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HomeMy WebLinkAbout03 - JOINT PH - DDA RSI Development LLC~ a ~-- - B• __ __ -~ ~a p JANUARY 5, 2009 TT JOINT PUBLIC HEARING - DISPOSITION AND DEVELOPMENT AGREEMENT WITH RSI DEVELOPMENT LLC >~ f C:TY lVlfi.'~,q~f~ ~X~CUTI4l~ DIRECT®~ ~ ~~ ~~, ~ CITY COUNCIL ACTION A~~01/E® As Reaammended As Amended Ordinance an 1st heading ® Ordinance an 2nd heading Impiemerrting ~esalatian ® het ~G~iic b•iearing Far ~0~~~~~D ~O FlL tVtJMSE~ Adopt a resolution regarding the sale of 1112 and 1118 S. Orange to RSI Development LLC for the ,development of two affordable, detached single- family homes. COMMUNITY REDEVELOPMENT AGENCY ACTION Adopt a resolution approving a Disposition and Development Agreement between the Community Redevelopment Agency and RSI Development LLC for the development of two affordable, detached single-family homes at 1112 and 1118 S. Orange. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION At its Regular Meeting of December 2, 2008, by a vote of 6:0, the Community Redevelopment and Housing Commission recommended to continue this item to the December 16, 2008, meeting to allow them time to review the new project in context with the existing neighborhood. At its Regular Meeting of December 16, 2008, by a vote of 4:1 (Vasquez, No), the Community Redevelopment and Housing Commission recommended that City Council adopt a resolution regarding the sale of 1112 and 1118 S. Orange to RSI Development LLC for the development of two affordable, detached single-family homes and recommended that the Community Redevelopment Agency adopt a resolution approving a Disposition and -1 Joint Public Hearing - DDA with RSI Development LLC January 5, 2009 Page 2 Development Agreement between the Community Redevelopment Agency and RSI Development LLC for the development of two affordable, detached single- family homes at 1112 and 1118 S. Orange, and which should include collaboration between the developer and the Eastside Neighborhood Association to develop home designs compatible with the historical integrity of the neighborhood. DISCUSSION A key objective of the Redevelopment Agency (Agency) is to expand and preserve affordable housing. To that end, the Agency staff has been working to develop Agency-owned property at 1112 and 1118 S. Orange Avenue (Exhibit 1) which was acquired as part of the McFadden Realignment project. Ronald M. Simon (RSI Development, LLC) has proposed a model project for this site consisting of two single-family homes (Exhibit 2). Mr. Simon has been recognized for his success in transforming the manufacturing process of bathroom and kitchen cabinetry by streamlining the supply chain and business process. The proposed model project will duplicate a similar precision manufacturing model. The construction process is controlled to enhance productivity and reduce waste of building materials. The houses are designed to match building product dimensions, thereby minimizing waste and utilizing wall panels and precut structural components to reduce building time. These homes will also meet Energy Star rating. Although the home designs have been created taking into consideration neighborhood compatibility, RSI will continue to work with Eastside Neighborhood Association representatives to ensure that the new homes support the historical integrity of the neighborhood. The terms of the Disposition and Development Agreement (DDA) with RSI provide for: 1) transfer of 1112 and 1118 S. Orange to RSI, at no cost; and, 2) Agency funded construction financing, including soft costs, in the amount of $225,000. The homes will have three and four bedrooms, with 1,621 and 1,968 square feet, respectively. They will be sold to low-income households earning no more than 80o Area Median Income (AMI), for a sale price of $160,700 and $171,700, respectively. The homebuyers will be responsible for securing the financing for the First Trust Deed and will execute a zero-interest promissory note and trust deed (silent second) with the Community Redevelopment Agency. The -2 Joint Public Hearing - DDA with RSI Development LLC January 5, 2009 Page 3 amount of the note will be equal to the difference between the fair market value of the homes and the affordable sales price at the time of completion. In accordance with previous direction from the Community Redevelopment and Housing Commission, preference will first be given to homebuyers that are military veterans and who live or work in Santa Ana. The second preference is for homebuyers who live or work in Santa Ana. The homes will be sold through a lottery process. The sale of these properties will be income-restricted for a period of forty-five years in accordance with California Redevelopment Law. All subsequent homeowners must also meet income eligibility requirements. It is anticipated that construction will commence by February 2009 and be completed in April 2009. Construction of these homes will assist the City and Agency in meeting the Regional Housing Needs Assessment (RHNA) goals identified in the Housing Element and the Agency's replacement and inclusionary housing obligations. On December 22 and December 29, 2008, notification was published in the Orange County Reporter that a public hearing will be held with regard to the proposed sale of the property at 1112 and 1118 S. Orange to RSI Development LLC. ENVIRONMENTAL COMPLIANCE In accordance with the California Environmental Quality Act, the proposed project is exempt from further review. FISCAL IMPACT Funds are available in the Tax Increment Housing Set-Aside account (no. 507-936-6631). APPROVED AS TO FUNDS AND ACCOUNTS: CJN/SLB/mlr H:\ACTION ITEMS\COUNCIL\2009\010509 JT PH CC-CRA DDA RSI (1}.doc -3 CUBBON F~ STREET BEVERLY PLACE W Z W ~ W Q ~ NORMANDY PL. HARWOOD PL. w J a a __ 1- Z w Q w F ~ N W ~ Z W Q ~ ° ~ ' O w v a a 1112-1118 South Orange Avenue Exhibit 1 McFADDEN AVE. (OLD) / ) ~_ _ W T i W ~® ~ li a ^- ++ ~.~.. ~ ® W V ~ _Z V `~"'i W ~ Z W J Q ,. V EXHIBIT 2 -6 RESOLUTION NO. 2009- A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE AGENCY AND RSI DEVELOPMENT, LLC BE IT RESOLVED BY THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA, AS FOLLOWS: Section 1: The Board of the Community Redevelopment Agency of the City of Santa Ana hereby finds, determines and declares as follows: A. The Community Redevelopment Agency of the City of Santa Ana (hereinafter referred to as the "Agency") is engaged in activities necessary to execute and implement the Redevelopment Plan for the Merged Redevelopment Project Areas (the "Redevelopment Plan"), including strengthening of public-private partnerships to provide more affordable housing, and particularly to provide decent, safe, sanitary, and affordable housing to the lower income citizens of the City of Santa Ana. B. In order to implement the Redevelopment Plan, the Agency has agreed, subject to the approval of the City Council, to sell certain real property located at 1112 and 1118 S. Orange Street (the "Property") pursuant to the terms and provisions of a Disposition and Development Agreement (hereinafter referred to as the "Agreement") between the Agency and RSI Development, LLC, which is on file in the office of the Executive Director of the Agency, in which said real property, is described. C. RSI Development, LLC, proposes to construct and sell these two homes to qualified Low Income Households. The term of affordability on each of the homes will be for forty-five years. D. The Agreement contains all of the provisions, terms, conditions and obligations required by the state and local laws. E. RSI Development, LLC, possesses the qualifications and financial resources necessary to acquire and insure development of the Properties, in accordance with the purpose and objectives of the Redevelopment Plan. 1 3-7 F. Pursuant to the provisions of the California Redevelopment Law, the Agency and the City Council have held a duly noticed joint public hearing on the proposed sale of the Property. Section 2. The Disposition and Development Agreement is hereby approved, and the Executive Director of the Agency is hereby authorized to execute the Agreement, with such non-substantive changes as may be approved by Agency's General Counsel. Section 3. The Executive Director of the Agency is hereby authorized to take all steps, and to sign all documents and instruments necessary to implement and carry out the Agreement on behalf of the Agency. 2 ADOPTED this day of , 2009. Miguel A. Pulido Chair APPROVED AS TO FORM: Joseph W. Fletcher, General Counsel By: Lisa E. Storck Assistant Counsel AYES: Boardmembers: NOES: Boardmembers: ABSTAIN: Boardmembers: NOT PRESENT: Boardmembers: CERTIFICATION OF ATTESTATION AND ORIGINALITY I, PATRICIA E. HEALY, Secretary of the Agency, do hereby attest to and certify the attached Resolution No. to be the original resolution adopted by the Community Redevelopment Agency of the City of Santa Ana on , 2009. Date: Secretary Community Redevelopment Agency of the City of Santa Ana 3 -9 THIS PAGE LEFT BLANK INTENTIONALLY 3-10 12/10/08 DISPOSITION AND DEVELOPMENT AGREEMENT THIS DISPOSITION AND DEVELOPMENT AGREEMENT ("DDA") is entered into on this _day of , 2008 by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA, a public body corporate and politic ("Agency"), and RSI DEVELOPMENT LLC, a Delaware limited liability company ("Developer"). RECITALS The following recitals are a substantive part of this Agreement: A. In furtherance of the objectives of the California Community Redevelopment Law, the Agency desires to redevelop two (2) developable Sites located at McFadden and Orange (APN Ol 1-062-32, Ol t-062-33, and Ol t-062-34) within the City of Santa Ana, as more particularly described on Exhibit A and incorporated herein (the "Sites"). The Sites are all undeveloped vacant properties. APN 011-062 & 011-062-33 ("Site 1") is 7,431 square feet and APN 011-062-34 ("Site 2") is 7,747 square feet. The Site Map is attached hereto as Exhibit B. B. The Sites are all currently owned by the Agency. C. The Agency and Developer desire by this Agreement for the Agency to convey the Sites to the Developer and for the Developer to agree to construct a total of two (2) detached single-family homes with landscaped front and back yards on the Sites. Each of the single- family homes will be sold at an affordable price to income-qualified households. D. The Agency's disposition of the Sites to the Developer, and the Developer's acquisition of the Sites and construction of the Improvements pursuant to the terms of this Agreement, are in the vital and best interest of the City and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the redevelopment of the Project has been undertaken. NOW THEREFORE, the Agency and Developer hereby agree as follows: 100. DEFINITIONS "Actual Knowledge" is defined in Section 208.1 hereof. "Affordability Restrictions on Transfer of Property" means the document containing the covenants and restrictions pertaining to affordability of the Units for a term of 45 years running with the land, to be executed by the Agency and the Low Income Household(s) and recorded against each of the Properties. Said Agreement is attached hereto and incorporated herein, along with the legally required Notice, as Exhibit C. 600457905v2 3 -11 "Affordable Housing Cost" means a price which is established at a level which ensures that the monthly housing costs of (a) any Low Income Household purchaser which earns not greater than eighty percent (80%) of the Area Median Income adjusted for household size, does not exceed the product of thirty percent (30%) multiplied by seventy percent (70%) of the Area Median Income adjusted for Household Size Appropriate to the Unit, and (b) any Low Income Household purchaser which earns not less than seventy percent (70%) or more than eighty percent (80%) of Area Median Income adjusted for household size, the payment of which does not exceed thirty percent (30%) of the gross income of such purchaser. Such housing costs (including mortgage payments, a reasonable utility allowance and similar costs) shall not exceed the maximum amount applicable to Low Income Households pursuant to California Health and Safety Code Section 50052.5(b)(3). "Affordable Units" means each of the single family homes to be constructed and sold at an Affordable Housing Cost pursuant to this Agreement. "Agency" means the Community Redevelopment Agency of the City of Santa Ana, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California, and any assignee of or successor to its rights, powers and responsibilities. "Agency's Conditions Precedent" means the conditions precedent to each Closing to the benefit of the Agency, as set forth in Section 205.1 hereof. "Agency's Election to Remediate" is defined in Section 208.3 hereof. "Agreement" means this Disposition and Development Agreement between the Agency and the Developer. "Area Median Income" means the median income figures for Orange County adopted by the State of California pursuant to Health and Safety Code Section 50093, as amended from time to time. "City" means the City of Santa Ana, a charter city and municipal corporation. "Closing" means the close of escrow for the conveyance of the Sites from the Agency to the Developer, as set forth in Section 202 hereof. "Closing Date" means the date of the Closing, as set forth in Section 202.4 hereof. "Condition of Title" is defined in Section 203 hereof. "Conveyance" means the conveyance of the Sites to Developer by recordation of the Grant Deeds from the Agency. "Date of Agreement" is set forth in the first paragraph hereof. 600457905v2 ®2 "Default" means the failure of a party to perform any action or covenant required by this Agreement within the time periods set forth herein following notice and opportunity to cure, as set forth in Section 501 hereof. "Design Development Drawings" means those plans and drawings to be submitted to the City for its approval, pursuant to Section 302 hereof. "Developer" means RSI Development LLC, a Delaware limited liability company. "Developer Parties" is defined in Section 208.7. "Developer's Conditions Precedent" means the conditions precedent to each Closing to the benefit of the Developer, as set forth in Section 205.2. "Developer's Remedial Work Estimate" is defined in Section 208.3 hereof. "Developer's Remediation Proposal" is defined in Section 208.3 hereof. "Environmental Consultant" means the environmental consultant to be employed by the Developer pursuant to Section 208.2 hereof. "Environmental Laws" means an federal, state or local law, statute, ordinance or regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous Materials including, but not limited to: (i) sections 25115, 25117, 25122.7,or 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Article 9 or Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (vi) Section 311 of the Clean Water Act (33 U.S.C. section 1317), (vii) Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. section 6901, et seq. (42 U.S.C. section 6903, (viii) Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. section 9601 et seq., or (ix) any state or federal lien or "superlien" law, any environmental cleanup statute or regulation, or any permit, approval, authorization, license, variance or permission required by any governmental authority having jurisdiction. "Environmental Site Assessment" is defined in section 208.1 hereof. "Escrow" is defined in Section 202 hereof. "Escrow Agent" is defined in Section 202 hereof. "Exceptions" is defined in Section 203 hereof. 600457905v2 3 "Executive Director" means the Executive Director of the Agency, or her/his designee. "Force Majeure" shall mean delays of performance by either party hereunder due to war; insurrection; strikes; lockouts; labor disputes; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including, but not limited to, litigation challenging the validity of this transaction or any element thereof (except condemnation); severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor, or supplies; acts of the other party; acts or failure to act of the City or any other public or governmental agency or entity (other than acts or failure to act on the part of the Agency or the City shall not excuse performance by the Agency); or any other cause beyond the control, or without the fault of the party claiming an extension of time to perform; provided that notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause or event resulting in such delays. Any such extension shall be for the duration of the cause of the delay. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States ,the state, the county, the City or any other political subdivision in which the Sites are located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Agency, the Developer or the Sites. "Grant Deed" means the grand deed for each conveyance of a Site from the Agency to the Developer, in the form of Exhibit D hereto which is incorporated herein. "Hazardous Materials" means any substance, material, or waste which is or becomes, regulated by any local governmental authority, the State of California, or the United States government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste under Section 25115, 25117, or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or Administrative Code, Division 4, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.,(42 U.S.C. section 6903) or (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. section 9601 et seq. "Household Size Appropriate for the Unit," for the purpose of determining Affordable Housing Cost only, means four persons for a three bedroom Affordable Unit and five persons for 600457905v2 -41 a four bedroom Affordable Unit. Household Size Appropriate for the Unit is not intended to constitute a limitation on the number of persons who may live in the Unit. "Improvements" means the improvements to be constructed by the Developer upon the Sites, all more specifically defined herein and in the Scope of Development. "Lender" is defined in Section 311.2 hereof. "Low Income Households" shall mean persons and families whose income does not exceed the qualifying limits for Low income families in Orange County as established by the State of California pursuant to Health and Safety Code section 50079.5, as such qualifying limit is amended from time to time. "Monthly Housing Costs" shall mean (i) one-twelfth of the annual cost of principal and interest payments on each loan secured by a mortgage on the Affordable Unit and loan insurance fees, if any, associated with such mortgages; (ii) one-twelfth of the annual cost of property taxes and assessments; (iii) one-twelfth of the annual cost of fire and casualty insurance covering replacement value of property improvements; (iv) one-twelfth of the annual cost of property maintenance and repairs; (v) one-twelfth of the annual cost of a reasonable allowance for utilities to be determined by the Agency, including garbage collection, sewer, water, gas, electricity, and other heating, cooking or refrigeration fuels, but not telephone service, and (vi) one-twelfth of annual homeowners association dues and assessments. "Mortgage" is defined in Section 311.2 hereof. "No Further Action Letter" is defined in Section 208.3 hereof. "Notice" shall mean notice in the form prescribed by Section 601 hereof. "Outside Date" shall mean the last date the Closing shall occur, as set forth in Section 202.4 hereof. "Phase I Report" is defined in Section 208.1 hereof. "Project" means predevelopment activities related to the Sites, the acquisition of the Sites by Developer, the construction of two (2) Affordable Units, the sale thereof to qualified purchasers of the Affordable Units at an Affordable Housing Cost and any other activities undertaken in connection therewith. "Project Budget" means the budget for the project submitted and approved by the Agency, attached hereto and incorporated herein as Exhibit E. "Purchase Price" means the price to be paid by the Developer to the Agency in consideration for the conveyance of fee title to each of the Sites. 600457905v2 -515 "RAP" means the remedial action plan for the remediation of the Sites, as defined in Section 208.3 hereof. "Release of Construction Covenants" means the document which evidences the Developer's satisfactory completion of the Improvements, as set forth in Section 310 hereof, in substantially the form of Exhibit F hereto which is incorporated herein. "Remedial Work" is defined in Section 208.3 hereof. "Remedial Work Expenditure Cap" is defined in Section 208.3 hereof. "Remediation Cost" is defined in Section 208.3 hereof. "Report" means the preliminary title report, as described in Section 203 hereof. "Schedule of Performance" means the Schedule of Performance attached hereto as Exhibit G and incorporated herein, setting out the dates and/or time periods by which certain obligations set firth in this Agreement must be accomplished. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing between the Developer and the Agency's Executive Director, and the Agency's Executive Director is authorized to make such revisions as he or she deems reasonably necessary. "Scope of Development" means the Scope of Development attached hereto as Exhibit H and incorporated herein, which describes the scope, amount and quality of development of the Improvements to be constructed by the Developer and the Agency Improvements to be developed by the Agency pursuant to the terms and conditions of this Agreement. "Site" means each of the locations upon which a housing unit shall be built. "Site Legal Description" means the description of the Sites attached hereto as Exhibit A, and incorporated herein. "Site Map" means the map depicting the Sites which is attached hereto as Exhibit B. "Studies" are defined in Section 207 hereof. "Threshold Amount" is defined in Section 208.3 hereof. "Title Company" is deEned in Section 204 hereof. "Title Policy" is defined in Section 204 hereof. "Trust Deed" is defined in Section 311.2 hereof. 600457905v2 3 -616 "Veteran" means a person who is serving or has served, in the armed forces of the United States, regardless of nature of service (peacetime/wartime) who was not discharged dishonorably. 200. CONVEYANCE OF THE SITES 201. Purchase and Sale of Sites. The Agency currently holds fee title to all of the Sites. Subject to all of the terms and conditions of this Agreement, Agency shall sell the Sites to Developer, and Developer shall purchase the Sites from Agency, for the all-inclusive cash purchase price of One Dollar ($1.00) (the "Purchase Price"). Payment of the Purchase Price represents the agreed upon reuse value of the Sites, at the use and with the covenants and conditions and development costs authorized by this Agreement. 201.1 Developer Responsibilities/Obligations: Developer shall be responsible for all necessary planning and zoning changes; preparation of plans; landscaping, including on-site and off-site improvements; construction of all Improvements; and maintaining construction defect insurance policy(ies) for a period of ten (10) years after conveyance of each Site to each qualified affordable household; and marketing, pre-qualification and sale of each Site to a qualified affordable household. 201.2 Timing. The Conveyance of the Sites shall comply with all of the provisions of this Article including, without limitation, the Escrow provisions set forth in Section 202 hereof, the title provisions set forth in Sections 203 and 204 hereof, and the Conditions Precedent set forth in Section 205 hereof. 202. Escrow. (a) The Agency agrees to open escrow for the sale of the Sites to the Developer with First American Title Insurance Company, or such other escrow company mutually agreed upon by the parties (the "Escrow Agent") within thirty (30) days of the effective date of this Agreement. This Agreement and Escrow Agent's Standard Form Escrow Instructions constitute the joint escrow instructions of the Agency and the Developer and a duplicate original of this Agreement shall be delivered to the Escrow Agent upon the opening of the escrow. (b) The Agency's Executive Director and the Developer shall provide such additional escrow instructions as shall be necessary and consistent with this Agreement. The Escrow Agent hereby is empowered to act under this Agreement, and upon indicating its acceptance of this Section in writing, delivered to the Agency and within five (5) days after delivery of this Agreement, shall carry out its duties as Escrow Agent hereunder. (c) After delivery to the Escrow Agent by the Agency of a deed for each of the Sites, and upon close of escrow, the Escrow Agent shall record such deeds in accordance with these escrow instructions, provided that the title to the Sites can be vested in the Developer in accordance with the terms and provisions of this Agreement. The Escrow Agent shall buy, affix, and cancel any transfer stamps required by law and pay any transfer tax required by law. Any 600457905v2 ~/ ®7~ insurance policies relating to such property shall not be transferred to Developer by Agency. (d) The Agency and the Developer shall deliver to the Escrow Agent all documents necessary for the conveyance of title to the Sites in conformity with, within the times, and in the manner provided in this Agreement. (e) If in the opinion of either party it is necessary or convenient in order to accomplish the Closing of this transaction, such party may require that the parties sign supplemental escrow instructions; provided that if there is any inconsistency between this Agreement and the supplemental escrow instructions, then the provisions of this Agreement shall control. The parties agree to execute such other and further document as may be reasonably necessary, helpful or appropriate to effectuate the provisions of this Agreement. The Closing shall take place when both the Agency's Conditions Precedent and the Developer's Conditions Precedent have been satisfied. Escrow Agent is instructed to release Agency's escrow closing and Developer's escrow closing statements to the respective parties. to Developer: 202.1 Costs of Conveyance. With regard to the conveyance of title to the Sites (1) The Developer shall pay the following fees, charges and costs: (a) Developer's share of the premium for any title insurance policies as set forth in Section 205 of this Agreement; (b) One-half (1/2) of escrow fees and recording fees; (c) The Purchase Price; (d) One-half (1/2) of notary fees. (2) The Agency shall pay all other fees, charges and costs, including without limitation: (a) Costs necessary to place title in the condition required by the provisions of this Agreement; (b) Ad valorem taxes, if any, upon the property conveyed for any time prior to conveyance of title; (c) Any federal, state, county or city documentary stamps and transfer taxes;. (d) The Agency's share of the Title Policy; (e) One-half (1/2) of escrow fees and recording fees; (f) One-half (1/2) of notary fees. 600457905v2 3 -g1 202.2 Reserved. 202.3 Authority of Escrow Agent. With respect to the Closing, Escrow Agent is authorized to, and shall: a. Pay and charge Agency for the premium of the Title Policy and any amount necessary to place title in the condition necessary to satisfy Section 203 of this Agreement. b. Pay and charge Developer and Agency for their respective shares of any escrow fees, charges, and costs payable under Section 202.1 of this Agreement. c. Pay and charge Developer for any endorsements to the Title Policy which are requested by the Developer. d. Disburse funds, and deliver and record the Grant Deed when both the Developer's Conditions Precedent and the Agency's Conditions Precedent have been fulfilled or waived by Developer and Agency. e. Do such other actions as necessary, including obtaining the Title Policy, to fulfill its obligations under this Agreement. £ Within the discretion of Escrow Agent, direct Agency and Developer to execute and deliver any instrument, affidavit, and statement, and to perform any act reasonably necessary to comply with the provisions of FIRPTA and any similar state act and regulation promulgated thereunder. Agency agrees to execute a Certificate of Non-Foreign Status by individual transferor and/or a Certification of Compliance with Real Estate Reporting Requirement of the 1986 Tax Reform Act as may be required by Escrow Agent, on the form to be supplied by Escrow Agent. g. Prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099-5 form, and be responsible for withholding taxes, if any such forms are provided for or required by law. 202.4 Closing. This transaction shall close ("Closing") within thirty (30) days of the parties' satisfaction of all Agency's and Developer's Conditions Precedent to Closing as set forth in Section 205 hereof, but in no event later than March 1, 2009 (the "Outside Date"). The Closing shall occur at the offices of Escrow Agent at a time and place reasonably agreed on by the parties. The "Closing" shall mean the time and day the Grant Deed is filed for record with the County of Orange Recorder's Office. The "Closing Date" shall mean the day on which the Closing of the Sites occurs. 600457905v2 9 1 9 202.5 Termination. If (except for deposit of money by Developer, which shall be made by Developer before the Closing) Escrow is not in condition to close by the Outside Date, then either party which has fully performed under this Agreement may, in writing, demand the return of money or property and terminate this Agreement. If either party makes a written demand for return of documents or properties, this Agreement shall not terminate until five (5) days after Escrow Agent shall have delivered copies of such demand to all other parties at the respective addresses shown in authorized to hold all papers and document until instructed by a court of competent jurisdiction or by mutual written instructions of the parties. Developer, however, shall have the sole option to withdraw any money deposited by it for the acquisition of the Sites less Developer's share of costs of Escrow. Termination of this Agreement shall be without prejudice as to whatever legal rights either party may have against the other arising from the Agreement. If no demands are made, the Escrow Agent shall proceed with the Closing as soon as possible. 202.6 Closing Procedure. Escrow Agent shall close Escrow as follows: a. Record the Grant Deed for each Site with instructions for the Orange County Recorder's Office, California, to deliver the Grant Deed to the Developer; b. Record the Deed(s) of Trust with instructions for the Recorder of Orange County, California to deliver the Deed(s) of Trust to the Agency; c.Instruct the Title Company to deliver the Title Policy for each Site to Developer; d. File any informational reports required by Internal Revenue Code Section 6045(e), as amended, and any other applicable requirements; and e. Deliver the FIRPTA Certificate, if any, to Developer; f. Forward to both Developer and Agency a separate accounting of all funds received and disbursed for each party and copies of all executed and recorded or filed documents deposited into Escrow, with such recording and filing date and information endorsed thereon. 203. Review of Title. The Agency shall cause First American Title Insurance Company, or another title company mutually agreeable to both parties (the "Title Company"), to deliver to Developer a standard preliminary title report (the "Report") with respect to the title to each of the Sites, together with legible copies of the document underlying the exceptions ("Exceptions") set forth in the Report, within thirty (30) days from the date of this Agreement. The Developer shall have the right to reasonably approve or disapprove the Exceptions; provided, however, that the Developer herein approves the Redevelopment Plan as an Exception. Developer shall have thirty (30) days from the date of its receipt of each Report to give written notice to Agency and Escrow Holder of Developer's approval or disapproval of any such Exceptions. Developer's failure to give written disapproval of the Report within such time limit shall be deemed approval of the Report. If Developer notifies Agency of its disapproval of any 600457905v2 ~ 101' Exceptions in the Report, Agency shall have the right, but not the obligation, to remove any disapproved Exceptions within thirty (30) days after receiving written notice of Developer's disapproval or provide assurances satisfactory to Developer that such Exception(s) will be removed on or before the Closing. If Agency cannot or does not elect to remove any of the disapproved Exception within that period, Developer shall have ten (10) business days after expiration of such thirty (30) day period to either give the Agency written notice that Developer elects to proceed with the purchase of the applicable Site subject to the disapproved Exceptions or to give the Agency written notice that the Developer elects to terminate this Agreement as to all of the Sites, or as to only the Site which is the subject of the disapproved Report. The Exceptions to title approved by Developer as provided herein shall hereinafter be referred to as the "Condition of Title." Developer shall have the right to approved or disapprove any Exception(s) reported by the Title Company after Developer has approved the Condition of Title for the Sites (which are not created by Developer) within ten (10) business days after receipt of any supplemental title report ("Supplemental Report") and a legible copy of the documents underlying the new Exception. Developer's failure to give written disapproval of the Supplemental Report within such time limits shall be deemed approval of the Supplemental Report. If Developer notifies Agency of its disapprovals of any Exceptions in the Supplemental Report, Agency shall have the right, but not the obligation, to remove any disapproved Exception(s) within twenty (20) days after receiving written notice of Developer's disapproval or provide assurance satisfactory to Developer that such Exception(s) would be removed on or before the Closing. If Agency cannot or does not elect to remove any of the disapproved Exceptions within that period, Developer shall have ten (10) business days after expiration of such twenty (20) day period to either give the Agency written notice that Developer elects to proceed with the purchase of the applicable Site subject to the disapproved Exception(s) or give the Agency written notice that Developer elects to terminate this Agreement as to all of the Sites, or only as to the Site which is the subject of the disapproved Supplemental Report. Agency shall not voluntarily create any new exceptions to title following the date of this Agreement. 204. Title Insurance. Concurrently with recordation of the Grant Deed(s) conveying title to each Site, there shall be issued to Developer an ALTA Owner's Policy of Title Insurance with Western Regional Exceptions (the "Title Policy"), together with such endorsements as are reasonably requested by the Developer, issued by First American Title Insurance Company (the "Title Company") insuring that the title to the Sites is vested in Developer in the condition required by Section 203 of this Agreement. The Title Company shall provide the Agency with a copy of the Title Policy. The Title Policy shall be for the amount of the fair market value of the Sites. The Agency agrees to remove on or before the Closing any deeds of trust or other monetary liens against the Sites. The Agency shall pay that portion of the premium for the Title Policy equal to the cost of the ALTA standard coverage title policy in the amount of the fair market value of the Sites. Any additional costs, including the cost of an ALTA extended coverage policy or any endorsements requested by the Developer, shall be borne by the Developer. 205. Conditions of Closing. The Closing of each Phase of the Sites is conditioned upon the satisfaction of the following terms and conditions within the times designated below: 600457905v2 3 1121 205.1 Agency's Conditions of Closing. Agency's obligation to proceed with the Closing of the sale of the Sites is subject to the fulfillment or waiver by Agency of each and all of the conditions precedent (a) through (j), inclusive, described below ("Agency's Conditions Precedent"), which are solely for the benefit of Agency, and which shall be fulfilled or waived by the time periods provided for herein: a. No Default. Prior to the Close of Escrow, Developer is not in default in any of its obligations under the terms of this Agreement and all representations and warranties of Developer contained herein shall be true and correct in all material respects. b. Execution of Documents. The Developer shall have executed the Grant Deed for each of the applicable Sites and executed any other documents required hereunder and delivered such documents into Escrow. c. Payment of Closing Costs. Prior to the Close of Escrow, Developer has paid all required costs of Closing into Escrow in accordance with Section 202 hereof. d. The DIR shall have issued a written determination regarding the Project. e. Design Approvals. The Developer shall have obtained approval by the Agency of the Design Development Drawings as set forth in Section 302 hereof. f. Land Use Approvals. The Developer shall have received all land use approvals and permits required pursuant to Section 303 hereof. g. Insurance. The Developer shall have provided proof of insurance as required by Section 302 hereof. h. Financing. The Agency shall have approved financing of the Improvements as provided in Section 311.1 hereof. i. No Litigation. No litigation shall be pending or threatened by any third parties which seeks to enjoin the transactions contemplated herein. j. Representations and Warranties. All representations and warranties of Developer contained in this Agreement shall be true and correct as if made on and as of the Closing. 205.2 Developer's Conditions of Closing. Developer's obligation to proceed with the purchase of each Phase of the Sites is subject to the fulfillment or waiver by Developer of each and all of the conditions precedent (a) through (1), inclusive, described below ("Developer's Conditions Precedent"), which are solely for the benefit of Developer, and which shall be fulfilled or waived by the time periods provided for herein: 600457905v2 ~ 1~l 7 a. No Default. Prior to the Close of Escrow, Agency is not in default in any of its obligations under the terms of this Agreement and all representations and warranties of Agency contained herein shall be true and correct in all material respects. b. Execution of Documents. The Agency shall have executed the Grant Deed for each of the applicable Sites and any other documents required hereunder, and delivered such documents into Escrow. c. Payment of Closing Costs. Prior to the Close of Escrow, Agency shall have paid all required costs of Closing for the applicable Phase into Escrow in accordance with Section 202 hereof. d. The DIR shall have issued a written determination regarding the Project. e. Review and Approval of Title. Developer shall have reviewed and approved the condition of title of the applicable Phase of the Sites, as provided in Section 203 hereof. f. Title Policy. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to the Title Policy for the applicable Phase of the Sites upon the Close of Escrow, in accordance with Section 204 hereof. g. Condition of Sites. The Developer shall have approved the environmental, physical and soils condition of the applicable Phase of the Sites and shall not have elected to cancel Escrow and terminate this Agreement pursuant to Section 208 hereof, the Remediation of the applicable Phase of the Sites (if required pursuant to that Section) shall have been completed as provided therein, and Agency is prepared to deliver exclusive possession of the Sites to Developer at the Closing. h. Design Approvals. The Developer shall have obtained approval by the Agency of the Design Development Drawings as set forth in Section 302 hereof. i. Land Use Approvals. The Developer shall have received all land use approvals and permits required pursuant to Section 303 hereof. j. Financing. The Developer shall have obtained construction financing of the Improvements on the applicable Phase as provided in Section 311.1 hereof. k. No Litigation. No litigation shall be pending or threatened by any third parties which seeks to enjoin the transactions contemplated herein. 1. Representations and Warranties. All representations and warranties of Agency contained in this Agreement shall be true and correct as if made on and as of the Closing. 600457905v2 3 1 3 206. Representations and Warranties. as follows: 206.1 Agency Representations. Agency represents and warrants to Developer a. Authority. Agency is a public body, corporate and politic, existing pursuant to the California Community Redevelopment Law (California Health and Safety Code Section 33000), which has been authorized to transact business pursuant to action of the City. Agency has full right, power and lawful authority to grant, sell and convey the Sites as provided herein and the execution, performance and delivery of this Agreement by Agency has been fully authorized by all requisite actions on the part of Agency. b. FIRPTA. Agency is not a "foreign person" within the parameters of FIRPTA or any similar state statute, or is exempt from the provisions of FIRPTA or any similar sate statue, or that Agency has complied and will comply with all the requirements under FIRPTA or any similar state statute. c. No Conflict. To the best of Agency's knowledge, Agency's execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Agency is a party or by which it is bound. d. Litigation. There are no claims, causes of action or other litigation or proceedings pending or, to the best knowledge of the Agency, threatened with respect to the ownership, operation or environmental condition of the Sites or any part thereof (including disputes with mortgagees, governmental authorities, utility companies, contractors, adjoining landowners or suppliers of goods and services). e. Violations. To the best knowledge of the Agency, there are no violations of any health, safety, pollution, zoning or other laws, ordinances, rules or regulations with respect to the Sites, which have not heretofore been entirely corrected. In the event Agency has actual knowledge of any such violations, Agency shall (i) immediately provide Developer with copies of all documents evidencing such violation, and (ii) cure such violation prior to Closing except as expressly provided herein. f. No Third Party Obligations. Agency has not made, and prior to the Closing Date will not make, any commitments to any governmental authorities, utility company, school board, church or other religious body, or any homeowner or homeowner's association, or to any other organization, group or individual, relating to the Sites which would impose any obligation on the Developer, or its successors or assigns, after the Closing Date to make any contributions of money, dedications of land or grant of easements or rights of way, or to construct, install or maintain any improvements of a public or private nature on or off the Sites, without the approval of the Developer. g. Use of Low and Moderate Income Housing Funds. The Agency has used moneys from its Low and Moderate Income Housing Fund, established pursuant to Health 600457905v2 1-T and Safety Code Section 33334.3, and no other funds, to acquire the Sites and to carry out all of its obligations under this Agreement. Agency understands that Developer is relying on this representation and warranty in making its determination as to whether the Improvements constitute a "public work" pursuant to Labor Code Section 1720, and whether the project does not constitute a project that is paid for in full or in part subject to the exception set forth in Labor Code Section 1720(c)(4). Until the Closing, Agency shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 206.1 not to be true as of Closing, immediately give written notice of such fact or condition to Developer. Such exception(s) to a representation shall not be deemed a breach by Agency hereunder, but shall constitute an exception which Developer shall have a right to approve or disapprove is such exception would have an effect on the value of the Sites and/or ability to develop the Sites. If Developer elects to close Escrow following disclosure of such information, Agency's representations and warranties contained herein shall be deemed to have been made as of the Closing, subject to such exception(s). If, following the disclosure of such information, Developer elects to not close Escrow, then this Agreement and the Escrow shall automatically terminate, and neither party shall have any further rights, obligations or liabilities hereunder. The representations and warranties set forth in this Section 206.1 shall survive the Closing. h. Leases and Other Interests. To the best of Agency's knowledge, there are no tenants or other persons who have a lawful interest in the Sites. To the best of Agency's knowledge, no person, firm, partnership or corporation has the right to possess the Sites or any portion thereof. 206.2 Developer's Representations. Developer represents and warrants to Agency as follows: a. Authority. Developer is a duly organized limited liability company formed within and in good standing under the laws of the State of Delaware. Developer has full right, power and lawful authority to purchase and accept the conveyance of the Sites and undertake all obligations as provided herein and the execution, performance and delivery of this Agreement by Developer has been fully authorized by all requisite actions on the part of the Developer. b. No Conflict. To the best of Developer's knowledge, Developer's execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which the Developer is a party or by which it is bound. c. No Developer Bankruptcy. Developer is not the subject of a bankruptcy proceeding. Until the Closing, Developer shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 206.2 not to be true as of Closing, immediately give written notice of such fact or condition to Agency. Such exception(s) to a 600457905v2 15 G representation shall not be deemed a breach by Developer hereunder, but shall constitute an exception which Agency shall have a right to approve or disapprove if such exception would have an effect on the value and/or operation of the Sites. If Agency elects to close Escrow following disclosure of such information, Developer's representations and warranties contained herein shall be deemed to have been made as of the Closing, subject to such exception(s). If, following the disclosure of such information, Agency elects to not close Escrow, then this Agreement and the Escrow shall automatically terminate, and neither party shall have any further rights, obligations or liabilities hereunder. The representations and warranties set forth in this Section 206.2 shall survive the Closing. 207. Studies and Reports. Prior to the Closing, representatives of Developer shall have the right of access to all portions of the Sites for the purpose of obtaining data and making surveys and tests necessary to carry out this Agreement, including the investigation of the environmental condition of the Sites pursuant to Section 208 hereof. Any preliminary work undertaken on the Sites by Developer prior to the Closing shall be done at the sole expense of the Developer, and the Developer's execution of a right of entry agreement to be provided by the Agency. Any preliminary work shall be undertaken only after securing any necessary permits from the appropriate governmental agencies. 208. Condition of the Sites 208.1 Disclosure. Prior to the execution of this Agreement, Agency has caused a "Phase 1" investigation of the environmental condition of each Site to be undertaken by Converse Consultants Inc., dated December 4, 2008 ("Agency Environmental Site Assessment"), with the cost of such investigation at the expense of Agency. Agency represents and warrants that Developer has been provided a copy of all reports and test results produced in connection with the environmental investigation of each of the Sites by Agency. If Developer desires, prior to the execution of this Agreement, Developer shall cause a "Phase 1" investigation of the environmental condition of each Site to be undertaken ("Developer Environmental Site Assessment"), with the cost of such investigation at the expense of Developer. Developer represents and warrants that Agency has been provided with all reports and test results produced in connection with the environmental investigation of each of the Sites by Developer. Agency and the Developer hereby represent and warrant to the other, except as set forth in the Agency Environmental Site Assessment and the Developer Site Assessment, that they have no Actual Knowledge, and have not received any notice or communication from any governmental agency having jurisdiction over the Sites, notifying such party of, the presence of surface or subsurface zone Hazardous Materials in, on, or under the Sites, or any portion thereof. "Actual Knowledge," as used herein, shall not impose a duty of investigation, and shall be limited to the current actual knowledge of the Executive Director of the Agency and the President of the Developer. 208.2 Investigation of Sites. Prior to Closing, the Developer shall have the right, at its sole cost and expense, to engage its own environmental consultant (the "Environmental Consultant") to make such investigations as Developer deems necessary, including any "Phase 1" and/or "Phase 2" investigations of the Sites, and the Agency shall promptly be provided a copy of all reports and test results provided by the Environmental Consultant. 600457905v2 1 ~2 6 The Developer shall reasonably approve or disapprove of the environmental condition of the Sites within the time set forth in the Schedule of Performance. The Developer's approval of the environmental condition of the Sites shall be a Developer's Condition Precedent to the Closing, as set forth in Section 205 hereof. If the Developer, based upon the above environmental reports, reasonably disapproves the environmental condition of any of the Sites, then the Developer may either eliminate the disapproved Site or Sites from this Agreement, or may terminate this Agreement by written Notice to the Agency; provided, however, that if the Agency, at its option, agrees to remediate the disapproved Sites in accordance with the terms of Section 208.3such termination shall be ineffective. 208.3 Remediation of Sites. Upon receipt of Developer's notice to terminate based upon the environmental condition of the Sites, Agency may, at Agency's option, agree to remediate the Sites in accordance with the recommendations of Developer's Environmental Consultant, Developer's Environmental Site Assessment and all Governmental Requirements ("Agency's Election to Remediate"), provided, Agency hereby agrees to make Agency's Election to Remediate in the event that Agency reasonably estimates that the cost to conduct the Remedial Worlc does not exceed Twenty Five Thousand Dollars ($ 25,000.00) ("Remedial Work Expenditure Cap"). Agency shall give notice to Developer and Escrow Agent of such election and Developer's notice to terminate shall be ineffective; provided, however, that Developer has approved of the scope of the Remedial Work and the RAP prior to the commencement of such work. If Agency makes Agency's Election to Remediate, then within a reasonable period after giving notice to Developer that it intends to proceed with remediation of the Sites, Agency shall deliver to Developer for Developer's approval a proposed remedial action plan ("RAP") prepared by Agency's Environmental Consultant ("Agency's Environmental Consultant"), which RAP shall be approved by the public agency asserting jurisdiction over the remedial work to be performed pursuant to the RAP (the "Remedial Work"). The Remedial Work shall assure the suitability of the Sites for the development, occupancy and operation of the Project and shall be performed in accordance with applicable Governmental Requirements and Environmental Laws, and shall be conducted in accordance with the requirements of Health and Safety Code Section 33459, et seq., in a manner which is intended to qualify for the immunity which is provided by Health and Safety Code Section 33459.3. Upon making Agency's Election to Remediate and receiving Developer's approval of the RAP, Agency shall proceed continuously and diligently with the Remedial Work. Agency's compliance with the provisions of this Section, and the issuance of a letter, certificate or other official writing by all governmental agencies which have asserted jurisdiction over the remediation of the Sites, which provides that no further investigation, monitoring, remediation, response or removal is currently necessary considering the development, occupancy and operation of the Project ("No Further Action Letter"), shall each be a Developer's Condition Precedent to the Closing and the Outside Date shall be extended until such conditions are satisfied. Upon completion of the Remedial Work, Agency shall deliver to Developer a certificate executed by the Agency's Environmental Consultant that the Remedial Work has been completed in accordance with all applicable laws. 600457905v2 17 Notwithstanding the foregoing, if Developer, based upon Developer's Environmental Site Assessment, Agency's Environmental Site Assessment and the RAP, reasonably estimates that the Remedial Work cannot be completed within ten (10) weeks, then Developer may terminate the Escrow and this Agreement by written notice to Agency. As an alternative to Agency performing the Remedial Work pursuant to this Section, Developer may propose ("Developer's Remediation Proposal") that Developer perform, or have performed, the Remedial Worlc by written notice to Agency accompanied by an estimate of the cost of performing the Remedial Work ("Developer's Remedial Work Estimate"). In the event that Developer's Remedial Work Estimate is less than Remedial Work Expenditure Cap, Agency shall elect to either (i) accept Developer's Remediation Proposal, in which event Developer shall perform the Remedial Work in accordance with this Section and Agency shall reimburse Developer in an amount not to exceed Developer's Remedial Work Estimate within thirty (30) days following receipt by Agency of written request therefor by Developer, together with copies of invoices and/or other such evidence as reasonably necessary to substantiate such costs and expenses, or (ii) reject Developer's Remediation Proposal, in which event Agency shall perform the Remedial Work in accordance with this Section. In the event that Developer's Remedial Worlc Estimate is greater than the Remedial Work Expenditure Cap, Agency may elect to terminate the Escrow and this Agreement, provided such termination shall be ineffective if Developer then elects to perform the Remedial Work in accordance with this Section and bear any costs and expenses in excess of the Remedial Work Expenditure Cap. 208.4 No Further Warranties As to Sites. Except as otherwise provided herein, and upon remediation of the Sites pursuant to Section 208.3 (if applicable) the physical condition, possession or title of the Sites shall be delivered from Agency to Developer in an "as- is" condition, with no warranty expressed or implied by Agency, including without limitation, the presence of Hazardous Materials or the condition of the soil, its geology, the presence of known or unknown seismic faults, or the suitability of the Sites for the development purposes intended hereunder. 208.5 Developer Precautions After Closing. Upon the Closing, the Developer shall take all necessary precautions to prevent the release into the environment of any Hazardous Materials which are located in, on or under the Sites. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous materials. In addition, the Developer shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. 208.6 Required Disclosures After Closing. After the Closing, the Developer shall notify the Agency, and provide to the Agency a copy or copies, of all environmental permits, disclosures, applications, entitlements or inquiries relating to the Sites which have been conveyed to the Developer, including notices of violation, notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist order, reports filed pursuant to self-reporting requirements and reports filed or applications made pursuant to any Governmental Requirement 600457905v2 ~ 1 `+ relating to Hazardous Materials and underground tanks. The Developer shall report to the Agency, as soon as possible after each incident, any unusual or potentially important incidents with respects to the environmental condition of the Sites. In the event of a release of any Hazardous Materials into the environment, the Developer shall, as soon as possible after the release, furnish to the Agency a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request, the Developer shall furnish to the Agency a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Sites including, but not limited to, all permit applications, permits and reports including, without limitation, those reports and other matters which maybe characterized as confidential. 208.7 Developer Environmental Indemnity. Upon the Closing, Developer agrees to indemnify, defend and hold Agency harmless 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 (i) the release, use, generation, discharge, storage or disposal by Developer or by any individual or entity that Developer shall bear the legal liability therefor including, but not limited to, officers, agents, employees or contractors of Developer (collectively, the "Developer Parties") of any Hazardous Materials in violation of Environmental Laws during the period of the Developer's ownership of the applicable Site, on, under, in or about, or the transportation of any such Hazardous Materials to or from, the .Sites by Developer or any of Developer Parties during the period of the Developer's ownership of the applicable Site, or (ii) the violation, or alleged violation, by Developer or any of Developer Parties of any Environmental Laws relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Sites during the period of the Developer's ownership of the applicable Site. This indemnity shall include, without limitation, any damage, liability, fine, penalty, cost or expense arising from or out of any claim, action, suit, or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. 208.8 Agency Environmental Indemnity. Upon the Closing, Agency agrees to indemnify, defend and hold Developer and the Developer Parties harmless 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 (i) the release, use, generation, discharge, storage or disposal of any Hazardous Materials in violation of Environmental Laws during the period prior to the Closing, on, under, in or about, or the transportation of any such Hazardous Materials to or from the Sites, during the period prior to the Closing; or (ii) the violation, or alleged violation, of any Environmental Laws relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Sites during the period prior to the Closing. This indemnity shall include, without limitation, any damage, liability, fine, penalty, cost or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for 600457905v2 1 ~ `~ lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse affect on the environment. 300. DEVELOPMENT OF THE SITES 301. Scope of Development. The Developer shall develop the Improvements in accordance with the Scope of Development and the plans, drawings and documents submitted by the Developer and approved by the City as set forth herein. The Improvements shall generally consist of the construction of two (2) detached single-family homes with garages, associated landscaping and other required onsite and offsite improvements. One home shall have three bedrooms and two bathrooms (approximately 1621 square feet), and the other will have four bedrooms and two bathrooms (approximately 1968 square feet). 302. Design Review. 302.1 Developer Submissions. Before commencement of construction of the Improvements or other works of improvement upon the Sites, and as a Condition Precedent pursuant to Section 205, and at or prior to the times set forth herein, the Developer shall submit to the City any plans and drawings (collectively, the "Design Development Drawings") which maybe required by the City with respect to any permits and entitlements which are required to be obtained to develop the Improvements, and such plans for the Improvements as required by the City in order for the Developer to obtain building and grading permits for the Improvements. Within thirty (30) days after the City's disapproval or conditional approval of such plans, the Developer shall revise the portions of such plans identified by the City as requiring revisions and resubmit the revised plans to the City. 302.1.1 Special Development Requirements. The Design Development Drawings shall, to the extent compatible with Section 403 [Affordable Housing] and applicable design requirements of the City of Santa Ana, incorporate design elements and building practices that will reduce the maintenance and utility costs of home ownership, and also reduce the adverse environmental impacts otherwise associated with residential construction. Such design elements and practices may include, but are not limited to passive solar design, environmentally sensitive landscaping, installation of energy efficient furnaces and water heaters (Energy Star Appliances), and installation of high efficiency toilets. 302.2 City Review and Approval. The City and the Agency shall have all rights to review and approve or disapprove all Design Development Drawings and other required submittals in accordance with the Santa Ana Municipal Code, and nothing set forth in this Agreement shall be construed as the City/Agency's approval of any or all of the Design Development Drawings. 302.3 Reserved. 302.4 Revisions. Any and all change orders or revisions required by the City and its inspectors which are required under the Municipal Code and all other applicable Uniform 600457905v2 ~ ?~ Codes (e.g. Building, Plumbing, Fire, Electrical, etc.) and under other applicable laws and regulations shall be included by the Developer in its Design Development Drawings and other required submittals and shall be completed during the construction of the Improvements. 302.5 Defects in Plans. The Agency and the City shall not be responsible either to the Developer or to third parties in any way for any defects in the Design Development Drawings, nor for any structural or other defects in any work done according to the approved Design Development Drawings, nor for any delays reasonably caused by the review and approval processes established by this Section 302. 303. Land Use Approvals. Before commencement of construction of the Improvements or other works of improvement upon the Sites, the Developer shall, at its own expense, secure or cause to be secured any and all land use and other entitlements, permits and approvals which may be required for the Improvements by the City or any other governmental agency affected by such construction or work. The Developer shall, without limitation, apply for and secure the following (as required), and pay all costs, charges and fees associated therewith: a. reserved; b. Zoning Amendment; c. reserved; d. Lot Line Adjustment; e. All permits and fees required by the City, Orange County and other governmental agencies with jurisdiction over the Improvements. However, the execution of this Agreement does not constitute the granting of or a commitment to obtain any required land use permits, entitlements or approvals required by the Agency or the City. 304. Schedule of Performance. The Developer shall submit all Design Development Drawings, commence and complete all construction of the Improvements, and satisfy all other obligations and conditions of this Agreement within the times established therefore in the Schedule of Performance attached hereto and incorporated herein as Exhibit G. The Agency shall perform all of its obligations hereunder within the times established therefore in the Schedule of Performance. 305. Cost of Construction. Except to the extent otherwise expressly set forth in this Agreement, all of the cost of acquisition of the Sites and the planning, designing, developing and constructing all of the Improvements, preparation of the Sites and grading shall be borne solely by the Developer. 600457905v2 3 ? 131 306. Insurance Requirements. The Developer shall take out and maintain or shall cause its contractor to take out and maintain until the completion of construction pursuant to the terms of this Agreement, a commercial general liability policy in the amount of Two Million Dollars ($2,000,000) combined single limit policy, and a comprehensive automobile liability policy in the amount of One Million Dollars ($1,000,000), combined single limit, or such other policy limits as the Agency may approve at its discretion, including contractual liability, as shall protect the Developer, City and Agency from claims for such damages. Such policy or policies be written on an occurrence form. The Developer shall also furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that Developer and any contractor with whom it has contracted for the performance of work on the Sites or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. The Developer shall furnish a certificate of insurance countersigned by an authorized agent of the insurance carrier on a form approved by the Agency setting forth the general provisions of the insurance coverage. This countersigned certificate shall name the City and the Agency and their respective officers, agents, and employees as additionally insured parties under the policy, and the certificates shall be accompanied by a duly executed enforcement evidencing such additional insured status (the Agency's preferred Additional Insured Endorsement is attached hereto as Exhibit I). The certificate and endorsement by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify City and the Agency of any material change, cancellation or termination of the coverage at least thirty (30) days in advance of the effective date of any such material change, cancellation or termination. Coverage provided hereunder by the Developer shall be primary insurance and not be contributing with any insurance maintained by the Agency or City, and the policy shall contain such an endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of the City and the Agency. The required certificate shall be furnished by the Developer at the time set forth in the Schedule of Performance. 306.1 Construction Defect Insurance. The Developer shall maintain construction defect insurance coverage on each of the Affordable Units that are built for a period of at least ten (10) years. 306.2 Builders Risk Insurance. The Developer shall take out and maintain Builders Risk Insurance coverage to cover the buildings during the course of construction. Such insurance shall provide coverage on an all risk basis, including theft and vandalism, for accidental losses, damage or destruction of the property during construction. The limit of insurance shall be in the amount of the full value of the project. 307. Reserved. 308. Rights of Access. For purposes of assuring compliance with this Agreement, representatives of the Agency shall have the right of access to the Sites, without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including but not limited to, the inspection of the work being performed in constructing the Improvements so long as Agency representatives comply with all safety rules. The Agency (or its representatives) shall, except in emergency situations, notify the Developer prior to exercising its right pursuant to this Section 308. 600457905v2 ~ 22~ 309. Compliance With Laws. The Developer shall carry out the design and construction of the Improvements in conformity with all applicable laws, including all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City of Santa Ana Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act. 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq 309.1 Taxes and Assessments. Following the Closing, the Developer shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Sites, subject to the Developer's right to contest in good faith any such taxes. The Developer shall remove or have removed any levy or attachment made on any of the Sites or any part thereof, or assure the satisfaction thereof within a reasonable time. The Developer shall not apply for or receive any exemption from the payment of property taxes or assessments on any interest in or to the Sites or the Improvements. 309.2 Liens and Stop Notices. The Developer shall not allow to be placed on the Sites or any part thereof any lien or stop notice. If a claim of a lien or stop notice is given or recorded affecting the Improvements the Developer shall within thirty (30) days of such recording or service or within five (5) days of the Agency's demand whichever last occurs: a. pay and discharge the same; or b. affect the release thereof by recording and delivering to the Agency a surety bond in sufficient form and amount, or otherwise; or c. provide the Agency with other assurance which the Agency deems, in its sole discretion, to be satisfactory for the payment of such lien or bonded stop notice and for the full and continuous protection of Agency from the effect of such lien or bonded stop notice. 309.3 Prevailing Wage Requirements. Pursuant to Labor Code section 1720 (c)(4), the construction or rehabilitation of affordable housing units for Low- or moderate-income persons pursuant to paragraph (5) or (7) of subdivision (e) of Section 33334.2 of the Health and Safety Code that are paid for solely with moneys from a Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Health and Safety Code do not constitute a project that is paid for in whole or in part out of public funds for which prevailing wage must be paid. The Agency hereby warrants and represents that (i) the Sites were acquired by Agency solely with moneys from a Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Health and Safety Code, and (ii) Agency shall pay for all costs and expenses arising out of this Agreement and under the Agency Loan solely with moneys from a Low and Moderate Income Housing Fund established pursuant Section 33334.3 of the Health and Safety Code. Further, Labor Code section 1720 (b)(6)(E) provides another exemption from prevailing wage law. Should a determination be made that this project is not 600457905v2 3 233 exempt from prevailing wage law, the Agency agrees to assume said risk and bear all costs and expenses associated therewith. 310. Release of Construction Covenants. Promptly after completion of the Improvements or any portion thereof in conformity with this Agreement, the Agency shall furnish the Developer with a "Release of Construction Covenants," substantially in the form of Exhibit F hereto which is incorporated herein by reference. The Agency shall not unreasonably withhold such Release of Construction Covenants. The Release of Construction Covenants shall be a conclusive determination of satisfactory completion of the applicable portion of the Improvements and the Release of Construction Covenants shall so state. Any party then owning or thereafter purchasing, leasing, or otherwise acquiring any interest in the Sites shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement except for those continuing covenants as set forth in Section 406 of this Agreement. If the Agency refuses or fails to furnish the Release of Construction Covenants, after written request from the Developer, the Agency shall, within thirty (30) days of written request therefore, provide the Developer with a written statement of the reasons the Agency refused or failed to furnish the Release of Construction Covenants. The statement shall also contain the Agency's opinion of the actions the Developer must take to obtain the Release of Construction Covenants. The Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of any mortgage, or any insurer of a mortgage securing money loaned to fmance the Improvements, or any part thereof. The Release of Construction Covenants is not a notice of completion as referred to in Section 3093 of the California Civil Code. 311. Financing of the Improvements. 311.1 Approval of Financing. As required herein and as an Agency Condition Precedent to the Closing, Developer shall submit to Agency evidence that Developer has obtained sufficient equity capital (for example, a Letter of Credit) or has obtained firm and binding commitments for construction and permanent financing necessary to undertake the development of the Sites and the construction of the Improvements in accordance with this Agreement. Agency shall approve or disapprove such evidence of financing commitments within thirty (30) days of receipt of a complete submission. Approval shall not be unreasonably withheld or conditioned. If Agency shall disapprove any such evidence of financing, Agency shall do so by Notice to Developer stating the reasons for such disapproval and Developer shall promptly obtain and submit to Agency new evidence of financing. Agency shall approve or disapprove such new evidence of financing in the same manner and within the same times established in this Section 311.1 for the approval or disapproval of the evidence of financing as initially submitted to Agency. Developer shall close the approved financing concurrently with the Closing. Such evidence of financing shall include the following: (a) a copy of a legally binding, firm and enforceable loan commitment(s)/ Letter of Credit obtained by Developer from 600457905v2 ~ ?d unrelated financial institutions for the mortgage loan or loans for financing to fund the construction, complete, operation and maintenance of the Improvements, subject to such lenders' reasonable, customary and normal conditions and terms, and/or (b) a certification from the chief financial officer of Developer that Developer has sufficient funds for such construction, and that such funds have been committed to such construction, and/or other documentation satisfactory to the Agency as evidence of other sources of capital sufficient to demonstrate that Developer has adequate funds to cover the difference between the total cost of the acquisition of the Sites, and construction and completion of the Improvements, less financing authorized by those loans set forth in subparagraph (a) above. Agency's loan amount to Developer shall not exceed $222,478.00. Sales proceeds from the sale of the affordable homes shall be retained by the Developer. Construction financing to Developer will be provided on the terms more fully described in the First Trust Deed Promissory Note, attached hereto and incorporated herein as Exhibit J and secured through a First Deed of Trust attached hereto and incorporated herein as Exhibit K. Developer acknowledges that these documents will be fully executed and recorded as part of the conveyance of each of the Sites. Agency and Developer agree to utilize a construction disbursement account through AmeriNational Community Services for the purpose of authorizing and releasing construction progress payments. The Agency has provided the following forms pertaining to disbursements: Request for Progress Payment, Release of Retention and Fu11 Release which are attached hereto and incorporated herein as Exhibit L. Said forms shall be submitted to the Agency along with proper documentation evidencing costs incurred by Developer. 311.2 No Encumbrances Except Agency recorded documents (Deeds of Trust/Affordability Restrictions on Transfer of Property) The Developer shall not enter into any conveyance for financing prior to the Release of Construction Covenants without the prior written approval of the Agency, which approval Agency agrees to give if any such conveyance for financing is given to a responsible financial lending institution or person or entity ("Lender"). The Developer may enter into a conveyance for financing after the completion of the Improvements as evidenced by the recording of the Release of Construction Covenants without the approval of the Agency. 400. COVENANTS AND RESTRICTIONS 401. Use in Accordance with Redevelopment Plan. The Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the Sites, that upon the Closing and during construction and thereafter, until Developer's sale of the Improvements on the Sites, the Developer shall devote the Sites to the uses specified in the Redevelopment Plan and this Agreement for the periods of time specified therein. All uses conducted on the Sites, including, without limitation, all activities undertaken by the Developer pursuant to this Agreement, shall conform to the Redevelopment Plan and all applicable provisions of the Santa Ana Municipal Code. The foregoing covenants shall run with the land. 402. Reserved. 600457905v2 3 253 5 403. Affordable Housing 403.1 Number of Units. Developer agrees to make available, restrict occupancy to, and sell each of the two (2) single family housing units to be developed upon the Sites to "Low Income Households" (as that term is herein defined) at an Affordable Housing Cost (the "Affordable Units"). In addition, the Developer agrees to cooperate with the Agency in any subsidized loan program the Agency may in its sole discretion make available to Low Income Household purchasers of some or all of the Affordable Units. 403.2 Selection of Buyers. The Developer shall provide the Agency with a copy of its Marketing Plan which shall set forth how the Developer plans to provide interested households with information about the Sites. The Developer shall be solely responsible for the selection of qualified purchasers of the Affordable Units. Developer shall ensure that there will be adequate homebuyer education with HUD approved pre- and post- purchase counseling. 403.2.1 Marketing and Outreach Plan. The goal of the Marketing and Outreach Plan is to insure that the marketing of affordable for-sale housing be as broad and inclusive as possible in order to inform and attract as many prospective buyers as possible. The Outreach and Marketing Plan and the associated applicant selection procedures will be targeted to purchasers regardless of race, color, religion, sex, disability status, familial status or national origin. The Marketing Plan is attached hereto as Exhibit M. Information shall also be provided on the Developers website, City of Santa Ana website, City cable channel, Workforce Investment Board, Santa Ana Chamber of Commerce, Santa Ana Unified School District, Rancho Santiago Community College District, Community Development Resource Network Newsletter and through neighborhood associations. A. LOTTERY Developer shall be responsible to organize, schedule and coordinate a lottery drawing, which shall be open to the public. The lottery shall take place not less than 90 days prior to completion of the available unit. Preference shall be given as follows: (1) Veterans who live or work in the City of Santa Ana, (2) households who live or work in Santa Ana, and (3) others. Those claiming the preferences will be maintained separately. For the purpose of the lottery drawing, the lottery will be divided by those who have claimed a preference and those who do not. All lottery forms will be drawn and numbered to create a complete list of alternate applications. Developer shall provide written notification to lottery participants informing them of the results and their priority number. This priority number represents the order with which prospective buyers' will be reviewed for final determination of eligibility. If a household who was selected claimed a preference but could not verify such will be deemed ineligible and the next selected participant will be notified. Pre-purchase counseling must be completed PRIOR to close of escrow. 600457905v2 3 263 6 403.3 Income of Buyers. Prior to the sale of any Affordable Unit to a purchaser, the Developer shall submit to the Agency a completed income computation and certification form from each purchaser of an Affordable Unit in the form which is provided by the Agency. Each purchaser shall certify, to the best of the purchaser's knowledge, that it is a Low Income Household and meets the eligibility requirements established for the Affordable Unit. The Developer shall obtain an income certification (copy of Income Certification form attached hereto as Exhibit N) from the prospective purchaser of an affordable unit and shall certify that, to Developer's Actual Knowledge, the income of the prospective purchaser is truthfully set forth in the income certification form. For purposes of such certification, the Developer shall verify the income certification of the prospective purchaser in one or more of the following methods reasonably acceptable to the Agency: (a) obtain two (2) paycheck stubs from the prospective purchaser's two (2) most recent pay period. (b) obtain a true copy of an income tax return from the prospective purchaser for the most recent tax year in which a return was filed. (c) obtain an income verification certification from the employer of the prospective purchaser. (d) obtain an income verification certification from the Social Security Administration and/or the California Department of Social Services if the prospective purchaser receives assistance from such agencies. (e) obtain an alternate form of income verification reasonably acceptable to the Agency, if none of the above forms of verification is available to the Developer. 403.4 Documentation. At the closing of escrow for the purchase of each Affordable Unit, the Agency will require each Low Income Household purchaser of such unit to execute, Affordability Restrictions on Transfer of Property, Notice of Affordability on Transfer of Property, the Promissory Note (attached hereto as Exhibit O) ,Deed of Trust (attached hereto as Exhibit P) and such further documents reasonably required by the Agency in a form provided by the Agency. The Promissory Note, Affordability Restrictions, and Notice of Affordability on Transfer of Property shall be for a term of forty-five (45) years. The principal amount of the Promissory Note shall be in an amount equal to the difference between the sales price of the Affordable Unit and the fair market value of such unit as if no restriction were placed thereon, as determined by the sales price of equivalent unrestricted units on the Sites at the time of such sale. If there are no equivalent unrestricted units on the Sites at the time of sale, the fair market value of the unit shall be determined by appraisal which is reasonably acceptable to the Agency. The Affordability Restrictions on Transfer of Property and Promissory Note shall permit sales of the Affordable Units prior to expiration of the forty-five year period only to a qualified Low Income household at an Affordable Housing Cost. The Affordability Restrictions and covenants must be fully explained to the Purchaser and the entire explanation and execution of said document must be videotaped by the Developer. A copy of said videotape shall be placed on a CD which shall be kept by the Developer and the Agency. 600457905v2 ?'3 7 403.5 Affordable Housing Property Tax. Developer shall be responsible for applying to the County of Orange to request that the property tax be based on the restricted value with the affordability covenants that are recorded against each Affordable Unit. 403.6 Maintenance. The Affordability Restrictions on Transfer of Property shall require each of the households to maintain their property in conformance with local and state requirements. 403.7 Reasonable Efforts to Sell Affordable Units. The Developer agrees tv exercise reasonable efforts consistent with prudent business practices to sell all of the Affordable Units developed on the Sites to owner-occupants as soon as practical following the completion of the construction. The Developer agrees that the units developed on the Sites shall not be sold to the Developer or any party/employee related to the Developer. 403.8 Guarantee/Homeowner Protection Plan. Developer agrees to guarantee its work from defects for a period of at least one (1) year after construction is complete, with a five (5) year guarantee for the roof of each Unit. Developer shall provide each Homebuyer with all of the manufacturer's warranties and product information. Developer shall also provide the Homebuyers of each of the Affordable Units with a Homeowner Protection Plan. 403.9 Subsequent Sales. The Grant Deed from Developer to any proposed qualified household shall restrict the use of the Property to owner-occupied, and shall restrict subsequent resales of the Property to Lower Income Households, at an Affordable Housing Cost, who agree to occupy the Unit(s) as their primary place of residence. 404. Maintenance Covenants. During the time of Developer's ownership of the Sites, the Developer shall maintain the Sites and all improvements thereon, including all landscaping, in compliance with the terms of all applicable provisions of the City of Santa Ana Municipal Code. Each homeowner shall be responsible for maintenance of their own property after transfer of title. 405. Nondiscrimination Covenants. Developer herein covenants by and for itself, its successors and assigns, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. Notwithstanding the immediately preceding paragraph, with respect to familial status, the immediately preceding paragraph shall not be construed to apply to housing for older 600457905v2 ~ ®2 v persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the immediately preceding paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding paragraph. All deeds, leases or contracts entered into by Developer relating to the Sites shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: a. In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. "Notwithstanding the immediately preceding paragraph, with respect to familial status, the immediately preceding paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the immediately preceding paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding paragraph." b. In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased. 600457905v2 3 293 9 "Notwithstanding the immediately preceding paragraph, with respect to familial status, the immediately preceding paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status; nothing in the immediately preceding paragraph shall. be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding paragraph." c. In contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." "Notwithstanding the immediately preceding paragraph, with respect to familial status, the immediately preceding paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the immediately preceding paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the immediately preceding paragraph." d. The foregoing covenants shall, without regard to technical classification and designation, be binding for the benefit and in favor of Agency, its successors and assigns, any occupants of the Sites, and any successor in interest to the Sites. The covenants against discrimination shall remain in effect in perpetuity. In no event shall anything in this Section 405 be construed as authority to lease Affordable Units unless otherwise permitted herein. 406. Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction. The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own right and for the purposes of protecting the interest of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Sites or in the Project. The Agency shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants maybe entitled. 600457905v2 V 30~® The covenants contained in this Agreement shall remain in effect as follows: environmental covenants set forth in Sections 208.5, 208.6 and 208.7 shall remain in effect in perpetuity. a. The covenants pertaining to use of the Sites which are set forth in Section 401 shall remain in effect for the term of the Redevelopment Plan. b. The covenants pertaining to the use of the Sites as affordable housing set forth in Section 403 shall remain in effect for a period of not less than forty-five (45) years from the date that the property is conveyed to a Low Income Household. c. The covenants pertaining to maintenance of the .Sites and all improvements thereon, as set forth in Section 404, shall remain in effect for the term of forty-five (45) years. d. The covenants against discrimination, as set forth in Section 405 shall remain in effect in perpetuity. 500. DEFAULTS AND REMEDIES 501. Default Remedies. Subject to the extensions of time set forth in Section 602 of this Agreement, failure by either party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default" under this Agreement. A party claiming a Default shall give written notice of Default to the other party specifying the Default complained of. Except as otherwise expressly provided in this Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with diligence. 502. Institution of Legal Actions. In addition to any other rights or remedies and subject to the restriction otherwise set forth in this Agreement, either party may institute and action at law or equity to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Courts of the County of Orange, State of California, or in the District of the United States District Court in which such county is located. 503. Termination by the Developer. In the event that the Developer is not in default under this Agreement and the Agency does not tender title to the Sites pursuant to the Grant Deed in the manner and condition and by the date provided in this Agreement; or one or more of the Developer's Conditions Precedent to the Closing is not fulfilled on or before the time set forth in the Schedule of Performance and such failure is not caused by the Developer; or in the event of any default of the Agency prior to the Closing which is not cured within the time set forth in Section 501 hereof, and any such failure is not cured within the applicable time period after written demand by the Developer, then this Agreement may, at the option of the Developer, be terminated by written notice thereof to the Agency. From the date of the written notice of 600457905v2 3 3 1 termination of this Agreement by the Developer to the Agency and thereafter this Agreement shall be deemed terminated and there shall be no further rights or obligations between the parties, except that the parties may pursue any other remedies they may have hereunder, including, without limitation, the right of Developer to commence an action. for monetary damages against Agency for all costs and expenses incurred by Developer in the investigation and acquisition of the Sites. 504. Termination by the Agency. In the event that the Agency is not in Default under this Agreement the Developer (or any successor in interest) assigns or attempts to assign the Agreement or any rights therein or in the Sites in violation of this Agreement; or one or more of the Agency's Conditions Precedent to the Closing is not fulfilled on or before the time set forth in the Schedule of Performance and such failure is not caused by the Agency or City; or the Developer is otherwise in default of this Agreement and fails to cure such default within the time set forth in Section 501 hereof; then this Agreement and any right of the Developer or any assignee or transferee with respect to or arising out of the Agreement or the Sites, shall, at the option of the Agency, be terminated by the Agency by Agreement by the Agency to the Developer and thereafter this Agreement shall be deemed terminated and there shall be no further rights or obligations between the parties, except that the parties may pursue any other remedies they may have hereunder. 505. Re-entry and Revesting of Title in the Agency After the Closing and Prior to Completion of Construction. The Agency has the right, at its election, to reenter and take possession of the Sites, with all improvements thereon, and terminate and revest in the Agency the estate conveyed to the Developer if after the Closing and prior to completion of construction the Developer (or its successors in interest) (and subject to the terms of Section 603) shall: a. fail to start the construction of the Improvements as required by this Agreement for a period of thirty (30) days after written notice thereof from the Agency; or b. abandon or substantially suspend construction of the Improvements required by this Agreement for a period of thirty(30) days after written notice thereof from the Agency; or c. contrary to the provisions of Section 603 transfer or suffer any involuntary transfer of the Sites or any part thereof in violation of this Agreement, and Developer fails to reverse such transfer within the time set forth in Section 501 hereof; or d. Otherwise materially breach this Agreement and such breach is not cured within thirty (30) days after written notice thereof from Agency. Such right to re-enter, terminate and revest shall be subject to and be limited by and shall not defeat, render invalid or limit: 1. Any mortgage or deed of trust permitted by this Agreement; or 2. Any rights or interests provided in this Agreement for the protection of the holders of such mortgages or deeds of trust. 324 600457905v2 The Grant Deed shall contain appropriate reference and provisions to give effect to the Agency's right as set forth in this Section 505, under specified circumstances, to re-enter and take possession of the Sites, with all improvements thereon, and to terminate and revest in the Agency the estate conveyed to the Developer. In no event, however, shall the Agency have the right to re-enter and take possession of any portion of the Site on which a completed home is located. Upon the revesting in the Agency of title to the Sites as provided in this Section 505, the Agency shall, pursuant to its responsibilities under state law, use its reasonable efforts to resell the Sites as soon and in such manner as the Agency shall find feasible and consistent with the objectives of such law and of the Redevelopment Plan, as it exists or maybe amended, to a qualified and responsible party or parties (as determined by the Agency) who will assume the obligation of making or completing the Improvements, or such Improvements in their stead as shall be satisfactory to the Agency and in accordance with the uses specified for such Sites or part thereof in the Redevelopment Plan. Upon such resale of the Sites, the net proceeds thereof after repayment of any mortgage or deed of trust encumbering the Sites which is permitted by this Agreement, shall be applied; i. First, to reimburse the Agency, on its own behalf or on behalf of the City, all costs and expenses incurred by the Agency, excluding City and Agency staff costs, but specifically, including, but not limited to, any expenditures by the Agency or the City in connection with the recapture, management and resale of the Sites or part thereof (but less any income derived by the Agency from the Sites or part thereof in connection with such management); all taxes, assessments and water or sewer charges with respect to the Sites or part thereof which the Developer has not paid (or, in the event that Sites is exempt from taxation or assessment of such charges during the period of ownership thereof by the Agency, an amount, if paid, equal to such taxes, assessments, or charges as would have been payable if the Sites were not so exempt); any payments made or necessary to be made to discharge any encumbrance or liens existing on the Sites or part thereof at the time or revesting of title thereto in the Agency, or to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligation, default or acts of the City, its successors or transferees; any expenditure made or obligation incurred with respect to the making or completion of the improvements or any part thereof on the Sites, or part thereof; and any amounts otherwise owing the Agency, and in the event additional proceeds are thereafter available, then ii. Second, to reimburse the Developer, its successor or transferee, up to the amount equal to the sum of (a) the costs incurred for the acquisition and development of the Sites and for the improvements existing on the Sites at the time of reentry and possession, less (b) any gains or income withdrawn or made by the Developer from the Sites or the improvements thereon. Any balance remaining after such reimbursements shall be retained by the Agency as its property. The rights established in this section 505 are not intended to be exclusive of any other right, power or remedy, but each and every such right, power, and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy authorized herein or now or hereafter existing at law or in equity. These rights are to be interpreted in light of the fact that the Agency will have conveyed the Sites to the Developer for redevelopment purposes, 600457905v2 ~ 33/~ particularly for development of for sale affordable housing, and not for speculation in undeveloped land. 506. Acceptance of Service of Progress. In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director of the Agency or in such other manner as may be provided bylaw. In the event that any legal action is commenced by the Agency against the Developer, service of process on the Developer shall be made by personal service upon the President of the Developer or in such other manner as may be provided by law. 507. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such right or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 508. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 509. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 600. GENERAL PROVISIONS 6004579osv2 34A 601. Notices, Demands and Communications Between the Parties. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in writing and maybe given by any commercially acceptable means to the party to whom the Notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by Notice. To Agency: Redevelopment Agency of the City of Santa Ana 20 Civic Center Plaza, M-25 Santa Ana, California 92780 Attention: Executive Director To Developer: RSI Development LLC 620 Newport Center Drive, Suite 1200 Newport Beach, CA 92660 Attention: Ron Simon Any written notice, demand or communication shall be deemed received immediate if delivered by hand and shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail. 602. Developer Indemnity. Developer shall indemnify, defend and hold harmless Agency, its officers, agents, employees and volunteers from and against any and all loss or damage, expenses, injuries, death to any person, damage to real or personal property, claim, demand, suit, action, judgment, settlement, reasonable attorney's fees, costs, or proceeding of any kind arising out of this Agreement, implementation of this Agreement, the sale of the property by Agency to Developer, securing of financing, design development drawings, engineering, construction, reconstruction, structural integrity of the homes to be built on the Sites, maintenance of Sites, operation, and subsequent sale of Sites, including but not limited to: (a) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials, on, under, in or about, or the transportation of any such hazardous materials to or from, the Sites after the Closing Date; (b) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Sites which occurs after the Closing Date; (c) latent material defects in construction; (d) any construction defect; (e) personal injury, including death, of the employees, agents, officers, and/or volunteers of Developer, Developer Parties, and/or any subcontractors, independent contractors, partners, and/or subsidiaries; (f) property damage claims of the employees, agents, officers, and/or volunteers of Developer, Developer Parties, and/or any subcontractors, independent contractors, partners, and/or subsidiaries; 600457905v2 ~ 35~ G (g) delay in construction; (h) personal injury, including death, of any third party; (i) property damage claims of any third party; and (j) the failure to make required real estate disclosures to subsequent buyers of homes on the Sites. Developer's obligation to indemnify as set forth in this Agreement shall extend to loss or damage, expenses, injuries, death to any person, damage to real or personal property, claim, demand, suit, action, judgment, settlement, reasonable attorney's fees, costs, or proceedings of any kind that, are discovered or accrue, either before or after the termination of this Agreement. Notwithstanding the foregoing, Developer shall not be required to indemnify and hold harmless Agency or the City for liability attributable to the active negligence or intentional misconduct of Agency or the City or any of their boards, officers, employees, representatives or agents. 603. Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Agreement shall be extended, where delays or Defaults are due to causes beyond the control or without the fault of the party claiming an extension of time to perform, which may include: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; acts of terrorism; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools, delays of any contractor, subcontractor or supplier; acts or omissions of the other party; acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of the Agency which shall not excuse performance by the Agency). Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and Developer. Notwithstanding any provision of this Agreement to the contrary, the lack of funding to complete the Improvements shall not constitute grounds of enforced delay pursuant to this Section 602. 604.Transfers of Interest in Sites or Agreement. 604.1 Prohibition. The qualifications and identity of the Developer are of particular concern to the Agency. It is because of those qualifications and identity that the Agency has entered into this Agreement with the Developer. For the period commencing upon the date of this Agreement and until the expiration of the use and operations covenants which are set forth in Section 401 hereof, no voluntary or involuntary successor in interest of the Developer shall acquire any rights or power under this Agreement, nor shall the Developer make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Sites or the Improvements thereon without prior written approval of the Agency, except as expressly set forth herein. Any proposed total or partial sale, transfer, 600457905v2 ~ ®3Ey1 G conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Sites or the Improvements will entitle the Agency to its right of re-entry and reverting as set forth in Section 505 hereof. 604.2 Permitted Transfers. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of an assignment of this Agreement or conveyance of the Sites or Improvements, or any part thereof, shall not be required in connection with any of the following: (a) Any transfers to an entity or entities in which the Developer retains ownership or beneficial interest and retains management and control of the transferee entity or entities. (b) The conveyance or dedication of any portion of the Sites to the City or other appropriate governmental agency, or the granting of easements or permits to facilitate construction of the Improvements (as defined herein). (c) Any requested assignment for financing purposes (subject to such financing being considered and approved by the Agency pursuant to Section 311 herein), including the grant of a deed of trust to secure the funds necessary for land acquisition, construction and permanent financing of the Improvements. (d) Any sale of the single family homes to owner-occupants, pursuant to Section 403 hereof. In the event of an assignment by Developer under subparagraphs (a) or (c) above not requiring the Agency's prior approval, Developer nevertheless agrees that at least thirty (30) days prior to such assignment it shall give written notice to Agency of such assignment and satisfactory evidence that the assignee has assumed jointly with Developer the obligations of this Agreement. 604.3 Agency Consideration of Requested Transfer. The Agency agrees that it will not unreasonably withhold approval of a request made pursuant to this Section 603, provided the Developer delivers written notice to the Agency requesting such approval. Such notice shall be accompanied by sufficient evidence regarding the proposed assignee's or purchaser's development and/or operational qualifications and experience, and its financial commitments and resources, in sufficient detail to enable the Agency to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 603 and as reasonably determined by the Agency. The Agency shall evaluate each proposed transferee or assignee on the basis of its development and/or qualifications and experience in the construction of facilities similar to the Improvements, and its financial commitments and resources, and may reasonably disapprove any proposed transferee or assignee, during the period for which this Section 603 applies, which the Agency determines does not posses equal or better qualifications that the transferring Developer. An assignment and assumption agreement inform satisfactory to the Agency's legal counsel shall also be required for all proposed assignments. Within thirty (30) days after the receipt of the Developer's written notice requesting Agency approval of an assignment or transfer pursuant to this Section 603, the Agency shall either approve or 600457905v2 3747 disapprove such proposed assignment or shall respond in writing by stating what further information, if any, the Agency reasonably requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, the Developer shall promptly furnish to the Agency such further information as may be reasonably requested. 604.4 Successors and Assigns. All of the terms, covenants and conditions of this Agreement shall be binding upon the Developer and its permitted successors and assigns. Whenever the term "Developer" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided. 604.5 Assignment by Agency. The Agency may assign or transfer any of its rights or obligations under this Agreement with the approval of the Developer, which approval shall not be unreasonably withheld; provided, however, that the Agency may assign or transfer any of its interests hereunder to the City at any time without the consent of the Developer. 605. Non-Liability of Officials and Employees of the Agency and the Developer. No member, official or employee of the Agency or the City shall be personally liable to the Developer, or any successor in interest, in the event of any Default or breach by the Agency (or the City) or for any amount which may become due to the Developer or its successors, or on any obligations under the terms of this Agreement. 606. Relationship Between Agency and Developer. It is hereby acknowledged that the relationship between the Agency and the Developer is not that of a partnership or joint venture and that the Agency and the Developer shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, the Agency shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Improvements. 607. Agency Approvals and Actions. The Agency shall maintain authority of this Agreement and the authority to implement this Agreement through the Agency Executive Director (or his duly authorized representative). The Agency Executive Director shall have the authority to make approvals, sign sales and escrow documents, issue interpretations, waive provisions, and/or enter into amendments of this Agreement on behalf of the Agency so long as such actions do not materially or substantially change the uses or development permitted on the Sites, or materially or substantially add to the costs incurred or to be incurred by the Agency as specified herein, and such approvals, interpretation, waivers and/or amendments may include extensions of time to perform as specified in the Schedule of Performance. All other material and/or substantial interpretations, waivers, or amendments shall require the consideration, action and written consent of the Agency Board. 608. Counterparts. This Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement and shall be deemed to be an original. 609. Integration. This Agreement contains the entire understanding between the parties relating to the transaction contemplated by this Agreement. All prior or contemporaneous 600457905v2 ~ 38~v agreements, understandings, representations and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. This Agreement includes pages 1 through _ and Exhibits A through P, which constitute the entire understanding and agreement of the parties, notwithstanding any previous negotiations or agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. 610. Real Estate Brokerage Commission. The Agency and the Developer each represent and warrant to the other that no broker or finder is entitled to any commission or finder's fee in connection with the Developer's acquisition of the Sites from the Agency. The parties agree to defend and hold harmless the other party from any claim to any such commission or fee from any broker, agent or finder with respect to this Agreement which is payable by such party. 611. Attorney's Fees. In any action between the parties to interpret, enforce, reform, modify, rescind, or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs and reasonable attorneys' fees. 612. 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. 613. 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. 614. 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 succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. 615. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 616. 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, or 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. 600457905v2 ~ 39/~ 617. Computation of Time. The time in which any act is to be done under this Agreement is computed by excluding the first day (such as the day escrow opens), and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 618. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 619. Time of Essence. Time is expressly made of the essence with respect to the performance by the Agency and the Developer of each and every obligation and condition of this Agreement. 620. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which maybe reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. 621. Conflicts of Interest. No member, official or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his/her personal interests or the interests of any corporation, partnership or association in which he/she is directly or indirectly interested. 622. Date of Agreement. The date of this Agreement shall be the date set forth in the first paragraph hereof. 600457905v2 4 IN WITNESS WHEREOF, the Agency and the Developer have executed this Agreement on the date set forth hereinabove AGENCY: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA, a public body, corporate and politic By: Cynthia J. Nelson, Executive Director ATTEST: Patricia E. Healy, Secretary APPROVED AS TO FORM: JOSEPH W.FLETCHER Agency General Counsel By: Lisa E. Storck Assistant Counsel DEVELOPER: RSI DEVELOPMENT LLC, a Delaware limited liability company By: Title: By: Title: 600457905v2 ~ ®4 12/10/08 EXHIBIT A LEGAL DESCRIPTION 600457905v2 3 - 2 EXHIBIT B SITE MAP 600457905v2 EXHIBIT C AFFORDABILITY COVENANTS ON TRANSFER OF PROPERTY 600457905v2 ~ ~1d EXHIBIT D DEVELOPER GRANT DEED 600457905v2 EXHIBIT E BUDGET 600457905v2 3 - 5 EXHIBIT F RELEASE OF CONSTRUCTION COVENANTS 600457905v2 EXHIBIT G SCHEDULE OF PERFORMANCE 600457905v2 3 - 5 LIST OF EXHIBITS Exhibit A -Legal Description(s) Exhibit B -Site Map Exhibit C -Affordability Restrictions on Transfer of Property Exhibit D -Developer Grant Deed Exhibit E -Project Budget Exhibit F -Release of Construction Covenants Exhibit G -Schedule of Performance Exhibit H -Scope of Development Exhibit I -Additional Insured Endorsement Exhibit J -Promissory Note (Developer) Exhibit K -First Deed of Trust (Developer) Exhibit L -Reimbursement Forms Exhibit M -Marketing Plan Exhibit N -Income Verification Form Exhibit O -Promissory Note (Homebuyer) Exhibit P -Deed of Trust (Homebuyer) 3- THIS PAGE LEFT BLANK INTENTIONALLY -60