AND TO THE ADJACENT STATE
FREEWAY.
UNLESS OTHERWISE NOTED, ALL BEARINGS AND DISTANCES IN THIS
DESCRIPTION ARE GRID BASED ON THE CALIFORNIA COORDINATE SYSTEM
(CCS83), ZONE VI, 1983 NAD (1991.35 EPOCH OCS ADJUSTMENJ). TO OBTAIN
GROUND -LEVEL DISTANCES, MULTIPLY DISTANCES HEREIN BY 1.00002055.
THIS REAL PROPERTY DESCRIPTION CONSISTS OF THIS LEGAL DESCRIPTION
AND EXHIBIT "1", HAS BEEN PREPARED BY ME, OR UNDER MY DIRECTION, IN
CONFORMANCE WITH THE PROFESSIONAL LAND SURVEYORS ACT.
(End of Legal Description)
Crossroads at Washington — Joint Povygt,SXAgryyent Page A-1
i0:cu:311111r►a
EXHIBIT B
LEGAL DESCRIPTION FOR COUNTY PROPERTY
County Property:
The land referred to is situated in the County of Orange, City of Santa Ana, State of
California, and is described as follows:
That portion of the land allotted to Maria Ygnacia Alvarado De Moreno, as described in
the final decree of partition of the Rancho Santiago De Santa Ana, which was entered
September 12, 1868 in Book "B" Page 410 of Judgments of the District Court of the
17th Judicial District, in and for Los Angeles County, California, described as follows:
Beginning at a point 1584.0 feet north and 301.05 feet west of an iron axle set at the
intersection of the centerlines of Fourth Street and Grand Avenue; thence North 717.80
feet; thence West 606.90 feet; thence South 717.80 feet; thence East 606.90 feet to the
point of beginning.
EXCEPTING THEREFROM: That portion lying southeasterly of the northwesterly line of
that certain 104.00 foot strip of land described in Parcel A of Deed to the City of Santa
Ana, recorded June 25, 1970 in Book 9327, page 72 of Official Records.
ALSO EXCEPTING THEREFROM: That portion described as Parcel C in said Deed to
the City of Santa Ana.
ALSO EXCEPTING THEREFROM: That portion conveyed in the deed to the State of
California recorded January 10, 1992, Instrument 92-15188 of Official Records.
APN: 398-092-13
(End of Legal Description)
Crossroads at Washington —Joint Povye AAgrg�ement Page A-2
10a:il-111 a
EXHIBIT C
PRE -GRANT ASSESSOR'S PARCEL MAP
m
o g
T7
_j 9Z-006
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T :3NN3AV
' 133H15
7
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Crossroads at Washington —Joint Powd AAgrg�e�ent Page B-1
EXHIBIT D
LEGAL DESCRIPTION FOR JOINT PROPERTY
The land referred to is situated in the County of Orange, City of Santa Ana, State of
California, and is described as follows:
That certain parcel of land situated in the City of Santa Ana, County of Orange, State of
California, being that portion of Parcel 1 of Parcel 73035 described in the Grant Deed
recorded July 24, 1991, Instrument No. 91-387576 of Official Records, together with
that portion of Parcel 73034 described in the Grant Deed recorded November 15, 1991,
Instrument No. 91-626431 of Official Records, lying southwesterly and westerly of those
three (3) courses and the Northwesterly extension of course Three (3) thereof, in the
State Right of Way as shown on a map filed in Book 194, pages 28 through 36 inclusive
of Record of Surveys in said Office of said County Recorder, said Three (3) courses
being shown on sheet 2 of said map as:
1) North 21 ° 00' 58" West 286.98';
2) North 320 46' 23" West 157.90';
3) North 250 03' 45" West 62.42'.
EXCEPTING THEREFROM: That portion of above said Parcel 1, lying within the limits
of the Washington Avenue Cul-De-Sac as shown on said Sheet 2 of said Map.
APN: 398-092-14
That portion of the land allotted to Maria Ygnacia Alvarado De Moreno, as described in
the final decree of partition of the Rancho Santiago De Santa Ana, which was entered
September 12, 1868 in Book "B" Page 410 of Judgments of the District Court of the
17th Judicial District, in and for Los Angeles County, California, described as follows:
Beginning at a point 1584.0 feet north and 301.05 feet west of an iron axle set at the
intersection of the centerlines of Fourth Street and Grand Avenue; thence North 717.80
feet; thence West 606.90 feet; thence South 717.80 feet; thence East 606.90 feet to the
point of beginning.
EXCEPTING THEREFROM: That portion lying southeasterly of the northwesterly line of
that certain 104.00 foot strip of land described in Parcel A of Deed to the City of Santa
Ana, recorded June 25, 1970 in Book 9327, page 72 of Official Records.
ALSO EXCEPTING THEREFROM: That portion described as Parcel C in said Deed to
the City of Santa Ana.
ALSO EXCEPTING THEREFROM: That portion conveyed in the deed to the State of
California recorded January 10, 1992, Instrument 92-15188 of Official Records.
APN: 398-092-13
Crossroads at Washington —Joint Povygt,S�Agrement Page E-1
10a:il-111 a
EXHIBIT E
TENANTS -IN -COMMON DEED FROM THE COUNTY
(See Attached)
Crossroads at Washington —Joint Povygt,S�Agrer�ent Page E-2
i0a:11-111 a
Recording requested by and
when recorded, return to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, CA 92702
Attention: Clerk of the Council
And
County of Orange, Real Estate Services
333 West Santa Ana Blvd, 3`d Floor
Santa Ana, CA 92701
Recording Fee Exempt
Per Govt. Code 27383
Facility:
XXXXXX
Facility No.:
XXXXXX
Parcel No.:
XXXXXX
A.P. No.:
398-092-13
Location:
Santa Ana, CA
THE UNDERSIGNED GRANTOR DECLARES THAT THIS IS A CONVEYANCE TO A
GOVERNMENTAL ENTITY AND NO TRANSFER TAX IS DUE PER CAL. R&T CODE 11922
QUITCLAIM DEED
For valuable consideration, receipt of which is hereby acknowledged, the
COUNTY OF ORANGE,
hereinafter referred to as "COUNTY",
does hereby remise, release and forever Quitclaim to
The Housing Authority of the City of Santa Ana,
A public body, corporate and politic,
hereinafter referred to as "AGENCY",
and
1*610041
as Tenants in Common
all right, title and interest in and to the real property in the City of Santa Ana, County of Orange,
State of California, described as:
See EXHIBIT A,
attached and by reference made a part.
80A-32
-1-
i0a:11-111 a
Dated:
APPROVED AS TO FORM
County Counsel
Deputy
Date:
C
GRANTOR:
COUNTY OF ORANGE
Thomas A. Miller
Chief Real Estate Officer
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,
(here 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/hex/their authorized capacity(ies), and that by his/hex/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
80A-33
i0a:11-111 a
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the within deed or grant to the County of
Orange, political subdivision of the State of California, is hereby accepted by order of the Board of Supervisors of
the County of Orange, and the County of Orange consents to recordation thereof by its duly authorized officer.
Dated:
APPROVED AS TO FORM
County Counsel
Deputy County Counsel
Michael Haubert
Lo
Thomas A. Miller
Chief Real Estate Officer
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 , 2019 before me, Notary Public, personally
appeared , who proved to me on the basis of satisfactory evidence
to be the persons) 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)
80A-34
>-
i0a:11-111 a
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the within deed or grant to the Housing
Authority of the City of Santa Ana, a public body, corporate and politic, is hereby accepted by order of the City
Council of the City of Santa Ana, and the Housing Authority of the City of Santa Ana consents to recordation thereof
by its duly authorized officer.
Dated:
APPROVED AS TO FORM
Authority General Counsel
Ryan O. Hodge
Assistant City Attorney
Date:
LN
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
Steven A. Mendoza, Executive Director
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 , 2019 before me, Notary Public, personally
appeared , who proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature: (seal)
80A-35
4-
10a:il-111 a
EXHIBIT F
TENANTS -IN -COMMON DEED FROM THE AGENCY
(See Attached)
Crossroads at Washington —Joint Povygt,S�Agrement Page E-3
i0a:11-111 a
Recording requested by and
when recorded, return to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, CA 92702
Attention: Clerk of the Council
And
County of Orange, Real Estate Services
333 West Santa Ana Blvd, 3`d Floor
Santa Ana, CA 92701
Recording Fee Exempt
Per Govt. Code 27383
Facility:
XXXXXX
Facility No.:
XXXXXX
Parcel No.:
XXXXXX
A.P. No.:
398-092-14
Location:
Santa Ana, CA
THE UNDERSIGNED GRANTOR DECLARES THAT THIS IS A CONVEYANCE TO A
GOVERNMENTAL ENTITY AND NO TRANSFER TAX IS DUE PER CAL. R&T CODE 11922
QUITCLAIM DEED
For valuable consideration, receipt of which is hereby acknowledged, the
The Housing Authority of the City of Santa Ana,
A public body, corporate and politic,
hereinafter referred to as "AGENCY",
does hereby remise, release and forever Quitclaim to
COUNTY OF ORANGE,
hereinafter referred to as "COUNTY",
and
AGENCY
as Tenants in Common
all right, title and interest in and to the real property in the City of Santa Ana, County of Orange,
State of California, described as:
See EXHIBIT A,
attached and by reference made a part.
80A-37
-1-
i0a:11-111 a
Dated:
APPROVED AS TO FORM
Authority General Counsel
RIN
Ryan O. Hodge
Assistant City Attorney
Date:
M
GRANTOR:
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
Steven A. Mendoza, Executive Director
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,
(here 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/hex/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
80A-38
i0a:11-111 a
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the within deed or grant to the County of
Orange, political subdivision of the State of California, is hereby accepted by order of the Board of Supervisors of
the County of Orange, and the County of Orange consents to recordation thereof by its duly authorized officer.
Dated:
APPROVED AS TO FORM
County Counsel
Deputy County Counsel
Michael Haubert
Lo
Thomas A. Miller
Chief Real Estate Officer
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 , 2019 before me, Notary Public, personally
appeared , who proved to me on the basis of satisfactory evidence
to be the persons) 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)
80A-39
>-
i0a:11-111 a
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the within deed or grant to the Housing
Authority of the City of Santa Ana, a public body, corporate and politic, is hereby accepted by order of the City
Council of the City of Santa Ana, and the Housing Authority of the City of Santa Ana consents to recordation thereof
by its duly authorized officer.
Dated:
APPROVED AS TO FORM
Authority General Counsel
Ryan O. Hodge
Assistant City Attorney
Date:
Un
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
Steven A. Mendoza, Executive Director
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 , 2019 before me, I Notary Public, personally
appeared , who proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
(seal)
80A-40
4-
i0a:11-111 a
EXHIBIT G
PROPOSED GROUND LEASE
(See Attached)
Crossroads at Washington —Joint Powd AAgre�r�ent Page E-4
GROUND LEASE
THIS GROUND LEASE ("Lease") is made and effective as of the day of
2020 ("Effective Date") by and between the COUNTY OF ORANGE, a political subdivision of the
State of California, the HOUSING AUTHORITY OF THE CITY OF SANTA ANA, a public body,
corporate and politic, as tenants -in -common (respectively, the "County" and the "Agency", and
collectively "Lessor") and WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a
California limited partnership (hereinafter called "Tenant") (also referred to hereinafter each as
"Party" or collectively as the "Parties").
RECITALS
A. County and Agency are tenants -in -common of a certain property that encompasses the
Premises (as hereinafter defined).
B. County and Agency have executed a Joint Powers Agreement ("Joint Powers
Agreement"), pursuant to which the County and Agency agreed to lease the Premises to the Tenant
to develop, entitle and construct an 86-unit multifamily affordable housing project, as more fully
described herein, upon the fulfillment of certain conditions precedent as set forth therein.
C. The Parties have executed an Option Agreement, dated 12020
("Option Agreement"), pursuant to which the Lessor had agreed to lease the Premises to the Tenant
upon the fulfillment of certain conditions precedent.
D. The County and Agency acknowledge that the conditions precedent required by the Joint
Powers Agreement and Option Agreement have been fulfilled and therefore the Parties desire that
Tenant shall ground lease the Premises from Lessor on the terms set forth herein.
E. Lessor and Tenant have jointly agreed to enter into this Lease as of the date set forth
above.
F. On July 2, 2019, the Agency authorized the Executive Director of the Agency and the
Recording Secretary to execute a pre -commitment letter with the Tenant to enter into negotiations for
a sixty-five (65) year ground -lease of 1126 E. Washington Ave for the development of the
Crossroads at Washington affordable housing project located at 1126 and 1146 E. Washington
Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14).
G. On July 2, 2019, the City of Santa Ana authorized the City Manager and the Clerk of the
Council to execute a pre -commitment letter with the Tenant for $3,971,440 in affordable housing
funds consisting of $963,951 in Neighborhood Stabilization Program funds and $3,007,489 in
HOME Investment Partnerships Program funds, for the development of the Crossroads at
Washington affordable housing project located at 1126 and 1146 E. Washington Avenue, Santa Ana,
CA 92701 (APNs 398-092-13 and 398-092-14).
Page 11
i0a:11-111 a
NOW, THEREFORE, in consideration of the above recitals, which are hereby incorporated into this
Lease by reference, and mutual covenants and agreements hereinafter contained, County, Agency
and Tenant mutually agree to the following:
ARTICLE
DEFINITIONS
1.1 Definitions: The following defined terms used in this Lease shall have the meanings set
forth below. Other terms are defined in other provisions of this Lease, and shall have the definitions
given to such terms in such other provisions.
1.1.1. "Affiliate" shall mean, with respect to any person (which as used herein
includes an individual, trust or entity), any other person which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control with, such person.
1.1.2. "Agency" shall mean the Housing Authority of the City of Santa Ana, acting
as the Housing Successor Agency, a public body, corporate and politic, exercising governmental
functions and powers, and organized and existing under the California Redevelopment Law. The
principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California 92702.
"Agency" shall also refer to the City of Santa Ana where the context dictates, to the effect that the
City of Santa Ana shall have all rights granted to the Agency hereunder.
1.1.3. "Aggregate Transfer" shall refer to the total "Ownership Interest(s)" in
Tenant transferred or assigned in one transaction or a series of related transactions (other than an
Excluded Transfer) occurring since the latest of (a) the Effective Date, (b) the execution by Tenant of
this Lease, or (c) the most recent Tenant Ownership Change; provided, however, that there shall be
no double counting of successive transfers of the same interest in the case of a transaction or series of
related transactions involving successive transfers of the same interest. Isolated and unrelated
transfers shall not be treated as a series of related transactions for purposes of the definition of
"Aggregate Transfer."
1.1.4. "Annual Operating Expenses" means all regular and customary annual
expenses incurred in relation to the operation of the Premises, including the Improvements, as
reflected on the annual budget that Tenant shall prepare and abide by each year during the Tenn of
the loans made by the Agency, City, and County, separately, for the Improvements and for so long as
Base Rent remains unpaid and outstanding, as approved in writing by the Lessor. Said Annual
Operating Expenses shall include a reasonable property management and administrative fee, fees
related to the tax credit syndication of the Premises, utility charges, operating and maintenance
expenses, Project property taxes and Project insurance premiums, and such other costs as approved
by the Lessor, in his/her reasonable discretion. Tenant will deliver an annual budget for the
following year no later than December 1 for each year following issuance of a permanent certificate
of occupancy for the Improvements. Lessor shall deliver any comments, or its approval to such
operating budget within thirty (30) days of receipt thereof. If an operating budget for the following
year has not been approved by Lessor and Tenant prior to January 1 of such year, the annual
operating budget from the previous year shall apply until a new operating budget is approved.
Notwithstanding the foregoing, in no event shall Annual Operating Expenses include any costs, fees,
fines, charges, penalties, awards, judgments or expenses (including, but not limited to legal and
accounting fees and expenses) which are due to or arising out of the Tenant's (A) breach or default of
any mortgage loan, (B) fraudulent acts or willful misconduct or (C) breach or default under any other
contract, lease or agreement pertaining to the Project. Annual Operating Expenses shall also not
Page 12
• M
iMa:11-111 a
include other expenses not related to the Project's operations such as depreciation, amortization,
accrued principal and interest expense on deferred payment debt and capital improvement
expenditures.
1.1.5. "Annual Project Revenue" means all annual revenue generated by the
Project from any source, including, but not limited to, rent payments, governmental assistance
housing payments, laundry and other vending machine and pay telephone income. Notwithstanding
the foregoing, Annual Project Revenue shall not include the following items: (a) security deposits
from subtenants (except when applied by Tenant to rent or other amounts owing by subtenants); (b)
capital contributions to Tenant by its members, partners or shareholders (including capital
contributions required to pay deferred developer fee); (c) condemnation or insurance proceeds; (d)
there shall be no line item, expense, or revenue shown allocable to vacant unit(s) at the Project; or (e)
receipt by an Affiliate of management fees or other bona fide anus -length payments for reasonable
and necessary Operating Expenses associated with the Project.
1.1.6. "Auditor -Controller" shall mean the Auditor -Controller, County of Orange,
or designee, or upon written notice to Tenant, such other person as may be designated by the Board
of Supervisors.
1.1.7. `Base Rent" shall mean a total of six million four hundred and fifty thousand
dollars ($6,450,000) due and owing and payable in full on the Commencement Date, but if not paid
in full on the Commencement Date, then the Base Rent amount paid in accordance with this Lease,
including pursuant to Article III, below, with four million, one hundred and eight thousand, one
hundred and thirty-six dollars ($4,108,136) being paid to the Agency pursuant to Section 3.1.2 and
two million, three hundred and forty-one thousand, eight hundred and sixty-four dollars ($2,341,864)
being paid to the County pursuant to Section 3.1.1.
Address
APN
Size
(Acres)
Size
(SF)
Land
Percentage
Value
Allocation
City Owned Site
398-092-14
1.456
63,423
63.69%
$4,108,136
County Owned Site
398-092-13
0.83
36,155
36.31%
$2,341,864
Total
2.286
99,578
100.00%
$6,450,000
1.1.8. "Board of Supervisors" shall mean the Board of Supervisors of the County of
Orange, a political subdivision of the State of California, the governing body of the County.
1.1.9. "Certificate of Occupancy" shall mean a temporary or final certificate of
occupancy (or other equivalent entitlement, however designated) which entitles Tenant to commence
normal operation and occupancy of the Improvements.
1.1.10. "Chief Real Estate Officer" shall mean the Chief Real Estate Officer,
County Executive Office, County of Orange, or designee, or upon written notice to Tenant, such
other person as may be designated by the County Board of Supervisors.
1.1.11. "City" shall mean the City of Santa Ana, California, a charter city and
municipal corporation. "City" shall also refer to the Agency where the context dictates, to the effect
that the Agency shall have all the rights granted to the City hereunder. "City Council" shall mean
the City Council of the City of Santa Ana.
Page13
iMa:11-111 a
1.1.12. "Claims" shall mean liens, claims, demands, suits, judgments, liabilities,
damages, fines, losses, penalties, costs and expenses (including without limitation reasonable
attorneys' fees and expert witness costs, and costs of suit), and sums reasonably paid in settlement of
any of the foregoing.
1.1.13. "Commencement Date" shall mean the date on which a Certificate of
Occupancy is issued for the Project, and on which the Term shall commence and Base Rent shall
become due and payable.
1.1.14. "Contractor" shall mean Tenant's general contractor for the construction of
the Improvements.
1.1.15. "County" shall mean the County of Orange, a political subdivision of the
State of California.
1.1.16. "Effective Date" is defined in the introductory paragraph to this Lease, and
shall be the date on which Tenant take possession of the Premises and is entitled to commence
construction pursuant to Article V, below.
1.1.17. "Event of Default" is defined in Section 11.1.
1.1.18. "Excluded Transfer" shall mean any of the following:
(a) A transfer by any direct or indirect partner, shareholder, or member of
Tenant (or of a limited partnership, corporation, or limited liability company that is a direct or
indirect owner in Tenant's ownership structure) as of the Effective Date or the date on which a
Tenant Ownership Change occurred as to the interest transferred, to any other direct or indirect
partner, shareholder, or member of Tenant (or of a limited partnership, corporation, or limited
liability company that is a direct or indirect owner in Tenant's ownership structure) as of the
Effective Date, including in each case to or from a trust for the benefit of the immediate family of
any direct or indirect partner or member of Tenant who is an individual;
(b) A transfer of an Ownership Interest in Tenant or in constituent entities of
Tenant (i) to a member of the immediate family of the transferor (which for purposes of this Lease
shall be limited to the transferor's spouse, children, parents, siblings, and grandchildren); (ii) to a
trust for the benefit of a member of the immediate family of the transferor; (iii) from such a trust or
any trust that is an owner in a constituent entity of Tenant as of the Effective Date, to the settlor or
beneficiaries of such trust or to one or more other trusts created by or for the benefit of any of the
foregoing persons, whether any such transfer described in this subsection is the result of gift, devise,
intestate succession, or operation of law; or (iv) in connection with a pledge by any partners or
members of a constituent entity of Tenant to an affiliate of such partner or member;
(c) A transfer of a direct or indirect interest resulting from public trading in
the stock or securities of an entity, when such entity is a corporation or other entity whose stock
and/or securities is/are traded publicly on a national stock exchange or traded in the over-the-counter
market and the price for which is regularly quoted in recognized national quotation services;
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(d) A mere change in the form, method, or status of ownership (including,
without limitation, the creation of single -purpose entities) as long as the ultimate beneficial
ownership remains the same as of the Effective Date, or is otherwise excluded in accordance with
subsections (a) — (c) above;
(e) A transfer to an Affiliated nonprofit public benefit corporation or for -
profit corporation, or to a limited partnership whose general partner is a nonprofit corporation, for -
profit corporation or limited liability company Affiliated with the Tenant or the Tenant's general
partner, subject to the County and Agency's right to reasonably approve the agreement to effect such
assignment or transfer;
(f) The lease, assignment of lease or sublease of any individual residential
unit in the Improvements;
(g) A transfer of the Tenant's interest in the Premises by foreclosure or deed
in lieu of foreclosure (i) to any bona fide third -party lender holding a lien encumbering the Premises
(or its nominee), and (ii) by a Lender Foreclosure Transferee to a third -party made in accordance
with Section 17.6.5;
(h) Transfers of any limited partnership or membership interest in the Tenant
to an investor solely in connection with the tax credit syndication of the Premises in accordance with
Section 42 of the Internal Revenue Code of 1986, as amended (the "Tax Credit Laws"), (including,
without limitation, a subsequent transfer of the Limited Partner's interest to an Affiliate of the
Limited Partner), provided, such syndication shall not extend the Term of this Lease;
(i) The grant or exercise of an option agreement or right of first refusal solely
in connection with the tax credit syndication of the Premises in accordance with the Tax Credit Laws
provided that the syndication shall not extend the Term of this Lease;
0) The removal and replacement of one or both of Tenant's general partners
pursuant to the terms of Tenant's Partnership Agreement as of the Effective Date and replacement by
the Limited Partner, or an Affiliate thereof, or
(k) Any assignment of the Lease by Tenant to an Affiliate of Tenant or to a
Mortgagee as security in which there is no change to the direct and indirect beneficial ownership of
the leasehold interest.
1.1.19. "Force Majeure Event" is defined in Article XIV.
1.1.20. "Hazardous Material(s)" is defined in Section 4.5.
1.1.21. "HCD" shall mean the California Department of Housing and Community
Development.
1.1.22. "Improvement Costs" shall mean the final actual construction costs incurred
by Tenant in connection with the construction of the Improvements and in accordance with the terms
of this Lease, excluding ordinary repair and maintenance costs and any Permitted Capital
Expenditures paid for out of the Capital Improvement Fund.
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1.1.23. "Improvements" shall mean and includes all buildings (including above-
ground and below ground portions thereof, and all foundations and supports), building systems and
equipment (such as HVAC, electrical and plumbing equipment), physical structures, fixtures,
hardscape, paving, curbs, gutters, sidewalks, fences, landscaping and all other improvements of any
type or nature whatsoever now or hereafter made or constructed on the Premises. The term
Improvements shall mean the Initial Improvements and any replacement improvements constructed
in accordance with the terms of this Lease. During the entire Term, the Improvements will be
restricted to the following uses:
(a) multifamily affordable housing,
(b) permanent supportive housing units and related services, and
(c) related commercial and community -serving uses as needed for the siting of the
affordable housing and supportive housing units, as approved by the Lessor.
1.1.24. "Includes" shall mean "includes but is not limited to" and "including" shall
mean "including but is not limited to."
1.1.25. "Initial Improvements" shall mean the improvements first constructed by
Tenant on the Premises at its sole cost and expense as more particularly described in Exhibit B
attached hereto and incorporated by reference herein.
1.1.26. "Interest Rate" shall mean the lower of: (a) the reference or prime rate of
U.S. Bank National Association, in effect from time to time plus three percent (3%); or (b) the
highest rate of interest permissible under the Laws not to exceed the rate of twelve percent (12%) per
annum.
1.1.27. "Laws" shall mean all laws, codes, ordinances, statutes, orders and
regulations now or hereafter made or issued by any federal, state, county, local or other governmental
agency or entity that are binding on and applicable to the Premises and improvements.
1.1.28. "Lease" shall mean this Ground Lease (including any and all addenda,
amendments and exhibits hereto), as now or hereafter amended.
1.1.29. "Leasehold Estate" is defined in Section 17.1.1.
1.1.30. "Leasehold Foreclosure Transferee" is defined in Section 17.1.2.
1.1.31. "Leasehold Mortgage" is defined in Section 17.1.3.
1.1.32. "Leasehold Mortgagee" is defined in Section 17.1.4.
1.1.33. "Lender" shall mean: (a) a bank, savings bank, investment bank, savings and
loan association, mortgage company, insurance company, trust company, commercial credit
corporation, real estate investment trust pension trust or real estate mortgage investment conduit; or
(b) some other type of lender engaged in the business of making commercial loans, provided that
such other type of lender has total assets of at least $2,000,000 and capital/statutory surplus or
shareholder's equity of at least $500,000,000 (or a substantially similar financial capacity if the
foregoing tests are not applicable to such type of lender); or (c) a local, state or federal governmental
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entity, including but not limited to HCD, which provides predevelopment, acquisition, construction
and/or permanent financing for Tenant's acquisition and development of the Property.
1.1.34. "Lessor's Interest" shall mean all of County's and Agency's interests in the
real property, the Premises, this Lease as tenants -in -common and their existing and reversionary
interest in the real property, Premises, as well as the Improvements upon the expiration of the Term
or earlier termination thereof.
1.1.35. "Lessor Parties" shall mean, collectively and individually, the County, the
Agency and their respective Affiliates, governing boards, agents, employees, members, officers,
directors and attorneys.
1.1.36. "Limited Partner" shall mean any limited partner or investor member (and
its successors and/or assigns) of Tenant and shall include all references to "investor" in this Ground
Lease.
1.1.37. "Net Refinancing Proceeds" is defined in Section 3.2.
1.1.38. "Net Syndication Proceeds" is defined in Section 3.2.
1.1.39. "New Lease" is defined in Section 17.7.1.
1.1.40. "Operating Costs" is defined in Section 3.4.1.
1.1.41. "Ownership Interests" shall mean the share(s) of stock, partnership
interests, membership interests, other equity interests or any other direct or indirect ownership
interests in Tenant, regardless of the form of ownership and regardless of whether such interests are
owned directly or through one or more layers of constituent partnerships, corporations, limited
liability companies, or trusts.
1.1.42. "Partnership Related Fees" shall mean the following fees of Tenant (or
partners thereof pursuant to Tenant's Partnership Agreement) which are actually paid including:
(i) a limited partner asset management fee payable to the Limited Partner in the
annual amount of $5,000 (increased annually by 3%); and
(ii) partnership management fee (administrative and/or managing general partner)
payable to the general partners of Tenant in the aggregate annual amount of $20,000 (increased
annually by 3%).
1.1.43. "Person" shall include firms, associations, partnerships, joint ventures, trusts,
corporations and other legal entities, including public or governmental bodies, agencies or
instrumentalities, as well as natural persons.
1.1.44. "Premises" shall mean that certain real property containing approximately
2.28 acres of undeveloped land in the City, together with all easements, rights and privileges
appurtenant thereto, to be leased to Tenant pursuant to this Lease and on which Tenant intends to
construct the Improvements. The legal description of the Premises is attached hereto as Exhibit A.
A rendering showing the approximate boundaries of the Premises is attached hereto as Exhibit A-1.
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1.1.45. "Project' shall mean the Improvements, and all related appurtenances,
constructed by Tenant on the Premises.
1.1.46. `Bent" shall mean and includes the County Base Rent, the Agency Base
Rent, and Additional Rent payable by Tenant under this Lease.
1.1.47. "Residual Receipts" means the Annual Project Revenue less (A) Annual
Operating Expenses (hereinafter defined), (B) obligated debt service on Leasehold Mortgages for the
funding of the improvements approved in writing by the Lessor at the closing of the construction
financing for the Improvements or as otherwise approved pursuant to Section 17.2, below, (C)
payment obligations approved in writing by the Lessor at the closing of the construction financing for
the Improvements, (D) Partnership Related Fees (including accrued by unpaid Partnership Related
Fees from the prior year or years), (E) repayment of loans, if any, made by Limited Partner to Tenant
for development and/or operating expense deficits on terms reasonably acceptable to Lessor, (F)
repayment of loans, if any, made by a general partner of Tenant solely for development and/or
operating expense deficits on terms reasonably acceptable to Lessor, (G) deferred developer fee, and
(H) scheduled deposits to reserves approved in writing by the Lessor at the closing of the
construction financing for the Improvements (or such higher reserve deposits as may be reasonably
required by any Leasehold Mortgagee).
1.1.48. `Risk Manager" shall mean the Manager of County Executive Office, Risk
Management, County of Orange, or designee, or upon written notice to Tenant, such other person as
may be designated by the Board of Supervisors and the Risk Manager for the City of Santa Ana, or
designee, or upon written notice to Tenant, such other person as may be designated by the City
Council.
1.1.49. "Taxes" is defined in Section 3.11.2.
1.1.51. "TCAC" is defined as the California Tax Credit Allocation Committee.
1.1.52. "Tenant Group" shall mean Tenant and Tenant's Affiliates, agents,
employees, members, officers, directors and attorneys.
1.1.53. "Tenant Ownership Change" shall mean (a) any transfer or assignment by
Tenant of the Leasehold Estate or (b) any "Aggregate Transfer" of at least twenty five percent (25%)
of the "Ownership Interest(s)" in Tenant, in each case that is not an "Excluded Transfer."
1.1.54. "Tenant's Partnership Agreement" shall mean Tenants Amended and
Restated Agreement of Limited Partnership dated as of
1.1.55. "Term" is defined in Section 2.2.
1.1.56. "Transfer" is defined in Section 10.1.1.
1.1.57. "Transfer Notice" is defined in Section 10.4.
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1.1.58. "Treasurer -Tax Collector" shall mean the Treasurer -Tax Collector, County
of Orange, or designee, or upon written notice to Tenant, such other person or entity as may be
designated by the Board of Supervisors.
1.1.59. "Utility Costs" is defined in Section 3.4.1.
1.1.60. "Work" shall mean both Tenant's construction activity with respect to the
Improvements, including permitted future changes, alterations and renovations thereto and also
including, without limiting the generality of the foregoing, site preparation, landscaping, installation
of utilities, street construction or improvement and grading or filling in or on the Premises.
ARTICLE II
LEASE OF PROPERTY
2.1 Lease of Premises.
2.1.1. Lessor hereby leases the Premises to Tenant for the Term, and Tenant hereby
leases the Premises from Lessor for the Term, subject to the terms, conditions, covenants, restrictions
and reservations of this Lease.
2.1.2. Warranty of Peaceful Possession. Lessor covenants and warrants that, subject
to the Tenant's payment of Rent and performance and observation of all of the covenants, obligations
and agreements herein contained and provided to Tenant, Tenant shall and may peaceably and
quietly have, hold, occupy, use and enjoy the Premises during the Term and may exercise all of its
rights hereunder. Except as otherwise set forth herein, the Lessor covenants and agrees that they
shall not grant any mortgage or lien on or in respect of its fee interest in the Premises unless the same
is expressly subject and subordinate to this Lease or any New Lease.
2.2 Term The "Term" of this Lease shall commence on the Effective Date of this Lease,
and shall expire at 12:00 midnight Pacific Standard Time on the 62nd anniversary of the
Commencement Date, unless sooner terminated as a result of Tenant's non-compliance with any
terms, conditions, covenants, restrictions or reservations of this Lease. Notwithstanding the
foregoing, the Term shall not exceed sixty five (65) years from the Effective Date.
2.3 Termination at End of Term. This Lease shall terminate without need of further
actions of any Party at 12:00 midnight Pacific Standard Time on the last day of the Term.
2.4 Condition of the Premises. TENANT HEREBY ACCEPTS THE PREMISES "AS
IS", AND ACKNOWLEDGES THAT THE PREMISES IS IN SATISFACTORY
CONDITION. COUNTY AND AGENCY MAKES NO WARRANTY, IMPLIED OR
OTHERWISE, AS TO THE SUITABILITY OF THE PREMISES FOR TENANT'S
PROPOSED USES. COUNTY AND AGENCY MAKE NO COVENANTS OR
WARRANTIES, IMPLIED OR OTHERWISE, RESPECTING THE CONDITION OF THE
SOIL, SUBSOIL, OR ANY OTHER CONDITIONS OF THE PREMISES OR THE
PRESENCE OF HAZARDOUS MATERIALS, NOR DOES COUNTY OR AGENCY
COVENANT OR WARRANT, IMPLIED OR OTHERWISE, AS TO THE SUITABILITY OF
THE PREMISES FOR THE PROPOSED DEVELOPMENT, CONSTRUCTION OR USE BY
TENANT. COUNTY AND AGENCY SHALL NOT BE RESPONSIBLE FOR ANY LAND
SUBSIDENCE, SLIPPAGE, SOIL INSTABILITY OR DAMAGE RESULTING
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THEREFROM. COUNTY AND AGENCY SHALL NOT BE REQUIRED OR OBLIGATED
TO MAKE ANY CHANGES, ALTERATIONS, ADDITIONS, IMPROVEMENTS OR
REPAIRS TO THE PREMISES. TENANT SHALL RELY ON ITS OWN INSPECTION AS
TO THE SUITABILITY OF THE PREMISES FOR THE INTENDED USE.
TENANT INITIALS:
2.5 Limitations of the Leasehold. This Lease and the rights and privileges granted Tenant
in and to the Premises are subject to all covenants, conditions, restrictions, and exceptions of record
as of the date hereof or otherwise disclosed to Tenant prior to the date hereof. Nothing contained in
this Lease or in any document related hereto shall be construed to imply the conveyance to Tenant of
rights in the Premises which exceed those owned by Lessor, or any representation or warranty, either
express or implied, relating to the nature or condition of the Premises or County's or Agency's
interest therein.
2.6 Tenant's Investigation. Tenant acknowledges that it is solely responsible for
investigating the Premises to determine the suitability thereof for the uses contemplated by Tenant.
Tenant further acknowledges by executing this Lease that it has completed its investigation and has
made such determinations as Tenant believes may be required under the circumstances.
ARTICLE III
TOTAL RENT
3.1 Base Rent. Throughout the Term of this Lease, regardless of an earlier termination date
Tenant shall pay to the County and the Agency the Base Rent as set forth herein.
3.1.1 County Base Rent. Tenant shall make annual payments to County of thirty-
three and four -tenths percent (33.4%) of the then available Residual Receipts (defined above), but
only to the extent said Residual Receipts are available, until the amount of two million, three hundred
and forty-one thousand, eight hundred and sixty-four dollars ($2,341,864) is fully paid ("County
Base Rent"). County Base Rent shall only become due after the Tenant has repaid that certain loan
from the County awarded under the 2016 Permanent Supportive Housing Notice of Funding
Availability, Addendum One, evidenced by a Loan Agreement, Promissory Note and Leasehold
Deed of Trust, in the amount of $2,280,701, which is also being paid out of the same thirty-three and
four -tenths percent (33.4%) of the Residual Receipts. On the last day of the Term the then
outstanding amount of the County Base Rent shall be paid in full if not already paid by that time.
County Base Rent will bear interest commencing on the Commencement Date at the simple rate of
three percent (3%) per year until paid in full. Once the County Base Rent has been paid in full with
interest, Tenant shall have no further obligation for County Base Rent under this Lease.
3.1.2 Agency Base Rent. Tenant shall also make annual payments to Agency of
thirty-three and one-third percent (33.3%) of the then available Residual Receipts (defined above),
but only to the extent said Residual Receipts are available, until the amount of four million, one
hundred and eight thousand, one hundred and thirty-six dollars ($4,108,136) is fully paid ("Agency
Base Rent"). Agency Base Rent shall only become due after the Tenant has repaid those two certain
loans from the City, each evidenced by a Loan Agreement, Promissory Note, Deed of Trust, and
Affordability Restrictions on Transfer of Property dated , 20 , in the amount
of $3,007,489.00, and dated 120 , in the amount of $963,951, which is also
being paid out of the same thirty-three and one-third percent (33.3%) of the Residual Receipts. On
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the last day of the Term the then outstanding amount of the Agency Base Rent shall be paid in full if
not already paid by that time. Agency Base Rent will bear interest commencing on the
Commencement Date at the simple rate of three percent (3%) per year until paid in full. Once the
Agency Base Rent has been paid in full, Tenant shall have no further obligation for Agency Base
Rent under this Lease.
3.2 Net Refinancing Proceeds/Net Syndication Proceeds. Any Net Refinancing Proceeds
or Net Syndication Proceeds received by Tenant shall be used to pay any unpaid Base
Rent. Additionally, the Tenant's right and obligation to use such net proceeds to pay Base Rent is
subject to the rights of Leasehold Mortgagees to control the use of such proceeds pursuant to the
terms of their respective loan documents, all of which have been reviewed and reasonably approved
by the Lessor and is further subject to the consent of TCAC to the extent required under the
applicable regulations or the extended use agreement. Without limiting application of those loan
documents and TCAC regulations and requirements, in no case shall Tenant be permitted to retain
Net Refinancing Proceeds or Net Syndication Proceeds without the prior written consent of the
Lessor, until full satisfaction of the unpaid Base Rent. Notwithstanding the foregoing, this Section
3.2 shall not apply to (i) any Excluded Transfer or (ii) any financing described in Section 17.2.
"Net Refinancing Proceeds" shall be defined as the proceeds from the refinancing of any loan
approved by Lessor hereunder, net of all of the following: the amount of the financing which is
satisfied out of such proceeds, closing costs, costs to rehabilitate the Project, including the costs
necessary to obtain refinancing proceeds (such as consultant, legal and other consultant costs), the
soft costs related to the rehabilitation of the Project (such as architecture, engineering and other
consultant costs, and all required relocation costs), and all hard costs of the rehabilitation, all of
which have been reviewed and reasonably approved by the Lessor.
"Net Syndication Proceeds" shall be defined as syndication proceeds net of final Project hard
and soft construction costs, including developer fee, based on a cost certification completed at the
end of construction, and syndication costs all of which has been reviewed and reasonably approved
by the Lessor.
3.3 Triple Net Rent. It is the intent of the Parties that all Rent shall be absolutely net to
Lessor and that, except as otherwise provided herein, Tenant will pay all costs, charges, insurance
premiums, taxes, utilities, expenses and assessments of every kind and nature incurred for, against or
in connection with the Premises which arise or become due during the Term as a result of Tenant's
use and occupancy of the Premises. Under no circumstances or conditions, whether now existing or
hereafter arising, or whether beyond the present contemplation of the Parties, shall County or Agency
be obligated or required to make any payment of any kind whatsoever or be under any other
obligation or liability under this Lease except as expressly provided herein.
3.4 Insufficient Funds. For purposes of this Section 3.4, Rent shall have the same meaning
as stated in Section 1.1.42. If any payment of Rent or other fees made by check is returned due to
insufficient funds or otherwise, County and Agency shall have the right to require Tenant to make all
subsequent Rent payments by cashier's check, certified check or automated clearing house debit
system. All Rent or other fees shall be paid in lawful money of the United States of America,
without offset or deduction or prior notice or demand. No payment by Tenant or receipt by County
and Agency of a lesser amount than the Rent or other fees due shall be deemed to be other than on
account of the Rent or other fees due, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and satisfaction, and County
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and Agency shall accept such check or payment without prejudice to County's and Agency's right to
recover the balance of the Rent or other fees or pursue any other remedy available to the County or
Agency in this Lease.
3.5 Reserved.
3.6 Additional Rent.
3.6.1. Additional Rent. During the Term, the Base Rent shall be absolutely net to
County and Agency so that all costs (including but not limited to Operating Costs and Utility Costs,
as defined below), fees, taxes (including but not limited to Real Estate Taxes and Equipment Taxes,
as defined below), charges, expenses, impositions, reimbursements, and obligations of every kind
relating to the Premises shall be paid or discharged by Tenant as additional rent ("Additional
Rent"). Additional Rent shall also include such amounts as described in Article XL As more
particularly set forth in Sections 3.6.3 and 3.6.6, below, Tenant has the right to pay under protest the
foregoing Additional Rent, as applicable, and defend against the same. Any imposition rebates shall
belong to Tenant.
3.6.2. Taxes. During the Term, Tenant shall pay directly to the taxing authorities all
Taxes (as herein defined) at least ten (10) days prior to delinquency thereof. For purposes hereof,
"Taxes" shall include any form of assessment, license fee, license tax, business license fee,
commercial rental tax, levy, penalty, sewer use fee, real property tax, charge, possessory interest tax,
tax or similar imposition (other than inheritance or estate taxes), imposed by any authority having the
direct or indirect power to tax, including any city, county, state or federal government, or any school,
agricultural, lighting, drainage, flood control, water pollution control, public transit or other special
district thereof, as against any legal or equitable interest of County or Agency in the Premises or any
payments in lieu of taxes required to be made by County or Agency, including, but not limited to, the
following:
(a) Any assessment, tax, fee, levy, improvement district tax, charge or similar
imposition in substitution, partially or totally, of any assessment, tax, fee, levy, charge or similar
imposition previously included within the definition of Taxes. It is the intention of Tenant and
Lessor that all such new and increased assessments, taxes, fees, levies, charges and similar
impositions be included within the definition of "Taxes" for the purpose of this Lease.
(b) Any assessment, tax, fee, levy, charge or similar imposition allocable to or
measured by the area of the Premises or the rent payable hereunder, including, without limitation,
any gross income tax or excise tax levied by the city, county, state or federal government, or any
political subdivision thereof, with respect to the receipt of such rent, or upon or with respect to the
possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof;
(c) Any assessment, tax, fee, levy, charge or similar imposition upon this
transaction or any document to which Tenant is a party, creating or transferring an interest or an
estate in the Premises, including any possessory interest tax levied on the Tenant's interest under this
Lease;
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(d) Any assessment, tax, fee, levy, charge or similar imposition by any
governmental agency related to any transportation plan, fund or system instituted within the
geographic area of which the Premises are a part.
The definition of "Taxes," including any additional tax the nature of which was previously included
within the definition of "Taxes," shall include any increases in such taxes, levies, charges or
assessments occasioned by increases in tax rates or increases in assessed valuations, whether
occurring as a result of a sale or otherwise.
3.6.3. Contest of Taxes. Tenant shall have the right to contest, oppose or object to
the amount or validity of any Taxes or other charge levied on or assessed against the Premises and/or
Improvements or any part thereof, provided, however, that the contest, opposition or objection must
be filed before such time the Taxes or other charge at which it is directed becomes delinquent.
Furthermore, no such contest, opposition or objection shall be continued or maintained after the date
the tax, assessment or other charge at which it is directed becomes delinquent unless Tenant has
either: (i) paid such tax, assessment or other charge under protest prior to its becoming delinquent; or
(ii) obtained and maintained a stay of all proceedings for enforcement and collection of the tax,
assessment or other charge by posting such bond or other matter required by law for such a stay; or
(iii) delivered to Lessor a good and sufficient undertaking in an amount specified by Lessor and
issued by a bonding corporation authorized to issue undertakings in California conditioned on the
payment by Tenant of the tax, assessments or charge, together with any fines, interest, penalties,
costs and expenses that may have accrued or been imposed thereon within thirty (30) days after final
determination of Tenant's contest, opposition or objection to such tax, assessment or other charge.
3.6.4. Payment by Lessor. Should Tenant fail to pay any Taxes required by this
Article III to be paid by Tenant within the time specified herein, subject to Tenant's right to contest
such Taxes in accordance with Section 3.6.3, and if such amount is not paid by Tenant within fifteen
(15) days after receipt of Lessor's written notice advising Tenant of such nonpayment, County and/or
Agency may, without further notice to or demand on Tenant, pay, discharge or adjust such tax,
assessment or other charge for the benefit of Tenant. In such event Tenant shall promptly on written
demand of County or Agency reimburse County and/or Agency for the full amount paid by County
and/or Agency in paying, discharging or adjusting such tax, assessment or other charge, together with
interest at the Interest Rate from the date advanced until the date repaid.
3.6.5. Operating Costs. Tenant shall pay all Operating Costs during the Term prior
to delinquency. As used in this Lease, the term "Operating Costs" shall mean all charges, costs and
expenses related to the Premises, including, but not limited to, management, operation, maintenance,
overhaul, improvement, replacement or repair of the Improvements and/or the Premises.
3.6.6. Utility Costs. Tenant shall pay all Utility Costs during the Term prior to
delinquency. As used in this Lease, the term "Utility Costs" shall include all charges, surcharges,
taxes, connection fees, service fees and other costs of installing and using all utilities required for or
utilized in connection with the Premises and/or the Improvements, including without limitation, costs
of heating, ventilation and air conditioning for the Premises, costs of furnishing gas, electricity and
other fuels or power sources to the Premises, and the costs of furnishing water and sewer services to
the Premises. Tenant agrees to indemnify and hold harmless the County and Agency against any
liability, claim, or demand for the late payment or non-payment of Utility Costs.
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ARTICLE IV
USE OF PREMISES
4.1 Permitted Use of Premises. Tenant may use the Premises for the construction,
development, entitlement, operation, maintenance, replacement and repair of the Improvements as
follows:
4.1.1. Required Services and Uses. Lessor's primary purpose for entering into this
Lease is to promote the development of the Improvements consistent with this Lease. In furtherance
of that purpose, Tenant shall construct and during the entire Term operate, maintain, replace and
repair the Improvements in a manner consistent with the Laws and for the following uses:
(a) multifamily affordable housing, and appurtenant improvements,
including, without limitation, parking,
(b) permanent supportive housing units and related services, and
(c) related commercial and community -serving uses, as approved by the
Lessor.
4.1.2. Ancillary Services and Uses. Subject to the prior written approval of Lessor,
which approval may be granted or withheld in the sole discretion of the Lessor, Tenant may provide
those additional services and uses which are ancillary to and compatible with the required services
and uses set forth in Section 4.1. L, above.
4.1.3. Additional Concessions or Services. Tenant may establish, maintain, and
operate such other additional facilities, concessions, and services as Tenant and Lessor may jointly
from time to time reasonably determine to be reasonably necessary for the use of the Premises and
which are otherwise permitted by Law for the sole purpose to provide affordable housing and/or
emergency shelter.
4.1.4. Restricted Use. The services and uses listed in this Section 4.1, both required
and optional, shall be the only services and uses permitted. Tenant agrees not to use the Premises for
any other purpose or engage in or permit any other activity within or from the Premises unless
approved in writing by the Lessor, which approval may be granted or withheld in the sole discretion
of the Lessor.
4.1.5. Continuous Use. During the Term, Tenant shall continuously conduct
Tenant's business in the Premises in the manner provided under this Lease and shall not discontinue
use of the Premises for any period of time except in the case of a Force Majeure Event or as
permitted in advance and in writing by the Lessor.
4.1.6. Alcohol Restrictions. Tenant shall not permit the sale or service of alcoholic
beverages on the Premises.
4.1.7. Permits and Licenses. Tenant shall be solely responsible to obtain, at its sole
cost and expense, any and all permits, licenses or other approvals required for the uses permitted
herein and shall maintain such permits, licenses or other approvals for the entire Term.
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4.2 Nuisance; Waste. Tenant shall not maintain, commit, or permit the maintenance or
commission of any nuisance as now or hereafter defined by any statutory or decisional law applicable
to the Premises and Improvements or any part thereof. Tenant shall not commit or allow to be
committed any waste in or upon the Premises or Improvements and shall keep the Premises and the
Improvements thereon in good condition, repair and appearance.
4.3 Compliance with Laws. Tenant shall not use or permit the Premises or the
Improvements or any portion thereof to be used in any manner or for any purpose that violates any
applicable Laws. Tenant shall have the right to contest, in good faith, any such Laws, and to delay
compliance with such Laws during the pendency of such contest (so long as there is no material
threat to life, health or safety that is not mitigated by Tenant to the satisfaction of the applicable
authorities). Lessor may cooperate with Tenant in all reasonable respects in such contest, including
joining with Tenant in any such contest if County and/or Agency's joinder is required in order to
maintain such contest; provide, however, that any such contest shall be without cost to Lessor, and
Tenant shall indemnify, defend (with attorneys acceptable to Lessor), and hold harmless the Lessor
from any and all claims, liabilities, losses, damages, or actions of any kind and nature, including
reasonable attorneys' fees, arising or related to Tenant's failure to observe or comply with the
contested Law during the pendency of the contest.
4.4 Hazardous Materials.
4.4.1. Definition of Hazardous Materials. For purposes of this Lease, the term
"Hazardous Material" or "Hazardous Materials" shall mean any hazardous or toxic substance,
material, product, byproduct, or waste, which is or shall become regulated by any governmental
entity, including, without limitation, the County and/or Agency acting in their governmental
capacity, the State of California or the United States government.
4.4.2. Use of Hazardous Materials. Except for those Hazardous Materials which
are customarily used in connection with the construction, operation, maintenance and repair of the
Improvements or used in connection with any permitted use of the Premises and Improvements under
this Lease (which Hazardous Materials shall be used in compliance with all applicable Laws), Tenant
or Tenant's employees, agents, independent contractors or invitees (collectively "Tenant Parties")
shall not cause or permit any Hazardous Materials to be brought upon, stored, kept, used, generated,
released into the environment or disposed of on, under, from or about the Premises (which for
purposes of this Section shall include the subsurface soil and ground water).
4.4.3. Tenant Obligations. If the presence of any Hazardous Materials on, under or
about the Premises caused or permitted by Tenant or Tenant Parties, and excluding Hazardous
Materials existing on the Premises prior to the Effective Date (the "Existing Hazardous
Materials"), results in (i) injury to any person, (ii) injury to or contamination of the Premises (or a
portion thereof), or (iii) injury to or contamination or any real or personal property wherever situated,
Tenant, at its sole cost and expense, shall promptly take all actions necessary or appropriate to return
the Premises to the condition existing prior to the introduction of such Hazardous Materials to the
Premises and to remedy or repair any such injury or contamination. Without limiting any other rights
or remedies of County or Agency under this Lease, Tenant shall pay the cost of any cleanup or
remedial work performed on, under, or about the Premises as required by this Lease or by applicable
Laws in connection with the removal, disposal, neutralization or other treatment of such Hazardous
Materials caused or permitted by Tenant or Tenant Parties, excluding the Existing Hazardous
Materials. Notwithstanding the foregoing, Tenant shall not take any remedial action in response to
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the presence, discharge or release, of any Hazardous Materials on, under or about the Premises
caused or permitted by Tenant or Tenant Parties, or enter into any settlement agreement, consent
decree or other compromise with any governmental or quasi -governmental entity without fast
obtaining the prior written consent of the Lessor. All work performed or caused to be performed by
Tenant as provided for above shall be done in good and workmanlike manner and in compliance with
plans, specifications, permits and other requirements for such work approved by Lessor.
4.4.4. Indemnification for Hazardous Materials.
(a) To the fullest extent permitted by law, Tenant hereby agrees to indemnify,
hold harmless, protect and defend (with attorneys acceptable to Lessor) Lessor, its elected officials,
officers, employees, agents, independent contractors, and the Premises, from and against any and all
liabilities, losses, damages (including, but not limited, damages for the loss or restriction on use of
rentable or usable space or any amenity of the Premises or damages arising from any adverse impact
on marketing and diminution in the value of the Premises), judgments, fines, demands, claims,
recoveries, deficiencies, costs and expenses (including, but not limited to, reasonable attorneys' fees,
disbursements and court costs and all other professional or consultant's expenses), whether
foreseeable or unforeseeable (collectively, "Liabilities"), arising out of the presence, use, generation,
storage, treatment, on or off -site disposal or transportation of Hazardous Materials on, into, from,
under or about the Premises by Tenant or Tenant Parties, and excluding all Existing Hazardous
Materials.
(b) The foregoing indemnity shall also specifically include the cost of any
required or necessary repair, restoration, clean-up or detoxification of the Premises and the
preparation of any closure or other required plans.
(c) The foregoing indemnity and defense obligations of this Lease shall
survive its expiration or termination; provided, however, that the indemnity contained in this Section
4.4.4 shall not apply to any Liabilities arising or occurring (a) prior to the Effective Date of this
Ground Lease, (b) after the expiration or earlier termination of the Term of this Ground Lease, or (c)
as a result of the grossly negligent or wrongful acts or omissions of Lessor.
4.5 Access by Lessor. Lessor reserves the right for County, Agency and their authorized
representatives to enter the Premises upon two (2) business days' prior written notice to Tenant,
during normal business hours, in order to determine whether Tenant is complying with Tenant's
obligations hereunder, or to enforce any rights given to County or Agency under this Lease. Lessor
and its representatives shall report to the Tenant's on -site office and must be accompanied by a
representative of Tenant at all times while on the Property and obey Tenant's rules and regulations.
Tenant acknowledges Lessor have the authority to enter the Premises and perform work on the
Premises at any time as needed to provide immediate or necessary protection for the general public.
Lessor will take all necessary measures not to unreasonably interfere with Tenant's business at the
Premises in exercising its rights under this Section.
Lessor shall indemnify and hold Tenant harmless from and against any loss, cost, damage or liability,
including, without limitation, attorneys' fees, which results fromLessor's willful misconduct or gross
negligence, or willful misconduct or gross negligence committed by any party acting under Lessor's
authority, of the rights granted by this Section 4.5.
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ARTICLE V
CONSTRUCTION OF H PROVEMENTS
5.1 Construction of Improvements.
5.1.1. Initial Improvements. Upon the fulfillment of the Preconditions set forth in
Section 5.1.2, below, and payment for and issuance of all permits required under the Laws (whether
from County or City in their governmental capacity, or otherwise), Tenant shall construct the Initial
Improvements.
5.1.2. Preconditions. No work for development of the Initial Improvements shall be
commenced, and no building or other materials shall be delivered to the Premises, until:
(a) Lessor has provided approval in writing that all the conditions set forth in
Section 5 of the Option Agreement have been satisfied;
(b) Tenant has obtained a permit through the City, submitted Project design,
conceptual development, plans and special provisions for the construction of Improvements in
accordance with the Lessor's criteria, standard and practices;
(c) Tenant has given Lessor written notice of the proposed commencement of
construction of the Premises or the delivery of construction materials in order to allow Lessor to take
all necessary actions under California Civil Code section 3094, including posting of a notice of non -
responsibility at the Premises; and
(d) Tenant has provided to Lessor evidence that (i) Tenant has entered into a
Construction Contract with a Contractor in accordance with Section 5.2 below, (ii) Tenant has
secured the construction funding required under Section 5.1.4 below, and (iii) Tenant has provided
Lessor with assurances sufficient to construct the Initial Improvements in accordance with Section
5.3 below.
5.1.3. Utilities. To the extent not already constructed, Tenant, at no cost to Lessor,
shall construct or cause to be constructed all water, gas, heat, light, power, air conditioning,
telephone, broadband intemet, and other utilities and related services supplied to and/or used on the
Premises at Tenant's sole cost and expense for the purposes of conducting Tenant's operations
thereon. All such utilities shall be separately metered from any utilities which may be used by
County and/or Agency in conducting its operations, if any, on or about the Premises. Nothing
contained in this Section is to be construed or implied to give Tenant the right or permission to install
or to permit any utility poles or communication towers to be constructed or installed on the Premises.
5.1.4. Construction Funding. Prior to commencement of construction of the Initial
Improvements, Tenant shall provide to Lessor evidence reasonably satisfactory to Lessor of funding
available to Tenant that is sufficient to pay for Tenant's estimated total cost of constructing the Initial
Improvements, which evidence may consist of (i) a written commitment to Tenant from a Lender
selected by Tenant to provide a construction loan to Tenant for the purpose of constructing the Initial
Improvements (which may be secured by a Leasehold Mortgage encumbering Tenant's leasehold
interest under this Lease), (ii) actual equity funds then held by Tenant or irrevocably committed to be
paid to Tenant for the purpose of constructing the Initial Improvements, or (iii) any combination of
the foregoing. Tenant may from time to time change any of the foregoing funding sources and the
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allocation thereof, so long as the aggregate available funding continues to be sufficient to pay for
Tenant's estimated remaining cost of constructing the Initial Improvements, provided that Tenant
shall promptly notify Lessor of any such change.
5.1.5. Compliance with Laws and Permits. Tenant shall cause all Improvements
made by Tenant to be constructed in substantial compliance with all applicable Laws, including all
applicable grading permits, building permits, and other permits and approvals issued by
governmental agencies and bodies having jurisdiction over the construction thereof. No permit,
approval, or consent given hereunder by County and/or Agency, in their governmental capacity, shall
affect or limit Tenant's obligations hereunder, nor shall any approvals or consents given by County
and/or Agency, as a Party to this Lease, be deemed approval as to compliance or conformance with
applicable governmental codes, laws, rules, or regulations.
5.1.6. Reports. Not less than monthly from the commencement of construction of
the Initial Improvements, Tenant shall provide Lessor with written construction status reports in the
form of AIA No. G702 ("Application and Certification for Payment") or comparable form,
augmented by oral reports if so requested by County or Agency.
5.1.7. Certificate of Occupancy. Tenant shall provide Lessor with a copy of the
Certificate of Occupancy promptly following issuance thereof The date of issuance of the
Certificate of Occupancy shall be the Commencement Date hereunder.
5.1.8. Insurance. Tenant (or the Contractor, as applicable) shall deliver to Lessor
both (i) certificates of insurance evidencing coverage for "builder's risk," as specified in Section 8.1,
and (ii) evidence of worker's compensation insurance, which provide the requisite insurance levels in
accordance with Article VHL for all persons employed in connection with the construction of any
Improvements upon the Premises and with respect to whom death or bodily injury claims could be
asserted against County and/or Agency or the Premises. Tenant shall (or shall cause Contractor to)
maintain, keep in force and pay all premiums required to maintain and keep in said insurance herein
at all times during which construction Work is in progress.
5.1.9. Mechanic's Liens.
(a) Payment of Liens. Tenant shall pay or cause to be paid the total cost and
expense of all "Work of Improvement," as that phrase is defined in the California Mechanics' Lien
law in effect and as amended from time to time. Tenant shall not suffer or permit to be enforced
against the Premises or Improvements or any portion thereof, any mechanics', materialmen's,
contractors' or subcontractors' liens arising from any work of improvement, however it may arise.
Tenant may, however, in good faith and at Tenant's sole cost and expense contest the validity of any
such asserted lien, claim, or demand, provided Tenant (or any contractor or subcontractor, as
applicable) has famished the release bond (if required by County, Agency or any construction lender)
required in California Civil Code section 8000 et seq. (or any comparable statute hereafter enacted
for providing a bond freeing the Premises from the effect of such lien claim). In the event a lien or
stop -notice is imposed upon the Premises as a result of such construction, repair, alteration, or
installation, and provided the lien is not the result of actions of, or work performed by, the Lessor,
Tenant shall either:
(1) Record a valid Release of Lien, or
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(2) Procure and record a bond in accordance with Section 8424 of the
Civil Code, which releases the Premises from the claim of the lien or stop -notice and from any action
brought to foreclose the lien, or
(3) Post such security as shall be required by Tenant's title insurer to
insure over such lien or stop -notice, or
(4) Should Tenant fail to accomplish either of the three optional
actions above within 30 days after Tenant receives notice of the filing of such a lien or stop -notice, it
shall constitute an Event of Default hereunder.
(b) Indemnification. Tenant shall at all times indemnify, defend with
counsel approved in writing by County and/or Agency and hold County and Agency harmless from
all claims, losses, demands, damages, cost, expenses, or liability costs for labor or materials in
connection with construction, repair, alteration, or installation of structures, improvements,
equipment, or facilities within the Premises, and from the cost of defending against such claims,
including reasonable attorneys' fees and costs, but excluding any liability resulting from the gross
negligence or willful misconduct of Lessor, and excluding any liens resulting from the actions of, or
work performed by, the Lessor.
(c) Protection Against Liens. Lessor shall have the right to post and
maintain on the Premises any notices of non -responsibility provided for under applicable California
law. During the course of construction, Tenant shall obtain customary mechanics' lien waivers and
releases. Upon completion of the construction of any Improvements, Tenant shall record a notice of
completion in accordance with applicable law. Promptly after the Improvements have been
completed, Tenant shall (or shall cause Contractor to) record a notice of completion as defined and
provided for in California Civil Code section 8000 et seq.
(d) Lessor's Rights. If Tenant (or any contractor or subcontractor, as
applicable) does not cause to be recorded the bond described in California Civil Code section 8000 et
seq. or otherwise protect the Premises and Improvements under any alternative or successor statute,
and a final judgment has been rendered against Tenant by a court of competent jurisdiction for the
foreclosure of a mechanic's, materialman's, contractor's or subcontractor's lien claim, and if Tenant
fails to stay the execution of judgment by lawful means or to pay the judgment, Lessor shall have the
right, but not the duty to pay or otherwise discharge, stay or prevent the execution of any such
judgment or lien or both. Upon any such payment by County and/or Agency, Tenant shall
immediately upon receipt of written request therefor by County or Agency, reimburse County and/or
Agency for all sums paid by County and/or Agency under this paragraph together with all County
and/or Agency's reasonable attorney's fees and costs, plus interest at the Interest Rate from the date
of payment until the date of reimbursement.
5.1.10. No Responsibility. Any approvals by County or Agency with respect to any
Improvements shall not make County or Agency responsible for the Improvement with respect to
which approval is given or the construction thereof. Tenant shall indemnify, defend and hold Lessor
harmless from and against all liability and all claims of liability (including, without limitation,
reasonable attorneys' fees and costs) arising during the Term of this Lease for damage or injury to
persons or property or for death of persons arising from or in connection with the Improvement or
construction thereof, but excluding any liability resulting from the gross negligence or willful
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misconduct of Lessor, and excluding any liens resulting from the actions of, or work performed by,
the Lessor.
5.2 Construction Contracts.
5.2.1. Construction Contract. Tenant shall enter into a written contract with a
general contractor ("Contractor") for construction of the Initial improvements based upon the
"Construction Contract Documents" approved pursuant to the Option Agreement. All construction
of the Initial Improvements shall be performed by contractors and subcontractors duly licensed as
such under the laws of the State of California. Tenant shall give Lessor a true copy of the contract or
contracts with the Contractor.
5.2.2. Assignment to County and/or Agency. Tenant shall obtain the written
agreement of the Contractor that, at County and/or Agency's election and in the event that Tenant
fails to perform its contract with the Contractor, such Contractor will recognize County and/or
Agency as the assignee of the contract with the Contractor, and that County and/or Agency may,
upon such election, assume such contract with credit for payments made prior thereto.
Notwithstanding the foregoing, the County's and/or Agency's rights under this Section 5.2.2 are
hereby made subject and subordinate to the lien of each Leasehold Mortgage.
5.3 Tenant's Assurance of Construction Completion. Prior to commencement of
construction of the Initial improvements, or any phase thereof, within the Premises by Tenant,
Tenant shall furnish to Lessor evidence that assures Lessor that sufficient monies will be available to
complete the proposed construction. The amount of money available shall be at least the total
estimated construction cost. Such evidence may take one of the following forms:
5.3.1. Performance bond and labor and materials bond in a principal sum equal to the
total estimated construction cost supplied by Contractor or subcontractors, provided said bonds are
issued jointly to Tenant, County, Agency and any Leasehold Mortgagees as obligees.
5.3.2. Irrevocable letter of credit issued to Lessor from a financial institution to be in
effect until County and Agency acknowledges satisfactory completion of construction;
5.3.3. Cash deposited with the County or Agency (may be in the form of cashier's
check or money order or may be electronically deposited);
5.3.4. A completion guaranty, in favor of County and Agency from an Affiliate of
The Related Companies of California, LLC, in a form reasonably acceptable to Lessor, coupled with
a repayment guaranty in favor of the senior construction lender for its loan;
5.3.4. Any combination of the above.
All bonds and letters of credit must be issued by a company qualified to do business in the State of
California and acceptable to Lessor. All bonds and letters of credit shall be in a form acceptable to
Lessor, County's Risk Manager and City's Risk Manager in their reasonable discretion, and shall
insure faithful and full observance and performance by Tenant of all terms, conditions, covenants,
and agreements relating to the construction of improvements within the Premises.
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Tenant shall provide or cause its Contractor to provide payment and/or performance bonds in
connection with the construction of the Initial Improvements, and shall name the County and City as
an additional obligee on, with the right to enforce, any such bonds.
5.4 Ownership of Improvements.
5.4.1. For purposes of this Section 5.4, "Term" shall have the meaning stated in
Section 2.2.3.
5.4.2. During Term. Title to all Improvements constructed or placed on the
Premises by Tenant and paid for by Tenant are and shall be vested in Tenant during the Term of this
Lease, until the expiration or earlier termination thereof. Any and all depreciation, amortization and
tax credits for federal or state purposes relating to the Improvements located on the Premises and any
and all additions thereto shall be deducted or credited exclusively by Tenant during the Term. The
Parties agree for themselves and all persons claiming under them that the Improvements are real
property.
5.4.3. Upon Expiration or Earlier Termination of Term. All Improvements on the
Premises at the expiration or earlier termination of the Term of this Lease shall, without additional
payment to Tenant, then become Lessor's property free and clear of all claims to or against them by
Tenant and free and clear of all Leasehold Mortgages and any other liens and claims arising from
Tenant's use and occupancy of the Premises, and with Taxes paid current as of the expiration or
earlier termination date. Tenant shall upon the expiration or earlier termination of the Term deliver
possession of the Premises and the Improvements to Lessor in good order, condition and repair
consistent with the requirements of this Lease and in compliance with all applicable laws and
regulations for the occupancy of the Project, taking into account reasonable wear and tear and the age
of the Improvements.
5.5 "AS -BUILT" Plans. Within sixty (60) days following completion of any substantial
improvement within the Premises, Tenant shall furnish the Lessor a complete set of reproducibles
and two sets of prints of "As -Built" plans and a magnetic tape, disk or other storage device
containing the "As -Built" plans in a form usable by Lessor, to Lessor's satisfaction, on Lessor's
computer aided mapping and design ("CAD") equipment. CAD files are also to be converted to
Acrobat Reader (pdf format), which shall be included on the disk or CD ROM. In addition, Tenant
shall furnish Lessor copy of the final construction costs for the construction of such improvements.
5.6 Capital Improvement Fund.
5.6.1. Tenant shall establish and maintain a reserve fund (the "Capital Improvement
Fund") during the Term of this Lease (as "Term" is defined in Section 2.2) in accordance with the
provisions of this Section 5.6 designated to pay for Permitted Capital Expenditures (as defined
below) for the Improvements during the Term of this Lease.
5.6.2. Tenant and Lessor agree and acknowledge that the purpose of the Capital
Improvement Fund shall be to provide sufficient funds to pay for the costs of major replacements,
renovations or significant upgrades of or to the Improvements, including without limitation building
facade or structure and major building systems (such as IIVAC, mechanical, electrical, plumbing,
vertical transportation, security, communications, structural or roof) that significantly affect the
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capacity, efficiency, useful life or economy of operation of the Improvements or their major systems,
after the completion of the Initial Improvements ("Permitted Capital Expenditure(s)").
5.6.3. The Capital Improvement Fund shall not be used to fund any portion of the
construction cost of the Initial Improvements. In addition, Permitted Capital Expenditures shall not
include the cost of periodic, recurring or ordinary maintenance expenditures or maintenance, repairs
or replacements that keep the Improvements in an ordinarily efficient operating condition, but that do
not significantly add to their value or appreciably prolong their useful life. Permitted Capital
Expenditures must constitute capital replacements, improvements or equipment under generally
accepted accounting principles consistently applied or constitute qualifying aesthetic improvements.
Permitted Capital Expenditures shall not include costs for any necessary repairs to remedy any
broken or damaged Improvements, all of which costs shall be separately funded by Tenant.
5.6.4. All specific purposes and costs for which Tenant desires to utilize amounts
from the Capital Improvement Fund shall be at Tenant's reasonable discretion and subject to Lessor's
written approval as provided for in Section 5.6.9, below. Tenant shall furnish to the Lessor
applicable invoices, evidence of payment and other back-up materials concerning the use of amounts
from the Capital Improvement Fund.
5.6.5. The Capital Improvement Fund shall be held in an account established with a
Lender acceptable to the Lessor, into which deposits shall be made by Tenant pursuant to Section
5.6.8, below.
5.6.6. Tenant shall have the right to partly or fully satisfy the Capital Improvement
Fund obligations of this Section 5.6 with capital improvement reserves (or replacement reserves)
required by Tenant's Leasehold Mortgagees or the Limited Partner, as long as such capital
improvement reserves or replacement reserves are in all material respects administered and utilized
in accordance, and otherwise comply, with the terms, provisions and requirements of this Section 5.6.
5.6.7. In the event of default by Tenant and the early termination of this Lease, the
Lessor shall have full access to the Capital Improvement Fund, provided the Tenant's Leasehold
Mortgagee does not use it within a reasonable time for the purposes stated in this Section 5.6;
provided, however, that Lessor's rights under this Section 5.6.7 are hereby made subject and
subordinate to the lien of each Leasehold Mortgage.
5.6.8. Commencing on the fifteenth (15th) day of the month during which the fifth
(5th) anniversary of the Commencement Date occurs, and continuing on or before the fifteenth (15th)
day of each month thereafter until five (5) years prior to the expiration of the Term, Tenant shall
make a monthly deposit to the Capital Improvement Fund in an amount equal to one percent (1%) of
total rent collected by Tenant from sub -tenants for the previous month. All interest and earnings on
the Capital Improvement Fund shall be added to the Capital Improvement Fund, but shall not be
treated as a credit against the Capital Improvement Fund deposits required to be made by Tenant
pursuant to this Section 5.6.
5.6.9. Disbursements shall be made from the Capital Improvement Fund only for
costs which satisfy the requirements of this Section 5.6. For the purpose of obtaining the Lessor's
prior approval of any Capital Improvement Fund disbursements, Tenant shall submit to the Lessor on
an annual calendar year basis a capital expenditure plan for the upcoming year which details the
amount and purpose of anticipated Capital Improvement Fund expenditures ("Capital Improvement
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Plan"). Lessor shall approve or disapprove such Capital Improvement Plan within thirty (30) days of
receipt, which approval shall not be unreasonably withheld, conditioned or delayed. Any
expenditure set forth in the approved Capital Improvement Plan shall be considered pre -approved by
Lessor (but only up to the amount of such expenditure set forth in the Capital Improvement Plan) for
the duration of the upcoming year. Tenant shall have the right during the course of each year to
submit to the Lessor for the Lessor's approval revisions to the then current Capital Improvement
Plan, or individual expenditures not noted on the previously submitted Capital Improvement Plan. In
the event of an unexpected emergency that necessitates a Permitted Capital Expenditure not
contemplated by the Capital Improvement Plan, the Tenant may complete such work using the funds
from the Capital Improvement Fund with contemporaneous or prior (if possible) written notice to the
Lessor and provide applicable documentation to the Lessor thereafter for approval. If the Lessor
disapproves the emergency expenditure which was not previously approved by Lessor, Tenant shall
refund the amount taken from the Capital Improvement Fund within thirty (30) days of written notice
from the Lessor of its decision.
5.6.10. Notwithstanding anything above to the contrary, if Tenant incurs
expenditures that constitute Permitted Capital Expenditures but which are not funded out of the
Capital Improvement Fund because sufficient funds are not then available in such fund, then Tenant
may credit the Permitted Capital Expenditures so funded by Tenant out of its own funds against
future Capital Improvement Fund contribution obligations of Tenant; provided, that such credit must
be applied, if at all, within four (4) years after such Permitted Capital Expenditure is incurred by the
Tenant.
ARTICLE VI
REPAIRS, MAINTENANCE, ADDITIONS AND RECONSTRUCTION
6.1 Maintenance by Tenant. Throughout the Term of this Lease, Tenant shall, at Tenant's
sole cost and expense, keep and maintain the Premises and any and all Improvements now or
hereafter constructed and installed on the Premises in good order, condition and repair (i.e., so that
the Premises does not deteriorate more quickly than its age and reasonable wear and tear would
otherwise dictate) and in a safe and sanitary condition and in compliance with all applicable Laws in
all material respects. Tenant shall immediately notify the Lessor of any damage relating to the
Premises.
6.2 Interior Improvements, Additions and Reconstruction of Improvements. Following
the completion of construction of the Initial Improvements, Tenant shall have the right from time to
time to make any interior improvements to the Improvements that are consistent with the Lessor's
approved use of the Premises as reflected in this Lease, without Lessor's prior written consent, but
with prior written notice to the Lessor (except in the event of an emergency, in which case no prior
written notice shall be required but Tenant shall notify Lessor of any emergency work done as soon
as practicable). With prior written approval of Lessor, Tenant may restore and reconstruct the
Improvements, and in that process make any modifications otherwise required by changes in Laws,
following any damage or destruction thereto (whether or not required to do so under Article VII);
and/or to make changes, revisions or improvements to the Improvements for uses consistent with the
Lessor approved use of the Premises as reflected in this Lease. Tenant shall perform all work
authorized by this Section at its sole cost and expense, including, without limitation, with insurance
proceeds approved for such use in accordance with Article VII, if any, and in compliance with all
applicable Laws in all material respects.
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6.3 All Other Construction, Demolition, Alterations, Improvements and
Reconstruction. Following the completion of construction of the Initial Improvements, and except
as specified in Sections 6.1 and 6.2, any construction, alterations, additions, major repairs,
demolition, improvements or reconstruction of any kind shall require the prior written consent of the
Lessor, which consent shall not be unreasonably conditioned, delayed or withheld and may require
their respective governing body's approval (e.g. Board of Supervisors' and City Council approval).
Tenant shall perform all work authorized by this Section at its sole cost and expense, including,
without limitation, with insurance proceeds approved for such use in accordance with Article VII, if
any, and in compliance with all applicable Laws in all material respects.
6.4 Requirements of Governmental Agencies. At all times during the Term of this Lease,
Tenant, at Tenant's sole cost and expense, shall: (i) make all alterations, improvements, demolitions,
additions or repairs to the Premises and/or the Improvements required to be made by any law,
ordinance, statute, order or regulation now or hereafter made or issued by any federal, state, county,
local or other governmental agency or entity; (ii) observe and comply in all material respects with all
Laws now or hereafter made or issued respecting the Premises and/or the Improvements (subject to
Tenant's right to contest such Laws in accordance with Section 4.4); (iv) indemnify, defend and hold
County, Agency, the Premises and the Improvements free and harmless from any and all liability,
loss, damages, fines, penalties, claims and actions resulting from Tenant's failure to comply with and
perform the requirements of this Article VI.
6.5 Lessor Obligations. Tenant specifically acknowledges and agrees that County, Agency
and Lessor Parties do not and shall not have any obligations with respect to the maintenance,
alteration, improvement, demolition, replacement, addition or repair of any Improvements.
6.6 Lessor Reservations. Without limiting Lessor's rights with respect to the Premises,
Lessor reserves for themselves, their successors and assigns those rights necessary to assure proper
maintenance and operation of the Premises and to permit any steps to be taken which the Lessor
deems necessary or desirable to maintain, repair, improve, modify or reconstruct the Premises. The
rights reserved to Lessor in this section or any other section of this Lease shall be exercised by the
Lessor at their sole discretion, unless otherwise provided herein.
ARTICLE VII
DAMAGE AND RESTORATION
7.1 Damage and Restoration. In the event the whole or any part of the Improvements shall
be damaged or destroyed by fire or other casualty, damage or action of the elements which is fully
covered by insurance required to be carried by Tenant pursuant to this Lease or in fact caused by
Tenant, at any time during the Term, Tenant shall with all due diligence, at Tenant's sole cost and
expense, repair, restore and rebuild the Improvements on substantially the same plan and design as
existed immediately prior to such damage or destruction and to substantially the same condition that
existed immediately prior to such damage, with any changes made by Tenant to comply with then
applicable Laws and with any upgrades or improvements that Tenant may determine in its reasonable
discretion. If Tenant desires to change the use of the Premises following such casualty, then Tenant
may make appropriate changes to the Premises to accommodate such changed use after approval of
such change of use by the Lessor pursuant to Article IV above. This Article shall not apply to
cosmetic damage or alterations. In the event that Tenant shall determine, subject to the rights of the
Leasehold Mortgagees and Limited Partner, if applicable, by notice to the Lessor given by the later
of ninety (90) days after the date of the damage or destruction or thirty (30) days after receipt by
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Tenant of any such insurance proceeds, that there are not adequate proceeds to restore the
Improvements and/or the Premises to substantially the same condition in which they existed prior to
the occurrence of such damage or destruction, then Tenant may terminate this Lease as of a date that
is not less than thirty (30) days after the date of such notice. Notwithstanding Section 17.9, if Tenant
terminates this Lease pursuant to this Section 7.1, Tenant shall surrender possession of the Premises
to the Lessor immediately and assign to the Lessor (or, if same has already been received by Tenant,
pay to the Lessor) all of its right, title and interest in and to the proceeds from Tenant's insurance
upon the Premises.
7.2 Restoration. In the event of any restoration or reconstruction pursuant to this Section, all
such work performed by Tenant shall be constructed in a good and workmanlike manner according to
and in conformance with the Laws, rules and regulations of all governmental bodies and agencies
and the requirements of this Lease applicable to the construction of the Initial Improvements.
7.3 No Rental Abatement. Tenant shall not be entitled to any abatement, allowance,
reduction, or suspension of Rent because part or all of the Improvements become untenantable as a
result of the partial or total destruction of the Improvements, and Tenant's obligation to keep and
perform all covenants and agreements on its part to be kept and performed hereunder, shall not be
decreased or affected in any way by any destruction of or damage to the hnprovements; except as
otherwise provided herein.
7.4 Application of Insurance Proceeds. If following the occurrence of damage or
destruction to the Premises or Improvements, Tenant is obligated to or determines that there are
adequate proceeds to restore the Premises and Improvements pursuant to this Article VII, then all
proceeds from the insurance required to be maintained by Tenant on the Premises and the
Improvements shall be applied to fully restore the same, and, subject to the rights of the Leasehold
Mortgagees and Limited Partner, if applicable, any excess proceeds shall be paid to Tenant and any
deficit in necessary funds plus the amount of any deductible shall be paid by Tenant. If Tenant after
commencing or causing the commencement of the restoration of Premises and Improvements shall
determine that the insurance proceeds are insufficient to pay all costs to fully restore the
Improvements, Tenant shall pay the deficiency and shall nevertheless proceed to complete the
restoration of Premises and the Improvements and pay the cost thereof. Upon lien free completion of
the restoration, subject to the rights of the Leasehold Mortgagees, if applicable, any balance of the
insurance proceeds remaining over and above the cost of such restoration shall be paid to Tenant.
7.5 Exclusive Remedies. Notwithstanding any destruction or damage to the Premises and/or
the Improvements, Tenant shall not be released from any of its obligations under this Lease, except
to the extent and upon the conditions expressly stated in this Article VII. County, Agency and
Tenant hereby expressly waive the provisions of California Civil Code Sections 1932(2) and 1933(4)
with respect to any damage or destruction of the Premises and/or the Improvements and agree that
their rights shall be exclusively governed by the provisions of this Article VII.
7.6 Damage Near End of Term. If, during the last three (3) years of the Term, as
applicable, the hnprovements shall be damaged or destroyed for which the repair and/or replacement
cost is fifty percent (50%) or more of then replacement cost of the improvements, then Tenant shall
have the option, to be exercised within ninety (90) days after such damage or destruction:
7.6.1. to notify the Lessor of its election to repair or restore the Improvements as
provided in this Article VII; or
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7.6.2. subject to the rights of Leasehold Mortgagees and such provisions of this Lease
that survive termination, to terminate this Lease by notice to the Lessor, which termination shall be
deemed to be effective as of the date of the damage or destruction. If Tenant terminates this Lease
pursuant to this Section 7.6.2, Tenant shall surrender possession of the Leased Premises to the Lessor
immediately and assign to the Lessor (or, if same has already been received by Tenant, pay to the
Lessor) all of its right, title and interest in and to the proceeds from Tenant's insurance upon the
Premises less (i) any costs, fees, or expenses incurred by Tenant in connection with the adjustment of
the loss or collection of the proceeds, (ii) any reasonable costs incurred by Tenant in connection with
the Premises after the damage or destruction, which costs are eligible for reimbursement from such
insurance proceeds, and (iii) the proceeds of any rental loss or business interruption insurance
applicable prior to the date of surrender of the Premises to the Lessor.
ARTICLE VIII
INSURANCE AND INDEMNITY
8.1 Tenant's Required Insurance.
8.1.1. Tenant agrees to purchase all required insurance at Tenant's expense and to
deposit with Chief Real Estate Officer certificates of insurance, including all endorsements required
herein, necessary to satisfy Chief Real Estate Officer that the insurance provisions of this Lease have
been complied with and to keep such insurance coverage and the certificates and endorsements
therefore on deposit with Chief Real Estate Officer during the entire term of this Lease.
8.1.2. Tenant agrees that it shall not operate on the Premises at any time the required
insurance is not in full force and effect as evidenced by a certificate of insurance and necessary
endorsements or, in the interim, an official binder being in the possession of Chief Real Estate
Officer, rent however shall not be suspended. In no cases shall assurances by Tenant, its employees,
agents, including any insurance agent, be construed as adequate evidence of insurance. Chief Real
Estate Officer will only accept valid certificates of insurance and endorsements, or in the interim, an
insurance binder as adequate evidence of insurance. Tenant also agrees that upon cancellation,
termination, or expiration of Tenant's insurance, Chief Real Estate Officer may take whatever steps
are necessary to interrupt any operation from or on the Premises until such time as the Chief Real
Estate Officer reinstates the Lease.
8.1.3. If Tenant fails to provide Chief Real Estate Officer with a valid certificate of
insurance and endorsements, or binder at any time during the term of the Lease, County and Tenant
agree that this shall constitute a material breach of the Lease. Whether or not a notice of default has
or has not been sent to Tenant, said material breach shall permit Chief Real Estate Officer to take
whatever steps are necessary to interrupt any operation from or on the Premises, and to prevent any
persons, including, but not limited to, members of the general public, and Tenant's employees and
agents, from entering the Premises until such time as the Chief Real Estate Officer is provided with
adequate evidence of insurance required herein. Tenant further agrees to hold County harmless for
any damages resulting from such interruption of business and possession, including, but not limited
to, damages resulting from any loss of income or business resulting from Chief Real Estate Officer's
action.
8.1.4. All contractors and subcontractors performing work on behalf of Tenant
pursuant to this Lease shall obtain insurance subject to the same terms and conditions as set forth
herein for Tenant and limits of insurance as described in Section 8.1.6 (e), Section 8.1.6 (f) and
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Section 8.1.6 (g). Tenant shall not allow contractors or subcontractors to work if contractors have
less than the level of coverage required by County under this Lease. It is the obligation of the Tenant
to provide written notice of the insurance requirements to every contractor and to receive proof of
insurance prior to allowing any contractor to begin work within the Premises. Such proof of
insurance must be maintained by Tenant through the entirety of this Lease and be available for
inspection by Chief Real Estate Officer at any reasonable time.
8.1.5. All self -insured retentions (SIRs) shall be clearly stated on the Certificate of
Insurance. Any self -insured retention (SIR) in an amount in excess of Fifty Thousand Dollars
($50,000) shall specifically be approved by the County's Risk Manager, or designee, upon review of
Tenant's current audited financial report. If Tenant's SIR is approved, Tenant, in addition to, and
without limitation of, any other indemnity provision(s) in this Lease, agrees to all of the following:
1) In addition to the duty to indemnify and hold the County harmless against any and all
liability, claim, demand or suit resulting from Tenant's, its agents, employee's or
subcontractor's performance of this Lease, Tenant shall defend the County at its sole cost and
expense with counsel approved by Board of Supervisors against same; and
2) Tenant's duty to defend, as stated above, shall be absolute and irrespective of any duty to
indemnify or hold harmless; and
3) The provisions of California Civil Code Section 2860 shall apply to any and all actions to
which the duty to defend stated above applies, and the Tenant's SIR provision shall be
interpreted as though the Tenant was an insurer and the County was the insured.
If the Tenant fails to maintain insurance acceptable to the County or City for the full term of this
Lease, the County or City may terminate this Lease.
8.1.6. All policies of insurance required under this Article VIII must be issued by an
insurer with a minimum rating of A- (Secure A.M. Best's Rating) and VIII (Financial Size Category
as determined by the most current edition of the Best's Key Rating Guide/Property-
Casualty/United States or ambest.com). It is preferred, but not mandatory, that the insurer must be
licensed to do business in the state of California.
(a) If the insurance carrier does not have an A.M. Best Rating of A-/VIII, the
Chief Real Estate Officer retains the right to approve or reject a carrier after a review of the carrier's
performance and financial ratings.
(b) If the insurance carrier is not an admitted carrier in the state of California
and does not have an A.M. Best rating of A-/VIII, the Chief Real Estate Officer retains the right to
approve or reject a carrier after a review of the company's performance and financial ratings.
(c.1) The policy or policies of insurance maintained by the TENANT
DURING CONSTRUCTION shall provide the minimum limits and coverage as set forth below:
Coverages
Minimum Limits
Builder's Risk (during the Construction Period)
naming retained General Contractor
Project value and no coinsurance
provision.
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Commercial General Liability
$5,000,000 per occurrence
$5,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
(c.2) The policy or policies of insurance maintained by the TENANT'S
GENERAL CONTRACTOR DURING CONSTRUCTION shall provide the minimum limits and
coverage as set forth below:
Coverages
Minimum Limits
Commercial General Liability
$5,000,000 per occurrence
$10,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$2,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
Contractor's Pollution Liability including NODS
$5,000,000 per claims made or per
occurrence
(d) The policy or policies of insurance maintained by the TENANT'S
SUBCONTRACTORS DURING CONSTRUCTION shall provide the minimum limits and
coverage as set forth below:
Coverages
Minimum Limits
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
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Employer's Liability Insurance (not required for
$1,000,000 per occurrence
self-employed subcontractors)
Contractor's Pollution Liability including NODS
$1,000,000 per claims made or per
(Required only of those subcontractors involved in
occurrence
pollution remediation)
(e) The policy or policies of insurance maintained by the ARCHITECT -
ENGINEER shall provide the minimum limits and coverage as set forth below:
Coverages
Minimum Limits
Professional Liability (architect, structural,
$2,000,000 per occurrence
electrical engineer, mechanical/plumbing
engineering, environmental engineer, civil engineer,
$2,000,000 aggregate
landscape architect, and geotechnical engineer)
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
$1,000,000 limit per occurrence
non -owned and hired vehicles
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
(f) The policy or policies of insurance maintained by the TENANT AFTER
CONSTRUCTION shall provide the minimum limits and coverage as set forth below:
Coverages
Minimum Limits
Commercial General Liability
$5,000,000 per occurrence
Including Sexual Misconduct (defined as abuse,
$5,000,000 aggregate
molestation and assault and battery)
Automobile Liability including coverage for owned,
$1,000,000 limit per occurrence
non -owned and hired vehicles
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
Commercial Property Insurance on an "All Risk" or
100% of the Replacement Cost Value
"Special Causes of Loss" basis coverin all
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buildings, contents and any tenant improvements and no coinsurance provision
including Business Interruption/Loss of Rents with
a 12 month limit
Contractor shall provide a builder's risk policy providing coverage for the full project value and no
coinsurance provision. The policy shall provide coverage for all perils excluding earthquake, and
flood. Contractor is responsible for any deductible amount. The County of Orange and the Housing
Authority of the City of Santa Ana shall be named as Loss Payees as its financial interests may
appear. This shall be evidenced by a Loss Payee endorsement which shall accompany the Certificate
of Insurance.
The Builder's Risk policy shall not be required to cover any tools, equipment, or supplies, unless
such tools, equipment, or supplies are part of the Work being constructed. The Contractor shall be
responsible for securing and maintaining appropriate insurance on any tools, equipment, or supplies
that are not part of the work being constructed.
The County and the Contractor waive all rights against each other and the subcontractors, sub -
subcontractors, officers, and employees of each other, and the Contractor waives all rights against
County's separate contractors, if any, and their subcontractors, sub -subcontractors, officers and
employees for damages caused by fire or other perils to the extent paid by the Builder's Risk
insurance, except such rights as they may have to the proceeds of such insurance. The Contractor
shall require of its subcontractors and sub -subcontractors by appropriate agreements, similar waivers,
each in favor of all other parties enumerated in the preceding sentence.
(g) The policy or policies of insurance maintained by the TENANT'S
CONTRACTOR AFTER CONSTRUCTION shall provide the minimum limits and coverage as
set forth below when performing maintenance and minor work after the building is in operation:
Coverages
Minimum Limits
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
8.1.7. Required Coverage Forms.
(a) The Commercial General Liability coverage shall be written on Insurance
Services Office (ISO) form CG 00 01, or a substitute form providing liability coverage at least as
broad.
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(b) The Business Auto Liability coverage shall be written on ISO form CA 00
01, CA 00 05, CA 00 12, CA 00 20, or a substitute form providing liability coverage as broad.
8.1.8. Required Endorsements. The Commercial General Liability policy shall
contain the following endorsements, which shall accompany the Certificate of insurance:
1) An Additional Insured endorsement using ISO form CG 20 26 04 13 or a form at least as
broad naming the County of Orange, City of Santa Ana, and their respective elected and
appointed officials, officers, employees, agents as Additional Insureds. Blanket coverage
may also be provided which will state, as required by Lease.
2) A primary non-contributing endorsement using ISO form CG 20 0104 13, or a form at
least as broad, evidencing that the TENANT'S insurance is primary and any insurance or
self-insurance maintained by the County of Orange shall be excess and non-contributing.
3) A Products and Completed Operations endorsement using ISO Form CG2037 (ed.04/13)
or a form at least as broad, or an acceptable alternative is the ISO from CG2010 (ed.
11/85). (Pertains to contractors and subcontractors performing major construction).
Contractors shall maintain Products and Completed Operations coverage for ten (10)
years following completion of construction.
The Contactors Pollution Liability and Pollution Liability policies shall contain the following
endorsements, which shall accompany the Certificate of Insurance:
1) An Additional Insured endorsement naming the County of Orange, City of Santa Ana,
and their respective elected and appointed officials, officers, employees, and agents as
Additional Insureds.
2) A primary non-contributing endorsement evidencing that the Contractor's insurance is
primary and any insurance or self-insurance maintained by County shall be excess and
non-contributing.
(a) The Workers' Compensation policy shall contain a waiver of subrogation
endorsement waiving all rights of subrogation against the County of Orange, City of Santa Ana, and
their respective elected and appointed officials, officers, agents and employees.
(b) All insurance policies required by this Lease shall waive all rights of
subrogation against the County of Orange, City of Santa Ana, and their respective elected and
appointed officials, officers, agents and employees when acting within the scope of their appointment
or employment.
(c) The Commercial Property Building policy shall include the County of
Orange and City of Santa Ana as both Named Insureds. A Certificate of Insurance shall be submitted
as evidence of this requirement. The Builders' Risk policy shall be endorsed to include the County of
Orange and City of Santa Ana as Loss Payees. A Loss Payee endorsement shall be submitted with
the Certificate of Insurance as evidence of this requirement.
(d) Tenant shall notify County and City in writing within thirty (30) days of
any policy cancellation and ten (10) days for non-payment of premium and provide a copy of the
cancellation notice to the County and City. Failure to provide written notice of cancellation may
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constitute a material breach of the Lease, after which the County or City may suspend or terminate
this Lease.
(e) The Commercial General Liability policy shall contain a severability of
interests clause, also known as a "separation of insureds" clause (standard in the ISO CG 001 policy).
(f) If Contractor's Pollution Liability and Pollution Liability are claims -made
policies, Contractor shall agree to maintain coverage for five (5) years following completion of the
construction. If Contractor's Professional Liability is a claims -made policy, Contractor shall agree to
maintain coverage for ten (10) years following the completion of construction. Products and
Completed Operations coverage shall be maintained for ten (10) years following the completion of
construction.
(g) Insurance certificates should be forwarded to County and City addresses
provided in Section 18.19 below. Tenant has ten (10) business days to provide adequate evidence of
insurance or it shall constitute an Event of Default.
(h) County or City expressly retains the right to require Tenant to increase or
decrease insurance of any of the above insurance types throughout the term of this Lease which shall
be mutually agreed upon by County, City and Tenant.
(i) Chief Real Estate Officer shall notify Tenant in writing of changes in the
insurance requirements consistent with subsection (h) above. If Tenant does not deposit copies of
certificates of insurance and endorsements with Chief Real Estate Officer incorporating such changes
within thirty (30) days of receipt of such notice, it shall constitute an Event of Default.
0) The procuring of such required policy or policies of insurance shall not be
construed to limit Tenant's liability hereunder nor to fulfill the indemnification provisions and
requirements of this Lease, nor in any way to reduce the policy coverage and limits available from
the insurer.
8.2 Indemnification. Tenant agrees to assume all risks, financial or otherwise, associated
with the Premises. Tenant hereby releases and waives all claims and recourse against Lessor,
including the right of contribution for loss or damage of persons or property, arising from, growing
out of or in any way connected with or related to this Lease, including any damage to or interruption
of use of the Premises including, but not limited to, loss of business, damage to, destruction of, or
relocation costs of Tenant's Improvements or impaired utility of the Premises caused by erosion,
flood, or flood overflow, or caused by any action undertaken in the operation, maintenance, repair,
reconstruction, replacement, enlargement or improvement of the Premises except claims arising from
the gross negligence or willful misconduct of County or Agency, their officers, agents, employees
and contractors. Tenant hereby agrees to indemnify, defend (with counsel approved in writing by
Lessor), and hold harmless, County and the Agency, their respective elected and appointed officials,
officers, agents, employees and contractors against any and all claims, losses, demands, damages,
cost, expenses or liability for injury to any persons or property, arising out of the operation or
maintenance of the Premises, and/or Tenant's exercise of the rights under this Lease, except for
liability arising out of the gross negligence or willful misconduct of County or Agency, their elected
and appointed officials, officers, agents, employees or contractors including the cost of defense of
any lawsuit arising therefrom, and except for claims arising after the later to occur of the expiration
or earlier termination of the Term, or the date Tenant vacates the Premises. If County and/or Agency
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is named as co-defendant in a lawsuit in connection with this Lease, Tenant shall notify Lessor of
such fact and shall represent the County and/or Agency in such legal action unless County or Agency
undertakes to represent themselves as co-defendant in such legal action, in which event, Tenant shall
pay to Lessor their litigation costs, expenses, and reasonable attorneys' fees. If judgment is entered
against County and/or Agency and Tenant by a court of competent jurisdiction because of the
concurrent active negligence of County and/or Agency and Tenant, County, Agency and Tenant
agree that liability will be apportioned as determined by the court. Neither Party shall request a jury
apportionment. A judgment or other judicial determination regarding Lessor's negligence shall not
be a condition precedent to Tenant's obligations stated in this Section.
Tenant acknowledges that it is familiar with the language and provisions of California Civil Code
Section 1542 which provides as follows:
A general release does not extend to claims which the creditor or releasing party does not know or
suspect to exist in his or her favor at the time of executing the release and that if known by him or
her, would have materially affected his or her settlement with the debtor or released party.
Tenant, being aware of and understanding the terms of Section 1542, hereby waives all benefit of its
provisions to the extent described in this paragraph.
The foregoing indemnity and defense obligations of this Lease shall survive its expiration or
termination. This Section 8.2 notwithstanding, indemnification with respect to Hazardous Materials
shall be governed by Section 4.4.4.
8.3 Damage to Tenant's Premises. Lessor shall not be liable for injury or damage which
may be sustained by the person, goods, wares, merchandise, or other property of Tenant, of Tenant's
employees, invitees, customers, or of any other person in or about the Premises or the Improvements
caused by or resulting from any peril which may affect the Premises or Improvements, including fire,
steam, electricity, gas, water, or rain which may leak or flow from or into any part of the Premises or
the Improvements, whether such damage or injury results from conditions arising upon the Premises
or from other sources; provided, however, Lessor shall be liable for injury or damage under this
Section 8.3 resulting from County or Agency, their elected and appointed officials, officers, agents,
employees or contractor's gross negligence or willful misconduct.
ARTICLE IX
CONDEMNATION
9.1 Definitions.
9.1.1. "Condemnation" means (i) the taking or damaging, including severance
damage, by eminent domain or by inverse condemnation or for any public or quasi -public use under
any statute, whether by legal proceedings or otherwise, by a Condemnor (hereinafter defined), and
(ii) a voluntary sale or transfer to a Condemnor, either under threat of condemnation or while
condemnation legal proceedings are pending.
9.1.2. "Date of Tatting" means the later of (i) the date actual physical possession is
taken by the Condemnor; or (ii) the date on which the right to compensation and damages accrues
under the law applicable to the Premises.
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9.1.3. "Award" means all compensation, sums or anything of value awarded, paid or
received for a Total Taking, a Substantial Taking or a Partial Taking (hereinafter defined), whether
pursuant to judgment or by agreement or otherwise.
9.1.4. "Condemnor" means any public or quasi -public authority or private
corporation or individual having the power of condemnation.
9.1.5. "Total Taking" means the taking by Condemnation of all of the Premises and
all of the Improvements.
9.1.6. "Substantial Taking" means the taking by Condemnation of so much of the
Premises or Improvements or both that one or more of the following conditions results, as reasonably
determined by Tenant: (i) The remainder of the Premises would not be economically and feasibly
usable by Tenant; and/or (ii) A reasonable amount of reconstruction would not make the Premises
and Improvements a practical improvement and reasonably suited for the uses and purposes for
which the Premises were being used prior to the Condemnation; and/or (iii) The conduct of Tenant's
business on the Premises would be materially and substantially prevented or impaired.
9.1.7. "Partial Taking" means any taking of the Premises or Improvements that is
neither a Total Taking nor a Substantial Taking.
9.1.8. `Notice of Intended Condemnation" means any notice or notification on
which a reasonably prudent person would rely and which he would interpret as expressing an existing
intention of Condemnation as distinguished from a mere preliminary inquiry or proposal. It includes
but is not limited to service of a Condemnation summons and complaint on a Party hereto. The
notice is considered to have been received when a Party receives from the Condemnor a notice of
intent to condemn, in writing, containing a description or map reasonably defining the extent of the
Condemnation.
9.2 Notice and Representation.
9.2.1. Notification. The Party receiving a notice of one or more of the kinds
specified below shall promptly notify the other Party (and the Limited Partner, if during the
Compliance Period) of the receipt, contents and dates of such notice: (i) a Notice of Intended
Condemnation; (ii) service of any legal process relating to the Condemnation of the Premises or
Improvements; (iii) any notice in connection with any proceedings or negotiations with respect to
such a Condemnation; (iv) any notice of an intent or willingness to make or negotiate a private
purchase, sale or transfer in lieu of Condemnation.
9.2.2. Separate Representation. County, Agency and Tenant each have the right to
represent its respective interest in each Condemnation proceeding or negotiation and to make full
proof of his claims. No agreement, settlement, sale or transfer to or with the Condemnor shall be
made without the consent of County, Agency and Tenant. County, Agency and Tenant shall each
execute and deliver to the other any instruments that may be required to effectuate or facilitate the
provisions of this Lease relating to Condemnation.
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9.3 Total or Substantial Taking.
9.3.1. Total Taking. On a Total Taking, this Lease shall terminate on the Date of
Taking
9.3.2. Substantial Taking. If a taking is a Substantial Taking, Tenant may, with the
consent of each Leasehold Mortgagee and the Limited Partner, to the extent required, by notice to
Lessor given within ninety (90) days after Tenant receives a Notice of Intended Condemnation, elect
to treat the taking as a Total Taking. If Tenant does not so notify Lessor, the taking shall be deemed
a Partial Taking.
9.3.3. Early Delivery of Possession. Tenant may continue to occupy the Premises
and Improvements until the Condemnor takes physical possession. At any time following Notice of
Intended Condemnation, Tenant may in its sole discretion, with the consent of each Leasehold
Mortgagee and the Limited Partner, to the extent required, elect to relinquish possession of the
Premises to Lessor before the actual Taking. The election shall be made by notice declaring the
election and agreeing to pay all Rent required under this Lease to the Date of Taking. Tenant's right
to apportionment of or compensation from the Award shall then accrue as of the date that the Tenant
relinquishes possession.
9.3.4. Apportionment of Award. On a Total Taking all sums, including damages
and interest, awarded for the fee or leasehold or both shall be distributed and disbursed as finally
determined by the court with jurisdiction over the Condemnation proceedings in accordance with
applicable law. Notwithstanding anything herein to the contrary, Tenant shall be entitled to receive
compensation for the value of its leasehold estate under this Lease including its fee interest in all
Improvements, personal property and trade fixtures located on the Premises, its relocation and
removal expenses, its loss of business goodwill and any other items to which Tenant may be entitled
under applicable law.
9.4 Partial Taking.
9.4.1. Effect on Rent. On a Partial Taking this Lease shall remain in full force and
effect covering the remainder of the Premises and Improvements, and Tenant shall not be entitled to
any refund of the Base Rent.
9.4.2. Restoration of Improvements. Promptly after a Partial Taking, Tenant shall
repair, alter, modify or reconstruct the Improvements ("Restoring") so as to make them reasonably
suitable for Tenant's continued occupancy for the uses and purposes for which the Premises are
leased.
9.4.3. Apportionment of Award. On a Partial Taking, Lessor shall be entitled to
receive the entire award for such Partial Taking, except that (i) the proceeds of such Partial Taking
shall first be applied towards the cost of Restoring the Premises pursuant to Section 9.4.2 and (ii)
Tenant shall be entitled to receive any portion of such award allocated to Tenant's interest in any of
Tenant's Improvements, Personal property and trade fixtures taken, and any part of the award
attributable to the low income housing tax credits.
9.5 Waiver of Termination Rights. Both Parties waive their rights under Section 1265.130
of the California Code of Civil Procedure (and any successor provision) and agree that the right to
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terminate this Lease in the event of Condemnation shall be governed by the provisions of this Article
IX.
ARTICLE X
ASSIGNMENT, SUBLETTING AND ENCUMBERING
10.1 General. Except as provided in Sections 10.3 and 17.6.4, below, Tenant shall not
mortgage, pledge, hypothecate, encumber, transfer, sublease Tenant's interest in this Lease or assign
(including an assignment by operation of law) Tenant's interest in the Premises or Improvements or
any part or portion thereof (hereinafter referred to collectively as "Transfer") without the written
consent of the Lessor, which consent may not be unreasonably withheld, conditioned or delayed.
Lessor's consent may be subject to approval by their respective governing bodies (e.g. Board of
Supervisors and City Council). Tenant's failure to obtain the Lessor's written consent to a Transfer
shall render such Transfer void. Occupancy of the Premises by a prospective transferee, sublessee,
or assignee prior to Lessor's written consent of a Transfer shall constitute an Event of Default, except
as set forth in Section 10.3, below.
10.1.1. Except as provided in Section 10.3, below, if Tenant hereunder is a
corporation, limited liability company, an unincorporated association or partnership, the sale or
transfer of any stock or interest in said corporation, company, association and partnership in the
aggregate exceeding 25% shall require the written consent of the Lessor, as set forth in Section 10.3,
above, which consent may not be unreasonably withheld, conditioned or delayed.
10.1.2. Should Lessor consent to any Transfer, such consent and approval shall not
constitute a waiver of any of the terms, conditions, covenants, restrictions or reservations of this
Lease nor be construed as Lessor's consent to any further Transfer. Such terms conditions,
covenants, restrictions and reservations shall apply to each and every Transfer hereunder and shall be
severally binding upon each and every party thereto. Any document to regarding the Transfer of the
Premises or any part thereof shall not be inconsistent with the provisions of this Lease and in the
event of any such inconsistency, the provisions of this Lease shall control.
10.1.3. This Section shall not be interpreted to prohibit, disallow or require Lessor's
consent to space leases (subleases of less than Tenant's entire Lease interest), including leases of
individual residential units in the Improvements, which are consistent with the approved uses under
this Lease.
10.2 Leasehold Mortgage. Under no circumstances may Tenant mortgage, encumber or
hypothecate Lessor's Fee Interest, other than as required by TCAC pursuant to its lease rider, if any,
and previously approved by Lessor prior to the Effective Date of this Lease, in connection with the
award of low income housing tax credits to Tenant.
10.3 Excluded Transfers. Lessor's consent, as set forth in Section 10.1, above, shall not be
required to for any Excluded Transfer (each party to whom an Excluded Transfer may be made is a
"Permitted Transferee"), provided, however, that (1) Tenant shall notify Lessor of such Excluded
Transfer at least twenty (20) days prior to the consummation of such Excluded Transfer, and shall
provide Lessor with information regarding the transferee evidencing that the Transfer falls within the
scope of this Section 10.3 and the definition of Excluded Transfer, set forth in Section 1.1.21, above,
and (2) if such Transfer involves an assignment of Tenant's rights under this Lease, Tenant or such
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transferee shall provide Lessor with a written assumption of Tenant's obligations and liabilities under
this Lease executed by such transferee in a form approved by the Lessor, which approval shall not be
unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the
terms of this Lease; provided, however, that the provisions of this Section 10.3 shall not apply to any
Transfer to a Foreclosure Transferee.
10.4 Transfer Procedure. The provisions of this Section 10.4 shall not be applicable to an
Excluded Transfer, which shall be governed by Sections 1.1.21 and 10.3, above. If Tenant desires at
any time to enter into a Transfer for which Lessor's consent is required hereunder, Tenant shall
provide Lessor with written notice ("Transfer Notice") at least ninety (90) days prior to the
proposed effective date of the Transfer. The Transfer Notice shall include (i) the name and address
of the proposed transferee, (ii) the nature of the Transfer (e.g., whether an assignment, sublease, etc.),
(iii) the proposed effective date of the Transfer, (iv) income statements and "fair market" balance
sheets of the proposed transferee for the two (2) most recently completed fiscal or calendar years
(provided however, if the proposed transferee is a newly formed entity and has not been in existence
for such two (2) year period, the financial statements submitted shall be those of its principals), (v) a
detailed description of the proposed transferees qualifications and experience that demonstrates the
transferee meets the criteria for a Tenant as established by this Lease, and (vi) a bank or other credit
reference. Thereafter, Tenant shall furnish such supplemental information as Lessor may reasonably
request concerning the proposed transferee. Lessor shall, no later than ninety (90) days after Lessor's
receipt of the information specified above, deliver written notice to Tenant which shall (i) indicate
whether Lessor give or withhold consent to the proposed Transfer, and (ii) if Lessor withhold consent
to the proposed Transfer, setting forth a detailed explanation of Lessor's grounds for doing so. If
Lessor consents to a proposed Transfer, then Tenant may thereafter effectuate such Transfer to the
proposed transferee based upon the specific terms of the Lessor's approval and after execution of a
consent to assignment by Lessor in a form approved by the Lessor, which approval shall not be
unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the
terms of this Lease; provided, however, that the provisions of this Section 10.4 shall not apply to any
Transfer to a Foreclosure Transferee.
10.5 Liability of Transferors/Transferees For Lease Obligations. In the case of an
assignment, including an assignment pursuant to Section 17.6.5, each Permitted Transferee and any
other assignees or transferees of this Lease shall assume in writing all of Tenant's obligations
thereafter arising under this Lease. All assignees or transferees of any interest in this Lease or the
Premises or Improvements (whether or not directly liable on this Lease) shall be subject to the terms,
conditions, covenants, restrictions and reservations of this Lease. Except as otherwise provided in
Section 17.6.5, the transferor may be released from all liability under this Lease only if the Permitted
Transferee or other transferee agrees in writing to assume all of transferor's obligations and liabilities
and provides to Lessor evidence of sufficient and adequate assets, including any required insurance
policies, subject to approval by Lessor, which approval shall not be unreasonably withheld, that
evidence said Permitted Transferee's or other transferees' financial and otherwise competence to
assume transferor's obligations and liability (an "Approved Release"). Except as otherwise
provided in Section 17.6.5 and except for an Approved Release, for all other Transfers, any transferor
of any interest in this Lease or the Premises or Improvements shall remain primarily liable for all
obligations hereunder and shall be subject to the terms, conditions, covenants, restrictions and
reservations of this Lease. Except as otherwise provided in Section 17.6.5 and except for an
Approved Release, the Lessor may proceed directly against the transferor in its sole and absolute
discretion, with no obligation to exhaust its remedies against the transferee. Notwithstanding
anything to the contrary contained herein, Lessor consent shall not be required for any of the
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following: (i) the exercise by the Limited Partner of its rights pursuant to Tenant's Partnership
Agreement to remove the general partner of the Tenant and appoint the Limited Partner or an affiliate
thereof as interim general partner of the Tenant; (ii) the exercise by the Limited Partner of its right to
enforce any repurchase requirements under Tenant's Partnership Agreement; and/or (iii) a transfer
by the Limited Partner of its partnership interest in Tenant to an Affiliate of the Limited Partner.
10.6 Conditions of Certain Lessor Consent.
10.6.1. Lessor may withhold consent to a Transfer (excluding Excluded Transfers
which shall not require Lessor consent) at its and absolute sole discretion if any of the following
conditions exist:
(a) An Event of Default exists under this Lease.
(b) The prospective transferee has not agreed in writing to keep, perform, and
be bound by all the terms conditions, covenants, restrictions and reservations of this Lease.
(c) In the case of an assignment, the prospective transferee has not agreed in
writing to assume all of transferor's obligations and liabilities.
(d) The construction of the Initial Improvements has not been completed.
(e) Any construction required of Tenant as a condition of this Lease has not
been completed.
(f) All the material terms, covenants, and conditions of the Transfer that are
relevant to the Lessor's approval of the Transfer have not been disclosed in writing to the Lessor.
10.7 Transfer of Mortgages of Lessor's Interest. Notwithstanding anything to the
contrary set forth in this Ground Lease, unless required by statute, court order or operation of law,
Lessor shall not transfer, assign, pledge or hypothecate its fee interest in the Premises (other than to
entities under common control with Lessor or other governmental entities under applicable law)
without the prior written consent of Tenant, Leasehold Mortgagee and the Limited Partner (provided,
the Limited Partner's consent shall be required only during the tax credit compliance period). Any
and all mortgages or liens placed or suffered by the Lessor encumbering the Lessor's fee interest in
the Premises shall be expressly subject and subordinate to this Lease, to all obligations of Lessor
hereunder, to all of the rights, titles, interests, and estates of the Tenant created or arising hereunder,
to each New Lease and to each Leasehold Mortgage. Furthermore, any Person succeeding to the
Lessor's fee interest as a consequence of any conveyance, foreclosure or other transfer shall succeed
to all of the obligations of the Lessor hereunder.
ARTICLE XI
DEFAULT AND REMEDIES
11.1 Event of Default. Each of the following events shall constitute an "Event of Default"
by Tenant:
11.1.1. Failure to Pay. Tenant's failure or omission to pay any Rent or other sum
payable hereunder on or before the date due where such failure shall continue for a period of five (5)
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days after written notice thereof from Lessor to Tenant; provided, however, that any such notice shall
be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure
§ 1161 et seq.
11.1.2. Failure to Perform. The failure or inability by Tenant to observe or perform
any of its obligations under this Lease (other than those specified in Sections 11.1.1, 11.1.3, 11.1.6,
or 11.1.8 herein, which have their own notice and cure periods), where such failure shall continue for
a period of thirty (30) days after written notice thereof from Lessor to Tenant or past any such longer
period as reasonably agreed upon by the Tenant, Lessor in writing as may be necessary for
completion of its cure; provided, however, that any such notice by Lessor shall be in lieu of, and not
in addition to, any notice required under California Code of Civil Procedure Section 1161 et. seq.;
provided, further, that if the nature of such failure is such that it can be cured by Tenant but that more
than thirty (30) days are reasonably required for its cure (for any reason other than financial
inability), then Tenant shall not be deemed to be in default if Tenant shall commence such cure
within said thirty (30) days, and thereafter diligently pursues such cure to completion.
11.1.3. Abandonment. The abandonment (as defined in California Civil Code
Section 1951.3) or vacation of the Premises by Tenant for a period of thirty (30) days or more.
11.1.4. Assignments.
(a) The making by Tenant of any assignment of its leasehold estate under this
Lease without Lessor's consent, as set forth in Article X;
(b) A case is commenced by or against Tenant under Chapters 7, 11 or 13 of
the Bankruptcy Code, Title 11 of the United States Code as now in force or hereafter amended and if
so commenced against Tenant, the same is not dismissed within ninety (90) days of such
commencement;
(c) the appointment of a trustee or receiver to take possession of substantially
all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure
is not discharged within sixty (60) days; or
(d) Tenant's convening of a meeting of its creditors or any class thereof for
the purpose of effecting a moratorium upon or composition of its debts. In the event of any such
default, neither this Lease nor any interests of Tenant in and to the Premises shall become an asset in
any of such proceedings.
11.1.5. Failure to Reimburse Lessor. Tenant's failure to reimburse the Lessor
pursuant to Section 3.6.4.
11.1.6. Termination of and Failure to Reinstate Insurance Coverage.
Termination of Tenant's insurance coverage and lack of reinstatement within ten (10) business days
after notice from Lessor of such termination.
11.1.7. Failure to Provide Evidence of Insurance. Tenant's failure to provide
Lessor with a valid and adequate certificate of insurance and endorsements, or binder, at any time
during the Term of the Lease, within the time period required under Section 8.1.3.
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11.1.8. Lessor's Consent and Approval of Transfer. Occupancy of the Premises
by a prospective transferee, sublessee, or assignee which requires Lessor's consent or approval,
before Lessor's written consent and approval of a Transfer is obtained as required in Section 10.1.
11.1.9. Tenant's failure to make Additional Rent payment(s) as set forth in Sections
11.3 and 11.10
11.2 Lessor's Remedies. If an Event of Default occurs, Lessor shall have the following
remedies in addition to all rights and remedies provided by law or equity to which Lessor may resort
cumulatively or in the alternative:
11.2.1. Termination of Lease. Subject to Article 17, as applicable, Lessor shall have
the right to terminate this Lease and all rights of Tenant hereunder including Tenant's right to
possession of the Premises. hi the event that Lessor shall elect to so terminate this Lease then Lessor
may recover from Tenant:
(a) The worth at the time of award of the unpaid Rent and other charges,
which had been earned as of the date of the termination hereof, plus
(b) The worth at the time of award of the amount by which the unpaid Rent
and other charges which would have been earned after the date of the termination hereof until the
time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably
avoided; plus
(c) The worth at the time of award of the amount by which the unpaid Rent
and other charges for the balance of the Term hereof after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided; plus
(d) Any other amount necessary to compensate Lessor for all the detriment
proximately caused by Tenant'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 repair, renovation
and alteration of the Premises, reasonable attorneys' fees, expert witness costs; plus
(e) Subject to the rights of any Leasehold Mortgagees and TCAC, the funds
in the Capital Improvement Fund; plus
(f) Any other amount which Lessor may by law hereafter be permitted to
recover from Tenant to compensate Lessor for the detriment caused by Tenant's default as permitted
under applicable California law.
The term "Rent" as used herein shall mean as defined in Section 1.1.41. Additional Rent
shall be computed on the basis of the average monthly amount thereof accruing during the 24-month
period immediately prior to default, except that if it becomes necessary to compute such Additional
Rent before such 24-month period has occurred, then it shall be computed on the basis of the average
monthly amount during such shorter period. As used in Sections 11.2.1(a) and 11.2.l(b) above, the
"worth at the time of award" shall be computed by allowing interest at the Interest Rate. As used in
Sections 11.2.1 (c) above, the "worth at the time of award" shall be computed by discounting such
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amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus
one percent (1%), but not in excess of the Interest Rate.
11.2.2. Continue Lease in Effect. Lessor may continue this Lease in effect without
terminating Tenant's right to possession and to enforce all of Lessors rights and remedies under this
Lease, at law or in equity, including the right to recover the Rent as it becomes due under this Lease;
provided, however, that Lessor may at any time thereafter elect to terminate this Lease for the
underlying Event(s) of Default by notifying Tenant in writing that Tenant's right to possession of the
Premises has been terminated.
11.2.3. Removal of Personal Property Following Termination of Lease. Lessor
shall have the right, following a termination of this Lease and Tenant's rights of possession of the
Premises under Section 11.2.1 above, to re-enter the Premises and, subject to applicable law, to
remove Tenant's personal property from the Premises. Such property may be removed and stored in
a public warehouse or elsewhere at the cost of and for the account of Tenant, or disposed of without
such storage, in accordance with applicable California law.
11.3 Lessor's Right to Cure Tenant Defaults. If Tenant shall have failed to cure, after
expiration of the applicable time for curing, a particular default under this Lease, Lessor may at their
election, but are not obligated to, make any payment required of Tenant under this Lease or perform
or comply with any tern, agreement or condition imposed on Tenant hereunder, and the amount so
paid plus the reasonable cost of any such performance or compliance, plus interest on such sum at the
Interest Rate from the date of payment, performance or compliance until reimbursed shall be deemed
to be Additional Rent payable by Tenant on Lessor's demand. Tenant's failure to reimburse the
County and/or Agency within 30 days of Lessor's demand shall constitute an Event of Default under
this Lease. No such payment, performance or compliance shall constitute a waiver of default or of
any remedy for default, or render County and/or Agency liable for any loss or damage resulting from
the same.
11.4 Lessor's Default. Lessor shall not be considered to be in default under this Lease
unless Tenant has given Lessor written notice specifying the default, and either (i) as to monetary
defaults, Lessor have failed to cure the same within ten (10) business days after written notice from
Tenant, or (ii) as to nonmonetary defaults, Lessor have failed to cure the same within thirty (30) days
after written notice from Tenant, or if the nature of Lessor's nonmonetary default is such that more
than thirty (30) days are reasonably required for its cure, then such thirty (30) day period shall be
extended automatically so long as County and/or Agency commences a cure within such thirty (30)
day period and thereafter diligently pursues such cure to completion. Tenant shall have no right to
offset or abate alleged amounts owing by County and/or Agency under this Lease against any
amounts owing by Tenant under this Lease. Additionally, Tenant's sole remedy for any monetary
default shall be towards the Lessor's interest in the property and not to any other assets. Any and all
claims or actions accruing hereunder shall be absolutely barred unless such action is commenced
within six (6) months of the event or action giving rise to the default.
11.5 Remedies Cumulative. All rights and remedies of Lessor contained in this Lease shall
be construed and held to be cumulative, and no one of them shall be exclusive of the other, and
Lessor shall have the right to pursue any one or all of such remedies or any other remedy or relief
which may be provided by law, whether or not stated in this Lease.
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11.6 Waiver by Lessor. No delay or omission of Lessor to exercise any right or remedy
shall be construed as a waiver of such right or remedy or any default by Tenant hereunder. The
acceptance by Lessor of Rent or any other sums hereunder shall not be (a) a waiver of any preceding
breach or default by Tenant of any provision thereof, other than the failure of Tenant to pay the
particular rent or sum accepted, regardless of Lessor's knowledge of such preceding breach or default
at the time of acceptance of such rent or sum, or (b) waiver of Lessor's right to exercise any remedy
available to Lessor by virtue of such breach or default. No act or thing done by County or Agency's
agents during the term of this Lease shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept a surrender shall be valid unless in writing and signed by Lessor.
11.7 Interest. Any installment or Rent due under this Lease or any other sums not paid to
Lessor when due (other than interest) shall bear interest at the Interest Rate from the date such
payment is due until paid, provided, however, that the payment of such interest shall not excuse or
cure the default.
11.8 Conditions Deemed Reasonable. Tenant acknowledges that each of the conditions to a
Transfer, and the rights of Lessor set forth in this Article X in the event of a Transfer is a reasonable
restriction for the purposes of California Civil Code Section 1951.4.
11.9 Waiver by Tenant. Tenant's waiver of any breach by Lessor of any term, covenant or
condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same
or any other term, covenant or condition herein contained.
11.10 Tenant Covenants and Agreements. All covenants and agreements to be performed
by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant's sole cost
and expenses and without any abatement of Rent. If Tenant shall fail to pay any sum of money, other
than Rent required to be paid by it hereunder, or shall fail to perform any other act on its part to be
performed hereunder, or to provide any insurance or evidence of insurance to be provided by Tenant
within the time period required under this Lease, then in addition to any other remedies provided
herein, Lessor may, but shall not be obligated to do so, and without waiving or releasing Tenant from
any obligations of Tenant, make any such payment or perform any such act on Tenant's part to be
made or performed as provided in this Lease or to provide such insurance. Any payment or
performance of any act or the provision of any such insurance by Lessor on Tenant's behalf shall not
give rise to any responsibility of Lessor to continue making the same or similar payments or
performing the same or similar acts. All costs, expenses, and other sums incurred or paid by Lessor
in connection therewith, together with interest at the Interest Rate from the date incurred or paid by
Lessor, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant within thirty
(30) days of receipt of a demand and invoice from Lessor, and Tenant's failure to pay the Lessor, as
stated herein, shall constitute an Event of Default under this Lease.
ARTICLE XII
HOLDING OVER
If Tenant holds over after the expiration or earlier termination of the Term hereof without the
express written consent of Lessor, Tenant shall become a Tenant at sufferance only, at a monthly
rental rate of (a) Fifty Thousand Dollars ($50,000) to the extent the Premises are not subject to any
tenant income or rent restrictions and all units may be rented at market -rate rents, or (b) Twenty Five
Thousand Dollars ($25,000) to the extent the Premises are subject to any tenant income or rent
restrictions ("Hold Over Rent"), increased annually commencing with commencement of the hold
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over period by an amount equal to the greater of (i) three percent (3%) for each year of the Term, or
(ii) a percentage equal to the percentage increase from the Base Period of the Consumer Price Index
("CPI") for Los Angeles- Riverside -Orange County [All Urban Consumers -All Items, not seasonally
adjusted (Base Period 1982-84=100)]. Said CPI for the month of December for the second year of the
Term shall be considered the `Base Period." Said adjustment shall be made by comparing the CPI for
the Base Period to the CPI for the month of December immediately preceding each such adjustment.
If at any time there shall not exist the CPI, Lessor shall substitute any official index published by the
Bureau of Labor Statistics, or successor or similar governmental agency, as may then be in existence,
and shall be most nearly equivalent thereto. If Tenant fails to surrender the Premises and the
Improvements as stated herein, and Lessor shall take legal action to cause Tenant's eviction from the
Premises and is successful in such action, Tenant shall be responsible for all costs and expenses,
including reasonable attorney's fees and costs, incurred by County and/or Agency in connection with
such eviction action; Tenant shall also indemnify and hold Lessor harmless from all loss or liability
or reasonable attorney's fees and costs, including any claim made by any succeeding tenant, incurred
by County and/or Agency founded on or resulting from such failure to surrender.
ARTICLE XIII
ESTOPPEL CERTIFICATES
At any time and from time to time, within ten (10) business days after written request by
either County, Agency or Tenant (the "requesting party"), the other Party (the "responding party")
shall execute, acknowledge and deliver an estoppel certificate addressed to the requesting party,
and/or to such other beneficiary (as described below) as the requesting party shall request, certifying
(i) that this Lease is in full force and effect, (ii) that this Lease is unmodified, or, if there have been
modifications, identifying the same, (iii) the dates to which Rent has been paid in advance, (iv) that,
to the actual knowledge of the responding party, there are no then existing and uncured defaults
under the Lease by either County, Agency or Tenant, or, if any such defaults are known, identifying
the same, and (v) any other factual matters (which shall be limited to the actual knowledge of the
responding party) as may be reasonably requested by the requesting party. Such certificate may
designate as the beneficiary thereof the requesting party, and/or any third party having a reasonable
need for such a certificate (such as, but not limited to, a prospective purchaser, transferee or lender)
and any such certificate may be relied upon by the Parties.
ARTICLE XIV
FORCE MAJEURE
Unless otherwise specifically provided herein, the period for performance of any
nonmonetary obligation by either Party shall be extended by the period of any delay in performance
caused by Acts of God, strikes, boycotts, lock -outs, inability to procure materials not related to the
price thereof, failure of electric power, riots, civil unrest, acts of terrorism, insurrection, war,
declaration of a state or national emergency, weather that could not have reasonably been anticipated,
changes in the Laws which would prevent the Premise from being operated in accordance with this
Lease, or other reasons beyond the reasonable control of County, Agency, Tenant, or their respective
agents or representatives (collectively, "Force Majeure Events"). In no event, however, shall Force
Majeure Events include the financial inability of a Party to this Lease to pay or perform its
obligations hereunder. Further, nothing herein shall extend the time for performance of any
monetary obligation owing under this Lease (including Tenant's obligation to pay Rent owing
hereunder).
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ARTICLE XV
RECORDS AND ACCOUNTS
15.1 Financial Statements. Within one hundred eighty (180) after the end of each
accounting year, Tenant shall at his own expense submit to Auditor -Controller and the Agency a
balance sheet and income statement prepared by a Certified Public Accountant ("CPA") who is a
member of the American Institute of Certified Public Accountants ("AICPA") and the California
Society of CPAs, reflecting business transacted on or from the Premises during the preceding
accounting year. The Certified Public Accountant must attest that the balance sheet and income
statement submitted are an accurate representation of Tenant's records as reported to the United
States of America for income tax purposes. At the same time, Tenant shall submit to Auditor -
Controller and Agency a statement certified as to accuracy by a Public Accountant who is a member
of AICPA and the California Society of CPAs, wherein the total Gross Receipts for the accounting
year are classified according to the categories of business established for percentage rent and listed in
Section 3.4.l(d) and for any other business conducted on or from the Premises. Tenant shall provide
Lessor with copies of any CPA's management letters prepared in conjunction with their audits of
Tenant's operations from the Premises. Copies of management letters shall be provided directly to
Lessor by the CPA at the same time Tenant's copy is provided to Tenant. In the event that when
such financial statements are submitted, the Tenant has a budget for the following accounting year,
Tenant, at the same time, shall also provide Lessor with such budget.
15.1.1. Tenant acknowledges its understanding that any and all of the Financial
Statement submitted to the Lessor pursuant to this Lease become Public Records and may be subject
to public inspection and copying pursuant to §§ 6250 et. seq. of the California Government Code.
15.1.2. All Tenant's books of account and records and supporting source documents
related to this Lease or to business operations conducted within or from the Premises shall be kept
and made available at one location within the limits of the County unless an alternative location is
approved in writing by the Lessor. Lessor shall, through their duly authorized agents or
representatives, have the right to examine and audit said books of account and records and supporting
source documents at any and all reasonable times for the purpose of determining the accuracy thereof
in connection with such Sections of this Lease as the Parties mutually and reasonably agree the audit
is relevant thereto.
15.2 Reports. In the event that the Tenant commissions, requests or is required to produce
any reports related to the physical condition of the Improvements or Premises, Tenant shall submit
copies of such reports to Lessor along with the financial statements required above in Section 15.1.
ARTICLE XVI
OPERATIONAL OBLIGATIONS OF TENANT
16.1 Standards of Operation.
16.1.1. Tenant shall operate the Premises in a manner reasonably comparable to other
comparable facilities or businesses within the County of Orange. Tenant shall at all times during the
Term provide adequate security measures to reasonably protect persons and property on the
Premises.
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16.1.2. The ultimate purpose of this Lease is to permit the construction and operation
of a multifamily affordable residential rental development, including permanent supportive housing,
in accordance with Section 4.1.1. Accordingly, Tenant covenants and agrees to operate said
Premises fully and continuously to accomplish said purposes and not to abandon or vacate the
Premises at any time.
16.1.3. The facilities on the Premises shall be operated during normal business hours,
subject to any temporary interruptions in operations or closures due to ordinary maintenance and
repair and any Force Majeure Event, defined in Article XIV above.
16.2 Protection of Environment. Tenant shall take all reasonable measures available to:
16.2.1. Avoid any pollution of the atmosphere or littering of land or water caused by
or originating in, on, or about Tenant's facilities.
16.2.2. Maintain a reasonable noise level on the Premises so that persons in the
general neighborhood will be able to comfortably enjoy the other facilities and amenities in the area.
16.2.3. Prevent the light fixtures of the Premises from emitting light that could
negatively affect the operation of cars, boats, or airplanes in the area.
16.2.4. Prevent all pollutants from Tenant's operations on the Premises from being
discharged, including petroleum products of any nature, except as may be permitted in accordance
with any applicable permits or as permitted by applicable Law. Tenant and all of Tenant's agents,
employees and contractors shall conduct operations under this Lease so as to ensure that pollutants
do not enter the municipal storm drain system (including but not limited to curbs and gutters that are
part of the street systems), or directly impact receiving waters (including but not limited to rivers,
creeks, streams, estuaries, lakes, harbors, bays and the ocean), except as may be permitted by any
applicable permits or as permitted by applicable law.
16.2.5. The Lessor may enter the Premises in accordance with Section 4.5 and/or
review Tenant records at all reasonable times to assure that activities conducted on the Premises
comply with the requirements of this Section.
16.3 On -Site Manager. Tenant shall employ a competent manager who shall be responsible
for the day-to-day operation and level of maintenance, cleanliness, and general order for the
Premises. Such person shall be vested with the authority of Tenant with respect to the supervision
over the operation and maintenance of the Premises, including the authority to enforce compliance by
Tenant's agents, employees, concessionaires, or licensees with the terms and conditions of this Lease
and any and all rules and regulations adopted hereunder. Tenant shall notify Lessor in writing of the
name of the Manager currently so employed as provided in Section 19.20 of this Lease.
16.4 Policies and Procedures to be Established by Tenant. Prior to the completion of
construction, Tenant shall submit to Lessor proposed policies and procedures pertinent to the
operation of the multifamily affordable residential rental development and manner of providing the
uses required by this Lease ("Policies and Procedures").
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ARTICLE XVII
LEASEHOLD MORTGAGES
17.1 Definitions. The following definitions are used in this Article (and in other Sections of
this Lease):
17.1.1. "Leasehold Estate" shall mean Tenant's leasehold estate in and to the
Premises, including Tenant's rights, title and interest in and to the Premises and the Improvements,
or any applicable portion thereof or interest therein.
17.1.2. "Leasehold Foreclosure Transferee" shall mean any person (which may, but
need not be, a Leasehold Mortgagee) which acquires the Leasehold Estate pursuant to a foreclosure,
assignment in lieu of foreclosure or other enforcement of remedies under or in connection with a
Leasehold Mortgage.
17.1.3. "Leasehold Mortgage" shall mean and includes a mortgage, deed of trust,
security deed, conditional deed, deed to secure debt or any other security instrument (including any
assignment of leases and rents, security agreement and financing statements) held by a Lender by
which Tenant's Leasehold Estate is mortgaged to secure a debt or other obligation, including a
purchase money obligation.
17.1.4. "Leasehold Mortgagee" shall mean a Lender which is the holder of a
Leasehold Mortgage.
17.1.5. "Tenant" shall mean all of the following: (i) the Tenant under this Lease; (ii)
an approved assignee, transferee or subtenant of the Tenant under this Lease who is or becomes
directly and primarily liable to Lessor; and (iii) any further assignee, transferee or subtenant of any of
the parties listed in (ii) who is or becomes directly and primarily liable to Lessor.
17.2 Tenant's Right to Encumber Leasehold Estate; No Right to Encumber Lessor's
Fee Interest. Provided that an Event of Default has not occurred and is continuing, Tenant may, at
any time during the Term of this Lease (with consent of Lessor after prior written notice providing
evidence that all requirements of this Lease have been complied with, which consent shall not be
unreasonably withheld, conditioned or delayed), encumber all or any portion of Tenant's Leasehold
Estate with one (1) or more Leasehold Mortgages; provided, however:
17.2.1. Such Leasehold Mortgage(s) (as of the date recorded) shall not exceed (a) if
recorded before completion of the Initial Improvements, One Hundred Percent (100%) of the costs of
the Initial Improvements, or (b) if recorded after completion of the Initial Improvements, eighty
percent (80%) of the Leasehold Estate value (including the value of all improvements) after
completion;
17.2.2. That Tenant shall not have the power to encumber, and no Leasehold
Mortgage shall encumber, Lessor's Fee Interest;
17.2.3. Except as expressly provided in this Lease, the Leasehold Mortgage and all
rights acquired under it shall be subject to each and all of the covenants, conditions, and restrictions
set forth in this Lease and to all rights and interests of Lessor hereunder; and
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17.2.4. Nothing in this Lease shall be construed so as to require or result in a
subordination in whole or in part in any way of the Lessor's Fee Interest to any Leasehold Mortgage,
and;
17.2.5. Except as otherwise expressly provided herein, in the event of any conflict
between the provisions of this Lease and the provisions of any such Leasehold Mortgage, the
provisions of this Lease shall control.
Tenant's encumbrance of its Leasehold Estate with a Leasehold Mortgage, as provided in this
Section 17.2, shall not constitute an assignment or other Transfer under Article X or otherwise, nor
shall any Leasehold Mortgagee, as such, be deemed to be an assignee or transferee of this Lease or of
the Leasehold Estate so as to require such Leasehold Mortgagee, as such, to assume the Tenant's
obligations and liabilities under this Lease.
Notwithstanding the foregoing, if any Leasehold Mortgagee (or its nominee) acquires title to
the Premises by foreclosure or deed in lieu thereof, any required consent of the Lessor under this
Section 17.2 shall not be unreasonably withheld.
17.3 Notification to Lessor of Leasehold Mortgage. Tenant or any Leasehold Mortgagee
shall, prior to making any Leasehold Mortgage, provide Lessor with written notice of such Leasehold
Mortgage and the name and address of the Leasehold Mortgagee. At the time of notice, Tenant or
such Leasehold Mortgagee shall furnish to Lessor a complete copy of any trust deed and note to be
secured thereby, together with the name and address of the holder thereof. Thereafter, Tenant or any
Leasehold Mortgagee shall notify Lessor of any change in the identity or address of such Leasehold
Mortgagee. Lessor shall be entitled to rely upon the addresses provided pursuant to this Section for
purposes of giving any notices required by this Article XVII.
17.4 Notice and Cure Rights of Leasehold Mortgagees With Respect to Tenant Defaults.
Lessor, upon delivery to Tenant of any notice of a default or demand for payment by Tenant under
this Lease or a matter as to which Lessor may predicate or claim a default, will promptly deliver a
copy of such notice to each Leasehold Mortgagee. Each notice or demand required to be given by
Lessor to a Leasehold Mortgagee under this Lease shall be in writing and shall be given by certified
or registered mail, postage prepaid, return receipt requested, to such Leasehold Mortgagee at the
address(es) provided by such Leasehold Mortgagee, as applicable, to Lessor from time to time in
writing and shall be effective upon receipt (or refusal to accept receipt). No notice or demand given
by Lessor to Tenant shall be effective until the duplicate copy of such notice or demand to the Tenant
shall have been effectively given to each Leasehold Mortgagee in accordance with this Lease. From
and after the date such notice has been given to any Leasehold Mortgagee, such Leasehold
Mortgagee shall have the same cure period for such default (or act or omission which is the subject
matter of such notice) that is provided to Tenant under this Lease or as otherwise agreed upon by
County, Agency and the Tenant, to commence and/or complete a cure of such default (or act or
omission which is the subject matter of such notice). Lessor shall accept any and all performance by
or on behalf of any Leasehold Mortgagee(s), including by any receiver obtained by any Leasehold
Mortgagee(s), as if the same had been done by Tenant. Tenant authorizes each Leasehold Mortgagee
to take any such action at such Leasehold Mortgagee's option, and hereby authorizes any Leasehold
Mortgagee (or any receiver or agent) to enter upon the Premises for such purpose.
17.5 Limitation on Lessor's Termination Right. If following the delivery of notice
pursuant to Section 17.4, above, the default by Tenant continues and is not cured by Tenant (or any
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Leasehold Mortgagee as allowed under Section 17.4, above), and such failure entitles County and/or
Agency to terminate this Lease, Lessor shall have no right to terminate this Lease unless Lessor shall
notify in writing each and every Leasehold Mortgagee who has complied with Section 17.3 of
Lessor's intent to so terminate at least sixty (60) days in advance of the proposed effective date of
such termination. If any Leasehold Mortgagee, within such sixty (60) day period, (i) notifies Lessor
of such Leasehold Mortgagee's desire to cure such default and initiates such cure and (ii) pays or
cause to be paid the amount that is necessary to cure any monetary default as stated in such notice, if
any, then Section 17.6 shall apply. The Lessor, at its sole discretion, may permit such additional time
as necessary for any Leasehold Mortgagee to commence the cure or make payment(s), as stated
herein. If any Leasehold Mortgagee and Limited Partner fails to respond to said notice of
termination within the allotted sixty (60) days as consistent with the conditions of this Section 17.5,
Lessor are entitled to immediately terminate this Lease.
17.6 Leasehold Mortgagee Foreclosure Period. If any Leasehold Mortgagee complies with
Section 17.5 above, then the following provisions shall apply:
17.6.1. If Lessor's notice under Section 17.5 specifies only monetary Events of
Default as the basis for Lessor's election to terminate this Lease, and Leasehold Mortgagee has fully
paid the monetary amount designated by Lessor in its notice, then such payment shall be deemed to
have cured the Event of Default. If Lessor's notice under Section 17.5 specifies both monetary and
non -monetary Events of Default or non -monetary Events of Default as the basis for Lessor's election
to terminate this Lease, and Leasehold Mortgagee has fully paid the monetary amount designated by
Lessor in its notice, as applicable, then the date of termination specified in Lessor's notice shall be
extended for a period of twelve (12) months, provided that such Leasehold Mortgagee shall, during
such twelve (12) month period:
(a) pay or cause to be paid all Rent under this Lease as the same becomes due
(subject to the notice and cure rights expressly set forth herein); and
(b) continue (subject to any stay as described in Section 17.6.2 below) its
good faith efforts to perform (and complete performance of) all of Tenant's nommonetary obligations
under this Lease, excepting nonmonetary obligations (whether or not a default exists with respect
thereto) that are not then reasonably susceptible of being cured by Leasehold Mortgagee; and
(c) commence and pursue with reasonable diligence until completion (subject
to any stay as described in Section 17.6.2 below) a judicial or nonjudicial foreclosure or other
enforcement of remedies under its Leasehold Mortgage.
17.6.2. In the event of a judicial or non judicial foreclosure, the twelve (12) month
period described in Section 17.6.1, above, shall automatically be extended by the length of any delay
caused by any stay (including any automatic stay arising from any bankruptcy or insolvency
proceeding involving Tenant), injunction or other order arising under applicable Laws or issued by
any court (which term as used herein includes any other governmental or quasi -governmental
authority having such power) (the foregoing being collectively referred to as a "Stay"). Further,
Leasehold Mortgagee's obligations stated in Section 17.6.1(b) and (c) shall be automatically
suspended during any period that any Stay prevents Leasehold Mortgagee from taking any such
actions. Nothing herein, however, shall be construed to extend this Lease beyond the Term hereof
nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after the Event of
Default has been cured. If the Event of Default has been cured and the Leasehold Mortgagee shall
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discontinue such foreclosure proceedings, this Lease shall continue in full force and effect as if
Tenant had not defaulted under this Lease.
17.6.3. In the event the Leasehold Mortgage requires a new lease between the Lessor
and the Leasehold Mortgagee, Lessor shall enter into such new lease with the Leasehold Mortgagee
pursuant to Section 17.7, below, provided Lessor are provided with the necessary and adequate
documents related to the new lease requirements in the Leasehold Mortgage as described in Section
17.7.
17.6.4. So long as any Leasehold Mortgagee is complying with Sections 17.6.1 and
17.6.2 above, then upon the acquisition of Tenant's Leasehold Estate by a Leasehold Foreclosure
Transferee, this Lease shall continue in full force and effect as if Tenant had not defaulted under this
Lease; provided that no Leasehold Foreclosure Transferee shall have any liability for the
performance of any of the Tenant's obligations under this Lease until the Leasehold Foreclosure
Transferee has acquired the Tenant's interest under the Lease, and then the Leasehold Foreclosure
Transferee shall be liable for the performance of only those obligations of the Tenant arising from
and after the effective date of the Leasehold Foreclosure Transferee's acquisition of the Tenant's
Leasehold Estate. Any such Leasehold Foreclosure Transferee shall be deemed to be an assignee or
transferee and shall be deemed to have agreed to perform all of the terms, covenants and conditions
on the part of the Tenant to be performed hereunder from and after the effective date on which such
Leasehold Foreclosure Transferee acquires title to the Leasehold Estate, but only for so long as such
purchaser or assignee is the owner of the leasehold estate.
17.6.5. Any Leasehold Mortgagee (or its designee) that becomes a Leasehold
Foreclosure Transferee, upon acquiring title to Tenant's Leasehold Estate without obtaining Lessor's
consent and provided it is not in default of any of the provisions of this Lease, shall have a one-time
right to assign the Leasehold Estate to an assignee (a) which is an Affiliate of the Leasehold
Foreclosure Transferee, or (b) which has substantial experience, or will employ a property
management company with substantial experience, managing, maintaining and operating affordable
housing developments like that on the Premises. Upon such assignment, the Leasehold Foreclosure
Transferee shall automatically be released of all obligations thereafter accruing under this Lease,
provided that, substantially concurrently with such assignment, the assignee delivers to Lessor a
written agreement assuming Tenant's obligations under the Lease thereafter accruing. Any
subsequent Transfers occurring after the one-time assignment permitted under this Section shall be
subject to Article X.
17.7 Leasehold Mortgagee's Right to New Lease.
17.7.1. In the event of any termination of this Lease (including any termination
because of an Event of Default, or because of any rejection or disaffirmance of this Lease pursuant to
bankruptcy law or any other law affecting creditor's rights, but other than by reason of a Total
Taking), Lessor shall give prompt written notice of such termination to each Leasehold Mortgagee
and shall (subject to Section 17.8 below if more than one Leasehold Mortgagee then exists) enter into
a new lease ("New Lease') of the Premises with the Leasehold Mortgagee holding the Leasehold
Mortgage that has the most senior lien priority, in accordance with Section 17.8 below, or its
designee, upon notice to Lessor by such Leasehold Mortgagee. The New Lease shall commence as
of its effective date and shall continue for the remainder of the scheduled Term of this Lease, at the
same Rent that is payable under this Lease, and on the same terms, conditions, covenants, restrictions
and reservations that are contained in this Lease (including any extension options, purchase options
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and rights of fast refusal, if any, provided for in this Lease), and subject to the rights of any tenants
under residential subleases or other subtenants then in valid occupancy of the Premises and
Improvements and further subject to any then existing senior Leasehold Mortgagees; provided that,
substantially concurrently with the delivery of a notice by Leasehold Mortgagee requiring Lessor to
enter into a New Lease, Leasehold Mortgagee shall pay to Lessor all Rent or any other amounts
payable by Tenant hereunder which are then due and shall commence and proceed with diligence to
cure all nonmonetary defaults under this Lease, other than those nonmonetary defaults which are
personal to the foreclosed tenant and impossible for the Leasehold Mortgagee to remedy.
17.7.2. If such Leasehold Mortgagee elects to enter into a New Lease pursuant to
Section 17.7.1 above, then County, Agency and the Leasehold Mortgagee (or its designee) shall
promptly prepare and enter into a written New Lease; but until such written New Lease is mutually
executed and delivered, this Lease shall govern, from and after the giving of notice pursuant to
Section 17.7.1 but prior to the execution of the New Lease, the Lessor's and Leasehold Mortgagee's
relationship with respect to the Premises and the Improvements and the Leasehold Mortgagee shall
(i) be entitled to possession of the Premises and to exercise all rights of Tenant hereunder, (ii) pay to
Lessor any Rent accruing under the New Lease as it becomes owing, and (iii) perform or cause to be
performed all of the other covenants and agreements under this Lease. Further, at such time as the
written New Lease is mutually executed and delivered, Leasehold Mortgagee (or its designee) shall
pay to Lessor its reasonable expenses, including reasonable attorneys' fees and costs, incurred in
connection with the preparation, execution and delivery of such written New Lease. In addition, upon
execution of any such New Lease, Lessor shall execute, acknowledge and deliver to such Leasehold
Mortgagee (or its designee) a grant deed, in recordable form, conveying to such Leasehold
Mortgagee (or its designee) fee title to all Improvements in the event that title to such Improvements
have vested with the County.
17.7.3. In the event that Lessor receives any net income (i.e., gross income less gross
expenses on a cash basis), if any, from the Premises and Improvements during any period that Lessor
may control the same, then the Leasehold Mortgagee under the New Lease shall be entitled to such
net income received by Lessor except to the extent that it was applied to cure any default of Tenant.
17.7.4. All rights and claims of Tenant under this Lease shall be subject and
subordinate to all right and claims of the tenant under the New Lease.
17.8 Multiple Leasehold Mortgages. If more than one Leasehold Mortgagee shall make a
written request upon Lessor for a New Lease in accordance with the provisions of Section 17.7, then
such New Lease shall be entered into pursuant to the request of the Leasehold Mortgagee holding the
Leasehold Mortgage that has the most senior lien priority.
Notwithstanding anything herein to the contrary, Lessor shall have no duty or obligation to resolve
any disputes or conflicting demands between Leasehold Mortgagees. In the event of any conflicting
demands made upon County and/or Agency by multiple Leasehold Mortgagees, Lessor may (subject
to any applicable court orders to the contrary) rely on the direction of the Leasehold Mortgagee
whose Leasehold Mortgage is recorded fnst in time in the Official Records of the County, as
determined by any national title company.
17.9 Condemnation and Insurance Proceeds. Notwithstanding anything to the contrary
contained herein, all condemnation proceeds (other than proceeds payable on account of the value of
the Lessor's Fee Interest as encumbered by this Lease) or insurance proceeds shall be subject to and
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paid in accordance with the requirements of the most senior (in order of lien priority) Leasehold
Mortgage, subject, however, to any requirement in this Lease that, to the extent not in conflict with
the terms of the applicable Leasehold Mortgage, such proceeds must be used to repair and restore the
Improvements to the Premises which were damaged or destroyed by such condemnation or casualty
(including, without limitation, as required in Article VII following a casualty and in Section 9.4.3
following a condemnation). The handling and disbursement of any such proceeds used to repair or
restore the Improvements to the Premises shall be subject to the requirements of such senior
Leasehold Mortgage.
17.10 Mortgagee Clauses. A standard mortgagee clause naming each Leasehold Mortgagee
may be added to any and all insurance policies required to be carried by Tenant hereunder, provided
that any such Leasehold Mortgagee shall hold and apply such insurance proceeds subject to the
provisions of this Lease.
17.11 No Waiver. No payment made to Lessor by a Leasehold Mortgagee shall constitute
agreement that such payment was, in fact, due under the terms of this Lease; and a Leasehold
Mortgagee having made any payment to Lessor pursuant to County and/or Agency's wrongful,
improper or mistaken notice or demand shall be entitled to the return of any such payment or portion
thereof.
17.12 Fees and Costs. Tenant agrees to reimburse Lessor for its reasonable attorneys' fees
and costs incurred in connection with Lessor's review and/or approval of any documentation which
may be required in connection with any Leasehold Mortgage by Tenant as provided herein.
17.13 No Termination, Cancellation, Surrender or Modification. Without the prior
written consent of each Leasehold Mortgagee, (a) this Lease may not be terminated or cancelled by
mutual agreement of County, Agency and Tenant, (b) Lessor may not accept the surrender this Lease
or the Leasehold Estate created hereunder without the consent of each Leasehold Mortgagee, and (c)
this Lease may not be amended, modified or supplemented (and any action taken in furtherance of
any of the foregoing without the required consent of each Leasehold Mortgagee shall be void and of
no effect). In addition, if any term or provision of this Lease gives Tenant the right to terminate or
cancel this Lease, in whole or in part, no such termination or cancellation shall be or become
effective unless Tenant has fast received approval in writing by each Leasehold Mortgagee.
17.14 Effect of Foreclosure upon Base Rent. Notwithstanding anything to the contrary
contained elsewhere in this Lease, (i) in no event shall any Leasehold Mortgagee (or its designee) be
required to pay or cure, in order to prevent the termination of this Lease, to exercise its cure rights
hereunder or to obtain a New Lease or otherwise, any Base Rent, and (ii) in no event shall any
Leasehold Mortgagee (or its designee) or its (or their) successors and assigns be required to pay or
cure any Base Rent which otherwise became due and payable prior to completion of any foreclosure
under any Leasehold Mortgage (or acceptance of any assignment or deed in lieu thereof).
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ARTICLE XVIII
BEST MANAGEMENT PRACTICES
18.1 Tenant and all of Tenant's, subtenant, agents, employees and contractors shall conduct
operations under this Lease so as to assure that pollutants do not enter municipal storm drain systems,
in violation of applicable Laws, which systems are comprised of, but are not limited to curbs and
gutters that are part of the street systems ("Stormwater Drainage System"), and to ensure that
pollutants do not directly impact "Receiving Waters" (as used herein, Receiving Waters include, but
are not limited to, rivers, creeks, streams, estuaries, lakes, harbors, bays and oceans).
18.2 The Santa Ana and San Diego Regional Water Quality Control Boards have issued
National Pollutant Discharge Elimination System ("NPDES") permits ("Stormwater Permits") to
the County of Orange, and to the Orange County Flood Control District ("Districf') and cities within
Orange County, as co-permittees (hereinafter collectively referred to as "NPDES Parties") which
regulate the discharge of urban runoff from areas within the County of Orange, including the
Premises leased under this Lease. The NPDES Parties have enacted water quality ordinances that
prohibit conditions and activities that may result in polluted runoff being discharged into the
Stormwater Drainage System.
18.3 To assure compliance with the Stormwater Permits and water quality ordinances, the
NPDES Parties have developed a Drainage Area Management Plan ("DAMP") which includes a
Local Implementation Plan ("LIP") for each jurisdiction that contains Best Management Practices
(`BMWs") that parties using properties within Orange County must adhere to. As used herein, a
BMP is defined as a technique, measure, or structural control that is used for a given set of conditions
to manage the quantity and improve the quality of stormwater runoff in a cost effective manner.
These BMPs are found within the District and/or County's LIP in the form of Model Maintenance
Procedures and BMP Fact Sheets (the Model Maintenance Procedures and BMP Fact Sheets
contained in the DAMP/LIP shall be referred to hereinafter collectively as "BMP Fact Sheets") and
contain pollution prevention and source control techniques to eliminate non-stormwater discharges
and minimize the impact of pollutants on stormwater runoff.
18.4 BMP Fact Sheets that apply to uses authorized under this Lease include the BMP Fact
Sheets that are attached hereto as Exhibit C. These BMP Fact Sheets may be modified during the
term of the Lease; and the Lessor shall provide Tenant with any such modified BMP Fact Sheets.
Tenant, its agents, contractors, representatives and employees and all persons authorized by Tenant
to conduct activities on the Premises shall, throughout the term of this Lease, comply with the BMP
Fact Sheets as they exist now or are modified, and shall comply with all other requirements of the
Stormwater Permits, as they exist at the time this Lease commences or as the Stormwater Permits
may be modified. Tenant agrees to maintain current copies of the BMP Fact Sheets on the Premises
throughout the term of this Lease. The BMPs applicable to uses authorized under this Lease must be
performed as described within all applicable BMP Fact Sheets.
18.5 Tenant may propose alternative BMPs that meet or exceed the pollution prevention
performance of the BMP Fact Sheets. Any such alternative BMPs shall be submitted to the Lessor
for review and approval prior to implementation.
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18.6 Lessor may enter the Premises and/or review Tenant's records at any reasonable time
during normal business hours to ensure that activities conducted on the Premises comply with the
requirements of this Section. Tenant may be required to implement a self -evaluation program to
demonstrate compliance with the requirements of this Section.
ARTICLE XIX
GENERAL CONDITIONS & MISCELLANEOUS PROVISIONS
19.1 Signs. Tenant agrees not to construct, maintain, or allow any signs, banners, flags, etc.,
upon the Premises except (a) as approved in writing in advance by Lessor, which approval may be
withheld in the sole and absolute discretion of the Lessor, or (b) required by any of Tenant's lenders,
provided that any such signage is in compliance with all applicable Laws. Tenant further agrees not
to construct, maintain, or allow billboards or outdoor advertising signs upon the Premises.
Unapproved signs, banners, flags, etc., may be removed by Lessor without prior notice to Tenant.
19.2 Nondiscrimination. Tenant agrees not to discriminate against any person or class of
persons by reason of sex, age (except as permitted by law), race, color, creed, physical handicap, or
national origin in employment practices and in the activities conducted pursuant to this Lease.
19.3 Taxes and Assessments. Pursuant to California Revenue and Taxation Code Section
107.6, Tenant is specifically informed that this Lease may create a possessory interest which is
subject to the payment of taxes levied on such interest. It is understood and agreed that all taxes and
assessments (including but not limited to said possessory interest tax) which become due and payable
upon the Premises or upon fixtures, equipment, or other property installed or constructed thereon,
shall be the full responsibility of Tenant, and Tenant shall cause said taxes and assessments to be
paid promptly.
19.4 Quitclaim of Interest upon Termination. Upon termination of this Lease for any
reason whatsoever in accordance with the terms of the Lease, Tenant shall execute, acknowledge,
and deliver to Lessor, within five (5) business days, a good and sufficient deed, in a form as approved
by the Lessor, whereby all right, title, and interest of Tenant in the Premises is quitclaimed back to
Lessor ("Quitclaim Deed"). The Quitclaim Deed shall then be recorded by Lessor to remove any
cloud on title created by this Lease. In the event that the Tenant fails to provide such Quitclaim Deed
within five (5) additional business days after written demand by either the County or City, the Parties
agree that the County and City will be damaged and entitled to compensation for those
damages. Such actual damages will, however, be extremely difficult to ascertain. Therefore, if the
Tenant does not provide the required Quitclaim Deed after such notice and cure period, in addition to
any other remedy provided by law or equity, the Tenant shall pay the Lessor $2,000 per day for every
day that passes until a Quitclaim Deed is delivered, which amount shall be deemed to constitute a
reasonable estimate of Lessor's damages and not a penalty. Such amount shall become due and
payable by Tenant to Lessor for each calendar day that passes beyond the cure period.
Notwithstanding the foregoing, if the Tenant has disputed the termination of the Lease by Lessor,
upon a final determination by a court of competent jurisdiction that the Lease has not been
terminated, Tenant shall not be subject to payment of the foregoing damages.
19.5 Public Records. Tenant acknowledges that any written information submitted to and/or
obtained by Lessor from Tenant or any other person or entity having to do with or related to this
Lease and/or the Premises, either pursuant to this Lease or otherwise, is a "public record" open to
inspection and copying by the public pursuant to the California Public Records Act (Government
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Code §6250, et seq.) ("CPRA") as now in force or hereafter amended, or any Law in substitution
thereof, or otherwise made available to the public, unless such information is exempt from disclosure
pursuant to the applicable sections of CPRA. In the event that a CPRA request is made for any
financial statements and records (not including Gross Receipts Statements) and the Lessor
determines that the records must be turned over, the Lessor will give Tenant fifteen (15) days'
written notice prior to turning over such records so that Tenant can take any necessary action,
including, but not limited to, injunctive relief, to prevent Lessor from turning over such financial
statements and records.
19.6 Attorney's Fees. In any action or proceeding brought to enforce or interpret any
provision of this Lease, or where any provision hereof is validly asserted as a defense, each Party
shall bear its own attorneys' fees and costs.
19.7 Payment Card Compliance. Should Tenant conduct credit/debit card transactions in
conjunction with Tenant's business with the County and/or Agency, on behalf of the County and/or
Agency, or as part of the business that Tenant conducts on the Premises, Tenant covenants and
warrants that it will during the course of such activities be Payment Card Industry Data Security
Standard ("PCl/DSS") and Payment Application Data Security Standard ("PA/DSS") compliant and
will remain compliant during the entire duration of its conduct of such activities. Tenant agrees to
immediately notify Lessor in the event Tenant should ever become non -compliant at a time when
compliance is required hereunder, and will take all necessary steps to return to compliance and shall
be compliant within ten (10) days of the commencement of any such interruption. Upon demand by
Lessor, Tenant shall provide to Lessor written certification of Tenant's PCl/DSS and/or PA/DSS
compliance.
19.8 Right to Work and Minimum Wage Laws.
19.8.1. In accordance with the United States Immigration Reform and Control Act of
1986, Tenant shall require its employees that directly or indirectly service the Premises, pursuant to
the terms and conditions of this Lease, in any manner whatsoever, to verify their identity and
eligibility for employment in the United States. Tenant shall also require and verify that its
contractors or any other persons servicing the Premises, pursuant to the terms and conditions of this
Lease, in any manner whatsoever, verify the identity of their employees and their eligibility for
employment in the United States.
19.8.2. Pursuant to the United States of America Fair Labor Standard Act of 1938, as
amended, and State of California Labor Code, Section 1178.5, Tenant shall pay no less than the
greater of the Federal or California Minimum Wage to all its employees that directly or indirectly
service the Premises, in any manner whatsoever. Tenant shall require and verify that all its
contractors or other persons servicing the Premises on behalf of the Tenant also pay their employees
no less than the greater of the Federal or California Minimum Wage.
19.8.3. Tenant shall comply and verify that its general contractor complies with all
other Federal and State of California laws for minimum wage, overtime pay, record keeping, and
child labor standards pursuant to the servicing of the Premises or terms and conditions of this Lease.
19.9 Declaration of Knowledge by Tenant. Tenant warrants that Tenant has carefully
examined this Lease and by investigation of the site and of all matters relating to the Lease
arrangements has fully informed itself as to all existing conditions and limitations affecting the
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construction of the Lease improvements and business practices required in the operation and
management of the uses contemplated hereunder.
19.10 Governing Law. This Lease shall be governed by and construed in accordance with
the laws of the State of California and the City.
19.11 Venue. The Parties hereto agree that this Lease has been negotiated and executed in
the State of California and shall be governed by and construed under the laws of California. In the
event of any legal action to enforce or interpret this Lease, the sole and exclusive venue shall be a
court of competent jurisdiction located in Orange County, California, and the Parties hereto agree to
and do hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure
Section 394. Furthermore, the Parties hereto specifically agree to waive any and all rights to request
that an action be transferred for trial to another county.
19.12 Headings and Titles. The captions of the Articles or Sections of this Lease are only to
assist the Parties in reading this Lease and shall have no effect upon the construction or interpretation
of any part hereof.
19.13 Interpretation. Whenever required by the context of this Lease, the singular shall
include the plural and the plural shall include the singular. The masculine, feminine and neuter
genders shall each include the other. In any provision relating to the conduct, acts or omissions of
Tenant, the term "Tenant' shall include Tenant's agents, employees, contractors, invitees,
successors or others using the Premises with Tenant's expressed or implied permission. In any
provision relating to the conduct, acts or omissions of County, the term "County" shall include
County's agents, employees, contractors, invitees, successors or others using the Premises with
County's expressed or implied permission. In any provision relating to the conduct, acts or omissions
of Agency, the term "Agency" shall include Agency's agents, employees, contractors, invitees,
successors or others using the Premises with Agency's expressed or implied permission.
19.14 Ambiguities. Each Party hereto has reviewed this Lease with legal counsel, and has
revised (or requested revisions of) this Lease based on the advice of counsel, and therefore any rules
of construction requiring that ambiguities are to be resolved against a particular Party shall not be
applicable in the construction and interpretation of this Lease or any exhibits hereto.
19.15 Successors and Assigns. Except as otherwise specifically provided in this Lease, all
of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective hens, personal representatives, successors and
assigns.
19.16 Time is of the Essence. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.
19.17 Severability. If any term or provision of this Lease is held invalid or unenforceable to
any extent under any applicable law by a court of competent jurisdiction, the remainder of this Lease
shall not be affected thereby, and each remaining term and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
19.18 Integration. This Lease, along with any exhibits, attachments or other documents
affixed hereto or referred to herein and related Agency permits, constitute the entire agreement
Page 155
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between County, Agency and Tenant relative to the leasing of the Premises. This Lease and such
exhibits, attachments and other documents may be amended or revoked only by an instrument in
writing signed by County, Agency and Tenant. County, Agency and Tenant hereby agree that no
prior agreement, understanding or representation pertaining to any matter covered or mentioned in
this Lease shall be effective for any purpose.
19.19 Notices. All notices or other communications required or permitted hereunder shall be
in writing, and shall be personally delivered or sent by registered or certified mail, postage prepaid,
return receipt requested, or electronic mail, shall be deemed received upon the earlier of (a) if
personally delivered, the date of delivery to the address of the person to receive such notice, (b) if
mailed, three (3) business days after the date of posting by the United States post office, (c) if given
by electronic mail, when sent if before 5:00 p.m., otherwise on the next business day, or (d) if
delivered by overnight delivery, one (1) business day after mailing. Any notice, request, demand,
direction or other communication sent by electronic mail must be confirmed within by letter mailed
or delivered within two business days in accordance with the foregoing.
Either Party may change the address for notices by giving the other Party at least ten (10) calendar
days' prior written notice of the new address.
If to Lessor: County of Orange
c/o CEO/Corporate Real Estate
333 W. Santa Ana Blvd, 3rd Floor
Santa, Ana, CA 92702
Attn: Chief Real Estate Officer
And to:
Housing Authority of the City of Santa Ana
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
Attn: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
If to Tenant: c/o The Related Companies of California, LLC
19201 Von Karman Avenue, Suite 900
Irvine, CA 92612
Attention: President
c/o A Community of Friends
3701 Wilshire Boulevard, Suite 700
Los Angeles, CA 90010
Attention: Dora Leong Gallo, President and Chief Executive Officer
And to:
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iMa:11-111 a
With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street 64th Floor
Los Angeles. CA 90071
Attention: Lance Bocarsly, Esq.
19.20 Amendments. This Lease is the sole and only agreement between the Parties regarding
the subject matter hereof, other agreements, either oral or written, are void. Any changes to this
Lease shall be in writing and shall be properly executed by all Parties.
19.21 Limited Partner Cure Rights. In the event the Tenant is a partnership, the Lessor
agrees to accept a cure of any Event of Default by Tenant made by any one or more of the Tenant's
limited partners as if such cure had been made by Tenant, provided such cure is made in accordance
with the applicable provisions of this Lease.
19.22 Dispositions of Abandoned Property. If Tenant abandons or quits the Premises or is
dispossessed thereof by process of law or otherwise, title to any personal property belonging to and
left on the Premises thirty (30) days after such event shall, at County and/or Agency's option, be
deemed to have been transferred to County and/or Agency. County and/or Agency shall have the
right to remove and to dispose of such property at Tenant's cost including the cost of labor,
materials, equipment and an administrative fee equal to fifteen percent (15%) of the sum of such
costs without liability therefor to Tenant or to any person claiming under Tenant, and shall have no
need to account therefor. At Lessor's option, Lessor may provide Tenant with an invoice for such
costs, which invoice Tenant agrees to pay within fifteen (15) days of receipt.
19.23 Brokers. If Tenant has engaged a broker in this transaction pursuant to a separate
agreement, Tenant shall be solely responsible for the payment of any broker commission or similar
fee payable pursuant to such separate agreement. Tenant each hereby agree to indemnify and hold the
Lessor harmless from and against all costs, expenses or liabilities (including attorney fees and court
costs, whether or not taxable and whether or not any action is prosecuted to judgment) incurred by
the County and/or Agency in connection with any claim or demand by a person or entity for any
broker's, finder's or other commission or fee from the County and/or Agency in connection with the
Tenant's entry into this Lease and the transactions contemplated hereby based upon any alleged
statement or representation or agreement of the Tenant. No broker, finder or other agent of any Party
hereto shall be a third -party beneficiary of this Lease
19.24 No Partnership. This Lease shall not be construed to constitute any form of
partnership or joint venture between County, Agency and Tenant. County, Agency and Tenant
mutually acknowledge that no business or financial relationship exists between them other than as
County, Agency and Tenant, and that County and Agency is not responsible in any way for the debts
of Tenant or any other Party.
19.25 Authorization. County, Agency and Tenant (each, a "signing party") each represents
and warrants to the other that the person or persons signing this Lease on behalf of the signing party
has full authority to do so and that this Lease binds the signing party. Concurrently with the
execution of this Lease, the Tenant shall deliver to the Lessor a certified copy of a resolution of the
signing parry's board of directors or other governing board authorizing the execution of this Lease by
the signing party.
Page 157
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19.26 Recording. This Lease itself shall not be recorded, but in the event that the Tenant
encumbers the leasehold as set forth in Article XVB, a memorandum hereof may be recorded in the
form of Exhibit D attached hereto (the "Memorandum"). The Memorandum may be executed
concurrently with this Lease and thereafter recorded in the Official Records of the County Recorder
on the Effective Date of this Lease has occurred. Tenant shall be responsible for the payment of all
charges imposed in connection with the recordation of the Memorandum, including, without
limitation, any documentary transfer tax imposed in connection with this transaction and all
recording fees and charges.
19.27 Exhibits. This Lease contains the following exhibits, schedules and addenda, each of
which is attached to this Lease and incorporated herein in its entirety by this reference:
Exhibit A:
Legal Description of the Premises
Exhibit A-1: Rendering of the Premises
Exhibit B:
Initial Improvements
Exhibit C:
Best Management Practices Fact Sheets
Exhibit D:
Form of Memorandum of Lease
19.28 Consent/Duty to Act Reasonably. Except as otherwise expressly provided herein,
whenever this Lease grants County, Agency and/or Tenant the right to take any action, grant any
approval or consent, or exercise any discretion, County, Agency and/or Tenant shall act reasonably
and in good faith and take no action which might result in the frustration of the other Parry's
reasonable expectations concerning the benefits to be enjoyed under this Lease.
19.29 Counterparts. For the convenience of the Parties to this Lease, this Lease may be
executed in several original counterparts, each of which shall together constitute but one and the
same agreement. Original executed pages may be assembled together into one fully executed
document.
19.30. No Merger. The interests created by this Lease shall not be extinguished by merger
of any or all of the ownership interests the Premises or the Improvements in one person or entity.
19.31 Cooperation of County and Agency. County and Agency hereby agree that (a)
Agency staff shall be responsible for administering the operation of the Project to insure it is being
used in conformance with this Lease, and (b) Agency staff shall serve as administrator of the Lease
with the Tenant and coordinate with the County as necessary. County and Agency hereby agree to
work cooperatively and expeditiously to provide written consent (or written refusal to provide
consent) to Tenant, the Leasehold Mortgagees and Limited Partner hereunder.
[Signatures On Following Pages]
Page 158
• ' • •
.�
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IN WITNESS WHEREOF, the Parties have executed this Lease on the date first written above.
APPROVED AS TO FORM:
SONIA CARAVALHO
AUTHORITY GENERAL COUNSEL
By:
Ryan O. Hodge, Assistant City Attorney
Date
TENANT
WASHINGTON SANTA ANA HOUSING
PARTNERS, L.P., a California limited partnership
By: Related/Washington Santa Ana Development
Co., LLC, a California limited liability
company, its Administrative General Partner
By:
Frank Cardone, President
By: Supportive Housing LLC, a California
limited liability company
By: A Community of Friends, a California
nonprofit public benefit corporation,
its sole member/manager
IC
Executive
LESSOR
Dora Leong Gallo,
President and Chief
Officer
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
a public body, corporate and politic
By:
Steven A. Mendoza, Executive Director
Date
Page 159
80A-100
i0a:11-111 a
APPROVED AS TO FORM: COUNTY OF ORANGE, a political subdivision of
COUNTY COUNSEL the State of California
By:
Deputy
Thomas A. Miller, Chief Real Estate Officer
Date Orange County, California
Page 160
80A-101
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EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
Page 161
80A-102
i0a:11-111 a
Exhibit A
Legal Description of the Premises
The land referred to is situated in the County of Orange, City of Santa Ana, State of California,
and is described as follows:
That certain parcel of land situated in the City of Santa Ana, County of Orange, State of
California, being that portion of Parcel I of Parcel 73035 described in the Grant Deed recorded
July 24, 1991, Instrument No. 91-387576 of Official Records, together with that portion of
Parcel 73034 described in the Grant Deed recorded November 15, 1991, Instrument No. 91-
626431 of Official Records, lying southwesterly and westerly of those three (3) courses and the
Northwesterly extension of course Three (3) thereof, in the State Right of Way as shown on a
map filed in Book 194, pages 28 through 36 inclusive of Record of Surveys in said Office of said
County Recorder, said Three (3) courses being shown on sheet 2 of said map as:
1) North 21' 00' 58" West 286.98;
2) North 320 46' 23" West 157.90;
3) North 250 03' 45" West 62.42'.
EXCEPTING THEREFROM: That portion of above said Parcel 1, lying within the limits of the
Washington Avenue Cul-De-Sac as shown on said Sheet 2 of said Map.
APN: 398-092-14
That portion of the land allotted to Maria Ygnacia Alvarado De Moreno, as described in the final
decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868
in Book "B" Page 410 of Judgments of the District Court of the 17th Judicial District, in and for
Los Angeles County, California, described as follows:
Beginning at a point 1584.0 feet north and 301.05 feet west of an iron axle set at the intersection
of the centerlines of Fourth Street and Grand Avenue; thence North 717.80 feet; thence West
606.90 feet; thence South 717.80 feet; thence East 606.90 feet to the point of beginning.
EXCEPTING THEREFROM: That portion lying southeasterly of the northwesterly line of that
certain 104.00 foot strip of land described in Parcel A of Deed to the City of Santa Ana, recorded
June 25, 1970 in Book 9327, page 72 of Official Records.
ALSO EXCEPTING THEREFROM: That portion described as Parcel C in said Deed to the City
of Santa Ana.
ALSO EXCEPTING THEREFROM: That portion conveyed in the deed to the State of
California recorded January 10, 1992, Instrument 92-15188 of Official Records.
APN: 398-092-13
80A-103
EXHIBIT A-1
RENDERING OF THE PROPERTY
Page 162
80A-104
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80A-105 co
i0a:11-111 a
EXIHBIT B
INITIAL IMPROVEMENTS
The proposed Project includes the development of two residential buildings with 86 units
surrounding two interior, landscaped courtyard/amenity spaces. The Project includes 16 studio units,
26 one bedroom units, 22 two -bedroom units, 17 three -bedroom units, and 5 four -bedroom units. All
units will be flat apartments located on the fast, second, third and fourth floors. In addition, a
proposed sound wall is being positioned along the eastern property line adjacent to the US Interstate
5 ramp. Approximately 3,500 square foot of interior community amenities and leasing offices is
designed to accommodate supportive and management services.
The Project will be 100% affordable to households earning no more than 30 percent of Area Median
Income (AMI) for Orange County of which 43 units will be set -aside for Permanent Supportive
Housing (PSH), with one exempt 2-bedroom managers unit. The unit mix and rent restrictions are as
follows, provided, however, the rent and income restrictions applicable to the Project shall be set
forth in and subject to the terms of the County Loan Regulatory Agreement:
Bedroom
Size
30%
AMI (PSH)
30%
ANH
Manager's
Unit
Total Units
Studios
16
16
One -Bedroom
26
26
Two -Bedroom
1
20
1
22
Three -Bedroom
17
17
Four -Bedroom
5
5
TOTAL
43
42
1
86
Page 163
80A-106
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EXHIBIT C
Best Management Practices
(`BMWs" Fact Sheets)
Best Management Practices can be found at: http://www.ocwatersheds.com/documentsibmp which
website may change from time to time.
BMPs apply to the TENANT's defined Premises and BMPs also apply to the TENANT's Contractor
therefore TENANT shall cause Contractor to be responsible for implementing and complying with
all BMP Fact Sheet requirements that apply to construction activity with respect to the
Improvements, and also including, without limiting the generality of the foregoing, site preparation,
landscaping, installation of utilities, street construction or improvement and grading or filling in or
on the Premises. TENANT is to be aware that the BMP clause within this Lease, along with all
related BMP Exhibits, may be revised, and may incorporate more than what is initially being
presented in this Lease. Suggested BMPs Fact Sheets may include, but may not be limited to, the
following list shown below and can be found at:
http://www.ocwatersheds.com/documents/bmp/industrialcommercialbusinessesactivities (which
website may change from time to time):
IC3 Building Maintenance
IC4 Carpet Cleaning
IC6 Contaminated or Erodible Surface Areas
IC7 Landscape Maintenance
IC9 Outdoor Drainage from Indoor Areas
IC 10 Outdoor Loading/Unloading of Materials
IC 12 Outdoor Storage of Raw Materials, Products, and Containers
IC 14 Painting, Finishing, and Coatings of Vehicles, Boats, Buildings, and Equipment
IC15 Parking & Storage Area Maintenance
IC 17 Spill Prevention and Cleanup
IC21 Waste Handling and Disposal
IC22 Eating and Drinking Establishments
IC23 Fire Sprinkler Testing/Maintenance
IC24 Wastewater Disposal Guidelines
Page 164
80A-107
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EXIHBIT D
FORM OF MEMORANDUM OF LEASE
MEMORANDUM OF LEASE
This is a Memorandum of Lease ("Memorandum'') made and entered into as of this
day of 120 by and between the County of Orange, a political subdivision of the State
A of California, the Housinguthority of the City of Santa Ana, a public body, corporate and politic
(collectively, the "Lessor") and , ("Tenant'), residing at , upon the following
terms:
1. Lease. The provisions set forth in a written lease between the parties hereto dated
("Lease"), are hereby incorporated by reference into this Memorandum.
2. Subject Premises. The Premises which are the subject of the Lease are more particularly
described as on Exhibit A, attached hereto
3. Effective Date of Lease. The Lease shall be deemed to have commenced on (the
"Effective Date") as set forth within the terms of the Lease.
4. Term The Term of the Lease shall be Sixty -Five (65) years from the Effective Date as stated in
the written Lease. The Term shall commence on the date hereof and terminate Sixty -Two (62) years
from the Commencement Date, which is the date on which a Certificate of Occupancy is issued for
the Project, provided, however the Term shall be no longer than sixty five (65) years from the
Effective Date.
5. Duplicate Copies of the originals of the Lease are in the possession of the Lessor and Tenant and
reference should be made thereto for a more detailed description thereof and for resolution of any
questions pertaining thereto. The addresses for Lessor and Tenant are as follows:
If to Lessor: County of Orange
c/o CEO/Corporate Real Estate
333 W. Santa Ana Blvd, 3rd Floor
Santa, Ana, CA 92702
Attn: Chief Real Estate Officer
And to:
Housing Authority of the City of Santa Ana
20 Civic Center Plaza (M-26)
P.O. BOX 1988
Santa Ana, California 92702
Attn: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Page 165
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If to Tenant: c/o The Related Companies of California, LLC
19201 Von Karman Avenue, Suite 900
Irvine, CA 92612
Attention: President
c/o A Community of Friends
3701 Wilshire Boulevard, Suite 700
Los Angeles, CA 90010
Attention: Dora Leong Gallo
And to:
With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street, 64th Floor
Los Angeles. CA 90071
Attention: Lance Bocarsly, Esq.
6. Purpose. It is expressly understood and agreed by all Parties that the sole purpose of this
Memorandum is to give record notice of the Lease; it being distinctly understood and agreed that said
Lease constitutes the entire lease and agreement between Lessor and Tenant with respect to the
Premises and is hereby incorporated by reference. The Lease contains and sets forth additional rights,
terms, conditions, duties, and obligations not enumerated within this instrument which govern the
Lease. This Memorandum is for informational purposes only and nothing contained herein may be
deemed in any way to modify or vary any of the terms or conditions of the Lease. In the event of any
inconsistency between the terms of the Lease and this instrument, the terms of the Lease shall
control. The rights and obligations set forth herein shall be binding upon and inure to the benefit of
the Parties hereto and their respective hens, representatives, successors, and assigns.
Page 166
80A-109
IN WITNESS WHEREOF, the Parties hereto have executed this Memorandum pursuant to due
authorization on the dates herein acknowledged.
COUNTY:
By:
Name:
Title:
AGENCY:
By:
Name:
Title:
TENANT:
By:
Name:
Title:
Name:
Title:
Page 167
80A-110
10a:il-111 a
EXHIBIT H
COUNTY QUITCLAIM
(See Attached)
Crossroads at Washington — Joint Pog)(Agfeirrynt Page E-5
i0a:11-111 a
Recording requested by and
when recorded, return to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, CA 92702
Attention: Clerk of the Council
And
County of Orange, Real Estate Services
333 West Santa Ana Blvd, 3`d Floor
Santa Ana, CA 92701
Recording Fee Exempt
Per Govt. Code 27383
Facility:
XXXXXX
Facility No.:
XXXXXX
Parcel No.:
XXXXXX
A.P. No.:
398-092-14
Location:
Santa Ana, CA
THE UNDERSIGNED GRANTOR DECLARES THAT THIS IS A CONVEYANCE TO A
GOVERNMENTAL ENTITY AND NO TRANSFER TAX IS DUE PER CAL. R&T CODE 11922
QUITCLAIM DEED
For valuable consideration, receipt of which is hereby acknowledged, the
The Housing Authority of the City of Santa Ana,
A public body, corporate and politic,
hereinafter referred to as "AGENCY",
and
COUNTY OF ORANGE,
hereinafter referred to as "COUNTY",
as Tenants in Common
do hereby remise, release and forever Quitclaim to
AGENCY
all right, title and interest in and to the real property in the City of Santa Ana, County of Orange,
State of California, described as:
See EXHIBIT A,
attached and by reference made a part.
80A-1-
112
-
i0a:11-111 a
Dated:
APPROVED AS TO FORM
Authority General Counsel
1.3
Ryan O. Hodge
Assistant City Attorney
Date:
In
GRANTOR:
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
Steven A. Mendoza, Executive Director
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,
(here 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/hex/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
80A-113
i0a:11-111 a
GRANTOR:
Dated: By:
Thomas A. Miller
Chief Real Estate Officer
APPROVED AS TO FORM
County Counsel
Deputy County Counsel
Michael Haubert
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 , 2019 before me, Notary Public, personally
appeared , who proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
(seal)
80A-114
>-
i0a:11-111 a
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the within deed or grant to the Housing
Authority of the City of Santa Ana, a public body, corporate and politic, is hereby accepted by order of the City
Council of the City of Santa Ana, and the Housing Authority of the City of Santa Ana consents to recordation thereof
by its duly authorized officer.
Dated:
APPROVED AS TO FORM
Authority General Counsel
Ryan O. Hodge
Assistant City Attorney
Date:
LN
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
Steven A. Mendoza, Executive Director
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 , 2019 before me, Notary Public, personally
appeared , who proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature: (seal)
80A-115
4-
10a:il-111 a
EXHIBIT I
AGENCY QUITCLAIM
(See Attached)
Crossroads at Washington - Joint Pog6s(Ag?ej gnt Page E-6
i0a:11-111 a
Recording requested by and
when recorded, return to:
City of Santa Ana
Clerk of the Council
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, CA 92702
Attention: Clerk of the Council
And
County of Orange, Real Estate Services
333 West Santa Ana Blvd, 3`d Floor
Santa Ana, CA 92701
Recording Fee Exempt
Per Govt. Code 27383
Facility:
XXXXXX
Facility No.:
XXXXXX
Parcel No.:
XXXXXX
A.P. No.:
398-092-13
Location:
Santa Ana, CA
THE UNDERSIGNED GRANTOR DECLARES THAT THIS IS A CONVEYANCE TO A
GOVERNMENTAL ENTITY AND NO TRANSFER TAX IS DUE PER CAL. R&T CODE 11922
QUITCLAIM DEED
For valuable consideration, receipt of which is hereby acknowledged, the
The Housing Authority of the City of Santa Ana,
A public body, corporate and politic,
hereinafter referred to as "AGENCY",
and
COUNTY OF ORANGE,
hereinafter referred to as "COUNTY",
as Tenants in Common
do hereby remise, release and forever Quitclaim to
4[s]" rry
all right, title and interest in and to the real property in the City of Santa Ana, County of Orange,
State of California, described as:
See EXHIBIT A,
attached and by reference made a part.
80A1-
-117
-
i0a:11-111 a
Dated:
APPROVED AS TO FORM
County Counsel
Deputy
Date:
C
GRANTOR:
COUNTY OF ORANGE
Thomas A. Miller
Chief Real Estate Officer
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,
(here 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/hex/their authorized capacity(ies), and that by his/hex/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
80A-118
i0a:11-111 a
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the within deed or grant to the County of
Orange, political subdivision of the State of California, is hereby accepted by order of the Board of Supervisors of
the County of Orange, and the County of Orange consents to recordation thereof by its duly authorized officer.
Dated:
APPROVED AS TO FORM
County Counsel
Deputy County Counsel
Michael Haubert
Lo
Thomas A. Miller
Chief Real Estate Officer
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 , 2019 before me, Notary Public, personally
appeared , who proved to me on the basis of satisfactory evidence
to be the persons) 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)
80A7119
>-
i0a:11-111 a
Dated:
APPROVED AS TO FORM
Authority General Counsel
RIN
Ryan O. Hodge
Assistant City Attorney
Date:
LN
GRANTOR:
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
Steven A. Mendoza, Executive Director
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 , 2019 before me, Notary Public, personally
appeared , who proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature: (seal)
80A-120
4-
EXHIBIT 3 U,�J
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Option Agreement") is made , 2020, ("Effective
Date") by and between the COUNTY OF ORANGE, a political subdivision of the State of California, the
HOUSING AUTHORITY OF THE CfFY OF SANTA ANA, a public body, corporate and politic,
(respectively, the "County" and the "Agency," and collectively "Optionor") and WASHINGTON SANTA
ANA HOUSING PARTNERS, L.P., a California limited partnership (hereinafter called "Optionee").
Optionor and Optionee may sometimes hereinafter individually be referred to as "Party" or jointly as
"Parties."
Recitals
A. County and Agency are owners of contiguous parcels of land totaling approximately 2.26 acres
located in Santa Ana, California, comprised of the two following lots: Assessor's Parcel Number
398-092-14 ("Agency Property"); and Assessor's Parcel Number 398-092-13 ("County Property").
B. The Agency and County desire to merge these two parcels for the purpose of executing a ground
lease ("Lease") for the combined property to Optionor, to create an 86-unit multifamily affordable
housing project with a permanent supportive housing component ("Project").
C. Optionee desires to obtain an option to lease the combined Agency Property and County Property,
once merged, as set forth on Attachment I, attached hereto and made a part hereof ("Premises"), to
develop and construct the Project.
D. The final negotiated form of the Lease is attached hereto as Attachment H and will more fully
describe the Project and other permitted uses.
E. Optionor is the fee owner of the Premises and is willing to enter into an option to lease said Premises
for the Project as set forth herein.
NOW, THEREFORE the Parties agree as follows:
1. DEFMTIONS (PM02.1 S)
a. `Board of Supervisors" means the Board of Supervisors of the County of Orange, a political
subdivision of the State of California, the governing board of the County.
b. "Agency" means the Housing Authority of the City of Santa Ana, acting as the Housing
Successor Agency, a public body, corporate and politic, exercising governmental functions and
powers, and organized and existing under the California Redevelopment Law. The principal office
of the Agency is located at 20 Civic Center Plaza, Santa Ana, California 92702. "Agency" shall
also refer to the City of Santa Ana where the context dictates, to the effect that the City of Santa
Ana shall have all rights granted to the Agency hereunder.
c. "City" shall mean the City of Santa Ana, California, a charter city and municipal corporation.
"City" shall also refer to the Agency where the context dictates, to the effect that the Agency
OPTION AGREEMENT -CROSSROADS 80A-121
shall have all the rights granted to the City hereunder. "City Council" shall mean the City
Council of the City of Santa Ana.
d. "County" means the County of Orange, a political subdivision of the State of California. Any
reference to the County herein, unless expressly stated to the contrary, shall refer to the
County solely in its capacity as owner of the Premises and not the County in its capacity as a
land use or other governmental approval authority.
e. "Lease" means that certain Ground Lease including any and all addenda, amendments and
exhibits attached hereto as Attachment H.
f. Premises" means that certain real property containing approximately 2.28 acres of
undeveloped land in the City of Santa Ana, made up of the Agency Property and the County
Property, together with all easements, rights and privileges appurtenant thereto, to be leased to
Optionee pursuant to the Lease for the development of the Project, as more fully set forth
therein. The map of the Premises is attached hereto as Attachment I.
2. OPTION (PM03.1 S)
Optionor hereby grants Optionee the option ("Option") to lease said Premises in accordance with the
covenants and conditions set forth herein. For purposes of clarification and for the purpose of this Option
Agreement, the Agency is specifically providing an Option on the Agency Property and the County is
specifically providing an Option on the County Property, as more fully set forth herein.
3. TERM (PM05.1 S)
The term of this Option Agreement shall be thirty-six (36) calendar months ("Option Term") and shall
commence on the Effective Date shown above.
If at any point during the Option Term the Optionee has failed to act diligently and in good faith to obtain
funding or to plan and permit the Project pursuant to Section 5 below, the Optionor, using reasonable
discretion, may terminate this Option Agreement, with fifteen (15) days written notice to Optionee setting
forth the reasons for such termination. If during such fifteen (15) day period the Optionee is able to cure any
issues indicated in the notice of termination, this Option Agreement may be reinstated by the Optionor and
shall remain in full force and effect.
4. OPTION PRICE (PM04.2 N)
The price of the Option granted herein is $36 ("Option Price"), which shall be paid to Optionor prior to the
Effective Date.
The Option Price shall be retained by Optionor in consideration for the granting of the Option. No portion of
the Option Price shall be refunded or credited to rent payments under the Lease.
8GA 122
OPT
ION AGREEMENT- CROSSROADS
5. CONDITIONS (PM07.1 N)
The Option may not be exercised until the following terms and conditions shall have been met. Each time a
condition has been met Optionor shall, upon written request therefor from Optionee, provide written
confirmation that such condition has been satisfied.
A. Preliminary Plans
Within one hundred eighty (180) days following the Effective Date of this Option Agreement, and
not less than five (5) business days before Optionee intends to submit such documents to the City,
Optionee shall submit preliminary plans for the development and use of the Premises for the Project
("Preliminary Plans"), for Optionor's approval. The preliminary plans shall be prepared by an
architect licensed in the State of California and shall include:
1) A detailed site plan of the Premises showing:
a. all improvements planned for the Premises
b. any existing and/or proposed easements affecting the Premises
c. ingress and egress to and from the Premises
d. parking
e. location of all utilities
f. drainage plan
g. grade elevations of all structures;
2) Detailed landscape development plans;
3) Colored rendering or model of the planned development;
4) A detailed cost estimate of all improvements; and
5) A detailed estimate of the construction schedule.
Within ten (10) business days of receipt of the Preliminary Plans, the Optionor will provide Optionee
with written comments, if any, on the Preliminary Plans. The Optionor's review shall be limited only
to reviewing plans for conformity with this Option Agreement and impacts on flood control
operations and shall not provide any representations or warranties regarding the sufficiency of the
plans for the required land use approvals or for construction.
B. Environmental Requirements
Concurrently with or prior to the submission of the Preliminary Plans to the Agency, Optionee shall
submit to the City a draft Initial Study, with a copy to the Optionor, prepared at Optionee's expense,
in order for the City to determine whether a Negative Declaration or an Environmental Impact Report
will be necessary for the proposed development. Such determination will be made in accordance
with the City's normal procedures.
If the City determines that a Negative Declaration is appropriate, Optionee shall submit all necessary
documentation and cooperate with the City in order to provide the Optionor with written proof of
environmental clearance on the Project from the appropriate governmental authority.
8GA 123
OPTION AGREEMENT- CROSSROADS
If an Environmental Impact Report is mandated by the City, Optionee shall obtain a screen check
Environmental Impact Report and draft Environmental Impact Report at its own expense and shall
process same in accordance with the City's procedure. Optionee shall, prior to commencement of
any construction on the Premises, provide supporting documentation to Optionor, evidencing that
Optionee has received environmental clearance on the Project from the appropriate authority
governing this matter
C. General Plan Conformity
Optionee shall request a finding from the City that the proposed development is in conformance with
the City's General Plan pursuant to Government Code Section 65402 and provide written evidence of
such conformity to the Optionor.
D. Construction Contract Documents
Within ninety (90) days following the Optionee's receipt of a commitment from the California Tax
Credit Allocation Committee of an award of tax credits for Optionee's proposed development of the
Premises, and not less than five (5) business days before Optionee intends to submit such documents
to the Agency, Optionee shall submit to the Optionor construction contract documents
("Construction Contract Documents") and cost estimates for development of the Premises. Such
Construction Contract Documents shall consist of the following:
1) Complete architectural, landscape, and engineering working drawings;
2) Outline unit specifications;
3) Construction contract form; and
4) Construction schedule.
Within ten (10) business days of receipt of the Construction Contract Documents, the Optionor will
provide Optionee with written comments, if any, on the Construction Contract Documents. If
Optionor provides any comments within such ten (10) day period, then, to the extent reasonable,
Optionee shall endeavor to address Optionor's comments with respect to the Construction Contract
Documents during the approval process with the City.
E. Permits and Approvals.
Optionor shall not unreasonably withhold consent to any application by Optionee with respect to any
permits or approvals related to activities or development plans approved by Optionor in accordance
with this Option Agreement which may be required by any governmental or regulatory agency.
Optionee shall provide Optionor with satisfactory evidence that Optionee has met all City
requirements, as applicable, and has obtained all necessary clearances and grading permits from the
City to commence construction of the planned development as preliminarily approved by the
Optionor.
8GA 124
OPT
ION AGREEMENT- CROSSROADS
Optionee acknowledges and agrees that no grading, or other construction activities shall be permitted
on the Premises until all applicable permits and clearances have been obtained from the City.
F. Lease Requirements
Optionee shall submit to the Optionor:
1) Satisfactory evidence of Optionee's ability to finance the cost of the development planned
for said Premises in accordance with the requirements of the Lease, which may be
evidenced by commitments from the Optionee's tax credit investor and the lenders
providing acquisition and construction financing for Optionee's proposed development of
the Premises. If Optionee plans to hypothecate the leasehold as security for a loan,
Optionee shall submit substantially final versions of all documents proposed in the loan
transaction along with a request for Optionor's consent to the proposed hypothecation in
accordance with the terms of the Lease, which consent shall not be unreasonably withheld.
2) Evidence that, when the Lease is executed, Optionee will provide assurances of
construction completion in accordance with the Lease, or a letter of intent bond that is
sufficient to assure Optionor that a bond is forthcoming consistent with the Lease, or
Lessee will provide a completion guaranty in accordance with the Lease.
3) Evidence of insurance coverage which will be available when the Lease is executed and
which fully complies with the Lease.
6. REVIEW BY COUNTY AND AGENCY (PM08.1 N)
Optionee hereby acknowledges that one of the purposes of this Option Agreement is to afford Optionee and
Optionor the opportunity to determine whether Optionee is able to meet the various conditions of this Option
Agreement and is able to obtain the required approvals as set forth in this Option Agreement. Several of
those conditions involve obtaining reviews and approvals from officers, employees or agents of the
Optionor, and/or the City. Each of those reviews shall be conducted in an independent manner and nothing
contained herein shall be deemed to limit the jurisdiction or authority otherwise possessed by said officers,
employees or agents in the conduct of such review.
Nothing contained in this Option Agreement shall be deemed to imply that required approvals will be
forthcoming, and the failure to issue any such approval or permit by any officer, employee or agent of the
County, and/or the City shall not be deemed in any manner a breach of this Option Agreement, nor shall any
such denial give rise to any claim, liability, obligation, or cause of action with respect to this Option
Agreement or the Lease.
No permit, approval, or consent given by the County, and/or the City, or their officers, employees, or agents,
acting in its/their governmental capacity, shall affect or limit Optionee's obligations under this Option
Agreement or under the Lease, nor shall any approvals or consents given under this Option Agreement by
Optionor, as a Party hereto, be deemed approval as to compliance or conformance with applicable
governmental codes, laws, rules, and/or regulations.
8GA 125
OPT
ION AGREEMENT- CROSSROADS
7. DISCLAIMER OF REPRESENTATIONS OF WARRANTIES (PM015.1 N)
Optionee agrees that Optionor has made no representations, warranties, or agreements as to any matters
concerning the Premises, including, but without being limited to, the land, marketability of title, topography,
climate, air, water, water rights, utilities, present or future zoning, soil, subsoil, hazardous substances, waste
or materials, the purposes for which the Premises is suited, drainage, access to public roads, proposed routes
of roads or extensions thereof or the availability of governmental permits or approvals of any kind. Optionee
represents and warrants to Optionor that it and its representatives and employees have made or will make
their own independent inspection and investigation of such matters concerning the Premises.
8. OPTIONEE'S RIGHT TO ENTER PREMISES, INDEMNIFICATION (PM09.1.1 N)
During the Option Term the Optionee and its employees, contractors, subcontractors, consultants, and
agents (collectively, "Consultants") shall have the right, at Optionee's sole cost and expense, to enter onto
the Premises at reasonable times to make such investigations of the Premises as the Optionee deems
necessary for Optionee to prepare the hereinabove-described Preliminary Plans and Construction Contract
Documents and in order to determine if the Premises is suitable for Optionee's intended development,
including but not limited to invasive testing, geotechnical testing, and "Phase I" and/or "Phase If'
investigations of Premises. The Optionee shall provide the Optionor with notice at least one (1) business day
prior to the date of any intended entry onto the Premises. After making such tests and inspections, the
Optionee shall promptly restore the Premises to its condition prior to such tests and inspections and shall
provide the Optionor with any written reports delivered to Optionee as a result of such tests and inspections,
but without any representation as to accuracy or the Optionor's right to rely on such reports.
Optionee hereby agrees to indemnify Optionor and hold Optionor, its officers, employees and agents
harmless from any loss, claims, liability, or costs arising out of or incurred by reason of such investigation;
provided, however, such indemnification shall not apply to any loss, claims, liability or costs arising out of
Optionee's discovery of Hazardous Materials (as such term is defined in the form of Ground Lease) on the
Premises not brought to the Premises by Optionee. Whether or not this option terminates or expires,
Optionee agrees to repair any and all damages caused to the Premises by reason of any such investigation or
investigations, which obligation shall not include remediation of any Hazardous Materials unless such
Hazardous Materials were brought to the Premises by Optionee or unless Optionee agrees to move forward
with such remediation after its environmental assessment of the Property. In no case shall Optionor be
responsible for the costs associated with any such remediation required for the Project.
As a condition to any entry onto the Premises, Optionee shall provide evidence of insurance as stated in
Section 11, entitled Insurance.
9. OMITTED
10. HOLD HARMLESS (PMGE10.1 S)
Optionee hereby releases and waives all claims and recourse against Optionor, including the right of
contribution for loss or damage of persons or property, arising from, growing out of or in any way connected
with or related to the activities of the Optionee or anyone acting for or under the direction of the Optionee
under this Option Agreement except and to the extent of claims arising from the negligence or misconduct of
Optionor, its officers, agents, and employees. Optionee hereby agrees to indemnify, defend (with counsel
8Gi4 126
OPT
ION AGREEMENT- CROSSROADS
approved in writing by Optionor), and hold harmless, Optionor, its elected and appointed officials, officers,
agents, employees and contractors against any and all claims, losses, demands, damages, cost, expenses or
liability for injury to any persons or property (collectively, "Claims"), arising out of the Optionee's exercise
of the rights under this Option Agreement, except and to the extent of liability arising out of the negligence
or misconduct of Optionor, its elected and appointed officials, officers, agents, or employees, including the
cost of defense of any lawsuit arising therefrom. If Optionor is named as co-defendant in a lawsuit with
respect to a Claim for which the Optionee has an indemnity obligation under this section, Optionee shall
notify Optionor of such fact and shall represent Optionor in such legal action unless Optionor undertakes to
represent itself as co-defendant in such legal action, in which event, Optionee shall pay to Optionor its
reasonable litigation costs, expenses, and attorneys' fees. If judgment is entered against Optionor and
Optionee by a court of competent jurisdiction because of the concurrent negligence or misconduct of
Optionor and Optionee, Optionor and Optionee agree that liability will be apportioned as determined by the
court. Neither party shall request a jury apportionment.
Optionee acknowledges that it is familiar with the language and provisions of California Civil Code Section
1542 which provides as follows:
A general release does not extend to claims that the creditor or releasing party does not know or
suspect to exist in his or her favor at the time of executing the release and that, if known by him or
her, would have materially affected his or her settlement with the debtor or released party.
Optionee, being aware of and understanding the terms of Section 1542, hereby waives all benefit of its
provisions to the extent described in this paragraph.
11. INSURANCE (PM09.2.2S)
A. General Requirements
Optionee agrees to purchase all required insurance at Optionee's expense and to deposit with the
Optionor certificates of insurance, including all endorsements required herein, necessary to satisfy
Optionor that the insurance provisions of this Option Agreement have been complied with and to
keep such insurance coverage and the certificates and endorsements therefor on deposit with
Optionor during the entire term of this Option Agreement and any extension thereof.
The Option shall terminate if Optionee's insurance coverage is terminated and Optionee has failed to
reinstate such insurance within five (5) business days after termination
Optionee agrees that Optionee shall not operate on the Premises at any time the required insurance is
not in full force and effect as evidenced by a certificate of insurance and necessary endorsements or,
in the interim, an official binder being in the possession of Optionor. In no cases shall assurances by
Optionee, its employees, agents, including any insurance agent, be construed as adequate evidence of
insurance. Optionor will only accept valid certificates of insurance and endorsements, or in the
interim, an insurance binder as adequate evidence of insurance. Optionee also agrees that upon
cancellation, termination, or expiration of Optionee's insurance, Optionor may take whatever steps
are necessary to interrupt any operation from or on the Premises until such time as the Optionor
reinstates the Option.
If Optionee fails at any time during the term of the Option to provide Optionor with a valid certificate
8Gi4 127
OPT
ION AGREEMENT- CROSSROADS
of insurance and endorsements, or binder, Optionor and Optionee agree that this shall constitute a
material breach of this Option Agreement. Said material breach shall permit Optionor to take
whatever steps necessary to interrupt any operation from or on the Premises, and to prevent any
persons, including, but not limited to, members of the general public, and Optionee's employees and
agents, from entering the Premises until such time as Optionor is provided with evidence of insurance
required herein. Optionee further agrees to hold Optionor harmless for any damages resulting from
such interruption of business and possession, including, but not limited to, damages resulting from
any loss of income or business resulting from Optionor's action.
All contractors performing work on behalf of Optionee pursuant to this Option Agreement shall
obtain insurance subject to the same terms and conditions as set forth herein for Optionee. Optionee
shall not allow any contractor to work if the contractor has less than the level of coverage required by
Optionor from the Optionee under this Option Agreement. It is the obligation of the Optionee to
provide written notice of the insurance requirements to the contractor and to receive proof of
insurance prior to allowing any contractor to begin work within the Premises. Such proof of
insurance must be maintained by Optionee through the entirety of this Option Agreement and be
available for inspection by an Optionor representative at any reasonable time.
All self -insured retentions (SIRS) shall be clearly stated on the Certificate of Insurance. Any self -
insured retention (SIR) in an amount in excess of Fifty Thousand Dollars ($50,000) shall specifically
be approved by the County's Risk Manager, or designee, and the City of Santa Ana Risk Manager
("Risk Manager") upon review of Optionee's current audited financial report. If Optionee's SIR is
approved, Optionee, in addition to, and without limitation of, any other indemnity provision(s) in this
Option, agrees to all of the following:
1) In addition to the duty to indemnify and hold the County and City harmless against any and
all liability, claim, demand or suit resulting from Optionee's, its agents, employee's or
subcontractor's performance of this Agreement, Optionee shall defend the County and City at
its sole cost and expense with counsel approved by Board of Supervisors and City of Santa
Ana against same; and
2) Optionee's duty to defend, as stated above, shall be absolute and irrespective of any duty to
indemnify or hold harmless; and
3) The provisions of California Civil Code Section 2860 shall apply to any and all actions to which the
duty to defend stated above applies, and the Optionee's SIR provision shall be interpreted as though
the Optionee was an insurer and the County and City were the insureds.
If the Optionee fails to maintain insurance acceptable to Optionor for the full term of this Option
Agreement, Optionor may terminate this Option Agreement, subject to the reinstatement rights
above, if any, set forth above in this section.
B. Qualified Insurer
The policy or policies of insurance must be issued by an insurer with a minimum rating of A- (Secure
A.M. Best's Rating) and VIII (Financial Size Category as determined by the most current edition of
the Best's Key Rating Guide/Property-Casualty/United States or ambest.com). It is preferred,
but not mandatory, that the insurer be licensed to do business in the state of California (California
Admitted Carrier).
8GA 128
OPT
ION AGREEMENT- CROSSROADS
If the insurance carrier does not have an A.M. Best Rating of A-NHI, the CEO/Office of Risk
Management and City of Santa Ana retains the right to approve or reject a carrier after a review of the
company's performance and financial ratings.
C. Minimum Limits
The policy or policies of insurance maintained by the Optionee shall provide the minimum limits and
coverage as set forth below:
Coverages
Commercial General Liability
Automobile Liability including coverag
for owned, non -owned and hire
vehicles
Workers' Compensation
Employers' Liability Insurance
Contractor's Pollution Liability
D. Coverage Forms
Minimum Limits
$1,000,000 per occurrence
$2,000,000 aggregate
$1,000,000 limit per occurrence
Statutory Minimum
$1,000,000 per occurrence
$1,000,000 per claims -made
or per occurrence
The Commercial General Liability coverage shall be written on Insurance Services Office (ISO) form
CG 00 01, or a substitute form providing liability coverage at least as broad.
The Business Auto Liability coverage shall be written on ISO form CA 00 01, CA 00 05, CA 00 12,
CA 00 20, or a substitute form providing liability coverage as broad.
E.
of Insurance
Required Endorsements. The following endorsements must be submitted with the Certificate
1) The Commercial General Liability policy shall contain an Additional Insured
endorsement using ISO form CG 20 26 04 13 or a form at least as broad naming the
County their respective elected and appointed officials, officers, employees, and agents as
Additional Insureds and the City of Santa Ana, its officers, employees, agents and
representatives as Additional Insureds with respect to General Liability and Auto Liability per
the attached endorsements or as required by written contract.
The Commercial General Liability policy shall contain a primary non-contributing
endorsement using ISO form CG 20 01 04 13, or a form as least as broad, evidencing that
the Optionee's-insurance is primary and any insurance or self-insurance maintained by the
8GA 129
OPT
ION AGREEMENT- CROSSROADS
Optionor shall be excess and non-contributing
2) The Workers' Compensation policy shall contain a waiver of subrogation endorsement
waiving all rights of subrogation against the Optionor, its elected and appointed officials,
officers, agents and employees.
All insurance policies required by this contract shall waive all rights of subrogation
against the Optionor, its elected and appointed officials, officers, agents and employees
when acting within the scope of their appointment or employment.
Optionee shall notify Optionor in writing within thirty (30) days of any policy cancellation
and ten (10) days for non-payment of premium and provide a copy of the cancellation
notice to Optionor. Failure to provide written notice of cancellation may constitute a
material breach of this Option upon which the Optionor may suspend or terminate this
Option.
3) For the City, the Certificate Holder must specifically read:
City of Santa Ana
Risk Management Division, 4s' Floor
20 Civic Center Plaza
Santa Ana, CA 92702
4) The Contractor's Pollution Liability policy shall contain the following endorsements and
language, which shall accompany the Certificate of Insurance:
A) An Additional Insured endorsement naming the County of Orange, City of Santa Ana,
and their respective elected and appointed officials, officers, employees and agents as
Additional Insureds.
B) A primary and non-contributing endorsement evidencing the Optionee's insurance is
primary and any insurance or self-insurance maintained by the County of Orange and City
of Santa Ana shall be excess and non-contributing; and,
C) If Optionee's Contractor's Pollution Liability policy is a claims -made policy, Optionee
shall agree to maintain coverage for two (2) years following termination of the Option.
F. Severability of Interest Clause - Commercial General Liability
The Commercial General Liability policy shall contain a severability of interests clause, also known
as a "separation of insureds" clause (standard in the ISO CG 001 policy).
G. Delivery
Insurance certificates should be forwarded to Optionor address provided in Section 16 (Notices)
below or to an address provided by the Optionor. Optionee has ten (10) business days to provide
adequate evidence of insurance or this Option Agreement may be cancelled.
H. Insurance Requirement Changes
Optionor expressly retains the right to reasonably require Optionee to increase or decrease insurance
Pa e 10 0 19
OPTION AGREEMENT - CROSSROADS
I 86Xe O
of any of the above insurance types throughout the term of this Option Agreement. Any increase or
decrease in insurance will be as deemed by the County and City Risk Manager as appropriate to
adequately protect Optionor.
Optionor shall notify Optionee in writing of changes in the insurance requirements. If Optionee does
not deposit copies of acceptable certificates of insurance and endorsements with Optionor
incorporating such changes within thirty (30) days of receipt of such notice, this Option Agreement
may be in breach without further notice to Optionee, and Optionor shall be entitled to all legal
remedies.
The procuring of such required policy or policies of insurance shall not be construed to limit Optionee's
liability hereunder nor to fulfill the indemnification provisions and requirements of this Option Agreement,
nor in any way to reduce the policy coverage and limits available from the insurer.
12. ASSIGNMENT (PMO10.1 S)
The Optionee may assign its right, title and interest in and to this Option Agreement to an affiliated nonprofit
public benefit corporation, or to a limited partnership whose general partner is a nonprofit corporation or
limited liability company affiliated with the Optionee, subject to the Optionor's right to reasonably approve
the agreement to effect such assignment. Otherwise, this Option Agreement shall not be sold, assigned, or
otherwise transferred without the prior written consent of Optionor, which consent may be withheld in the
Optionor's sole and absolute discretion. Failure to obtain Optionor's approval of the assignment agreement
or required written consent, as applicable, shall render said sale, assignment, or transfer void.
If Optionee hereunder is a corporation or an unincorporated association or partnership, the sale, transfer, or
assignment of any stock or interest in said corporation, association, or partnership in the aggregate exceeding
twenty-five percent (25%) shall be deemed an assignment within the meaning of this clause.
13. EXERCISE OF OPTION TO LEASE (PMO11.1 S)
At any time during the Option Term that Optionee shall have performed all conditions as set forth in Section
5 (Conditions) of this Option Agreement, Optionee may exercise the Option by giving Optionor written
notice of election to do so, accompanied by properly executed copies of the Lease in triplicate. County and
Agency hereby represent and warrant that concurrent with execution of this Option Agreement, County and
Agency have entered into that certain Crossroads at Washington - Joint Powers Agreement ("JPA") and such
agreement is in full force and effect.
14. EXECUTION OF LEASE & MERGER OF PARCELS (PM012.1 N)
After confirmation that the Optionee has performed all conditions as set forth in Section 5 (Conditions) of
this Option Agreement, Optionor shall execute any and all documents necessary to merge the Premises under
a tenants -in -common ownership structure and execute the Lease within fourteen (14) days of receipt of
Optionee's notice of election to exercise the Option and receipt of the Lease executed by Optionee.
15. TERMINATION (PM014.1 S)
Failure of Optionee to fully and satisfactorily meet the terms and conditions of this Option Agreement within
the time limits stated shall absolutely and conclusively terminate Optionee's rights hereunder.
Pa e 11 0 19
OPTION AGREEMENT - CROSSROADS
1 K�e
Concurrent with execution of this Option Agreement, the Optionee shall execute, acknowledge, and deliver
to Julie Massey, Escrow Officer, Old Republic Title Company, 555 - 12th Street, Suite 2000, Oakland,
California 94607 (the "Escrow Holder") a quitclaim deed, in a form as approved by the Optionor,
quitclaiming all right title and interest created by this Option Agreement back to the Optionor ("Quitclaim
Deed"). In the event of termination of this Option Agreement for any reason, Optionor shall be entitled to
instruct the Escrow Holder to record the Quitclaim Deed; provided, however, that County shall first deliver
to Optionee at least five (5) days' prior to written notice of its intention to authorize Escrow Holder to record
the Quitclaim Deed. Optionee shall be responsible for all costs associated with such escrow.
16. NOTICES (PMO18.1 N)
All notices, documents, correspondence and communications concerning this Option Agreement shall be
addressed as set forth in this Section 16, or as the Parties may hereafter designate by written notice, and shall
be sent through the United States mail, return receipt requested or with other proof of delivery, with postage
prepaid, by personal delivery, Federal Express or similar courier service. Notices so given shall be deemed
to have been given upon receipt.
TO OPTIONOR:
County of Orange
c/o CEO Real Estate
ATTN: Thomas Miller, Chief Real Estate
Officer
333 W. Santa Ana Blvd, 3rd Floor
Santa Ana, CA 92702
Email thomas.millergocgov.com
Phone: 714/834-3046
And to:
Housing Authority of the City of Santa Ana
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
Attn: Housing Manager
With a copy to:
Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
TO OPTIONEE:
c/o The Related Companies of California, LLC
19201 Von Karman Avenue, Suite 900
Irvine, CA 92612
Attention: President
c/o A Community of Friends
3701 Wilshire Boulevard, Suite 700
Los Angeles, CA 90010
Attention: Dora Leone Gallo. President and
Chief Executive Officer
With a copy to:
Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street, 64th Floor
Los Angeles. CA 90071
Attention: Lance Bocarsly, Esq.
All notices or other communications required or permitted hereunder shall be in writing, and shall be
personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, or
electronic mail, shall be deemed received upon the earlier of (a) if personally delivered, the date of delivery
Pa e 12 0 19
OPTION AGREEMENT - CROSSROADS
Q 8Ue
to the address of the person to receive such notice, (b) if mailed, three (3) business days after the date of
posting by the United States post office, (c) if given by electronic mail, when sent if before 5:00 p.m.,
otherwise on the next business day, or (d) if delivered by overnight delivery, one (1) business day after
mailing. Any notice, request, demand, direction or other communication sent by electronic mail must be
confirmed within by letter mailed or delivered within two business days in accordance with the foregoing;
except that notices required under Section 8 prior to Optionee's access onto the Premises may be given just
by email
Either Party may change the address for notices by giving the other Party at least ten (10) calendar days'
prior written notice of the new address.
17. VENUE (PMES13.1S)
The Parties hereto agree that this Option Agreement has been negotiated and executed in the State of
California and shall be governed by and construed under the laws of California. In the event of any legal
action to enforce or interpret this Option Agreement, the sole and exclusive venue shall be a court of
competent jurisdiction located in the County of Orange, California, and the Parties hereto agree to and do
hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure Section 394.
Furthermore, the Parties hereto specifically agree to waive any and all rights to request that an action be
transferred for trial to another county.
18. SEVERABILITY (PMES15.1S)
If any term, covenant, condition, or provision of this Option Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions hereof shall remain in full
force and effect and shall in no way be affected, impaired or invalidated thereby.
19. ATTORNEYS' FEES (PMES16.1S)
In any action or proceeding brought to enforce or interpret any provision of this Option Agreement, or where
any provision hereof is validly asserted as a defense, each Party shall bear its own attorney fees and costs.
20. SUCCESSORS AND ASSIGNS (PMES18.1S)
The terms, covenants, and conditions contained herein shall apply to and bind the heirs, successors,
executors, administrators, and assigns of the Parties hereto.
21. AUTHORITY (PMES20.1S)
The Parties to this Option Agreement represent and warrant that it has been duly authorized and, once
executed, will constitute the legally binding obligation of their respective organization or entity, enforceable
in accordance with its terms.
22. ENTIRE AGREEMENT (PM017.1 S)
This instrument contains the entire agreement between the Parties relating to the Option granted herein and
all negotiations and agreements between the Parties hereto or their agents with respect to this transaction are
merged herein. Any oral representations, modifications, or waivers concerning this instrument shall be of no
force and effect, except in a subsequent instrument made in writing and signed by both Parties. Time is of
Pa e 13 0 19
OPTION AGREEMENT - CROSSROADS
1 K�e
the essence in the performance of the Parties' respective obligations herein contained. Subject to the
restrictions against sale, assignment, or other transfer above, this Option Agreement shall inure to the benefit
of and be binding upon the Parties hereto and their respective heirs, successors, and assigns.
Pa e 14 o 19
OPTION AGREEMENT -CROSSROADS 8U- 34
IN WITNESS WHEREOF, the Parties have executed
written.
Page15o
OPT
ION AGREEMENT -CROSSROADS 80A-�
EXHIBIT 3
this Option Agreement the day and year first above
OPTIONEE
WASHINGTON SANTA ANA HOUSING
PARTNERS, L.P., a California limited partnership
By: Related/Washington Santa Ana Development
Co., LLC, a California limited liability
company, its Administrative General Partner
By:
Frank Cardone President
By: Supportive Housing LLC, a California limited
liability company, its Managing General
Partner
By: A Community of Friends, a California
nonprofit public benefit corporation, its
sole member/manager
By:
Dora Leong Gallo,
President and Chief Executive
Officer
'19
35
1: *0 111 A Ia]
Washington Santa Ana Housing Partners, L.P.
18201 Von Karman Avenue, Suite 900 Irvine, CA 92612
P: (949) 660-7272
January 31, 2020
Mr. Judson Brown
Housing Division Manager
City of Santa Ana
Community Development Agency
20 Civic Center Plaza M-25, P.O. Box 1988
Santa Ana, California 92702
RE: Acceptance of terms of Option Agreement and Ground Lease
Mr. Brown,
Washington Santa Ana Housing Partners, L.P., the California limited partnership formed by The
Related Companies of California, LLC and A Community of Friends, has reviewed and accepted
the terms of the Option Agreement and the Ground Lease.
If you have any questions, please don't hesitate to call me at (949) 660-7272.
Washington Santa Ana Housing Partners, L.P.,
a California limited partnership
By: Related/Washington Santa Ana Development Co.. LLC.
a California limited liability company,
its Administrative General Partner
Bv:
Name: Liane Takano
Title: Authorized Signatory
80A-136
ONII1:31II N
OPTIONOR
APPROVED AS TO FORM:
COUNTY COUNSEL COUNTY OF ORANGE,
County of Orange, California a political subdivision of the State of California
By:
Deputy
Thomas Miller, Chief Real Estate Officer
Date: County of Orange, California
APPROVED AS TO FORM: HOUSING AUTHORITY OF THE CITY OF SANTA
SO ALHO ANA ACTING AS THE HOUSING SUCCESSOR
A ENERALCOUNSEL AGENCY
a public body, corporate and politic
By:
Ryan O. sistant City Attorney
Date lb[YStevenA. Mendoza, Executive Director
Date
Page 16 of 19
OPTION AGREEMENT -CROSSROADS
80A-137
We acknowledge receipt of the foregoing agreement and agree to comply with the terms of Section 15
thereof with respect to recordation of the Quitclaim Deed.
Old Republic Title Company
Julie Massey, Escrow Officer
Page 17 of 19
OPTION AGREEMENT - CROSSROADS 8 e 3 Q
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Page 19 0119
OPTION AGREEMENT - CROSSROADS Q V e 4 1
GROUND LEASE
THIS GROUND LEASE ("Lease") is made and effective as of the day of
2020 ("Effective Date") by and between the COUNTY OF ORANGE, a political subdivision of the
State of California, the HOUSING AUTHORITY OF THE CITY OF SANTA ANA, a public body,
corporate and politic, as tenants -in -common (respectively, the "County" and the "Agency", and
collectively "Lessor") and WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a
California limited partnership (hereinafter called "Tenant") (also referred to hereinafter each as
"Party" or collectively as the "Parties").
RECITALS
A. County and Agency are tenants -in -common of a certain property that encompasses the
Premises (as hereinafter defined).
B. County and Agency have executed a Joint Powers Agreement ("Joint Powers
Agreement"), pursuant to which the County and Agency agreed to lease the Premises to the Tenant
to develop, entitle and construct an 86-unit multifamily affordable housing project, as more fully
described herein, upon the fulfillment of certain conditions precedent as set forth therein.
C. The Parties have executed an Option Agreement, dated 12020
("Option Agreement"), pursuant to which the Lessor had agreed to lease the Premises to the Tenant
upon the fulfillment of certain conditions precedent.
D. The County and Agency acknowledge that the conditions precedent required by the Joint
Powers Agreement and Option Agreement have been fulfilled and therefore the Parties desire that
Tenant shall ground lease the Premises from Lessor on the terms set forth herein.
E. Lessor and Tenant have jointly agreed to enter into this Lease as of the date set forth
above.
F. On July 2, 2019, the Agency authorized the Executive Director of the Agency and the
Recording Secretary to execute a pre -commitment letter with the Tenant to enter into negotiations for
a sixty-five (65) year ground -lease of 1126 E. Washington Ave for the development of the
Crossroads at Washington affordable housing project located at 1126 and 1146 E. Washington
Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14).
G. On July 2, 2019, the City of Santa Ana authorized the City Manager and the Clerk of the
Council to execute a pre -commitment letter with the Tenant for $3,971,440 in affordable housing
funds consisting of $963,951 in Neighborhood Stabilization Program funds and $3,007,489 in
HOME Investment Partnerships Program funds, for the development of the Crossroads at
Washington affordable housing project located at 1126 and 1146 E. Washington Avenue, Santa Ana,
CA 92701 (APNs 398-092-13 and 398-092-14).
Page 11
80A-142
NOW, THEREFORE, in consideration of the above recitals, which are hereby incorporated into this
Lease by reference, and mutual covenants and agreements hereinafter contained, County, Agency
and Tenant mutually agree to the following:
ARTICLE
DEFINITIONS
1.1 Definitions: The following defined terms used in this Lease shall have the meanings set
forth below. Other terms are defined in other provisions of this Lease, and shall have the definitions
given to such terms in such other provisions.
1.1.1. "Affiliate" shall mean, with respect to any person (which as used herein
includes an individual, trust or entity), any other person which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control with, such person.
1.1.2. "Agency" shall mean the Housing Authority of the City of Santa Ana, acting
as the Housing Successor Agency, a public body, corporate and politic, exercising governmental
functions and powers, and organized and existing under the California Redevelopment Law. The
principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California 92702.
"Agency" shall also refer to the City of Santa Ana where the context dictates, to the effect that the
City of Santa Ana shall have all rights granted to the Agency hereunder.
1.1.3. "Aggregate Transfer" shall refer to the total "Ownership Interest(s)" in
Tenant transferred or assigned in one transaction or a series of related transactions (other than an
Excluded Transfer) occurring since the latest of (a) the Effective Date, (b) the execution by Tenant of
this Lease, or (c) the most recent Tenant Ownership Change; provided, however, that there shall be
no double counting of successive transfers of the same interest in the case of a transaction or series of
related transactions involving successive transfers of the same interest. Isolated and unrelated
transfers shall not be treated as a series of related transactions for purposes of the definition of
"Aggregate Transfer."
1.1.4. "Annual Operating Expenses" means all regular and customary annual
expenses incurred in relation to the operation of the Premises, including the Improvements, as
reflected on the annual budget that Tenant shall prepare and abide by each year during the Tenn of
the loans made by the Agency, City, and County, separately, for the Improvements and for so long as
Base Rent remains unpaid and outstanding, as approved in writing by the Lessor. Said Annual
Operating Expenses shall include a reasonable property management and administrative fee, fees
related to the tax credit syndication of the Premises, utility charges, operating and maintenance
expenses, Project property taxes and Project insurance premiums, and such other costs as approved
by the Lessor, in his/her reasonable discretion. Tenant will deliver an annual budget for the
following year no later than December 1 for each year following issuance of a permanent certificate
of occupancy for the Improvements. Lessor shall deliver any comments, or its approval to such
operating budget within thirty (30) days of receipt thereof. If an operating budget for the following
year has not been approved by Lessor and Tenant prior to January I of such year, the annual
operating budget from the previous year shall apply until a new operating budget is approved.
Notwithstanding the foregoing, in no event shall Annual Operating Expenses include any costs, fees,
fines, charges, penalties, awards, judgments or expenses (including, but not limited to legal and
accounting fees and expenses) which are due to or arising out of the Tenant's (A) breach or default of
any mortgage loan, (B) fraudulent acts or willful misconduct or (C) breach or default under any other
contract, lease or agreement pertaining to the Project. Annual Operating Expenses shall also not
Page 12
80A-143
include other expenses not related to the Project's operations such as depreciation, amortization,
accrued principal and interest expense on deferred payment debt and capital improvement
expenditures.
1.1.5. "Annual Project Revenue" means all annual revenue generated by the
Project from any source, including, but not limited to, rent payments, governmental assistance
housing payments, laundry and other vending machine and pay telephone income. Notwithstanding
the foregoing, Annual Project Revenue shall not include the following items: (a) security deposits
from subtenants (except when applied by Tenant to rent or other amounts owing by subtenants); (b)
capital contributions to Tenant by its members, partners or shareholders (including capital
contributions required to pay deferred developer fee); (c) condemnation or insurance proceeds; (d)
there shall be no line item, expense, or revenue shown allocable to vacant unit(s) at the Project; or (e)
receipt by an Affiliate of management fees or other bona fide anus -length payments for reasonable
and necessary Operating Expenses associated with the Project.
1.1.6. "Auditor -Controller" shall mean the Auditor -Controller, County of Orange,
or designee, or upon written notice to Tenant, such other person as may be designated by the Board
of Supervisors.
1.1.7. `Base Rent" shall mean a total of six million four hundred and fifty thousand
dollars ($6,450,000) due and owing and payable in full on the Commencement Date, but if not paid
in full on the Commencement Date, then the Base Rent amount paid in accordance with this Lease,
including pursuant to Article III, below, with four million, one hundred and eight thousand, one
hundred and thirty-six dollars ($4,108,136) being paid to the Agency pursuant to Section 3.1.2 and
two million, three hundred and forty-one thousand, eight hundred and sixty-four dollars ($2,341,864)
being paid to the County pursuant to Section 3.1.1.
Address
APN
Size
(Acres)
Size
(SF)
Land
Percentage
Value
Allocation
City Owned Site
398-092-14
1.456
63,423
63.69%
$4,108,136
County Owned Site
398-092-13
0.83
36,155
36.31%
$2,341,864
Total
2.286
99,578
100.00%
$6,450,000
1.1.8. "Board of Supervisors" shall mean the Board of Supervisors of the County of
Orange, a political subdivision of the State of California, the governing body of the County.
1.1.9. "Certificate of Occupancy" shall mean a temporary or final certificate of
occupancy (or other equivalent entitlement, however designated) which entitles Tenant to commence
normal operation and occupancy of the Improvements.
1.1.10. "Chief Real Estate Officer" shall mean the Chief Real Estate Officer,
County Executive Office, County of Orange, or designee, or upon written notice to Tenant, such
other person as may be designated by the County Board of Supervisors.
1.1.11. "City" shall mean the City of Santa Ana, California, a charter city and
municipal corporation. "City" shall also refer to the Agency where the context dictates, to the effect
that the Agency shall have all the rights granted to the City hereunder. "City Council" shall mean
the City Council of the City of Santa Ana.
Page13
80A-144
1.1.12. "Claims" shall mean liens, claims, demands, suits, judgments, liabilities,
damages, fines, losses, penalties, costs and expenses (including without limitation reasonable
attorneys' fees and expert witness costs, and costs of suit), and sums reasonably paid in settlement of
any of the foregoing.
1.1.13. "Commencement Date" shall mean the date on which a Certificate of
Occupancy is issued for the Project, and on which the Term shall commence and Base Rent shall
become due and payable.
1.1.14. "Contractor" shall mean Tenant's general contractor for the construction of
the Improvements.
1.1.15. "County" shall mean the County of Orange, a political subdivision of the
State of California.
1.1.16. "Effective Date" is defined in the introductory paragraph to this Lease, and
shall be the date on which Tenant take possession of the Premises and is entitled to commence
construction pursuant to Article V, below.
1.1.17. "Event of Default" is defined in Section 11.1.
1.1.18. "Excluded Transfer" shall mean any of the following:
(a) A transfer by any direct or indirect partner, shareholder, or member of
Tenant (or of a limited partnership, corporation, or limited liability company that is a direct or
indirect owner in Tenant's ownership structure) as of the Effective Date or the date on which a
Tenant Ownership Change occurred as to the interest transferred, to any other direct or indirect
partner, shareholder, or member of Tenant (or of a limited partnership, corporation, or limited
liability company that is a direct or indirect owner in Tenant's ownership structure) as of the
Effective Date, including in each case to or from a trust for the benefit of the immediate family of
any direct or indirect partner or member of Tenant who is an individual;
(b) A transfer of an Ownership Interest in Tenant or in constituent entities of
Tenant (i) to a member of the immediate family of the transferor (which for purposes of this Lease
shall be limited to the transferor's spouse, children, parents, siblings, and grandchildren); (ii) to a
trust for the benefit of a member of the immediate family of the transferor; (iii) from such a trust or
any trust that is an owner in a constituent entity of Tenant as of the Effective Date, to the settlor or
beneficiaries of such trust or to one or more other trusts created by or for the benefit of any of the
foregoing persons, whether any such transfer described in this subsection is the result of gift, devise,
intestate succession, or operation of law; or (iv) in connection with a pledge by any partners or
members of a constituent entity of Tenant to an affiliate of such partner or member;
(c) A transfer of a direct or indirect interest resulting from public trading in
the stock or securities of an entity, when such entity is a corporation or other entity whose stock
and/or securities is/are traded publicly on a national stock exchange or traded in the over-the-counter
market and the price for which is regularly quoted in recognized national quotation services;
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80A-145
(d) A mere change in the form, method, or status of ownership (including,
without limitation, the creation of single -purpose entities) as long as the ultimate beneficial
ownership remains the same as of the Effective Date, or is otherwise excluded in accordance with
subsections (a) — (c) above;
(e) A transfer to an Affiliated nonprofit public benefit corporation or for -
profit corporation, or to a limited partnership whose general partner is a nonprofit corporation, for -
profit corporation or limited liability company Affiliated with the Tenant or the Tenant's general
partner, subject to the County and Agency's right to reasonably approve the agreement to effect such
assignment or transfer;
(f) The lease, assignment of lease or sublease of any individual residential
unit in the Improvements;
(g) A transfer of the Tenant's interest in the Premises by foreclosure or deed
in lieu of foreclosure (i) to any bona fide third -party lender holding a lien encumbering the Premises
(or its nominee), and (ii) by a Lender Foreclosure Transferee to a third -party made in accordance
with Section 17.6.5;
(h) Transfers of any limited partnership or membership interest in the Tenant
to an investor solely in connection with the tax credit syndication of the Premises in accordance with
Section 42 of the Internal Revenue Code of 1986, as amended (the "Tax Credit Laws"), (including,
without limitation, a subsequent transfer of the Limited Partner's interest to an Affiliate of the
Limited Partner), provided, such syndication shall not extend the Term of this Lease;
(i) The grant or exercise of an option agreement or right of fast refusal solely
in connection with the tax credit syndication of the Premises in accordance with the Tax Credit Laws
provided that the syndication shall not extend the Term of this Lease;
0) The removal and replacement of one or both of Tenant's general partners
pursuant to the terms of Tenant's Partnership Agreement as of the Effective Date and replacement by
the Limited Partner, or an Affiliate thereof, or
(k) Any assignment of the Lease by Tenant to an Affiliate of Tenant or to a
Mortgagee as security in which there is no change to the direct and indirect beneficial ownership of
the leasehold interest.
1.1.19. "Force Majeure Event" is defined in Article XIV.
1.1.20. "Hazardous Material(s)" is defined in Section 4.5.
1.1.21. "HCD" shall mean the California Department of Housing and Community
Development.
1.1.22. "Improvement Costs" shall mean the final actual construction costs incurred
by Tenant in connection with the construction of the Improvements and in accordance with the terms
of this Lease, excluding ordinary repair and maintenance costs and any Permitted Capital
Expenditures paid for out of the Capital Improvement Fund.
Page 15
80A-146
1.1.23. "Improvements" shall mean and includes all buildings (including above-
ground and below ground portions thereof, and all foundations and supports), building systems and
equipment (such as HVAC, electrical and plumbing equipment), physical structures, fixtures,
hardscape, paving, curbs, gutters, sidewalks, fences, landscaping and all other improvements of any
type or nature whatsoever now or hereafter made or constructed on the Premises. The term
Improvements shall mean the Initial Improvements and any replacement improvements constructed
in accordance with the terms of this Lease. During the entire Term, the Improvements will be
restricted to the following uses:
(a) multifamily affordable housing,
(b) permanent supportive housing units and related services, and
(c) related commercial and community -serving uses as needed for the siting of the
affordable housing and supportive housing units, as approved by the Lessor.
1.1.24. "Includes" shall mean "includes but is not limited to" and "including" shall
mean "including but is not limited to."
1.1.25. "Initial Improvements" shall mean the improvements first constructed by
Tenant on the Premises at its sole cost and expense as more particularly described in Exhibit B
attached hereto and incorporated by reference herein.
1.1.26. "Interest Rate" shall mean the lower of: (a) the reference or prime rate of
U.S. Bank National Association, in effect from time to time plus three percent (3%); or (b) the
highest rate of interest permissible under the Laws not to exceed the rate of twelve percent (12%) per
annum.
1.1.27. "Laws" shall mean all laws, codes, ordinances, statutes, orders and
regulations now or hereafter made or issued by any federal, state, county, local or other governmental
agency or entity that are binding on and applicable to the Premises and improvements.
1.1.28. "Lease" shall mean this Ground Lease (including any and all addenda,
amendments and exhibits hereto), as now or hereafter amended.
1.1.29. "Leasehold Estate" is defined in Section 17.1.1.
1.1.30. "Leasehold Foreclosure Transferee" is defined in Section 17.1.2.
1.1.31. "Leasehold Mortgage" is defined in Section 17.1.3.
1.1.32. "Leasehold Mortgagee" is defined in Section 17.1.4.
1.1.33. "Lender" shall mean: (a) a bank, savings bank, investment bank, savings and
loan association, mortgage company, insurance company, trust company, commercial credit
corporation, real estate investment trust pension trust or real estate mortgage investment conduit; or
(b) some other type of lender engaged in the business of making commercial loans, provided that
such other type of lender has total assets of at least $2,000,000 and capital/statutory surplus or
shareholder's equity of at least $500,000,000 (or a substantially similar financial capacity if the
foregoing tests are not applicable to such type of lender); or (c) a local, state or federal governmental
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entity, including but not limited to HCD, which provides predevelopment, acquisition, construction
and/or permanent financing for Tenant's acquisition and development of the Property.
1.1.34. "Lessor's Interest" shall mean all of County's and Agency's interests in the
real property, the Premises, this Lease as tenants -in -common and their existing and reversionary
interest in the real property, Premises, as well as the Improvements upon the expiration of the Term
or earlier termination thereof.
1.1.35. "Lessor Parties" shall mean, collectively and individually, the County, the
Agency and their respective Affiliates, governing boards, agents, employees, members, officers,
directors and attorneys.
1.1.36. "Limited Partner" shall mean any limited partner or investor member (and
its successors and/or assigns) of Tenant and shall include all references to "investor" in this Ground
Lease.
1.1.37. "Net Refinancing Proceeds" is defined in Section 3.2.
1.1.38. "Net Syndication Proceeds" is defined in Section 3.2.
1.1.39. "New Lease" is defined in Section 17.7.1.
1.1.40. "Operating Costs" is defined in Section 3.4.1.
1.1.41. "Ownership Interests" shall mean the share(s) of stock, partnership
interests, membership interests, other equity interests or any other direct or indirect ownership
interests in Tenant, regardless of the form of ownership and regardless of whether such interests are
owned directly or through one or more layers of constituent partnerships, corporations, limited
liability companies, or trusts.
1.1.42. "Partnership Related Fees" shall mean the following fees of Tenant (or
partners thereof pursuant to Tenant's Partnership Agreement) which are actually paid including:
(i) a limited partner asset management fee payable to the Limited Partner in the
annual amount of $5,000 (increased annually by 3%); and
(ii) partnership management fee (administrative and/or managing general partner)
payable to the general partners of Tenant in the aggregate annual amount of $20,000 (increased
annually by 3%).
1.1.43. "Person" shall include firms, associations, partnerships, joint ventures, trusts,
corporations and other legal entities, including public or governmental bodies, agencies or
instrumentalities, as well as natural persons.
1.1.44. "Premises" shall mean that certain real property containing approximately
2.28 acres of undeveloped land in the City, together with all easements, rights and privileges
appurtenant thereto, to be leased to Tenant pursuant to this Lease and on which Tenant intends to
construct the Improvements. The legal description of the Premises is attached hereto as Exhibit A.
A rendering showing the approximate boundaries of the Premises is attached hereto as Exhibit A-1.
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1.1.45. "Project' shall mean the Improvements, and all related appurtenances,
constructed by Tenant on the Premises.
1.1.46. `Bent" shall mean and includes the County Base Rent, the Agency Base
Rent, and Additional Rent payable by Tenant under this Lease.
1.1.47. "Residual Receipts" means the Annual Project Revenue less (A) Annual
Operating Expenses (hereinafter defined), (B) obligated debt service on Leasehold Mortgages for the
funding of the improvements approved in writing by the Lessor at the closing of the construction
financing for the Improvements or as otherwise approved pursuant to Section 17.2, below, (C)
payment obligations approved in writing by the Lessor at the closing of the construction financing for
the Improvements, (D) Partnership Related Fees (including accrued by unpaid Partnership Related
Fees from the prior year or years), (E) repayment of loans, if any, made by Limited Partner to Tenant
for development and/or operating expense deficits on terms reasonably acceptable to Lessor, (F)
repayment of loans, if any, made by a general partner of Tenant solely for development and/or
operating expense deficits on terms reasonably acceptable to Lessor, (G) deferred developer fee, and
(H) scheduled deposits to reserves approved in writing by the Lessor at the closing of the
construction financing for the Improvements (or such higher reserve deposits as may be reasonably
required by any Leasehold Mortgagee).
1.1.48. `Risk Manager" shall mean the Manager of County Executive Office, Risk
Management, County of Orange, or designee, or upon written notice to Tenant, such other person as
may be designated by the Board of Supervisors and the Risk Manager for the City of Santa Ana, or
designee, or upon written notice to Tenant, such other person as may be designated by the City
Council.
1.1.49. "Taxes" is defined in Section 3.11.2.
1.1.51. "TCAC" is defined as the California Tax Credit Allocation Committee.
1.1.52. "Tenant Group" shall mean Tenant and Tenant's Affiliates, agents,
employees, members, officers, directors and attorneys.
1.1.53. "Tenant Ownership Change" shall mean (a) any transfer or assignment by
Tenant of the Leasehold Estate or (b) any "Aggregate Transfer" of at least twenty five percent (25%)
of the "Ownership Interest(s)" in Tenant, in each case that is not an "Excluded Transfer."
1.1.54. "Tenant's Partnership Agreement" shall mean Tenants Amended and
Restated Agreement of Limited Partnership dated as of
1.1.55. "Term" is defined in Section 2.2.
1.1.56. "Transfer" is defined in Section 10.1.1.
1.1.57. "Transfer Notice" is defined in Section 10.4.
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1.1.58. "Treasurer -Tax Collector" shall mean the Treasurer -Tax Collector, County
of Orange, or designee, or upon written notice to Tenant, such other person or entity as may be
designated by the Board of Supervisors.
1.1.59. "Utility Costs" is defined in Section 3.4.1.
1.1.60. "Work" shall mean both Tenant's construction activity with respect to the
Improvements, including permitted future changes, alterations and renovations thereto and also
including, without limiting the generality of the foregoing, site preparation, landscaping, installation
of utilities, street construction or improvement and grading or filling in or on the Premises.
ARTICLE II
LEASE OF PROPERTY
2.1 Lease of Premises.
2.1.1. Lessor hereby leases the Premises to Tenant for the Term, and Tenant hereby
leases the Premises from Lessor for the Term, subject to the terms, conditions, covenants, restrictions
and reservations of this Lease.
2.1.2. Warranty of Peaceful Possession. Lessor covenants and warrants that, subject
to the Tenant's payment of Rent and performance and observation of all of the covenants, obligations
and agreements herein contained and provided to Tenant, Tenant shall and may peaceably and
quietly have, hold, occupy, use and enjoy the Premises during the Term and may exercise all of its
rights hereunder. Except as otherwise set forth herein, the Lessor covenants and agrees that they
shall not grant any mortgage or lien on or in respect of its fee interest in the Premises unless the same
is expressly subject and subordinate to this Lease or any New Lease.
2.2 Term The "Term" of this Lease shall commence on the Effective Date of this Lease,
and shall expire at 12:00 midnight Pacific Standard Time on the 62nd anniversary of the
Commencement Date, unless sooner terminated as a result of Tenant's non-compliance with any
terms, conditions, covenants, restrictions or reservations of this Lease. Notwithstanding the
foregoing, the Term shall not exceed sixty five (65) years from the Effective Date.
2.3 Termination at End of Term. This Lease shall terminate without need of further
actions of any Party at 12:00 midnight Pacific Standard Time on the last day of the Term.
2.4 Condition of the Premises. TENANT HEREBY ACCEPTS THE PREMISES "AS
IS", AND ACKNOWLEDGES THAT THE PREMISES IS IN SATISFACTORY
CONDITION. COUNTY AND AGENCY MAKES NO WARRANTY, IMPLIED OR
OTHERWISE, AS TO THE SUITABILITY OF THE PREMISES FOR TENANT'S
PROPOSED USES. COUNTY AND AGENCY MAKE NO COVENANTS OR
WARRANTIES, IMPLIED OR OTHERWISE, RESPECTING THE CONDITION OF THE
SOIL, SUBSOIL, OR ANY OTHER CONDITIONS OF THE PREMISES OR THE
PRESENCE OF HAZARDOUS MATERIALS, NOR DOES COUNTY OR AGENCY
COVENANT OR WARRANT, IMPLIED OR OTHERWISE, AS TO THE SUITABILITY OF
THE PREMISES FOR THE PROPOSED DEVELOPMENT, CONSTRUCTION OR USE BY
TENANT. COUNTY AND AGENCY SHALL NOT BE RESPONSIBLE FOR ANY LAND
SUBSIDENCE, SLIPPAGE, SOIL INSTABILITY OR DAMAGE RESULTING
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THEREFROM. COUNTY AND AGENCY SHALL NOT BE REQUIRED OR OBLIGATED
TO MAKE ANY CHANGES, ALTERATIONS, ADDITIONS, IMPROVEMENTS OR
REPAIRS TO THE PREMISES. TENANT SHALL RELY ON ITS OWN INSPECTION AS
TO THE SUITABILITY OF THE PREMISES FOR THE INTENDED USE.
TENANT INITIALS:
2.5 Limitations of the Leasehold. This Lease and the rights and privileges granted Tenant
in and to the Premises are subject to all covenants, conditions, restrictions, and exceptions of record
as of the date hereof or otherwise disclosed to Tenant prior to the date hereof. Nothing contained in
this Lease or in any document related hereto shall be construed to imply the conveyance to Tenant of
rights in the Premises which exceed those owned by Lessor, or any representation or warranty, either
express or implied, relating to the nature or condition of the Premises or County's or Agency's
interest therein.
2.6 Tenant's Investigation. Tenant acknowledges that it is solely responsible for
investigating the Premises to determine the suitability thereof for the uses contemplated by Tenant.
Tenant further acknowledges by executing this Lease that it has completed its investigation and has
made such determinations as Tenant believes may be required under the circumstances.
ARTICLE III
TOTAL RENT
3.1 Base Rent. Throughout the Term of this Lease, regardless of an earlier termination date
Tenant shall pay to the County and the Agency the Base Rent as set forth herein.
3.1.1 County Base Rent. Tenant shall make annual payments to County of thirty-
three and four -tenths percent (33.4%) of the then available Residual Receipts (defined above), but
only to the extent said Residual Receipts are available, until the amount of two million, three hundred
and forty-one thousand, eight hundred and sixty-four dollars ($2,341,864) is fully paid ("County
Base Rent"). County Base Rent shall only become due after the Tenant has repaid that certain loan
from the County awarded under the 2016 Permanent Supportive Housing Notice of Funding
Availability, Addendum One, evidenced by a Loan Agreement, Promissory Note and Leasehold
Deed of Trust, in the amount of $2,280,701, which is also being paid out of the same thirty-three and
four -tenths percent (33.4%) of the Residual Receipts. On the last day of the Term the then
outstanding amount of the County Base Rent shall be paid in full if not already paid by that time.
County Base Rent will bear interest commencing on the Commencement Date at the simple rate of
three percent (3%) per year until paid in full. Once the County Base Rent has been paid in full with
interest, Tenant shall have no further obligation for County Base Rent under this Lease.
3.1.2 Agency Base Rent. Tenant shall also make annual payments to Agency of
thirty-three and one-third percent (33.3%) of the then available Residual Receipts (defined above),
but only to the extent said Residual Receipts are available, until the amount of four million, one
hundred and eight thousand, one hundred and thirty-six dollars ($4,108,136) is fully paid ("Agency
Base Rent"). Agency Base Rent shall only become due after the Tenant has repaid those two certain
loans from the City, each evidenced by a Loan Agreement, Promissory Note, Deed of Trust, and
Affordability Restrictions on Transfer of Property dated , 20 , in the amount
of $3,007,489.00, and dated 120 , in the amount of $963,951, which is also
being paid out of the same thirty-three and one-third percent (33.3%) of the Residual Receipts. On
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the last day of the Term the then outstanding amount of the Agency Base Rent shall be paid in full if
not already paid by that time. Agency Base Rent will bear interest commencing on the
Commencement Date at the simple rate of three percent (3%) per year until paid in full. Once the
Agency Base Rent has been paid in full, Tenant shall have no further obligation for Agency Base
Rent under this Lease.
3.2 Net Refinancing Proceeds/Net Syndication Proceeds. Any Net Refinancing Proceeds
or Net Syndication Proceeds received by Tenant shall be used to pay any unpaid Base
Rent. Additionally, the Tenant's right and obligation to use such net proceeds to pay Base Rent is
subject to the rights of Leasehold Mortgagees to control the use of such proceeds pursuant to the
terms of their respective loan documents, all of which have been reviewed and reasonably approved
by the Lessor and is further subject to the consent of TCAC to the extent required under the
applicable regulations or the extended use agreement. Without limiting application of those loan
documents and TCAC regulations and requirements, in no case shall Tenant be permitted to retain
Net Refinancing Proceeds or Net Syndication Proceeds without the prior written consent of the
Lessor, until full satisfaction of the unpaid Base Rent. Notwithstanding the foregoing, this Section
3.2 shall not apply to (i) any Excluded Transfer or (ii) any financing described in Section 17.2.
"Net Refinancing Proceeds" shall be defined as the proceeds from the refinancing of any loan
approved by Lessor hereunder, net of all of the following: the amount of the financing which is
satisfied out of such proceeds, closing costs, costs to rehabilitate the Project, including the costs
necessary to obtain refinancing proceeds (such as consultant, legal and other consultant costs), the
soft costs related to the rehabilitation of the Project (such as architecture, engineering and other
consultant costs, and all required relocation costs), and all hard costs of the rehabilitation, all of
which have been reviewed and reasonably approved by the Lessor.
"Net Syndication Proceeds" shall be defined as syndication proceeds net of final Project hard
and soft construction costs, including developer fee, based on a cost certification completed at the
end of construction, and syndication costs all of which has been reviewed and reasonably approved
by the Lessor.
3.3 Triple Net Rent. It is the intent of the Parties that all Rent shall be absolutely net to
Lessor and that, except as otherwise provided herein, Tenant will pay all costs, charges, insurance
premiums, taxes, utilities, expenses and assessments of every kind and nature incurred for, against or
in connection with the Premises which arise or become due during the Term as a result of Tenant's
use and occupancy of the Premises. Under no circumstances or conditions, whether now existing or
hereafter arising, or whether beyond the present contemplation of the Parties, shall County or Agency
be obligated or required to make any payment of any kind whatsoever or be under any other
obligation or liability under this Lease except as expressly provided herein.
3.4 Insufficient Funds. For purposes of this Section 3.4, Rent shall have the same meaning
as stated in Section 1.1.42. If any payment of Rent or other fees made by check is returned due to
insufficient funds or otherwise, County and Agency shall have the right to require Tenant to make all
subsequent Rent payments by cashier's check, certified check or automated clearing house debit
system. All Rent or other fees shall be paid in lawful money of the United States of America,
without offset or deduction or prior notice or demand. No payment by Tenant or receipt by County
and Agency of a lesser amount than the Rent or other fees due shall be deemed to be other than on
account of the Rent or other fees due, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and satisfaction, and County
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and Agency shall accept such check or payment without prejudice to County's and Agency's right to
recover the balance of the Rent or other fees or pursue any other remedy available to the County or
Agency in this Lease.
3.5 Reserved.
3.6 Additional Rent.
3.6.1. Additional Rent. During the Term, the Base Rent shall be absolutely net to
County and Agency so that all costs (including but not limited to Operating Costs and Utility Costs,
as defined below), fees, taxes (including but not limited to Real Estate Taxes and Equipment Taxes,
as defined below), charges, expenses, impositions, reimbursements, and obligations of every kind
relating to the Premises shall be paid or discharged by Tenant as additional rent ("Additional
Rent"). Additional Rent shall also include such amounts as described in Article XL As more
particularly set forth in Sections 3.6.3 and 3.6.6, below, Tenant has the right to pay under protest the
foregoing Additional Rent, as applicable, and defend against the same. Any imposition rebates shall
belong to Tenant.
3.6.2. Taxes. During the Term, Tenant shall pay directly to the taxing authorities all
Taxes (as herein defined) at least ten (10) days prior to delinquency thereof. For purposes hereof,
"Taxes" shall include any form of assessment, license fee, license tax, business license fee,
commercial rental tax, levy, penalty, sewer use fee, real property tax, charge, possessory interest tax,
tax or similar imposition (other than inheritance or estate taxes), imposed by any authority having the
direct or indirect power to tax, including any city, county, state or federal government, or any school,
agricultural, lighting, drainage, flood control, water pollution control, public transit or other special
district thereof, as against any legal or equitable interest of County or Agency in the Premises or any
payments in lieu of taxes required to be made by County or Agency, including, but not limited to, the
following:
(a) Any assessment, tax, fee, levy, improvement district tax, charge or similar
imposition in substitution, partially or totally, of any assessment, tax, fee, levy, charge or similar
imposition previously included within the definition of Taxes. It is the intention of Tenant and
Lessor that all such new and increased assessments, taxes, fees, levies, charges and similar
impositions be included within the definition of "Taxes" for the purpose of this Lease.
(b) Any assessment, tax, fee, levy, charge or similar imposition allocable to or
measured by the area of the Premises or the rent payable hereunder, including, without limitation,
any gross income tax or excise tax levied by the city, county, state or federal government, or any
political subdivision thereof, with respect to the receipt of such rent, or upon or with respect to the
possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof;
(c) Any assessment, tax, fee, levy, charge or similar imposition upon this
transaction or any document to which Tenant is a party, creating or transferring an interest or an
estate in the Premises, including any possessory interest tax levied on the Tenant's interest under this
Lease;
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(d) Any assessment, tax, fee, levy, charge or similar imposition by any
governmental agency related to any transportation plan, fund or system instituted within the
geographic area of which the Premises are a part.
The definition of "Taxes," including any additional tax the nature of which was previously included
within the definition of "Taxes," shall include any increases in such taxes, levies, charges or
assessments occasioned by increases in tax rates or increases in assessed valuations, whether
occurring as a result of a sale or otherwise.
3.6.3. Contest of Taxes. Tenant shall have the right to contest, oppose or object to
the amount or validity of any Taxes or other charge levied on or assessed against the Premises and/or
Improvements or any part thereof, provided, however, that the contest, opposition or objection must
be filed before such time the Taxes or other charge at which it is directed becomes delinquent.
Furthermore, no such contest, opposition or objection shall be continued or maintained after the date
the tax, assessment or other charge at which it is directed becomes delinquent unless Tenant has
either: (i) paid such tax, assessment or other charge under protest prior to its becoming delinquent; or
(ii) obtained and maintained a stay of all proceedings for enforcement and collection of the tax,
assessment or other charge by posting such bond or other matter required by law for such a stay; or
(iii) delivered to Lessor a good and sufficient undertaking in an amount specified by Lessor and
issued by a bonding corporation authorized to issue undertakings in California conditioned on the
payment by Tenant of the tax, assessments or charge, together with any fines, interest, penalties,
costs and expenses that may have accrued or been imposed thereon within thirty (30) days after final
determination of Tenant's contest, opposition or objection to such tax, assessment or other charge.
3.6.4. Payment by Lessor. Should Tenant fail to pay any Taxes required by this
Article III to be paid by Tenant within the time specified herein, subject to Tenant's right to contest
such Taxes in accordance with Section 3.6.3, and if such amount is not paid by Tenant within fifteen
(15) days after receipt of Lessor's written notice advising Tenant of such nonpayment, County and/or
Agency may, without further notice to or demand on Tenant, pay, discharge or adjust such tax,
assessment or other charge for the benefit of Tenant. In such event Tenant shall promptly on written
demand of County or Agency reimburse County and/or Agency for the full amount paid by County
and/or Agency in paying, discharging or adjusting such tax, assessment or other charge, together with
interest at the Interest Rate from the date advanced until the date repaid.
3.6.5. Operating Costs. Tenant shall pay all Operating Costs during the Term prior
to delinquency. As used in this Lease, the term "Operating Costs" shall mean all charges, costs and
expenses related to the Premises, including, but not limited to, management, operation, maintenance,
overhaul, improvement, replacement or repair of the Improvements and/or the Premises.
3.6.6. Utility Costs. Tenant shall pay all Utility Costs during the Term prior to
delinquency. As used in this Lease, the term "Utility Costs" shall include all charges, surcharges,
taxes, connection fees, service fees and other costs of installing and using all utilities required for or
utilized in connection with the Premises and/or the Improvements, including without limitation, costs
of heating, ventilation and air conditioning for the Premises, costs of furnishing gas, electricity and
other fuels or power sources to the Premises, and the costs of furnishing water and sewer services to
the Premises. Tenant agrees to indemnify and hold harmless the County and Agency against any
liability, claim, or demand for the late payment or non-payment of Utility Costs.
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ARTICLE IV
USE OF PREMISES
4.1 Permitted Use of Premises. Tenant may use the Premises for the construction,
development, entitlement, operation, maintenance, replacement and repair of the Improvements as
follows:
4.1.1. Required Services and Uses. Lessor's primary purpose for entering into this
Lease is to promote the development of the Improvements consistent with this Lease. In furtherance
of that purpose, Tenant shall construct and during the entire Term operate, maintain, replace and
repair the Improvements in a manner consistent with the Laws and for the following uses:
(a) multifamily affordable housing, and appurtenant improvements,
including, without limitation, parking,
(b) permanent supportive housing units and related services, and
(c) related commercial and community -serving uses, as approved by the
Lessor.
4.1.2. Ancillary Services and Uses. Subject to the prior written approval of Lessor,
which approval may be granted or withheld in the sole discretion of the Lessor, Tenant may provide
those additional services and uses which are ancillary to and compatible with the required services
and uses set forth in Section 4.1. L, above.
4.1.3. Additional Concessions or Services. Tenant may establish, maintain, and
operate such other additional facilities, concessions, and services as Tenant and Lessor may jointly
from time to time reasonably determine to be reasonably necessary for the use of the Premises and
which are otherwise permitted by Law for the sole purpose to provide affordable housing and/or
emergency shelter.
4.1.4. Restricted Use. The services and uses listed in this Section 4.1, both required
and optional, shall be the only services and uses permitted. Tenant agrees not to use the Premises for
any other purpose or engage in or permit any other activity within or from the Premises unless
approved in writing by the Lessor, which approval may be granted or withheld in the sole discretion
of the Lessor.
4.1.5. Continuous Use. During the Term, Tenant shall continuously conduct
Tenant's business in the Premises in the manner provided under this Lease and shall not discontinue
use of the Premises for any period of time except in the case of a Force Majeure Event or as
permitted in advance and in writing by the Lessor.
4.1.6. Alcohol Restrictions. Tenant shall not permit the sale or service of alcoholic
beverages on the Premises.
4.1.7. Permits and Licenses. Tenant shall be solely responsible to obtain, at its sole
cost and expense, any and all permits, licenses or other approvals required for the uses permitted
herein and shall maintain such permits, licenses or other approvals for the entire Term.
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4.2 Nuisance; Waste. Tenant shall not maintain, commit, or permit the maintenance or
commission of any nuisance as now or hereafter defined by any statutory or decisional law applicable
to the Premises and Improvements or any part thereof. Tenant shall not commit or allow to be
committed any waste in or upon the Premises or Improvements and shall keep the Premises and the
Improvements thereon in good condition, repair and appearance.
4.3 Compliance with Laws. Tenant shall not use or permit the Premises or the
Improvements or any portion thereof to be used in any manner or for any purpose that violates any
applicable Laws. Tenant shall have the right to contest, in good faith, any such Laws, and to delay
compliance with such Laws during the pendency of such contest (so long as there is no material
threat to life, health or safety that is not mitigated by Tenant to the satisfaction of the applicable
authorities). Lessor may cooperate with Tenant in all reasonable respects in such contest, including
joining with Tenant in any such contest if County and/or Agency's joinder is required in order to
maintain such contest; provide, however, that any such contest shall be without cost to Lessor, and
Tenant shall indemnify, defend (with attorneys acceptable to Lessor), and hold harmless the Lessor
from any and all claims, liabilities, losses, damages, or actions of any kind and nature, including
reasonable attorneys' fees, arising or related to Tenant's failure to observe or comply with the
contested Law during the pendency of the contest.
4.4 Hazardous Materials.
4.4.1. Definition of Hazardous Materials. For purposes of this Lease, the term
"Hazardous Material" or "Hazardous Materials" shall mean any hazardous or toxic substance,
material, product, byproduct, or waste, which is or shall become regulated by any governmental
entity, including, without limitation, the County and/or Agency acting in their governmental
capacity, the State of California or the United States government.
4.4.2. Use of Hazardous Materials. Except for those Hazardous Materials which
are customarily used in connection with the construction, operation, maintenance and repair of the
Improvements or used in connection with any permitted use of the Premises and Improvements under
this Lease (which Hazardous Materials shall be used in compliance with all applicable Laws), Tenant
or Tenant's employees, agents, independent contractors or invitees (collectively "Tenant Parties")
shall not cause or permit any Hazardous Materials to be brought upon, stored, kept, used, generated,
released into the environment or disposed of on, under, from or about the Premises (which for
purposes of this Section shall include the subsurface soil and ground water).
4.4.3. Tenant Obligations. If the presence of any Hazardous Materials on, under or
about the Premises caused or permitted by Tenant or Tenant Parties, and excluding Hazardous
Materials existing on the Premises prior to the Effective Date (the "Existing Hazardous
Materials"), results in (i) injury to any person, (ii) injury to or contamination of the Premises (or a
portion thereof), or (iii) injury to or contamination or any real or personal property wherever situated,
Tenant, at its sole cost and expense, shall promptly take all actions necessary or appropriate to return
the Premises to the condition existing prior to the introduction of such Hazardous Materials to the
Premises and to remedy or repair any such injury or contamination. Without limiting any other rights
or remedies of County or Agency under this Lease, Tenant shall pay the cost of any cleanup or
remedial work performed on, under, or about the Premises as required by this Lease or by applicable
Laws in connection with the removal, disposal, neutralization or other treatment of such Hazardous
Materials caused or permitted by Tenant or Tenant Parties, excluding the Existing Hazardous
Materials. Notwithstanding the foregoing, Tenant shall not take any remedial action in response to
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the presence, discharge or release, of any Hazardous Materials on, under or about the Premises
caused or permitted by Tenant or Tenant Parties, or enter into any settlement agreement, consent
decree or other compromise with any governmental or quasi -governmental entity without fast
obtaining the prior written consent of the Lessor. All work performed or caused to be performed by
Tenant as provided for above shall be done in good and workmanlike manner and in compliance with
plans, specifications, permits and other requirements for such work approved by Lessor.
4.4.4. Indemnification for Hazardous Materials.
(a) To the fullest extent permitted by law, Tenant hereby agrees to indemnify,
hold harmless, protect and defend (with attorneys acceptable to Lessor) Lessor, its elected officials,
officers, employees, agents, independent contractors, and the Premises, from and against any and all
liabilities, losses, damages (including, but not limited, damages for the loss or restriction on use of
rentable or usable space or any amenity of the Premises or damages arising from any adverse impact
on marketing and diminution in the value of the Premises), judgments, fines, demands, claims,
recoveries, deficiencies, costs and expenses (including, but not limited to, reasonable attorneys' fees,
disbursements and court costs and all other professional or consultant's expenses), whether
foreseeable or unforeseeable (collectively, "Liabilities"), arising out of the presence, use, generation,
storage, treatment, on or off -site disposal or transportation of Hazardous Materials on, into, from,
under or about the Premises by Tenant or Tenant Parties, and excluding all Existing Hazardous
Materials.
(b) The foregoing indemnity shall also specifically include the cost of any
required or necessary repair, restoration, clean-up or detoxification of the Premises and the
preparation of any closure or other required plans.
(c) The foregoing indemnity and defense obligations of this Lease shall
survive its expiration or termination; provided, however, that the indemnity contained in this Section
4.4.4 shall not apply to any Liabilities arising or occurring (a) prior to the Effective Date of this
Ground Lease, (b) after the expiration or earlier termination of the Term of this Ground Lease, or (c)
as a result of the grossly negligent or wrongful acts or omissions of Lessor.
4.5 Access by Lessor. Lessor reserves the right for County, Agency and their authorized
representatives to enter the Premises upon two (2) business days' prior written notice to Tenant,
during normal business hours, in order to determine whether Tenant is complying with Tenant's
obligations hereunder, or to enforce any rights given to County or Agency under this Lease. Lessor
and its representatives shall report to the Tenant's on -site office and must be accompanied by a
representative of Tenant at all times while on the Property and obey Tenant's rules and regulations.
Tenant acknowledges Lessor have the authority to enter the Premises and perform work on the
Premises at any time as needed to provide immediate or necessary protection for the general public.
Lessor will take all necessary measures not to unreasonably interfere with Tenant's business at the
Premises in exercising its rights under this Section.
Lessor shall indemnify and hold Tenant harmless from and against any loss, cost, damage or liability,
including, without limitation, attorneys' fees, which results fromLessor's willful misconduct or gross
negligence, or willful misconduct or gross negligence committed by any party acting under Lessor's
authority, of the rights granted by this Section 4.5.
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ARTICLE V
CONSTRUCTION OF 1WROVEMENTS
5.1 Construction of Improvements.
5.1.1. Initial Improvements. Upon the fulfillment of the Preconditions set forth in
Section 5.1.2, below, and payment for and issuance of all permits required under the Laws (whether
from County or City in their governmental capacity, or otherwise), Tenant shall construct the Initial
Improvements.
5.1.2. Preconditions. No work for development of the Initial Improvements shall be
commenced, and no building or other materials shall be delivered to the Premises, until:
(a) Lessor has provided approval in writing that all the conditions set forth in
Section 5 of the Option Agreement have been satisfied;
(b) Tenant has obtained a permit through the City, submitted Project design,
conceptual development, plans and special provisions for the construction of Improvements in
accordance with the Lessor's criteria, standard and practices;
(c) Tenant has given Lessor written notice of the proposed commencement of
construction of the Premises or the delivery of construction materials in order to allow Lessor to take
all necessary actions under California Civil Code section 3094, including posting of a notice of non -
responsibility at the Premises; and
(d) Tenant has provided to Lessor evidence that (i) Tenant has entered into a
Construction Contract with a Contractor in accordance with Section 5.2 below, (ii) Tenant has
secured the construction funding required under Section 5.1.4 below, and (iii) Tenant has provided
Lessor with assurances sufficient to construct the Initial Improvements in accordance with Section
5.3 below.
5.1.3. Utilities. To the extent not already constructed, Tenant, at no cost to Lessor,
shall construct or cause to be constructed all water, gas, heat, light, power, air conditioning,
telephone, broadband intemet, and other utilities and related services supplied to and/or used on the
Premises at Tenant's sole cost and expense for the purposes of conducting Tenant's operations
thereon. All such utilities shall be separately metered from any utilities which may be used by
County and/or Agency in conducting its operations, if any, on or about the Premises. Nothing
contained in this Section is to be construed or implied to give Tenant the right or permission to install
or to permit any utility poles or communication towers to be constructed or installed on the Premises.
5.1.4. Construction Funding. Prior to commencement of construction of the Initial
Improvements, Tenant shall provide to Lessor evidence reasonably satisfactory to Lessor of funding
available to Tenant that is sufficient to pay for Tenant's estimated total cost of constructing the Initial
Improvements, which evidence may consist of (i) a written commitment to Tenant from a Lender
selected by Tenant to provide a construction loan to Tenant for the purpose of constructing the Initial
Improvements (which may be secured by a Leasehold Mortgage encumbering Tenant's leasehold
interest under this Lease), (ii) actual equity funds then held by Tenant or irrevocably committed to be
paid to Tenant for the purpose of constructing the Initial Improvements, or (iii) any combination of
the foregoing. Tenant may from time to time change any of the foregoing funding sources and the
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allocation thereof, so long as the aggregate available funding continues to be sufficient to pay for
Tenant's estimated remaining cost of constructing the Initial Improvements, provided that Tenant
shall promptly notify Lessor of any such change.
5.1.5. Compliance with Laws and Permits. Tenant shall cause all Improvements
made by Tenant to be constructed in substantial compliance with all applicable Laws, including all
applicable grading permits, building permits, and other permits and approvals issued by
governmental agencies and bodies having jurisdiction over the construction thereof. No permit,
approval, or consent given hereunder by County and/or Agency, in their governmental capacity, shall
affect or limit Tenant's obligations hereunder, nor shall any approvals or consents given by County
and/or Agency, as a Party to this Lease, be deemed approval as to compliance or conformance with
applicable governmental codes, laws, rules, or regulations.
5.1.6. Reports. Not less than monthly from the commencement of construction of
the Initial Improvements, Tenant shall provide Lessor with written construction status reports in the
form of AIA No. G702 ("Application and Certification for Payment") or comparable form,
augmented by oral reports if so requested by County or Agency.
5.1.7. Certificate of Occupancy. Tenant shall provide Lessor with a copy of the
Certificate of Occupancy promptly following issuance thereof The date of issuance of the
Certificate of Occupancy shall be the Commencement Date hereunder.
5.1.8. Insurance. Tenant (or the Contractor, as applicable) shall deliver to Lessor
both (i) certificates of insurance evidencing coverage for "builder's risk," as specified in Section 8.1,
and (ii) evidence of worker's compensation insurance, which provide the requisite insurance levels in
accordance with Article VIII, for all persons employed in connection with the construction of any
Improvements upon the Premises and with respect to whom death or bodily injury claims could be
asserted against County and/or Agency or the Premises. Tenant shall (or shall cause Contractor to)
maintain, keep in force and pay all premiums required to maintain and keep in said insurance herein
at all times during which construction Work is in progress.
5.1.9. Mechanic's Liens.
(a) Payment of Liens. Tenant shall pay or cause to be paid the total cost and
expense of all "Work of Improvement," as that phrase is defined in the California Mechanics' Lien
law in effect and as amended from time to time. Tenant shall not suffer or permit to be enforced
against the Premises or Improvements or any portion thereof, any mechanics', materialmen's,
contractors' or subcontractors' liens arising from any work of improvement, however it may arise.
Tenant may, however, in good faith and at Tenant's sole cost and expense contest the validity of any
such asserted lien, claim, or demand, provided Tenant (or any contractor or subcontractor, as
applicable) has furnished the release bond (if required by County, Agency or any construction lender)
required in California Civil Code section 8000 et seq. (or any comparable statute hereafter enacted
for providing a bond freeing the Premises from the effect of such lien claim). In the event a lien or
stop -notice is imposed upon the Premises as a result of such construction, repair, alteration, or
installation, and provided the lien is not the result of actions of, or work performed by, the Lessor,
Tenant shall either:
(1) Record a valid Release of Lien, or
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(2) Procure and record a bond in accordance with Section 8424 of the
Civil Code, which releases the Premises from the claim of the lien or stop -notice and from any action
brought to foreclose the lien, or
(3) Post such security as shall be required by Tenant's title insurer to
insure over such lien or stop -notice, or
(4) Should Tenant fail to accomplish either of the three optional
actions above within 30 days after Tenant receives notice of the filing of such a lien or stop -notice, it
shall constitute an Event of Default hereunder.
(b) Indemnification. Tenant shall at all times indemnify, defend with
counsel approved in writing by County and/or Agency and hold County and Agency harmless from
all claims, losses, demands, damages, cost, expenses, or liability costs for labor or materials in
connection with construction, repair, alteration, or installation of structures, improvements,
equipment, or facilities within the Premises, and from the cost of defending against such claims,
including reasonable attorneys' fees and costs, but excluding any liability resulting from the gross
negligence or willful misconduct of Lessor, and excluding any liens resulting from the actions of, or
work performed by, the Lessor.
(c) Protection Against Liens. Lessor shall have the right to post and
maintain on the Premises any notices of non -responsibility provided for under applicable California
law. During the course of construction, Tenant shall obtain customary mechanics' lien waivers and
releases. Upon completion of the construction of any Improvements, Tenant shall record a notice of
completion in accordance with applicable law. Promptly after the Improvements have been
completed, Tenant shall (or shall cause Contractor to) record a notice of completion as defined and
provided for in California Civil Code section 8000 et seq.
(d) Lessor's Rights. If Tenant (or any contractor or subcontractor, as
applicable) does not cause to be recorded the bond described in California Civil Code section 8000 et
seq. or otherwise protect the Premises and Improvements under any alternative or successor statute,
and a final judgment has been rendered against Tenant by a court of competent jurisdiction for the
foreclosure of a mechanic's, materialman's, contractor's or subcontractor's lien claim, and if Tenant
fails to stay the execution of judgment by lawful means or to pay the judgment, Lessor shall have the
right, but not the duty to pay or otherwise discharge, stay or prevent the execution of any such
judgment or lien or both. Upon any such payment by County and/or Agency, Tenant shall
immediately upon receipt of written request therefor by County or Agency, reimburse County and/or
Agency for all sums paid by County and/or Agency under this paragraph together with all County
and/or Agency's reasonable attorney's fees and costs, plus interest at the Interest Rate from the date
of payment until the date of reimbursement.
5.1.10. No Responsibility. Any approvals by County or Agency with respect to any
Improvements shall not make County or Agency responsible for the Improvement with respect to
which approval is given or the construction thereof. Tenant shall indemnify, defend and hold Lessor
harmless from and against all liability and all claims of liability (including, without limitation,
reasonable attorneys' fees and costs) arising during the Term of this Lease for damage or injury to
persons or property or for death of persons arising from or in connection with the Improvement or
construction thereof, but excluding any liability resulting from the gross negligence or willful
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misconduct of Lessor, and excluding any liens resulting from the actions of, or work performed by,
the Lessor.
5.2 Construction Contracts.
5.2.1. Construction Contract. Tenant shall enter into a written contract with a
general contractor ("Contractor") for construction of the Initial improvements based upon the
"Construction Contract Documents" approved pursuant to the Option Agreement. All construction
of the Initial Improvements shall be performed by contractors and subcontractors duly licensed as
such under the laws of the State of California. Tenant shall give Lessor a true copy of the contract or
contracts with the Contractor.
5.2.2. Assignment to County and/or Agency. Tenant shall obtain the written
agreement of the Contractor that, at County and/or Agency's election and in the event that Tenant
fails to perform its contract with the Contractor, such Contractor will recognize County and/or
Agency as the assignee of the contract with the Contractor, and that County and/or Agency may,
upon such election, assume such contract with credit for payments made prior thereto.
Notwithstanding the foregoing, the County's and/or Agency's rights under this Section 5.2.2 are
hereby made subject and subordinate to the lien of each Leasehold Mortgage.
5.3 Tenant's Assurance of Construction Completion. Prior to commencement of
construction of the Initial improvements, or any phase thereof, within the Premises by Tenant,
Tenant shall furnish to Lessor evidence that assures Lessor that sufficient monies will be available to
complete the proposed construction. The amount of money available shall be at least the total
estimated construction cost. Such evidence may take one of the following forms:
5.3.1. Performance bond and labor and materials bond in a principal sum equal to the
total estimated construction cost supplied by Contractor or subcontractors, provided said bonds are
issued jointly to Tenant, County, Agency and any Leasehold Mortgagees as obligees.
5.3.2. Irrevocable letter of credit issued to Lessor from a financial institution to be in
effect until County and Agency acknowledges satisfactory completion of construction;
5.3.3. Cash deposited with the County or Agency (may be in the form of cashier's
check or money order or may be electronically deposited);
5.3.4. A completion guaranty, in favor of County and Agency from an Affiliate of
The Related Companies of California, LLC, in a form reasonably acceptable to Lessor, coupled with
a repayment guaranty in favor of the senior construction lender for its loan;
5.3.4. Any combination of the above.
All bonds and letters of credit must be issued by a company qualified to do business in the State of
California and acceptable to Lessor. All bonds and letters of credit shall be in a form acceptable to
Lessor, County's Risk Manager and City's Risk Manager in their reasonable discretion, and shall
insure faithful and full observance and performance by Tenant of all terms, conditions, covenants,
and agreements relating to the construction of improvements within the Premises.
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Tenant shall provide or cause its Contractor to provide payment and/or performance bonds in
connection with the construction of the Initial Improvements, and shall name the County and City as
an additional obligee on, with the right to enforce, any such bonds.
5.4 Ownership of Improvements.
5.4.1. For purposes of this Section 5.4, "Term" shall have the meaning stated in
Section 2.2.3.
5.4.2. During Term. Title to all Improvements constructed or placed on the
Premises by Tenant and paid for by Tenant are and shall be vested in Tenant during the Term of this
Lease, until the expiration or earlier termination thereof. Any and all depreciation, amortization and
tax credits for federal or state purposes relating to the Improvements located on the Premises and any
and all additions thereto shall be deducted or credited exclusively by Tenant during the Term. The
Parties agree for themselves and all persons claiming under them that the Improvements are real
property.
5.4.3. Upon Expiration or Earlier Termination of Term. All Improvements on the
Premises at the expiration or earlier termination of the Term of this Lease shall, without additional
payment to Tenant, then become Lessor's property free and clear of all claims to or against them by
Tenant and free and clear of all Leasehold Mortgages and any other liens and claims arising from
Tenant's use and occupancy of the Premises, and with Taxes paid current as of the expiration or
earlier termination date. Tenant shall upon the expiration or earlier termination of the Term deliver
possession of the Premises and the Improvements to Lessor in good order, condition and repair
consistent with the requirements of this Lease and in compliance with all applicable laws and
regulations for the occupancy of the Project, taking into account reasonable wear and tear and the age
of the Improvements.
5.5 "AS -BUILT" Plans. Within sixty (60) days following completion of any substantial
improvement within the Premises, Tenant shall furnish the Lessor a complete set of reproducibles
and two sets of prints of "As -Built" plans and a magnetic tape, disk or other storage device
containing the "As -Built" plans in a form usable by Lessor, to Lessor's satisfaction, on Lessor's
computer aided mapping and design ("CAD") equipment. CAD files are also to be converted to
Acrobat Reader (pdf format), which shall be included on the disk or CD ROM. In addition, Tenant
shall furnish Lessor copy of the final construction costs for the construction of such improvements.
5.6 Capital Improvement Fund.
5.6.1. Tenant shall establish and maintain a reserve fund (the "Capital Improvement
Fund") during the Term of this Lease (as "Term" is defined in Section 2.2) in accordance with the
provisions of this Section 5.6 designated to pay for Permitted Capital Expenditures (as defined
below) for the Improvements during the Term of this Lease.
5.6.2. Tenant and Lessor agree and acknowledge that the purpose of the Capital
Improvement Fund shall be to provide sufficient funds to pay for the costs of major replacements,
renovations or significant upgrades of or to the Improvements, including without limitation building
facade or structure and major building systems (such as IIVAC, mechanical, electrical, plumbing,
vertical transportation, security, communications, structural or roof) that significantly affect the
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capacity, efficiency, useful life or economy of operation of the Improvements or their major systems,
after the completion of the Initial Improvements ("Permitted Capital Expenditure(s)").
5.6.3. The Capital Improvement Fund shall not be used to fund any portion of the
construction cost of the Initial Improvements. In addition, Permitted Capital Expenditures shall not
include the cost of periodic, recurring or ordinary maintenance expenditures or maintenance, repairs
or replacements that keep the Improvements in an ordinarily efficient operating condition, but that do
not significantly add to their value or appreciably prolong their useful life. Permitted Capital
Expenditures must constitute capital replacements, improvements or equipment under generally
accepted accounting principles consistently applied or constitute qualifying aesthetic improvements.
Permitted Capital Expenditures shall not include costs for any necessary repairs to remedy any
broken or damaged Improvements, all of which costs shall be separately funded by Tenant.
5.6.4. All specific purposes and costs for which Tenant desires to utilize amounts
from the Capital Improvement Fund shall be at Tenant's reasonable discretion and subject to Lessor's
written approval as provided for in Section 5.6.9, below. Tenant shall furnish to the Lessor
applicable invoices, evidence of payment and other back-up materials concerning the use of amounts
from the Capital Improvement Fund.
5.6.5. The Capital Improvement Fund shall be held in an account established with a
Lender acceptable to the Lessor, into which deposits shall be made by Tenant pursuant to Section
5.6.8, below.
5.6.6. Tenant shall have the right to partly or fully satisfy the Capital Improvement
Fund obligations of this Section 5.6 with capital improvement reserves (or replacement reserves)
required by Tenant's Leasehold Mortgagees or the Limited Partner, as long as such capital
improvement reserves or replacement reserves are in all material respects administered and utilized
in accordance, and otherwise comply, with the terms, provisions and requirements of this Section 5.6.
5.6.7. In the event of default by Tenant and the early termination of this Lease, the
Lessor shall have full access to the Capital Improvement Fund, provided the Tenant's Leasehold
Mortgagee does not use it within a reasonable time for the purposes stated in this Section 5.6;
provided, however, that Lessor's rights under this Section 5.6.7 are hereby made subject and
subordinate to the lien of each Leasehold Mortgage.
5.6.8. Commencing on the fifteenth (15th) day of the month during which the fifth
(5th) anniversary of the Commencement Date occurs, and continuing on or before the fifteenth (15th)
day of each month thereafter until five (5) years prior to the expiration of the Term, Tenant shall
make a monthly deposit to the Capital Improvement Fund in an amount equal to one percent (1%) of
total rent collected by Tenant from sub -tenants for the previous month. All interest and earnings on
the Capital Improvement Fund shall be added to the Capital Improvement Fund, but shall not be
treated as a credit against the Capital Improvement Fund deposits required to be made by Tenant
pursuant to this Section 5.6.
5.6.9. Disbursements shall be made from the Capital Improvement Fund only for
costs which satisfy the requirements of this Section 5.6. For the purpose of obtaining the Lessor's
prior approval of any Capital Improvement Fund disbursements, Tenant shall submit to the Lessor on
an annual calendar year basis a capital expenditure plan for the upcoming year which details the
amount and purpose of anticipated Capital Improvement Fund expenditures ("Capital Improvement
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Plan"). Lessor shall approve or disapprove such Capital Improvement Plan within thirty (30) days of
receipt, which approval shall not be unreasonably withheld, conditioned or delayed. Any
expenditure set forth in the approved Capital Improvement Plan shall be considered pre -approved by
Lessor (but only up to the amount of such expenditure set forth in the Capital Improvement Plan) for
the duration of the upcoming year. Tenant shall have the right during the course of each year to
submit to the Lessor for the Lessor's approval revisions to the then current Capital Improvement
Plan, or individual expenditures not noted on the previously submitted Capital Improvement Plan. In
the event of an unexpected emergency that necessitates a Permitted Capital Expenditure not
contemplated by the Capital Improvement Plan, the Tenant may complete such work using the funds
from the Capital Improvement Fund with contemporaneous or prior (if possible) written notice to the
Lessor and provide applicable documentation to the Lessor thereafter for approval. If the Lessor
disapproves the emergency expenditure which was not previously approved by Lessor, Tenant shall
refund the amount taken from the Capital Improvement Fund within thirty (30) days of written notice
from the Lessor of its decision.
5.6.10. Notwithstanding anything above to the contrary, if Tenant incurs
expenditures that constitute Permitted Capital Expenditures but which are not funded out of the
Capital Improvement Fund because sufficient funds are not then available in such fund, then Tenant
may credit the Permitted Capital Expenditures so funded by Tenant out of its own funds against
future Capital Improvement Fund contribution obligations of Tenant; provided, that such credit must
be applied, if at all, within four (4) years after such Permitted Capital Expenditure is incurred by the
Tenant.
ARTICLE VI
REPAIRS, MAINTENANCE, ADDITIONS AND RECONSTRUCTION
6.1 Maintenance by Tenant. Throughout the Term of this Lease, Tenant shall, at Tenant's
sole cost and expense, keep and maintain the Premises and any and all Improvements now or
hereafter constructed and installed on the Premises in good order, condition and repair (i.e., so that
the Premises does not deteriorate more quickly than its age and reasonable wear and tear would
otherwise dictate) and in a safe and sanitary condition and in compliance with all applicable Laws in
all material respects. Tenant shall immediately notify the Lessor of any damage relating to the
Premises.
6.2 Interior Improvements, Additions and Reconstruction of Improvements. Following
the completion of construction of the Initial Improvements, Tenant shall have the right from time to
time to make any interior improvements to the Improvements that are consistent with the Lessor's
approved use of the Premises as reflected in this Lease, without Lessor's prior written consent, but
with prior written notice to the Lessor (except in the event of an emergency, in which case no prior
written notice shall be required but Tenant shall notify Lessor of any emergency work done as soon
as practicable). With prior written approval of Lessor, Tenant may restore and reconstruct the
Improvements, and in that process make any modifications otherwise required by changes in Laws,
following any damage or destruction thereto (whether or not required to do so under Article VII);
and/or to make changes, revisions or improvements to the Improvements for uses consistent with the
Lessor approved use of the Premises as reflected in this Lease. Tenant shall perform all work
authorized by this Section at its sole cost and expense, including, without limitation, with insurance
proceeds approved for such use in accordance with Article VII, if any, and in compliance with all
applicable Laws in all material respects.
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6.3 All Other Construction, Demolition, Alterations, Improvements and
Reconstruction. Following the completion of construction of the Initial Improvements, and except
as specified in Sections 6.1 and 6.2, any construction, alterations, additions, major repairs,
demolition, improvements or reconstruction of any kind shall require the prior written consent of the
Lessor, which consent shall not be unreasonably conditioned, delayed or withheld and may require
their respective governing body's approval (e.g. Board of Supervisors' and City Council approval).
Tenant shall perform all work authorized by this Section at its sole cost and expense, including,
without limitation, with insurance proceeds approved for such use in accordance with Article VII, if
any, and in compliance with all applicable Laws in all material respects.
6.4 Requirements of Governmental Agencies. At all times during the Term of this Lease,
Tenant, at Tenant's sole cost and expense, shall: (i) make all alterations, improvements, demolitions,
additions or repairs to the Premises and/or the Improvements required to be made by any law,
ordinance, statute, order or regulation now or hereafter made or issued by any federal, state, county,
local or other governmental agency or entity; (ii) observe and comply in all material respects with all
Laws now or hereafter made or issued respecting the Premises and/or the Improvements (subject to
Tenant's right to contest such Laws in accordance with Section 4.4); (iv) indemnify, defend and hold
County, Agency, the Premises and the Improvements free and harmless from any and all liability,
loss, damages, fines, penalties, claims and actions resulting from Tenant's failure to comply with and
perform the requirements of this Article VI.
6.5 Lessor Obligations. Tenant specifically acknowledges and agrees that County, Agency
and Lessor Parties do not and shall not have any obligations with respect to the maintenance,
alteration, improvement, demolition, replacement, addition or repair of any Improvements.
6.6 Lessor Reservations. Without limiting Lessor's rights with respect to the Premises,
Lessor reserves for themselves, their successors and assigns those rights necessary to assure proper
maintenance and operation of the Premises and to permit any steps to be taken which the Lessor
deems necessary or desirable to maintain, repair, improve, modify or reconstruct the Premises. The
rights reserved to Lessor in this section or any other section of this Lease shall be exercised by the
Lessor at their sole discretion, unless otherwise provided herein.
ARTICLE VII
DAMAGE AND RESTORATION
7.1 Damage and Restoration. In the event the whole or any part of the Improvements shall
be damaged or destroyed by fire or other casualty, damage or action of the elements which is fully
covered by insurance required to be carried by Tenant pursuant to this Lease or in fact caused by
Tenant, at any time during the Term, Tenant shall with all due diligence, at Tenant's sole cost and
expense, repair, restore and rebuild the Improvements on substantially the same plan and design as
existed immediately prior to such damage or destruction and to substantially the same condition that
existed immediately prior to such damage, with any changes made by Tenant to comply with then
applicable Laws and with any upgrades or improvements that Tenant may determine in its reasonable
discretion. If Tenant desires to change the use of the Premises following such casualty, then Tenant
may make appropriate changes to the Premises to accommodate such changed use after approval of
such change of use by the Lessor pursuant to Article IV above. This Article shall not apply to
cosmetic damage or alterations. In the event that Tenant shall determine, subject to the rights of the
Leasehold Mortgagees and Limited Partner, if applicable, by notice to the Lessor given by the later
of ninety (90) days after the date of the damage or destruction or thirty (30) days after receipt by
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Tenant of any such insurance proceeds, that there are not adequate proceeds to restore the
Improvements and/or the Premises to substantially the same condition in which they existed prior to
the occurrence of such damage or destruction, then Tenant may terminate this Lease as of a date that
is not less than thirty (30) days after the date of such notice. Notwithstanding Section 17.9, if Tenant
terminates this Lease pursuant to this Section 7.1, Tenant shall surrender possession of the Premises
to the Lessor immediately and assign to the Lessor (or, if same has already been received by Tenant,
pay to the Lessor) all of its right, title and interest in and to the proceeds from Tenant's insurance
upon the Premises.
7.2 Restoration. In the event of any restoration or reconstruction pursuant to this Section, all
such work performed by Tenant shall be constructed in a good and workmanlike manner according to
and in conformance with the Laws, rules and regulations of all governmental bodies and agencies
and the requirements of this Lease applicable to the construction of the Initial Improvements.
7.3 No Rental Abatement. Tenant shall not be entitled to any abatement, allowance,
reduction, or suspension of Rent because part or all of the Improvements become untenantable as a
result of the partial or total destruction of the Improvements, and Tenant's obligation to keep and
perform all covenants and agreements on its part to be kept and performed hereunder, shall not be
decreased or affected in any way by any destruction of or damage to the hnprovements; except as
otherwise provided herein.
7.4 Application of Insurance Proceeds. If following the occurrence of damage or
destruction to the Premises or Improvements, Tenant is obligated to or determines that there are
adequate proceeds to restore the Premises and Improvements pursuant to this Article VII, then all
proceeds from the insurance required to be maintained by Tenant on the Premises and the
Improvements shall be applied to fully restore the same, and, subject to the rights of the Leasehold
Mortgagees and Limited Partner, if applicable, any excess proceeds shall be paid to Tenant and any
deficit in necessary funds plus the amount of any deductible shall be paid by Tenant. If Tenant after
commencing or causing the commencement of the restoration of Premises and Improvements shall
determine that the insurance proceeds are insufficient to pay all costs to fully restore the
Improvements, Tenant shall pay the deficiency and shall nevertheless proceed to complete the
restoration of Premises and the Improvements and pay the cost thereof. Upon lien free completion of
the restoration, subject to the rights of the Leasehold Mortgagees, if applicable, any balance of the
insurance proceeds remaining over and above the cost of such restoration shall be paid to Tenant.
7.5 Exclusive Remedies. Notwithstanding any destruction or damage to the Premises and/or
the Improvements, Tenant shall not be released from any of its obligations under this Lease, except
to the extent and upon the conditions expressly stated in this Article VII. County, Agency and
Tenant hereby expressly waive the provisions of California Civil Code Sections 1932(2) and 1933(4)
with respect to any damage or destruction of the Premises and/or the Improvements and agree that
their rights shall be exclusively governed by the provisions of this Article VII.
7.6 Damage Near End of Term. If, during the last three (3) years of the Term, as
applicable, the hnprovements shall be damaged or destroyed for which the repair and/or replacement
cost is fifty percent (50%) or more of then replacement cost of the improvements, then Tenant shall
have the option, to be exercised within ninety (90) days after such damage or destruction:
7.6.1. to notify the Lessor of its election to repair or restore the Improvements as
provided in this Article VII; or
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7.6.2. subject to the rights of Leasehold Mortgagees and such provisions of this Lease
that survive termination, to terminate this Lease by notice to the Lessor, which termination shall be
deemed to be effective as of the date of the damage or destruction. If Tenant terminates this Lease
pursuant to this Section 7.6.2, Tenant shall surrender possession of the Leased Premises to the Lessor
immediately and assign to the Lessor (or, if same has already been received by Tenant, pay to the
Lessor) all of its right, title and interest in and to the proceeds from Tenant's insurance upon the
Premises less (i) any costs, fees, or expenses incurred by Tenant in connection with the adjustment of
the loss or collection of the proceeds, (ii) any reasonable costs incurred by Tenant in connection with
the Premises after the damage or destruction, which costs are eligible for reimbursement from such
insurance proceeds, and (iii) the proceeds of any rental loss or business interruption insurance
applicable prior to the date of surrender of the Premises to the Lessor.
ARTICLE VIII
INSURANCE AND INDEMNITY
8.1 Tenant's Required Insurance.
8.1.1. Tenant agrees to purchase all required insurance at Tenant's expense and to
deposit with Chief Real Estate Officer certificates of insurance, including all endorsements required
herein, necessary to satisfy Chief Real Estate Officer that the insurance provisions of this Lease have
been complied with and to keep such insurance coverage and the certificates and endorsements
therefore on deposit with Chief Real Estate Officer during the entire term of this Lease.
8.1.2. Tenant agrees that it shall not operate on the Premises at any time the required
insurance is not in full force and effect as evidenced by a certificate of insurance and necessary
endorsements or, in the interim, an official binder being in the possession of Chief Real Estate
Officer, rent however shall not be suspended. In no cases shall assurances by Tenant, its employees,
agents, including any insurance agent, be construed as adequate evidence of insurance. Chief Real
Estate Officer will only accept valid certificates of insurance and endorsements, or in the interim, an
insurance binder as adequate evidence of insurance. Tenant also agrees that upon cancellation,
termination, or expiration of Tenant's insurance, Chief Real Estate Officer may take whatever steps
are necessary to interrupt any operation from or on the Premises until such time as the Chief Real
Estate Officer reinstates the Lease.
8.1.3. If Tenant fails to provide Chief Real Estate Officer with a valid certificate of
insurance and endorsements, or binder at any time during the term of the Lease, County and Tenant
agree that this shall constitute a material breach of the Lease. Whether or not a notice of default has
or has not been sent to Tenant, said material breach shall permit Chief Real Estate Officer to take
whatever steps are necessary to interrupt any operation from or on the Premises, and to prevent any
persons, including, but not limited to, members of the general public, and Tenant's employees and
agents, from entering the Premises until such time as the Chief Real Estate Officer is provided with
adequate evidence of insurance required herein. Tenant further agrees to hold County harmless for
any damages resulting from such interruption of business and possession, including, but not limited
to, damages resulting from any loss of income or business resulting from Chief Real Estate Officer's
action.
8.1.4. All contractors and subcontractors performing work on behalf of Tenant
pursuant to this Lease shall obtain insurance subject to the same terms and conditions as set forth
herein for Tenant and limits of insurance as described in Section 8.1.6 (e), Section 8.1.6 (f) and
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Section 8.1.6 (g). Tenant shall not allow contractors or subcontractors to work if contractors have
less than the level of coverage required by County under this Lease. It is the obligation of the Tenant
to provide written notice of the insurance requirements to every contractor and to receive proof of
insurance prior to allowing any contractor to begin work within the Premises. Such proof of
insurance must be maintained by Tenant through the entirety of this Lease and be available for
inspection by Chief Real Estate Officer at any reasonable time.
8.1.5. All self -insured retentions (SIRs) shall be clearly stated on the Certificate of
Insurance. Any self -insured retention (SIR) in an amount in excess of Fifty Thousand Dollars
($50,000) shall specifically be approved by the County's Risk Manager, or designee, upon review of
Tenant's current audited financial report. If Tenant's SIR is approved, Tenant, in addition to, and
without limitation of, any other indemnity provision(s) in this Lease, agrees to all of the following:
1) In addition to the duty to indemnify and hold the County harmless against any and all
liability, claim, demand or suit resulting from Tenant's, its agents, employee's or
subcontractor's performance of this Lease, Tenant shall defend the County at its sole cost and
expense with counsel approved by Board of Supervisors against same; and
2) Tenant's duty to defend, as stated above, shall be absolute and irrespective of any duty to
indemnify or hold harmless; and
3) The provisions of California Civil Code Section 2860 shall apply to any and all actions to
which the duty to defend stated above applies, and the Tenant's SIR provision shall be
interpreted as though the Tenant was an insurer and the County was the insured.
If the Tenant fails to maintain insurance acceptable to the County or City for the full term of this
Lease, the County or City may terminate this Lease.
8.1.6. All policies of insurance required under this Article VIII must be issued by an
insurer with a minimum rating of A- (Secure A.M. Best's Rating) and VIII (Financial Size Category
as determined by the most current edition of the Best's Key Rating Guide/Property-
Casualty/United States or ambest.com). It is preferred, but not mandatory, that the insurer must be
licensed to do business in the state of California.
(a) If the insurance carrier does not have an A.M. Best Rating of A-/VIII, the
Chief Real Estate Officer retains the right to approve or reject a carrier after a review of the carrier's
performance and financial ratings.
(b) If the insurance carrier is not an admitted carrier in the state of California
and does not have an A.M. Best rating of A-/VIII, the Chief Real Estate Officer retains the right to
approve or reject a carrier after a review of the company's performance and financial ratings.
(c.1) The policy or policies of insurance maintained by the TENANT
DURING CONSTRUCTION shall provide the minimum limits and coverage as set forth below:
Coverages
Minimum Limits
Builder's Risk (during the Construction Period)
naming retained General Contractor
Project value and no coinsurance
provision.
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Commercial General Liability
$5,000,000 per occurrence
$5,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
(c.2) The policy or policies of insurance maintained by the TENANT'S
GENERAL CONTRACTOR DURING CONSTRUCTION shall provide the minimum limits and
coverage as set forth below:
Coverages
Minimum Limits
Commercial General Liability
$5,000,000 per occurrence
$10,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$2,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
Contractor's Pollution Liability including NODS
$5,000,000 per claims made or per
occurrence
(d) The policy or policies of insurance maintained by the TENANT'S
SUBCONTRACTORS DURING CONSTRUCTION shall provide the minimum limits and
coverage as set forth below:
Coverages
Minimum Limits
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
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Employer's Liability Insurance (not required for
$1,000,000 per occurrence
self-employed subcontractors)
Contractor's Pollution Liability including NODS
$1,000,000 per claims made or per
(Required only of those subcontractors involved in
occurrence
pollution remediation)
(e) The policy or policies of insurance maintained by the ARCHITECT -
ENGINEER shall provide the minimum limits and coverage as set forth below:
Coverages
Minimum Limits
Professional Liability (architect, structural,
$2,000,000 per occurrence
electrical engineer, mechanical/plumbing
engineering, environmental engineer, civil engineer,
$2,000,000 aggregate
landscape architect, and geotechnical engineer)
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
$1,000,000 limit per occurrence
non -owned and hired vehicles
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
(f) The policy or policies of insurance maintained by the TENANT AFTER
CONSTRUCTION shall provide the minimum limits and coverage as set forth below:
Coverages
Minimum Limits
Commercial General Liability
$5,000,000 per occurrence
Including Sexual Misconduct (defined as abuse,
$5,000,000 aggregate
molestation and assault and battery)
Automobile Liability including coverage for owned,
$1,000,000 limit per occurrence
non -owned and hired vehicles
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
Commercial Property Insurance on an "All Risk" or
100% of the Replacement Cost Value
"Special Causes of Loss" basis coverin all
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buildings, contents and any tenant improvements and no coinsurance provision
including Business Interruption/Loss of Rents with
a 12 month limit
Contractor shall provide a builder's risk policy providing coverage for the full project value and no
coinsurance provision. The policy shall provide coverage for all perils excluding earthquake, and
flood. Contractor is responsible for any deductible amount. The County of Orange and the Housing
Authority of the City of Santa Ana shall be named as Loss Payees as its financial interests may
appear. This shall be evidenced by a Loss Payee endorsement which shall accompany the Certificate
of Insurance.
The Builder's Risk policy shall not be required to cover any tools, equipment, or supplies, unless
such tools, equipment, or supplies are part of the Work being constructed. The Contractor shall be
responsible for securing and maintaining appropriate insurance on any tools, equipment, or supplies
that are not part of the work being constructed.
The County and the Contractor waive all rights against each other and the subcontractors, sub -
subcontractors, officers, and employees of each other, and the Contractor waives all rights against
County's separate contractors, if any, and their subcontractors, sub -subcontractors, officers and
employees for damages caused by fire or other perils to the extent paid by the Builder's Risk
insurance, except such rights as they may have to the proceeds of such insurance. The Contractor
shall require of its subcontractors and sub -subcontractors by appropriate agreements, similar waivers,
each in favor of all other parties enumerated in the preceding sentence.
(g) The policy or policies of insurance maintained by the TENANT'S
CONTRACTOR AFTER CONSTRUCTION shall provide the minimum limits and coverage as
set forth below when performing maintenance and minor work after the building is in operation:
Coverages
Minimum Limits
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
8.1.7. Required Coverage Forms.
(a) The Commercial General Liability coverage shall be written on Insurance
Services Office (ISO) form CG 00 01, or a substitute form providing liability coverage at least as
broad.
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(b) The Business Auto Liability coverage shall be written on ISO form CA 00
01, CA 00 05, CA 00 12, CA 00 20, or a substitute form providing liability coverage as broad.
8.1.8. Required Endorsements. The Commercial General Liability policy shall
contain the following endorsements, which shall accompany the Certificate of insurance:
1) An Additional Insured endorsement using ISO form CG 20 26 04 13 or a form at least as
broad naming the County of Orange, City of Santa Ana, and their respective elected and
appointed officials, officers, employees, agents as Additional Insureds. Blanket coverage
may also be provided which will state, as required by Lease.
2) A primary non-contributing endorsement using ISO form CG 20 0104 13, or a form at
least as broad, evidencing that the TENANT'S insurance is primary and any insurance or
self-insurance maintained by the County of Orange shall be excess and non-contributing.
3) A Products and Completed Operations endorsement using ISO Form CG2037 (ed.04/13)
or a form at least as broad, or an acceptable alternative is the ISO from CG2010 (ed.
11/85). (Pertains to contractors and subcontractors performing major construction).
Contractors shall maintain Products and Completed Operations coverage for ten (10)
years following completion of construction.
The Contactors Pollution Liability and Pollution Liability policies shall contain the following
endorsements, which shall accompany the Certificate of Insurance:
1) An Additional Insured endorsement naming the County of Orange, City of Santa Ana,
and their respective elected and appointed officials, officers, employees, and agents as
Additional Insureds.
2) A primary non-contributing endorsement evidencing that the Contractor's insurance is
primary and any insurance or self-insurance maintained by County shall be excess and
non-contributing.
(a) The Workers' Compensation policy shall contain a waiver of subrogation
endorsement waiving all rights of subrogation against the County of Orange, City of Santa Ana, and
their respective elected and appointed officials, officers, agents and employees.
(b) All insurance policies required by this Lease shall waive all rights of
subrogation against the County of Orange, City of Santa Ana, and their respective elected and
appointed officials, officers, agents and employees when acting within the scope of their appointment
or employment.
(c) The Commercial Property Building policy shall include the County of
Orange and City of Santa Ana as both Named Insureds. A Certificate of Insurance shall be submitted
as evidence of this requirement. The Builders' Risk policy shall be endorsed to include the County of
Orange and City of Santa Ana as Loss Payees. A Loss Payee endorsement shall be submitted with
the Certificate of Insurance as evidence of this requirement.
(d) Tenant shall notify County and City in writing within thirty (30) days of
any policy cancellation and ten (10) days for non-payment of premium and provide a copy of the
cancellation notice to the County and City. Failure to provide written notice of cancellation may
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constitute a material breach of the Lease, after which the County or City may suspend or terminate
this Lease.
(e) The Commercial General Liability policy shall contain a severability of
interests clause, also known as a "separation of insureds" clause (standard in the ISO CG 001 policy).
(f) If Contractor's Pollution Liability and Pollution Liability are claims -made
policies, Contractor shall agree to maintain coverage for five (5) years following completion of the
construction. If Contractor's Professional Liability is a claims -made policy, Contractor shall agree to
maintain coverage for ten (10) years following the completion of construction. Products and
Completed Operations coverage shall be maintained for ten (10) years following the completion of
construction.
(g) Insurance certificates should be forwarded to County and City addresses
provided in Section 18.19 below. Tenant has ten (10) business days to provide adequate evidence of
insurance or it shall constitute an Event of Default.
(h) County or City expressly retains the right to require Tenant to increase or
decrease insurance of any of the above insurance types throughout the term of this Lease which shall
be mutually agreed upon by County, City and Tenant.
(i) Chief Real Estate Officer shall notify Tenant in writing of changes in the
insurance requirements consistent with subsection (h) above. If Tenant does not deposit copies of
certificates of insurance and endorsements with Chief Real Estate Officer incorporating such changes
within thirty (30) days of receipt of such notice, it shall constitute an Event of Default.
0) The procuring of such required policy or policies of insurance shall not be
construed to limit Tenant's liability hereunder nor to fulfill the indemnification provisions and
requirements of this Lease, nor in any way to reduce the policy coverage and limits available from
the insurer.
8.2 Indemnification. Tenant agrees to assume all risks, financial or otherwise, associated
with the Premises. Tenant hereby releases and waives all claims and recourse against Lessor,
including the right of contribution for loss or damage of persons or property, arising from, growing
out of or in any way connected with or related to this Lease, including any damage to or interruption
of use of the Premises including, but not limited to, loss of business, damage to, destruction of, or
relocation costs of Tenant's Improvements or impaired utility of the Premises caused by erosion,
flood, or flood overflow, or caused by any action undertaken in the operation, maintenance, repair,
reconstruction, replacement, enlargement or improvement of the Premises except claims arising from
the gross negligence or willful misconduct of County or Agency, their officers, agents, employees
and contractors. Tenant hereby agrees to indemnify, defend (with counsel approved in writing by
Lessor), and hold harmless, County and the Agency, their respective elected and appointed officials,
officers, agents, employees and contractors against any and all claims, losses, demands, damages,
cost, expenses or liability for injury to any persons or property, arising out of the operation or
maintenance of the Premises, and/or Tenant's exercise of the rights under this Lease, except for
liability arising out of the gross negligence or willful misconduct of County or Agency, their elected
and appointed officials, officers, agents, employees or contractors including the cost of defense of
any lawsuit arising therefrom, and except for claims arising after the later to occur of the expiration
or earlier termination of the Term, or the date Tenant vacates the Premises. If County and/or Agency
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is named as co-defendant in a lawsuit in connection with this Lease, Tenant shall notify Lessor of
such fact and shall represent the County and/or Agency in such legal action unless County or Agency
undertakes to represent themselves as co-defendant in such legal action, in which event, Tenant shall
pay to Lessor their litigation costs, expenses, and reasonable attorneys' fees. If judgment is entered
against County and/or Agency and Tenant by a court of competent jurisdiction because of the
concurrent active negligence of County and/or Agency and Tenant, County, Agency and Tenant
agree that liability will be apportioned as determined by the court. Neither Party shall request a jury
apportionment. A judgment or other judicial determination regarding Lessor's negligence shall not
be a condition precedent to Tenant's obligations stated in this Section.
Tenant acknowledges that it is familiar with the language and provisions of California Civil Code
Section 1542 which provides as follows:
A general release does not extend to claims which the creditor or releasing party does not know or
suspect to exist in his or her favor at the time of executing the release and that if known by him or
her, would have materially affected his or her settlement with the debtor or released party.
Tenant, being aware of and understanding the terms of Section 1542, hereby waives all benefit of its
provisions to the extent described in this paragraph.
The foregoing indemnity and defense obligations of this Lease shall survive its expiration or
termination. This Section 8.2 notwithstanding, indemnification with respect to Hazardous Materials
shall be governed by Section 4.4.4.
8.3 Damage to Tenant's Premises. Lessor shall not be liable for injury or damage which
may be sustained by the person, goods, wares, merchandise, or other property of Tenant, of Tenant's
employees, invitees, customers, or of any other person in or about the Premises or the Improvements
caused by or resulting from any peril which may affect the Premises or Improvements, including fire,
steam, electricity, gas, water, or rain which may leak or flow from or into any part of the Premises or
the Improvements, whether such damage or injury results from conditions arising upon the Premises
or from other sources; provided, however, Lessor shall be liable for injury or damage under this
Section 8.3 resulting from County or Agency, their elected and appointed officials, officers, agents,
employees or contractor's gross negligence or willful misconduct.
ARTICLE IX
CONDEMNATION
9.1 Definitions.
9.1.1. "Condemnation" means (i) the taking or damaging, including severance
damage, by eminent domain or by inverse condemnation or for any public or quasi -public use under
any statute, whether by legal proceedings or otherwise, by a Condemnor (hereinafter defined), and
(ii) a voluntary sale or transfer to a Condemnor, either under threat of condemnation or while
condemnation legal proceedings are pending.
9.1.2. "Date of Tatting" means the later of (i) the date actual physical possession is
taken by the Condemnor; or (ii) the date on which the right to compensation and damages accrues
under the law applicable to the Premises.
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9.1.3. "Award" means all compensation, sums or anything of value awarded, paid or
received for a Total Taking, a Substantial Taking or a Partial Taking (hereinafter defined), whether
pursuant to judgment or by agreement or otherwise.
9.1.4. "Condemnor" means any public or quasi -public authority or private
corporation or individual having the power of condemnation.
9.1.5. "Total Taking" means the taking by Condemnation of all of the Premises and
all of the Improvements.
9.1.6. "Substantial Taking" means the taking by Condemnation of so much of the
Premises or Improvements or both that one or more of the following conditions results, as reasonably
determined by Tenant: (i) The remainder of the Premises would not be economically and feasibly
usable by Tenant; and/or (ii) A reasonable amount of reconstruction would not make the Premises
and Improvements a practical improvement and reasonably suited for the uses and purposes for
which the Premises were being used prior to the Condemnation; and/or (iii) The conduct of Tenant's
business on the Premises would be materially and substantially prevented or impaired.
9.1.7. "Partial Taking" means any taking of the Premises or Improvements that is
neither a Total Taking nor a Substantial Taking.
9.1.8. `Notice of Intended Condemnation" means any notice or notification on
which a reasonably prudent person would rely and which he would interpret as expressing an existing
intention of Condemnation as distinguished from a mere preliminary inquiry or proposal. It includes
but is not limited to service of a Condemnation summons and complaint on a Party hereto. The
notice is considered to have been received when a Party receives from the Condemnor a notice of
intent to condemn, in writing, containing a description or map reasonably defining the extent of the
Condemnation.
9.2 Notice and Representation.
9.2.1. Notification. The Party receiving a notice of one or more of the kinds
specified below shall promptly notify the other Party (and the Limited Partner, if during the
Compliance Period) of the receipt, contents and dates of such notice: (i) a Notice of Intended
Condemnation; (ii) service of any legal process relating to the Condemnation of the Premises or
Improvements; (iii) any notice in connection with any proceedings or negotiations with respect to
such a Condemnation; (iv) any notice of an intent or willingness to make or negotiate a private
purchase, sale or transfer in lieu of Condemnation.
9.2.2. Separate Representation. County, Agency and Tenant each have the right to
represent its respective interest in each Condemnation proceeding or negotiation and to make full
proof of his claims. No agreement, settlement, sale or transfer to or with the Condemnor shall be
made without the consent of County, Agency and Tenant. County, Agency and Tenant shall each
execute and deliver to the other any instruments that may be required to effectuate or facilitate the
provisions of this Lease relating to Condemnation.
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9.3 Total or Substantial Taking.
9.3.1. Total Taking. On a Total Taking, this Lease shall terminate on the Date of
Taking
9.3.2. Substantial Taking. If a taking is a Substantial Taking, Tenant may, with the
consent of each Leasehold Mortgagee and the Limited Partner, to the extent required, by notice to
Lessor given within ninety (90) days after Tenant receives a Notice of Intended Condemnation, elect
to treat the taking as a Total Taking. If Tenant does not so notify Lessor, the taking shall be deemed
a Partial Taking.
9.3.3. Early Delivery of Possession. Tenant may continue to occupy the Premises
and Improvements until the Condemnor takes physical possession. At any time following Notice of
Intended Condemnation, Tenant may in its sole discretion, with the consent of each Leasehold
Mortgagee and the Limited Partner, to the extent required, elect to relinquish possession of the
Premises to Lessor before the actual Taking. The election shall be made by notice declaring the
election and agreeing to pay all Rent required under this Lease to the Date of Taking. Tenant's right
to apportionment of or compensation from the Award shall then accrue as of the date that the Tenant
relinquishes possession.
9.3.4. Apportionment of Award. On a Total Taking all sums, including damages
and interest, awarded for the fee or leasehold or both shall be distributed and disbursed as finally
determined by the court with jurisdiction over the Condemnation proceedings in accordance with
applicable law. Notwithstanding anything herein to the contrary, Tenant shall be entitled to receive
compensation for the value of its leasehold estate under this Lease including its fee interest in all
Improvements, personal property and trade fixtures located on the Premises, its relocation and
removal expenses, its loss of business goodwill and any other items to which Tenant may be entitled
under applicable law.
9.4 Partial Taking.
9.4.1. Effect on Rent. On a Partial Taking this Lease shall remain in full force and
effect covering the remainder of the Premises and Improvements, and Tenant shall not be entitled to
any refund of the Base Rent.
9.4.2. Restoration of Improvements. Promptly after a Partial Taking, Tenant shall
repair, alter, modify or reconstruct the Improvements ("Restoring") so as to make them reasonably
suitable for Tenant's continued occupancy for the uses and purposes for which the Premises are
leased.
9.4.3. Apportionment of Award. On a Partial Taking, Lessor shall be entitled to
receive the entire award for such Partial Taking, except that (i) the proceeds of such Partial Taking
shall first be applied towards the cost of Restoring the Premises pursuant to Section 9.4.2 and (ii)
Tenant shall be entitled to receive any portion of such award allocated to Tenant's interest in any of
Tenant's Improvements, Personal property and trade fixtures taken, and any part of the award
attributable to the low income housing tax credits.
9.5 Waiver of Termination Rights. Both Parties waive their rights under Section 1265.130
of the California Code of Civil Procedure (and any successor provision) and agree that the right to
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terminate this Lease in the event of Condemnation shall be governed by the provisions of this Article
IX.
ARTICLE X
ASSIGNMENT, SUBLETTING AND ENCUMBERING
10.1 General. Except as provided in Sections 10.3 and 17.6.4, below, Tenant shall not
mortgage, pledge, hypothecate, encumber, transfer, sublease Tenant's interest in this Lease or assign
(including an assignment by operation of law) Tenant's interest in the Premises or Improvements or
any part or portion thereof (hereinafter referred to collectively as "Transfer") without the written
consent of the Lessor, which consent may not be unreasonably withheld, conditioned or delayed.
Lessor's consent may be subject to approval by their respective governing bodies (e.g. Board of
Supervisors and City Council). Tenant's failure to obtain the Lessor's written consent to a Transfer
shall render such Transfer void. Occupancy of the Premises by a prospective transferee, sublessee,
or assignee prior to Lessor's written consent of a Transfer shall constitute an Event of Default, except
as set forth in Section 10.3, below.
10.1.1. Except as provided in Section 10.3, below, if Tenant hereunder is a
corporation, limited liability company, an unincorporated association or partnership, the sale or
transfer of any stock or interest in said corporation, company, association and partnership in the
aggregate exceeding 25% shall require the written consent of the Lessor, as set forth in Section 10.3,
above, which consent may not be unreasonably withheld, conditioned or delayed.
10.1.2. Should Lessor consent to any Transfer, such consent and approval shall not
constitute a waiver of any of the terms, conditions, covenants, restrictions or reservations of this
Lease nor be construed as Lessor's consent to any further Transfer. Such terms conditions,
covenants, restrictions and reservations shall apply to each and every Transfer hereunder and shall be
severally binding upon each and every party thereto. Any document to regarding the Transfer of the
Premises or any part thereof shall not be inconsistent with the provisions of this Lease and in the
event of any such inconsistency, the provisions of this Lease shall control.
10.1.3. This Section shall not be interpreted to prohibit, disallow or require Lessor's
consent to space leases (subleases of less than Tenant's entire Lease interest), including leases of
individual residential units in the Improvements, which are consistent with the approved uses under
this Lease.
10.2 Leasehold Mortgage. Under no circumstances may Tenant mortgage, encumber or
hypothecate Lessor's Fee Interest, other than as required by TCAC pursuant to its lease rider, if any,
and previously approved by Lessor prior to the Effective Date of this Lease, in connection with the
award of low income housing tax credits to Tenant.
10.3 Excluded Transfers. Lessor's consent, as set forth in Section 10.1, above, shall not be
required to for any Excluded Transfer (each party to whom an Excluded Transfer may be made is a
"Permitted Transferee"), provided, however, that (1) Tenant shall notify Lessor of such Excluded
Transfer at least twenty (20) days prior to the consummation of such Excluded Transfer, and shall
provide Lessor with information regarding the transferee evidencing that the Transfer falls within the
scope of this Section 10.3 and the definition of Excluded Transfer, set forth in Section 1.1.21, above,
and (2) if such Transfer involves an assignment of Tenant's rights under this Lease, Tenant or such
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transferee shall provide Lessor with a written assumption of Tenant's obligations and liabilities under
this Lease executed by such transferee in a form approved by the Lessor, which approval shall not be
unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the
terms of this Lease; provided, however, that the provisions of this Section 10.3 shall not apply to any
Transfer to a Foreclosure Transferee.
10.4 Transfer Procedure. The provisions of this Section 10.4 shall not be applicable to an
Excluded Transfer, which shall be governed by Sections 1.1.21 and 10.3, above. If Tenant desires at
any time to enter into a Transfer for which Lessor's consent is required hereunder, Tenant shall
provide Lessor with written notice ("Transfer Notice") at least ninety (90) days prior to the
proposed effective date of the Transfer. The Transfer Notice shall include (i) the name and address
of the proposed transferee, (ii) the nature of the Transfer (e.g., whether an assignment, sublease, etc.),
(iii) the proposed effective date of the Transfer, (iv) income statements and "fair market" balance
sheets of the proposed transferee for the two (2) most recently completed fiscal or calendar years
(provided however, if the proposed transferee is a newly formed entity and has not been in existence
for such two (2) year period, the financial statements submitted shall be those of its principals), (v) a
detailed description of the proposed transferees qualifications and experience that demonstrates the
transferee meets the criteria for a Tenant as established by this Lease, and (vi) a bank or other credit
reference. Thereafter, Tenant shall furnish such supplemental information as Lessor may reasonably
request concerning the proposed transferee. Lessor shall, no later than ninety (90) days after Lessor's
receipt of the information specified above, deliver written notice to Tenant which shall (i) indicate
whether Lessor give or withhold consent to the proposed Transfer, and (ii) if Lessor withhold consent
to the proposed Transfer, setting forth a detailed explanation of Lessor's grounds for doing so. If
Lessor consents to a proposed Transfer, then Tenant may thereafter effectuate such Transfer to the
proposed transferee based upon the specific terms of the Lessor's approval and after execution of a
consent to assignment by Lessor in a form approved by the Lessor, which approval shall not be
unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the
terms of this Lease; provided, however, that the provisions of this Section 10.4 shall not apply to any
Transfer to a Foreclosure Transferee.
10.5 Liability of Transferors/Transferees For Lease Obligations. In the case of an
assignment, including an assignment pursuant to Section 17.6.5, each Permitted Transferee and any
other assignees or transferees of this Lease shall assume in writing all of Tenant's obligations
thereafter arising under this Lease. All assignees or transferees of any interest in this Lease or the
Premises or Improvements (whether or not directly liable on this Lease) shall be subject to the terms,
conditions, covenants, restrictions and reservations of this Lease. Except as otherwise provided in
Section 17.6.5, the transferor may be released from all liability under this Lease only if the Permitted
Transferee or other transferee agrees in writing to assume all of transferor's obligations and liabilities
and provides to Lessor evidence of sufficient and adequate assets, including any required insurance
policies, subject to approval by Lessor, which approval shall not be unreasonably withheld, that
evidence said Permitted Transferee's or other transferees' financial and otherwise competence to
assume transferor's obligations and liability (an "Approved Release"). Except as otherwise
provided in Section 17.6.5 and except for an Approved Release, for all other Transfers, any transferor
of any interest in this Lease or the Premises or Improvements shall remain primarily liable for all
obligations hereunder and shall be subject to the terms, conditions, covenants, restrictions and
reservations of this Lease. Except as otherwise provided in Section 17.6.5 and except for an
Approved Release, the Lessor may proceed directly against the transferor in its sole and absolute
discretion, with no obligation to exhaust its remedies against the transferee. Notwithstanding
anything to the contrary contained herein, Lessor consent shall not be required for any of the
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following: (i) the exercise by the Limited Partner of its rights pursuant to Tenant's Partnership
Agreement to remove the general partner of the Tenant and appoint the Limited Partner or an affiliate
thereof as interim general partner of the Tenant; (ii) the exercise by the Limited Partner of its right to
enforce any repurchase requirements under Tenant's Partnership Agreement; and/or (iii) a transfer
by the Limited Partner of its partnership interest in Tenant to an Affiliate of the Limited Partner.
10.6 Conditions of Certain Lessor Consent.
10.6.1. Lessor may withhold consent to a Transfer (excluding Excluded Transfers
which shall not require Lessor consent) at its and absolute sole discretion if any of the following
conditions exist:
(a) An Event of Default exists under this Lease.
(b) The prospective transferee has not agreed in writing to keep, perform, and
be bound by all the terms conditions, covenants, restrictions and reservations of this Lease.
(c) In the case of an assignment, the prospective transferee has not agreed in
writing to assume all of transferor's obligations and liabilities.
(d) The construction of the Initial Improvements has not been completed.
(e) Any construction required of Tenant as a condition of this Lease has not
been completed.
(f) All the material terms, covenants, and conditions of the Transfer that are
relevant to the Lessor's approval of the Transfer have not been disclosed in writing to the Lessor.
10.7 Transfer of Mortgages of Lessor's Interest. Notwithstanding anything to the
contrary set forth in this Ground Lease, unless required by statute, court order or operation of law,
Lessor shall not transfer, assign, pledge or hypothecate its fee interest in the Premises (other than to
entities under common control with Lessor or other governmental entities under applicable law)
without the prior written consent of Tenant, Leasehold Mortgagee and the Limited Partner (provided,
the Limited Partner's consent shall be required only during the tax credit compliance period). Any
and all mortgages or liens placed or suffered by the Lessor encumbering the Lessor's fee interest in
the Premises shall be expressly subject and subordinate to this Lease, to all obligations of Lessor
hereunder, to all of the rights, titles, interests, and estates of the Tenant created or arising hereunder,
to each New Lease and to each Leasehold Mortgage. Furthermore, any Person succeeding to the
Lessor's fee interest as a consequence of any conveyance, foreclosure or other transfer shall succeed
to all of the obligations of the Lessor hereunder.
ARTICLE XI
DEFAULT AND REMEDIES
11.1 Event of Default. Each of the following events shall constitute an "Event of Default"
by Tenant:
11.1.1. Failure to Pay. Tenant's failure or omission to pay any Rent or other sum
payable hereunder on or before the date due where such failure shall continue for a period of five (5)
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days after written notice thereof from Lessor to Tenant; provided, however, that any such notice shall
be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure
§ 1161 et seq.
11.1.2. Failure to Perform. The failure or inability by Tenant to observe or perform
any of its obligations under this Lease (other than those specified in Sections 11.1.1, 11.1.3, 11.1.6,
or 11.1.8 herein, which have their own notice and cure periods), where such failure shall continue for
a period of thirty (30) days after written notice thereof from Lessor to Tenant or past any such longer
period as reasonably agreed upon by the Tenant, Lessor in writing as may be necessary for
completion of its cure; provided, however, that any such notice by Lessor shall be in lieu of, and not
in addition to, any notice required under California Code of Civil Procedure Section 1161 et. seq.;
provided, further, that if the nature of such failure is such that it can be cured by Tenant but that more
than thirty (30) days are reasonably required for its cure (for any reason other than financial
inability), then Tenant shall not be deemed to be in default if Tenant shall commence such cure
within said thirty (30) days, and thereafter diligently pursues such cure to completion.
11.1.3. Abandonment. The abandonment (as defined in California Civil Code
Section 1951.3) or vacation of the Premises by Tenant for a period of thirty (30) days or more.
11.1.4. Assignments.
(a) The making by Tenant of any assignment of its leasehold estate under this
Lease without Lessor's consent, as set forth in Article X;
(b) A case is commenced by or against Tenant under Chapters 7, 11 or 13 of
the Bankruptcy Code, Title 11 of the United States Code as now in force or hereafter amended and if
so commenced against Tenant, the same is not dismissed within ninety (90) days of such
commencement;
(c) the appointment of a trustee or receiver to take possession of substantially
all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure
is not discharged within sixty (60) days; or
(d) Tenant's convening of a meeting of its creditors or any class thereof for
the purpose of effecting a moratorium upon or composition of its debts. In the event of any such
default, neither this Lease nor any interests of Tenant in and to the Premises shall become an asset in
any of such proceedings.
11.1.5. Failure to Reimburse Lessor. Tenant's failure to reimburse the Lessor
pursuant to Section 3.6.4.
11.1.6. Termination of and Failure to Reinstate Insurance Coverage.
Termination of Tenant's insurance coverage and lack of reinstatement within ten (10) business days
after notice from Lessor of such termination.
11.1.7. Failure to Provide Evidence of Insurance. Tenant's failure to provide
Lessor with a valid and adequate certificate of insurance and endorsements, or binder, at any time
during the Term of the Lease, within the time period required under Section 8.1.3.
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11.1.8. Lessor's Consent and Approval of Transfer. Occupancy of the Premises
by a prospective transferee, sublessee, or assignee which requires Lessor's consent or approval,
before Lessor's written consent and approval of a Transfer is obtained as required in Section 10.1.
11.1.9. Tenant's failure to make Additional Rent payment(s) as set forth in Sections
11.3 and 11.10
11.2 Lessor's Remedies. If an Event of Default occurs, Lessor shall have the following
remedies in addition to all rights and remedies provided by law or equity to which Lessor may resort
cumulatively or in the alternative:
11.2.1. Termination of Lease. Subject to Article 17, as applicable, Lessor shall have
the right to terminate this Lease and all rights of Tenant hereunder including Tenant's right to
possession of the Premises. hi the event that Lessor shall elect to so terminate this Lease then Lessor
may recover from Tenant:
(a) The worth at the time of award of the unpaid Rent and other charges,
which had been earned as of the date of the termination hereof, plus
(b) The worth at the time of award of the amount by which the unpaid Rent
and other charges which would have been earned after the date of the termination hereof until the
time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably
avoided; plus
(c) The worth at the time of award of the amount by which the unpaid Rent
and other charges for the balance of the Term hereof after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided; plus
(d) Any other amount necessary to compensate Lessor for all the detriment
proximately caused by Tenant'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 repair, renovation
and alteration of the Premises, reasonable attorneys' fees, expert witness costs; plus
(e) Subject to the rights of any Leasehold Mortgagees and TCAC, the funds
in the Capital Improvement Fund; plus
(f) Any other amount which Lessor may by law hereafter be permitted to
recover from Tenant to compensate Lessor for the detriment caused by Tenant's default as permitted
under applicable California law.
The term "Rent" as used herein shall mean as defined in Section 1.1.41. Additional Rent
shall be computed on the basis of the average monthly amount thereof accruing during the 24-month
period immediately prior to default, except that if it becomes necessary to compute such Additional
Rent before such 24-month period has occurred, then it shall be computed on the basis of the average
monthly amount during such shorter period. As used in Sections 11.2.1(a) and 11.2.l(b) above, the
"worth at the time of award" shall be computed by allowing interest at the Interest Rate. As used in
Sections 11.2.1 (c) above, the "worth at the time of award" shall be computed by discounting such
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amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus
one percent (1%), but not in excess of the Interest Rate.
11.2.2. Continue Lease in Effect. Lessor may continue this Lease in effect without
terminating Tenant's right to possession and to enforce all of Lessors rights and remedies under this
Lease, at law or in equity, including the right to recover the Rent as it becomes due under this Lease;
provided, however, that Lessor may at any time thereafter elect to terminate this Lease for the
underlying Event(s) of Default by notifying Tenant in writing that Tenant's right to possession of the
Premises has been terminated.
11.2.3. Removal of Personal Property Following Termination of Lease. Lessor
shall have the right, following a termination of this Lease and Tenant's rights of possession of the
Premises under Section 11.2.1 above, to re-enter the Premises and, subject to applicable law, to
remove Tenant's personal property from the Premises. Such property may be removed and stored in
a public warehouse or elsewhere at the cost of and for the account of Tenant, or disposed of without
such storage, in accordance with applicable California law.
11.3 Lessor's Right to Cure Tenant Defaults. If Tenant shall have failed to cure, after
expiration of the applicable time for curing, a particular default under this Lease, Lessor may at their
election, but are not obligated to, make any payment required of Tenant under this Lease or perform
or comply with any tern, agreement or condition imposed on Tenant hereunder, and the amount so
paid plus the reasonable cost of any such performance or compliance, plus interest on such sum at the
Interest Rate from the date of payment, performance or compliance until reimbursed shall be deemed
to be Additional Rent payable by Tenant on Lessor's demand. Tenant's failure to reimburse the
County and/or Agency within 30 days of Lessor's demand shall constitute an Event of Default under
this Lease. No such payment, performance or compliance shall constitute a waiver of default or of
any remedy for default, or render County and/or Agency liable for any loss or damage resulting from
the same.
11.4 Lessor's Default. Lessor shall not be considered to be in default under this Lease
unless Tenant has given Lessor written notice specifying the default, and either (i) as to monetary
defaults, Lessor have failed to cure the same within ten (10) business days after written notice from
Tenant, or (ii) as to nonmonetary defaults, Lessor have failed to cure the same within thirty (30) days
after written notice from Tenant, or if the nature of Lessor's nonmonetary default is such that more
than thirty (30) days are reasonably required for its cure, then such thirty (30) day period shall be
extended automatically so long as County and/or Agency commences a cure within such thirty (30)
day period and thereafter diligently pursues such cure to completion. Tenant shall have no right to
offset or abate alleged amounts owing by County and/or Agency under this Lease against any
amounts owing by Tenant under this Lease. Additionally, Tenant's sole remedy for any monetary
default shall be towards the Lessor's interest in the property and not to any other assets. Any and all
claims or actions accruing hereunder shall be absolutely barred unless such action is commenced
within six (6) months of the event or action giving rise to the default.
11.5 Remedies Cumulative. All rights and remedies of Lessor contained in this Lease shall
be construed and held to be cumulative, and no one of them shall be exclusive of the other, and
Lessor shall have the right to pursue any one or all of such remedies or any other remedy or relief
which may be provided by law, whether or not stated in this Lease.
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11.6 Waiver by Lessor. No delay or omission of Lessor to exercise any right or remedy
shall be construed as a waiver of such right or remedy or any default by Tenant hereunder. The
acceptance by Lessor of Rent or any other sums hereunder shall not be (a) a waiver of any preceding
breach or default by Tenant of any provision thereof, other than the failure of Tenant to pay the
particular rent or sum accepted, regardless of Lessor's knowledge of such preceding breach or default
at the time of acceptance of such rent or sum, or (b) waiver of Lessor's right to exercise any remedy
available to Lessor by virtue of such breach or default. No act or thing done by County or Agency's
agents during the term of this Lease shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept a surrender shall be valid unless in writing and signed by Lessor.
11.7 Interest. Any installment or Rent due under this Lease or any other sums not paid to
Lessor when due (other than interest) shall bear interest at the Interest Rate from the date such
payment is due until paid, provided, however, that the payment of such interest shall not excuse or
cure the default.
11.8 Conditions Deemed Reasonable. Tenant acknowledges that each of the conditions to a
Transfer, and the rights of Lessor set forth in this Article X in the event of a Transfer is a reasonable
restriction for the purposes of California Civil Code Section 1951.4.
11.9 Waiver by Tenant. Tenant's waiver of any breach by Lessor of any term, covenant or
condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same
or any other term, covenant or condition herein contained.
11.10 Tenant Covenants and Agreements. All covenants and agreements to be performed
by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant's sole cost
and expenses and without any abatement of Rent. If Tenant shall fail to pay any sum of money, other
than Rent required to be paid by it hereunder, or shall fail to perform any other act on its part to be
performed hereunder, or to provide any insurance or evidence of insurance to be provided by Tenant
within the time period required under this Lease, then in addition to any other remedies provided
herein, Lessor may, but shall not be obligated to do so, and without waiving or releasing Tenant from
any obligations of Tenant, make any such payment or perform any such act on Tenant's part to be
made or performed as provided in this Lease or to provide such insurance. Any payment or
performance of any act or the provision of any such insurance by Lessor on Tenant's behalf shall not
give rise to any responsibility of Lessor to continue making the same or similar payments or
performing the same or similar acts. All costs, expenses, and other sums incurred or paid by Lessor
in connection therewith, together with interest at the Interest Rate from the date incurred or paid by
Lessor, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant within thirty
(30) days of receipt of a demand and invoice from Lessor, and Tenant's failure to pay the Lessor, as
stated herein, shall constitute an Event of Default under this Lease.
ARTICLE XII
HOLDING OVER
If Tenant holds over after the expiration or earlier termination of the Term hereof without the
express written consent of Lessor, Tenant shall become a Tenant at sufferance only, at a monthly
rental rate of (a) Fifty Thousand Dollars ($50,000) to the extent the Premises are not subject to any
tenant income or rent restrictions and all units may be rented at market -rate rents, or (b) Twenty Five
Thousand Dollars ($25,000) to the extent the Premises are subject to any tenant income or rent
restrictions ("Hold Over Rent"), increased annually commencing with commencement of the hold
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over period by an amount equal to the greater of (i) three percent (3%) for each year of the Term, or
(ii) a percentage equal to the percentage increase from the Base Period of the Consumer Price Index
("CPI") for Los Angeles- Riverside -Orange County [All Urban Consumers -All Items, not seasonally
adjusted (Base Period 1982-84=100)]. Said CPI for the month of December for the second year of the
Term shall be considered the `Base Period." Said adjustment shall be made by comparing the CPI for
the Base Period to the CPI for the month of December immediately preceding each such adjustment.
If at any time there shall not exist the CPI, Lessor shall substitute any official index published by the
Bureau of Labor Statistics, or successor or similar governmental agency, as may then be in existence,
and shall be most nearly equivalent thereto. If Tenant fails to surrender the Premises and the
Improvements as stated herein, and Lessor shall take legal action to cause Tenant's eviction from the
Premises and is successful in such action, Tenant shall be responsible for all costs and expenses,
including reasonable attorney's fees and costs, incurred by County and/or Agency in connection with
such eviction action; Tenant shall also indemnify and hold Lessor harmless from all loss or liability
or reasonable attorney's fees and costs, including any claim made by any succeeding tenant, incurred
by County and/or Agency founded on or resulting from such failure to surrender.
ARTICLE XIII
ESTOPPEL CERTIFICATES
At any time and from time to time, within ten (10) business days after written request by
either County, Agency or Tenant (the "requesting party"), the other Party (the "responding party")
shall execute, acknowledge and deliver an estoppel certificate addressed to the requesting party,
and/or to such other beneficiary (as described below) as the requesting party shall request, certifying
(i) that this Lease is in full force and effect, (ii) that this Lease is unmodified, or, if there have been
modifications, identifying the same, (iii) the dates to which Rent has been paid in advance, (iv) that,
to the actual knowledge of the responding party, there are no then existing and uncured defaults
under the Lease by either County, Agency or Tenant, or, if any such defaults are known, identifying
the same, and (v) any other factual matters (which shall be limited to the actual knowledge of the
responding party) as may be reasonably requested by the requesting party. Such certificate may
designate as the beneficiary thereof the requesting party, and/or any third party having a reasonable
need for such a certificate (such as, but not limited to, a prospective purchaser, transferee or lender)
and any such certificate may be relied upon by the Parties.
ARTICLE XIV
FORCE MAJEURE
Unless otherwise specifically provided herein, the period for performance of any
nonmonetary obligation by either Party shall be extended by the period of any delay in performance
caused by Acts of God, strikes, boycotts, lock -outs, inability to procure materials not related to the
price thereof, failure of electric power, riots, civil unrest, acts of terrorism, insurrection, war,
declaration of a state or national emergency, weather that could not have reasonably been anticipated,
changes in the Laws which would prevent the Premise from being operated in accordance with this
Lease, or other reasons beyond the reasonable control of County, Agency, Tenant, or their respective
agents or representatives (collectively, "Force Majeure Events"). In no event, however, shall Force
Majeure Events include the financial inability of a Party to this Lease to pay or perform its
obligations hereunder. Further, nothing herein shall extend the time for performance of any
monetary obligation owing under this Lease (including Tenant's obligation to pay Rent owing
hereunder).
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ARTICLE XV
RECORDS AND ACCOUNTS
15.1 Financial Statements. Within one hundred eighty (180) after the end of each
accounting year, Tenant shall at his own expense submit to Auditor -Controller and the Agency a
balance sheet and income statement prepared by a Certified Public Accountant ("CPA") who is a
member of the American Institute of Certified Public Accountants ("AICPA") and the California
Society of CPAs, reflecting business transacted on or from the Premises during the preceding
accounting year. The Certified Public Accountant must attest that the balance sheet and income
statement submitted are an accurate representation of Tenant's records as reported to the United
States of America for income tax purposes. At the same time, Tenant shall submit to Auditor -
Controller and Agency a statement certified as to accuracy by a Public Accountant who is a member
of AICPA and the California Society of CPAs, wherein the total Gross Receipts for the accounting
year are classified according to the categories of business established for percentage rent and listed in
Section 3.4.l(d) and for any other business conducted on or from the Premises. Tenant shall provide
Lessor with copies of any CPA's management letters prepared in conjunction with their audits of
Tenant's operations from the Premises. Copies of management letters shall be provided directly to
Lessor by the CPA at the same time Tenant's copy is provided to Tenant. In the event that when
such financial statements are submitted, the Tenant has a budget for the following accounting year,
Tenant, at the same time, shall also provide Lessor with such budget.
15.1.1. Tenant acknowledges its understanding that any and all of the Financial
Statement submitted to the Lessor pursuant to this Lease become Public Records and may be subject
to public inspection and copying pursuant to §§ 6250 et. seq. of the California Government Code.
15.1.2. All Tenant's books of account and records and supporting source documents
related to this Lease or to business operations conducted within or from the Premises shall be kept
and made available at one location within the limits of the County unless an alternative location is
approved in writing by the Lessor. Lessor shall, through their duly authorized agents or
representatives, have the right to examine and audit said books of account and records and supporting
source documents at any and all reasonable times for the purpose of determining the accuracy thereof
in connection with such Sections of this Lease as the Parties mutually and reasonably agree the audit
is relevant thereto.
15.2 Reports. In the event that the Tenant commissions, requests or is required to produce
any reports related to the physical condition of the Improvements or Premises, Tenant shall submit
copies of such reports to Lessor along with the financial statements required above in Section 15.1.
ARTICLE XVI
OPERATIONAL OBLIGATIONS OF TENANT
16.1 Standards of Operation.
16.1.1. Tenant shall operate the Premises in a manner reasonably comparable to other
comparable facilities or businesses within the County of Orange. Tenant shall at all times during the
Term provide adequate security measures to reasonably protect persons and property on the
Premises.
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16.1.2. The ultimate purpose of this Lease is to permit the construction and operation
of a multifamily affordable residential rental development, including permanent supportive housing,
in accordance with Section 4.1.1. Accordingly, Tenant covenants and agrees to operate said
Premises fully and continuously to accomplish said purposes and not to abandon or vacate the
Premises at any time.
16.1.3. The facilities on the Premises shall be operated during normal business hours,
subject to any temporary interruptions in operations or closures due to ordinary maintenance and
repair and any Force Majeure Event, defined in Article XIV above.
16.2 Protection of Environment. Tenant shall take all reasonable measures available to:
16.2.1. Avoid any pollution of the atmosphere or littering of land or water caused by
or originating in, on, or about Tenant's facilities.
16.2.2. Maintain a reasonable noise level on the Premises so that persons in the
general neighborhood will be able to comfortably enjoy the other facilities and amenities in the area.
16.2.3. Prevent the light fixtures of the Premises from emitting light that could
negatively affect the operation of cars, boats, or airplanes in the area.
16.2.4. Prevent all pollutants from Tenant's operations on the Premises from being
discharged, including petroleum products of any nature, except as may be permitted in accordance
with any applicable permits or as permitted by applicable Law. Tenant and all of Tenant's agents,
employees and contractors shall conduct operations under this Lease so as to ensure that pollutants
do not enter the municipal storm drain system (including but not limited to curbs and gutters that are
part of the street systems), or directly impact receiving waters (including but not limited to rivers,
creeks, streams, estuaries, lakes, harbors, bays and the ocean), except as may be permitted by any
applicable permits or as permitted by applicable law.
16.2.5. The Lessor may enter the Premises in accordance with Section 4.5 and/or
review Tenant records at all reasonable times to assure that activities conducted on the Premises
comply with the requirements of this Section.
16.3 On -Site Manager. Tenant shall employ a competent manager who shall be responsible
for the day-to-day operation and level of maintenance, cleanliness, and general order for the
Premises. Such person shall be vested with the authority of Tenant with respect to the supervision
over the operation and maintenance of the Premises, including the authority to enforce compliance by
Tenant's agents, employees, concessionaires, or licensees with the terms and conditions of this Lease
and any and all rules and regulations adopted hereunder. Tenant shall notify Lessor in writing of the
name of the Manager currently so employed as provided in Section 19.20 of this Lease.
16.4 Policies and Procedures to be Established by Tenant. Prior to the completion of
construction, Tenant shall submit to Lessor proposed policies and procedures pertinent to the
operation of the multifamily affordable residential rental development and manner of providing the
uses required by this Lease ("Policies and Procedures").
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ARTICLE XVII
LEASEHOLD MORTGAGES
17.1 Definitions. The following definitions are used in this Article (and in other Sections of
this Lease):
17.1.1. "Leasehold Estate" shall mean Tenant's leasehold estate in and to the
Premises, including Tenant's rights, title and interest in and to the Premises and the Improvements,
or any applicable portion thereof or interest therein.
17.1.2. "Leasehold Foreclosure Transferee" shall mean any person (which may, but
need not be, a Leasehold Mortgagee) which acquires the Leasehold Estate pursuant to a foreclosure,
assignment in lieu of foreclosure or other enforcement of remedies under or in connection with a
Leasehold Mortgage.
17.1.3. "Leasehold Mortgage" shall mean and includes a mortgage, deed of trust,
security deed, conditional deed, deed to secure debt or any other security instrument (including any
assignment of leases and rents, security agreement and financing statements) held by a Lender by
which Tenant's Leasehold Estate is mortgaged to secure a debt or other obligation, including a
purchase money obligation.
17.1.4. "Leasehold Mortgagee" shall mean a Lender which is the holder of a
Leasehold Mortgage.
17.1.5. "Tenant" shall mean all of the following: (i) the Tenant under this Lease; (ii)
an approved assignee, transferee or subtenant of the Tenant under this Lease who is or becomes
directly and primarily liable to Lessor; and (iii) any further assignee, transferee or subtenant of any of
the parties listed in (ii) who is or becomes directly and primarily liable to Lessor.
17.2 Tenant's Right to Encumber Leasehold Estate; No Right to Encumber Lessor's
Fee Interest. Provided that an Event of Default has not occurred and is continuing, Tenant may, at
any time during the Term of this Lease (with consent of Lessor after prior written notice providing
evidence that all requirements of this Lease have been complied with, which consent shall not be
unreasonably withheld, conditioned or delayed), encumber all or any portion of Tenant's Leasehold
Estate with one (1) or more Leasehold Mortgages; provided, however:
17.2.1. Such Leasehold Mortgage(s) (as of the date recorded) shall not exceed (a) if
recorded before completion of the Initial Improvements, One Hundred Percent (100%) of the costs of
the Initial Improvements, or (b) if recorded after completion of the Initial Improvements, eighty
percent (80%) of the Leasehold Estate value (including the value of all improvements) after
completion;
17.2.2. That Tenant shall not have the power to encumber, and no Leasehold
Mortgage shall encumber, Lessor's Fee Interest;
17.2.3. Except as expressly provided in this Lease, the Leasehold Mortgage and all
rights acquired under it shall be subject to each and all of the covenants, conditions, and restrictions
set forth in this Lease and to all rights and interests of Lessor hereunder; and
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17.2.4. Nothing in this Lease shall be construed so as to require or result in a
subordination in whole or in part in any way of the Lessor's Fee Interest to any Leasehold Mortgage,
and;
17.2.5. Except as otherwise expressly provided herein, in the event of any conflict
between the provisions of this Lease and the provisions of any such Leasehold Mortgage, the
provisions of this Lease shall control.
Tenant's encumbrance of its Leasehold Estate with a Leasehold Mortgage, as provided in this
Section 17.2, shall not constitute an assignment or other Transfer under Article X or otherwise, nor
shall any Leasehold Mortgagee, as such, be deemed to be an assignee or transferee of this Lease or of
the Leasehold Estate so as to require such Leasehold Mortgagee, as such, to assume the Tenant's
obligations and liabilities under this Lease.
Notwithstanding the foregoing, if any Leasehold Mortgagee (or its nominee) acquires title to
the Premises by foreclosure or deed in lieu thereof, any required consent of the Lessor under this
Section 17.2 shall not be unreasonably withheld.
17.3 Notification to Lessor of Leasehold Mortgage. Tenant or any Leasehold Mortgagee
shall, prior to making any Leasehold Mortgage, provide Lessor with written notice of such Leasehold
Mortgage and the name and address of the Leasehold Mortgagee. At the time of notice, Tenant or
such Leasehold Mortgagee shall furnish to Lessor a complete copy of any trust deed and note to be
secured thereby, together with the name and address of the holder thereof. Thereafter, Tenant or any
Leasehold Mortgagee shall notify Lessor of any change in the identity or address of such Leasehold
Mortgagee. Lessor shall be entitled to rely upon the addresses provided pursuant to this Section for
purposes of giving any notices required by this Article XVII.
17.4 Notice and Cure Rights of Leasehold Mortgagees With Respect to Tenant Defaults.
Lessor, upon delivery to Tenant of any notice of a default or demand for payment by Tenant under
this Lease or a matter as to which Lessor may predicate or claim a default, will promptly deliver a
copy of such notice to each Leasehold Mortgagee. Each notice or demand required to be given by
Lessor to a Leasehold Mortgagee under this Lease shall be in writing and shall be given by certified
or registered mail, postage prepaid, return receipt requested, to such Leasehold Mortgagee at the
address(es) provided by such Leasehold Mortgagee, as applicable, to Lessor from time to time in
writing and shall be effective upon receipt (or refusal to accept receipt). No notice or demand given
by Lessor to Tenant shall be effective until the duplicate copy of such notice or demand to the Tenant
shall have been effectively given to each Leasehold Mortgagee in accordance with this Lease. From
and after the date such notice has been given to any Leasehold Mortgagee, such Leasehold
Mortgagee shall have the same cure period for such default (or act or omission which is the subject
matter of such notice) that is provided to Tenant under this Lease or as otherwise agreed upon by
County, Agency and the Tenant, to commence and/or complete a cure of such default (or act or
omission which is the subject matter of such notice). Lessor shall accept any and all performance by
or on behalf of any Leasehold Mortgagee(s), including by any receiver obtained by any Leasehold
Mortgagee(s), as if the same had been done by Tenant. Tenant authorizes each Leasehold Mortgagee
to take any such action at such Leasehold Mortgagee's option, and hereby authorizes any Leasehold
Mortgagee (or any receiver or agent) to enter upon the Premises for such purpose.
17.5 Limitation on Lessor's Termination Right. If following the delivery of notice
pursuant to Section 17.4, above, the default by Tenant continues and is not cured by Tenant (or any
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Leasehold Mortgagee as allowed under Section 17.4, above), and such failure entitles County and/or
Agency to terminate this Lease, Lessor shall have no right to terminate this Lease unless Lessor shall
notify in writing each and every Leasehold Mortgagee who has complied with Section 17.3 of
Lessor's intent to so terminate at least sixty (60) days in advance of the proposed effective date of
such termination. If any Leasehold Mortgagee, within such sixty (60) day period, (i) notifies Lessor
of such Leasehold Mortgagee's desire to cure such default and initiates such cure and (ii) pays or
cause to be paid the amount that is necessary to cure any monetary default as stated in such notice, if
any, then Section 17.6 shall apply. The Lessor, at its sole discretion, may permit such additional time
as necessary for any Leasehold Mortgagee to commence the cure or make payment(s), as stated
herein. If any Leasehold Mortgagee and Limited Partner fails to respond to said notice of
termination within the allotted sixty (60) days as consistent with the conditions of this Section 17.5,
Lessor are entitled to immediately terminate this Lease.
17.6 Leasehold Mortgagee Foreclosure Period. If any Leasehold Mortgagee complies with
Section 17.5 above, then the following provisions shall apply:
17.6.1. If Lessor's notice under Section 17.5 specifies only monetary Events of
Default as the basis for Lessor's election to terminate this Lease, and Leasehold Mortgagee has fully
paid the monetary amount designated by Lessor in its notice, then such payment shall be deemed to
have cured the Event of Default. If Lessor's notice under Section 17.5 specifies both monetary and
non -monetary Events of Default or non -monetary Events of Default as the basis for Lessor's election
to terminate this Lease, and Leasehold Mortgagee has fully paid the monetary amount designated by
Lessor in its notice, as applicable, then the date of termination specified in Lessor's notice shall be
extended for a period of twelve (12) months, provided that such Leasehold Mortgagee shall, during
such twelve (12) month period:
(a) pay or cause to be paid all Rent under this Lease as the same becomes due
(subject to the notice and cure rights expressly set forth herein); and
(b) continue (subject to any stay as described in Section 17.6.2 below) its
good faith efforts to perform (and complete performance of) all of Tenant's nommonetary obligations
under this Lease, excepting nonmonetary obligations (whether or not a default exists with respect
thereto) that are not then reasonably susceptible of being cured by Leasehold Mortgagee; and
(c) commence and pursue with reasonable diligence until completion (subject
to any stay as described in Section 17.6.2 below) a judicial or nonjudicial foreclosure or other
enforcement of remedies under its Leasehold Mortgage.
17.6.2. In the event of a judicial or non judicial foreclosure, the twelve (12) month
period described in Section 17.6.1, above, shall automatically be extended by the length of any delay
caused by any stay (including any automatic stay arising from any bankruptcy or insolvency
proceeding involving Tenant), injunction or other order arising under applicable Laws or issued by
any court (which term as used herein includes any other governmental or quasi -governmental
authority having such power) (the foregoing being collectively referred to as a "Stay"). Further,
Leasehold Mortgagee's obligations stated in Section 17.6.1(b) and (c) shall be automatically
suspended during any period that any Stay prevents Leasehold Mortgagee from taking any such
actions. Nothing herein, however, shall be construed to extend this Lease beyond the Term hereof
nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after the Event of
Default has been cured. If the Event of Default has been cured and the Leasehold Mortgagee shall
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discontinue such foreclosure proceedings, this Lease shall continue in full force and effect as if
Tenant had not defaulted under this Lease.
17.6.3. In the event the Leasehold Mortgage requires a new lease between the Lessor
and the Leasehold Mortgagee, Lessor shall enter into such new lease with the Leasehold Mortgagee
pursuant to Section 17.7, below, provided Lessor are provided with the necessary and adequate
documents related to the new lease requirements in the Leasehold Mortgage as described in Section
17.7.
17.6.4. So long as any Leasehold Mortgagee is complying with Sections 17.6.1 and
17.6.2 above, then upon the acquisition of Tenant's Leasehold Estate by a Leasehold Foreclosure
Transferee, this Lease shall continue in full force and effect as if Tenant had not defaulted under this
Lease; provided that no Leasehold Foreclosure Transferee shall have any liability for the
performance of any of the Tenant's obligations under this Lease until the Leasehold Foreclosure
Transferee has acquired the Tenant's interest under the Lease, and then the Leasehold Foreclosure
Transferee shall be liable for the performance of only those obligations of the Tenant arising from
and after the effective date of the Leasehold Foreclosure Transferee's acquisition of the Tenant's
Leasehold Estate. Any such Leasehold Foreclosure Transferee shall be deemed to be an assignee or
transferee and shall be deemed to have agreed to perform all of the terms, covenants and conditions
on the part of the Tenant to be performed hereunder from and after the effective date on which such
Leasehold Foreclosure Transferee acquires title to the Leasehold Estate, but only for so long as such
purchaser or assignee is the owner of the leasehold estate.
17.6.5. Any Leasehold Mortgagee (or its designee) that becomes a Leasehold
Foreclosure Transferee, upon acquiring title to Tenant's Leasehold Estate without obtaining Lessor's
consent and provided it is not in default of any of the provisions of this Lease, shall have a one-time
right to assign the Leasehold Estate to an assignee (a) which is an Affiliate of the Leasehold
Foreclosure Transferee, or (b) which has substantial experience, or will employ a property
management company with substantial experience, managing, maintaining and operating affordable
housing developments like that on the Premises. Upon such assignment, the Leasehold Foreclosure
Transferee shall automatically be released of all obligations thereafter accruing under this Lease,
provided that, substantially concurrently with such assignment, the assignee delivers to Lessor a
written agreement assuming Tenant's obligations under the Lease thereafter accruing. Any
subsequent Transfers occurring after the one-time assignment permitted under this Section shall be
subject to Article X.
17.7 Leasehold Mortgagee's Right to New Lease.
17.7.1. In the event of any termination of this Lease (including any termination
because of an Event of Default, or because of any rejection or disaffirmance of this Lease pursuant to
bankruptcy law or any other law affecting creditor's rights, but other than by reason of a Total
Taking), Lessor shall give prompt written notice of such termination to each Leasehold Mortgagee
and shall (subject to Section 17.8 below if more than one Leasehold Mortgagee then exists) enter into
a new lease ("New Lease') of the Premises with the Leasehold Mortgagee holding the Leasehold
Mortgage that has the most senior lien priority, in accordance with Section 17.8 below, or its
designee, upon notice to Lessor by such Leasehold Mortgagee. The New Lease shall commence as
of its effective date and shall continue for the remainder of the scheduled Term of this Lease, at the
same Rent that is payable under this Lease, and on the same terms, conditions, covenants, restrictions
and reservations that are contained in this Lease (including any extension options, purchase options
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and rights of fast refusal, if any, provided for in this Lease), and subject to the rights of any tenants
under residential subleases or other subtenants then in valid occupancy of the Premises and
Improvements and further subject to any then existing senior Leasehold Mortgagees; provided that,
substantially concurrently with the delivery of a notice by Leasehold Mortgagee requiring Lessor to
enter into a New Lease, Leasehold Mortgagee shall pay to Lessor all Rent or any other amounts
payable by Tenant hereunder which are then due and shall commence and proceed with diligence to
cure all nonmonetary defaults under this Lease, other than those nonmonetary defaults which are
personal to the foreclosed tenant and impossible for the Leasehold Mortgagee to remedy.
17.7.2. If such Leasehold Mortgagee elects to enter into a New Lease pursuant to
Section 17.7.1 above, then County, Agency and the Leasehold Mortgagee (or its designee) shall
promptly prepare and enter into a written New Lease; but until such written New Lease is mutually
executed and delivered, this Lease shall govern, from and after the giving of notice pursuant to
Section 17.7.1 but prior to the execution of the New Lease, the Lessor's and Leasehold Mortgagee's
relationship with respect to the Premises and the Improvements and the Leasehold Mortgagee shall
(i) be entitled to possession of the Premises and to exercise all rights of Tenant hereunder, (ii) pay to
Lessor any Rent accruing under the New Lease as it becomes owing, and (iii) perform or cause to be
performed all of the other covenants and agreements under this Lease. Further, at such time as the
written New Lease is mutually executed and delivered, Leasehold Mortgagee (or its designee) shall
pay to Lessor its reasonable expenses, including reasonable attorneys' fees and costs, incurred in
connection with the preparation, execution and delivery of such written New Lease. In addition, upon
execution of any such New Lease, Lessor shall execute, acknowledge and deliver to such Leasehold
Mortgagee (or its designee) a grant deed, in recordable form, conveying to such Leasehold
Mortgagee (or its designee) fee title to all Improvements in the event that title to such Improvements
have vested with the County.
17.7.3. In the event that Lessor receives any net income (i.e., gross income less gross
expenses on a cash basis), if any, from the Premises and Improvements during any period that Lessor
may control the same, then the Leasehold Mortgagee under the New Lease shall be entitled to such
net income received by Lessor except to the extent that it was applied to cure any default of Tenant.
17.7.4. All rights and claims of Tenant under this Lease shall be subject and
subordinate to all right and claims of the tenant under the New Lease.
17.8 Multiple Leasehold Mortgages. If more than one Leasehold Mortgagee shall make a
written request upon Lessor for a New Lease in accordance with the provisions of Section 17.7, then
such New Lease shall be entered into pursuant to the request of the Leasehold Mortgagee holding the
Leasehold Mortgage that has the most senior lien priority.
Notwithstanding anything herein to the contrary, Lessor shall have no duty or obligation to resolve
any disputes or conflicting demands between Leasehold Mortgagees. In the event of any conflicting
demands made upon County and/or Agency by multiple Leasehold Mortgagees, Lessor may (subject
to any applicable court orders to the contrary) rely on the direction of the Leasehold Mortgagee
whose Leasehold Mortgage is recorded fnst in time in the Official Records of the County, as
determined by any national title company.
17.9 Condemnation and Insurance Proceeds. Notwithstanding anything to the contrary
contained herein, all condemnation proceeds (other than proceeds payable on account of the value of
the Lessor's Fee Interest as encumbered by this Lease) or insurance proceeds shall be subject to and
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paid in accordance with the requirements of the most senior (in order of lien priority) Leasehold
Mortgage, subject, however, to any requirement in this Lease that, to the extent not in conflict with
the terms of the applicable Leasehold Mortgage, such proceeds must be used to repair and restore the
Improvements to the Premises which were damaged or destroyed by such condemnation or casualty
(including, without limitation, as required in Article VII following a casualty and in Section 9.4.3
following a condemnation). The handling and disbursement of any such proceeds used to repair or
restore the Improvements to the Premises shall be subject to the requirements of such senior
Leasehold Mortgage.
17.10 Mortgagee Clauses. A standard mortgagee clause naming each Leasehold Mortgagee
may be added to any and all insurance policies required to be carried by Tenant hereunder, provided
that any such Leasehold Mortgagee shall hold and apply such insurance proceeds subject to the
provisions of this Lease.
17.11 No Waiver. No payment made to Lessor by a Leasehold Mortgagee shall constitute
agreement that such payment was, in fact, due under the terms of this Lease; and a Leasehold
Mortgagee having made any payment to Lessor pursuant to County and/or Agency's wrongful,
improper or mistaken notice or demand shall be entitled to the return of any such payment or portion
thereof.
17.12 Fees and Costs. Tenant agrees to reimburse Lessor for its reasonable attorneys' fees
and costs incurred in connection with Lessor's review and/or approval of any documentation which
may be required in connection with any Leasehold Mortgage by Tenant as provided herein.
17.13 No Termination, Cancellation, Surrender or Modification. Without the prior
written consent of each Leasehold Mortgagee, (a) this Lease may not be terminated or cancelled by
mutual agreement of County, Agency and Tenant, (b) Lessor may not accept the surrender this Lease
or the Leasehold Estate created hereunder without the consent of each Leasehold Mortgagee, and (c)
this Lease may not be amended, modified or supplemented (and any action taken in furtherance of
any of the foregoing without the required consent of each Leasehold Mortgagee shall be void and of
no effect). In addition, if any term or provision of this Lease gives Tenant the right to terminate or
cancel this Lease, in whole or in part, no such termination or cancellation shall be or become
effective unless Tenant has fast received approval in writing by each Leasehold Mortgagee.
17.14 Effect of Foreclosure upon Base Rent. Notwithstanding anything to the contrary
contained elsewhere in this Lease, (i) in no event shall any Leasehold Mortgagee (or its designee) be
required to pay or cure, in order to prevent the termination of this Lease, to exercise its cure rights
hereunder or to obtain a New Lease or otherwise, any Base Rent, and (ii) in no event shall any
Leasehold Mortgagee (or its designee) or its (or their) successors and assigns be required to pay or
cure any Base Rent which otherwise became due and payable prior to completion of any foreclosure
under any Leasehold Mortgage (or acceptance of any assignment or deed in lieu thereof).
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ARTICLE XVIII
BEST MANAGEMENT PRACTICES
18.1 Tenant and all of Tenant's, subtenant, agents, employees and contractors shall conduct
operations under this Lease so as to assure that pollutants do not enter municipal storm drain systems,
in violation of applicable Laws, which systems are comprised of, but are not limited to curbs and
gutters that are part of the street systems ("Stormwater Drainage System"), and to ensure that
pollutants do not directly impact "Receiving Waters" (as used herein, Receiving Waters include, but
are not limited to, rivers, creeks, streams, estuaries, lakes, harbors, bays and oceans).
18.2 The Santa Ana and San Diego Regional Water Quality Control Boards have issued
National Pollutant Discharge Elimination System ("NPDES") permits ("Stormwater Permits") to
the County of Orange, and to the Orange County Flood Control District ("Districf') and cities within
Orange County, as co-permittees (hereinafter collectively referred to as "NPDES Parties") which
regulate the discharge of urban runoff from areas within the County of Orange, including the
Premises leased under this Lease. The NPDES Parties have enacted water quality ordinances that
prohibit conditions and activities that may result in polluted runoff being discharged into the
Stormwater Drainage System.
18.3 To assure compliance with the Stormwater Permits and water quality ordinances, the
NPDES Parties have developed a Drainage Area Management Plan ("DAMP") which includes a
Local Implementation Plan ("LIP") for each jurisdiction that contains Best Management Practices
(`BMWs") that parties using properties within Orange County must adhere to. As used herein, a
BMP is defined as a technique, measure, or structural control that is used for a given set of conditions
to manage the quantity and improve the quality of stormwater runoff in a cost effective manner.
These BMPs are found within the District and/or County's LIP in the form of Model Maintenance
Procedures and BMP Fact Sheets (the Model Maintenance Procedures and BMP Fact Sheets
contained in the DAMP/LIP shall be referred to hereinafter collectively as "BMP Fact Sheets") and
contain pollution prevention and source control techniques to eliminate non-stormwater discharges
and minimize the impact of pollutants on stormwater runoff.
18.4 BMP Fact Sheets that apply to uses authorized under this Lease include the BMP Fact
Sheets that are attached hereto as Exhibit C. These BMP Fact Sheets may be modified during the
term of the Lease; and the Lessor shall provide Tenant with any such modified BMP Fact Sheets.
Tenant, its agents, contractors, representatives and employees and all persons authorized by Tenant
to conduct activities on the Premises shall, throughout the term of this Lease, comply with the BMP
Fact Sheets as they exist now or are modified, and shall comply with all other requirements of the
Stormwater Permits, as they exist at the time this Lease commences or as the Stormwater Permits
may be modified. Tenant agrees to maintain current copies of the BMP Fact Sheets on the Premises
throughout the term of this Lease. The BMPs applicable to uses authorized under this Lease must be
performed as described within all applicable BMP Fact Sheets.
18.5 Tenant may propose alternative BMPs that meet or exceed the pollution prevention
performance of the BMP Fact Sheets. Any such alternative BMPs shall be submitted to the Lessor
for review and approval prior to implementation.
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18.6 Lessor may enter the Premises and/or review Tenant's records at any reasonable time
during normal business hours to ensure that activities conducted on the Premises comply with the
requirements of this Section. Tenant may be required to implement a self -evaluation program to
demonstrate compliance with the requirements of this Section.
ARTICLE XIX
GENERAL CONDITIONS & MISCELLANEOUS PROVISIONS
19.1 Signs. Tenant agrees not to construct, maintain, or allow any signs, banners, flags, etc.,
upon the Premises except (a) as approved in writing in advance by Lessor, which approval may be
withheld in the sole and absolute discretion of the Lessor, or (b) required by any of Tenant's lenders,
provided that any such signage is in compliance with all applicable Laws. Tenant further agrees not
to construct, maintain, or allow billboards or outdoor advertising signs upon the Premises.
Unapproved signs, banners, flags, etc., may be removed by Lessor without prior notice to Tenant.
19.2 Nondiscrimination. Tenant agrees not to discriminate against any person or class of
persons by reason of sex, age (except as permitted by law), race, color, creed, physical handicap, or
national origin in employment practices and in the activities conducted pursuant to this Lease.
19.3 Taxes and Assessments. Pursuant to California Revenue and Taxation Code Section
107.6, Tenant is specifically informed that this Lease may create a possessory interest which is
subject to the payment of taxes levied on such interest. It is understood and agreed that all taxes and
assessments (including but not limited to said possessory interest tax) which become due and payable
upon the Premises or upon fixtures, equipment, or other property installed or constructed thereon,
shall be the full responsibility of Tenant, and Tenant shall cause said taxes and assessments to be
paid promptly.
19.4 Quitclaim of Interest upon Termination. Upon termination of this Lease for any
reason whatsoever in accordance with the terms of the Lease, Tenant shall execute, acknowledge,
and deliver to Lessor, within five (5) business days, a good and sufficient deed, in a form as approved
by the Lessor, whereby all right, title, and interest of Tenant in the Premises is quitclaimed back to
Lessor ("Quitclaim Deed"). The Quitclaim Deed shall then be recorded by Lessor to remove any
cloud on title created by this Lease. In the event that the Tenant fails to provide such Quitclaim Deed
within five (5) additional business days after written demand by either the County or City, the Parties
agree that the County and City will be damaged and entitled to compensation for those
damages. Such actual damages will, however, be extremely difficult to ascertain. Therefore, if the
Tenant does not provide the required Quitclaim Deed after such notice and cure period, in addition to
any other remedy provided by law or equity, the Tenant shall pay the Lessor $2,000 per day for every
day that passes until a Quitclaim Deed is delivered, which amount shall be deemed to constitute a
reasonable estimate of Lessor's damages and not a penalty. Such amount shall become due and
payable by Tenant to Lessor for each calendar day that passes beyond the cure period.
Notwithstanding the foregoing, if the Tenant has disputed the termination of the Lease by Lessor,
upon a final determination by a court of competent jurisdiction that the Lease has not been
terminated, Tenant shall not be subject to payment of the foregoing damages.
19.5 Public Records. Tenant acknowledges that any written information submitted to and/or
obtained by Lessor from Tenant or any other person or entity having to do with or related to this
Lease and/or the Premises, either pursuant to this Lease or otherwise, is a "public record" open to
inspection and copying by the public pursuant to the California Public Records Act (Government
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Code §6250, et seq.) ("CPRA") as now in force or hereafter amended, or any Law in substitution
thereof, or otherwise made available to the public, unless such information is exempt from disclosure
pursuant to the applicable sections of CPRA. In the event that a CPRA request is made for any
financial statements and records (not including Gross Receipts Statements) and the Lessor
determines that the records must be turned over, the Lessor will give Tenant fifteen (15) days'
written notice prior to turning over such records so that Tenant can take any necessary action,
including, but not limited to, injunctive relief, to prevent Lessor from turning over such financial
statements and records.
19.6 Attorney's Fees. In any action or proceeding brought to enforce or interpret any
provision of this Lease, or where any provision hereof is validly asserted as a defense, each Party
shall bear its own attorneys' fees and costs.
19.7 Payment Card Compliance. Should Tenant conduct credit/debit card transactions in
conjunction with Tenant's business with the County and/or Agency, on behalf of the County and/or
Agency, or as part of the business that Tenant conducts on the Premises, Tenant covenants and
warrants that it will during the course of such activities be Payment Card Industry Data Security
Standard ("PCl/DSS") and Payment Application Data Security Standard ("PA/DSS") compliant and
will remain compliant during the entire duration of its conduct of such activities. Tenant agrees to
immediately notify Lessor in the event Tenant should ever become non -compliant at a time when
compliance is required hereunder, and will take all necessary steps to return to compliance and shall
be compliant within ten (10) days of the commencement of any such interruption. Upon demand by
Lessor, Tenant shall provide to Lessor written certification of Tenant's PCl/DSS and/or PA/DSS
compliance.
19.8 Right to Work and Minimum Wage Laws.
19.8.1. In accordance with the United States Immigration Reform and Control Act of
1986, Tenant shall require its employees that directly or indirectly service the Premises, pursuant to
the terms and conditions of this Lease, in any manner whatsoever, to verify their identity and
eligibility for employment in the United States. Tenant shall also require and verify that its
contractors or any other persons servicing the Premises, pursuant to the terms and conditions of this
Lease, in any manner whatsoever, verify the identity of their employees and their eligibility for
employment in the United States.
19.8.2. Pursuant to the United States of America Fair Labor Standard Act of 1938, as
amended, and State of California Labor Code, Section 1178.5, Tenant shall pay no less than the
greater of the Federal or California Minimum Wage to all its employees that directly or indirectly
service the Premises, in any manner whatsoever. Tenant shall require and verify that all its
contractors or other persons servicing the Premises on behalf of the Tenant also pay their employees
no less than the greater of the Federal or California Minimum Wage.
19.8.3. Tenant shall comply and verify that its general contractor complies with all
other Federal and State of California laws for minimum wage, overtime pay, record keeping, and
child labor standards pursuant to the servicing of the Premises or terms and conditions of this Lease.
19.9 Declaration of Knowledge by Tenant. Tenant warrants that Tenant has carefully
examined this Lease and by investigation of the site and of all matters relating to the Lease
arrangements has fully informed itself as to all existing conditions and limitations affecting the
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construction of the Lease improvements and business practices required in the operation and
management of the uses contemplated hereunder.
19.10 Governing Law. This Lease shall be governed by and construed in accordance with
the laws of the State of California and the City.
19.11 Venue. The Parties hereto agree that this Lease has been negotiated and executed in
the State of California and shall be governed by and construed under the laws of California. In the
event of any legal action to enforce or interpret this Lease, the sole and exclusive venue shall be a
court of competent jurisdiction located in Orange County, California, and the Parties hereto agree to
and do hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure
Section 394. Furthermore, the Parties hereto specifically agree to waive any and all rights to request
that an action be transferred for trial to another county.
19.12 Headings and Titles. The captions of the Articles or Sections of this Lease are only to
assist the Parties in reading this Lease and shall have no effect upon the construction or interpretation
of any part hereof.
19.13 Interpretation. Whenever required by the context of this Lease, the singular shall
include the plural and the plural shall include the singular. The masculine, feminine and neuter
genders shall each include the other. In any provision relating to the conduct, acts or omissions of
Tenant, the term "Tenant' shall include Tenant's agents, employees, contractors, invitees,
successors or others using the Premises with Tenant's expressed or implied permission. In any
provision relating to the conduct, acts or omissions of County, the term "County" shall include
County's agents, employees, contractors, invitees, successors or others using the Premises with
County's expressed or implied permission. In any provision relating to the conduct, acts or omissions
of Agency, the term "Agency" shall include Agency's agents, employees, contractors, invitees,
successors or others using the Premises with Agency's expressed or implied permission.
19.14 Ambiguities. Each Party hereto has reviewed this Lease with legal counsel, and has
revised (or requested revisions of) this Lease based on the advice of counsel, and therefore any rules
of construction requiring that ambiguities are to be resolved against a particular Party shall not be
applicable in the construction and interpretation of this Lease or any exhibits hereto.
19.15 Successors and Assigns. Except as otherwise specifically provided in this Lease, all
of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective hens, personal representatives, successors and
assigns.
19.16 Time is of the Essence. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.
19.17 Severability. If any term or provision of this Lease is held invalid or unenforceable to
any extent under any applicable law by a court of competent jurisdiction, the remainder of this Lease
shall not be affected thereby, and each remaining term and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
19.18 Integration. This Lease, along with any exhibits, attachments or other documents
affixed hereto or referred to herein and related Agency permits, constitute the entire agreement
Page 155
80A-196
between County, Agency and Tenant relative to the leasing of the Premises. This Lease and such
exhibits, attachments and other documents may be amended or revoked only by an instrument in
writing signed by County, Agency and Tenant. County, Agency and Tenant hereby agree that no
prior agreement, understanding or representation pertaining to any matter covered or mentioned in
this Lease shall be effective for any purpose.
19.19 Notices. All notices or other communications required or permitted hereunder shall be
in writing, and shall be personally delivered or sent by registered or certified mail, postage prepaid,
return receipt requested, or electronic mail, shall be deemed received upon the earlier of (a) if
personally delivered, the date of delivery to the address of the person to receive such notice, (b) if
mailed, three (3) business days after the date of posting by the United States post office, (c) if given
by electronic mail, when sent if before 5:00 p.m., otherwise on the next business day, or (d) if
delivered by overnight delivery, one (1) business day after mailing. Any notice, request, demand,
direction or other communication sent by electronic mail must be confirmed within by letter mailed
or delivered within two business days in accordance with the foregoing.
Either Party may change the address for notices by giving the other Party at least ten (10) calendar
days' prior written notice of the new address.
If to Lessor: County of Orange
c/o CEO/Corporate Real Estate
333 W. Santa Ana Blvd, 3rd Floor
Santa, Ana, CA 92702
Attn: Chief Real Estate Officer
And to:
Housing Authority of the City of Santa Ana
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
Attn: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
If to Tenant: c/o The Related Companies of California, LLC
19201 Von Karman Avenue, Suite 900
Irvine, CA 92612
Attention: President
c/o A Community of Friends
3701 Wilshire Boulevard, Suite 700
Los Angeles, CA 90010
Attention: Dora Leong Gallo, President and Chief Executive Officer
And to:
Page 156
80A-197
With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street 64th Floor
Los Angeles. CA 90071
Attention: Lance Bocarsly, Esq.
19.20 Amendments. This Lease is the sole and only agreement between the Parties regarding
the subject matter hereof, other agreements, either oral or written, are void. Any changes to this
Lease shall be in writing and shall be properly executed by all Parties.
19.21 Limited Partner Cure Rights. In the event the Tenant is a partnership, the Lessor
agrees to accept a cure of any Event of Default by Tenant made by any one or more of the Tenant's
limited partners as if such cure had been made by Tenant, provided such cure is made in accordance
with the applicable provisions of this Lease.
19.22 Dispositions of Abandoned Property. If Tenant abandons or quits the Premises or is
dispossessed thereof by process of law or otherwise, title to any personal property belonging to and
left on the Premises thirty (30) days after such event shall, at County and/or Agency's option, be
deemed to have been transferred to County and/or Agency. County and/or Agency shall have the
right to remove and to dispose of such property at Tenant's cost including the cost of labor,
materials, equipment and an administrative fee equal to fifteen percent (15%) of the sum of such
costs without liability therefor to Tenant or to any person claiming under Tenant, and shall have no
need to account therefor. At Lessor's option, Lessor may provide Tenant with an invoice for such
costs, which invoice Tenant agrees to pay within fifteen (15) days of receipt.
19.23 Brokers. If Tenant has engaged a broker in this transaction pursuant to a separate
agreement, Tenant shall be solely responsible for the payment of any broker commission or similar
fee payable pursuant to such separate agreement. Tenant each hereby agree to indemnify and hold the
Lessor harmless from and against all costs, expenses or liabilities (including attorney fees and court
costs, whether or not taxable and whether or not any action is prosecuted to judgment) incurred by
the County and/or Agency in connection with any claim or demand by a person or entity for any
broker's, finder's or other commission or fee from the County and/or Agency in connection with the
Tenant's entry into this Lease and the transactions contemplated hereby based upon any alleged
statement or representation or agreement of the Tenant. No broker, finder or other agent of any Party
hereto shall be a third -party beneficiary of this Lease
19.24 No Partnership. This Lease shall not be construed to constitute any form of
partnership or joint venture between County, Agency and Tenant. County, Agency and Tenant
mutually acknowledge that no business or financial relationship exists between them other than as
County, Agency and Tenant, and that County and Agency is not responsible in any way for the debts
of Tenant or any other Party.
19.25 Authorization. County, Agency and Tenant (each, a "signing party") each represents
and warrants to the other that the person or persons signing this Lease on behalf of the signing party
has full authority to do so and that this Lease binds the signing party. Concurrently with the
execution of this Lease, the Tenant shall deliver to the Lessor a certified copy of a resolution of the
signing parry's board of directors or other governing board authorizing the execution of this Lease by
the signing party.
Page 157
.O •
19.26 Recording. This Lease itself shall not be recorded, but in the event that the Tenant
encumbers the leasehold as set forth in Article XVB, a memorandum hereof may be recorded in the
form of Exhibit D attached hereto (the "Memorandum"). The Memorandum may be executed
concurrently with this Lease and thereafter recorded in the Official Records of the County Recorder
on the Effective Date of this Lease has occurred. Tenant shall be responsible for the payment of all
charges imposed in connection with the recordation of the Memorandum, including, without
limitation, any documentary transfer tax imposed in connection with this transaction and all
recording fees and charges.
19.27 Exhibits. This Lease contains the following exhibits, schedules and addenda, each of
which is attached to this Lease and incorporated herein in its entirety by this reference:
Exhibit A:
Legal Description of the Premises
Exhibit A-1: Rendering of the Premises
Exhibit B:
Initial Improvements
Exhibit C:
Best Management Practices Fact Sheets
Exhibit D:
Form of Memorandum of Lease
19.28 Consent/Duty to Act Reasonably. Except as otherwise expressly provided herein,
whenever this Lease grants County, Agency and/or Tenant the right to take any action, grant any
approval or consent, or exercise any discretion, County, Agency and/or Tenant shall act reasonably
and in good faith and take no action which might result in the frustration of the other Parry's
reasonable expectations concerning the benefits to be enjoyed under this Lease.
19.29 Counterparts. For the convenience of the Parties to this Lease, this Lease may be
executed in several original counterparts, each of which shall together constitute but one and the
same agreement. Original executed pages may be assembled together into one fully executed
document.
19.30. No Merger. The interests created by this Lease shall not be extinguished by merger
of any or all of the ownership interests the Premises or the Improvements in one person or entity.
19.31 Cooperation of County and Agency. County and Agency hereby agree that (a)
Agency staff shall be responsible for administering the operation of the Project to insure it is being
used in conformance with this Lease, and (b) Agency staff shall serve as administrator of the Lease
with the Tenant and coordinate with the County as necessary. County and Agency hereby agree to
work cooperatively and expeditiously to provide written consent (or written refusal to provide
consent) to Tenant, the Leasehold Mortgagees and Limited Partner hereunder.
[Signatures On Following Pages]
Page 158
80A-199
IN WITNESS WHEREOF, the Parties have executed this Lease on the date first written above.
APPROVED AS TO FORM:
SONIA CARAVALHO
AUTHORITY GENERAL COUNSEL
By:
Ryan O. Hodge, Assistant City Attorney
Date
TENANT
WASHINGTON SANTA ANA HOUSING
PARTNERS, L.P., a California limited partnership
By: Related/Washington Santa Ana Development
Co., LLC, a California limited liability
company, its Administrative General Partner
By:
Frank Cardone, President
By: Supportive Housing LLC, a California
limited liability company
By: A Community of Friends, a California
nonprofit public benefit corporation,
its sole member/manager
IC
Executive
LESSOR
Dora Leong Gallo,
President and Chief
Officer
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
a public body, corporate and politic
By:
Steven A. Mendoza, Executive Director
Date
Page 159
80A-200
APPROVED AS TO FORM: COUNTY OF ORANGE, a political subdivision of
COUNTY COUNSEL the State of California
By:
Deputy
Thomas A. Miller, Chief Real Estate Officer
Date Orange County, California
Page 160
80A-201
1M:ILy111c3
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
Page 161
80A-202
Exhibit A
Legal Description of the Premises
The land referred to is situated in the County of Orange, City of Santa Ana, State of California,
and is described as follows:
That certain parcel of land situated in the City of Santa Ana, County of Orange, State of
California, being that portion of Parcel I of Parcel 73035 described in the Grant Deed recorded
July 24, 1991, Instrument No. 91-387576 of Official Records, together with that portion of
Parcel 73034 described in the Grant Deed recorded November 15, 1991, Instrument No. 91-
626431 of Official Records, lying southwesterly and westerly of those three (3) courses and the
Northwesterly extension of course Three (3) thereof, in the State Right of Way as shown on a
map filed in Book 194, pages 28 through 36 inclusive of Record of Surveys in said Office of said
County Recorder, said Three (3) courses being shown on sheet 2 of said map as:
1) North 21' 00' 58" West 286.98;
2) North 320 46' 23" West 157.90;
3) North 250 03' 45" West 62.42'.
EXCEPTING THEREFROM: That portion of above said Parcel 1, lying within the limits of the
Washington Avenue Cul-De-Sac as shown on said Sheet 2 of said Map.
APN: 398-092-14
That portion of the land allotted to Maria Ygnacia Alvarado De Moreno, as described in the final
decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868
in Book "B" Page 410 of Judgments of the District Court of the 17th Judicial District, in and for
Los Angeles County, California, described as follows:
Beginning at a point 1584.0 feet north and 301.05 feet west of an iron axle set at the intersection
of the centerlines of Fourth Street and Grand Avenue; thence North 717.80 feet; thence West
606.90 feet; thence South 717.80 feet; thence East 606.90 feet to the point of beginning.
EXCEPTING THEREFROM: That portion lying southeasterly of the northwesterly line of that
certain 104.00 foot strip of land described in Parcel A of Deed to the City of Santa Ana, recorded
June 25, 1970 in Book 9327, page 72 of Official Records.
ALSO EXCEPTING THEREFROM: That portion described as Parcel C in said Deed to the City
of Santa Ana.
ALSO EXCEPTING THEREFROM: That portion conveyed in the deed to the State of
California recorded January 10, 1992, Instrument 92-15188 of Official Records.
APN: 398-092-13
80A-203
M3:ILy111c3
EXHIBIT A-1
RENDERING OF THE PROPERTY
Page 162
80A-204
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80A-205 co
EXIHBIT B
INITIAL IMPROVEMENTS
The proposed Project includes the development of two residential buildings with 86 units
surrounding two interior, landscaped courtyard/amenity spaces. The Project includes 16 studio units,
26 one bedroom units, 22 two -bedroom units, 17 three -bedroom units, and 5 four -bedroom units. All
units will be flat apartments located on the fast, second, third and fourth floors. In addition, a
proposed sound wall is being positioned along the eastern property line adjacent to the US Interstate
5 ramp. Approximately 3,500 square foot of interior community amenities and leasing offices is
designed to accommodate supportive and management services.
The Project will be 100% affordable to households earning no more than 30 percent of Area Median
Income (AMI) for Orange County of which 43 units will be set -aside for Permanent Supportive
Housing (PSH), with one exempt 2-bedroom managers unit. The unit mix and rent restrictions are as
follows, provided, however, the rent and income restrictions applicable to the Project shall be set
forth in and subject to the terms of the County Loan Regulatory Agreement:
Bedroom
Size
30%
AMI (PSH)
30%
ANH
Manager's
Unit
Total Units
Studios
16
16
One -Bedroom
26
26
Two -Bedroom
1
20
1
22
Three -Bedroom
17
17
Four -Bedroom
5
5
TOTAL
43
42
1
86
Page 163
80A-206
EXHIBIT C
Best Management Practices
(`BMWs" Fact Sheets)
Best Management Practices can be found at: http://www.ocwatersheds.com/documentsibmp which
website may change from time to time.
BMPs apply to the TENANT's defined Premises and BMPs also apply to the TENANT's Contractor
therefore TENANT shall cause Contractor to be responsible for implementing and complying with
all BMP Fact Sheet requirements that apply to construction activity with respect to the
Improvements, and also including, without limiting the generality of the foregoing, site preparation,
landscaping, installation of utilities, street construction or improvement and grading or filling in or
on the Premises. TENANT is to be aware that the BMP clause within this Lease, along with all
related BMP Exhibits, may be revised, and may incorporate more than what is initially being
presented in this Lease. Suggested BMPs Fact Sheets may include, but may not be limited to, the
following list shown below and can be found at:
http://www.ocwatersheds.com/documents/bmp/industrialcommercialbusinessesactivities (which
website may change from time to time):
IC3 Building Maintenance
IC4 Carpet Cleaning
IC6 Contaminated or Erodible Surface Areas
IC7 Landscape Maintenance
IC9 Outdoor Drainage from Indoor Areas
IC 10 Outdoor Loading/Unloading of Materials
IC 12 Outdoor Storage of Raw Materials, Products, and Containers
IC 14 Painting, Finishing, and Coatings of Vehicles, Boats, Buildings, and Equipment
IC15 Parking & Storage Area Maintenance
IC 17 Spill Prevention and Cleanup
IC21 Waste Handling and Disposal
IC22 Eating and Drinking Establishments
IC23 Fire Sprinkler Testing/Maintenance
IC24 Wastewater Disposal Guidelines
Page 164
80A-207
EXIHBIT D
FORM OF MEMORANDUM OF LEASE
MEMORANDUM OF LEASE
This is a Memorandum of Lease ("Memorandum'') made and entered into as of this
day of 120 by and between the County of Orange, a political subdivision of the State
A of California, the Housinguthority of the City of Santa Ana, a public body, corporate and politic
(collectively, the "Lessor") and , ("Tenant'), residing at , upon the following
terms:
1. Lease. The provisions set forth in a written lease between the parties hereto dated
("Lease"), are hereby incorporated by reference into this Memorandum.
2. Subject Premises. The Premises which are the subject of the Lease are more particularly
described as on Exhibit A, attached hereto
3. Effective Date of Lease. The Lease shall be deemed to have commenced on (the
"Effective Date") as set forth within the terms of the Lease.
4. Term The Term of the Lease shall be Sixty -Five (65) years from the Effective Date as stated in
the written Lease. The Term shall commence on the date hereof and terminate Sixty -Two (62) years
from the Commencement Date, which is the date on which a Certificate of Occupancy is issued for
the Project, provided, however the Term shall be no longer than sixty five (65) years from the
Effective Date.
5. Duplicate Copies of the originals of the Lease are in the possession of the Lessor and Tenant and
reference should be made thereto for a more detailed description thereof and for resolution of any
questions pertaining thereto. The addresses for Lessor and Tenant are as follows:
If to Lessor: County of Orange
c/o CEO/Corporate Real Estate
333 W. Santa Ana Blvd, 3rd Floor
Santa, Ana, CA 92702
Attn: Chief Real Estate Officer
And to:
Housing Authority of the City of Santa Ana
20 Civic Center Plaza (M-26)
P.O. BOX 1988
Santa Ana, California 92702
Attn: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Page 165
Fi l fflI i
If to Tenant: c/o The Related Companies of California, LLC
19201 Von Karman Avenue, Suite 900
Irvine, CA 92612
Attention: President
c/o A Community of Friends
3701 Wilshire Boulevard, Suite 700
Los Angeles, CA 90010
Attention: Dora Leong Gallo
And to:
With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street, 64th Floor
Los Angeles. CA 90071
Attention: Lance Bocarsly, Esq.
6. Purpose. It is expressly understood and agreed by all Parties that the sole purpose of this
Memorandum is to give record notice of the Lease; it being distinctly understood and agreed that said
Lease constitutes the entire lease and agreement between Lessor and Tenant with respect to the
Premises and is hereby incorporated by reference. The Lease contains and sets forth additional rights,
terms, conditions, duties, and obligations not enumerated within this instrument which govern the
Lease. This Memorandum is for informational purposes only and nothing contained herein may be
deemed in any way to modify or vary any of the terms or conditions of the Lease. In the event of any
inconsistency between the terms of the Lease and this instrument, the terms of the Lease shall
control. The rights and obligations set forth herein shall be binding upon and inure to the benefit of
the Parties hereto and their respective hens, representatives, successors, and assigns.
Page 166
80A-209
1W:ILy111c3
IN WITNESS WHEREOF, the Parties hereto have executed this Memorandum pursuant to due
authorization on the dates herein acknowledged.
COUNTY:
By:
Name:
Title:
AGENCY:
By:
Name:
Title:
TENANT:
By:
Name:
Title:
Name:
Title:
Page 167
80A-210
EKK91-�.;A
GROUND LEASE
THIS GROUND LEASE ("Lease") is made and effective as of the day of
2020 ("Effective Date") by and between the COUNTY OF ORANGE, a political subdivision of the
State of California, the HOUSING AUTHORITY OF THE CITY OF SANTA ANA, a public body,
corporate and politic, as tenants -in -common (respectively, the "County" and the "Agency", and
collectively "Lessor") and WASHINGTON SANTA ANA HOUSING PARTNERS, L.P., a
California limited partnership (hereinafter called "Tenant") (also referred to hereinafter each as
"Party" or collectively as the "Parties").
RECITALS
A. County and Agency are tenants -in -common of a certain property that encompasses the
Premises (as hereinafter defined).
B. County and Agency have executed a Joint Powers Agreement ("Joint Powers
Agreement"), pursuant to which the County and Agency agreed to lease the Premises to the Tenant
to develop, entitle and construct an 86-unit multifamily affordable housing project, as more fully
described herein, upon the fulfillment of certain conditions precedent as set forth therein.
C. The Parties have executed an Option Agreement, dated 12020
("Option Agreement"), pursuant to which the Lessor had agreed to lease the Premises to the Tenant
upon the fulfillment of certain conditions precedent.
D. The County and Agency acknowledge that the conditions precedent required by the Joint
Powers Agreement and Option Agreement have been fulfilled and therefore the Parties desire that
Tenant shall ground lease the Premises from Lessor on the terms set forth herein.
E. Lessor and Tenant have jointly agreed to enter into this Lease as of the date set forth
above.
F. On July 2, 2019, the Agency authorized the Executive Director of the Agency and the
Recording Secretary to execute a pre -commitment letter with the Tenant to enter into negotiations for
a sixty-five (65) year ground -lease of 1126 E. Washington Ave for the development of the
Crossroads at Washington affordable housing project located at 1126 and 1146 E. Washington
Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14).
G. On July 2, 2019, the City of Santa Ana authorized the City Manager and the Clerk of the
Council to execute a pre -commitment letter with the Tenant for $3,971,440 in affordable housing
funds consisting of $963,951 in Neighborhood Stabilization Program funds and $3,007,489 in
HOME Investment Partnerships Program funds, for the development of the Crossroads at
Washington affordable housing project located at 1126 and 1146 E. Washington Avenue, Santa Ana,
CA 92701 (APNs 398-092-13 and 398-092-14).
Page 11
80A-211
NOW, THEREFORE, in consideration of the above recitals, which are hereby incorporated into this
Lease by reference, and mutual covenants and agreements hereinafter contained, County, Agency
and Tenant mutually agree to the following:
ARTICLE I
DEFINITIONS
1.1 Definitions: The following defined terms used in this Lease shall have the meanings set
forth below. Other terms are defined in other provisions of this Lease, and shall have the definitions
given to such terms in such other provisions.
1.1.1. "Affiliate" shall mean, with respect to any person (which as used herein
includes an individual, trust or entity), any other person which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control with, such person.
1.1.2. "Agency" shall mean the Housing Authority of the City of Santa Ana, acting
as the Housing Successor Agency, a public body, corporate and politic, exercising governmental
functions and powers, and organized and existing under the California Redevelopment Law. The
principal office of the Agency is located at 20 Civic Center Plaza, Santa Ana, California 92702.
"Agency" shall also refer to the City of Santa Ana where the context dictates, to the effect that the
City of Santa Ana shall have all rights granted to the Agency hereunder.
1.1.3. "Aggregate Transfer" shall refer to the total "Ownership Interest(s)" in
Tenant transferred or assigned in one transaction or a series of related transactions (other than an
Excluded Transfer) occurring since the latest of (a) the Effective Date, (b) the execution by Tenant of
this Lease, or (c) the most recent Tenant Ownership Change; provided, however, that there shall be
no double counting of successive transfers of the same interest in the case of a transaction or series of
related transactions involving successive transfers of the same interest. Isolated and unrelated
transfers shall not be treated as a series of related transactions for purposes of the definition of
"Aggregate Transfer."
1.1.4. "Annual Operating Expenses" means all regular and customary annual
expenses incurred in relation to the operation of the Premises, including the Improvements, as
reflected on the annual budget that Tenant shall prepare and abide by each year during the Term of
the loans made by the Agency, City, and County, separately, for the Improvements and for so long as
Base Rent remains unpaid and outstanding, as approved in writing by the Lessor. Said Annual
Operating Expenses shall include a reasonable property management and administrative fee, fees
related to the tax credit syndication of the Premises, utility charges, operating and maintenance
expenses, Project property taxes and Project insurance premiums, and such other costs as approved
by the Lessor, in his/her reasonable discretion. Tenant will deliver an annual budget for the
following year no later than December 1 for each year following issuance of a permanent certificate
of occupancy for the Improvements. Lessor shall deliver any comments, or its approval to such
operating budget within thirty (30) days of receipt thereof. If an operating budget for the following
year has not been approved by Lessor and Tenant prior to January 1 of such year, the annual
operating budget from the previous year shall apply until a new operating budget is approved.
Notwithstanding the foregoing, in no event shall Annual Operating Expenses include any costs, fees,
fines, charges, penalties, awards, judgments or expenses (including, but not limited to legal and
accounting fees and expenses) which are due to or arising out of the Tenant's (A) breach or default of
any mortgage loan, (B) fraudulent acts or willful misconduct or (C) breach or default under any other
contract, lease or agreement pertaining to the Project. Annual Operating Expenses shall also not
Page 12
80A-212
include other expenses not related to the Project's operations such as depreciation, amortization,
accrued principal and interest expense on deferred payment debt and capital improvement
expenditures.
1.1.5. "Annual Project Revenue" means all annual revenue generated by the
Project from any source, including, but not limited to, rent payments, governmental assistance
housing payments, laundry and other vending machine and pay telephone income. Notwithstanding
the foregoing, Annual Project Revenue shall not include the following items: (a) security deposits
from subtenants (except when applied by Tenant to rent or other amounts owing by subtenants); (b)
capital contributions to Tenant by its members, partners or shareholders (including capital
contributions required to pay deferred developer fee); (c) condemnation or insurance proceeds; (d)
there shall be no line item, expense, or revenue shown allocable to vacant unit(s) at the Project; or (e)
receipt by an Affiliate of management fees or other bona fide arms -length payments for reasonable
and necessary Operating Expenses associated with the Project.
1.1.6. "Auditor -Controller" shall mean the Auditor -Controller, County of Orange,
or designee, or upon written notice to Tenant, such other person as may be designated by the Board
of Supervisors.
1.1.7. "Base Rent" shall mean a total of six million four hundred and fifty thousand
dollars ($6,450,000) due and owing and payable in full on the Commencement Date, but if not paid
in full on the Commencement Date, then the Base Rent amount paid in accordance with this Lease,
including pursuant to Article III, below, with four million, one hundred and eight thousand, one
hundred and thirty-six dollars ($4,108,136) being paid to the Agency pursuant to Section 3.1.2 and
two million, three hundred and forty-one thousand, eight hundred and sixty-four dollars ($2,341,864)
being paid to the County pursuant to Section 3.1.1.
Address
APN
Size
(Acres)
Size
(SF)
Land
Percentage
Value
Allocation
City Owned Site
398-092-14
1.456
63,423
63.69%
$4,108,136
County Owned Site
398-092-13
0.83
36,155
36.31%
$2,341,864
Total
2.286
99,578
100.00%
$6,450,000
1.1.8. "Board of Supervisors" shall mean the Board of Supervisors of the County of
Orange, a political subdivision of the State of California, the governing body of the County.
1.1.9. "Certificate of Occupancy" shall mean a temporary or final certificate of
occupancy (or other equivalent entitlement, however designated) which entitles Tenant to commence
normal operation and occupancy of the Improvements.
1.1.10. "Chief Real Estate Officer" shall mean the Chief Real Estate Officer,
County Executive Office, County of Orange, or designee, or upon written notice to Tenant, such
other person as may be designated by the County Board of Supervisors.
1.1.11. "City" shall mean the City of Santa Ana, California, a charter city and
municipal corporation. "City" shall also refer to the Agency where the context dictates, to the effect
that the Agency shall have all the rights granted to the City hereunder. "City Council" shall mean
the City Council of the City of Santa Ana.
Page l3
80A-213
1.1.12. "Claims" shall mean liens, claims, demands, suits, judgments, liabilities,
damages, fines, losses, penalties, costs and expenses (including without limitation reasonable
attorneys' fees and expert witness costs, and costs of suit), and sums reasonably paid in settlement of
any of the foregoing.
1.1.13. "Commencement Date" shall mean the date on which a Certificate of
Occupancy is issued for the Project, and on which the Term shall commence and Base Rent shall
become due and payable.
1.1.14. "Contractor" shall mean Tenant's general contractor for the construction of
the Improvements.
1.1.15. "County" shall mean the County of Orange, a political subdivision of the
State of California.
1.1.16. "Effective Date" is defined in the introductory paragraph to this Lease, and
shall be the date on which Tenant take possession of the Premises and is entitled to commence
construction pursuant to Article V, below.
1.1.17. "Event of Default" is defined in Section 11.1.
1.1.18. "Excluded Transfer" shall mean any of the following:
(a) A transfer by any direct or indirect partner, shareholder, or member of
Tenant (or of a limited partnership, corporation, or limited liability company that is a direct or
indirect owner in Tenant's ownership structure) as of the Effective Date or the date on which a
Tenant Ownership Change occurred as to the interest transferred, to any other direct or indirect
partner, shareholder, or member of Tenant (or of a limited partnership, corporation, or limited
liability company that is a direct or indirect owner in Tenant's ownership structure) as of the
Effective Date, including in each case to or from a trust for the benefit of the immediate family of
any direct or indirect partner or member of Tenant who is an individual;
(b) A transfer of an Ownership Interest in Tenant or in constituent entities of
Tenant (i) to a member of the immediate family of the transferor (which for purposes of this Lease
shall be limited to the transferor's spouse, children, parents, siblings, and grandchildren); (ii) to a
trust for the benefit of a member of the immediate family of the transferor, (iii) from such a trust or
any trust that is an owner in a constituent entity of Tenant as of the Effective Date, to the settlor or
beneficiaries of such trust or to one or more other trusts created by or for the benefit of any of the
foregoing persons, whether any such transfer described in this subsection is the result of gift, devise,
intestate succession, or operation of law; or (iv) in connection with a pledge by any partners or
members of a constituent entity of Tenant to an affiliate of such partner or member;
(c) A transfer of a direct or indirect interest resulting from public trading in
the stock or securities of an entity, when such entity is a corporation or other entity whose stock
and/or securities is/are traded publicly on a national stock exchange or traded in the over-the-counter
market and the price for which is regularly quoted in recognized national quotation services;
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(d) A mere change in the form, method, or status of ownership (including,
without limitation, the creation of single -purpose entities) as long as the ultimate beneficial
ownership remains the same as of the Effective Date, or is otherwise excluded in accordance with
subsections (a) — (c) above;
(e) A transfer to an Affiliated nonprofit public benefit corporation or for -
profit corporation, or to a limited partnership whose general partner is a nonprofit corporation, for -
profit corporation or limited liability company Affiliated with the Tenant or the Tenant's general
partner, subject to the County and Agency's right to reasonably approve the agreement to effect such
assignment or transfer;
(f) The lease, assignment of lease or sublease of any individual residential
unit in the Improvements;
(g) A transfer of the Tenant's interest in the Premises by foreclosure or deed
in lieu of foreclosure (i) to any bona fide third -party lender holding a lien encumbering the Premises
(or its nominee), and (ii) by a Lender Foreclosure Transferee to a third -party made in accordance
with Section 17.6.5;
(h) Transfers of any limited partnership or membership interest in the Tenant
to an investor solely in connection with the tax credit syndication of the Premises in accordance with
Section 42 of the Internal Revenue Code of 1986, as amended (the "Tax Credit Laws"), (including,
without limitation, a subsequent transfer of the Limited Partner's interest to an Affiliate of the
Limited Partner), provided, such syndication shall not extend the Term of this Lease;
(i) The grant or exercise of an option agreement or right of first refusal solely
in connection with the tax credit syndication of the Premises in accordance with the Tax Credit Laws
provided that the syndication shall not extend the Term of this Lease;
0) The removal and replacement of one or both of Tenant's general partners
pursuant to the terms of Tenant's Partnership Agreement as of the Effective Date and replacement by
the Limited Partner, or an Affiliate thereof, or
(k) Any assignment of the Lease by Tenant to an Affiliate of Tenant or to a
Mortgagee as security in which there is no change to the direct and indirect beneficial ownership of
the leasehold interest.
1.1.19. "Force Majeure Event" is defined in Article XTV.
1.1.20. "Hazardous Material(s)" is defined in Section 4.5.
1.1.21. "HCD" shall mean the California Department of Housing and Community
Development.
1.1.22. "Improvement Costs" shall mean the final actual construction costs incurred
by Tenant in connection with the construction of the Improvements and in accordance with the terms
of this Lease, excluding ordinary repair and maintenance costs and any Permitted Capital
Expenditures paid for out of the Capital Improvement Fund.
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1.1.23. "Improvements" shall mean and includes all buildings (including above-
ground and below ground portions thereof, and all foundations and supports), building systems and
equipment (such as HVAC, electrical and plumbing equipment), physical structures, fixtures,
hardscape, paving, curbs, gutters, sidewalks, fences, landscaping and all other improvements of any
type or nature whatsoever now or hereafter made or constructed on the Premises. The term
Improvements shall mean the Initial Improvements and any replacement improvements constructed
in accordance with the terms of this Lease. During the entire Term, the Improvements will be
restricted to the following uses:
(a) multifamily affordable housing,
(b) permanent supportive housing units and related services, and
(c) related commercial and community -serving uses as needed for the siting of the
affordable housing and supportive housing units, as approved by the Lessor.
1.1.24. "Includes" shall mean "includes but is not limited to" and "including" shall
mean "including but is not limited to."
1.1.25. "Initial Improvements" shall mean the improvements first constructed by
Tenant on the Premises at its sole cost and expense as more particularly described in Exhibit B
attached hereto and incorporated by reference herein.
1.1.26. "Interest Rate" shall mean the lower of: (a) the reference or prime rate of
U.S. Bank National Association, in effect from time to time plus three percent (3%); or (b) the
highest rate of interest permissible under the Laws not to exceed the rate of twelve percent (12%) per
annum.
1.1.27. "Laws" shall mean all laws, codes, ordinances, statutes, orders and
regulations now or hereafter made or issued by any federal, state, county, local or other governmental
agency or entity that are binding on and applicable to the Premises and Improvements.
1.1.28. "Lease" shall mean this Ground Lease (including any and all addenda,
amendments and exhibits hereto), as now or hereafter amended.
1.1.29. "Leasehold Estate" is defined in Section 17.1.1.
1.1.30. "Leasehold Foreclosure Transferee" is defined in Section 17.1.2.
1.1.31. "Leasehold Mortgage" is defined in Section 17.1.3.
1.1.32. "Leasehold Mortgagee" is defined in Section 17.1.4.
1.1.33. "Lender" shall mean: (a) a bank, savings bank, investment bank, savings and
loan association, mortgage company, insurance company, trust company, commercial credit
corporation, real estate investment trust, pension trust or real estate mortgage investment conduit; or
(b) some other type of lender engaged in the business of making commercial loans, provided that
such other type of lender has total assets of at least $2,000,000 and capital/statutory surplus or
shareholder's equity of at least $500,000,000 (or a substantially similar financial capacity if the
foregoing tests are not applicable to such type of lender); or (c) a local, state or federal governmental
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entity, including but not limited to HCD, which provides predevelopment, acquisition, construction
and/or permanent financing for Tenant's acquisition and development of the Property.
1.1.34. "Lessor's Interest" shall mean all of County's and Agency's interests in the
real property, the Premises, this Lease as tenants -in -common and their existing and reversionary
interest in the real property, Premises, as well as the Improvements upon the expiration of the Term
or earlier termination thereof.
1.1.35. "Lessor Parties" shall mean, collectively and individually, the County, the
Agency and their respective Affiliates, governing boards, agents, employees, members, officers,
directors and attorneys.
1.1.36. "Limited Partner" shall mean any limited partner or investor member (and
its successors and/or assigns) of Tenant and shall include all references to "investor" in this Ground
Lease.
1.1.37. "Net Refinancing Proceeds" is defined in Section 3.2.
1.1.38. "Net Syndication Proceeds" is defined in Section 3.2.
1.1.39. "New Lease" is defined in Section 17.7.1.
1.1.40. "Operating Costs" is defined in Section 3.4.1.
1.1.41. "Ownership Interests" shall mean the share(s) of stock, partnership
interests, membership interests, other equity interests or any other direct or indirect ownership
interests in Tenant, regardless of the form of ownership and regardless of whether such interests are
owned directly or through one or more layers of constituent partnerships, corporations, limited
liability companies, or trusts.
1.1.42. "Partnership Related Fees" shall mean the following fees of Tenant (or
partners thereof pursuant to Tenant's Partnership Agreement) which are actually paid including:
(i) a limited partner asset management fee payable to the Limited Partner in the
annual amount of $5,000 (increased annually by 3%); and
(ii) partnership management fee (administrative and/or managing general partner)
payable to the general partners of Tenant in the aggregate annual amount of $20,000 (increased
annually by 3%).
1.1.43. "Person" shall include firms, associations, partnerships, joint ventures, trusts,
corporations and other legal entities, including public or governmental bodies, agencies or
instrumentalities, as well as natural persons.
1.1.44. "Premises" shall mean that certain real property containing approximately
2.28 acres of undeveloped land in the City, together with all easements, rights and privileges
appurtenant thereto, to be leased to Tenant pursuant to this Lease and on which Tenant intends to
construct the Improvements. The legal description of the Premises is attached hereto as Exhibit A.
A rendering showing the approximate boundaries of the Premises is attached hereto as Exhibit A-1.
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1.1.45. "Project" shall mean the Improvements, and all related appurtenances,
constructed by Tenant on the Premises.
1.1.46. "Rent" shall mean and includes the County Base Rent, the Agency Base
Rent, and Additional Rent payable by Tenant under this Lease.
1.1.47. "Residual Receipts" means the Annual Project Revenue less (A) Annual
Operating Expenses (hereinafter defined), (B) obligated debt service on Leasehold Mortgages for the
funding of the Improvements approved in writing by the Lessor at the closing of the construction
financing for the Improvements or as otherwise approved pursuant to Section 17.2, below, (C)
payment obligations approved in writing by the Lessor at the closing of the construction financing for
the Improvements, (D) Partnership Related Fees (including accrued by unpaid Partnership Related
Fees from the prior year or years), (E) repayment of loans, if any, made by Limited Partner to Tenant
for development and/or operating expense deficits on terms reasonably acceptable to Lessor, (F)
repayment of loans, if any, made by a general partner of Tenant solely for development and/or
operating expense deficits on terms reasonably acceptable to Lessor, (G) deferred developer fee, and
(IT) scheduled deposits to reserves approved in writing by the Lessor at the closing of the
construction financing for the Improvements (or such higher reserve deposits as may be reasonably
required by any Leasehold Mortgagee).
1.1.48. "Risk Manager" shall mean the Manager of County Executive Office, Risk
Management, County of Orange, or designee, or upon written notice to Tenant, such other person as
may be designated by the Board of Supervisors and the Risk Manager for the City of Santa Ana, or
designee, or upon written notice to Tenant, such other person as may be designated by the City
Council.
1.1.49. "Taxes" is defined in Section 3.11.2.
1.1.51. "TCAC" is defined as the California Tax Credit Allocation Committee.
1.1.52. "Tenant Group" shall mean Tenant and Tenant's Affiliates, agents,
employees, members, officers, directors and attorneys.
1.1.53. "Tenant Ownership Change" shall mean (a) any transfer or assignment by
Tenant of the Leasehold Estate or (b) any "Aggregate Transfer" of at least twenty five percent (25%)
of the "Ownership Interest(s)" in Tenant, in each case that is not an "Excluded Transfer."
1.1.54. "Tenant's Partnership Agreement" shall mean Tenants Amended and
Restated Agreement of Limited Partnership dated as of
1.1.55. "Term" is defined in Section 2.2.
1.1.56. "Transfer" is defined in Section 10.1.1.
1.1.57. "Transfer Notice" is defined in Section 10.4.
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1.1.58. "Treasurer -Tax Collector" shall mean the Treasurer -Tax Collector, County
of Orange, or designee, or upon written notice to Tenant, such other person or entity as may be
designated by the Board of Supervisors.
1.1.59. "Utility Costs" is defined in Section 3.4.1.
1.1.60. "Work" shall mean both Tenant's construction activity with respect to the
Improvements, including permitted future changes, alterations and renovations thereto and also
including, without limiting the generality of the foregoing, site preparation, landscaping, installation
of utilities, street construction or improvement and grading or filling in or on the Premises.
ARTICLE II
LEASE OF PROPERTY
2.1 Lease of Premises.
2.1.1. Lessor hereby leases the Premises to Tenant for the Term, and Tenant hereby
leases the Premises from Lessor for the Term, subject to the terms, conditions, covenants, restrictions
and reservations of this Lease.
2.1.2. Warranty of Peaceful Possession. Lessor covenants and warrants that, subject
to the Tenant's payment of Rent and performance and observation of all of the covenants, obligations
and agreements herein contained and provided to Tenant, Tenant shall and may peaceably and
quietly have, hold, occupy, use and enjoy the Premises during the Term and may exercise all of its
rights hereunder. Except as otherwise set forth herein, the Lessor covenants and agrees that they
shall not grant any mortgage or lien on or in respect of its fee interest in the Premises unless the same
is expressly subject and subordinate to this Lease or any New Lease.
2.2 Term. The "Term" of this Lease shall commence on the Effective Date of this Lease,
and shall expire at 12:00 midnight Pacific Standard Time on the 62nd anniversary of the
Commencement Date, unless sooner terminated as a result of Tenant's non-compliance with any
terms, conditions, covenants, restrictions or reservations of this Lease. Notwithstanding the
foregoing, the Term shall not exceed sixty five (65) years from the Effective Date.
2.3 Termination at End of Term. This Lease shall terminate without need of further
actions of any Party at 12:00 midnight Pacific Standard Time on the last day of the Term.
2.4 Condition of the Premises. TENANT HEREBY ACCEPTS THE PREMISES "AS
IS", AND ACKNOWLEDGES THAT THE PREMISES IS IN SATISFACTORY
CONDITION. COUNTY AND AGENCY MAKES NO WARRANTY, IMPLIED OR
OTHERWISE, AS TO THE SUITABILITY OF THE PREMISES FOR TENANT'S
PROPOSED USES. COUNTY AND AGENCY MAKE NO COVENANTS OR
WARRANTIES, IMPLIED OR OTHERWISE, RESPECTING THE CONDITION OF THE
SOIL, SUBSOIL, OR ANY OTHER CONDITIONS OF THE PREMISES OR THE
PRESENCE OF HAZARDOUS MATERIALS, NOR DOES COUNTY OR AGENCY
COVENANT OR WARRANT, IMPLIED OR OTHERWISE, AS TO THE SUITABILITY OF
THE PREMISES FOR THE PROPOSED DEVELOPMENT, CONSTRUCTION OR USE BY
TENANT. COUNTY AND AGENCY SHALL NOT BE RESPONSIBLE FOR ANY LAND
SUBSIDENCE, SLIPPAGE, SOIL INSTABILITY OR DAMAGE RESULTING
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THEREFROM. COUNTY AND AGENCY SHALL NOT BE REQUIRED OR OBLIGATED
TO MAKE ANY CHANGES, ALTERATIONS, ADDITIONS, IMPROVEMENTS OR
REPAIRS TO THE PREMISES. TENANT SHALL RELY ON ITS OWN INSPECTION AS
TO THE SUITABILITY OF THE PREMISES FOR THE INTENDED USE.
TENANT INITIALS:
2.5 Limitations of the Leasehold. This Lease and the rights and privileges granted Tenant
in and to the Premises are subject to all covenants, conditions, restrictions, and exceptions of record
as of the date hereof or otherwise disclosed to Tenant prior to the date hereof. Nothing contained in
this Lease or in any document related hereto shall be construed to imply the conveyance to Tenant of
rights in the Premises which exceed those owned by Lessor, or any representation or warranty, either
express or implied, relating to the nature or condition of the Premises or County's or Agency's
interest therein.
2.6 Tenant's Investigation. Tenant acknowledges that it is solely responsible for
investigating the Premises to determine the suitability thereof for the uses contemplated by Tenant.
Tenant further acknowledges by executing this Lease that it has completed its investigation and has
made such determinations as Tenant believes may be required under the circumstances.
ARTICLE III
TOTAL RENT
3.1 Base Rent. Throughout the Term of this Lease, regardless of an earlier termination date
Tenant shall pay to the County and the Agency the Base Rent as set forth herein.
3.1.1 County Base Rent. Tenant shall make annual payments to County of thirty-
three and four -tenths percent (33.4%) of the then available Residual Receipts (defined above), but
only to the extent said Residual Receipts are available, until the amount of two million, three hundred
and forty-one thousand, eight hundred and sixty-four dollars ($2,341,864) is fully paid ("County
Base Rent"). County Base Rent shall only become due after the Tenant has repaid that certain loan
from the County awarded under the 2016 Permanent Supportive Housing Notice of Funding
Availability, Addendum One, evidenced by a Loan Agreement, Promissory Note and Leasehold
Deed of Trust, in the amount of $2,280,701, which is also being paid out of the same thirty-three and
four -tenths percent (33.4%) of the Residual Receipts. On the last day of the Term the then
outstanding amount of the County Base Rent shall be paid in full if not already paid by that time.
County Base Rent will bear interest commencing on the Commencement Date at the simple rate of
three percent (3%) per year until paid in full. Once the County Base Rent has been paid in full with
interest, Tenant shall have no further obligation for County Base Rent under this Lease.
3.1.2 Agency Base Rent. Tenant shall also make annual payments to Agency of
thirty-three and one-third percent (33.3%) of the then available Residual Receipts (defined above),
but only to the extent said Residual Receipts are available, until the amount of four million, one
hundred and eight thousand, one hundred and thirty-six dollars ($4,108,136) is fully paid ("Agency
Base Rent"). Agency Base Rent shall only become due after the Tenant has repaid those two certain
loans from the City, each evidenced by a Loan Agreement, Promissory Note, Deed of Trust, and
Affordability Restrictions on Transfer of Property dated , 20 , in the amount
of $3,007,489.00, and dated 120 , in the amount of $963,951, which is also
being paid out of the same thirty-three and one-third percent (33.3%) of the Residual Receipts. On
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the last day of the Term the then outstanding amount of the Agency Base Rent shall be paid in full if
not already paid by that time. Agency Base Rent will bear interest commencing on the
Commencement Date at the simple rate of three percent (3 °/u) per year until paid in full. Once the
Agency Base Rent has been paid in full, Tenant shall have no further obligation for Agency Base
Rent under this Lease.
3.2 Net Refinancing Proceeds/Net Syndication Proceeds. Any Net Refinancing Proceeds
or Net Syndication Proceeds received by Tenant shall be used to pay any unpaid Base
Rent. Additionally, the Tenant's right and obligation to use such net proceeds to pay Base Rent is
subject to the rights of Leasehold Mortgagees to control the use of such proceeds pursuant to the
terms of their respective loan documents, all of which have been reviewed and reasonably approved
by the Lessor and is further subject to the consent of TCAC to the extent required under the
applicable regulations or the extended use agreement. Without limiting application of those loan
documents and TCAC regulations and requirements, in no case shall Tenant be permitted to retain
Net Refinancing Proceeds or Net Syndication Proceeds without the prior written consent of the
Lessor, until full satisfaction of the unpaid Base Rent. Notwithstanding the foregoing, this Section
3.2 shall not apply to (i) any Excluded Transfer or (ii) any financing described in Section 17.2.
"Net Refinancing Proceeds" shall be defined as the proceeds from the refinancing of any loan
approved by Lessor hereunder, net of all of the following: the amount of the financing which is
satisfied out of such proceeds, closing costs, costs to rehabilitate the Project, including the costs
necessary to obtain refinancing proceeds (such as consultant, legal and other consultant costs), the
soft costs related to the rehabilitation of the Project (such as architecture, engineering and other
consultant costs, and all required relocation costs), and all hard costs of the rehabilitation, all of
which have been reviewed and reasonably approved by the Lessor.
"Net Syndication Proceeds" shall be defined as syndication proceeds net of final Project hard
and soft construction costs, including developer fee, based on a cost certification completed at the
end of construction, and syndication costs all of which has been reviewed and reasonably approved
by the Lessor.
3.3 Triple Net Rent. It is the intent of the Parties that all Rent shall be absolutely net to
Lessor and that, except as otherwise provided herein, Tenant will pay all costs, charges, insurance
premiums, taxes, utilities, expenses and assessments of every kind and nature incurred for, against or
in connection with the Premises which arise or become due during the Term as a result of Tenant's
use and occupancy of the Premises. Under no circumstances or conditions, whether now existing or
hereafter arising, or whether beyond the present contemplation of the Parties, shall County or Agency
be obligated or required to make any payment of any kind whatsoever or be under any other
obligation or liability under this Lease except as expressly provided herein.
3.4 Insufficient Funds. For purposes of this Section 3.4, Rent shall have the same meaning
as stated in Section 1.1.42. If any payment of Rent or other fees made by check is returned due to
insufficient funds or otherwise, County and Agency shall have the right to require Tenant to make all
subsequent Rent payments by cashier's check, certified check or automated clearing house debit
system. All Rent or other fees shall be paid in lawful money of the United States of America,
without offset or deduction or prior notice or demand. No payment by Tenant or receipt by County
and Agency of a lesser amount than the Rent or other fees due shall be deemed to be other than on
account of the Rent or other fees due, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and satisfaction, and County
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and Agency shall accept such check or payment without prejudice to County's and Agency's right to
recover the balance of the Rent or other fees or pursue any other remedy available to the County or
Agency in this Lease.
3.5 Reserved.
3.6 Additional Rent.
3.6.1. Additional Rent. During the Term, the Base Rent shall be absolutely net to
County and Agency so that all costs (including but not limited to Operating Costs and Utility Costs,
as defined below), fees, taxes (including but not limited to Real Estate Taxes and Equipment Taxes,
as defined below), charges, expenses, impositions, reimbursements, and obligations of every kind
relating to the Premises shall be paid or discharged by Tenant as additional rent ("Additional
Rent"). Additional Rent shall also include such amounts as described in Article XI. As more
particularly set forth in Sections 3.6.3 and 3.6.6, below, Tenant has the right to pay under protest the
foregoing Additional Rent, as applicable, and defend against the same. Any imposition rebates shall
belong to Tenant.
3.6.2. Taxes. During the Term, Tenant shall pay directly to the taxing authorities all
Taxes (as herein defined) at least ten (10) days prior to delinquency thereof. For purposes hereof,
"Taxes" shall include any form of assessment, license fee, license tax, business license fee,
commercial rental tax, levy, penalty, sewer use fee, real property tax, charge, possessory interest tax,
tax or similar imposition (other than inheritance or estate taxes), imposed by any authority having the
direct or indirect power to tax, including any city, county, state or federal government, or any school,
agricultural, lighting, drainage, flood control, water pollution control, public transit or other special
district thereof, as against any legal or equitable interest of County or Agency in the Premises or any
payments in lieu of taxes required to be made by County or Agency, including, but not limited to, the
following:
(a) Any assessment, tax, fee, levy, improvement district tax, charge or similar
imposition in substitution, partially or totally, of any assessment, tax, fee, levy, charge or similar
imposition previously included within the definition of Taxes. It is the intention of Tenant and
Lessor that all such new and increased assessments, taxes, fees, levies, charges and similar
impositions be included within the definition of "Taxes" for the purpose of this Lease.
(b) Any assessment, tax, fee, levy, charge or similar imposition allocable to or
measured by the area of the Premises or the rent payable hereunder, including, without limitation,
any gross income tax or excise tax levied by the city, county, state or federal government, or any
political subdivision thereof, with respect to the receipt of such rent, or upon or with respect to the
possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof;
(c) Any assessment, tax, fee, levy, charge or similar imposition upon this
transaction or any document to which Tenant is a party, creating or transferring an interest or an
estate in the Premises, including any possessory interest tax levied on the Tenant's interest under this
Lease;
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(d) Any assessment, tax, fee, levy, charge or similar imposition by any
governmental agency related to any transportation plan, fund or system instituted within the
geographic area of which the Premises are a part.
The definition of "Taxes," including any additional tax the nature of which was previously included
within the definition of "Taxes," shall include any increases in such taxes, levies, charges or
assessments occasioned by increases in tax rates or increases in assessed valuations, whether
occurring as a result of a sale or otherwise.
3.6.3. Contest of Taxes. Tenant shall have the right to contest, oppose or object to
the amount or validity of any Taxes or other charge levied on or assessed against the Premises and/or
Improvements or any part thereof, provided, however, that the contest, opposition or objection must
be filed before such time the Taxes or other charge at which it is directed becomes delinquent.
Furthermore, no such contest, opposition or objection shall be continued or maintained after the date
the tax, assessment or other charge at which it is directed becomes delinquent unless Tenant has
either: (i) paid such tax, assessment or other charge under protest prior to its becoming delinquent; or
(ii) obtained and maintained a stay of all proceedings for enforcement and collection of the tax,
assessment or other charge by posting such bond or other matter required by law for such a stay; or
(iii) delivered to Lessor a good and sufficient undertaking in an amount specified by Lessor and
issued by a bonding corporation authorized to issue undertakings in California conditioned on the
payment by Tenant of the tax, assessments or charge, together with any fines, interest, penalties,
costs and expenses that may have accrued or been imposed thereon within thirty (30) days after final
determination of Tenant's contest, opposition or objection to such tax, assessment or other charge.
3.6.4. Payment by Lessor. Should Tenant fail to pay any Taxes required by this
Article III to be paid by Tenant within the time specified herein, subject to Tenant's right to contest
such Taxes in accordance with Section 3.6.3, and if such amount is not paid by Tenant within fifteen
(15) days after receipt of Lessor's written notice advising Tenant of such nonpayment, County and/or
Agency may, without further notice to or demand on Tenant, pay, discharge or adjust such tax,
assessment or other charge for the benefit of Tenant. In such event Tenant shall promptly on written
demand of County or Agency reimburse County and/or Agency for the full amount paid by County
and/or Agency in paying, discharging or adjusting such tax, assessment or other charge, together with
interest at the Interest Rate from the date advanced until the date repaid.
3.6.5. Operating Costs. Tenant shall pay all Operating Costs during the Term prior
to delinquency. As used in this Lease, the term "Operating Costs" shall mean all charges, costs and
expenses related to the Premises, including, but not limited to, management, operation, maintenance,
overhaul, improvement, replacement or repair of the Improvements and/or the Premises.
3.6.6. Utility Costs. Tenant shall pay all Utility Costs during the Term prior to
delinquency. As used in this Lease, the term "Utility Costs" shall include all charges, surcharges,
taxes, connection fees, service fees and other costs of installing and using all utilities required for or
utilized in connection with the Premises and/or the Improvements, including without limitation, costs
of heating, ventilation and air conditioning for the Premises, costs of furnishing gas, electricity and
other fuels or power sources to the Premises, and the costs of furnishing water and sewer services to
the Premises. Tenant agrees to indemnify and hold harmless the County and Agency against any
liability, claim, or demand for the late payment or non-payment of Utility Costs.
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ARTICLE IV
USE OF PREMISES
4.1 Permitted Use of Premises. Tenant may use the Premises for the construction,
development, entitlement, operation, maintenance, replacement and repair of the Improvements as
follows:
4.1.1. Required Services and Uses. Lessor's primary purpose for entering into this
Lease is to promote the development of the Improvements consistent with this Lease. In furtherance
of that purpose, Tenant shall construct and during the entire Term operate, maintain, replace and
repair the Improvements in a manner consistent with the Laws and for the following uses:
(a) multifamily affordable housing, and appurtenant improvements,
including, without limitation, parking,
(b) permanent supportive housing units and related services, and
(c) related commercial and community -serving uses, as approved by the
Lessor.
4.1.2. Ancillary Services and Uses. Subject to the prior written approval of Lessor,
which approval may be granted or withheld in the sole discretion of the Lessor, Tenant may provide
those additional services and uses which are ancillary to and compatible with the required services
and uses set forth in Section 4.1. L, above.
4.1.3. Additional Concessions or Services. Tenant may establish, maintain, and
operate such other additional facilities, concessions, and services as Tenant and Lessor may jointly
from time to time reasonably determine to be reasonably necessary for the use of the Premises and
which are otherwise permitted by Law for the sole purpose to provide affordable housing and/or
emergency shelter.
4.1.4. Restricted Use. The services and uses listed in this Section 4.1, both required
and optional, shall be the only services and uses permitted. Tenant agrees not to use the Premises for
any other purpose or engage in or permit any other activity within or from the Premises unless
approved in writing by the Lessor, which approval may be granted or withheld in the sole discretion
of the Lessor.
4.1.5. Continuous Use. During the Term, Tenant shall continuously conduct
Tenant's business in the Premises in the manner provided under this Lease and shall not discontinue
use of the Premises for any period of time except in the case of a Force Majeure Event or as
permitted in advance and in writing by the Lessor.
4.1.6. Alcohol Restrictions. Tenant shall not permit the sale or service of alcoholic
beverages on the Premises.
4.1.7. Permits and Licenses. Tenant shall be solely responsible to obtain, at its sole
cost and expense, any and all permits, licenses or other approvals required for the uses permitted
herein and shall maintain such permits, licenses or other approvals for the entire Term.
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4.2 Nuisance; Waste. Tenant shall not maintain, commit, or permit the maintenance or
commission of any nuisance as now or hereafter defined by any statutory or decisional law applicable
to the Premises and Improvements or any part thereof. Tenant shall not commit or allow to be
committed any waste in or upon the Premises or Improvements and shall keep the Premises and the
Improvements thereon in good condition, repair and appearance.
4.3 Compliance with Laws. Tenant shall not use or permit the Premises or the
Improvements or any portion thereof to be used in any manner or for any purpose that violates any
applicable Laws. Tenant shall have the right to contest, in good faith, any such Laws, and to delay
compliance with such Laws during the pendency of such contest (so long as there is no material
threat to life, health or safety that is not mitigated by Tenant to the satisfaction of the applicable
authorities). Lessor may cooperate with Tenant in all reasonable respects in such contest, including
joining with Tenant in any such contest if County and/or Agency's joinder is required in order to
maintain such contest; provide, however, that any such contest shall be without cost to Lessor, and
Tenant shall indemnify, defend (with attorneys acceptable to Lessor), and hold harmless the Lessor
from any and all claims, liabilities, losses, damages, or actions of any kind and nature, including
reasonable attorneys' fees, arising or related to Tenant's failure to observe or comply with the
contested Law during the pendency of the contest.
4.4 Hazardous Materials.
4.4.1. Definition of Hazardous Materials. For purposes of this Lease, the term
"Hazardous Material" or "Hazardous Materials" shall mean any hazardous or toxic substance,
material, product, byproduct, or waste, which is or shall become regulated by any governmental
entity, including, without limitation, the County and/or Agency acting in their governmental
capacity, the State of California or the United States government.
4.4.2. Use of Hazardous Materials. Except for those Hazardous Materials which
are customarily used in connection with the construction, operation, maintenance and repair of the
Improvements or used in connection with any permitted use of the Premises and Improvements under
this Lease (which Hazardous Materials shall be used in compliance with all applicable Laws), Tenant
or Tenant's employees, agents, independent contractors or invitees (collectively "Tenant Parties")
shall not cause or permit any Hazardous Materials to be brought upon, stored, kept, used, generated,
released into the environment or disposed of on, under, from or about the Premises (which for
purposes of this Section shall include the subsurface soil and ground water).
4.4.3. Tenant Obligations. If the presence of any Hazardous Materials on, under or
about the Premises caused or permitted by Tenant or Tenant Parties, and excluding Hazardous
Materials existing on the Premises prior to the Effective Date (the "Existing Hazardous
Materials"), results in (i) injury to any person, (ii) injury to or contamination of the Premises (or a
portion thereof), or (iii) injury to or contamination or any real or personal property wherever situated.
Tenant, at its sole cost and expense, shall promptly take all actions necessary or appropriate to return
the Premises to the condition existing prior to the introduction of such Hazardous Materials to the
Premises and to remedy or repair any such injury or contamination. Without limiting any other rights
or remedies of County or Agency under this Lease, Tenant shall pay the cost of any cleanup or
remedial work performed on, under, or about the Premises as required by this Lease or by applicable
Laws in connection with the removal, disposal, neutralization or other treatment of such Hazardous
Materials caused or permitted by Tenant or Tenant Parties, excluding the Existing Hazardous
Materials. Notwithstanding the foregoing, Tenant shall not take any remedial action in response to
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the presence, discharge or release, of any Hazardous Materials on, under or about the Premises
caused or permitted by Tenant or Tenant Parties, or enter into any settlement agreement, consent
decree or other compromise with any governmental or quasi -governmental entity without first
obtaining the prior written consent of the Lessor. All work performed or caused to be performed by
Tenant as provided for above shall be done in good and workmanlike manner and in compliance with
plans, specifications, permits and other requirements for such work approved by Lessor.
4.4.4. Indemnification for Hazardous Materials.
(a) To the fullest extent permitted by law, Tenant hereby agrees to indemnify,
hold harmless, protect and defend (with attorneys acceptable to Lessor) Lessor, its elected officials,
officers, employees, agents, independent contractors, and the Premises, from and against any and all
liabilities, losses, damages (including, but not limited, damages for the loss or restriction on use of
rentable or usable space or any amenity of the Premises or damages arising from any adverse impact
on marketing and diminution in the value of the Premises), judgments, fines, demands, claims,
recoveries, deficiencies, costs and expenses (including, but not limited to, reasonable attorneys' fees,
disbursements and court costs and all other professional or consultant's expenses), whether
foreseeable or unforeseeable (collectively, "Liabilities"), arising out of the presence, use, generation,
storage, treatment, on or off -site disposal or transportation of Hazardous Materials on, into, from,
under or about the Premises by Tenant or Tenant Parties, and excluding all Existing Hazardous
Materials.
(b) The foregoing indemnity shall also specifically include the cost of any
required or necessary repair, restoration, clean-up or detoxification of the Premises and the
preparation of any closure or other required plans.
(c) The foregoing indemnity and defense obligations of this Lease shall
survive its expiration or termination; provided, however, that the indemnity contained in this Section
4.4.4 shall not apply to any Liabilities arising or occurring (a) prior to the Effective Date of this
Ground Lease, (b) after the expiration or earlier termination of the Term of this Ground Lease, or (c)
as a result of the grossly negligent or wrongful acts or omissions of Lessor.
4.5 Access by Lessor. Lessor reserves the right for County, Agency and their authorized
representatives to enter the Premises upon two (2) business days' prior written notice to Tenant,
during normal business hours, in order to determine whether Tenant is complying with Tenant's
obligations hereunder, or to enforce any rights given to County or Agency under this Lease. Lessor
and its representatives shall report to the Tenant's on -site office and must be accompanied by a
representative of Tenant at all times while on the Property and obey Tenant's rules and regulations.
Tenant acknowledges Lessor have the authority to enter the Premises and perform work on the
Premises at any time as needed to provide immediate or necessary protection for the general public.
Lessor will take all necessary measures not to unreasonably interfere with Tenant's business at the
Premises in exercising its rights under this Section.
Lessor shall indemnify and hold Tenant harmless from and against any loss, cost, damage or liability,
including, without limitation, attorneys' fees, which results fromLessor's willful misconduct or gross
negligence, or willful misconduct or gross negligence committed by any party acting under Lessor's
authority, of the rights granted by this Section 4.5.
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ARTICLE V
CONSTRUCTION OF IMPROVEMENTS
5.1 Construction of Improvements.
5.1.1. Initial Improvements. Upon the fulfillment of the Preconditions set forth in
Section 5.1.2, below, and payment for and issuance of all permits required under the Laws (whether
from County or City in their governmental capacity, or otherwise), Tenant shall construct the Initial
Improvements.
5.1.2. Preconditions. No work for development of the Initial Improvements shall be
commenced, and no building or other materials shall be delivered to the Premises, until:
(a) Lessor has provided approval in writing that all the conditions set forth in
Section 5 of the Option Agreement have been satisfied;
(b) Tenant has obtained a permit through the City, submitted Project design,
conceptual development, plans and special provisions for the construction of Improvements in
accordance with the Lessor's criteria, standard and practices;
(c) Tenant has given Lessor written notice of the proposed commencement of
construction of the Premises or the delivery of construction materials in order to allow Lessor to take
all necessary actions under California Civil Code section 3094, including posting of a notice of non -
responsibility at the Premises; and
(d) Tenant has provided to Lessor evidence that (i) Tenant has entered into a
Construction Contract with a Contractor in accordance with Section 5.2 below, (ii) Tenant has
secured the construction funding required under Section 5.1.4 below, and (iii) Tenant has provided
Lessor with assurances sufficient to construct the Initial Improvements in accordance with Section
5.3 below.
5.1.3. Utilities. To the extent not already constructed, Tenant, at no cost to Lessor,
shall construct or cause to be constructed all water, gas, heat, light, power, air conditioning,
telephone, broadband internet, and other utilities and related services supplied to and/or used on the
Premises at Tenant's sole cost and expense for the purposes of conducting Tenant's operations
thereon. All such utilities shall be separately metered from any utilities which may be used by
County and/or Agency in conducting its operations, if any, on or about the Premises. Nothing
contained in this Section is to be construed or implied to give Tenant the right or permission to install
or to permit any utility poles or communication towers to be constructed or installed on the Premises.
5.1.4. Construction Funding. Prior to commencement of construction of the Initial
Improvements, Tenant shall provide to Lessor evidence reasonably satisfactory to Lessor of funding
available to Tenant that is sufficient to pay for Tenant's estimated total cost of constructing the Initial
Improvements, which evidence may consist of (i) a written commitment to Tenant from a Lender
selected by Tenant to provide a construction loan to Tenant for the purpose of constructing the Initial
Improvements (which may be secured by a Leasehold Mortgage encumbering Tenant's leasehold
interest under this Lease), (ii) actual equity funds then held by Tenant or irrevocably committed to be
paid to Tenant for the purpose of constructing the Initial Improvements, or (iii) any combination of
the foregoing. Tenant may from time to time change any of the foregoing funding sources and the
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allocation thereof, so long as the aggregate available funding continues to be sufficient to pay for
Tenant's estimated remaining cost of constructing the Initial Improvements, provided that Tenant
shall promptly notify Lessor of any such change.
5.1.5. Compliance with Laws and Permits. Tenant shall cause all Improvements
made by Tenant to be constructed in substantial compliance with all applicable Laws, including all
applicable grading permits, building permits, and other permits and approvals issued by
governmental agencies and bodies having jurisdiction over the construction thereof. No permit,
approval, or consent given hereunder by County and/or Agency, in their governmental capacity, shall
affect or limit Tenant's obligations hereunder, nor shall any approvals or consents given by County
and/or Agency, as a Party to this Lease, be deemed approval as to compliance or conformance with
applicable governmental codes, laws, rules, or regulations.
5.1.6. Reports. Not less than monthly from the commencement of construction of
the Initial Improvements, Tenant shall provide Lessor with written construction status reports in the
form of AIA No. G702 ("Application and Certification for Payment") or comparable form,
augmented by oral reports if so requested by County or Agency.
5.1.7. Certificate of Occupancy. Tenant shall provide Lessor with a copy of the
Certificate of Occupancy promptly following issuance thereof. The date of issuance of the
Certificate of Occupancy shall be the Commencement Date hereunder.
5.1.8. Insurance. Tenant (or the Contractor, as applicable) shall deliver to Lessor
both (i) certificates of insurance evidencing coverage for "builder's risk," as specified in Section 8.1,
and (ii) evidence of worker's compensation insurance, which provide the requisite insurance levels in
accordance with Article VIII, for all persons employed in connection with the construction of any
Improvements upon the Premises and with respect to whom death or bodily injury claims could be
asserted against County and/or Agency or the Premises. Tenant shall (or shall cause Contractor to)
maintain, keep in force and pay all premiums required to maintain and keep in said insurance herein
at all times during which construction Work is in progress.
5.1.9. Mechanic's Liens.
(a) Payment of Liens. Tenant shall pay or cause to be paid the total cost and
expense of all "Work of Improvement," as that phrase is defined in the California Mechanics' Lien
law in effect and as amended from time to time. Tenant shall not suffer or permit to be enforced
against the Premises or Improvements or any portion thereof, any mechanics', materialmen's,
contractors' or subcontractors' liens arising from any work of improvement, however it may arise.
Tenant may, however, in good faith and at Tenant's sole cost and expense contest the validity of any
such asserted lien, claim, or demand, provided Tenant (or any contractor or subcontractor, as
applicable) has furnished the release bond (if required by County, Agency or any construction lender)
required in California Civil Code section 8000 et seq. (or any comparable statute hereafter enacted
for providing a bond freeing the Premises from the effect of such lien claim). In the event a lien or
stop -notice is imposed upon the Premises as a result of such construction, repair, alteration, or
installation, and provided the lien is not the result of actions of, or work performed by, the Lessor,
Tenant shall either:
(1) Record a valid Release of Lien, or
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(2) Procure and record a bond in accordance with Section 8424 of the
Civil Code, which releases the Premises from the claim of the lien or stop -notice and from any action
brought to foreclose the lien, or
(3) Post such security as shall be required by Tenant's title insurer to
insure over such lien or stop -notice, or
(4) Should Tenant fail to accomplish either of the three optional
actions above within 30 days after Tenant receives notice of the filing of such a lien or stop -notice, it
shall constitute an Event of Default hereunder.
(b) Indemnification. Tenant shall at all times indemnify, defend with
counsel approved in writing by County and/or Agency and hold County and Agency harmless from
all claims, losses, demands, damages, cost, expenses, or liability costs for labor or materials in
connection with construction, repair, alteration, or installation of structures, improvements,
equipment, or facilities within the Premises, and from the cost of defending against such claims,
including reasonable attorneys' fees and costs, but excluding any liability resulting from the gross
negligence or willful misconduct of Lessor, and excluding any liens resulting from the actions of, or
work performed by, the Lessor.
(c) Protection Against Liens. Lessor shall have the right to post and
maintain on the Premises any notices of non -responsibility provided for under applicable California
law. During the course of construction, Tenant shall obtain customary mechanics' lien waivers and
releases. Upon completion of the construction of any Improvements, Tenant shall record a notice of
completion in accordance with applicable law. Promptly after the Improvements have been
completed, Tenant shall (or shall cause Contractor to) record a notice of completion as defined and
provided for in California Civil Code section 8000 et seq.
(d) Lessor's Rights. If Tenant (or any contractor or subcontractor, as
applicable) does not cause to be recorded the bond described in California Civil Code section 8000 et
seq. or otherwise protect the Premises and Improvements under any alternative or successor statute,
and a final judgment has been rendered against Tenant by a court of competent jurisdiction for the
foreclosure of a mechanic's, materialman's, contractor's or subcontractor's lien claim, and if Tenant
fails to stay the execution of judgment by lawful means or to pay the judgment, Lessor shall have the
right, but not the duty to pay or otherwise discharge, stay or prevent the execution of any such
judgment or lien or both. Upon any such payment by County and/or Agency, Tenant shall
immediately upon receipt of written request therefor by County or Agency, reimburse County and/or
Agency for all sums paid by County and/or Agency under this paragraph together with all County
and/or Agency's reasonable attorney's fees and costs, plus interest at the Interest Rate from the date
of payment until the date of reimbursement.
5.1.10. No Responsibility. Any approvals by County or Agency with respect to any
Improvements shall not make County or Agency responsible for the Improvement with respect to
which approval is given or the construction thereof. Tenant shall indemnify, defend and hold Lessor
harmless from and against all liability and all claims of liability (including, without limitation,
reasonable attorneys' fees and costs) arising during the Term of this Lease for damage or injury to
persons or property or for death of persons arising from or in connection with the Improvement or
construction thereof, but excluding any liability resulting from the gross negligence or willful
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misconduct of Lessor, and excluding any liens resulting from the actions of, or work performed by,
the Lessor.
5.2 Construction Contracts.
5.2.1. Construction Contract. Tenant shall enter into a written contract with a
general contractor ("Contractor") for construction of the Initial Improvements based upon the
"Construction Contract Documents" approved pursuant to the Option Agreement. All construction
of the Initial Improvements shall be performed by contractors and subcontractors duly licensed as
such under the laws of the State of California. Tenant shall give Lessor a true copy of the contract or
contracts with the Contractor.
5.2.2. Assignment to County and/or Agency. Tenant shall obtain the written
agreement of the Contractor that, at County and/or Agency's election and in the event that Tenant
fails to perform its contract with the Contractor, such Contractor will recognize County and/or
Agency as the assignee of the contract with the Contractor, and that County and/or Agency may,
upon such election, assume such contract with credit for payments made prior thereto.
Notwithstanding the foregoing, the County's and/or Agency's rights under this Section 5.2.2 are
hereby made subject and subordinate to the lien of each Leasehold Mortgage.
5.3 Tenant's Assurance of Construction Completion. Prior to commencement of
construction of the Initial Improvements, or any phase thereof, within the Premises by Tenant,
Tenant shall furnish to Lessor evidence that assures Lessor that sufficient monies will be available to
complete the proposed construction. The amount of money available shall be at least the total
estimated construction cost. Such evidence may take one of the following forms:
5.3.1. Performance bond and labor and materials bond in a principal sum equal to the
total estimated construction cost supplied by Contractor or subcontractors, provided said bonds are
issued jointly to Tenant, County, Agency and any Leasehold Mortgagees as obligees.
5.3.2. Irrevocable letter of credit issued to Lessor from a financial institution to be in
effect until County and Agency acknowledges satisfactory completion of construction;
5.3.3. Cash deposited with the County or Agency (may be in the form of cashier's
check or money order or may be electronically deposited);
5.3.4. A completion guaranty, in favor of County and Agency from an Affiliate of
The Related Companies of California, LLC, in a form reasonably acceptable to Lessor, coupled with
a repayment guaranty in favor of the senior construction lender for its loan;
5.3.4. Any combination of the above.
All bonds and letters of credit must be issued by a company qualified to do business in the State of
California and acceptable to Lessor. All bonds and letters of credit shall be in a form acceptable to
Lessor, County's Risk Manager and City's Risk Manager in their reasonable discretion, and shall
insure faithful and full observance and performance by Tenant of all terms, conditions, covenants,
and agreements relating to the construction of improvements within the Premises.
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Tenant shall provide or cause its Contractor to provide payment and/or performance bonds in
connection with the construction of the Initial Improvements, and shall name the County and City as
an additional obligee on, with the right to enforce, any such bonds.
5.4 Ownership of Improvements.
5.4.1. For purposes of this Section 5.4, "Term" shall have the meaning stated in
Section 2.2.3.
5.4.2. During Term. Title to all Improvements constructed or placed on the
Premises by Tenant and paid for by Tenant are and shall be vested in Tenant during the Term of this
Lease, until the expiration or earlier termination thereof. Any and all depreciation, amortization and
tax credits for federal or state purposes relating to the Improvements located on the Premises and any
and all additions thereto shall be deducted or credited exclusively by Tenant during the Term. The
Parties agree for themselves and all persons claiming under them that the Improvements are real
property.
5.4.3. Upon Expiration or Earlier Termination of Term. All Improvements on the
Premises at the expiration or earlier termination of the Term of this Lease shall, without additional
payment to Tenant, then become Lessor's property free and clear of all claims to or against them by
Tenant and free and clear of all Leasehold Mortgages and any other liens and claims arising from
Tenant's use and occupancy of the Premises, and with Taxes paid current as of the expiration or
earlier termination date. Tenant shall upon the expiration or earlier termination of the Term deliver
possession of the Premises and the Improvements to Lessor in good order, condition and repair
consistent with the requirements of this Lease and in compliance with all applicable laws and
regulations for the occupancy of the Project, taking into account reasonable wear and tear and the age
of the Improvements.
5.5 "AS -BUILT" Plans. Within sixty (60) days following completion of any substantial
improvement within the Premises, Tenant shall furnish the Lessor a complete set of reproducibles
and two sets of prints of "As-Builf' plans and a magnetic tape, disk or other storage device
containing the "As -Builf 'plans in a form usable by Lessor, to Lessor's satisfaction, on Lessor's
computer aided mapping and design ("CAD") equipment. CAD files are also to be converted to
Acrobat Reader (pdf format), which shall be included on the disk or CD ROM. In addition, Tenant
shall furnish Lessor copy of the final construction costs for the construction of such improvements.
5.6 Capital Improvement Fund.
5.6.1. Tenant shall establish and maintain a reserve fund (the "Capital Improvement
Fund") during the Term of this Lease (as "Term" is defined in Section 2.2) in accordance with the
provisions of this Section 5.6 designated to pay for Permitted Capital Expenditures (as defined
below) for the Improvements during the Term of this Lease.
5.6.2. Tenant and Lessor agree and acknowledge that the purpose of the Capital
Improvement Fund shall be to provide sufficient funds to pay for the costs of major replacements,
renovations or significant upgrades of or to the Improvements, including without limitation building
facade or structure and major building systems (such as IIVAC, mechanical, electrical, plumbing,
vertical transportation, security, communications, structural or roof) that significantly affect the
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capacity, efficiency, useful life or economy of operation of the Improvements or their major systems,
after the completion of the Initial Improvements ("Permitted Capital Expenditure(s)").
5.6.3. The Capital Improvement Fund shall not be used to fund any portion of the
construction cost of the Initial Improvements. In addition, Permitted Capital Expenditures shall not
include the cost of periodic, recurring or ordinary maintenance expenditures or maintenance, repairs
or replacements that keep the Improvements in an ordinarily efficient operating condition, but that do
not significantly add to their value or appreciably prolong their useful life. Permitted Capital
Expenditures must constitute capital replacements, improvements or equipment under generally
accepted accounting principles consistently applied or constitute qualifying aesthetic improvements.
Permitted Capital Expenditures shall not include costs for any necessary repairs to remedy any
broken or damaged Improvements, all of which costs shall be separately funded by Tenant.
5.6.4. All specific purposes and costs for which Tenant desires to utilize amounts
from the Capital Improvement Fund shall be at Tenant's reasonable discretion and subject to Lessor's
written approval as provided for in Section 5.6.9, below. Tenant shall furnish to the Lessor
applicable invoices, evidence of payment and other back-up materials concerning the use of amounts
from the Capital Improvement Fund.
5.6.5. The Capital Improvement Fund shall be held in an account established with a
Lender acceptable to the Lessor, into which deposits shall be made by Tenant pursuant to Section
5.6.8, below.
5.6.6. Tenant shall have the right to partly or fully satisfy the Capital Improvement
Fund obligations of this Section 5.6 with capital improvement reserves (or replacement reserves)
required by Tenant's Leasehold Mortgagees or the Limited Partner, as long as such capital
improvement reserves or replacement reserves are in all material respects administered and utilized
in accordance, and otherwise comply, with the terms, provisions and requirements of this Section 5.6.
5.6.7. In the event of default by Tenant and the early termination of this Lease, the
Lessor shall have full access to the Capital Improvement Fund, provided the Tenant's Leasehold
Mortgagee does not use it within a reasonable time for the purposes stated in this Section 5.6;
provided, however, that Lessor's rights under this Section 5.6.7 are hereby made subject and
subordinate to the lien of each Leasehold Mortgage.
5.6.8. Commencing on the fifteenth (15th) day of the month during which the fifth
(5th) anniversary of the Commencement Date occurs, and continuing on or before the fifteenth (15th)
day of each month thereafter until five (5) years prior to the expiration of the Term, Tenant shall
make a monthly deposit to the Capital Improvement Fund in an amount equal to one percent (1%) of
total rent collected by Tenant from sub -tenants for the previous month. All interest and earnings on
the Capital Improvement Fund shall be added to the Capital Improvement Fund, but shall not be
treated as a credit against the Capital Improvement Fund deposits required to be made by Tenant
pursuant to this Section 5.6.
5.6.9. Disbursements shall be made from the Capital Improvement Fund only for
costs which satisfy the requirements of this Section 5.6. For the purpose of obtaining the Lessor's
prior approval of any Capital Improvement Fund disbursements, Tenant shall submit to the Lessor on
an annual calendar year basis a capital expenditure plan for the upcoming year which details the
amount and purpose of anticipated Capital Improvement Fund expenditures ("Capital Improvement
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Plan"). Lessor shall approve or disapprove such Capital Improvement Plan within thirty (30) days of
receipt, which approval shall not be unreasonably withheld, conditioned or delayed. Any
expenditure set forth in the approved Capital Improvement Plan shall be considered pre -approved by
Lessor (but only up to the amount of such expenditure set forth in the Capital Improvement Plan) for
the duration of the upcoming year. Tenant shall have the right during the course of each year to
submit to the Lessor for the Lessor's approval revisions to the then current Capital Improvement
Plan, or individual expenditures not noted on the previously submitted Capital Improvement Plan. In
the event of an unexpected emergency that necessitates a Permitted Capital Expenditure not
contemplated by the Capital Improvement Plan, the Tenant may complete such work using the funds
from the Capital Improvement Fund with contemporaneous or prior (if possible) written notice to the
Lessor and provide applicable documentation to the Lessor thereafter for approval. If the Lessor
disapproves the emergency expenditure which was not previously approved by Lessor, Tenant shall
refund the amount taken from the Capital Improvement Fund within thirty (30) days of written notice
from the Lessor of its decision.
5.6.10. Notwithstanding anything above to the contrary, if Tenant incurs
expenditures that constitute Permitted Capital Expenditures but which are not funded out of the
Capital Improvement Fund because sufficient funds are not then available in such fund, then Tenant
may credit the Permitted Capital Expenditures so funded by Tenant out of its own funds against
future Capital Improvement Fund contribution obligations of Tenant; provided, that such credit must
be applied, if at all, within four (4) years after such Permitted Capital Expenditure is incurred by the
Tenant.
ARTICLE VI
REPAIRS, MAINTENANCE, ADDITIONS AND RECONSTRUCTION
6.1 Maintenance by Tenant. Throughout the Term of this Lease, Tenant shall, at Tenant's
sole cost and expense, keep and maintain the Premises and any and all Improvements now or
hereafter constructed and installed on the Premises in good order, condition and repair (i.e., so that
the Premises does not deteriorate more quickly than its age and reasonable wear and tear would
otherwise dictate) and in a safe and sanitary condition and in compliance with all applicable Laws in
all material respects. Tenant shall immediately notify the Lessor of any damage relating to the
Premises.
6.2 Interior Improvements, Additions and Reconstruction of Improvements. Following
the completion of construction of the Initial Improvements, Tenant shall have the right from time to
time to make any interior improvements to the Improvements that are consistent with the Lessor's
approved use of the Premises as reflected in this Lease, without Lessor's prior written consent, but
with prior written notice to the Lessor (except in the event of an emergency, in which case no prior
written notice shall be required but Tenant shall notify Lessor of any emergency work done as soon
as practicable). With prior written approval of Lessor, Tenant may restore and reconstruct the
Improvements, and in that process make any modifications otherwise required by changes in Laws,
following any damage or destruction thereto (whether or not required to do so under Article VII);
and/or to make changes, revisions or improvements to the Improvements for uses consistent with the
Lessor approved use of the Premises as reflected in this Lease. Tenant shall perform all work
authorized by this Section at its sole cost and expense, including, without limitation, with insurance
proceeds approved for such use in accordance with Article VII, if any, and in compliance with all
applicable Laws in all material respects.
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6.3 All Other Construction, Demolition, Alterations, Improvements and
Reconstruction. Following the completion of construction of the Initial Improvements, and except
as specified in Sections 6.1 and 6.2, any construction, alterations, additions, major repairs,
demolition, improvements or reconstruction of any kind shall require the prior written consent of the
Lessor, which consent shall not be unreasonably conditioned, delayed or withheld and may require
their respective governing body's approval (e.g. Board of Supervisors' and City Council approval).
Tenant shall perform all work authorized by this Section at its sole cost and expense, including,
without limitation, with insurance proceeds approved for such use in accordance with Article VII, if
any, and in compliance with all applicable Laws in all material respects.
6.4 Requirements of Governmental Agencies. At all times during the Term of this Lease,
Tenant, at Tenant's sole cost and expense, shall: (i) make all alterations, improvements, demolitions,
additions or repairs to the Premises and/or the Improvements required to be made by any law,
ordinance, statute, order or regulation now or hereafter made or issued by any federal, state, county,
local or other governmental agency or entity; (ii) observe and comply in all material respects with all
Laws now or hereafter made or issued respecting the Premises and/or the Improvements (subject to
Tenant's right to contest such Laws in accordance with Section 4.4); (iv) indemnify, defend and hold
County, Agency, the Premises and the Improvements free and harmless from any and all liability,
loss, damages, fines, penalties, claims and actions resulting from Tenant's failure to comply with and
perform the requirements of this Article VI.
6.5 Lessor Obligations. Tenant specifically acknowledges and agrees that County, Agency
and Lessor Parties do not and shall not have any obligations with respect to the maintenance,
alteration, improvement, demolition, replacement, addition or repair of any Improvements.
6.6 Lessor Reservations. Without limiting Lessor's rights with respect to the Premises,
Lessor reserves for themselves, their successors and assigns those rights necessary to assure proper
maintenance and operation of the Premises and to permit any steps to be taken which the Lessor
deems necessary or desirable to maintain, repair, improve, modify or reconstruct the Premises. The
rights reserved to Lessor in this section or any other section of this Lease shall be exercised by the
Lessor at their sole discretion, unless otherwise provided herein.
ARTICLE VII
DAMAGE AND RESTORATION
7.1 Damage and Restoration. In the event the whole or any part of the Improvements shall
be damaged or destroyed by fire or other casualty, damage or action of the elements which is fully
covered by insurance required to be carried by Tenant pursuant to this Lease or in fact caused by
Tenant, at any time during the Term, Tenant shall with all due diligence, at Tenant's sole cost and
expense, repair, restore and rebuild the Improvements on substantially the same plan and design as
existed immediately prior to such damage or destruction and to substantially the same condition that
existed immediately prior to such damage, with any changes made by Tenant to comply with then
applicable Laws and with any upgrades or improvements that Tenant may determine in its reasonable
discretion. If Tenant desires to change the use of the Premises following such casualty, then Tenant
may make appropriate changes to the Premises to accommodate such changed use after approval of
such change of use by the Lessor pursuant to Article IV above. This Article shall not apply to
cosmetic damage or alterations. In the event that Tenant shall determine, subject to the rights of the
Leasehold Mortgagees and Limited Partner, if applicable, by notice to the Lessor given by the later
of ninety (90) days after the date of the damage or destruction or thirty (30) days after receipt by
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Tenant of any such insurance proceeds, that there are not adequate proceeds to restore the
Improvements and/or the Premises to substantially the same condition in which they existed prior to
the occurrence of such damage or destruction, then Tenant may terminate this Lease as of a date that
is not less than thirty (30) days after the date of such notice. Notwithstanding Section 17.9, if Tenant
terminates this Lease pursuant to this Section 7.1, Tenant shall surrender possession of the Premises
to the Lessor immediately and assign to the Lessor (or, if same has already been received by Tenant,
pay to the Lessor) all of its right, title and interest in and to the proceeds from Tenant's insurance
upon the Premises.
7.2 Restoration. In the event of any restoration or reconstruction pursuant to this Section, all
such work performed by Tenant shall be constructed in a good and workmanlike manner according to
and in conformance with the Laws, rules and regulations of all governmental bodies and agencies
and the requirements of this Lease applicable to the construction of the Initial Improvements.
7.3 No Rental Abatement. Tenant shall not be entitled to any abatement, allowance,
reduction, or suspension of Rent because part or all of the Improvements become untenantable as a
result of the partial or total destruction of the Improvements, and Tenant's obligation to keep and
perform all covenants and agreements on its part to be kept and performed hereunder, shall not be
decreased or affected in any way by any destruction of or damage to the Improvements; except as
otherwise provided herein.
7.4 Application of Insurance Proceeds. If following the occurrence of damage or
destruction to the Premises or Improvements, Tenant is obligated to or determines that there are
adequate proceeds to restore the Premises and Improvements pursuant to this Article VII, then all
proceeds from the insurance required to be maintained by Tenant on the Premises and the
Improvements shall be applied to fully restore the same, and, subject to the rights of the Leasehold
Mortgagees and Limited Partner, if applicable, any excess proceeds shall be paid to Tenant and any
deficit in necessary funds plus the amount of any deductible shall be paid by Tenant. If Tenant after
commencing or causing the commencement of the restoration of Premises and Improvements shall
determine that the insurance proceeds are insufficient to pay all costs to fully restore the
Improvements, Tenant shall pay the deficiency and shall nevertheless proceed to complete the
restoration of Premises and the Improvements and pay the cost thereof. Upon lien free completion of
the restoration, subject to the rights of the Leasehold Mortgagees, if applicable, any balance of the
insurance proceeds remaining over and above the cost of such restoration shall be paid to Tenant.
7.5 Exclusive Remedies. Notwithstanding any destruction or damage to the Premises and/or
the Improvements, Tenant shall not be released from any of its obligations under this Lease, except
to the extent and upon the conditions expressly stated in this Article VII. County, Agency and
Tenant hereby expressly waive the provisions of California Civil Code Sections 1932(2) and 1933(4)
with respect to any damage or destruction of the Premises and/or the Improvements and agree that
their rights shall be exclusively governed by the provisions of this Article VII.
7.6 Damage Near End of Term. If, during the last three (3) years of the Term, as
applicable, the Improvements shall be damaged or destroyed for which the repair and/or replacement
cost is fifty percent (50%) or more of then replacement cost of the Improvements, then Tenant shall
have the option, to be exercised within ninety (90) days after such damage or destruction:
7.6.1. to notify the Lessor of its election to repair or restore the Improvements as
provided in this Article VII; or
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7.6.2. subject to the rights of Leasehold Mortgagees and such provisions of this Lease
that survive termination, to terminate this Lease by notice to the Lessor, which termination shall be
deemed to be effective as of the date of the damage or destruction. If Tenant terminates this Lease
pursuant to this Section 7.6.2, Tenant shall surrender possession of the Leased Premises to the Lessor
immediately and assign to the Lessor (or, if same has already been received by Tenant, pay to the
Lessor) all of its right, title and interest in and to the proceeds from Tenant's insurance upon the
Premises less (i) any costs, fees, or expenses incurred by Tenant in connection with the adjustment of
the loss or collection of the proceeds, (ii) any reasonable costs incurred by Tenant in connection with
the Premises after the damage or destruction, which costs are eligible for reimbursement from such
insurance proceeds, and (iii) the proceeds of any rental loss or business interruption insurance
applicable prior to the date of surrender of the Premises to the Lessor.
ARTICLE VIII
INSURANCE AND INDEMNITY
8.1 Tenant's Required Insurance.
8.1.1. Tenant agrees to purchase all required insurance at Tenant's expense and to
deposit with Chief Real Estate Officer certificates of insurance, including all endorsements required
herein, necessary to satisfy Chief Real Estate Officer that the insurance provisions of this Lease have
been complied with and to keep such insurance coverage and the certificates and endorsements
therefore on deposit with Chief Real Estate Officer during the entire term of this Lease.
8.1.2. Tenant agrees that it shall not operate on the Premises at any time the required
insurance is not in full force and effect as evidenced by a certificate of insurance and necessary
endorsements or, in the interim, an official binder being in the possession of Chief Real Estate
Officer; rent however shall not be suspended. In no cases shall assurances by Tenant, its employees,
agents, including any insurance agent, be construed as adequate evidence of insurance. Chief Real
Estate Officer will only accept valid certificates of insurance and endorsements, or in the interim, an
insurance binder as adequate evidence of insurance. Tenant also agrees that upon cancellation,
termination, or expiration of Tenant's insurance, Chief Real Estate Officer may take whatever steps
are necessary to interrupt any operation from or on the Premises until such time as the Chief Real
Estate Officer reinstates the Lease.
8.1.3. If Tenant fails to provide Chief Real Estate Officer with a valid certificate of
insurance and endorsements, or binder at any time during the term of the Lease, County and Tenant
agree that this shall constitute a material breach of the Lease. Whether or not a notice of default has
or has not been sent to Tenant, said material breach shall permit Chief Real Estate Officer to take
whatever steps are necessary to interrupt any operation from or on the Premises, and to prevent any
persons, including, but not limited to, members of the general public, and Tenant's employees and
agents, from entering the Premises until such time as the Chief Real Estate Officer is provided with
adequate evidence of insurance required herein. Tenant further agrees to hold County harmless for
any damages resulting from such interruption of business and possession, including, but not limited
to, damages resulting from any loss of income or business resulting from Chief Real Estate Officer's
action.
8.1.4. All contractors and subcontractors performing work on behalf of Tenant
pursuant to this Lease shall obtain insurance subject to the same terms and conditions as set forth
herein for Tenant and limits of insurance as described in Section 8.1.6 (e), Section 8.1.6 (f) and
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Section 8.1.6 (g). Tenant shall not allow contractors or subcontractors to work if contractors have
less than the level of coverage required by County under this Lease. It is the obligation of the Tenant
to provide written notice of the insurance requirements to every contractor and to receive proof of
insurance prior to allowing any contractor to begin work within the Premises. Such proof of
insurance must be maintained by Tenant through the entirety of this Lease and be available for
inspection by Chief Real Estate Officer at any reasonable time.
8.1.5. All self -insured retentions (SIRs) shall be clearly stated on the Certificate of
Insurance. Any self -insured retention (SIR) in an amount in excess of Fifty Thousand Dollars
($50,000) shall specifically be approved by the County's Risk Manager, or designee, upon review of
Tenant's current audited financial report. If Tenant's SIR is approved, Tenant, in addition to, and
without limitation of, any other indemnity provision(s) in this Lease, agrees to all of the following:
1) In addition to the duty to indemnify and hold the County harmless against any and all
liability, claim, demand or suit resulting from Tenant's, its agents, employee's or
subcontractor's performance of this Lease, Tenant shall defend the County at its sole cost and
expense with counsel approved by Board of Supervisors against same; and
2) Tenant's duty to defend, as stated above, shall be absolute and irrespective of any duty to
indemnify or hold harmless; and
3) The provisions of California Civil Code Section 2860 shall apply to any and all actions to
which the duty to defend stated above applies, and the Tenant's SIR provision shall be
interpreted as though the Tenant was an insurer and the County was the insured.
If the Tenant fails to maintain insurance acceptable to the County or City for the full term of this
Lease, the County or City may terminate this Lease.
8.1.6. All policies of insurance required under this Article VIII must be issued by an
insurer with a minimum rating of A- (Secure A.M. Best's Rating) and VIII (Financial Size Category
as determined by the most current edition of the Best's Key Rating Guide/Property-
Casualty/United States or ambest.com). It is preferred, but not mandatory, that the insurer must be
licensed to do business in the state of California.
(a) If the insurance carrier does not have an A.M. Best Rating of A-/VIII, the
Chief Real Estate Officer retains the right to approve or reject a carrier after a review of the carrier's
performance and financial ratings.
(b) If the insurance carrier is not an admitted carrier in the state of California
and does not have an A.M. Best rating of A-/VIII, the Chief Real Estate Officer retains the right to
approve or reject a carrier after a review of the company's performance and financial ratings.
(c.1) The policy or policies of insurance maintained by the TENANT
DURING CONSTRUCTION shall provide the minimum limits and coverage as set forth below:
Coverages
Minimum Limits
Builder's Risk (during the Construction Period)
naming retained General Contractor
Project value and no coinsurance
provision.
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Commercial General Liability
$5,000,000 per occurrence
$5,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
(c.2) The policy or policies of insurance maintained by the TENANT'S
GENERAL CONTRACTOR DURING CONSTRUCTION shall provide the minimum limits and
coverage as set forth below:
Coverages
Minimum Limits
Commercial General Liability
$5,000,000 per occurrence
$10,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$2,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
Contractor's Pollution Liability including NODS
$5,000,000 per claims made or per
occurrence
(d) The policy or policies of insurance maintained by the TENANT'S
SUBCONTRACTORS DURING CONSTRUCTION shall provide the minimum limits and
coverage as set forth below:
Coverages
Minimum Limits
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
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Employer's Liability Insurance (not required for
$1,000,000 per occurrence
self-employed subcontractors)
Contractor's Pollution Liability including NODS
$1,000,000 per claims made or per
(Required only of those subcontractors involved in
occurrence
pollution remediation)
(e) The policy or policies of insurance maintained by the ARCHITECT -
ENGINEER shall provide the minimum limits and coverage as set forth below:
Coverages
Minimum Limits
Professional Liability (architect, structural,
$2,000,000 per occurrence
electrical engineer, mechanical/plumbing
engineering, environmental engineer, civil engineer,
$2,000,000 aggregate
landscape architect, and geotechnical engineer)
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
$1,000,000 limit per occurrence
non -owned and hired vehicles
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
(f) The policy or policies of insurance maintained by the TENANT AFTER
CONSTRUCTION shall provide the minimum limits and coverage as set forth below:
Coverages
Minimum Limits
Commercial General Liability
$5,000,000 per occurrence
Including Sexual Misconduct (defined as abuse,
$5,000,000 aggregate
molestation and assault and battery)
Automobile Liability including coverage for owned,
$1,000,000 limit per occurrence
non -owned and hired vehicles
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
Commercial Property Insurance on an "All Risk" or
100% of the Replacement Cost Value
"Special Causes of Loss" basis covering all
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buildings, contents and any tenant improvements and no coinsurance provision
including Business Interruption/Loss of Rents with
a 12 month limit
Tenant shall provide a builder's risk policy, naming the Contractor, providing coverage for the full
project value and no coinsurance provision. The policy shall provide coverage for all perils excluding
earthquake, and flood. Tenant is responsible for any deductible amount. The County of Orange and
the Housing Authority of the City of Santa Ana shall be named as Loss Payees as its financial
interests may appear. This shall be evidenced by a Loss Payee endorsement which shall accompany
the Certificate of Insurance.
The Builder's Risk policy shall not be required to cover any tools, equipment, or supplies, unless
such tools, equipment, or supplies are part of the Work being constructed. The Contractor shall be
responsible for securing and maintaining appropriate insurance on any tools, equipment, or supplies
that are not part of the work being constructed.
The County and the Contractor waive all rights against each other and the subcontractors, sub -
subcontractors, officers, and employees of each other, and the Contractor waives all rights against
County's separate contractors, if any, and their subcontractors, sub -subcontractors, officers and
employees for damages caused by fire or other perils to the extent paid by the Builder's Risk
insurance, except such rights as they may have to the proceeds of such insurance. The Contractor
shall require of its subcontractors and sub -subcontractors by appropriate agreements, similar waivers,
each in favor of all other parties enumerated in the preceding sentence.
(g) The policy or policies of insurance maintained by the TENANT'S
CONTRACTOR AFTER CONSTRUCTION shall provide the minimum limits and coverage as
set forth below when performing maintenance and minor work after the building is in operation:
Coverages
Minimum Limits
Commercial General Liability
$1,000,000 per occurrence
$2,000,000 aggregate
Automobile Liability including coverage for owned,
non -owned and hired vehicles
$1,000,000 limit per occurrence
Workers' Compensation
Statutory Minimum
Employers' Liability Insurance
$1,000,000 per occurrence
8.1.7. Required Coverage Forms.
(a) The Commercial General Liability coverage shall be written on Insurance
Services Office (ISO) form CG 00 01, or a substitute form providing liability coverage at least as
broad.
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(b) The Business Auto Liability coverage shall be written on ISO form CA 00
01, CA 00 05, CA 00 12, CA 00 20, or a substitute form providing liability coverage as broad.
8.1.8. Required Endorsements. The Commercial General Liability policy shall
contain the following endorsements, which shall accompany the Certificate of insurance:
1) An Additional Insured endorsement using ISO form CG 20 26 04 13 or a form at least as
broad naming the County of Orange, City of Santa Ana, and their respective elected and
appointed officials, officers, employees, agents as Additional Insureds. Blanket coverage
may also be provided which will state, as required by Lease.
2) A primary non-contributing endorsement using ISO form CG 20 01 04 13, or a form at
least as broad, evidencing that the TENANT'S insurance is primary and any insurance or
self-insurance maintained by the County of Orange shall be excess and non-contributing.
3) A Products and Completed Operations endorsement using ISO Form CG2037 (ed.04/13)
or a form at least as broad, or an acceptable alternative is the ISO from CG2010 (ed.
11/85). (Pertains to contractors and subcontractors performing major construction).
Contractors shall maintain Products and Completed Operations coverage for ten (10)
years following completion of construction.
The Contactors Pollution Liability and Pollution Liability policies shall contain the following
endorsements, which shall accompany the Certificate of Insurance:
1) An Additional Insured endorsement naming the County of Orange, City of Santa Ana,
and their respective elected and appointed officials, officers, employees, and agents as
Additional Insureds.
2) A primary non-contributing endorsement evidencing that the Contractor's insurance is
primary and any insurance or self-insurance maintained by County shall be excess and
non-contributing.
(a) The Workers' Compensation policy shall contain a waiver of subrogation
endorsement waiving all rights of subrogation against the County of Orange, City of Santa Ana, and
their respective elected and appointed officials, officers, agents and employees.
(b) All insurance policies required by this Lease shall waive all rights of
subrogation against the County of Orange, City of Santa Ana, and their respective elected and
appointed officials, officers, agents and employees when acting within the scope of their appointment
or employment.
(c) The Commercial Property Building policy shall include the County of
Orange and City of Santa Ana as both Named Insureds. A Certificate of Insurance shall be submitted
as evidence of this requirement. The Builders' Risk policy shall be endorsed to include the County of
Orange and City of Santa Ana as Loss Payees. A Loss Payee endorsement shall be submitted with
the Certificate of Insurance as evidence of this requirement.
(d) Tenant shall notify County and City in writing within thirty (30) days of
any policy cancellation and ten (10) days for non-payment of premium and provide a copy of the
cancellation notice to the County and City. Failure to provide written notice of cancellation may
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constitute a material breach of the Lease, after which the County or City may suspend or terminate
this Lease.
(e) The Commercial General Liability policy shall contain a severability of
interests clause, also known as a "separation of insureds" clause (standard in the ISO CG 001 policy).
(f) If Contractor's Pollution Liability and Pollution Liability are claims -made
policies, Contractor shall agree to maintain coverage for five (5) years following completion of the
construction. If Contractor's Professional Liability is a claims -made policy, Contractor shall agree to
maintain coverage for ten (10) years following the completion of construction. Products and
Completed Operations coverage shall be maintained for ten (10) years following the completion of
construction.
(g) Insurance certificates should be forwarded to County and City addresses
provided in Section 18.19 below. Tenant has ten (10) business days to provide adequate evidence of
insurance or it shall constitute an Event of Default.
(h) County or City expressly retains the right to require Tenant to increase or
decrease insurance of any of the above insurance types throughout the term of this Lease which shall
be mutually agreed upon by County, City and Tenant.
(i) Chief Real Estate Officer shall notify Tenant in writing of changes in the
insurance requirements consistent with subsection (h) above. If Tenant does not deposit copies of
certificates of insurance and endorsements with Chief Real Estate Officer incorporating such changes
within thirty (30) days of receipt of such notice, it shall constitute an Event of Default.
0) The procuring of such required policy or policies of insurance shall not be
construed to limit Tenant's liability hereunder nor to fulfill the indemnification provisions and
requirements of this Lease, nor in any way to reduce the policy coverage and limits available from
the insurer.
8.2 Indemnification. Tenant agrees to assume all risks, financial or otherwise, associated
with the Premises. Tenant hereby releases and waives all claims and recourse against Lessor,
including the right of contribution for loss or damage of persons or property, arising from, growing
out of or in any way connected with or related to this Lease, including any damage to or interruption
of use of the Premises including, but not limited to, loss of business, damage to, destruction of, or
relocation costs of Tenant's Improvements or impaired utility of the Premises caused by erosion,
flood, or flood overflow, or caused by any action undertaken in the operation, maintenance, repair,
reconstruction, replacement, enlargement or improvement of the Premises except claims arising from
the gross negligence or willful misconduct of County or Agency, their officers, agents, employees
and contractors. Tenant hereby agrees to indemnify, defend (with counsel approved in writing by
Lessor), and hold harmless, County and the Agency, their respective elected and appointed officials,
officers, agents, employees and contractors against any and all claims, losses, demands, damages,
cost, expenses or liability for injury to any persons or property, arising out of the operation or
maintenance of the Premises, and/or Tenant's exercise of the rights under this Lease, except for
liability arising out of the gross negligence or willful misconduct of County or Agency, their elected
and appointed officials, officers, agents, employees or contractors including the cost of defense of
any lawsuit arising therefrom, and except for claims arising after the later to occur of the expiration
or earlier termination of the Term, or the date Tenant vacates the Premises. If County and/or Agency
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is named as co-defendant in a lawsuit in connection with this Lease, Tenant shall notify Lessor of
such fact and shall represent the County and/or Agency in such legal action unless County or Agency
undertakes to represent themselves as co-defendant in such legal action, in which event, Tenant shall
pay to Lessor their litigation costs, expenses, and reasonable attorneys' fees. If judgment is entered
against County and/or Agency and Tenant by a court of competent jurisdiction because of the
concurrent active negligence of County and/or Agency and Tenant, County, Agency and Tenant
agree that liability will be apportioned as determined by the court. Neither Party shall request a jury
apportionment. A judgment or other judicial determination regarding Lessor's negligence shall not
be a condition precedent to Tenant's obligations stated in this Section.
Tenant acknowledges that it is familiar with the language and provisions of California Civil Code
Section 1542 which provides as follows:
A general release does not extend to claims which the creditor or releasing party does not know or
suspect to exist in his or her favor at the time of executing the release and that if known by him or
her, would have materially affected his or her settlement with the debtor or released party.
Tenant, being aware of and understanding the terms of Section 1542, hereby waives all benefit of its
provisions to the extent described in this paragraph.
The foregoing indemnity and defense obligations of this Lease shall survive its expiration or
termination. This Section 8.2 notwithstanding, indemnification with respect to Hazardous Materials
shall be governed by Section 4.4.4.
8.3 Damage to Tenant's Premises. Lessor shall not be liable for injury or damage which
may be sustained by the person, goods, wares, merchandise, or other property of Tenant, of Tenant's
employees, invitees, customers, or of any other person in or about the Premises or the Improvements
caused by or resulting from any peril which may affect the Premises or Improvements, including fire,
steam, electricity, gas, water, or rain which may leak or flow from or into any part of the Premises or
the Improvements, whether such damage or injury results from conditions arising upon the Premises
or from other sources; provided, however, Lessor shall be liable for injury or damage under this
Section 8.3 resulting from County or Agency, their elected and appointed officials, officers, agents,
employees or contractor's gross negligence or willful misconduct.
ARTICLE IX
CONDEMNATION
9.1 Definitions.
9.1.1. "Condemnation" means (i) the taking or damaging, including severance
damage, by eminent domain or by inverse condemnation or for any public or quasi -public use under
any statute, whether by legal proceedings or otherwise, by a Condemnor (hereinafter defined), and
(ii) a voluntary sale or transfer to a Condemnor, either under threat of condemnation or while
condemnation legal proceedings are pending.
9.1.2. "Date of Taking" means the later of (i) the date actual physical possession is
taken by the Condemnor; or (ii) the date on which the right to compensation and damages accrues
under the law applicable to the Premises.
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9.1.3. "Award" means all compensation, sums or anything of value awarded, paid or
received for a Total Taking, a Substantial Taking or a Partial Taking (hereinafter defined), whether
pursuant to judgment or by agreement or otherwise.
9.1.4. "Condemnor" means any public or quasi -public authority or private
corporation or individual having the power of condemnation.
9.1.5. "Total Taking" means the taking by Condemnation of all of the Premises and
all of the Improvements.
9.1.6. "Substantial Taking" means the taking by Condemnation of so much of the
Premises or Improvements or both that one or more of the following conditions results, as reasonably
determined by Tenant: (i) The remainder of the Premises would not be economically and feasibly
usable by Tenant; and/or (ii) A reasonable amount of reconstruction would not make the Premises
and Improvements a practical improvement and reasonably suited for the uses and purposes for
which the Premises were being used prior to the Condemnation; and/or (iii) The conduct of Tenant's
business on the Premises would be materially and substantially prevented or impaired.
9.1.7. "Partial Taking" means any taking of the Premises or Improvements that is
neither a Total Taking nor a Substantial Taking.
9.1.8. "Notice of Intended Condemnation" means any notice or notification on
which a reasonably prudent person would rely and which he would interpret as expressing an existing
intention of Condemnation as distinguished from a mere preliminary inquiry or proposal. It includes
but is not limited to service of a Condemnation summons and complaint on a Party hereto. The
notice is considered to have been received when a Party receives from the Condemnor a notice of
intent to condemn, in writing, containing a description or map reasonably defining the extent of the
Condemnation.
9.2 Notice and Representation.
9.2.1. Notification. The Party receiving a notice of one or more of the kinds
specified below shall promptly notify the other Party (and the Limited Partner, if during the
Compliance Period) of the receipt, contents and dates of such notice: (i) a Notice of Intended
Condemnation; (ii) service of any legal process relating to the Condemnation of the Premises or
Improvements; (iii) any notice in connection with any proceedings or negotiations with respect to
such a Condemnation; (iv) any notice of an intent or willingness to make or negotiate a private
purchase, sale or transfer in lieu of Condemnation.
9.2.2. Separate Representation. County, Agency and Tenant each have the right to
represent its respective interest in each Condemnation proceeding or negotiation and to make full
proof of his claims. No agreement, settlement, sale or transfer to or with the Condemnor shall be
made without the consent of County, Agency and Tenant. County, Agency and Tenant shall each
execute and deliver to the other any instruments that may be required to effectuate or facilitate the
provisions of this Lease relating to Condemnation.
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9.3 Total or Substantial Taking.
9.3.1. Total Taking. On a Total Taking, this Lease shall terminate on the Date of
Taking
9.3.2. Substantial Taking. If a taking is a Substantial Taking, Tenant may, with the
consent of each Leasehold Mortgagee and the Limited Partner, to the extent required, by notice to
Lessor given within ninety (90) days after Tenant receives a Notice of Intended Condemnation, elect
to treat the taking as a Total Taking. If Tenant does not so notify Lessor, the taking shall be deemed
a Partial Taking.
9.3.3. Early Delivery of Possession. Tenant may continue to occupy the Premises
and Improvements until the Condemnor takes physical possession. At any time following Notice of
Intended Condemnation, Tenant may in its sole discretion, with the consent of each Leasehold
Mortgagee and the Limited Partner, to the extent required, elect to relinquish possession of the
Premises to Lessor before the actual Taking. The election shall be made by notice declaring the
election and agreeing to pay all Rent required under this Lease to the Date of Taking. Tenant's right
to apportionment of or compensation from the Award shall then accrue as of the date that the Tenant
relinquishes possession.
9.3.4. Apportionment of Award. On a Total Taking all sums, including damages
and interest, awarded for the fee or leasehold or both shall be distributed and disbursed as finally
determined by the court with jurisdiction over the Condemnation proceedings in accordance with
applicable law. Notwithstanding anything herein to the contrary, Tenant shall be entitled to receive
compensation for the value of its leasehold estate under this Lease including its fee interest in all
Improvements, personal property and trade fixtures located on the Premises, its relocation and
removal expenses, its loss of business goodwill and any other items to which Tenant may be entitled
under applicable law.
9.4 Partial Taking.
9.4.1. Effect on Rent. On a Partial Taking this Lease shall remain in full force and
effect covering the remainder of the Premises and Improvements, and Tenant shall not be entitled to
any refund of the Base Rent.
9.4.2. Restoration of Improvements. Promptly after a Partial Taking, Tenant shall
repair, alter, modify or reconstruct the Improvements ("Restoring') so as to make them reasonably
suitable for Tenant's continued occupancy for the uses and purposes for which the Premises are
leased.
9.4.3. Apportionment of Award. On a Partial Taking, Lessor shall be entitled to
receive the entire award for such Partial Taking, except that (i) the proceeds of such Partial Taking
shall first be applied towards the cost of Restoring the Premises pursuant to Section 9.4.2 and (ii)
Tenant shall be entitled to receive any portion of such award allocated to Tenant's interest in any of
Tenant's Improvements, Personal property and trade fixtures taken, and any part of the award
attributable to the low income housing tax credits.
9.5 Waiver of Termination Rights. Both Parties waive their rights under Section 1265.130
of the California Code of Civil Procedure (and any successor provision) and agree that the right to
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terminate this Lease in the event of Condemnation shall be governed by the provisions of this Article
IX.
ARTICLE X
ASSIGNMENT, SUBLETTING AND ENCUMBERING
10.1 General. Except as provided in Sections 10.3 and 17.6.4, below, Tenant shall not
mortgage, pledge, hypothecate, encumber, transfer, sublease Tenant's interest in this Lease or assign
(including an assignment by operation of law) Tenant's interest in the Premises or Improvements or
any part or portion thereof (hereinafter referred to collectively as "Transfer") without the written
consent of the Lessor, which consent may not be unreasonably withheld, conditioned or delayed.
Lessor's consent may be subject to approval by their respective governing bodies (e.g. Board of
Supervisors and City Council). Tenant's failure to obtain the Lessor's written consent to a Transfer
shall render such Transfer void. Occupancy of the Premises by a prospective transferee, sublessee,
or assignee prior to Lessor's written consent of a Transfer shall constitute an Event of Default, except
as set forth in Section 10.3, below.
10.1.1. Except as provided in Section 10.3, below, if Tenant hereunder is a
corporation, limited liability company, an unincorporated association or partnership, the sale or
transfer of any stock or interest in said corporation, company, association and partnership in the
aggregate exceeding 25% shall require the written consent of the Lessor, as set forth in Section 10.3,
above, which consent may not be unreasonably withheld, conditioned or delayed.
10.1.2. Should Lessor consent to any Transfer, such consent and approval shall not
constitute a waiver of any of the terms, conditions, covenants, restrictions or reservations of this
Lease nor be construed as Lessor's consent to any further Transfer. Such terms conditions,
covenants, restrictions and reservations shall apply to each and every Transfer hereunder and shall be
severally binding upon each and every party thereto. Any document to regarding the Transfer of the
Premises or any part thereof shall not be inconsistent with the provisions of this Lease and in the
event of any such inconsistency, the provisions of this Lease shall control.
10.1.3. This Section shall not be interpreted to prohibit, disallow or require Lessor's
consent to space leases (subleases of less than Tenant's entire Lease interest), including leases of
individual residential units in the Improvements, which are consistent with the approved uses under
this Lease.
10.2 Leasehold Mortgage. Under no circumstances may Tenant mortgage, encumber or
hypothecate Lessor's Fee Interest, other than as required by TCAC pursuant to its lease rider, if any,
and previously approved by Lessor prior to the Effective Date of this Lease, in connection with the
award of low income housing tax credits to Tenant.
10.3 Excluded Transfers. Lessor's consent, as set forth in Section 10.1, above, shall not be
required to for any Excluded Transfer (each party to whom an Excluded Transfer may be made is a
"Permitted Transferee"), provided, however, that (1) Tenant shall notify Lessor of such Excluded
Transfer at least twenty (20) days prior to the consummation of such Excluded Transfer, and shall
provide Lessor with information regarding the transferee evidencing that the Transfer falls within the
scope of this Section 10.3 and the definition of Excluded Transfer, set forth in Section 1.1.21, above,
and (2) if such Transfer involves an assignment of Tenant's rights under this Lease, Tenant or such
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transferee shall provide Lessor with a written assumption of Tenant's obligations and liabilities under
this Lease executed by such transferee in a form approved by the Lessor, which approval shall not be
unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the
terms of this Lease; provided, however, that the provisions of this Section 10.3 shall not apply to any
Transfer to a Foreclosure Transferee.
10.4 Transfer Procedure. The provisions of this Section 10.4 shall not be applicable to an
Excluded Transfer, which shall be governed by Sections 1.1.21 and 10.3, above. If Tenant desires at
any time to enter into a Transfer for which Lessor's consent is required hereunder, Tenant shall
provide Lessor with written notice ("Transfer Notice") at least ninety (90) days prior to the
proposed effective date of the Transfer. The Transfer Notice shall include (i) the name and address
of the proposed transferee, (ii) the nature of the Transfer (e.g., whether an assignment, sublease, etc.),
(iii) the proposed effective date of the Transfer, (iv) income statements and "fair market' balance
sheets of the proposed transferee for the two (2) most recently completed fiscal or calendar years
(provided however, if the proposed transferee is a newly formed entity and has not been in existence
for such two (2) year period, the financial statements submitted shall be those of its principals), (v) a
detailed description of the proposed transferees qualifications and experience that demonstrates the
transferee meets the criteria for a Tenant as established by this Lease, and (vi) a bank or other credit
reference. Thereafter, Tenant shall furnish such supplemental information as Lessor may reasonably
request concerning the proposed transferee. Lessor shall, no later than ninety (90) days after Lessor's
receipt of the information specified above, deliver written notice to Tenant which shall (i) indicate
whether Lessor give or withhold consent to the proposed Transfer, and (ii) if Lessor withhold consent
to the proposed Transfer, setting forth a detailed explanation of Lessor's grounds for doing so. If
Lessor consents to a proposed Transfer, then Tenant may thereafter effectuate such Transfer to the
proposed transferee based upon the specific terms of the Lessor's approval and after execution of a
consent to assignment by Lessor in a form approved by the Lessor, which approval shall not be
unreasonably withheld, conditioned or delayed in the event that the assignment is consistent with the
terms of this Lease; provided, however, that the provisions of this Section 10.4 shall not apply to any
Transfer to a Foreclosure Transferee.
10.5 Liability of Transferors/Transferees For Lease Obligations. In the case of an
assignment, including an assignment pursuant to Section 17.6.5, each Permitted Transferee and any
other assignees or transferees of this Lease shall assume in writing all of Tenant's obligations
thereafter arising under this Lease. All assignees or transferees of any interest in this Lease or the
Premises or Improvements (whether or not directly liable on this Lease) shall be subject to the terms,
conditions, covenants, restrictions and reservations of this Lease. Except as otherwise provided in
Section 17.6.5, the transferor may be released from all liability under this Lease only if the Permitted
Transferee or other transferee agrees in writing to assume all of transferor's obligations and liabilities
and provides to Lessor evidence of sufficient and adequate assets, including any required insurance
policies, subject to approval by Lessor, which approval shall not be unreasonably withheld, that
evidence said Permitted Transferee's or other transferees' financial and otherwise competence to
assume transferor's obligations and liability (an "Approved Release"). Except as otherwise
provided in Section 17.6.5 and except for an Approved Release, for all other Transfers, any transferor
of any interest in this Lease or the Premises or Improvements shall remain primarily liable for all
obligations hereunder and shall be subject to the terms, conditions, covenants, restrictions and
reservations of this Lease. Except as otherwise provided in Section 17.6.5 and except for an
Approved Release, the Lessor may proceed directly against the transferor in its sole and absolute
discretion, with no obligation to exhaust its remedies against the transferee. Notwithstanding
anything to the contrary contained herein, Lessor consent shall not be required for any of the
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following: (i) the exercise by the Limited Partner of its rights pursuant to Tenant's Partnership
Agreement to remove the general partner of the Tenant and appoint the Limited Partner or an affiliate
thereof as interim general partner of the Tenant; (ii) the exercise by the Limited Partner of its right to
enforce any repurchase requirements under Tenant's Partnership Agreement; and/or (iii) a transfer
by the Limited Partner of its partnership interest in Tenant to an Affiliate of the Limited Partner.
10.6 Conditions of Certain Lessor Consent.
10.6.1. Lessor may withhold consent to a Transfer (excluding Excluded Transfers
which shall not require Lessor consent) at its and absolute sole discretion if any of the following
conditions exist:
(a) An Event of Default exists under this Lease.
(b) The prospective transferee has not agreed in writing to keep, perform, and
be bound by all the terms conditions, covenants, restrictions and reservations of this Lease.
(c) In the case of an assignment, the prospective transferee has not agreed in
writing to assume all of transferor's obligations and liabilities.
(d) The construction of the Initial Improvements has not been completed.
(e) Any construction required of Tenant as a condition of this Lease has not
been completed.
(f) All the material terms, covenants, and conditions of the Transfer that are
relevant to the Lessor's approval of the Transfer have not been disclosed in writing to the Lessor.
10.7 Transfer of Mortgages of Lessor's Interest. Notwithstanding anything to the
contrary set forth in this Ground Lease, unless required by statute, court order or operation of law,
Lessor shall not transfer, assign, pledge or hypothecate its fee interest in the Premises (other than to
entities under common control with Lessor or other governmental entities under applicable law)
without the prior written consent of Tenant, Leasehold Mortgagee and the Limited Partner (provided,
the Limited Partner's consent shall be required only during the tax credit compliance period). Any
and all mortgages or liens placed or suffered by the Lessor encumbering the Lessor's fee interest in
the Premises shall be expressly subject and subordinate to this Lease, to all obligations of Lessor
hereunder, to all of the rights, titles, interests, and estates of the Tenant created or arising hereunder,
to each New Lease and to each Leasehold Mortgage. Furthermore, any Person succeeding to the
Lessor's fee interest as a consequence of any conveyance, foreclosure or other transfer shall succeed
to all of the obligations of the Lessor hereunder.
ARTICLE XI
DEFAULT AND REMEDIES
11.1 Event of Default. Each of the following events shall constitute an "Event of Default"
by Tenant:
11.1.1. Failure to Pay. Tenant's failure or omission to pay any Rent or other sum
payable hereunder on or before the date due where such failure shall continue for a period of five (5)
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days after written notice thereof from Lessor to Tenant; provided, however, that any such notice shall
be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure
§1161 etseq.
11.1.2. Failure to Perform. The failure or inability by Tenant to observe or perform
any of its obligations under this Lease (other than those specified in Sections 11.1.1, 11.1.3, 11.1.6,
or 11.1.8 herein, which have their own notice and cure periods), where such failure shall continue for
a period of thirty (30) days after written notice thereof from Lessor to Tenant or past any such longer
period as reasonably agreed upon by the Tenant, Lessor in writing as may be necessary for
completion of its cure; provided, however, that any such notice by Lessor shall be in lieu of, and not
in addition to, any notice required under California Code of Civil Procedure Section 1161 et. seq.;
provided, further, that if the nature of such failure is such that it can be cured by Tenant but that more
than thirty (30) days are reasonably required for its cure (for any reason other than financial
inability), then Tenant shall not be deemed to be in default if Tenant shall commence such cure
within said thirty (30) days, and thereafter diligently pursues such cure to completion.
11.1.3. Abandonment. The abandonment (as defined in California Civil Code
Section 1951.3) or vacation of the Premises by Tenant for a period of thirty (30) days or more.
11.1.4. Assignments.
(a) The making by Tenant of any assignment of its leasehold estate under this
Lease without Lessor's consent, as set forth in Article X;
(b) A case is commenced by or against Tenant under Chapters 7, 11 or 13 of
the Bankruptcy Code, Title 11 of the United States Code as now in force or hereafter amended and if
so commenced against Tenant, the same is not dismissed within ninety (90) days of such
commencement;
(c) the appointment of a trustee or receiver to take possession of substantially
all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure
is not discharged within sixty (60) days; or
(d) Tenant's convening of a meeting of its creditors or any class thereof for
the purpose of effecting a moratorium upon or composition of its debts. In the event of any such
default, neither this Lease nor any interests of Tenant in and to the Premises shall become an asset in
any of such proceedings.
11.1.5. Failure to Reimburse Lessor. Tenant's failure to reimburse the Lessor
pursuant to Section 3.6.4.
11.1.6. Termination of and Failure to Reinstate Insurance Coverage.
Termination of Tenant's insurance coverage and lack of reinstatement within ten (10) business days
after notice from Lessor of such termination.
11.1.7. Failure to Provide Evidence of Insurance. Tenant's failure to provide
Lessor with a valid and adequate certificate of insurance and endorsements, or binder, at any time
during the Term of the Lease, within the time period required under Section 8.1.3.
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11.1.8. Lessor's Consent and Approval of Transfer. Occupancy of the Premises
by a prospective transferee, sublessee, or assignee which requires Lessor's consent or approval,
before Lessor's written consent and approval of a Transfer is obtained as required in Section 10.1.
11.1.9. Tenant's failure to make Additional Rent payment(s) as set forth in Sections
11.3 and 11.10
11.2 Lessor's Remedies. If an Event of Default occurs, Lessor shall have the following
remedies in addition to all rights and remedies provided by law or equity to which Lessor may resort
cumulatively or in the alternative:
11.2.1. Termination of Lease. Subject to Article 17, as applicable, Lessor shall have
the right to terminate this Lease and all rights of Tenant hereunder including Tenant's right to
possession of the Premises. In the event that Lessor shall elect to so terminate this Lease then Lessor
may recover from Tenant:
(a) The worth at the time of award of the unpaid Rent and other charges,
which had been earned as of the date of the termination hereof, plus
(b) The worth at the time of award of the amount by which the unpaid Rent
and other charges which would have been earned after the date of the termination hereof until the
time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably
avoided; plus
(c) The worth at the time of award of the amount by which the unpaid Rent
and other charges for the balance of the Term hereof after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided; plus
(d) Any other amount necessary to compensate Lessor for all the detriment
proximately caused by Tenant'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 repair, renovation
and alteration of the Premises, reasonable attorneys' fees, expert witness costs; plus
(e) Subject to the rights of any Leasehold Mortgagees and TCAC, the funds
in the Capital Improvement Fund; plus
(f) Any other amount which Lessor may by law hereafter be permitted to
recover from Tenant to compensate Lessor for the detriment caused by Tenant's default as permitted
under applicable California law.
The term "Rent" as used herein shall mean as defined in Section 1.1.41. Additional Rent
shall be computed on the basis of the average monthly amount thereof accruing during the 24-month
period immediately prior to default, except that if it becomes necessary to compute such Additional
Rent before such 24-month period has occurred, then it shall be computed on the basis of the average
monthly amount during such shorter period. As used in Sections 11.2.1(a) and 11.2.1(b) above, the
"worth at the time of award" shall be computed by allowing interest at the Interest Rate. As used in
Sections 11.2.1 (c) above, the "worth at the time of award" shall be computed by discounting such
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amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus
one percent (1%), but not in excess of the Interest Rate.
11.2.2. Continue Lease in Effect. Lessor may continue this Lease in effect without
terminating Tenant's right to possession and to enforce all of Lessor's rights and remedies under this
Lease, at law or in equity, including the right to recover the Rent as it becomes due under this Lease;
provided, however, that Lessor may at any time thereafter elect to terminate this Lease for the
underlying Event(s) of Default by notifying Tenant in writing that Tenant's right to possession of the
Premises has been terminated.
11.2.3. Removal of Personal Property Following Termination of Lease. Lessor
shall have the right, following a termination of this Lease and Tenant's rights of possession of the
Premises under Section 11.2.1 above, to re-enter the Premises and, subject to applicable law, to
remove Tenant's personal property from the Premises. Such property may be removed and stored in
a public warehouse or elsewhere at the cost of and for the account of Tenant, or disposed of without
such storage, in accordance with applicable California law.
11.3 Lessor's Right to Cure Tenant Defaults. If Tenant shall have failed to cure, after
expiration of the applicable time for curing, a particular default under this Lease, Lessor may at their
election, but are not obligated to, make any payment required of Tenant under this Lease or perform
or comply with any term, agreement or condition imposed on Tenant hereunder, and the amount so
paid plus the reasonable cost of any such performance or compliance, plus interest on such sum at the
Interest Rate from the date of payment, performance or compliance until reimbursed shall be deemed
to be Additional Rent payable by Tenant on Lessor's demand. Tenant's failure to reimburse the
County and/or Agency within 30 days of Lessor's demand shall constitute an Event of Default under
this Lease. No such payment, performance or compliance shall constitute a waiver of default or of
any remedy for default, or render County and/or Agency liable for any loss or damage resulting from
the same.
11.4 Lessor's Default. Lessor shall not be considered to be in default under this Lease
unless Tenant has given Lessor written notice specifying the default, and either (i) as to monetary
defaults, Lessor have failed to cure the same within ten (10) business days after written notice from
Tenant, or (ii) as to nomnonetary defaults, Lessor have failed to cure the same within thirty (30) days
after written notice from Tenant, or if the nature of Lessor's nonmonetary default is such that more
than thirty (30) days are reasonably required for its cure, then such thirty (30) day period shall be
extended automatically so long as County and/or Agency commences a cure within such thirty (30)
day period and thereafter diligently pursues such cure to completion. Tenant shall have no right to
offset or abate alleged amounts owing by County and/or Agency under this Lease against any
amounts owing by Tenant under this Lease. Additionally, Tenant's sole remedy for any monetary
default shall be towards the Lessor's interest in the property and not to any other assets. Any and all
claims or actions accruing hereunder shall be absolutely barred unless such action is commenced
within six (6) months of the event or action giving rise to the default.
11.5 Remedies Cumulative. All rights and remedies of Lessor contained in this Lease shall
be construed and held to be cumulative, and no one of them shall be exclusive of the other, and
Lessor shall have the right to pursue any one or all of such remedies or any other remedy or relief
which may be provided by law, whether or not stated in this Lease.
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11.6 Waiver by Lessor. No delay or omission of Lessor to exercise any right or remedy
shall be construed as a waiver of such right or remedy or any default by Tenant hereunder. The
acceptance by Lessor of Rent or any other sums hereunder shall not be (a) a waiver of any preceding
breach or default by Tenant of any provision thereof, other than the failure of Tenant to pay the
particular rent or sum accepted, regardless of Lessor's knowledge of such preceding breach or default
at the time of acceptance of such rent or sum, or (b) waiver of Lessor's right to exercise any remedy
available to Lessor by virtue of such breach or default. No act or thing done by County or Agency's
agents during the term of this Lease shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept a surrender shall be valid unless in writing and signed by Lessor.
11.7 Interest Any installment or Rent due under this Lease or any other sums not paid to
Lessor when due (other than interest) shall bear interest at the Interest Rate from the date such
payment is due until paid, provided, however, that the payment of such interest shall not excuse or
cure the default.
11.8 Conditions Deemed Reasonable. Tenant acknowledges that each of the conditions to a
Transfer, and the rights of Lessor set forth in this Article X in the event of a Transfer is a reasonable
restriction for the purposes of California Civil Code Section 1951.4.
11.9 Waiver by Tenant. Tenant's waiver of any breach by Lessor of any term, covenant or
condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same
or any other term, covenant or condition herein contained.
11.10 Tenant Covenants and Agreements. All covenants and agreements to be performed
by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant's sole cost
and expenses and without any abatement of Rent. If Tenant shall fail to pay any sum of money, other
than Rent required to be paid by it hereunder, or shall fail to perform any other act on its part to be
performed hereunder, or to provide any insurance or evidence of insurance to be provided by Tenant
within the time period required under this Lease, then in addition to any other remedies provided
herein, Lessor may, but shall not be obligated to do so, and without waiving or releasing Tenant from
any obligations of Tenant, make any such payment or perform any such act on Tenant's part to be
made or performed as provided in this Lease or to provide such insurance. Any payment or
performance of any act or the provision of any such insurance by Lessor on Tenant's behalf shall not
give rise to any responsibility of Lessor to continue making the same or similar payments or
performing the same or similar acts. All costs, expenses, and other sums incurred or paid by Lessor
in connection therewith, together with interest at the Interest Rate from the date incurred or paid by
Lessor, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant within thirty
(30) days of receipt of a demand and invoice from Lessor, and Tenant's failure to pay the Lessor, as
stated herein, shall constitute an Event of Default under this Lease.
ARTICLE XII
HOLDING OVER
If Tenant holds over after the expiration or earlier termination of the Term hereof without the
express written consent of Lessor, Tenant shall become a Tenant at sufferance only, at a monthly
rental rate of (a) Fifty Thousand Dollars ($50,000) to the extent the Premises are not subject to any
tenant income or rent restrictions and all units may be rented at market -rate rents, or (b) Twenty Five
Thousand Dollars ($25,000) to the extent the Premises are subject to any tenant income or rent
restrictions ("Hold Over Rent"), increased annually commencing with commencement of the hold
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over period by an amount equal to the greater of (i) three percent (3%) for each year of the Term, or
(ii) a percentage equal to the percentage increase from the Base Period of the Consumer Price Index
("CPI") for Los Angeles- Riverside -Orange County [All Urban Consumers -All Items, not seasonally
adjusted (Base Period 1982-84=100)]. Said CPI for the month of December for the second year of the
Term shall be considered the `Base Period." Said adjustment shall be made by comparing the CPI for
the Base Period to the CPI for the month of December immediately preceding each such adjustment.
If at any time there shall not exist the CPI, Lessor shall substitute any official index published by the
Bureau of Labor Statistics, or successor or similar governmental agency, as may then be in existence,
and shall be most nearly equivalent thereto. If Tenant fails to surrender the Premises and the
Improvements as stated herein, and Lessor shall take legal action to cause Tenant's eviction from the
Premises and is successful in such action, Tenant shall be responsible for all costs and expenses,
including reasonable attorney's fees and costs, incurred by County and/or Agency in connection with
such eviction action; Tenant shall also indemnify and hold Lessor harmless from all loss or liability
or reasonable attorney's fees and costs, including any claim made by any succeeding tenant, incurred
by County and/or Agency founded on or resulting from such failure to surrender.
ARTICLE XIII
ESTOPPEL CERTIFICATES
At any time and from time to time, within ten (10) business days after written request by
either County, Agency or Tenant (the "requesting party"), the other Party (the "responding party")
shall execute, acknowledge and deliver an estoppel certificate addressed to the requesting party,
and/or to such other beneficiary (as described below) as the requesting party shall request, certifying
(i) that this Lease is in full force and effect, (ii) that this Lease is unmodified, or, if there have been
modifications, identifying the same, (iii) the dates to which Rent has been paid in advance, (iv) that,
to the actual knowledge of the responding party, there are no then existing and uncured defaults
under the Lease by either County, Agency or Tenant, or, if any such defaults are known, identifying
the same, and (v) any other factual matters (which shall be limited to the actual knowledge of the
responding party) as may be reasonably requested by the requesting party. Such certificate may
designate as the beneficiary thereof the requesting party, and/or any third party having a reasonable
need for such a certificate (such as, but not limited to, a prospective purchaser, transferee or lender)
and any such certificate may be relied upon by the Parties.
ARTICLE XIV
FORCE MAJEURE
Unless otherwise specifically provided herein, the period for performance of any
nonmonetary obligation by either Party shall be extended by the period of any delay in performance
caused by Acts of God, strikes, boycotts, lock -outs, inability to procure materials not related to the
price thereof, failure of electric power, riots, civil unrest, acts of terrorism, insurrection, war,
declaration of a state or national emergency, weather that could not have reasonably been anticipated,
changes in the Laws which would prevent the Premise from being operated in accordance with this
Lease, or other reasons beyond the reasonable control of County, Agency, Tenant, or their respective
agents or representatives (collectively, "Force Majeure Events"). In no event, however, shall Force
Majeure Events include the financial inability of a Party to this Lease to pay or perform its
obligations hereunder. Further, nothing herein shall extend the time for performance of any
monetary obligation owing under this Lease (including Tenant's obligation to pay Rent owing
hereunder).
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ARTICLE XV
RECORDS AND ACCOUNTS
15.1 Financial Statements. Within one hundred eighty (180) after the end of each
accounting year, Tenant shall at his own expense submit to Auditor -Controller and the Agency a
balance sheet and income statement prepared by a Certified Public Accountant ("CPA") who is a
member of the American Institute of Certified Public Accountants ("AICPA") and the California
Society of CPAs, reflecting business transacted on or from the Premises during the preceding
accounting year. The Certified Public Accountant must attest that the balance sheet and income
statement submitted are an accurate representation of Tenant's records as reported to the United
States of America for income tax purposes. At the same time, Tenant shall submit to Auditor -
Controller and Agency a statement certified as to accuracy by a Public Accountant who is a member
of AICPA and the California Society of CPAs, wherein the total Gross Receipts for the accounting
year are classified according to the categories of business established for percentage rent and listed in
Section 3.4.1(d) and for any other business conducted on or from the Premises. Tenant shall provide
Lessor with copies of any CPA's management letters prepared in conjunction with their audits of
Tenant's operations from the Premises. Copies of management letters shall be provided directly to
Lessor by the CPA at the same time Tenant's copy is provided to Tenant In the event that when
such financial statements are submitted, the Tenant has a budget for the following accounting year,
Tenant, at the same time, shall also provide Lessor with such budget.
15.1.1. Tenant acknowledges its understanding that any and all of the Financial
Statement submitted to the Lessor pursuant to this Lease become Public Records and may be subject
to public inspection and copying pursuant to § § 6250 et. seq. of the California Government Code.
15.1.2. All Tenant's books of account and records and supporting source documents
related to this Lease or to business operations conducted within or from the Premises shall be kept
and made available at one location within the limits of the County unless an alternative location is
approved in writing by the Lessor. Lessor shall, through their duly authorized agents or
representatives, have the right to examine and audit said books of account and records and supporting
source documents at any and all reasonable times for the purpose of determining the accuracy thereof
in connection with such Sections of this Lease as the Parties mutually and reasonably agree the audit
is relevant thereto.
15.2 Reports. In the event that the Tenant commissions, requests or is required to produce
any reports related to the physical condition of the Improvements or Premises, Tenant shall submit
copies of such reports to Lessor along with the financial statements required above in Section 15.1.
ARTICLE XVI
OPERATIONAL OBLIGATIONS OF TENANT
16.1 Standards of Operation.
16.1.1. Tenant shall operate the Premises in a manner reasonably comparable to other
comparable facilities or businesses within the County of Orange. Tenant shall at all times during the
Term provide adequate security measures to reasonably protect persons and property on the
Premises.
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16.1.2. The ultimate purpose of this Lease is to permit the construction and operation
of a multifamily affordable residential rental development, including permanent supportive housing,
in accordance with Section 4.1.1. Accordingly, Tenant covenants and agrees to operate said
Premises fully and continuously to accomplish said purposes and not to abandon or vacate the
Premises at any time
16.1.3. The facilities on the Premises shall be operated during normal business hours,
subject to any temporary interruptions in operations or closures due to ordinary maintenance and
repair and any Force Majeure Event, defined in Article XIV above.
16.2 Protection of Environment. Tenant shall take all reasonable measures available to:
16.2.1. Avoid any pollution of the atmosphere or littering of land or water caused by
or originating in, on, or about Tenant's facilities.
16.2.2. Maintain a reasonable noise level on the Premises so that persons in the
general neighborhood will be able to comfortably enjoy the other facilities and amenities in the area.
16.2.3. Prevent the light fixtures of the Premises from emitting light that could
negatively affect the operation of cars, boats, or airplanes in the area.
16.2.4. Prevent all pollutants from Tenant's operations on the Premises from being
discharged, including petroleum products of any nature, except as may be permitted in accordance
with any applicable permits or as permitted by applicable Law. Tenant and all of Tenant's agents,
employees and contractors shall conduct operations under this Lease so as to ensure that pollutants
do not enter the municipal storm drain system (including but not limited to curbs and gutters that are
part of the street systems), or directly impact receiving waters (including but not limited to rivers,
creeks, streams, estuaries, lakes, harbors, bays and the ocean), except as may be permitted by any
applicable permits or as permitted by applicable law.
16.2.5. The Lessor may enter the Premises in accordance with Section 4.5 and/or
review Tenant records at all reasonable times to assure that activities conducted on the Premises
comply with the requirements of this Section.
16.3 On -Site Manager. Tenant shall employ a competent manager who shall be responsible
for the day-to-day operation and level of maintenance, cleanliness, and general order for the
Premises. Such person shall be vested with the authority of Tenant with respect to the supervision
over the operation and maintenance of the Premises, including the authority to enforce compliance by
Tenant's agents, employees, concessionaires, or licensees with the terms and conditions of this Lease
and any and all rules and regulations adopted hereunder. Tenant shall notify Lessor in writing of the
name of the Manager currently so employed as provided in Section 19.20 of this Lease.
16.4 Policies and Procedures to be Established by Tenant. Prior to the completion of
construction, Tenant shall submit to Lessor proposed policies and procedures pertinent to the
operation of the multifamily affordable residential rental development and manner of providing the
uses required by this Lease ("Policies and Procedures").
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ARTICLE XVII
LEASEHOLD MORTGAGES
17.1 Definitions. The following definitions are used in this Article (and in other Sections of
this Lease):
17.1.1. "Leasehold Estate" shall mean Tenant's leasehold estate in and to the
Premises, including Tenant's rights, title and interest in and to the Premises and the Improvements,
or any applicable portion thereof or interest therein.
17.1.2. "Leasehold Foreclosure Transferee" shall mean any person (which may, but
need not be, a Leasehold Mortgagee) which acquires the Leasehold Estate pursuant to a foreclosure,
assignment in lieu of foreclosure or other enforcement of remedies under or in connection with a
Leasehold Mortgage.
17.1.3. "Leasehold Mortgage" shall mean and includes a mortgage, deed of trust,
security deed, conditional deed, deed to secure debt or any other security instrument (including any
assignment of leases and rents, security agreement and financing statements) held by a Lender by
which Tenant's Leasehold Estate is mortgaged to secure a debt or other obligation, including a
purchase money obligation.
17.1.4. "Leasehold Mortgagee" shall mean a Lender which is the holder of a
Leasehold Mortgage.
17.1.5. "Tenant" shall mean all of the following: (i) the Tenant under this Lease; (ii)
an approved assignee, transferee or subtenant of the Tenant under this Lease who is or becomes
directly and primarily liable to Lessor; and (iii) any further assignee, transferee or subtenant of any of
the parties listed in (ii) who is or becomes directly and primarily liable to Lessor.
17.2 Tenant's Right to Encumber Leasehold Estate; No Right to Encumber Lessor's
Fee Interest. Provided that an Event of Default has not occurred and is continuing, Tenant may, at
any time during the Term of this Lease (with consent of Lessor after prior written notice providing
evidence that all requirements of this Lease have been complied with, which consent shall not be
unreasonably withheld, conditioned or delayed), encumber all or any portion of Tenant's Leasehold
Estate with one (1) or more Leasehold Mortgages; provided, however:
17.2.1. Such Leasehold Mortgage(s) (as of the date recorded) shall not exceed (a) if
recorded before completion of the Initial Improvements, One Hundred Percent (100%) of the costs of
the Initial Improvements, or (b) if recorded after completion of the Initial Improvements, eighty
percent (80%) of the Leasehold Estate value (including the value of all improvements) after
completion;
17.2.2. That Tenant shall not have the power to encumber, and no Leasehold
Mortgage shall encumber, Lessor's Fee Interest;
17.2.3. Except as expressly provided in this Lease, the Leasehold Mortgage and all
rights acquired under it shall be subject to each and all of the covenants, conditions, and restrictions
set forth in this Lease and to all rights and interests of Lessor hereunder; and
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17.2.4. Nothing in this Lease shall be construed so as to require or result in a
subordination in whole or in part in any way of the Lessor's Fee Interest to any Leasehold Mortgage,
and;
17.2.5. Except as otherwise expressly provided herein, in the event of any conflict
between the provisions of this Lease and the provisions of any such Leasehold Mortgage, the
provisions of this Lease shall control.
Tenant's encumbrance of its Leasehold Estate with a Leasehold Mortgage, as provided in this
Section 17.2, shall not constitute an assignment or other Transfer under Article X or otherwise, nor
shall any Leasehold Mortgagee, as such, be deemed to be an assignee or transferee of this Lease or of
the Leasehold Estate so as to require such Leasehold Mortgagee, as such, to assume the Tenant's
obligations and liabilities under this Lease.
Notwithstanding the foregoing, if any Leasehold Mortgagee (or its nominee) acquires title to
the Premises by foreclosure or deed in lieu thereof, any required consent of the Lessor under this
Section 17.2 shall not be unreasonably withheld.
17.3 Notification to Lessor of Leasehold Mortgage. Tenant or any Leasehold Mortgagee
shall, prior to making any Leasehold Mortgage, provide Lessor with written notice of such Leasehold
Mortgage and the name and address of the Leasehold Mortgagee. At the time of notice, Tenant or
such Leasehold Mortgagee shall furnish to Lessor a complete copy of any trust deed and note to be
secured thereby, together with the name and address of the holder thereof. Thereafter, Tenant or any
Leasehold Mortgagee shall notify Lessor of any change in the identity or address of such Leasehold
Mortgagee. Lessor shall be entitled to rely upon the addresses provided pursuant to this Section for
purposes of giving any notices required by this Article XVII.
17.4 Notice and Cure Rights of Leasehold Mortgagees With Respect to Tenant Defaults.
Lessor, upon delivery to Tenant of any notice of a default or demand for payment by Tenant under
this Lease or a matter as to which Lessor may predicate or claim a default, will promptly deliver a
copy of such notice to each Leasehold Mortgagee. Each notice or demand required to be given by
Lessor to a Leasehold Mortgagee under this Lease shall be in writing and shall be given by certified
or registered mail, postage prepaid, return receipt requested, to such Leasehold Mortgagee at the
address(es) provided by such Leasehold Mortgagee, as applicable, to Lessor from time to time in
writing and shall be effective upon receipt (or refusal to accept receipt). No notice or demand given
by Lessor to Tenant shall be effective until the duplicate copy of such notice or demand to the Tenant
shall have been effectively given to each Leasehold Mortgagee in accordance with this Lease. From
and after the date such notice has been given to any Leasehold Mortgagee, such Leasehold
Mortgagee shall have the same cure period for such default (or act or omission which is the subject
matter of such notice) that is provided to Tenant under this Lease or as otherwise agreed upon by
County, Agency and the Tenant, to commence and/or complete a cure of such default (or act or
omission which is the subject matter of such notice). Lessor shall accept any and all performance by
or on behalf of any Leasehold Mortgagee(s), including by any receiver obtained by any Leasehold
Mortgagee(s), as if the same had been done by Tenant. Tenant authorizes each Leasehold Mortgagee
to take any such action at such Leasehold Mortgagee's option, and hereby authorizes any Leasehold
Mortgagee (or any receiver or agent) to enter upon the Premises for such purpose.
17.5 Limitation on Lessor's Termination Right. If following the delivery of notice
pursuant to Section 17.4, above, the default by Tenant continues and is not cured by Tenant (or any
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Leasehold Mortgagee as allowed under Section 17.4, above), and such failure entitles County and/or
Agency to terminate this Lease, Lessor shall have no right to terminate this Lease unless Lessor shall
notify in writing each and every Leasehold Mortgagee who has complied with Section 17.3 of
Lessor's intent to so terminate at least sixty (60) days in advance of the proposed effective date of
such termination. If any Leasehold Mortgagee, within such sixty (60) day period, (i) notifies Lessor
of such Leasehold Mortgagee's desire to cure such default and initiates such cure and (ii) pays or
cause to be paid the amount that is necessary to cure any monetary default as stated in such notice, if
any, then Section 17.6 shall apply. The Lessor, at its sole discretion, may permit such additional time
as necessary for any Leasehold Mortgagee to commence the cure or make payment(s), as stated
herein. If any Leasehold Mortgagee and Limited Partner fails to respond to said notice of
termination within the allotted sixty (60) days as consistent with the conditions of this Section 17.5,
Lessor are entitled to immediately terminate this Lease.
17.6 Leasehold Mortgagee Foreclosure Period. If any Leasehold Mortgagee complies with
Section 17.5 above, then the following provisions shall apply:
17.6.1. If Lessor's notice under Section 17.5 specifies only monetary Events of
Default as the basis for Lessor's election to terminate this Lease, and Leasehold Mortgagee has fully
paid the monetary amount designated by Lessor in its notice, then such payment shall be deemed to
have cured the Event of Default. If Lessor's notice under Section 17.5 specifies both monetary and
non -monetary Events of Default or non -monetary Events of Default as the basis for Lessor's election
to terminate this Lease, and Leasehold Mortgagee has fully paid the monetary amount designated by
Lessor in its notice, as applicable, then the date of termination specified in Lessor's notice shall be
extended for a period of twelve (12) months, provided that such Leasehold Mortgagee shall, during
such twelve (12) month period:
(a) pay or cause to be paid all Rent under this Lease as the same becomes due
(subject to the notice and cure rights expressly set forth herein); and
(b) continue (subject to any stay as described in Section 17.6.2 below) its
good faith efforts to perform (and complete performance of) all of Tenant's nommonetary obligations
under this Lease, excepting nonmonetary obligations (whether or not a default exists with respect
thereto) that are not then reasonably susceptible of being cured by Leasehold Mortgagee; and
(c) commence and pursue with reasonable diligence until completion (subject
to any stay as described in Section 17.6.2 below) a judicial or nonjudicial foreclosure or other
enforcement of remedies under its Leasehold Mortgage.
17.6.2. In the event of a judicial or non -judicial foreclosure, the twelve (12) month
period described in Section 17.6.1, above, shall automatically be extended by the length of any delay
caused by any stay (including any automatic stay arising from any bankruptcy or insolvency
proceeding involving Tenant), injunction or other order arising under applicable Laws or issued by
any court (which term as used herein includes any other governmental or quasi -governmental
authority having such power) (the foregoing being collectively referred to as a "Stay"). Further,
Leasehold Mortgagee's obligations stated in Section 17.6.1(b) and (c) shall be automatically
suspended during any period that any Stay prevents Leasehold Mortgagee from taking any such
actions. Nothing herein, however, shall be construed to extend this Lease beyond the Term hereof
nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after the Event of
Default has been cured. If the Event of Default has been cured and the Leasehold Mortgagee shall
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discontinue such foreclosure proceedings, this Lease shall continue in full force and effect as if
Tenant had not defaulted under this Lease.
17.6.3. In the event the Leasehold Mortgage requires a new lease between the Lessor
and the Leasehold Mortgagee, Lessor shall enter into such new lease with the Leasehold Mortgagee
pursuant to Section 17.7, below, provided Lessor are provided with the necessary and adequate
documents related to the new lease requirements in the Leasehold Mortgage as described in Section
17.7.
17.6.4. So long as any Leasehold Mortgagee is complying with Sections 17.6.1 and
17.6.2 above, then upon the acquisition of Tenant's Leasehold Estate by a Leasehold Foreclosure
Transferee, this Lease shall continue in full force and effect as if Tenant had not defaulted under this
Lease; provided that no Leasehold Foreclosure Transferee shall have any liability for the
performance of any of the Tenant's obligations under this Lease until the Leasehold Foreclosure
Transferee has acquired the Tenant's interest under the Lease, and then the Leasehold Foreclosure
Transferee shall be liable for the performance of only those obligations of the Tenant arising from
and after the effective date of the Leasehold Foreclosure Transferee's acquisition of the Tenant's
Leasehold Estate. Any such Leasehold Foreclosure Transferee shall be deemed to be an assignee or
transferee and shall be deemed to have agreed to perform all of the terms, covenants and conditions
on the part of the Tenant to be performed hereunder from and after the effective date on which such
Leasehold Foreclosure Transferee acquires title to the Leasehold Estate, but only for so long as such
purchaser or assignee is the owner of the leasehold estate.
17.6.5. Any Leasehold Mortgagee (or its designee) that becomes a Leasehold
Foreclosure Transferee, upon acquiring title to Tenant's Leasehold Estate without obtaining Lessor's
consent and provided it is not in default of any of the provisions of this Lease, shall have a one-time
right to assign the Leasehold Estate to an assignee (a) which is an Affiliate of the Leasehold
Foreclosure Transferee, or (b) which has substantial experience, or will employ a property
management company with substantial experience, managing, maintaining and operating affordable
housing developments like that on the Premises. Upon such assignment, the Leasehold Foreclosure
Transferee shall automatically be released of all obligations thereafter accruing under this Lease,
provided that, substantially concurrently with such assignment, the assignee delivers to Lessor a
written agreement assuming Tenant's obligations under the Lease thereafter accruing. Any
subsequent Transfers occurring after the one-time assignment permitted under this Section shall be
subject to Article X.
17.7 Leasehold Mortgagee's Right to New Lease.
17.7.1. In the event of any termination of this Lease (including any termination
because of an Event of Default, or because of any rejection or disaffirmance of this Lease pursuant to
bankruptcy law or any other law affecting creditor's rights, but other than by reason of a Total
Taking), Lessor shall give prompt written notice of such termination to each Leasehold Mortgagee
and shall (subject to Section 17.8 below if more than one Leasehold Mortgagee then exists) enter into
a new lease ("New Lease") of the Premises with the Leasehold Mortgagee holding the Leasehold
Mortgage that has the most senior lien priority, in accordance with Section 17.8 below, or its
designee, upon notice to Lessor by such Leasehold Mortgagee. The New Lease shall commence as
of its effective date and shall continue for the remainder of the scheduled Term of this Lease, at the
same Rent that is payable under this Lease, and on the same terms, conditions, covenants, restrictions
and reservations that are contained in this Lease (including any extension options, purchase options
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and rights of first refusal, if any, provided for in this Lease), and subject to the rights of any tenants
under residential subleases or other subtenants then in valid occupancy of the Premises and
Improvements and further subject to any then existing senior Leasehold Mortgagees; provided that,
substantially concurrently with the delivery of a notice by Leasehold Mortgagee requiring Lessor to
enter into a New Lease, Leasehold Mortgagee shall pay to Lessor all Rent or any other amounts
payable by Tenant hereunder which are then due and shall commence and proceed with diligence to
cure all nonmonetary defaults under this Lease, other than those nonmonetary defaults which are
personal to the foreclosed tenant and impossible for the Leasehold Mortgagee to remedy.
17.7.2. If such Leasehold Mortgagee elects to enter into a New Lease pursuant to
Section 17.7.1 above, then County, Agency and the Leasehold Mortgagee (or its designee) shall
promptly prepare and enter into a written New Lease; but until such written New Lease is mutually
executed and delivered, this Lease shall govern, from and after the giving of notice pursuant to
Section 17.7.1 but prior to the execution of the New Lease, the Lessor's and Leasehold Mortgagee's
relationship with respect to the Premises and the Improvements and the Leasehold Mortgagee shall
(i) be entitled to possession of the Premises and to exercise all rights of Tenant hereunder, (ii) pay to
Lessor any Rent accruing under the New Lease as it becomes owing, and (iii) perform or cause to be
performed all of the other covenants and agreements under this Lease. Further, at such time as the
written New Lease is mutually executed and delivered, Leasehold Mortgagee (or its designee) shall
pay to Lessor its reasonable expenses, including reasonable attorneys' fees and costs, incurred in
connection with the preparation, execution and delivery of such written New Lease. In addition, upon
execution of any such New Lease, Lessor shall execute, acknowledge and deliver to such Leasehold
Mortgagee (or its designee) a grant deed, in recordable form, conveying to such Leasehold
Mortgagee (or its designee) fee title to all Improvements in the event that title to such Improvements
have vested with the County.
17.7.3. In the event that Lessor receives any net income (i.e., gross income less gross
expenses on a cash basis), if any, from the Premises and Improvements during any period that Lessor
may control the same, then the Leasehold Mortgagee under the New Lease shall be entitled to such
net income received by Lessor except to the extent that it was applied to cure any default of Tenant.
17.7.4. All rights and claims of Tenant under this Lease shall be subject and
subordinate to all right and claims of the tenant under the New Lease.
17.8 Multiple Leasehold Mortgages. If more than one Leasehold Mortgagee shall make a
written request upon Lessor for a New Lease in accordance with the provisions of Section 17.7, then
such New Lease shall be entered into pursuant to the request of the Leasehold Mortgagee holding the
Leasehold Mortgage that has the most senior lien priority.
Notwithstanding anything herein to the contrary, Lessor shall have no duty or obligation to resolve
any disputes or conflicting demands between Leasehold Mortgagees. In the event of any conflicting
demands made upon County and/or Agency by multiple Leasehold Mortgagees, Lessor may (subject
to any applicable court orders to the contrary) rely on the direction of the Leasehold Mortgagee
whose Leasehold Mortgage is recorded first in time in the Official Records of the County, as
determined by any national title company.
17.9 Condemnation and Insurance Proceeds. Notwithstanding anything to the contrary
contained herein, all condemnation proceeds (other than proceeds payable on account of the value of
the Lessor's Fee Interest as encumbered by this Lease) or insurance proceeds shall be subject to and
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paid in accordance with the requirements of the most senior (in order of lien priority) Leasehold
Mortgage, subject, however, to any requirement in this Lease that, to the extent not in conflict with
the terms of the applicable Leasehold Mortgage, such proceeds must be used to repair and restore the
Improvements to the Premises which were damaged or destroyed by such condemnation or casualty
(including, without limitation, as required in Article VII following a casualty and in Section 9.4.3
following a condemnation). The handling and disbursement of any such proceeds used to repair or
restore the Improvements to the Premises shall be subject to the requirements of such senior
Leasehold Mortgage.
17.10 Mortgagee Clauses. A standard mortgagee clause naming each Leasehold Mortgagee
may be added to any and all insurance policies required to be carried by Tenant hereunder, provided
that any such Leasehold Mortgagee shall hold and apply such insurance proceeds subject to the
provisions of this Lease.
17.11 No Waiver. No payment made to Lessor by a Leasehold Mortgagee shall constitute
agreement that such payment was, in fact, due under the terms of this Lease; and a Leasehold
Mortgagee having made any payment to Lessor pursuant to County and/or Agency's wrongful,
improper or mistaken notice or demand shall be entitled to the return of any such payment or portion
thereof.
17.12 Fees and Costs. Tenant agrees to reimburse Lessor for its reasonable attorneys' fees
and costs incurred in connection with Lessor's review and/or approval of any documentation which
may be required in connection with any Leasehold Mortgage by Tenant as provided herein.
17.13 No Termination, Cancellation, Surrender or Modification. Without the prior
written consent of each Leasehold Mortgagee, (a) this Lease may not be terminated or cancelled by
mutual agreement of County, Agency and Tenant, (b) Lessor may not accept the surrender this Lease
or the Leasehold Estate created hereunder without the consent of each Leasehold Mortgagee, and (c)
this Lease may not be amended, modified or supplemented (and any action taken in furtherance of
any of the foregoing without the required consent of each Leasehold Mortgagee shall be void and of
no effect). In addition, if any term or provision of this Lease gives Tenant the right to terminate or
cancel this Lease, in whole or in part, no such termination or cancellation shall be or become
effective unless Tenant has first received approval in writing by each Leasehold Mortgagee.
17.14 Effect of Foreclosure upon Base Rent. Notwithstanding anything to the contrary
contained elsewhere in this Lease, (i) in no event shall any Leasehold Mortgagee (or its designee) be
required to pay or cure, in order to prevent the termination of this Lease, to exercise its cure rights
hereunder or to obtain a New Lease or otherwise, any Base Rent, and (ii) in no event shall any
Leasehold Mortgagee (or its designee) or its (or their) successors and assigns be required to pay or
cure any Base Rent which otherwise became due and payable prior to completion of any foreclosure
under any Leasehold Mortgage (or acceptance of any assignment or deed in lieu thereof).
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ARTICLE XVIII
BEST MANAGEMENT PRACTICES
18.1 Tenant and all of Tenant's, subtenant, agents, employees and contractors shall conduct
operations under this Lease so as to assure that pollutants do not enter municipal storm drain systems,
in violation of applicable Laws, which systems are comprised of, but are not limited to curbs and
gutters that are part of the street systems ("Stormwater Drainage System"), and to ensure that
pollutants do not directly impact "Receiving Waters" (as used herein, Receiving Waters include, but
are not limited to, rivers, creeks, streams, estuaries, lakes, harbors, bays and oceans).
18.2 The Santa Ana and San Diego Regional Water Quality Control Boards have issued
National Pollutant Discharge Elimination System ("NPDES') permits ("Stormwater Permits") to
the County of Orange, and to the Orange County Flood Control District ("District") and cities within
Orange County, as co-permittees (hereinafter collectively referred to as "NPDES Parties") which
regulate the discharge of urban runoff from areas within the County of Orange, including the
Premises leased under this Lease. The NPDES Parties have enacted water quality ordinances that
prohibit conditions and activities that may result in polluted runoff being discharged into the
Stormwater Drainage System.
18.3 To assure compliance with the Stormwater Permits and water quality ordinances, the
NPDES Parties have developed a Drainage Area Management Plan ("DAMP") which includes a
Local Implementation Plan ("LIP") for each jurisdiction that contains Best Management Practices
(`BMPs") that parties using properties within Orange County must adhere to. As used herein, a
BMP is defined as a technique, measure, or structural control that is used for a given set of conditions
to manage the quantity and improve the quality of stormwater runoff in a cost effective manner.
These BMPs are found within the District and/or County's LIP in the form of Model Maintenance
Procedures and BMP Fact Sheets (the Model Maintenance Procedures and BMP Fact Sheets
contained in the DAMP/LIP shall be referred to hereinafter collectively as `BMP Fact Sheets") and
contain pollution prevention and source control techniques to eliminate non-stormwater discharges
and minimize the impact of pollutants on stormwater runoff.
18.4 BMP Fact Sheets that apply to uses authorized under this Lease include the BMP Fact
Sheets that are attached hereto as Exhibit C. These BMP Fact Sheets may be modified during the
term of the Lease; and the Lessor shall provide Tenant with any such modified BMP Fact Sheets.
Tenant, its agents, contractors, representatives and employees and all persons authorized by Tenant
to conduct activities on the Premises shall, throughout the term of this Lease, comply with the BMP
Fact Sheets as they exist now or are modified, and shall comply with all other requirements of the
Stormwater Permits, as they exist at the time this Lease commences or as the Stormwater Permits
may be modified. Tenant agrees to maintain current copies of the BMP Fact Sheets on the Premises
throughout the term of this Lease. The BMPs applicable to uses authorized under this Lease must be
performed as described within all applicable BMP Fact Sheets.
18.5 Tenant may propose alternative BMPs that meet or exceed the pollution prevention
performance of the BMP Fact Sheets. Any such alternative BMPs shall be submitted to the Lessor
for review and approval prior to implementation.
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18.6 Lessor may enter the Premises and/or review Tenant's records at any reasonable time
during normal business hours to ensure that activities conducted on the Premises comply with the
requirements of this Section. Tenant may be required to implement a self -evaluation program to
demonstrate compliance with the requirements of this Section.
ARTICLE XIX
GENERAL CONDITIONS & MISCELLANEOUS PROVISIONS
19.1 Signs. Tenant agrees not to construct, maintain, or allow any signs, banners, flags, etc.,
upon the Premises except (a) as approved in writing in advance by Lessor, which approval may be
withheld in the sole and absolute discretion of the Lessor, or (b) required by any of Tenant's lenders,
provided that any such signage is in compliance with all applicable Laws. Tenant further agrees not
to construct, maintain, or allow billboards or outdoor advertising signs upon the Premises.
Unapproved signs, banners, flags, etc., may be removed by Lessor without prior notice to Tenant
19.2 Nondiscrimination. Tenant agrees not to discriminate against any person or class of
persons by reason of sex, age (except as permitted by law), race, color, creed, physical handicap, or
national origin in employment practices and in the activities conducted pursuant to this Lease.
19.3 Taxes and Assessments. Pursuant to California Revenue and Taxation Code Section
107.6, Tenant is specifically informed that this Lease may create a possessory interest which is
subject to the payment of taxes levied on such interest. It is understood and agreed that all taxes and
assessments (including but not limited to said possessory interest tax) which become due and payable
upon the Premises or upon fixtures, equipment, or other property installed or constructed thereon,
shall be the full responsibility of Tenant, and Tenant shall cause said taxes and assessments to be
paid promptly.
19.4 Quitclaim of Interest upon Termination. Upon termination of this Lease for any
reason whatsoever in accordance with the terms of the Lease, Tenant shall execute, acknowledge,
and deliver to Lessor, within five (5) business days, a good and sufficient deed, in a form as approved
by the Lessor, whereby all right, title, and interest of Tenant in the Premises is quitclaimed back to
Lessor ("Quitclaim Deed"). The Quitclaim Deed shall then be recorded by Lessor to remove any
cloud on title created by this Lease. In the event that the Tenant fails to provide such Quitclaim Deed
within five (5) additional business days after written demand by either the County or City, the Parties
agree that the County and City will be damaged and entitled to compensation for those
damages. Such actual damages will, however, be extremely difficult to ascertain. Therefore, if the
Tenant does not provide the required Quitclaim Deed after such notice and cure period, in addition to
any other remedy provided by law or equity, the Tenant shall pay the Lessor $2,000 per day for every
day that passes until a Quitclaim Deed is delivered, which amount shall be deemed to constitute a
reasonable estimate of Lessor's damages and not a penalty. Such amount shall become due and
payable by Tenant to Lessor for each calendar day that passes beyond the cure period.
Notwithstanding the foregoing, if the Tenant has disputed the termination of the Lease by Lessor,
upon a final determination by a court of competent jurisdiction that the Lease has not been
terminated, Tenant shall not be subject to payment of the foregoing damages.
19.5 Public Records. Tenant acknowledges that any written information submitted to and/or
obtained by Lessor from Tenant or any other person or entity having to do with or related to this
Lease and/or the Premises, either pursuant to this Lease or otherwise, is a "public record" open to
inspection and copying by the public pursuant to the California Public Records Act (Government
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Code §6250, et seq.) ("CPRA") as now in force or hereafter amended, or any Law in substitution
thereof, or otherwise made available to the public, unless such information is exempt from disclosure
pursuant to the applicable sections of CPRA. In the event that a CPRA request is made for any
financial statements and records (not including Gross Receipts Statements) and the Lessor
determines that the records must be turned over, the Lessor will give Tenant fifteen (15) days'
written notice prior to turning over such records so that Tenant can take any necessary action,
including, but not limited to, injunctive relief, to prevent Lessor from turning over such financial
statements and records.
19.6 Attorney's Fees. In any action or proceeding brought to enforce or interpret any
provision of this Lease, or where any provision hereof is validly asserted as a defense, each Party
shall bear its own attorneys' fees and costs.
19.7 Payment Card Compliance. Should Tenant conduct credit/debit card transactions in
conjunction with Tenant's business with the County and/or Agency, on behalf of the County and/or
Agency, or as part of the business that Tenant conducts on the Premises, Tenant covenants and
warrants that it will during the course of such activities be Payment Card Industry Data Security
Standard ("PCl/DSS") and Payment Application Data Security Standard ("PA/DSS") compliant and
will remain compliant during the entire duration of its conduct of such activities. Tenant agrees to
immediately notify Lessor in the event Tenant should ever become non -compliant at a time when
compliance is required hereunder, and will take all necessary steps to return to compliance and shall
be compliant within ten (10) days of the commencement of any such interruption. Upon demand by
Lessor, Tenant shall provide to Lessor written certification of Tenant's PCl/DSS and/or PA/DSS
compliance.
19.8 Right to Work and Minimum Wage Laws.
19.8.1. In accordance with the United States Immigration Reform and Control Act of
1986, Tenant shall require its employees that directly or indirectly service the Premises, pursuant to
the terms and conditions of this Lease, in any manner whatsoever, to verify their identity and
eligibility for employment in the United States. Tenant shall also require and verify that its
contractors or any other persons servicing the Premises, pursuant to the terms and conditions of this
Lease, in any manner whatsoever, verify the identity of their employees and their eligibility for
employment in the United States.
19.8.2. Pursuant to the United States of America Fair Labor Standard Act of 1938, as
amended, and State of California Labor Code, Section 1178.5, Tenant shall pay no less than the
greater of the Federal or California Minimum Wage to all its employees that directly or indirectly
service the Premises, in any manner whatsoever. Tenant shall require and verify that all its
contractors or other persons servicing the Premises on behalf of the Tenant also pay their employees
no less than the greater of the Federal or California Minimum Wage.
19.8.3. Tenant shall comply and verify that its general contractor complies with all
other Federal and State of California laws for minimum wage, overtime pay, record keeping, and
child labor standards pursuant to the servicing of the Premises or terms and conditions of this Lease.
19.9 Declaration of Knowledge by Tenant. Tenant warrants that Tenant has carefully
examined this Lease and by investigation of the site and of all matters relating to the Lease
arrangements has fully informed itself as to all existing conditions and limitations affecting the
Page l54
80A-264
construction of the Lease improvements and business practices required in the operation and
management of the uses contemplated hereunder.
19.10 Governing Law. This Lease shall be governed by and construed in accordance with
the laws of the State of California and the City.
19.11 Venue. The Parties hereto agree that this Lease has been negotiated and executed in
the State of California and shall be governed by and construed under the laws of California. In the
event of any legal action to enforce or interpret this Lease, the sole and exclusive venue shall be a
court of competent jurisdiction located in Orange County, California, and the Parties hereto agree to
and do hereby submit to the jurisdiction of such court, notwithstanding Code of Civil Procedure
Section 394. Furthermore, the Parties hereto specifically agree to waive any and all rights to request
that an action be transferred for trial to another county.
19.12 Headings and Titles. The captions of the Articles or Sections of this Lease are only to
assist the Parties in reading this Lease and shall have no effect upon the construction or interpretation
of any part hereof.
19.13 Interpretation. Whenever required by the context of this Lease, the singular shall
include the plural and the plural shall include the singular. The masculine, feminine and neuter
genders shall each include the other. In any provision relating to the conduct, acts or omissions of
Tenant, the term "Tenant" shall include Tenant's agents, employees, contractors, invitees,
successors or others using the Premises with Tenant's expressed or implied permission. In any
provision relating to the conduct, acts or omissions of County, the term "County" shall include
County's agents, employees, contractors, invitees, successors or others using the Premises with
County's expressed or implied permission. In any provision relating to the conduct, acts or omissions
of Agency, the term "Agency" shall include Agency's agents, employees, contractors, invitees,
successors or others using the Premises with Agency's expressed or implied permission.
19.14 Ambiguities. Each Party hereto has reviewed this Lease with legal counsel, and has
revised (or requested revisions of) this Lease based on the advice of counsel, and therefore any rules
of construction requiring that ambiguities are to be resolved against a particular Party shall not be
applicable in the construction and interpretation of this Lease or any exhibits hereto.
19.15 Successors and Assigns. Except as otherwise specifically provided in this Lease, all
of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective heirs, personal representatives, successors and
assigns.
19.16 Time is of the Essence. Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.
19.17 Severability. If any term or provision of this Lease is held invalid or unenforceable to
any extent under any applicable law by a court of competent jurisdiction, the remainder of this Lease
shall not be affected thereby, and each remaining term and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
19.18 Integration. This Lease, along with any exhibits, attachments or other documents
affixed hereto or referred to herein and related Agency permits, constitute the entire agreement
Page l55
80A-265
between County, Agency and Tenant relative to the leasing of the Premises. This Lease and such
exhibits, attachments and other documents may be amended or revoked only by an instrument in
writing signed by County, Agency and Tenant. County, Agency and Tenant hereby agree that no
prior agreement, understanding or representation pertaining to any matter covered or mentioned in
this Lease shall be effective for any purpose.
19.19 Notices. All notices or other communications required or permitted hereunder shall be
in writing, and shall be personally delivered or sent by registered or certified mail, postage prepaid,
return receipt requested, or electronic mail, shall be deemed received upon the earlier of (a) if
personally delivered, the date of delivery to the address of the person to receive such notice, (b) if
mailed, three (3) business days after the date of posting by the United States post office, (c) if given
by electronic mail, when sent if before 5:00 p.m., otherwise on the next business day, or (d) if
delivered by overnight delivery, one (1) business day after mailing. Any notice, request, demand,
direction or other communication sent by electronic mail must be confirmed within by letter mailed
or delivered within two business days in accordance with the foregoing.
Either Party may change the address for notices by giving the other Party at least ten (10) calendar
days' prior written notice of the new address.
If to Lessor: County of Orange
c/o CEO/Corporate Real Estate
333 W. Santa Ana Blvd, 3rd Floor
Santa, Ana, CA 92702
Attn: Chief Real Estate Officer
And to:
Housing Authority of the City of Santa Ana
20 Civic Center Plaza (1\4-26)
P.O. Box 1988
Santa Ana, California 92702
Attn: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
If to Tenant: c/o The Related Companies of California, LLC
19201 Von Karman Avenue, Suite 900
Irvine, CA 92612
Attention: President
c/o A Community of Friends
3701 Wilshire Boulevard, Suite 700
Los Angeles, CA 90010
Attention: Dora Leong Gallo, President and Chief Executive Officer
And to:
Page l56
80A-266
With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street, 64th Floor
Los Angeles. CA 90071
Attention: Lance Bocarsly, Esq.
19.20 Amendments. This Lease is the sole and only agreement between the Parties regarding
the subject matter hereof, other agreements, either oral or written, are void. Any changes to this
Lease shall be in writing and shall be properly executed by all Parties.
19.21 Limited Partner Cure Rights. In the event the Tenant is a partnership, the Lessor
agrees to accept a cure of any Event of Default by Tenant made by any one or more of the Tenant's
limited partners as if such cure had been made by Tenant, provided such cure is made in accordance
with the applicable provisions of this Lease.
19.22 Dispositions of Abandoned Property. If Tenant abandons or quits the Premises or is
dispossessed thereof by process of law or otherwise, title to any personal property belonging to and
left on the Premises thirty (30) days after such event shall, at County and/or Agency's option, be
deemed to have been transferred to County and/or Agency. County and/or Agency shall have the
right to remove and to dispose of such property at Tenant's cost, including the cost of labor,
materials, equipment and an administrative fee equal to fifteen percent (15%) of the sum of such
costs without liability therefor to Tenant or to any person claiming under Tenant, and shall have no
need to account therefor. At Lessor's option, Lessor may provide Tenant with an invoice for such
costs, which invoice Tenant agrees to pay within fifteen (15) days of receipt.
19.23 Brokers. If Tenant has engaged a broker in this transaction pursuant to a separate
agreement, Tenant shall be solely responsible for the payment of any broker commission or similar
fee payable pursuant to such separate agreement. Tenant each hereby agree to indemnify and hold the
Lessor harmless from and against all costs, expenses or liabilities (including attorney fees and court
costs, whether or not taxable and whether or not any action is prosecuted to judgment) incurred by
the County and/or Agency in connection with any claim or demand by a person or entity for any
broker's, finder's or other commission or fee from the County and/or Agency in connection with the
Tenant's entry into this Lease and the transactions contemplated hereby based upon any alleged
statement or representation or agreement of the Tenant. No broker, finder or other agent of any Party
hereto shall be a third -party beneficiary of this Lease
19.24 No Partnership. This Lease shall not be construed to constitute any form of
partnership or joint venture between County, Agency and Tenant. County, Agency and Tenant
mutually acknowledge that no business or financial relationship exists between them other than as
County, Agency and Tenant, and that County and Agency is not responsible in any way for the debts
of Tenant or any other Party.
19.25 Authorization. County, Agency and Tenant (each, a "signing party") each represents
and warrants to the other that the person or persons signing this Lease on behalf of the signing party
has full authority to do so and that this Lease binds the signing party. Concurrently with the
execution of this Lease, the Tenant shall deliver to the Lessor a certified copy of a resolution of the
signing party's board of directors or other governing board authorizing the execution of this Lease by
the signing party.
Page l57
80A-267
19.26 Recording. This Lease itself shall not be recorded, but in the event that the Tenant
encumbers the leasehold as set forth in Article XVII, a memorandum hereof may be recorded in the
form of Exhibit D attached hereto (the "Memorandum"). The Memorandum may be executed
concurrently with this Lease and thereafter recorded in the Official Records of the County Recorder
on the Effective Date of this Lease has occurred. Tenant shall be responsible for the payment of all
charges imposed in connection with the recordation of the Memorandum, including, without
limitation, any documentary transfer tax imposed in connection with this transaction and all
recording fees and charges.
19.27 Exhibits. This Lease contains the following exhibits, schedules and addenda, each of
which is attached to this Lease and incorporated herein in its entirety by this reference:
Exhibit A:
Legal Description of the Premises
Exhibit A-1: Rendering of the Premises
Exhibit B:
Initial Improvements
Exhibit C:
Best Management Practices Fact Sheets
Exhibit D:
Form of Memorandum of Lease
19.28 Consent/Duty to Act Reasonably. Except as otherwise expressly provided herein,
whenever this Lease grants County, Agency and/or Tenant the right to take any action, grant any
approval or consent, or exercise any discretion, County, Agency and/or Tenant shall act reasonably
and in good faith and take no action which might result in the frustration of the other Parry's
reasonable expectations concerning the benefits to be enjoyed under this Lease.
19.29 Counterparts. For the convenience of the Parties to this Lease, this Lease may be
executed in several original counterparts, each of which shall together constitute but one and the
same agreement. Original executed pages maybe assembled together into one fully executed
document.
19.30. No Merger. The interests created by this Lease shall not be extinguished by merger
of any or all of the ownership interests the Premises or the Improvements in one person or entity.
19.31 Cooperation of County and Agency. County and Agency hereby agree that (a)
Agency staff shall be responsible for administering the operation of the Project to insure it is being
used in conformance with this Lease, and (b) Agency staff shall serve as administrator of the Lease
with the Tenant and coordinate with the County as necessary. County and Agency hereby agree to
work cooperatively and expeditiously to provide written consent (or written refusal to provide
consent) to Tenant, the Leasehold Mortgagees and Limited Partner hereunder.
[Signatures On Following Pages]
Page l58
.o • •
IW:P.II:l10
IN WITNESS WHEREOF, the Parties have executed this Lease on the date fast written above.
APPROVED AS TO FORM:
COUNSEL
By:
Ryan O. o e, ssistant City Attorney
Date
WASHINGTON SANTA ANA HOUSING
PARTNERS, L.P., a California limited partnership
By: Related/Washington Santa Ana Development
Co., LLC, a California limited liability
company, its Administrative General Partner
By:
Frank Cardone, President
By: Supportive Housing LLC, a California
limited liability company
By: A Community of Friends, a California
nonprofit public benefit corporation,
its sole member/manager
By:
Dora Leong Gallo,
President and Chief
Executive Officer
LESSOR
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
a public body, corporate and politic
By:
Steven A. Mendoza, Executive Director
Date
Page159
80A-269
IN WITNESS WHEREOF, the Parties have executed this Lease on the date first written above.
APPROVED AS TO FORM:
SONIA CARAVALHO
AUTHORITY GENERAL COUNSEL
By:
Ryan O. Hodge, Assistant City Attorney
Date
TENANT
WASHINGTON SANTA ANA HOUSING
PARTNERS, L.P., a California limited partnership
By: Related/Washington Santa Ana Development
Co., LLC, a California limited liability
company, its Administrative General Partner
By:
Frank Cardone, President
By: Supportive Housing LLC, a California
limited liability company
By: A Community of Friends, a California
nonprofit public benefit corporation,
its sole member/manager
R
Executive
LESSOR
Dora Leong Gallo,
President and Chief
Officer
HOUSING AUTHORITY OF THE CITY OF
SANTA ANA ACTING AS THE HOUSING
SUCCESSOR AGENCY
a public body, corporate and politic
By:
Steven A. Mendoza, Executive Director
Date
Page l59
80A-270
APPROVED AS TO FORM: COUNTY OF ORANGE, a political subdivision of
COUNTY COUNSEL the State of California
By:
Deputy
Thomas A. Miller, Chief Real Estate Officer
Date Orange County, California
Page I60
80A-271
EXHIBIT 4
Washington Santa Ana Housing Partners, L.P.
18201 Von Karman Avenue, Suite 900 Irvine, CA 92612
P: (949) 660-7272
January 31, 2020
Mr. Judson Brown
Housing Division Manager
City of Santa Ana
Community Development Agency
20 Civic Center Plaza M-25, P.O. Box 1988
Santa Ana, California 92702
RE: Acceptance of terms of Option Agreement and Ground Lease
Mr. Brown,
Washington Santa Ana Housing Partners, L.P., the California limited partnership formed by The
Related Companies of California, LLC and A Community of Friends, has reviewed and accepted
the terms of the Option Agreement and the Ground Lease.
If you have any questions, please don't hesitate to call me at (949) 660-7272.
Washington Santa Ana Housing Partners, L.P.,
a California limited partnership
By: Related/Washington Santa Ana Development Co.. LLC.
a California limited liability company,
its Administrative General Partner
Bv:
Name: Liane Takano
Title: Authorized Signatory
80A-272
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
Page l61
80A-273
Exhibit A
Legal Description of the Premises
The land referred to is situated in the County of Orange, City of Santa Ana, State of California,
and is described as follows:
That certain parcel of land situated in the City of Santa Ana, County of Orange, State of
California, being that portion of Parcel 1 of Parcel 73035 described in the Grant Deed recorded
July 24, 1991, Instrument No. 91-387576 of Official Records, together with that portion of
Parcel 73034 described in the Grant Deed recorded November 15, 1991, Instrument No. 91-
626431 of Official Records, lying southwesterly and westerly of those three (3) courses and the
Northwesterly extension of course Three (3) thereof, in the State Right of Way as shown on a
map filed in Book 194, pages 28 through 36 inclusive of Record of Surveys in said Office of said
County Recorder, said Three (3) courses being shown on sheet 2 of said map as:
1) North 21' 00' 58" West 286.98;
2) North 32' 46' 23" West 157.90;
3) North 25' 03' 45" West 62.42'.
EXCEPTING THEREFROM: That portion of above said Parcel 1, lying within the limits of the
Washington Avenue Cul-De-Sac as shown on said Sheet 2 of said Map.
APN: 398-092-14
That portion of the land allotted to Maria Ygnacia Alvarado De Moreno, as described in the final
decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868
in Book "B" Page 410 of Judgments of the District Court of the 17th Judicial District, in and for
Los Angeles County, California, described as follows:
Beginning at a point 1584.0 feet north and 301.05 feet west of an iron axle set at the intersection
of the centerlines of Fourth Street and Grand Avenue; thence North 717.80 feet; thence West
606.90 feet; thence South 717.80 feet; thence East 606.90 feet to the point of beginning.
EXCEPTING THEREFROM: That portion lying southeasterly of the northwesterly line of that
certain 104.00 foot strip of land described in Parcel A of Deed to the City of Santa Ana, recorded
June 25, 1970 in Book 9327, page 72 of Official Records.
ALSO EXCEPTING THEREFROM: That portion described as Parcel C in said Deed to the City
of Santa Ana.
ALSO EXCEPTING THEREFROM: That portion conveyed in the deed to the State of
California recorded January 10, 1992, Instrument 92-15188 of Official Records.
APN: 398-092-13
80A-274
EXHIBIT A-1
RENDERING OF THE PROPERTY
Page l62
80A-275
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80A-276 g QO
EXHIBIT B
INITIAL IMPROVEMENTS
The proposed Project includes the development of two residential buildings with 86 units
surrounding two interior, landscaped courtyard/amenity spaces. The Project includes 16 studio units,
26 one bedroom units, 22 two -bedroom units, 17 three -bedroom units, and 5 four -bedroom units. All
units will be flat apartments located on the first, second, third and fourth floors. In addition, a
proposed sound wall is being positioned along the eastern property line adjacent to the US Interstate
5 ramp. Approximately 3,500 square foot of interior community amenities and leasing offices is
designed to accommodate supportive and management services.
The Project will be 100% affordable to households earning no more than 30 percent of Area Median
Income (AMI) for Orange County of which 43 units will be set -aside for Permanent Supportive
Housing (PSH), with one exempt 2-bedroom managers unit. The unit mix and rent restrictions are as
follows, provided, however, the rent and income restrictions applicable to the Project shall be set
forth in and subject to the terms of the County Loan Regulatory Agreement:
Bedroom
Size
30%
AMI (PSH)
30%
AMI
Manager's
Unit
Total Units
Studios
16
16
One -Bedroom
26
26
Two -Bedroom
1
20
1
22
Three -Bedroom
17
17
Four -Bedroom
5
5
TOTAL
43
42
1
86
Page 163
80A-277
EXHIBIT C
Best Management Practices
(`BMPs" Fact Sheets)
Best Management Practices can be found at: http://www.ocwatersheds.com/documents/bmp which
website may change from time to time.
BMPs apply to the TENANT's defined Premises and BMPs also apply to the TENANT's Contractor
therefore TENANT shall cause Contractor to be responsible for implementing and complying with
all BMP Fact Sheet requirements that apply to construction activity with respect to the
Improvements, and also including, without limiting the generality of the foregoing, site preparation,
landscaping, installation of utilities, street construction or improvement and grading or filling in or
on the Premises. TENANT is to be aware that the BMP clause within this Lease, along with all
related BMP Exhibits, may be revised, and may incorporate more than what is initially being
presented in this Lease. Suggested BMPs Fact Sheets may include, but may not be limited to, the
following list shown below and can be found at:
http://www.oewatersheds.com/documents/bmp/industrialcommercialbusinessesactivities (which
website may change from time to time):
IC3 Building Maintenance
IC4 Carpet Cleaning
IC6 Contaminated or Erodible Surface Areas
IC7 Landscape Maintenance
IC9 Outdoor Drainage from Indoor Areas
IC10 Outdoor Loading/Unloading of Materials
IC12 Outdoor Storage of Raw Materials, Products, and Containers
IC14 Painting, Finishing, and Coatings of Vehicles, Boats, Buildings, and Equipment
IC15 Parking & Storage Area Maintenance
IC17 Spill Prevention and Cleanup
IC21 Waste Handling and Disposal
IC22 Eating and Drinking Establishments
IC23 Fire Sprinkler Testing/Maintenance
IC24 Wastewater Disposal Guidelines
Page l64
80A-278
EXHIBIT D
FORM OF MEMORANDUM OF LEASE
MEMORANDUM OF LEASE
This is a Memorandum of Lease ("Memorandum") made and entered into as of this
day of 120 , by and between the County of Orange, a political subdivision of the State
of California, the Housing Authority of the City of Santa Ana, a public body, corporate and politic
(collectively, the "Lessor") and , ("Tenant"), residing at , upon the following
terms:
1. Lease. The provisions set forth in a written lease between the parties hereto dated
("Lease"), are hereby incorporated by reference into this Memorandum.
2. Subject Premises. The Premises which are the subject of the Lease are more particularly
described as on Exhibit A, attached hereto
3. Effective Date of Lease. The Lease shall be deemed to have commenced on (the
"Effective Date") as set forth within the terms of the Lease.
4. Term. The Term of the Lease shall be Sixty -Five (65) years from the Effective Date as stated in
the written Lease. The Term shall commence on the date hereof and terminate Sixty -Two (62) years
from the Commencement Date, which is the date on which a Certificate of Occupancy is issued for
the Project, provided, however the Term shall be no longer than sixty five (65) years from the
Effective Date.
5. Duplicate Copies of the originals of the Lease are in the possession of the Lessor and Tenant and
reference should be made thereto for a more detailed description thereof and for resolution of any
questions pertaining thereto. The addresses for Lessor and Tenant are as follows:
If to Lessor: County of Orange
c/o CEO/Corporate Real Estate
333 W. Santa Ana Blvd, 3rd Floor
Santa, Ana, CA 92702
Attn: Chief Real Estate Officer
And to:
Housing Authority of the City of Santa Ana
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
Attn: Housing Manager
With a copy to: Office of the City Attorney
City of Santa Ana
20 Civic Center Plaza, 7th Floor (M-29)
Santa Ana, California 92702
Page l65
80A-279
If to Tenant: c/o The Related Companies of California, LLC
19201 Von Karman Avenue, Suite 900
Irvine, CA 92612
Attention: President
c/o A Community of Friends
3701 Wilshire Boulevard, Suite 700
Los Angeles, CA 90010
Attention: Dora Leong Gallo
And to:
With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. 5th Street, 64th Floor
Los Angeles. CA 90071
Attention: Lance Bocarsly, Esq.
6. Purpose. It is expressly understood and agreed by all Parties that the sole purpose of this
Memorandum is to give record notice of the Lease; it being distinctly understood and agreed that said
Lease constitutes the entire lease and agreement between Lessor and Tenant with respect to the
Premises and is hereby incorporated by reference. The Lease contains and sets forth additional rights,
terms, conditions, duties, and obligations not enumerated within this instrument which govern the
Lease. This Memorandum is for informational purposes only and nothing contained herein may be
deemed in any way to modify or vary any of the terms or conditions of the Lease. In the event of any
inconsistency between the terms of the Lease and this instrument, the terms of the Lease shall
control. The rights and obligations set forth herein shall be binding upon and inure to the benefit of
the Parties hereto and their respective heirs, representatives, successors, and assigns.
Page l66
Fi 1 i l
IN WITNESS WHEREOF, the Parties hereto have executed this Memorandum pursuant to due
authorization on the dates herein acknowledged.
COUNTY:
By:
Name:
Title:
AGENCY:
By:
Name:
Title:
TENANT:
By:
Name:
Title:
Name:
Title:
Page l67
80A-281
1010111-1110
RESOLUTION NO.
A RESOLUTION OF THE HOUSING AUHTORITY OF THE CITY OF
SANTA ANA GRANTING CONSENT TO THE ORANGE COUNTY
HOUSING AUTHORITY TO ADMINISTER PROJECT -BASED
VOUCHERS IN THE CITY OF SANTA ANA
WHEREAS, the Housing Authority of the City of Santa Ana ("Agency") is a California
housing authority duly organized and existing under the California Housing Authorities Law,
Part 2 of Division 24, Section 34200, et seq., of the Health and Safety Code ("HAL"), and has
been authorized to transact business and exercise the power of a California housing authority
pursuant to action of the City Council ("City Council") of the City of Santa Ana; and
WHEREAS, on July 2, 2019, the Agency authorized the Executive Director of the
Agency and the Recording Secretary to execute a pre -commitment letter with the Related
Companies of California to enter into negotiations for a sixty-two (62) year ground -lease of 1126
E. Washington Ave for the development of the Crossroads at Washington affordable housing
project located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-
13 and 398-092-14) ("Project'); and
WHEREAS, on July 2, 2019, the City of Santa Ana authorized the City Manager and the
Clerk of the Council to execute a pre -commitment letter with the Related Companies of
California for $3,971,440 in affordable housing funds consisting of $963,951 in Neighborhood
Stabilization Program funds and $3,007,489 in HOME Investment Partnerships Program funds,
for the development of the Crossroads at Washington affordable housing project located at 1126
and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and 398-092-14);
and
WHEREAS, California Health and Safety Code Section 34209 allows the Orange
County Housing Authority to allocate and administer Project -Based Vouchers in the City of
Santa Ana with the consent of the City Council of the City of Santa Ana; and
WHEREAS, the Orange County Housing Authority intends to administer Project -Based
Vouchers in the City of Santa Ana for the development of the Crossroads at Washington
affordable housing project located at 1126 and 1146 E. Washington Avenue, Santa Ana, CA
92701 (APNs 398-092-13 and 398-092-14); and
WHEREAS, the Project is vital to and in the best interest of City and the health, safety
and welfare of its residents, and is in accordance with the public purposes of applicable state and
local laws.
NOW, THEREFORE, BE IT RESOLVED BY THE HOUSING AUTHORITY OF
THE CITY OF SANTA ANA:
Section 1. The City Council finds and determines that the foregoing recitals are true
and correct and are a substantive part of this Resolution.
80A-282
1010111-1110
Section 2. The City Council hereby grants consent to the Orange County Housing
Authority to administer project -based vouchers in the City of Santa Ana for the development of
the Project.
Section 3. This Resolution shall take effect immediately upon its adoption by the
Housing Authority, and the Clerk of the Council shall attest to and certify the vote adopting this
Resolution.
ADOPTED this day of 12019.
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
�q�
Ry r O. H U ge
Assistant City Attorney
AYES: Councilmembers:
NOES: Councilmembers:
ABSTAIN: Councilmembers:
NOT PRESENT: Councilmembers:
Miguel A. Pulido
Mayor
O
80A-283
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Daisy Gomez, Clerk of the Council, do hereby attest to and certify the attached Ordinance No.
NS-XXXX to be the original ordinance adopted by the City Council of the City of Santa Ana on
, 2019.
Date:
Clerk of the Council
City of Santa Ana
Fj A
101011I:1190
MEMORANDUM OF AGREEMENT
BETWEEN THE COUNTY OF ORANGE AND THE CITY OF SANTA ANA
REGARDING REGIONAL HOUSING NEEDS ALLOCATIONS FOR FUTURE
HOUSING ELEMENT PLANNING PERIODS
This Memorandum of Agreement ("MOU") between the County of Orange, a political
subdivision of the State of California ("County") and the City of Santa Ana, a chartered city and
municipal corporation ("City"), is dated, for the convenience of the parties, as the first date upon
which it is executed by both the County and the City, as shown by the signatures of their
authorized representatives below, and the various obligations established hereby shall take effect
as provided herein.
RECITALS
A. The City and County have entered into a Joint Powers Agreement dated as of
, 2020 ("Agreement') regarding the future development of multiple parcels of
land in the City of Santa Ana comprising approximately 2.28 acres and commonly referred to as
the Crossroads at Washington site (APNs 398-092-13 and 398-092-14, as and hereafter, the
"Property"). The Property is depicted in greater particularity on Exhibit A hereto. The City has
approved a development proposal for the Property (the "Project") which proposal is more
particularly described in those certain documents entitled 'PRE -COMMITMENT LETTER"
dated July 2, 2019.
B. To further support of this Project, Orange County Board of Supervisors approved
a loan in the amount of $2,280,701 on February 25, 2020, toward the completion of 43 units
within the Project.
C. The Orange County Board of Supervisors, acting as the Board of Commissioners
to the Orange County Housing Authority, also approved the use of 43 Project -Based Housing
Choice Vouchers on February 25, 2020, to further assist in the success of this Project.
D. The County desires to rely on housing proposed as part of the Project to meet
certain affordable housing obligations imposed on the County by state law. Pursuant to Article
10.6 (the "Housing Element Law") (Government Code sections 65580 - 65589.8) of Chapter 3
of the Planning and Zoning Law, the Southern California Association of Governments
("SCAG") periodically adopts and assigns a Regional Housing Needs Assessment ("RHNA")
allocation for each county and city in the County of Orange, including Orange County and the
City of Santa Ana. Under the Housing Element Law, each city and county must periodically
revise the housing element of its general plan utilizing the latest RHNA allocation adopted by
SCAG. The next required revision to the housing elements of the City and County is designated
as the sixth required revision by Government Code Section 65588, and is identified by SCAG as
the 2021-2029 housing element planning period ("2021-29 Planning Period").
E. The Agreement between the City and County provides in Section 6 that the
City and County may enter into a RHNA allocation transfer agreement as allowed under
Government Code Section 65584.07 or any successor statute ("Section 65584.07") providing for
Crossroads at Washington
RHNA Allocation Transfer Agreement
80A-285
101011I:1190
the transfer to the City of Santa Ana of some share of the County's RHNA allocation obligation
for the sixth housing element planning period, provided that certain requirements of the
Agreement are satisfied. This MOU is intended by the County and the City to serve as the
RHNA allocation transfer agreement contemplated by Section 6 of the Agreement as may be
amended pursuant to Section 14 of this agreement and to attain approval by SCAG.
F. Approval of the Project and successful implementation of the MOU will allow the County to
meet its RHNA for the 2021-29 Planning Period and obtain a certified housing element. This
MOU provides for RHNA allocation transfers from the County to the City in the2021-29
Planning Period.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained herein, the Parties hereto mutually agree as follows:
1. Housing Site. The City has identified the specific portion of the Property zoned
Transit Village (TV) in the Transit Zoning Code (the "Housing Site"), as shown in Exhibit B
hereto, as an available site for housing in its 2021-2029 housing element, and intends to issue,
upon application, residential building permits for construction of 85-units of extremely low-
income housing on the Housing Site during the 2021-29 Planning Period, while the Housing Site
remains in the City's jurisdiction, in order to satisfy the City's RHNA allocation obligation for
the 2021-29 Planning Period. The City will receive RHNA credit for all of the units on the
Housing Site.
2. Transfer of RHNA Allocation Shares.
a. Very Low -Income Unit Transfer. For the 2021-29 RHNA Planning Period (or as
that planning period may be adjusted by SCAG, the Department of Housing and
Community Development, or statute), upon SCAG's adoption of a final RHNA,
the County and City shall jointly apply to SCAG to transfer 20 units from the
County's RHNA allocation to the City. Ibis would result in a reduction of the
County's RHNA allocation of -very -low units by 20 units and an increase to the
City's RHNA allocation of very -low units by 20 units, as provided for and in
conformance with the requirements of Government Code section 65584.07.
Accordingly, upon SCAG's approval, the City's RHNA allocation of very -low
units will increase by 20 units and the County's RHNA allocation of very -low
units shall decrease by 20 units, as allowed under Government Code section
65584.07. For purposes of this paragraph, "very low-income units" shall mean
units where the household income for eligibility to live in the unit does not exceed
30% of the local area median income (AMI) as established by state and federal
law.
b. Moderate Unit Transfer. Additionally, the County's RHNA allocation of
moderate -income units shall be reduced proportionally in conformance with the
requirements of Government Code section 65584.07. To fulfill the obligations set
forth in Government Code section 65584.07, the County and City shall jointly
apply to SCAG to transfer 22 moderate units from the County's RHNA allocation
to the City. This would result in a reduction of to reduce the County's RHNA
Crossroads at Washington
RHNA Allocation Transfer Agreement
80A-286
101011I:1190
allocation of moderate units by 22 units and to an increase to the City's RHNA
share allocation of moderate units by 22 units of the County's original RHNA
allocation. Accordingly, upon SCAG's approval, the City's share of its RHNA
allocation of moderate units will increase by 22 units of the County's original
allocation and the County's RHNA allocation of moderate will decrease by 22
units of the County's original allocation. For purposes of this paragraph,
"moderate units" shall mean units where the household income for eligibility to
live in the unit does not exceed 120% of the local area median income (AMI) as
established by state and federal law.
c. The Parties agree that the land and financial commitments found in the Recitals to
assist in the success of the Project is full and adequate consideration for the
RHNA allocation transfers contemplated in this Section 2.
3. RHNA Methodologies: Parties Obligations. SCAG may determine the City and
County's RHNA for the 2021-2029 Planning Period and subsequent revisions of the housing
element in one of two ways. SCAG may make the determination based on its methodology
adopted under Government Code Section 65584.04. Upon SCAG's adoption of a final RHNA,
the County and City shall jointly apply to SCAG to reduce the County's RHNA allocation as
described in Section 2., above, and to increase the City's RHNA allocation as described in
Section 2., above.
4. Cooperation. The City and County shall take all steps reasonably necessary to
comply with the Government Code section 65584.07 to implement this MOU, including but not
limited to, providing the appropriate documentation to SCAG or any other agency, as required.
The parties agree to work together to obtain SCAG and any other approval where required to
effectuate this MOU. City further agrees that it will utilize the revised RHNA allocation that
includes the transfer of RHNA shares contemplated by this MOU in preparing the City s 2021-
2029 Planning Period and subsequent housing element revisions, as applicable.
5. Indemnification. City shall, to the extent permitted by law, indemnify, defend, and hold
harmless the County and it officers, agents, and employees, from and against any claim, action,
suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or
expense (including, without limitation, attorneys' fees), resulting from, arising out of, or based
upon the negligence or wrongful act or omission of City or its City Council, boards and
commissions, officers, agents, volunteers, or employees, in approving this MOU.
County shall, to the extent permitted by law, indemnify, defend, and hold harmless the City and
its officers, agents, and employees, from and against any claim, action, suit, proceeding, loss,
cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without
limitation, attorney's fees), resulting from, arising out of, or based upon the negligence or
wrongful act or omission of County or its Board of Supervisors, committees and commissions,
officers, agents, volunteers, employees, in approving this MOU.
6. Time. Time is of the essence in this MOU.
Crossroads at Washington
RHNA Allocation Transfer Agreement
80A-287
101011I:1190
7. Management. Except as otherwise provided in this MOU, the approval of both the City
and County shall be required for decisions regarding management and disposition of the Joint
Property.
8. Successors and Assigns. This MOU shall be binding upon and shall inure to the benefit of
the County and City and their respective heirs, personal representatives, successors and assigns.
Neither Party shall have the right to assign this MOU or any interest or right under this MOU
without the prior written consent of the other Party.
9. No Attorneys' Fees. In any action between the Parties to interpret, enforce, award, modify
or rescind any of the terms or provisions of this MOU, or any action otherwise commenced or
taken in connection with this MOU, both Parties shall be responsible for their respective litigation
costs and attorneys' fees, except as provided in Section 5, above, regarding indemnity.
10. Jurisdiction and Venue. This MOU shall be construed under the laws of the State of
California in effect at the time of the signing of this MOU. The Parties consent to the jurisdiction
of the California courts with venue in County of Orange.
11. Titles and Captions. Titles and captions are for convenience of reference only and do not
define, describe or limit the scope or the intent of this MOU or of any of its terms. Reference to
section numbers are to sections in this MOU, unless expressly stated otherwise.
12. Interpretation. As used in this MOU, masculine, feminine or neuter gender and the singular
or plural number shall each be deemed to include the others where and when the context so dictates.
The word "including" shall be construed as if followed by the words "without limitation." This
MOU shall be interpreted as though prepared jointly by both Parties.
13. No Waiver. A waiver by either Party of a breach of any of the covenants, conditions or
agreements under this MOU to be performed by the other Party shall not be construed as a waiver
of any such breach or succeeding breach or of the same or other covenants, agreements, restrictions
or conditions of this MOU.
14. Modifications. Any alteration, change or modification of or to this MOU, to become
effective, shall be made in writing and in each instance signed on behalf of each Party.
15. Severability. If any term, provision, condition or covenant of this MOU or its application
to any Party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder
of this MOU, and the application of the term, provision, condition or covenant to persons or
circumstances other than those as to whom or which it is held invalid or unenforceable, shall not
be affected, and shall be valid and enforceable to the fullest extent permitted by law.
16. Cooperation. Each Party agrees to cooperate with the other in the execution of this MOU
and, in that regard, to sign any and all documents which may be reasonably necessary, helpful, or
appropriate to carry out the purposes and intent of this MOU including, but not limited to, releases
or additional agreements.
17. Counterparts. This MOU may be signed in multiple counterparts which, when signed by
all Parties, shall constitute a binding agreement.
Crossroads at Washington 4
RHNA Allocation Transfer Agreement
80A-288
101011I:1190
18. Notices. Any notice requirement set forth herein shall be in writing and delivered to the
appropriate party at the address listed in this subparagraph. Addresses for notice may be
changed from time to time by written notice to the other party. All communications shall be
effective when actually received; provided, however, that nonreceipt of any communication as
the result of a change in address of which the sending party was not notified or as the result of a
refusal to accept delivery shall be deemed receipt of such communication.
To County: County of Orange
Attn: County Executive Office, Real Estate
333 W. Santa Ana Boulevard, 3rd Floor
Santa Ana, CA 92701
To City: City of Santa Ana
Attn: Housing Manager
20 Civic Center Plaza (M-26)
P.O. Box 1988
Santa Ana, California 92702
IN WITNESS WHEREOF, the Parties hereto have caused this MOU to be executed by their
respective governing bodies on the dates set forth opposite their signatures.
Crossroads at Washington
RHNA Allocation Transfer Agreement
80A-289
101011I:1190
COUNTY:
COUNTY OF ORANGE, a political
subdivision of the State of California
By:
Dated:
Name:
Title: Chairwoman, Board of Supervisors
APPROVED AS TO FORM:
OFFICE OF COUNTY COUNSEL
ORANGE COUNTY, CALIFORNIA
Deputy
SIGNED AND CERTIFIED THAT A
COPY OF THIS DOCUMENT HAS
BEEN DELIVERED TO THE CHAIRWOMAN
OF THE BOARD PER GC § 25103, RESO. 79-1535
Attest:
ROBIN STIELER
Clerk of the Board of Supervisors
of Orange County, California
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80A-290
iM:N:11:1106"
RWA
g�I • .
By:
yyyF i'
ATTEST:
By:
City Clerk
CITY:
CITY OF SANTA ANA, a municipal
corporation and charter city
By: _
Dated:
80A-291
101011I:1190
Crossroads at Washington
RHNA Allocation Transfer Agreement
Exhibit A
[PROPERTY LEGAL DESCRIPTION]
Exhibit A
80A-292
100111-11190
Exhibit A
Legal Description of the Premises
The land referred to is situated in the County of Orange, City of Santa Ana, State of California,
and is described as follows:
That certain parcel of land situated in the City of Santa Ana, County of Orange, State of
California, being that portion of Parcel 1 of Parcel 73035 described in the Grant Deed recorded
July 24, 1991, Instrument No. 91-387576 of Official Records, together with that portion of
Parcel 73034 described in the Grant Deed recorded November 15, 1991, Instrument No. 91-
626431 of Official Records, lying southwesterly and westerly of those three (3) courses and the
Northwesterly extension of course Three (3) thereof, in the State Right of Way as shown on a
map filed in Book 194, pages 28 through 36 inclusive of Record of Surveys in said Office of said
County Recorder, said Three (3) courses being shown on sheet 2 of said map as:
1) North 21' 00' S8" West 286.98;
2) North 320 46' 23" West 157.90;
3) North 250 03' 45" West 62.42'.
EXCEPTING THEREFROM: That portion of above said Parcel 1, lying within the limits of the
Washington Avenue Cul-De-Sac as shown on said Sheet 2 of said Map.
APN: 398-092-14
That portion of the land allotted to Maria Ygnacia Alvarado De Moreno, as described in the final
decree of partition of the Rancho Santiago De Santa Ana, which was entered September 12, 1868
in Book "B" Page 410 of Judgments of the District Court of the 17th Judicial District, in and for
Los Angeles County, California, described as follows:
Beginning at a point 1584.0 feet north and 301.05 feet west of an iron axle set at the intersection
of the centerlines of Fourth Street and Grand Avenue; thence North 717.80 feet; thence West
606.90 feet; thence South 717.80 feet; thence East 606.90 feet to the point of beginning.
EXCEPTING THEREFROM: That portion lying southeasterly of the northwesterly line of that
certain 104.00 foot strip of land described in Parcel A of Deed to the City of Santa Ana, recorded
June 25, 1970 in Book 9327, page 72 of Official Records.
ALSO EXCEPTING THEREFROM: That portion described as Parcel C in said Deed to the City
of Santa Ana.
ALSO EXCEPTING THEREFROM: That portion conveyed in the deed to the State of
California recorded January 10, 1992, Instrument 92-15188 of Official Records.
APN: 398-092-13
80A-293
101011I:1190
Crossroads at Washington
RHNA Allocation Transfer Agreement
Exhibit B
[HOUSING SITE DESCRIPTION]
Esliibit B
80A-294
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80A-295 co
SUBSTANTIAL AMENDMENT TO THE CITY OF SANTA ANA
NEIGHBORHOOD STABILIZATION PROGRAM (NSP 1, 2 and 3)
The City of Santa Ana recommends a "Substantial Amendment" to the Neighborhood
Stabilization Program 1, 2, and 3 (NSP) to reallocate funds to a newly added activity.
The City of Santa Ana is proposing to:
Add the Crossroads at Washington affordable housing project as a new NSP Activity.
Reallocate $963,951 in NSP 1, 2 and 3 funds to the Crossroads at Washington
affordable housing project.
The proposed use of NSP 1, 2 and 3 funds will allow the City to increase the housing
stock and provide suitable housing for low and moderate -income residents. In particular,
the funds will be used to complete the development of the Crossroads at Washington
affordable housing project. Due to the project's development costs, the project
requires funding from the NSP Program. The reallocation and obligation of NSP 1, 2,
and 3 dollars to this project will allow the developer to secure their remaining financing,
including Low -Income Housing Tax Credits, needed to complete the project.
Attached is a "New Activity" sheet providing a detailed description of the Crossroads at
Washington affordable housing project.
80A-296
NEW ACTIVITY
(1) Activity Name: Crossroads at Washington Affordable Housing Project
(2) Activity Type:
NSP Eligible Use: Redevelopment
NSP Eligible Property: Vacant Property
Eligible Activity: New Construction Activities (24 CFR 570.201(d))
Specific Activity: Construct new affordable housing development
(3) National Objective:
24 CFR 570.208(a)(3) - LMMH - Rent the residential property to family at or
below 120% AMI.
(4) Projected Start Date: December 2020
(5) Projected End Date: February 2023
(6) Responsible Organization:
City of Santa Ana
Community Development Agency - Housing Division
20 Civic Center Plaza
Post Office Box 1988
Santa Ana, CA 92702
Attn: Judson Brown, Hosing Division Manager
Tel: (714) 667-2241
ibrownCcDsanta-ana.org
(7) Location Description:
The Crossroads at Washington affordable housing project is located at 1126
and 1146 E. Washington Avenue, Santa Ana, CA 92701 (APNs 398-092-13 and
398-092- 14).
(8) Activity Description:
The proposed project will consist of a new transit -oriented affordable
housing community on 2.28 acres located at 1126 and 1146 Washington
Avenue and the County of Orange parcel directly to the south of 1126 and
1146 Washington Avenue. The site is currently vacant, and positioned within
walking distance from the Santa Ana Regional Transportation Center — a key
transit hub for not only Orange County, but all of Southern California. The
Project site is on two (2) contiguous undeveloped parcels, one fronting E.
Washington Avenue on the northern half of the site (Housing Authority -
owned parcel) and one parcel directly south of the Housing Authority -owned
80A2 297
parcel (County -owned parcel). The five original buildings located on the site
were demolished in the 1990s by CalTrans during a freeway -widening project.
As a vacant and undeveloped site, there is an opportunity to imagine a newly
designed site that will truly meet the needs of the local community. The entire
site is designated District Center (DC) in the City of Santa Ana 1998 General
Plan and zoned Transit Village (TV) in the Transit Zoning Code. The proposed
Project includes the development of one residential building, subdivided into
three (3) residential portions, with 86 units surrounding two interior
landscaped courtyard and amenity spaces. Developed at an overall density of
37.7 units per acre, there will be 16 studios, 26 one -bedrooms units, 22 two -
bedroom units, 17 three -bedroom units, and 5 four -bedroom units. All units
will be apartments located on the first, second, and third floors.
(9) Total Budget:
This Activity will use $963,951 in NSP 1, 2 and 3 Program funds.
(10) Performance Measures
The Project will be 100% affordable to households earning no more than 30
percent of Area Median Income (AMI) of which 43 units will be set - aside for
Permanent Supportive Housing, with one exempt 2-bedroom manager's unit.
The large bedroom units align with the City's priorities and needs while the
Permanent Supportive Housing units meets the County's priorities. The
proposed unit mix and rent restrictions are as follows:
Bedroom
Size
30%
AMI (PSH)
30%AMI
Manager's
Unit
Total Units
Studios
16
16
One -Bedroom
26
26
Two -Bedroom
1
20
1
22
Three -Bedroom
17
17
Four -Bedroom
1
1 6
1
1 6
TOTAL
1 43
1 42
1 1
1 86
80A- 298