Option Agreement 2003-0766358 Recording requested by 31031
First American Title DOC 4 2003-0766358
RECORDING REQUESTED B1' ) JUN 27 , 2003 3 : 40 PM
AND WHEN RECORDED MAIL TO: ) OFFICIAL RECORDS
SAN DIEGO COUNTY RECORDER'S OFFICE
Poway Redevelopment Agency ) GREGORY J SMITH, COUNTY RECORDER
13325 Civic Center Drive ,. p 1 p p p p FEES: 0.00
Poway, California 92064 IIIIIIIuNIIIIII1IIIIIIIIIIII1111II11iuIIIIIII�IIIIIIIIIIIIIII� � OC: NA
Attention: Redevelopment Director
4 . . ,1 2093;9769.3H Li
GC_' O 2
'i _ This document is exempt from the payment of
0 I 0 •
a recording fee pursuant to Government Code
\0 d 7J 33 7 _d q Section 27383.
OPTION AGREEMENT
rf It— THIS OPTION AGREEMENT is entered into as of June 26, 2003, by and between the
POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"),
and SPECIAL FRIENDS FOUNDATION, a California nonprofit corporation (the "Owner").
RECITALS
A. Owner has purchased a five bedroom single family house in the City of Poway
located at 13411 Sagewood Drive, as such real property is more particularly described in Exhibit "A"
attached hereto and incorporated herein (the "Property").
B. Owner and the Agency have entered into an Affordable Housing Agreement dated
June 24, 2003 (the "Affordable Housing Agreement"). Under the terms of the Affordable Housing
Agreement, the parties have agreed that that for a fifty-five year period the Property shall be used as
a Level 2 group home for persons with developmental disabilities who are Extremely Low Income
Households, with rents at an Affordable Rent (as those terms are defined in the Affordable Housing
Agreement). Pursuant to the Affordable Housing Agreement, the parties have executed and recorded
in the Official Records of San Diego County a "Regulatory Agreement" which sets forth such
requirements.
C. Pursuant to Section 403 of the Affordable Housing Agreement, the Owner has agreed
to grant to the Agency an option to purchase the Property in the event that the Property is no longer
used as a Level 2 group home for persons with developmental disabilities (or an equivalent level
group home, as provided in Section 403 of the Affordable Housing Agreement), or upon the
occurrence of certain events of default, as set forth therein.
D. Owner desires to grant to Agency an option to purchase the Property on the terms and
conditions set forth hereinbelow. For purposes of this Option Agreement, "Property" shall also be
deemed to include any and all improvements located on the real property.
NOW,THEREFORE, in consideration of the foregoing, and the mutual covenants and
conditions contained herein, the parties hereto agree as follows:
1. Grant of Option. Owner grants to Agency an option (the "Option") to purchase the
Property on the terms and conditions set forth in this Option Agreement. The purchase price payable
by the Agency to the Owner for the Property shall be Six Hundred Thousand Dollars (3600,000) plus
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DOCSOCl9779 17v 1122345.0038
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the original hard cost of construction of the Improvements (as defined in the Affordable Housing
Agreement, as adjusted by(a) the percentage change in the San Diego County median income for a
family of four, as published by regulation of the California Department of Housing and Community
Development, from the figure in effect as of the date of this Option Agreement (560,100), to the
figure in effect as of the date that the option is exercised by the Agency, and (b) the fair market
value, as of the date that the option is exercised, of capital improvements made to the Property after
the Owner's purchase of the Property, other than the Improvements, as determined by appraisal
pursuant to Section 5 hereof(the "Option Price"). The Option created hereby shall be irrevocable by
Owner and shall be binding upon the successors and assigns of Owner. The Agency shall have the
right of specific performance to enforce the terms of this Option Agreement.
2. Term and Consideration for Option. The term of the Option ("Option Term")
shall commence on the date of this Option Agreement, and shall expire on the date that the Agency
Loan is repaid in full. In the event of the sale of the Property pursuant to foreclosure instituted with
respect to the First Mortgage Loan (as defined in the Affordable Housing Agreement), this
Agreement shall terminate and be of no further force or effect.
3. Exercise of Option. The Option may be exercised by Agency's delivery to Owner of
written notice of such exercise (the "Exercise Notice") only upon (a) the occurrence of an event of
default under the Affordable Housing Agreement, which has not been cured by the time set forth
therein, or(b) the date that the Property is no longer used as a Level 2 group home for persons with
developmental disabilities. In the event that the Agency exercises the Option, but prior to the sale of
the Property to the Agency the Owner either(i) cures the default of the Affordable Housing
Agreement, or(ii) resumes the use of the Property as a Level 2 group home for persons with
developmental disabilities, or(iii) transfers the Property to a qualified nonprofit buyer approved by
the Agency pursuant to Section 504 of the Affordable Housing Agreement, the Agency's exercise of
the Option shall be deemed revoked. In the event that the Owner gives written notice to the Agency
of its intent to undertake one or more of the actions in (i), (ii) or(iii)above, the Agency shall give the
Owner a reasonable period of time to undertake such action or actions before closing escrow on the
Agency's purchase of the Property hereunder. The revocation of the exercise of the Option shall not
terminate this Option Agreement or preclude the Agency from subsequently exercising the Option
upon a later event of default under the Affordable Housing Agreement or change in use of the
Property.
4. Escrow and Completion of Sale. Within five (5) days after Agency has exercised
the Option, or as soon thereafter as reasonably practicable, an escrow shall be opened with an escrow
company mutually acceptable to Agency and Owner for the conveyance of the Property to the
Agency. The Agency shall deposit the Option Price in escrow not later than one (1) business day
prior to the anticipated close of escrow date. The Agency's obligation to close escrow shall be
subject to the Agency's approval of a then-current preliminary title report and, at Agency's option,
environmental and other site testing. Any exceptions shown on such preliminary title report created
on or after the Owner's acquisition of the Property shall be removed by Owner at its sole expense
prior to the close of escrow pursuant to this Section 4 unless such exception(s) is(are) accepted by
Agency in its reasonable discretion; provided, however, that Agency shall accept the following
exceptions to title: (i) current taxes not yet delinquent, (ii) matters affecting title existing on the date
of Owner's acquisition of the Property, (iii) liens and encumbrances in favor of the Agency, (iv) the
first deed of trust(if Agency is assuming such first deed of trust), (v) the Affordable Housing
Agreement and Regulatory Agreement, and (vi) matters shown as printed exceptions in the standard
form ALTA owner's policy of title insurance. The parties shall each be responsible for one-half of
the escrow fees, documentary transfer taxes, recording fees and any other costs and expenses of the
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escrow, and the Owner shall be responsible for the cost of an ALTA owner's policy of title
insurance. Agency shall have thirty(30)days after exercise of the Option to enter upon the Property
to conduct any tests, inspections, investigations, or studies of the condition of the Property. Owner
shall permit the Agency access to the Property for such purposes. The Agency shall indemnify,
defend, and hold harmless Owner and its officers, directors, shareholders, partners, employees,
agents, and representatives from and against all claims, liabilities, or damages, and including expert
witness fees and reasonable attorney's fees and costs, caused by Agency's activities with respect to
or arising out of such testing, inspection, or investigatory activity on the Property. Escrow shall close
promptly after acceptance by Agency of the condition of title and the physical and environmental
condition of the Property, and in no event later than ninety(90)days after the date that the Agency
has exercised the Option. Until the Closing, the terms of the Affordable Housing Agreement and the
documents executed and recorded pursuant thereto shall remain in full force and effect.
5. Appraisal of Capital Improvements. The appraised value of capital
improvements to the Property shall be determined as follows. Upon Agency's exercise of the option,
Owner shall notify Agency of the capital improvements Owner desires to have included in the Option
Price. Owner shall then select an appraiser from a list of appraisers supplied by the Agency. Owner
may request that Agency review the qualifications and experience of appraiser(s) not on such list and
add such appraisers to the list as Agency deems appropriate. Whether any particular appraiser is
added to the list shall be determined by Agency in its sole and absolute discretion. The cost of such
appraisal shall be paid by the Agency. The appraised value determined by the appraiser shall apply,
unless the Owner notifies Agency, within five (5) days after the receipt of the appraisal, that the
• appraisal is unsatisfactory. If Owner notifies Agency that the appraisal is unsatisfactory, then Owner
may choose another appraiser from the Agency's list, and may have a second appraisal conducted at
Owner's expense. If the amount of the appraised value determined by the second appraiser differs by
• less than twenty-five percent (25%) of the amount of the appraised value determined by the first
appraisal, whether higher or lower, the average of the two appraisals shall apply. If the amount of the
second appraisal differs by more than twenty-five percent (25%)of the amount of the first appraisal,
whether higher or lower, the Agency shall pay for a third appraisal and the mean of the three
appraisals shall apply.
6. Failure to Exercise Option. If the Option is not exercised in the manner provided in
Section 3 above before the expiration of the Option Term, the Option shall terminate. Upon receipt
of the written request of Owner, Agency shall cause a quitclaim deed terminating or releasing any
and all rights Agency may have to acquire the Property(the "Quitclaim Deed") to be recorded in the
Official Records of San Diego County, California.
7. Assignment and Nomination. Agency shall not assign its interest hereunder without
the approval of the Owner, which maybe given or withheld in Owner's sole and absolute discretion;
provided that the Agency may nominate another person or entity to acquire the Property, and the
identity of such nominee shall not be subject to the approval of the Owner.
8. Title. Following the date hereof, except as permitted by the Affordable Housing
Agreement, Owner agrees not to cause,and shall use commercially reasonable efforts not to permit,
any lien, easement, encumbrance or other exception to title to be recorded against the Property
without Agency's prior written approval, such approval not to be unreasonably withheld.
9. Representations and Warranties of Owner. Owner hereby represents, warrants
and covenants to Agency as follows, which representations and warranties shall survive the exercise
of the Option and the Close of Escrow:
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DOCSOC1977917v I\22345.0038
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(a) that this Option Agreement and the other documents to be executed by Owner
hereunder, upon execution and delivery thereof by Owner, will have been duly entered into by
Owner, and will constitute legal, valid and binding obligations of Owner;
(b) neither this Option Agreement, nor anything provided to be done under this
Option Agreement, violates or shall violate any contract, document, understanding, agreement or
instrument to which Owner is a party or by which it is bound; and
(c) Owner shall pay, prior to delinquency, any and all real property taxes and
assessments which affect the Property.
Owner agrees to indemnify, protect, defend, and hold Agency and the Property harmless
from and against any damage, claim, liability, or expense of any kind whatsoever (including, without
limitation, reasonable attorneys' fees and fees of expert witnesses) arising from or in connection with
any breach of the foregoing representations, warranties and covenants. Such representations and
warranties of Owner, shall be true and correct on and as of the date of this Option Agreement and on
and as of the date of the Close of Escrow.
10. Representations and Warranties of Agency. Agency hereby represents and
warrants and covenants to Owner, as follows, which representations and warranties shall survive the
Close of Escrow:
(a) that this Option Agreement and the other documents to be executed by
Agency hereunder, upon execution and delivery thereof by Agency, will have been duly entered into
by Agency, and will constitute legal, valid and binding obligations of Agency, and
(b) neither this Option Agreement, nor anything provided to be done under this
Option Agreement, violates or shall violate any contract, document, understanding, agreement or
instrument to which Agency is a party or by which it is bound.
Agency agrees to indemnify, protect, defend, and hold Owner and the Property harmless
from and against any damage, claim, liability, or expense of any kind whatsoever(including, without
limitation, reasonable attorneys' fees and fees of expert witnesses) arising from or in connection with
any breach of the foregoing representations, warranties and covenants. Such representations and
warranties of Agency, and any other representations and warranties of Agency contained elsewhere
in this Option Agreement shall be true and correct on and as of the date of this Option Agreement
and on and as of the date of the Close of Escrow.
11. General Provisions.
11.1 Paragraph Headings. The paragraph headings used in this Option
Agreement are for purposes of convenience only. They shall not be construed to limit or extend the
meaning of any part of this Option Agreement.
11.2 Notices. Any notice, demand, approval, consent, or other communication
required or desired to be given under this Option Agreement shall be in writing and shall be either
personally served, sent by telecopy, mailed in the United States mails, certified, return receipt
requested, postage prepaid, or sent by other commercially acceptable means, addressed to the party to
be served with the copies indicated below, at the last address given by that party to the other under
the provisions of this section. All communications shall be deemed delivered at the earlier of actual
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!OCSOC19779170\22345.0038
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receipt, the next business day after deposit with Federal Express or other overnight delivery service
or two (2) business days following mailing as aforesaid, or if telecopied, when sent, provided a copy
is mailed or delivered as provided herein:
Owner: Special Friends Foundation
12461 Vaughn Road
Poway, California 92064
Attention: Administrator
Agency: Poway Redevelopment Agency
13325 Civic Center Drive
Poway, California 92064
Attention: Assistant Executive Director
11.3 Binding Effect. The terms, covenants and conditions of this Option
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns and transferees.
11.4 Entire Agreement. This Option Agreement sets forth the entire agreement
between the parties hereto respecting the Option, and supersedes all prior negotiations and
agreements, written or oral, concerning or relating to the subject matter of this Option Agreement.
11.5 California Law. This Option Agreement shall be governed by the laws of
the State of California and any question arising hereunder shall be construed or determined according
to such laws.
11.6 Time of the Essence. Time is of the essence of each and every provision of
this Option Agreement.
11.7 Counterparts. This Option Agreement may be signed by the parties hereto
in duplicate counterparts which together shall constitute one and the same agreement between the
parties and shall become effective at such time as both of the parties shall have signed such
counterparts.
11.8 Attorneys' Fees. If either party commences an action against the other to
enforce any of the terms hereof or because of the breach by either party of any of the terms hereof,
the losing party shall pay to the prevailing party reasonable attorneys' fees, costs and expenses
incurred in connection with the prosecution or defense of such action, including appeal of and/or
enforcement of a judgment.
11.9 Computation of Time. All periods of time referred to in this Option
Agreement shall include all Saturdays, Sundays and state or national holidays, unless the period of
time is specified as business days (which shall not include Saturdays, Sundays and state or national
holidays), provided that if the date or last date to perform any act or give any notice with respect to
this Option Agreement shall fall on a Saturday, Sunday or state or national holiday, such act or notice
may be timely performed or given on the next succeeding day which is not a Saturday, Sunday or
state or national holiday.
11.10 Definition of Terms. Terms not otherwise defined in this Option Agreement
are defined in the Affordable Housing Agreement.
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DOCS00977917 v I\22345.0038
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®31036
IN WITNESS WHEREOF, this Option Agreement is executed by the parties hereto
on the date first above written.
OWNER:
SPECIAL FRIENDS FOUNDATION, a California
nonprofit corporation �
By: g.f ;./ F (/V •I.�CLG'l
/
Its: iee
•
AGENCY:
POWAY REDEVELOr NT AGENCY, a public
body, corporate Ic
/
By: ,%
Assista. -cutive Director
ATTEST:
cAge c� �y Secretary
APPROVED AS TO FORM:
Stradling Yocca Carlson & Rauth
Agency Special Counsel
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DOCSOC\977917v R22345.0038
0 ® 31037
•
IN WITNESS WHEREOF, this Option Agreement is executed by the parties hereto
on the date first above written.
OWNER:
SPECIAL FRIE/' 0 r NDATION, a California
nonprofit corpo.: io
By: 14
its:
. a
AGENCf
POWAY REDEVELOPMENT AGENCY, a public
body, corporate and politic
By:
Executive Director
ATTEST:
b
A Cl . ILA._... !•.01.-
+ Agen y Secretary
APPROVED • S 1TO FORM:•
A11
►fr 1
Stradli l; Yocca .rlson & Rauth
Agency...pedal Counsel
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DOCS0097791 7v1\22345.0033
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31038
EXHIBIT "A"
LEGAL DESCRIPTION
That real property located in the City of Poway, County of San Diego, State of California,
described as follows:
Lots 210 of Green Valley Estates Unit No. 11, in the City of Poway, County of San Diego, State
of California, according to Map thereof No. 4586, filed in the office of the County Recorder of
San Diego County, July 13, 1960.
APN: 275-333-09
•
DOCSOC\956946v6\22345.0038
® 31039
STATE OF CALIFORNIA
ss.
COUNTY OF ryT\ � ) 1 "\\,,,
On 210,—.2n , before me, 1 (,��1�� l\ ,t-)r` �l L' ary Public,
(Print Name of Notary Public)
personally appeared (\1\
DCpersonally known to me
-or-
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
PArsAn(.e).,or..the qptity upon behalf of which the person(s) acted, executed the instrument.
MICHatEPAuuNEHERERGOn
S Commission ft 1298219 z WI" NESS my hand and official seal.
j Notary Public - California
�
;,�a.. San Diego County [[ 1 \ �� \ ���� �
�-^ � MyCarvn.E>Gires Mar73.20D5Y tt�-J\v.`' ��� ��
n A Signature Of Notary
OPTIONAL
• Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
❑ Individual
❑ Corporate Officer
Title(s) Title Or Type Of Document
❑ Partner(s) ❑ Limited
0 General
❑ Attorney-In-Fact
❑ Trustee(s)
❑ Guardian/Conservator Number Of Pages
❑ Other:
Signer is representing:
Name Of Person(s)Or Entity(ies)
Date Of Documents
Signer(s)Other Than Named Above
•
D00500977917v R22345.0038