Item 3.1 - Poway Commons, LLC Purchase, Sale and Development AgreementCity of Poway
(ED
COUNCIL AGENDA REPORT
DATE:
TO:
March 19, 2019
APPROVED a
APPROVED AS AMENDED ❑
(SEE MINUTES)
DENIED ❑
REMOVED ❑
CONTINUED
RESOLUTION NO. +j .�
Honorable Mayor and Members of the City Council
Honorable Chair and Members of the Poway Housing Authority
FROM: Tina White, City Manager/Executive Director
CONTACT: Craig Ruiz, Economic Development Administrator
(858) 668-4509 or cruiz@poway.org
SUBJECT: Poway Commons Purchase, Sale, and Development Agreement,
Affordable Housing Purchase, Sale, and Development Agreement,
Property Exchange Implementation Agreement, and a Government
Code Section 52201 Summary Report
Summary:
In April 2017, the City of Poway ("City") initiated a Request for Qualifications/Proposals ("RFQ/P")
process to identify a developer to acquire and develop City and Poway Housing Authority
("Authority") owned properties within the Town Center area of the Poway Road Specific Plan. The
RFQ/P process identified the development team of Meridian Development, LLC and Sudberry
Properties, Inc. as having the most qualified proposal.
In December 2017, the City and the Authority entered into an Exclusive Negotiation Agreement
("ENA") with the Developers. The ENA allowed the City, Authority and Developers to negotiate a
Purchase, Sale, and Development Agreement ("PSDA") for a mixed-use, market -rate
development and an Affordable Housing and Property Disposition Agreement ("AHPDA") for an
affordable housing project. The purpose of this item is to approve the PSDA, the AHPDA, Property
Exchange Agreement, Loan Agreements and Government Code Section 52201 Summary
Report.
Recommended Action:
It is recommended that the City Council: 1) Approve the Purchase, Sale, and Development
Agreement (Exhibit B of City of Poway Resolution); 2) Adopt a resolution authorizing the City
Manager to execute the Purchase, Sale, and Development Agreement, the Property Exchange
Implementation Agreement and all ancillary documents related to its implementation (Exhibit C of
City of Poway Resolution); 3) Authorize the approval of a Loan in the Amount of $1,700,000 for
the purchase of the property; 4) Hold a public hearing and make specified findings to allow for the
disposition of the Property in compliance with Government Code Section 52201 (Attachment C).
It is recommended that the governing board of the Poway Housing Authority: 1) Approve the
Affordable Housing and Property Disposition Agreement between the Authority and Poway
Commons, LLC (Exhibit B to Housing Authority Resolution); 2) Approve the Property Exchange
Implementation Agreement between the Authority and the City (Exhibit C to Housing Authority
Resolution); 3) Adopt a resolution authorizing the Executive Director to execute the Affordable
Housing and Property Disposition Agreement, the Property Exchange Implementation Agreement
and all ancillary documents related to its implementation; and 4) Authorize the allocation of up to
$2,200,000 from the Authority's Low- and Moderate -Income Housing Asset Fund.
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Discussion:
Background
Historically, the City has pursued different approaches to revitalizing the Poway Road corridor.
Most recently, in 2014, the City initiated the Poway Road Corridor Study and an updated Poway
Road Specific Plan ("PRSP"). The PRSP was adopted in December 2017 and provides an
implementation strategy to help guide land use, transportation, design/aesthetics, and economic
development decisions for Poway Road.
In April 2017, the City initiated a Request for Qualifications/Proposals ("RFP/Q") to select a
developer to develop City and Housing Authority and privately-owned properties ("Properties").
The purpose of the RFP/Q was to select a developer to construct a mixed-use residential and
commercial project along with 44 units of affordable housing in the Town Center area of the PRSP.
The initial solicitation resulted in proposals from four development teams. After evaluating the
proposals, and interviewing all four firms, the top two firms were invited to submit term sheets
further detailing their development concepts for the Properties. After evaluating the term sheets,
staff recommended to council the development team of Meridian Development, LLC ("Meridian")
and Sudberry Properties, Inc. ("Sudberry") (collectively the "Developers") to continue in the
process.
In December 2017, the City and Authority entered into an Exclusive Negotiating Agreement (ENA)
with the Developers. The ENA allowed staff and the Developers enough time to negotiate the
terms and conditions of a PSDA for the market rate, mixed use development and an AHPDA
(collectively the "Development Agreements") for the affordable housing. The Development
Agreements set forth the schedule for acquisition and development of the Properties, the type
and scale of development and purchase price and terms. Approval of the Development
Agreements does not approve or commit the City Council to approve the market rate or affordable
developments (collectively the "Developments"). The Developments must still go through the
City's standard entitlement process.
Project Concept Description
The development concept entails three distinct product types, including approximately 98 for-sale,
market rate, attached housing units, approximately 25,000 square feet of commercial retail space
on 2.2 acres and 44 affordable senior housing units. Meridian will develop the market rate housing
and Sudberry Properties will develop the commercial space. Meridian has identified Chelsea
Investment Corporation ("Chelsea") as the developer of the affordable units.
The mixed-use concept of the project will consist of the Retail Parcels comprising approximately
2.2 acres and approximately 25,000 square feet of retail, and residential parcels with three for-
sale product types. The first for-sale product type will be approximately 38 units of two-story
attached condominiums. Unit sizes will generally range from 1,400-1,600 square footage,
configured with 2-3 bedrooms, with approximately 2.5 baths. A second product type will be
approximately 54 units configured in three-story buildings. This product type consists of three-
story attached buildings, containing two-story townhomes and flat condominiums. Unit sizes will
generally range from 1, 700-2,200 square footage and will be configured with 3 bedrooms/lofts
and 2 to 3 baths. Product type three is approximately 6 units of three-story attached
condominiums. Unit sizes will generally range from 1,300-1,800 square footage with 2-3
bedrooms and 2.5 baths. This product will include a small live/work space associated with the
units along Poway Road. Every for-sale unit will have an attached two-car garage.
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The affordable senior housing project will be developed by Chelsea and the on-site manager will
be Con Am Properties. Chelsea has developed over 10,000 affordable units in over 100 affordable
communities. The project will consist of 36 one-bedroom units (includes one manager's unit), 8
two-bedroom units, a 2,750 square foot community room for classes and activities, and the
manager's office. The affordability levels are expected to range from 50% to 60% of area median
income, with an average affordability of 58%. Chelsea anticipates financing the project primarily
with 4% tax credits, construction and permanent loans, a loan from the County of San Diego's
Innovative Housing Trust Funds, a loan from Meridian in the amount of $2,022,000, and a loan
from the Housing Authority in an amount not to exceed $2,200,000 (discussed in the Fiscal Impact
section below).
Initially, both the PSDA and the AHPDA will be between the City and Meridian. When the
commercial project commences, the commercial portion of the project will be assigned to
Sudberry. When the affordable housing project commences, that portion of the development will
be assigned to Chelsea.
Project Exchange Implementation Agreement
The land discussed for the Developments involves five properties currently owned by the City and
two properties currently owned by the Poway Housing Authority as shown in Attachment E, Site
Plan -Current Ownership. As shown in the proposed Subdivision Map (Attachment D), the
ultimate development will involve the affordable housing development to be located on land
currently owned by the City (the "City-Owned Mixed Site") and a portion of both the market rate
housing and retail area will be located on land currently owned by the Authority. The Property
Exchange Implementation Agreement (the "Exchange Agreement") allows for the City to
exchange the Affordable Site for 2.91 acres owned by the Authority (as shown in Attachment F).
All of the properties in the Development have been appraised by the City's approved MAI
appraiser lntegra Realty Resources (IRR). Poway Commons is paying $2,693,305 for the
Housing Authority properties and $1,200,000 for the southernmost 0.9 acres of the City-Owned
Mixed Site. Both purchase amounts exceed the appraised value of the properties. The Exchange
Agreement provides that the difference in value between the properties will be deposited into the
Authority's Low-and Moderate-Income Housing Asset Fund from the proceeds of the sale of the
City properties.
Project Construction and Phasing
If the PSDA and AHPDA are approved, Meridian and Chelsea will begin the process to obtain
City entitlements for the residential developments. Entitlements would include a tentative map
and design review, as well as grading and improvement plans. As with any other entitlement
process, Meridian would be required to hold neighborhood meeting(s) and Council approval of a
map and design review would be needed. Once entitlements are received and all conditions to
close escrow have been satisfied, escrow will close, and all properties will be owned by Meridian.
It is expected that this could take somewhere between nine and 15 months. Meridian would then
begin the site preparation work for the site. The site preparation will include rough grading the
entire site, demolishing approximately 60,000 square feet of vacant office and storage buildings,
removing contaminated soil, lead based paint and asbestos from the vacant buildings, and
providing backbone utilities to the Affordable Site (water, sewer, electricity). When the grading
and utility work is completed on the Affordable Site, a final map has been recorded and Chelsea
has received project financing, the Affordable Site will be transferred from Meridian to Chelsea,
and Chelsea will assume all the requirements of the AHPDA. The development of the affordable
and market rate housing will generally be constructed concurrently.
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In the initial RFP/Q, the intent was to not only develop City and Authority owned properties, but
to potentially include surrounding privately owned properties. Meridian has been able to enter into
purchase agreements with three surrounding private property owners. As shown on the proposed
Subdivision Map (Attachment D), there are two areas labeled "Retail Area". The PSDA allows
Meridian and Sudberry two years to find a suitable tenant for the project. If no suitable tenant has
be identified at the end of the second year, the City and Meridian will meet to determine if the
tenant search should continue for an additional year. At the end of the third year, Meridian can
apply to the City to amend the PSDA to pursue alternative development options. If alternative
developments cannot be agreed upon, the City has the option to repurchase the Retail Parcels
from the Developer. The purchase price would be the greater of (i) the outstanding amount owed
on the City Note (described below), or (ii) eighty percent (80%) of the appraised value of the Retail
Parcels as of that date.
Government Code Section 52201 Summary Report
Government Code Section 52201 requires the City to prepare and make publicly available a report
(the "Summary Report") disclosing certain information regarding property sold to create an
economic opportunity. The City retained Kosmont Companies, a nationally recognized real estate,
financial advisory and economic development services firm to prepare the Summary Report
(Attachment C).The proposed sale of the City Parcels to the Developer, as described therein, will
create an economic opportunity by facilitating the development of the City Parcels in alignment
with the PRSP, thereby increasing the City's revenue base (e.g. property tax, sales tax, etc.),
promoting an increase in the supply of housing, stimulating economic activity and job growth
within the City, and ultimately serving as a catalyst for the revival of the City's Town Center area
and mixed-use core.
Environmental Review:
The environmental impacts of the contemplated development of the parcels subject to the AHPDA
and PSDA (the "Retail/Residential and Affordable Projects") are fully analyzed in and covered by
the previously certified Poway Road Specific Plan ("PRSP") environmental impact report ("EIR";
SCH# 2017031035), and no conditions set forth in Public Resources Code section 21166 and
CEQA Guidelines section 15162 exist. However, if the City Council approves the AHPDA and
PSDA, it is still not committing itself to approve any of the entitlements required for the
Retail/Residential and Affordable Projects, and instead the City Council has expressly retained
its full discretion to deny the Retail/Residential and Affordable Projects, which will still be subject
to further environmental review pursuant to the California Environmental Quality Act ("CEQA") to
ensure that the PRSP EIR fully analyzes and covers all of the Retail/Residential and Affordable
Projects' impacts, and no conditions set forth in Public Resources Code section 21166 and CEQA
Guidelines section 15162 exist.
Fiscal Impact:
There are seven properties subject to the two development agreements. Of the seven properties,
only the property containing Poway Stoway at 13033 Poway Road produces revenue for the City.
The City's former Redevelopment Agency purchased the Poway Stoway property in 2004 and the
City continues to lease the property to the business. The rent is currently $13,104 per month. The
terms of the lease agreement require the City to give six months' notice to the business owner to
vacate the property. Notice to vacate will be given to the business owner within five days of the
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Developer receiving entitlements from the City. The remaining properties consist of four vacant
parcels and two parcels with vacant buildings. These six properties cost the City/Authority
approximately $7,000 per year to maintain, although that figure would increase over time as the
buildings continue to age and deteriorate.
The City retained IRR to conduct a highest and best use appraisal of the City and Authority
properties. IRR is the largest independent commercial real estate valuation, counseling, and
advisory services firm in the United States. IRR conducted two appraisals. The first was for the
single property at 13100 Poway Road ("North Appraisal") and the second appraisal was for the
six properties on the south side of Poway Road ("South Appraisal). The North Appraisal valued
the land at $1,820,000 and the South Appraisal valued the properties at $4,740,000, for a
combined appraised value of $6,560,000. Meridian has offered to purchase the properties for
$7,620,500 (the "Purchase Price") which exceeds the appraised value. Of the Purchase Price,
$1,200,000 will be paid to the Housing Authority for the Affordable Site and $6,420,500 will be
paid to the City for the remaining properties. As stated above, the City and the Authority will be
exchanging property as part of this transaction. The Authority currently owns two parcels totaling
2.91 acres. Based upon the South Appraisal, the Authority's properties are valued at $2, 693,305.
The difference between the purchase price for the Authority's properties on the South Side of
Poway Road and the Affordable Site is $1,493,305, which amount will be deposited into the
Authority's low-and moderate-income housing asset fund from the proceeds of the sale of the
City properties. The balance of the sales proceeds, less the loan described below will be
deposited into the City's General Fund.
Chelsea is requesting a loan from the Authority in an amount up to $2,200,000 for the Affordable
Development. The loan is a $1,500,000 cash loan to bridge its funding gap and a loan of an
amount not to exceed $700,000 to pay the City's estimated development impact fees. When
Chelsea submits for building permit approval, the exact amount of the impact fees will be
determined. The loans will be repaid from residual receipt revenue from the project, which is a
typical funding mechanism for an affordable development. The residual receipts will be divided
50% to Chelsea (or their lender) and 50% to the Authority once the project generates enough
cash flow to cover operations with surplus. The term of the loan is 55 years and the interest rate
is 3%. The loan funds will be from the Authority's low-and moderate-income housing trust fund
and the funds for the development impact fees shall be transferred from the low-and moderate-
income housing trust fund to the respective development impact fund accounts.
Meridian is requesting a loan of $1,700,000 for the purchase of the property for the Retail project.
The term of the loan would be four years, and the interest rate is equal to the Five-Year Treasury
Bill, plus two and one-quarter percent (2.25%). Using an average of the past 20 years, the rate is
estimated to be approximately 5.07%. The Note will be secured only against the Retail Parcels
and all outstanding principal and interest would be due on the fourth anniversary of the Note.
The breakdown of the Purchase Price, loans to Chelsea and Meridian, and deposits to the City
and the Authority can be found in the Section 52201 Summary Report (Attachment C).
Public Notification:
Notice of this hearing was published in the San Diego Union Tribune on March 5, 2019 and
on March 12, 2019.
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Attachments :
A. City of Poway Resolution -Page 7
• Exhibit A -Vicinity Map -Page 12
• Exhibit B -Purchase , Sale and Development Agreement -Page 13
• Exhibit C -Property Exchange Implementation Agreement -Page 120
B. Housing Authority Resolution -Page 125
• Exhibit A -Affordable Parcel Map -Page 129
• Ex hibit B -Affordable Housing and Property Disposition Agreement -Page 130
• Exhibit C -Property Exchange Implementation Agreement -Page 304
C. Section 52201 Summary Report -Page 309
D. Proposed Subdivision Map -Page 321
E. Site Plan -Current Ownership -Page 322
F. Site Plan -Property Exchange -Page 323
Reviewed/Approved By:
Wendy Kaserman
Assistant City Manager
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Reviewed By:
Alan Fenstermacher
City Attorney
~-AA~
Tina M. White
City Manager
March 19, 2019 Item #3.1
RESOLUTION NO. 19-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
POWAY, CALIFORNIA, APPROVING (I) A PURCHASE, SALE,
AND DEVELOPMENT AGREEMENT WITH POWAY COMMONS,
LLC, FOR CITY-OWNED PROPERTIES BEARING ASSESSOR'S
PARCEL NUMBER 317-472-18, 317-472-23, 317-472-24, 317-472-
25 AND THE NORTHERLY APPROXIMATELY .64 ACRES OF 317-
101-06, AND (II) A PROPERTY EXCHANGE IMPLEMENTATION
AGREEMENT BETWEEN THE CITY AND THE CITY OF POWAY
HOUSING AUTHORITY
WHEREAS, the City of Poway (the "City") is a municipal corporation and general law city
duly organized and existing under and pursuant to the Constitution and laws of the State of
California; and
WHEREAS, the City is authorized to "control, dispose of, and convey" public property for
"the benefit of the city" (Gov. Code Section 37351);
WHEREAS, the City is also authorized to sell property to create an economic opportunity
(Gov. Code Section 52201 );
WHEREAS, the City is the fee title owner of five (5) parcels comprising approximately 4.56
acres of real property generally located at 13100 Poway Road and bearing Assessor's Parcel
Number 317-101-06, 317-472-18, 317-472-23, 317-472-24 and 317-472-25 (the "City Parcels"),
in the City of Poway, County of San Diego, State of California;
WHEREAS, the City of Poway Housing Authority (the "Authority") is the fee title owner of
two (2) parcels comprising approximately 2.91 acres of real property generally located at 13021
and 13031 Poway Road and bearing Assessor's Parcel Numbers 317-472-01 and 317-472-06
(the "Housing Authority Parcels"), in the City of Poway, County of San Diego, State of California;
WHEREAS, the Housing Authority Parcels and the City Parcels (with the exception of the
southernmost approximately .9 acres of Assessor's Parcel Number 317-101-06 of the City
Parcels, referred to hereinafter as the "Affordable Parcel") are collectively referred to as the
"Properties", and are identified on the Vicinity Map, which is included as Exhibit A to this
Resolution;
WHEREAS, the City retained lntegra Realty Resources to prepare an MAI appraisal of the
Properties, which identified the current full fair market value of the Properties as $5,579,091;
WHEREAS, the Properties are currently zoned for the Poway Road Specific Plan
("Specific Plan"), are designated as Town Center, and allow general commercial and multi-family
residential uses;
WHEREAS, City staff have negotiated a Purchase, Sale, and Development Agreement
(the "PSDA") with Poway Commons, LLC, a California limited liability company ("Developer"),
pursuant to which the City would sell the Properties to Developer for a purchase price of
$6,400,500, and the Developer would be required to develop the Properties with a commercial
retail development and residential uses permitted by, and in compliance with, the development
standards set forth in, the Specific Plan (the "Project"), all as more particularly described in the
7 of 323 Attachment A March 19, 2019 Item #3.1
PSDA;
Resolution No. 19-
Page
WHEREAS, pursuant to the PSDA, the Developer would be required to perform certain
improvements to the Properties, including demolishing existing buildings, removing hazardous
materials, and remediating contaminated soil, and would also be required to maintain the
completed development in a good condition and repair;
WHEREAS, pursuant to the PSDA, City would make a loan to the Developer to assist in
the purchase of the Properties and the Developer would be required to execute a note evidencing
its obligation to repay the City loan, with interest compounded monthly, with such repayment due
in full on the fourth anniversary of the note;
WHEREAS, concurrently with the negotiation of the PSDA, Housing Authority staff have
negotiated an Affordable Housing and Property Disposition Agreement with the Developer (the
"AHPDA"), pursuant to which the Housing Authority would sell to the Developer the Affordable
Parcel, for the Developer's subsequent sale (after establishing the Affordable Parcel as a
separate legal parcel and performing certain grading and infrastructure work on the Affordable
Parcel) to a limited partnership established by Chelsea Investment Company, an experienced
affordable housing developer, or similarly qualified affordable housing developer acceptable to
the Authority (an "Affordable Developer"), and for the Affordable Developer's development and
operation on the Affordable Parcel of a 44 unit senior affordable housing development;
WHEREAS, City and Authority staff have determined that the proposed AHPDA and
PSDA reflect the optimal development potential of the Affordable Parcel and Properties;
WHEREAS, to facilitate the implementation of the AHPDA and PSDA, City and Authority
staff have prepared a Property Exchange Implementation Agreement, pursuant to which,
concurrently with the close of escrow under the AHPDA and PSDA, (i) the City would transfer the
Affordable Parcel to Authority, (ii) Authority would transfer the Housing Authority Parcels to the
City, and (iii) the City would deposit into the Authority's Low and Moderate Income Housing Asset
Fund the sum of One Million Four Hundred Ninety-Three Thousand Three Hundred Five Dollars
($1,493,305), which is the difference between the value of the Affordable Parcel and the Housing
Authority Parcels;
WHEREAS, Government Code 52201 requires that the City prepare a Summary Report
to consider the financial terms of the transaction, as set forth in the PSDA, that the City Council
conduct a noticed public hearing with respect to the PSDA, and that the approval of the PSDA be
accompanied by certain findings and determinations as set forth herein;
WHEREAS, a Summary Report for the PSDA has been prepared and the public hearing
has been conducted in accordance with applicable requirements of law;
WHEREAS, the City Council has considered all the information and evidence set forth in
the Summary Report presented by City staff and presented by persons wishing to appear and be
heard concerning the impact of the PSDA on the City;
WHEREAS, the PSDA is of benefit to and in the best interests of the City of Poway; and
WHEREAS, City staff recommend that the City Council find and determine that the
environmental impacts of the contemplated development of the parcels subject to the AHPDA
and PSDA (the "Retail/Residential and Affordable Projects") are fully analyzed in and covered by
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Resolution No. 19-
Page
the previously certified Poway Road Specific Plan ("PRSP") environmental impact report ("EIR";
SCH# 2017031035), and that the City, by approving this resolution, is not committing itself nor
the City Council to approve any of the entitlements required for the Retail/Residential and
Affordable Projects, and instead both the City and Housing Authority retain the discretion to deny
the Retail/Residential and Affordable Projects, which will still be subject to further environmental
review pursuant to the California Environmental Quality Act ("CEQA") to ensure the PRSP EIR
covers all of the Retail/Residential and Affordable Projects' impacts, and no conditions set forth
in Public Resources Code section 21166 and CEQA Guidelines section 15162 exist.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as
follows:
Section 1: The foregoing recitals are true and correct and are a substantive part
of this Resolution.
Section 2. The environmental impacts of the Retail/Residential and Affordable
Projects are fully analyzed in and covered by the previously certified PRSP EIR (SCH#
2017031035), and no conditions set forth in Public Resources Code section 21166 and CEQA
Guidelines section 15162 exist.
Section 3. Notwithstanding the foregoing, the City Council retains all discretion to
deny any entitlements required for the Retail/Residential and Affordable Projects. The
Retail/Residential and Affordable Projects will be subject to further environmental review pursuant
to CEQA ensure the PRSP EIR covers all of the Retail/Residential and Affordable Projects'
impacts, and no conditions set forth in Public Resources Code section 21166 and CEQA
Guidelines section 15162 exist.
Section 4. The City Council hereby finds and determines that the purchase price
for the Properties pursuant to the PSDA is not less than the fair market value of the Properties at
their highest and best use.
Section 5. The City Council hereby finds and determines that the PSDA will assist
in the creation of economic opportunity in that the PSDA will create at least one full-time
equivalent, permanent job after full capacity and implementation.
Section 6. The City Council approves the PSDA and the sale of the Properties to
the Developer for the purchase price of $6,420,500, which purchase price is not less than the full
fair market value of the Properties, pursuant to the PSDA, a copy of which is attached hereto as
Exhibit B.
Section 7. The City Council approves the Property Exchange Implementation
Agreement, a copy of which is attached hereto as Exhibit C.
Section 8. The City Council authorizes and directs the City Manager and City
Attorney to make final modifications to the PSDA and Property Exchange Implementation
Agreement that are consistent with the substantive terms of the PSDA and Property Exchange
Implementation Agreement approved hereby, and to thereafter sign the PSDA and Property
Exchange Implementation Agreement on behalf of the City.
Section 9. The City Council authorizes and directs the City Manager to (i) sign
such other and further documents, including but not limited to escrow instructions, that require
the City's signature, and (ii) take such other and further actions, as may be necessary and proper
9 of 323 March 19, 2019 Item #3.1
Resolution No. 19-
Page
to carry out the terms of the PSDA and Property Exchange Implementation Agreement.
Section 10. This Resolution shall take effect from and after its adoption.
PASSED, ADOPTED AND APPROVED by the City Council of the City of Poway,
California, at a regular meeting this 19th day of March 2019.
Steve Vaus, Mayor
ATIEST:
Faviola Medina, CMG, City Clerk
10 of 323 March 19, 2019 Item #3.1
STATE OF CALIFORNIA )
) ss
COUNTY OF SAN DIEGO )
Resolution No. 19-
Page
I, Faviola Medina, City Clerk of the City of Poway, California, do hereby certify under
penalty of perjury that the foregoing Resolution No. 19-*** was duly adopted by the City Council
at a meeting of said City Council held on the 19th day of March 2019, and that it was so adopted
by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
11 of 323
Faviola Medina, CMC, City Clerk
City of Poway
March 19, 2019 Item #3.1
12 of 323
Exhibit A
Vicinity Map
Resolution No . 19-
Page
March 19, 2019 Item #3.1
882/012782-0020
1¥96¥'32~3115/19
EXHIBIT B to CITY RESOLUTION
PURCHASE, SALE, AND DEVELOPMENT AGREEMENT
by and between
CITY OF POWAY
a California municipal corporation,
and
POWAY COMMONS, LLC
a Delaware limited liability company
March 19, 2019 Item #3.1
PURCHASE. SALE, AND DEVELOPMENT AGREEMENT
THIS PURCHASE, SALE, AND DEVELOPMENT AGREEMENT (this
"Agreement") is dated as of , 2019 (the "Effective Date"), and is entered into
by and between POWAY COMMONS, LLC, a Delaware limited liability company
("Developer"), and the CITY OF POWAY, a California municipal corporation {the "City").
City and Developer enter into this Agreement with reference to the following recited facts
(each a "Recital"):
RECITALS
A. City owns fee title to that certain real property located in the City of Poway,
County of San Diego, State of California, commonly known as APN Nos. 317-472-18,
23, 24 & 25 (collectively, the "City-Owned Property").
B. City also owns fee title to that certain real property located in the City of
Poway, County of San Diego, State of California, commonly known as APN No. 317-101-
06 (the "City-Owned Mixed Property").
C. Concurrently with the execution of this Agreement, City is entering into an
agreement with the City of Poway Housing Authority ("Authority") to acquire that certain
real property located in the City of Poway, County of San Diego, State of California,
commonly known as APN No. 317-472-01 & 06 (the "Authority-Owned Property").
D. Developer has entered into purchase and sale agreements (the "Private
Parcels Purchase Agreements") with the owners of the real property located at 13029,
13117, and 13126 Poway Road, in the City of Poway, County of San Diego, State of
California (collectively, the "Private Parcels").
E. City and Developer desire by this Agreement for (i) Developer to close
escrow under the Private Parcels Purchase Agreements and acquire fee title to the
Private Parcels; (ii) City to sell to Developer fee title to the "City Parcels," which is
comprised of (a) the City-Owned Property, (b) the City-Owned Mixed Property, other than
approximately nine tenths (.9) acres located in the southernmost portion of the parcel,
and (c) the Authority-Owned Property; (iii) Developer to (a) process through City one or
more subdivision maps to create (1) from the southernmost nine tenths (.9) acre portion
of the City-Owned Mixed Property, the "Affordable Housing Parcel", (2) a subdivision
containing approximately four (4) parcels (collectively, the "Residential Parcels") for
development thereon of a residential condominium development containing ninety-eight
(98) condominium units and common area improvements and amenities to serve such
units (collectively, the "Residential Development"), and (3) approximately two
(2) parcels (the "Retail Parcels"); and (b)(1) construct on the Residential Parcels the
Residential Development, and (2) diligently pursue and attempt to plan and develop a
comprehensive retail development that includes the Retail Parcels and certain other real
property within the City of Poway, County of San Diego, State of California, encompassing
a minimum of twenty-five thousand square feet (25,000 sf) (a "Comprehensive Retail
Development").
882/012782-0020
1tl'"Jf'32f 3115119 March 19, 2019 Item #3.1
F. The City-Owned Property, the City-Owned Mixed Property, and the
Authority-Owned Property are legally described in Attachment No. 1, which is attached
hereto and incorporated herein by this reference.
G. The City-Owned Property, the City-Owned Mixed Property, the Authority-
Owned Property, and the Private Parcels are depicted on the area site map attached
hereto and incorporated herein as Attachment No. 2A (the "Area Site Map").
H. The proposed subdivisions and locations of the Affordable Housing Parcel,
Residential Parcels, and Retail Parcels are depicted on the proposed subdivision map
attached hereto and incorporated herein as Attachment No. 28 (the "Proposed
Subdivision Map").
I. City's disposition of the City Parcels to Developer, and Developer's
subsequent construction and completion of the "Project" (as that term is defined in
Article II below), pursuant to the terms of this Agreement, are in the vital and best interest
of the City of Poway and the health, safety and welfare of its residents, and in accord with
the public purposes and provisions of applicable federal, state, and local laws and
requirements.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION AND THE
PROMISES AND COVENANTS OF THE PARTIES SET FORTH IN THIS AGREEMENT,
CITY AND DEVELOPER AGREE, AS FOLLOWS:
ARTICLE I
RECITALS AND IDENTITIES OF PARTIES
Section 1.1 Incorporation of Recitals. The Recitals of fact set forth above are
true and correct and are incorporated into this Agreement in their entirety by this
reference.
Section 1.2
and Developer.
Parties to the Agreement. The Parties to this Agreement are City
Section 1.3 Restrictions on Change in Management or Control of Developer
and Assignment or Transfer.
(a) Developer acknowledges that the qualifications and identity of
Developer are of particular importance to City. Developer further recognizes and
acknowledges that City has relied and is relying on the specific qualifications and identity
of Developer in entering into this Agreement with Developer and, as a consequence,
Transfers are permitted only as expressly provided in this Agreement.
(b) Developer shall promptly notify City in writing of any and all changes
whatsoever in the identity of the business entities or individuals either comprising or in
control of Developer, as well as any and all changes in the interest or the degree of control
of Developer by any such person, of which information Developer or any of its partners,
members or officers are notified or may otherwise have knowledge or information. If there
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March 19, 2019 Item #3.1
is any Transfer, whether voluntary or involuntary, in membership, ownership,
management or control of Developer (other than such changes occasioned by the death
or incapacity of any individual) other than a Permitted Transfer or a Transfer that has
been approved in writing by City prior to the time of such Transfer, then prior to the Project
Completion Date City may exercise any remedy available to City under the terms of this
Agreement; provided, however, that (i) City shall first notify Developer in writing of its
intention to terminate this Agreement or to exercise any other remedy, and (ii) Developer
shall have twenty (20) calendar days following its receipt of such written notice to
commence and, thereafter, diligently and continuously proceed to cure the default of
Developer and submit evidence of the initiation and satisfactory completion of such cure
to City, in a form and substance reasonably satisfactory to City.
(c) Except for Permitted Transfers or as otherwise set forth in this
Section 1.3, and notwithstanding any provision to the contrary in this Agreement, prior to
the Project Completion Date, Developer shall not sell, assign, convey, create any trust
estate with respect to or otherwise Transfer any of its interests in this Agreement, the
Property, and/or the Project, without the prior written approval of the City Manager, which
approval shall not be unreasonably conditioned, delayed, or denied; this restriction shall
not apply on and after the Project Completion Date. Developer recognizes that the
qualifications and identity of Developer are of particular concern to City and that a sale,
assignment, conveyance with respect to or other Transfer of any of Developer's interests
in this Agreement, the Property, and/or the Project is for all practical purposes a transfer
or disposition of the responsibilities of Developer with respect to this Agreement, the
Property, and/or the Project and, therefore, are only allowed in accordance with the
provisions of this Section 1.3. Except as expressly permitted in this Agreement,
Developer represents and agrees that it has not made and will not create or suffer to be
made or created, any Transfer, either voluntarily, involuntarily or by operation of law,
without the prior written approval of City, until after the Project Completion Date. Any
Transfer made in contravention of this Section 1.3 shall be voidable at the election of City
and, if voided, shall be deemed to be an Event of Default by Developer, whether or not
Developer knew of or participated in such Transfer.
(d) Subject to the terms of paragraph (c) above in this Section 1.3,
Developer is not required to give City advance notice of, nor shall City have the right to
approve, a Permitted Transfer. Additionally, City may, in its reasonable discretion,
approve in writing any other Transfer (meaning, a Transfer that is not a Permitted
Transfer) requested by Developer, provided the proposed transferee can satisfactorily
demonstrate successful experience in the development of a project of the same type as
the Project, acquires fee title to the Property, and expressly assumes in writing all of the
obligations of the Developer under this Agreement. Further, Developer may allow an
investor to acquire an ownership interest in Developer, and/or Developer may assign (a)
all of its rights and obligations under this Agreement, (b) all of its rights and obligations
with respect to the Retail Parcels and the Comprehensive Retail Development, or (c) all
of its rights and obligations with respect to (I) obtaining all of the Entitlements, (II) the
Residential Parcels, (Ill) the Residential Development, and (IV) performance of all
demolition and grading activities required by this Agreement to be performed on or with
respect to the Property, to an entity in which Developer or an Affiliate thereof and an
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March 19, 2019 Item #3.1
investor are the sole owners, provided (i) City approves the investor, and (ii) Poway
Commons, LLC, a Delaware limited liability company, or an Affiliate thereof, retains
control of the day-to-day operations of the development of the Project. City shall be
required to approve any proposed investor that provides evidence to City that it (1) is a
Person that has been legally established and is operating in good standing in the
jurisdiction in which it has been established, (2) has experience in developing and/or
financing development projects similar in nature to the Project, and (3) has the financial
capability to undertake the obligations proposed to be undertaken pursuant to the
contractual arrangement between said investor and Developer. All instruments and other
legal documents proposed to effect any Transfer shall be submitted to City for review,
prior to the Transfer, and the written approval or disapproval of City shall be provided to
Developer, within fifteen (15) calendar days of City's receipt of Developer's request.
(e) The provisions of this Section 1.3 shall terminate and be of no further
force and effect upon issuance of a Release of Construction Covenants for the Project.
(f) Upon an approved or Permitted Transfer of the Property by
Developer prior to the Project Completion Date or any Transfer thereafter, Developer shall
be deemed released from any obligations under this Agreement except for any
indemnification obligations with respect to Claims based on actions and/or inactions
occurring prior to such Permitted Transfer.
ARTICLE II
DEFINITIONS
Section 2.1 Defined Terms. In addition to the usage of certain words, terms or
phrases that are defined in the initial paragraph or Recitals of this Agreement, the
following words, terms and phrases are used in this Agreement, including in ARTICLE I
above, unless the particular context of usage of a word, term or phrase requires another
interpretation:
(a) "13033 Poway Road Parcel" means and refers to the portion of the
City Parcels located at 13033 Poway Road.
(b) "Additional Deposit" means and refers to the amount of One
Hundred Twenty-Five Thousand Dollars ($125,000), in cash or other immediately
available funds.
(c) "Affiliate" means and refers to any Person, directly or indirectly,
Controlling or Controlled by or under common Control with Developer, whether by direct
or indirect ownership of equity interests, by contract or otherwise.
(d) "Affordable Housing Parcel" means and refers to the southernmost
portion of the City-Owned Mixed Property, which is designated as the "Affordable Housing
Parcel" on the Proposed Subdivision Map. The Affordable Housing Parcel comprises
approximately nine tenths (.9) acres. Notwithstanding anything in this Agreement to the
contrary, the Affordable Housing Parcel shall not comprise a portion of the City Parcels
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or the Property, and the disposition and development of the Affordable Housing Parcel
shall be addressed in the AHPDA.
(e) "AHPDA" means and refers to that certain Affordable Housing and
Property Disposition Agreement entered into between the Authority and Developer on or
about the Effective Date, pursuant to which the Authority has agreed to sell to Developer
the Affordable Housing Parcel, and Developer has agreed to perform certain grading and
infrastructure work, and to thereafter transfer the Affordable Housing Parcel and assign
its rights and obligations under the AHPDA to a limited partnership in which any of
(i) Chelsea Investment Corporation, a California nonprofit public benefit corporation
("Chelsea"), (ii) an affiliate of Chelsea, or (iii) another entity experienced in the
development and operation of affordable housing and acceptable to the Authority in the
Authority's reasonable discretion, is a general partner, for said limited partnership to
develop and operate on the Affordable Housing Parcel a forty-four (44) unit affordable
senior rental apartment development.
(f) "Authority" means and refers to the City of Poway Housing
Authority.
(g) "CEQA" means and refers to the California Environmental Quality
Act, Public Resources Code Section 21000, el seq.
(h) "CEQA Claims" means and refers to any appeals or protests
(including litigation) taken or filed with respect to City's findings, determinations, and/or
certifications pursuant to CEQA in connection with City's approval of this Agreement and
in connection with City's approval, conditional approval, or denial, of the Entitlements.
(i) "City" means and refers to the City of Poway, California.
(j) "City and City Personnel" means and refers, collectively, to City, its
elected and appointed officials, commissions, employees, agents, representatives, and
attorneys.
(k) "City Deed of Trust" means and refers to a deed of trust
substantially in the form of Attachment No. 8 to this Agreement, securing Developer's
obligation to repay the City Note. The City Deed of Trust shall be recorded against the
Retail Parcels.
(I) "City Grant Deed" means and refers to a grant deed substantially in
the form of Attachment No. 5 to this Agreement, conveying all of City's interest in the
Property to Developer.
(m) "City Loan " means and refers to the loan to be made by City at the
Close of Escrow, in the amount of One Million Seven Hundred Thousand Dollars
($1,700,000). The City Loan shall be provided to Developer in the form of a credit towards
Developer's payment of the Purchase Price.
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March 19, 2019 Item #3.1
(n) "City Manager" means and refers to the person duly appointed to
the position of City Manager of the City or his or her designee or successor in function.
(o) "City Note" means and refers to a note substantially in the form of
Attachment No. 7 to this Agreement, evidencing the City Loan.
(p) "City-Owned Mixed Property" shall have the meaning ascribed
thereto in Recital B. The City-Owned Mixed Property comprises approximately one and
fifty-four hundredths (1.54) acres. The City-Owned Mixed Property is legally described in
Attachment No. 1, which is incorporated herein by this reference.
(q) "City Parcels" shall have the meaning ascribed thereto in Recital A.
The City Parcels comprise approximately three and two hundredths (3.02) acres. The
City Parcels are legally described in Attachment No. 1, which is attached hereto and
incorporated herein by this reference. Notwithstanding anything to the contrary in this
Agreement, the City Parcels shall not include the Affordable Housing Parcel. The
Affordable Housing Parcel shall be conveyed to Developer pursuant to the AHPDA.
(r) "City's Right of First Refusal" means and refers to City's right to
acquire all or any portion of the Property pursuant to the terms set forth in Section 10.6
below.
(s) "City's Title Notice Response" means and refers to the written
response of City to Developer's Title Notice, in which City elects to (i) cause the removal
from the Preliminary Report of some or all of the disapproved exceptions, or (ii) not to
cause the removal from the Preliminary Title Report of any disapproved exceptions.
(t) "City's Title Policy" means and refers to a standard AL TA lenders'
policy of title insurance issued by the Title Company, with coverage in the full amount of
the City Loan and insuring the priority of the City Loan.
(u) "Claims" means any and all claims, losses, costs, damages,
expenses, liabilities, liens, actions, causes of action (whether in tort or contract, at law or
in equity, or otherwise), charges, awards, assessments, fines, and penalties of any kind
(including consultant and expert expenses, court costs, and reasonable attorney's fees
of counsel retained by the City Parties, expert fees, costs of staff time, and investigation
costs, of whatever kind or nature), and judgments, including, but not limited to, Claims
for: (1) injury to any person (including death at any time resulting from that injury); (2) loss
of, injury or damage to, or destruction of, property (including all loss of use resulting from
that loss, injury, damage, or destruction) regardless of where located, including the
property of the City Parties; (3) any workers' compensation or prevailing wage
determination; and (4) all economic losses and consequential or resulting damage of any
kind.
(v) "Close of Escrow" means and refers to the recording of the City
Grant Deed in the Official Records of the Recorder of the County of San Diego, California,
and completion of each of the actions set forth in ARTICLE IV by the Escrow Holder for
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March 19, 2019 Item #3.1
City to sell the City Parcels to Developer and Developer to purchase the City Parcels from
City.
(w) "Comprehensive Retail Development" shall have the meaning
ascribed thereto in Recital C.
(x) "Control" means and refers to possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a Person,
whether by ownership of equity interests, by contract or otherwise.
(y)
having Control.
(z)
Section 5.12.
"Controlling" and "Controlled" mean and refer to exercising or
"Developer CC&Rs" shall have the meaning ascribed thereto in
(aa) "Developer's Second Title Notice" means and refers to a written
notice from Developer to City indicating Developer's continued disapproval of specific
matters shown in Schedule B of the Preliminary Title Report or Supplement Report, as
exceptions to coverage under the proposed Developer's Title Policy for the City Parcels,
describing in suitable detail the actions that Developer reasonably believes are necessary
to obtain Developer's approval of the state of the title to the City Parcels.
(bb) "Developer's Title Notice" means and refers to a written notice from
Developer to City indicating Developer's acceptance of the state of the title to the City
Parcels, as described in the Preliminary Report or Supplemental Report, or Developer's
disapproval of specific matters shown in Schedule B of the Preliminary Report or
Supplemental Report, as exceptions to coverage under the proposed Developer's
Title Policy for the City Parcels, describing in suitable detail the actions that Developer
reasonably believes are necessary to obtain Developer's approval of the state of the title
to the City Parcels.
(cc) "Developer's Title Notice Waiver" means and refers to a written
notice from Developer to City waiving Developer's previous disapproval in the
Developer's Title Notice of specific matters shown in Schedule B of the Preliminary
Report or in the Supplemental Report as exceptions to coverage under the proposed
Developer's Title Policy for the City Parcels.
(dd) "Developer's Title Policy" means and refers to a standard AL TA
owners' policy of title insurance issued by the Title Company, with coverage in the full
amount of the Purchase Price and insuring fee title to the City Parcels vested in the
Developer; provided, however, that Developer shall have the right, at Developer's sole
cost, to elect to obtain title endorsements and/or an extended coverage AL TA owner's
policy, as further set forth in Section 4.8 below.
(ee) "Development Agreement" means and refers to a Development
Agreement entered into or to be entered into between City and Developer pursuant to
Government Code section 65864 et seq., in a form acceptable to City and Developer.
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March 19, 2019 Item #3.1
(ff) "Due Diligence Investigations" means and refers to Developer's
due diligence investigations of the City Parcels to determine the condition of the City
Parcels and the suitability of the City Parcels for development of the Project, and such
other matters as Developer may deem relevant.
(gg) "Due Diligence Investigation Conclusion Notice" means and
refers to a written notice of Developer delivered to both City and the Escrow Holder, prior
to the end of the Due Diligence Period, indicating Developer's acceptance of the City
Parcels or indicating Developer's rejection of the City Parcels and refusal to accept a
conveyance of fee title to the City Parcels, describing in reasonable detail the actions or
circumstances that Developer reasonably believes are necessary to allow Developer to
accept the City Parcels; provided, however, that Developer may, in its sole and absolute
discretion, determine not to accept the City Parcels without identifying any such actions
or circumstances.
(hh) "Due Diligence Period" means and refers to the time period of one
hundred twenty (120) continuous days commencing on the day immediately following the
Escrow Opening Date.
(ii) "Earnest Money Deposit" means and refers, collectively, to the
Initial Deposit and the Additional Deposit.
Uj) "Entitlement Approval Date" means the date that all of the
Entitlements have been approved by each required Governmental Agency and all appeal
and protest periods have expired with no appeals or protests (including litigation) taken
or filed ("Entitlement Claims"), or, if any are so taken or filed, then upon the resolution
of the Entitlement Claims upon terms acceptable to each of City and Developer, in their
respective sole and absolute discretion.
(kk) "Entitlements" means and refers to all of the discretionary
entitlements, permits and approvals required for the development of the Project,
including, without limitation, the Development Agreement, a Development Review and
Tentative Map.
(II) "Environmental Claims" means and refers to any and all claims,
demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of
action, judgments, suits, proceedings, costs, disbursements and expenses, including,
without limitation, attorney fees, disbursements and costs of attorneys, environmental
consultants and other experts, and all foreseeable and unforeseeable damages or costs
of any kind or of any nature whatsoever directly or indirectly relating to or arising from any
Environmental Matters existing or occurring during or arising from Developer's Due
Diligence Investigations, Developer's ownership or occupancy of the Property or
Developer's construction of the Project.
(mm) "Environmental Laws" means and refers to all federal, state, local,
or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or
requirements of any governmental authority regulating, relating to, or imposing liability or
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March 19, 2019 Item #3.1
standards of conduct concerning any Hazardous Substance, or pertaining to occupational
health or industrial hygiene (to the extent that the occupational health or industrial hygiene
laws, ordinances, or regulations relate to any Hazardous Substance on, under, or about
the Property), occupational or environmental conditions on, under, or about the Property,
as now or may, at any later time, be in effect, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA") [42 U.S.C. Section 9601 et seq.]; the Resource Conservation and Recovery
Act of 1976 ("RCRA") [42 U.S.C. Section 6901 et seq.]; the Clean Water Act, also known
as the Federal Water Pollution Control Act ("FWPCA") [33 U.S.C. Section 1251 et seq.];
the Toxic Substances Control Act ("TSCA") [15 U.S.C. Section 2601 et seq.]; the
Hazardous Materials Transportation Act ("HMTA") [49 U.S.C. Section 1801 et seq.]; the
Insecticide, Fungicide, Rodenticide Act [7 U.S.C. Section 6901 et seq.] the Clean Air Act
[42 U.S.C. Section 7401 et seq.]; the Safe Drinking Water Act [42 U.S.C. Section 300f
et seq.]; the Solid Waste Disposal Act [42 U.S.C. Section 6901 et seq.]; the Surface
Mining Control and Reclamation Act [30 U.S.C. Section 101 et seq.]; the Emergency
Planning and Community Right to Know Act [42 U.S.C. Section 11001 et seq.]; the
Occupational Safety and Health Act [29 U.S.C. Section 655 and 657]; the California
Underground Storage of Hazardous Substances Act [Health and Safety Code
Section 25280 et seq.]; the California Hazardous Substances Account Act [Health and
Safety Code Section 25300 et seq.]; the California Safe Drinking Water and Toxic
Enforcement Act [Health and Safety Code Section 24249.5 et seq.] the Porter-Cologne
Water Quality Act [Water Code Section 13000 et seq.] together with any amendments of,
or regulations promulgated under the statutes cited above and any other federal, state,
or local law, statute, ordinance, or regulation, now in effect or later enacted, that pertains
to occupational health or industrial hygiene, and only to the extent the occupational health
or industrial hygiene laws, ordinances, or regulations relating to any Hazardous
Substance on, under, or about the Property, or the regulation or protection of the
environment, including ambient air, soil, soil vapor, groundwater, surface water, or land
use.
(nn) "Environmental Matters" means and refers to any of the following:
(1) The presence of any Hazardous Substances on, in, under,
from or affecting all or any portion of the Property or the Project;
(2) The storage, holding, handling, release, threatened release,
discharge, generation, leak, abatement, removal or transportation of any Hazardous
Substances on, in, under, from or affecting the Property or the Project;
(3) The violation of any law, rule, regulation, judgment, order,
permit, license, agreement, covenant, restriction, requirement or the like by Developer,
its agents or contractors, relating to or governing in any way Hazardous Substances on,
in, under, from or affecting the Property or the Project;
(4) The failure of Developer, its agents or contractors, to properly
complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations,
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March 19, 2019 Item #3.1
covenants and the like in connection with Developer's activities on the Property or
regarding the Project;
(5) The implementation and enforcement by Developer, its
agents or contractors of any monitoring, notification or other precautionary measures that
may, at any time, become necessary to protect against the release, potential release or
discharge of any Hazardous Substances on, in, under, from or affecting the Property or
the Project;
(6) The failure of Developer, its agents or contractors, in
compliance with all applicable Environmental Laws, to lawfully remove, contain, transport
or dispose of any Hazardous Substances existing, stored or generated on, in, under or
from the Property or the Project;
(7) Any investigation, inquiry, order, hearing, action or other
proceeding by or before any Governmental Agency in connection with any Hazardous
Substances on, in, under, from or affecting the Property or the Project or the violation of
any Environmental Law relating to the Property. or the Project
(oo) "Escrow" means and refers to an escrow, as defined in Civil Code
Section 1057, that is conducted by the Escrow Holder with respect to the Property,
pursuant to this Agreement.
(pp) "Escrow Closing Date" means and refers to the earliest of: (1) a
date two (2) business days after the date that Developer is issued the first grading permit
for the Project, or fifteen (15) months after the Effective Date; provided, however, if any
of such dates is not a business day (meaning a day that documents can be placed of
record in San Diego County), then the applicable date shall be extended to the second
such business day thereafter. Developer shall have the right, but not the obligation and
upon five (5) days advance written notice to City, to extend the Escrow Closing Date for
two successive periods of one (1) month each.
(qq) "Escrow Holder" means and refers to First American Title Insurance
Company, with its offices at 4380 La Jolla Village Drive, Suite 200, San Diego, CA 92122.
(rr) "Escrow Opening Date" means and refers to the first date on which
a fully executed copy of this Agreement, the Initial Earnest Money Deposit is deposited
with the Escrow Holder.
(ss) "Event of Default" shall have the meaning ascribed to the term in
Section 9.2.
(II) "FIRPTA Affidavit" means and refers to an affidavit complying with
Section 1445 of the United States Internal Revenue Code ("IRC 1445") evidencing that
neither Developer nor Escrow Holder is required to withhold City's closing funds pursuant
to IRC 1445.
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March 19, 2019 Item #3.1
(uu) "First Phase" shall have the meaning ascribed to the term in Section
4.2(b)(17).
(vv) "Form 593" means and refers to a California Franchise Tax Board
Form 593-W evidencing that neither Developer nor Escrow Holder is required to withhold
City's closing funds pursuant to California Revenue and Taxation Code Section 18662e).
(ww) "Governmental Agency" means and refers to any and all courts,
boards, agencies, commissions, offices, or authorities of any nature whatsoever for any
governmental unit (federal, state, county, district, municipal, city, or otherwise), including
the City, pursuant to its general police power jurisdiction, whether now or later in existence
with jurisdiction over the Property or the construction of any portion of the Project.
(xx) "Governmental Requirements" means and refers to all codes,
statutes, ordinances, laws, permits, orders, and any rules and regulations promulgated
thereunder of any Governmental Agency.
(yy) "Hazardous Substance" means and refers to, without limitation,
substances defined as a "Hazardous Substance," "hazardous material," "toxic
substance," "solid waste," or "pollutant or contaminate" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sections 9601, et seq.; the Toxic Substances Control Act ("TSCA") [15
U.S.C. Sections 2601, et seq.]; the Hazardous Materials Transportation Act, 49
U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901, et seq.; those substances listed in the United States Department
of Transportation (DOT) Table [ 49 CFR 172.101], or by the EPA, or any successor
authority, as a Hazardous Substance [ 40 CFR Part 302]; and those substances defined
as "hazardous waste" in Section 25117 of the California Health and Safety Code or,
as a "Hazardous Substance" in Section 25316 of the California Health and Safety Code;
other substances, materials, and wastes that are, or become, regulated or classified as
hazardous or toxic under federal, state, or local laws or regulations and in the regulations
adopted pursuant to said laws, and shall also include manure, asbestos, polychlorinated
biphenyl, flammable explosives, radioactive material, petroleum products, and
substances designated as a hazardous substance pursuant to 33 U.S.C. Section 1321 or
listed pursuant to 33 U.S.C. Section 1317.
(zz) "Initial Deposit" means and refers to the amount of One Hundred
Twenty-Five Thousand Dollars ($125,000), in cash or other immediately available funds.
(aaa) "Institutional Lender" means any of the following institutions
having assets or deposits in the aggregate of not less than One Hundred Million Dollars
($100,000,000): a California chartered bank; a bank created and operated under and
pursuant to the laws of the United States of America; an "incorporated admitted insurer''
(as that term is used in Section 1100.1 of the California Insurance Code); a "foreign (other
state) bank" (as that term is defined in Section 1700(1) of the California Financial Code);
a federal savings and loan association (Cal. Fin. Code Section 8600); a commercial
finance lender (within the meaning of Sections 2600 et seq. of the California Financial
882/012782-0020 2lf•Jfj2~3/15/19 -11-March 19, 2019 Item #3.1
Code); a "foreign (other nation) bank" provided it is licensed to maintain an office in
California, is licensed or otherwise authorized by another state to maintain an agency or
branch office in that state, or maintains a federal agency or federal branch in any state
(Section 1716 of the California Financial Code); a bank holding company or a subsidiary
of a bank holding company which is not a bank (Section 3707 of the California Financial
Code); a trust company, savings and loan association, insurance company, investment
banker; college or university; pension or retirement fund or system, either governmental
or private, or any pension or retirement fund or system of which any of the foregoing shall
be trustee, provided the same be organized under the laws of the United States or of any
state thereof; and a Real Estate Investment Trust, as defined in Section 856 of the Internal
Revenue Code of 1986, as amended, provided such trust is listed on either the American
Stock Exchange or the New York Stock Exchange.
(bbb) "Lender" means and refers to any person or entity making a Loan to
Developer.
(ccc) "Loan" means and refers, individually, to any loan that Developer
shall obtain, the proceeds of which are to be used and applied solely to pay the
reasonable costs of obtaining such loan and: (1) the Purchase Price and the other costs
of acquiring the Property through the Escrow and/or (2) the costs of developing the
Project.
(ddd) "Memorandum of Agreement" means and refers to the
memorandum in substantially the form of Attachment No. 6 to this Agreement to be
recorded against the Property at the Close of Escrow to provide constructive record notice
of the existence and application of this Agreement to the Property.
(eee) "Party" means and refers, individually, to either City or Developer, as
applicable.
(fff) "Parties" means and refers, collectively, to City and Developer.
(ggg) "PCO Report" means and refers to a preliminary change of
ownership report required under California Revenue and Taxation Code Section 480.3.
(hhh) "Permitted Transfer" means and refers to any of the following types
of Transfers by Developer, where the Person to which such Transfer is made, acquires
the Property or a portion thereof (if such Permitted Transfer occurs after the Closing) and
expressly assumes the obligations of Developer under this Agreement with respect to the
portion of the Property so Transferred in a written instrument satisfactory to the City or
acquires an equity interest in Developer:
(1) Any Transfer of stock or equity of Developer that does not
change management or operational control of the Property or the Project or is less than
a 49% interest, as set forth in Section (1) of the definition of Transfer.
(2) Any Transfer of any interest in Developer irrespective of the
percentage of ownership (i) to any other owner of any interest in Developer; or (ii) to any
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Affiliate, or (iii) to any other Person in which any holder of an interest (including any
beneficial interest) in Developer as a manager, officer or partner or in which any of the
aforementioned is a shareholder, member or partner (including a beneficial owner).
(3) The pledge of any interest in the Property as security for a
Loan.
(4) Any foreclosure or deed in lieu of foreclose under the
documents evidencing and securing repayment of a Loan.
(5) Any Property Transfer to an entity in which Developer (or an
Affiliate) has an ownership interest and which is formed with a third party to fund the
development of the Project, and the exercise of any and all remedies under the applicable
entity documents.
(6) The recordation of replacemenVpermanent financing to
replace a Loan.
(7) The granting of easements and licenses in the ordinary
course of the development and ownership of the Property and the Project.
(8) A Transfer of the Retail Parcels to Sudberry Development
Inc., a California corporation, or an Affiliate thereof.
(iii) "Person" means and refers to any association, corporation,
governmental entity or agency, individual, joint venture, joint-stock company, limited
liability company, partnership, trust, unincorporated organization, or other entity of any
kind.
(jjj) "Poway Stoway Self-Storage Lease" means and refers to that
certain month-to-month lease between City and Poway Stoway Self-Storage with respect
to the 13033 Poway Road Parcel.
(kkk) "Pre-Closing Liquidated Damages Amount" means and refers to
the amount of Fifty Thousand Dollars ($50,000).
(Ill) "Preliminary Report" means and refers to a preliminary report
issued by the Title Company for the City Parcels, in contemplation of the issuance of the
Developer's Title Policy, accompanied by copies of all documents listed in Schedule B of
the report as exceptions to coverage under the proposed Developer's Title Policy.
(mmm) "Private Parcels" shall have the meaning ascribed thereto in
Recital C. The Private Parcels are legally described in Attachment No. 1, which is
attached hereto and incorporated herein by this reference.
(nnn) "Private Parcels Purchase Agreements" shall have the meaning
ascribed thereto in Recital C.
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(ooo) "Project" means and refers to Developer's development of (i) the
Residential Development on the Residential Property, (ii) the Comprehensive Retail
Development on the Retail Parcels, and (iii) all required and/or associated on-site and off-
site improvements, all as generally described in the Scope of Development, and all to be
developed in accordance with plans and specifications approved by City and any
conditions imposed by City in its approval of the Developer's development application(s)
related to the Project.
(ppp) "Project Budget" means and refers to the budget attached hereto
and incorporated herein as Attachment No. 9. With respect to said attached budget, City
acknowledges and agrees that Developer's cost estimates may change between the
Effective Date and the Close of Escrow. Prior to the Close of Escrow, Developer shall
submit its revised proposed budget to City for review and approval, which approval shall
not be unreasonably withheld, conditioned or delayed. Upon City's approval thereof, said
revised proposed budget shall become the Project Budget, and said budget shall be the
budget upon which City bases its review pursuant to Section 4.2(b)(4).
(qqq) "Project Completion Date" means and refers to the date on which
City issues a Release of Construction Covenants for the Project.
(rrr) "Property" means and refers to the City Parcels, the Private Parcels,
and any other real property that Developer acquires during the term of this Agreement
and proposes to develop as part of a Comprehensive Retail Development.
(sss) "Property Transfer" means and refers to any "change in ownership,"
as defined in Revenue and Taxation Code Sections 60, et seq., of all or any portion of the
Property.
{tit) "Purchase Price" means and refers to the amount of Six Million Four
Hundred Twenty Thousand Five Hundred Dollars ($6,420,500).
(uuu) "Record," "recorded," "recording" or "recordation" each mean and
refer to recordation of the referenced document in the official records of the Recorder of
the County of San Diego, California.
(vvv) "Release of Construction Covenants" means and refers to the
written certification of City that the Project is complete and in compliance with the terms
and conditions of this Agreement, in substantially the form of Attachment No. 1 O to this
Agreement.
(www) "Residential Development" shall have the meaning ascribed
thereto in Recital D.
(xxx) " Residential Property" shall have the meaning ascribed thereto in
Recital D.
(yyy) "Retail Parcels" shall have the meaning ascribed thereto in Recital
D.
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(zzz) "Schedule of Performance" means and refers to the schedule for
the performance of certain actions by City or Developer pursuant to the terms and
conditions of this Agreement, attached to this Agreement as Attachment No. 4.
(aaaa)"Scope of Development" means and refers to the detailed
description of the primary elements of the Project attached to this Agreement as
Attachment No. 3.
(bbbb)"Specific Plan" means and refers to the Poway Road Specific Plan,
which was approved by the City Council of City on December 5, 2017. Developer's
development and operation of the Project shall be in substantial conformance with the
Specific Plan, as it may be amended from time to time in accordance with its provisions.
In the event this Agreement is inconsistent with the Specific Plan, the terms of the Specific
Plan shall prevail.
(cccc) "Supplemental Report" means and refers to a supplement issued
to the Preliminary Report by Title Company, accompanied by the additional documents
referred to thereon.
(dddd)"Tentative Map" means and refers to a tentative map subdividing the
Property into multiple parcels, as necessary to accomplish the development of the
Project.
(eeee)"Title Company" means and refers to First American Title Insurance
Company, with its offices at 4380 La Jolla Village Drive, Suite 200, San Diego, CA 92122.
(ffff) "Transfer" means and refers to any of the following:
(1) Any total or partial sale, assignment, conveyance, trust,
power, or transfer in any other mode or form, by Developer of more than a 49% interest
in Developer's interest in this Agreement, the Property, or the Project or a series of such
sales, assignments and the like that, in the aggregate, result in a disposition of more than
a 49% interest in Developer's interest in this Agreement, the Property, or the Project; or
(2) Any total or partial sale, assignment, conveyance, or transfer
in any other mode or form, of or with respect to any interest in Developer or a series of
such sales, assignments and the like that, in the aggregate, result in a disposition of more
than a 49% interest in any interest in Developer; or
(3) Any merger, consolidation, sale or lease of all or substantially
all of the assets of Developer or a series of such sales, assignments and the like that, in
the aggregate, result in a disposition of more than a 49% interest of all or substantially all
of the assets of Developer; or
(4) Any Property Transfer; or
(5) The recordation of any deed of trust, mortgage, lien or similar
encumbrance against all or any portion of the Property or the Project other than a Loan.
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March 19, 2019 Item #3.1
(gggg)"Unavoidable Delay" means and refers to a delay in either Party
performing any obligation under this Agreement, except payment of money, arising from
or on account of any cause whatsoever beyond the Party's reasonable control, despite
such Party's commercially reasonable efforts, including, without limitation, floods,
earthquakes, or other extreme acts of nature, industry-wide strikes, unreasonable delays
in obtaining governmental, utility company approvals or actions (provided, however, the
Party claiming such delay makes a showing of reasonable and timely submission of all
necessary materials and information, and that the response to such submittals was
unusual, unreasonable and/or untimely), labor troubles or other union activities (but only
to the extent such actions affect similar persons at that time and do not result from an act
or omission of the Party), casualty, war, acts of terrorism or riots. Unavoidable Delay
shall not include delay caused by a Party's financial condition, illiquidity, or insolvency.
ARTICLE Ill
PUBLIC PARCELS DISPOSITION: AS-IS SALE
Section 3.1 Purchase and Sale. City shall sell the City Parcels to Developer
and Developer shall purchase the City Parcels from City pursuant to the terms and
conditions of this Agreement. For the purposes of exchanging funds and documents to
complete the sale from City to Developer and the purchase by Developer from City of the
City Parcels, pursuant to the terms and conditions of this Agreement, City and the
Developer agree to open the Escrow with the Escrow Holder. ARTICLE IV of this
Agreement constitutes the joint escrow instructions of the Parties to the Escrow Holder
for the conduct of the Escrow for the sale of the Property. Developer and City shall
execute the Escrow Holder's standard or general escrow instructions, provided, however,
that the provisions of this Agreement shall be controlling, in the event of any conflict
between the provisions of this Agreement and any such standard or general escrow
instructions requested by the Escrow Holder.
Section 3.2 Payment of Purchase Price. As further described in this
Section 3.2, Developer shall deposit the Purchase Price less the sum of (a) the City Loan,
and (b) the Earnest Money Deposit (for which Developer will receive a credit), into the
Escrow in immediately available funds, as provided in this Agreement.
(a) Earnest Money Deposit. Concurrent with its opening of the Escrow,
Developer shall deposit the Initial Deposit into the Escrow. Upon Developer's acceptance
of the City Parcels in a Due Diligence Investigation Conclusion Notice pursuant to
Section 3.3, (i) Developer shall deposit the Additional Deposit into the Escrow, and
(ii) Escrow Holder shall promptly release the entire Earnest Money Deposit to City. Upon
the Close of Escrow, the Earnest Money Deposit shall be credited to Developer toward
the Purchase Price. In the event the Close of Escrow does not occur as a result of the
failure of one of Developer's conditions to closing to be satisfied, or waived by Developer,
pursuant to the terms of this Agreement, or a material default by City, the Earnest Money
Deposit shall be refundable to Developer. Notwithstanding anything in this Agreement to
the contrary, a portion of the Earnest Money Deposit, in the amount of One Hundred
Dollars ($100) (the "Independent Contract Consideration"), shall be released
immediately to City as consideration for City's execution and delivery of this Agreement
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and Developer's right to approve or disapprove any Developer contingencies set forth in
this Agreement with respect to the Property. The Independent Contract Consideration is
in all respects nonrefundable to Developer.
(b) At Close of Escrow. At least one (1) business day preceding the
Escrow Closing Date, Developer shall deposit into the Escrow the Purchase Price less the
sum of (a) the Earnest Money Deposit, and (b) the City Loan.
(c) Title Approval. As soon as practicable following the Escrow Opening
Date, City shall obtain the Preliminary Report from the Title Company and deliver a copy
of the Preliminary Report to Developer. In addition to the foregoing, Developer shall have
a right, at its own cost, to conduct a survey of the City Parcels. Within forty-five (45) days
following Developer's receipt of the Preliminary Report, Developer shall deliver the
Developer's Title Notice to City. If Developer fails to deliver Developer's Title Notice to
City, within such forty-five (45) day period, Developer will be deemed to approve the
status of title to the City Parcels and to accept title to the City Parcels. Within twenty
(20) days following the earlier of City's receipt of Developer's Title Notice or expiration of
the lime period provided in this Section 3.2 for delivery of Developer's Title Notice, City
shall serve City's Title Notice Response. If the Developer's Title Notice does not
disapprove any matter in the Preliminary Report, City shall not be required to serve City's
Title Notice Response. If City does not serve City's Title Notice Response, if necessary,
within twenty (20) days following its receipt of the Developer's Title Notice, City shall be
deemed to elect not to cause any matter disapproved in the Developer's Title Notice to
be removed from the Preliminary Report. If City elects in City's Title Notice Response to
cause the removal of any matter disapproved in Developer's Title Notice from the
Preliminary Report, City shall cause the removal of each such matter from the Preliminary
Report, prior to or concurrently with the Escrow Closing Date. Notwithstanding anything
herein to the contrary, City shall be obligated to remove from record, on or before the
Escrow Closing Date, any liens, claims, encumbrances, deeds of trust or mortgages
encumbering the Property, except to the extent directly caused by Developer. If City
elects or is deemed to have elected not to cause the removal of any matter disapproved
in the Developer's Title Notice from the Preliminary Report, then, within ten (10) days
following the earlier of Developer's receipt of City's Title Notice Response or the
expiration of the time period provided in this Section 3.2 for delivery of City's Title Notice
Response, Developer shall either: (1) refuse to accept the title to and conveyance of the
Property by delivering the Developer's Second Title Notice to City, or (2) waive its
disapproval of any matters set forth in the Developer's Title Notice by delivering the
Developer's Title Notice Waiver to City. Failure by Developer to deliver Developer's
Title Notice Waiver, where City's Title Notice Response or City's failure to serve City's
Title Notice Response indicates or results in City's election not to cause the removal of
any one or more matters disapproved in Developer's Title Notice from the Preliminary
Report, within ten (10) days following Developer's receipt of City's Title Notice Response
or expiration of the time period for City to deliver City's Title Notice Response under this
Agreement, will be deemed Developer's agreement to accept the title to and conveyance
of the City Parcels. In the event Developer delivers Developer's Second Title Notice to
City, either City or Developer shall have the right to cancel the Escrow and terminate this
Agreement, each in their respective sole and absolute discretion, by delivery of a written
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March 19, 2019 Item #3.1
notice of termination to both the other Party and the Escrow Holder, in which case the
Parties and the Escrow Holder shall proceed pursuant to Section 4.10.
(d) In the event that a Supplement is issued, the Parties shall follow and
otherwise abide by the same process set forth in Section 3.2(c).
Section 3.3 Developer Due Diligence Investigations.
(a) City represents to Developer that prior to the Effective Date, City has
provided Developer with hard copies, electronic files, or other access to all reports, plans,
studies and other similar records with respect to the City Parcels (collectively, "City
Reports") that are in City's possession and reasonably known to City. Developer
acknowledges and agrees that (i) the City Parcels were acquired at different times and
by various City entities, and (ii) although City has reviewed its real property files for City
Reports, City has not conducted a comprehensive search of all City files for City Reports.
(b) Developer shall complete all of its Due Diligence Investigations
within the Due Diligence Period and shall conduct all of its Due Diligence Investigations
at its sole cost and expense.
(c) City licenses, permits and authorizes Developer to enter the City
Parcels for the sole purpose of conducting Developer's Due Diligence Investigations,
subject to all of the terms and conditions of this Agreement. Developer shall have the
right, but not the obligation, to engage in environmental testing, soils testing and
surveying on the City Parcels. Following the conduct of any Due Diligence Investigations
on the City Parcels, Developer shall restore the City Parcels to substantially its condition
prior to the conduct of such Due Diligence Investigations.
(d) Any Due Diligence Investigations of the City Parcels by Developer
shall not unreasonably disrupt any then-existing use or occupancy of the City Parcels or
the operations of City, including without limitation the use by Poway Stoway Self-Storage
of the 13033 Poway Road Parcel pursuant to the Poway Stoway Self-Storage Lease.
The activities of Developer or its agents directly or indirectly related to Developer's Due
Diligence Investigations shall be subject to Developer's indemnity, defense and hold
harmless obligations pursuant to Section 9.8. Prior to commencing any Due Diligence
Investigations on the City Parcels, Developer shall deliver all copies of policies or
certificates of insurance required to be delivered pursuant to Section 5.11.
(e) Developer shall deliver to City and the Escrow Holder prior to the end
of the Due Diligence Period a Due Diligence Investigation Conclusion Notice that either
rejects the City Parcels or unconditionally accepts the City Parcels. If Developer does
not deliver a Due Diligence Investigation Conclusion Notice unconditionally accepting the
City Parcels prior to the end of the Due Diligence Period, then Developer shall be deemed
to have accepted the Property and agreed to accept conveyance of title to the City
Parcels. If the City Parcels are rejected by Developer, then each of City or Developer
shall have the right, in their sole and absolute discretion, to cancel the Escrow and
terminate this Agreement, by delivery of a written notice of termination to the other Party
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March 19, 2019 Item #3.1
and the Escrow Holder, in which case the Parties and the Escrow Holder shall proceed
pursuant to Section 4.10.
Section 3.4 Developer to Obtain all Project Approvals.
(a) Following the Escrow Opening Date, City shall reasonably consent,
as necessary, to Developer processing necessary entitlements, permits or applications
with each Governmental Agency for development of the Project, including, as necessary,
the City Manager signing any such applications on behalf of the City, as the owner of the
City Parcels.
(b) Developer shall, within the lime period(s) for such actions set forth in
the Schedule of Performance (subject to Unavoidable Delays), prepare and submit a
complete application and any other required application, document, fee, charge or other
item (including, without limitation, deposit, fund or surety) required for construction of the
Project, pursuant to all Governmental Requirements, to each necessary Governmental
Agency for review and approval. City's zoning, building and land use regulations (whether
contained in ordinances, City's municipal code, conditions of approval or elsewhere), shall
be applicable to the construction of the Project by Developer, pursuant to this Agreement.
Developer acknowledges that all plans and specifications and any changes to plans and
specifications for the Project shall be subject to all Governmental Requirements.
No action by City with reference to this Agreement or any related documents shall be
deemed to constitute a waiver of any required City permit, approval or authorization
regarding the City Parcels, the Project, Developer, any successor-in-interest of the
Developer or any successor-in-interest to the City Parcels.
(c) The approval of this Agreement by City shall not constitute a pre-
commitment by City or the City Council of City regarding any approvals required for
development of the Project, including, without limitation, all required analysis under
CEQA. Developer obtains no right or entitlement to construct the Project by virtue of this
Agreement. City reserves unfettered discretion to approve, conditionally approve, or deny
any entitlements and/or other approvals required for the Project and all proceedings and
decisions in connection therewith. This Agreement shall not be construed as a grant of
development rights or land use entitlements to construct the Project on the Property. All
design, architectural, and building plans for the Project shall be subject to the review and
approval of City and any other Governmental Agency. By its execution of this Agreement,
City is not committing itself to or agreeing to undertake any acts or activities requiring the
subsequent independent exercise of discretion by City or any agency or department
thereof.
(d) If any revisions of the Project are required by a Governmental
Agency, Developer shall promptly make any such revisions, provided such revisions are
generally consistent with the Scope of Development.
(e) Notwithstanding any provision to the contrary in this Agreement,
Developer agrees to abide by and comply fully with any and all conditions of approval
applicable to all approvals, permits and other governmental actions regarding the
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March 19, 2019 Item #3.1
construction of the Project; provided, however, that Developer reserves its rights to
challenge any illegally imposed condition of approval applicable to an approval, permit,
or other governmental action regarding the construction of the Project.
(f) Developer and City agree that City shall not provide any financial
assistance to Developer in connection with the construction of the Project. Developer
shall be solely responsible for paying for the costs of all design work, construction, labor,
materials, fees, permit, application, surety bond and other expenses associated with the
Project. Developer shall pay any and all fees pertaining to the review and approval of the
Project by each Governmental Agency and utility service providers, including the costs of
preparation of all required construction, planning and other documents reasonably
required by each Governmental Agency or utility service provider pertinent to the
construction of the Project, including, but not limited to, specifications, drawings, plans,
maps, permit applications, land use applications, zoning applications, environmental
review and disclosure documents and design review documents. Developer shall obtain
any and all necessary governmental approvals, prior to the commencement of applicable
portions of construction of the Project, and Developer shall take all necessary precautions
to ensure the safety and stability of surrounding properties during the construction of the
Project.
(g) Developer shall obtain all entitlements, permits and other approvals
for construction of the Project from each Governmental Agency, within the time periods
for such actions set forth in the Schedule of Performance, subject to any extensions of
time authorized by this Agreement upon the occurrence of an Unavoidable Delay.
Section 3.5 Notice to Vacate. Within five (5) business days after the
occurrence of the Entitlement Approval Date, City shall deliver to each tenant and
occupant of any occupied City Parcels a written notice of termination.
Section 3.6 Quale Court. If requested in writing by Developer, City staff will
agendize, for City Council consideration, Developer's request to vacate Quale Court.
ARTICLE IV
JOINT ESCROW INSTRUCTIONS
Section 4.1 Opening of Escrow. City and Developer shall cause the Escrow to
be opened within five (5) days following the Effective Date. Escrow Holder shall promptly
confirm in writing to each of the Parties the date of the Escrow Opening
Date. This ARTICLE IV shall constitute the joint escrow instructions of City and
Developer to Escrow Holder for conduct of the Escrow.
Section 4.2 Conditions to Close of Escrow. The conditions set forth below in
this Section 4.2 shall be satisfied or waived by the respective benefited Party on or before
the Escrow Closing Date or the Party benefited by any unsatisfied condition shall not be
required to proceed to close the Escrow.
(a) Developer's Conditions. Developer's obligation to purchase the City
Parcels from City on the Escrow Closing Date shall be subject to the satisfaction or waiver
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March 19, 2019 Item #3.1
of each of the following conditions precedent, each of which can only be waived in writing
by Developer, in Developer's sole and absolute discretion:
(1) Developer has not timely elected to terminate the Escrow and
this Agreement pursuant to the provisions in Section 3.2;
(2) The occurrence of the Entitlement Approval Date;
(3) The Title Company is unconditionally committed to issue the
Developer's Title Policy to Developer, at the Close of Escrow;
(4) City has deposited all of the items into the Escrow required by
Section 4.4;
(5) Developer has reasonably approved the Escrow Holder's final
estimated closing/settlement statement;
(6) The escrow under the Private Parcels Purchase Agreements
has closed, and Developer has acquired fee title to the Private Parcels;
(7) City has acquired fee title to all of the City Parcels;
(8) The escrow under the AHPDA has closed, and Developer has
acquired fee title to the Affordable Housing Parcel;
(9) The City Council of City has approved, and City and
Developer have entered into, a Development Agreement;
(10) Developer has obtained all City permits required to complete
the rough grading of the Property;
(11) The City Parcels have been vacated and are free from
occupancy; and
(12) City has performed all of its material obligations required to be
performed by City under this Agreement prior to Close of Escrow; and is not in default of
any of its obligations under this Agreement.
(b) City's Conditions. City's obligation to sell the City Parcels to
Developer on or before the Escrow Closing Date shall be subject to the satisfaction or
waiver of each of the following conditions precedent, which can only be waived in writing
by City, in City's sole and absolute discretion:
(1) Developer has deposited the Earnest Money Deposit into
Escrow, pursuant to Section 3.2(a), and the Earnest Money Deposit has been released
to City;
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March 19, 2019 Item #3.1
(2) Developer has not timely elected to terminate the Escrow and
this Agreement pursuant to the provisions in Section 3.2;
(3) The occurrence of the Entitlement Approval Date;
(4) Developer has provided evidence reasonably satisfactory to
City that Developer has sufficient financing, or Developer has obtained commitments for
sufficient financing, to develop the Project in accordance with the Project Budget, and any
such financing for which Developer has obtained commitments shall close and be
available to Developer on the Escrow Closing Date;
(5) Developer has delivered to City, at least fourteen (14) days
prior to the Escrow Closing Date, a legally binding written contract between Developer
and a general contractor, licensed in California, experienced in the construction of
projects similar to the Project, for the construction of the Project, which general contractor
may be an Affiliate of Developer provided that the terms of the construction contract are
standard, competitive, market-based terms;
(6) Developer has deposited all of the items into Escrow required
by Section 4.3;
(7) City has reasonably approved the Escrow Holder's final
estimated closing/settlement statement;
(8) The escrow under the Private Parcels Purchase Agreements
has closed and Developer has acquired fee title to the Private Parcels,
(9) City has acquired fee title to all of the City Parcels;
(10) The escrow under the AHPDA has closed and Developer has
acquired fee title to the Affordable Housing Parcel;
(11) Developer has performed all of its material obligations
required to be performed by Developer under this Agreement prior to Close of Escrow;
and is not in default of any of its obligations under this Agreement;
(12) The Title Company is unconditionally committed to issue the
City's Title Policy to City, at the Close of Escrow;
(13) Developer has obtained all City permits required to complete
the rough grading of the Property;
(14) Developer, at its sole cost and expense, shall have provided
to City all studies, reports, data, and supporting materials necessary for City to conduct
all required analysis under CEQA, City shall have completed such analysis, and the City
Council or City Planning Commission (as applicable), in its sole and absolute discretion,
shall have made all requisite findings, determinations, and/or certifications necessary to
enable the Project to move forward;
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March 19, 2019 Item #3.1
(15) The City Parcels have been vacated and are free from
occupancy;
(16) The representations, warranties and covenants of Developer
set forth in ARTICLE VIII are true and correct in all material respects on the Effective Date
and continuing through and including on the Escrow Closing Date;
(17) Developer has provided City with a residential real estate
report or other documentation and/or analysis reasonably acceptable to the City Manager
evidencing that the residential real estate market for new "for-sale" multifamily homes in
general, and in the City of Poway in particular is in a condition to enable Developer to sell
not less than twelve (12) "for-sale" multifamily homes (the "First Phase"), and
(18) Developer has delivered to City organizational documents
evidencing the establishment and good standing of Developer, and the authority of
Developer to enter into this Agreement and perform its obligations hereunder.
Section 4.3 Developer's Escrow Deposits. Following satisfaction or waiver of
each of Developer's conditions to the Close of Escrow set forth in Section 4.2(a), at least
one (1) business day prior to the Escrow Closing Date scheduled by the Escrow Holder
in a writing delivered to each of the Parties, Developer shall deposit the following funds
and documents into the Escrow and, concurrently, provide a copy of each such document
to City:
(a) Purchase Price. The Purchase Price, less the sum of (i) the Earnest
Money Deposit, and (ii) the City Loan, plus any additional funds required to be deposited
into the Escrow by Developer under the terms of this Agreement to close the Escrow, all
in immediately available funds;
(b) PCO Report. A Preliminary Change of Ownership Report executed
by the authorized representative(s) of Developer;
(c) Memorandum of Agreement. The Memorandum of Agreement
executed by the authorized representative(s) of Developer in recordable form;
(d) City Note. The City Note, executed by the authorized
representative(s) of Developer; and
(e) City Deed of Trust. The City Deed of Trust, executed by the
authorized representative(s) of Developer.
Section 4.4 City's Escrow Deposits. Following satisfaction or waiver of each of
City's conditions to Close of Escrow set forth in Section 4.2(b), at least one (1) business
day prior to the Escrow Closing Date scheduled by the Escrow Holder in a writing
delivered to each of the Parties, City shall deposit the following funds and documents into
the Escrow and, concurrently, provide a copy of each such document to Developer:
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March 19, 2019 Item #3.1
(a) City Grant Deed. The City Grant Deed executed by the authorized
representative(s) of City in recordable form;
(b) Fl RPT A Affidavit. The FIRPTA Affidavit completed and executed by
the authorized representative( s) of City;
(c) Memorandum of Agreement. The Memorandum of Agreement
executed by the authorized representative(s) of City in recordable form; and
(d) Form 593. A Form 593 executed by the authorized representative(s)
of City.
Section 4.5 Closing Procedure. When each of Developer's Escrow deposits,
as set forth in Section 4.3, and each of City's Escrow deposits, as set forth in Section 4.4,
are deposited into the Escrow, the Escrow Holder shall request confirmation in writing
from both City and Developer that each of their respective conditions to the Close of
Escrow, as set forth in Section 4.2, are satisfied or waived. Upon the Escrow Holder's
receipt of written confirmation from both City and Developer that each of their respective
conditions to the Close of Escrow are either satisfied or waived, the Escrow Holder shall
close the Escrow by doing all of the following:
(a) Insertion of Dates. Insert the Escrow Closing Date into the City Grant
Deed, Memorandum of Agreement, City Note, and City Deed of Trust, as the date of such
document, prior to the recordation of the City Grant Deed, Memorandum of Agreement
and City Deed of Trust;
(b) Recordation of Documents. File the City Grant Deed, the
Memorandum of Agreement, and City Deed of Trust (as applicable) with the Office of the
Recorder of the County of San Diego, California, for recordation in the order set forth in
Section 4.7;
(c) Distribution of Recorded Documents. Distribute conformed copies of
each recorded document to the Party or person designated for such distribution in
Section 4.7;
(d) PCO Report. File the PCO Report with the Office of the Recorder of
the County of San Diego, California;
(e) FIRPTA Affidavit. Deliver the FIRPTA Affidavit to Developer, and
deliver a copy to City;
(f) Form 593. Deliver the Form 593 to Developer, and deliver a copy to
City;
(g) Developer's Title Policy. Obtain and deliver to Developer the
Developer's Title Policy;
(h) City's Title Policy. Obtain and deliver to City the City's Title Policy;
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March 19, 2019 Item #3.1
(i) Purchase Price. Deliver the Purchase Price to City, less the sum of
(i) the Earnest Money Deposit, (ii) the City Loan, and (iii) any other charges to the account
of City, and return all remaining funds held by the Escrow Holder for the account of
Developer to Developer, less Developer's share of the Escrow closing costs, and less
any other charges chargeable to the account of Developer under the terms of this
Agreement; and
U) Report to IRS. Following the Close of Escrow and prior to the last
date on which such report is required to be filed with the Internal Revenue Service, if such
report is required pursuant to Section 6045(e) of the Internal Revenue Code, the Escrow
Holder shall report the gross proceeds of the purchase and sale of the Property to the
Internal Revenue Service on Form 1099-B, W-9 or such other form(s) as may be specified
by the Internal Revenue Service pursuant to Section 6045(e). Upon the filing of such
reporting form with the Internal Revenue Service, the Escrow Holder shall deliver a copy
of the filed form to City and Developer.
Section 4.6 Close of Escrow. Close of Escrow shall occur on or before the
Escrow Closing Date. lffor any reason the Close of Escrow has not occurred on or before
the Escrow Closing Date, then any Party not then in default of this Agreement may cancel
the Escrow and terminate this Agreement, without liability to the other Party or any other
person for such cancellation and termination, by delivering written notice of termination
to both the other Party and the Escrow Holder and, thereafter, the Parties shall proceed
pursuant to Section 4.10. Without limiting the right of either Party to cancel the Escrow
and terminate this Agreement pursuant to the preceding sentence, if the Escrow does not
close on or before the Escrow Closing Date, and neither Party has exercised its
contractual right to cancel the Escrow and terminate this Agreement before such time,
then the Escrow shall close as soon as reasonably possible following the first date on
which the Escrow Holder is in a position to close the Escrow, pursuant to the terms and
conditions of this Agreement.
Section 4.7 Recordation and Distribution of Documents. Escrow Holder shall
cause the following documents to be recorded in the official records of the Recorder of
the County of San Diego, California, in the following order at the Close of Escrow: (i) the
City Grant Deed, (ii) the City Deed of Trust, (iii) the Memorandum of Agreement, and
(iv) any other documents to be recorded through the Escrow upon the joint instructions of
the Parties. The Escrow Holder shall deliver conformed copies of all documents recorded
through the Escrow to City and Developer and any other person designated in the joint
escrow instructions of the Parties to receive a conformed copy of each such document,
each showing all recording information.
Section 4.8 Escrow Closing Costs. Taxes and Title Policy Premium. Developer
and City shall each pay half of the documentary transfer taxes, Escrow fees, and such
other costs as the Escrow Holder may charge for the conduct of the Escrow. The Escrow
Holder shall notify Developer and City of the costs to be borne by each of Developer and
City at the Close of Escrow by delivering the Escrow Holder's estimated
closing/settlement statement to both City and Developer, at least, four (4) business days
prior to the Escrow Closing Date. City shall pay the premium charged by the
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March 19. 2019 Item #3.1
Title Company for the Developer's Title Policy, with standard coverage, and for the City's
Title Policy; provided, however, that Developer shall pay the costs of any endorsements
or other supplements to the coverage of the Developer's Title Policy that may be
requested by Developer, including the additional cost for extended ALTA coverage, if
such coverage is elected by Developer. City shall pay any and all recording fees, and
any and all other charges, fees and taxes levied by a governmental authority relative to
the conveyance of the Property through the Escrow.
Section 4.9 Escrow Cancellation Charges. If the Escrow fails to close due to
City's material default under this Agreement, City shall pay all ordinary and reasonable
cancellation charges relating to the Escrow, the Developer's Title Policy and the City's
Title Policy. If the Escrow fails to close due to Developer's material default under this
Agreement, or for any reason other than the material default of City, Developer shall pay
all ordinary and reasonable cancellation charges relating to the Escrow, the Developer's
Title Policy, and the City's Title Policy.
Section 4.10 Escrow Cancellation. If the Escrow is cancelled and this
Agreement is terminated pursuant to a contractual right granted to a Party in this
Agreement to cancel the Escrow and terminate this Agreement, other than due to the
default of another Party, the Parties shall do each of the following:
(a) Cancellation Instructions. The Parties shall, within three
(3) business days following receipt of the Escrow Holder's written request, execute any
reasonable Escrow cancellation instructions requested by the Escrow Holder;
(b) Return of Funds and Documents. Within ten (10) days following
receipt by the Parties of a settlement statement from the Escrow Holder of cancellation
charges regarding the Escrow, the Developer's Title Policy, and the City's Title Policy, if
any: (i) Developer or the Escrow Holder shall return to City any documents previously
delivered by City to Developer or the Escrow Holder regarding the Escrow, (ii) City or the
Escrow Holder shall return to Developer all documents previously delivered by Developer
to City or the Escrow Holder regarding the Escrow; and (iii) the Escrow Holder shall return
to Developer any funds deposited into the Escrow, except as otherwise provided in either
Section 3.2(a) or Section 9.3, less the customary and reasonable Escrow and title order
cancellation charges regarding the Escrow, the Developer's Title Policy, and the City's
Title Policy, if any.
Section 4.11 Entitlement Claims: CEQA Claims. If any Entitlement Claims
and/or CEQA Claims are taken or filed, then Developer shall have the right to elect to
either defend the same or not defend the same, at Developer's cost, including, without
limitation, all of the court costs, attorney fees, monetary awards, sanctions, attorney fee
awards, expert witness and consulting fees, and the expenses of any and all financial or
performance obligations resulting from the disposition of the legal action. If Developer
elects to so defend the same, then Developer shall appoint counsel and direct strategy;
provided, however, that such counsel shall be acceptable to City. If Developer elects not
to so defend, then either City or Developer shall have the right to terminate this
Agreement.
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March 19, 2019 Item #3.1
ARTICLE V
PROJECT DEVELOPMENT
Section 5.1 Developer Covenant to Undertake Project. Developer covenants
and agrees for itself and its successors and assigns, to and for the exclusive benefit of
City, that Developer shall develop the Project in a good and workmanlike manner, within
the applicable time periods set forth in the Schedule of Performance, and in conformity
with the terms and conditions of this Agreement, the Scope of Development, the
Entitlements, any and all plans, specifications and similar development documents
required by this Agreement and approved by City, including all conditions of approval
issued in connection with any of the foregoing approvals, except for such changes as may
be mutually agreed upon in writing by and between Developer and City, and all applicable
laws, regulations, orders and conditions of each Governmental Agency. The covenants
of this Section 5.1 shall run with the land of the City Parcels until the Project Completion
Date.
Section 5.2 Developer Changes to Project Plans and Specifications During
Course of Construction. Developer shall have the right, during the course of construction
of the Project, to make "Minor Field Changes" (as defined in the following sentence),
without seeking the approval of City, if such changes do not affect the type of use to be
conducted within all or any portion of a structure. "Minor Field Changes" shall be defined
as those changes from the approved construction drawings, plans and specifications that:
(1) have no substantial effect on the Project and are made in order to expedite, clarify or
facilitate the work of construction in response to field conditions; (2) are changes to the
Project's interior spaces that substantially conform to the drawings, plans, and
specifications and/or are required pursuant to an applicable law by a lender or equity
partner; (3) are changes that represent the selection of a particular design option or
feature; (4) are changes that are required under applicable laws; and/or (5) are changes
dictated by the identification of any unforeseen conditions. Nothing contained in this
Section 5.2 shall be deemed to constitute a waiver of or change in any Governmental
Requirements governing any such Minor Field Changes or in any approvals by any
Governmental Agency otherwise required for any such Minor Field Changes.
Section 5.3 Completion of Project.
(a) Upon Developer's completion of the Project, Developer shall:
(1) Record a Notice of Completion, in accordance with California
Civil Code Section 3093, for the entirety of the Project;
(2) Cause the Project to be inspected by each Governmental
Agency and correct any defects and deficiencies that may be disclosed by any such
inspection; and
(3) Cause all occupancy certificates and other licenses, permits
and authorizations necessary for the operation and occupancy of the completed Project
to be duly issued.
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March 19, 2019 Item #3.1
(b) After commencement of the work of improvement of the Project,
Developer shall not permit the work of improvement of the Project to cease or be
suspended for a time period in excess of thirty (30) calendar days, either consecutively
or in the aggregate. Notwithstanding the foregoing, such thirty (30) calendar day period
may be extended by the City Manager for up to an additional thirty (30) calendar days, in
the aggregate, unless caused by Unavoidable Delays.
Section 5.4 Compliance with Laws. All work performed in connection with the
construction of the Project shall comply with all Governmental Requirements.
Section 5.5 Schedule of Performance. All planning, construction, and other
development obligations and responsibilities of Developer related to the Project shall be
initiated and completed within the times specified in the Schedule of Performance, or
within such reasonable extensions of such times granted by City in writing or as otherwise
provided for in this Agreement.
Section 5.6 Developer Attendance at City Meetings. Developer agrees to have
one or more of its employees or consultants who are knowledgeable regarding this
Agreement and the development of the Project, such that such person(s) can
meaningfully respond to City staff questions regarding the progress of the Project, attend
meetings with City staff or meetings of the Poway City Council, when requested to do so
by City staff.
Section 5.7 City Right to Inspect Project and Property. Officers, employees,
agents and representatives of City shall have the right of reasonable access to the
Property, without the payment of charges or fees, during normal construction hours,
during the period of construction of the Project. Any and all officers, employees, agents
or representatives of City who enter the Property shall identify themselves at the
construction management office or, if none, to the apparent on-site construction
supervisor on the Property, upon their entrance onto the Property, and shall at all times
be accompanied by a representative of Developer, while on the Property. Developer shall
make a representative of Developer available for this purpose at all times during normal
construction hours, upon reasonable advance notice from City. If in City's reasonable
judgment ii is necessary, City shall have the further right, from time to time, to retain a
consultant or consultants to inspect the Project and verify compliance by Developer with
the provisions of this Agreement. Developer acknowledges and agrees that any such
City inspections are for the sole purpose of protecting City's rights under this Agreement,
are made solely for City's benefit, may be superficial and general in nature, and are for
the purposes of informing City of the progress of the Project and the conformity of the
Project with the terms and conditions of this Agreement, and that Developer shall not be
entitled to rely on any such inspection(s) as constituting City's approval, satisfaction or
acceptance of any materials, workmanship, conformity of the Project with this Agreement
or otherwise. Developer agrees to make its own regular inspections of the work of
construction of the Project to determine that the quality of the Project and all other
requirements of the work of construction of the Project are being performed in a manner
satisfactory to Developer.
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March 19, 2019 Item #3.1
Section 5.8 Construction in Compliance with Applicable Laws.
(a) Developer shall be solely responsible, expressly or impliedly and
legally and financially, for determining and effectuating compliance with all applicable
federal, state and local public works requirements, prevailing wage laws, and labor laws
and standards, and City makes no representation, either legally and/or financially, as to
the applicability or non-applicability of any federal, state and local laws to Developer's
construction of the Project. Developer expressly, knowingly and voluntarily
acknowledges and agrees that City has not previously represented to Developer or to any
representative, agent or affiliate of Developer, or any contractor(s) or any subcontractor(s)
for the construction or development of the Project, in writing or otherwise, in a call for bids
or otherwise, that the work and construction of the Project is (or is not) a "public work," as
defined in Section 1720 of the Labor Code or under the Davis-Bacon Act, 40 U.S.C.
Section 3141, et seq., and the regulations promulgated thereunder set forth at 29 CFR
Part 1 (collectively, "Davis-Bacon").
(b) Developer knowingly and voluntarily agrees that Developer shall
have the obligation to provide any and all disclosures or identifications as and to the extent
required by Labor Code Section 1781 and/or by Davis-Bacon, as the same may be
amended from time to lime, or any other similar law or regulation. Developer shall
indemnify, protect, pay for, defend and hold harmless City, with legal counsel reasonably
acceptable to City from and against any and all loss, liability, damage, claim, cost,
expense and/or "increased costs" (including reasonable attorney's fees, court and
litigation costs, and fees of expert witnesses) which, in connection with the development,
construction (as defined by applicable law) and/or operation of the Project, including,
without limitation, any and all public works (as defined by applicable law), results or arises
in any way from any of the following: (i) the noncompliance by Developer or its contractor
with any applicable local, state and/or federal law or regulation, including, without
limitation, any applicable federal and/or state labor laws or regulations (including, without
limitation, if applicable, the requirement to pay state and/or federal prevailing wages and
hire apprentices); (ii) the implementation of Section 1781 of the Labor Code and/or of
Davis-Bacon, as the same may be amended from time to time, or any other similar law or
regulation; and/or (iii) failure by Developer to provide any required disclosure or
identification as required by Labor Code Section 1781 and/or by Davis-Bacon, as the
same may be amended from time to lime, or any other similar law or regulation. It is
agreed by the Parties that, in connection with the development and construction (as
defined by applicable law or regulation) of the Project, including, without limitation, any
and all public works (as defined by applicable law or regulation), Developer shall bear all
risks of payment or non-payment of prevailing wages under applicable federal, state and
local law or regulation and/or the implementation of Labor Code Section 1781 and/or by
Davis-Bacon, as the same may be amended from lime to time, and/or any other similar
law or regulation. The foregoing indemnity shall survive termination of this Agreement
and shall continue after completion of the construction and development of the Project.
"Increased costs," as used in this Section 5.8, shall have the meaning
ascribed to it in Labor Code Section 1781, as the same may be amended from lime to
time.
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March 19, 2019 Item #3.1
DEVELOPER, ON BEHALF OF ITSELF, ITS SUCCESSORS, AND
ASSIGNS, WAIVES AND RELEASES CITY FROM ANY RIGHT OF ACTION THAT MAY
BE AVAILABLE TO ANY OF THEM PURSUANT TO LABOR CODE SECTION 1781.
DEVELOPER ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE
SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS
SECTION 5.8, WHICH READS AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.
BY INITIALING BELOW, DEVELOPER KNOWINGLY AND VOLUNTARILY
WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE
WAIVERS AND RELEASES OF THIS SECTION 5.8:
Developer's Initials
Section 5.9 AS-IS SALE; RELEASE
(a) Developer acknowledges, agrees, and represents to City that
Developer is experienced in the acquisition and development of land similar to the City
Parcels and that as of the Close of Escrow, it has been given an adequate opportunity to
review and inspect, and has approved all aspects of, the City Parcels. Developer shall
rely solely and exclusively upon the results of its Due Diligence Investigations of the City
Parcels, including, without limitation, investigations regarding geotechnical soil
conditions, compliance with applicable laws pertaining to the use of the City Parcels by
Developer and any other matters relevant to the condition or suitability of the City Parcels
for the Project, as Developer may deem necessary or appropriate. City makes no
representation or warranty to Developer relating to the condition of the City Parcels or
suitability of the City Parcels for any intended use or development by Developer.
(b) Developer shall accept all conditions of the City Parcels, without any
liability of City whatsoever, upon Developer's acceptance of the City Parcels indicated in
its Due Diligence Investigation Conclusion Notice, or Developer's deemed acceptance of
the City Parcels by Developer's failure to deliver a Due Diligence Investigation Conclusion
Notice. Developer's delivery of its Due Diligence Investigation Conclusion Notice
indicating Developer's unconditional acceptance of the City Parcels, or Developer's
deemed acceptance of the City Parcels by Developer's failure to deliver a Due Diligence
Investigation Conclusion Notice, shall evidence Developer's unconditional and
irrevocable acceptance of the City Parcels in the Public Parcel's AS IS, WHERE IS,
SUBJECT TO ALL FAUL TS CONDITION, WITHOUT WARRANTY AS TO QUALITY,
CHARACTER, PERFORMANCE OR CONDITION and with full knowledge of the physical
condition of the City Parcels, all zoning, other land use laws and other Governmental
882/012782-0020
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March 19, 2019 Item #3.1
Requirements affecting the City Parcels, and of the conditions, restrictions,
encumbrances and all matters of record relating to the City Parcels. Developer's delivery
of its Due Diligence Investigation Conclusion Notice indicating Developer's unconditional
acceptance of the City Parcels, or Developer's deemed acceptance of the City Parcels
by Developer's failure to deliver a Due Diligence Investigation Conclusion Notice, shall
constitute Developer's representation and warranty to City that Developer has received
assurances acceptable to Developer by means independent of City or any agent of City
of the truth of all facts material to Developer's acquisition of the City Parcels pursuant to
this Agreement, and that the City Parcels are being acquired by Developer as a result of
its own knowledge, inspection and investigation of the City Parcels and not as a result of
any representations made by City or any employee, official, consultant or agent of City
relating to the condition of the City Parcels, unless such statement or representation is
expressly and specifically set forth in this Agreement. City hereby expressly and
specifically disclaims any express or implied warranties regarding the City Parcels.
DEVELOPER, ON BEHALF OF ITSELF, ITS SUCCESSORS, AND
ASSIGNS, WAIVES AND RELEASES CITY FROM ANY RIGHT OF ACTION THAT MAY
BE AVAILABLE TO ANY OF THEM WITH RESPECT TO THE CONDITION OF THE
PUBLIC PARCELS. DEVELOPER ACKNOWLEDGES THE PROTECTIONS OF CIVIL
CODE SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN
THIS SECTION 5.9, WHICH READS AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.
BY INITIALING BELOW, DEVELOPER KNOWINGLY AND VOLUNTARILY
WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE
WAIVERS AND RELEASES OF THIS SECTION 5.9:
Developer's Initials
Section 5.10 Environmental Indemnity of City by Developer. On and after the
Escrow Closing Date, Developer agrees, at its sole cost and expense, to fully indemnify,
protect, hold harmless, and defend (with counsel selected by Developer and approved by
City) City and City Personnel, and each of them, from and against any and all claims,
demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of
action, judgments, suits, proceedings, costs, disbursements and expenses, including,
without limitation, attorney fees, disbursements and costs of attorneys, environmental
consultants and other experts, and all foreseeable and unforeseeable damages or costs
of any kind or of any nature whatsoever (collectively, "Environmental Losses") that may,
at any time, be imposed upon, incurred or suffered by, or claimed, asserted or awarded
against, City directly or indirectly relating to or arising from any of the following
882/012782-0020
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March 19, 2019 Item #3.1
"Environmental Matters" occurring during and/or arising from Developer's ownership of
the Property or construction or operation of the Project:
(a) the presence of Hazardous Substances on, in, under, from or
affecting all or any portion of the Property or the Project.
(b) The storage, holding, handling, release, threatened release,
discharge, generation, leak, abatement, removal or transportation of any Hazardous
Substances on, in, under, from or affecting the Property or the Project.
(c) The violation of any law, rule, regulation, judgment, order, permit,
license, agreement, covenant, restriction, requirement or the like by Developer, its agents
or contractors, relating to or governing in any way Hazardous Substances on, in, under,
from or affecting the Property or the Project.
(d) The violation of any law, rule, regulation, judgment, order, permit,
license, agreement, covenant, restriction, requirement or the like by Developer, its agents
or contractors, relating to or governing in any way the discharge of storm water on, in,
under, from or affecting the Property or the Project, and the failure of Developer, its agents
or contractors to comply with any permit issued pursuant to the National Pollutant
Discharge Elimination System and applicable to the Project and/or Property.
(e) The failure of Developer, its agents or contractors, to properly
complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations,
covenants and the like in connection with Developer's activities on the Property or
regarding the Project.
(f) The implementation and enforcement by Developer, its agents or
contractors of any monitoring, notification or other precautionary measures that may, at
any time, become necessary to protect against the release, potential release or discharge
of Hazardous Substances on, in, under, from or affecting the Property or the Project.
(g) The failure of Developer, its agents or contractors, in compliance with
all applicable Environmental Laws, to lawfully remove, contain, transport or dispose of
any Hazardous Substances existing, stored or generated on, in, under or from the
Property or the Project.
(h) Any investigation, inquiry, order, hearing, action or other proceeding
by or before any Governmental Agency in connection with any Hazardous Substances
on, in, under, from or affecting the Property or the Project or the violation of any
Environmental Law relating to the Property or the Project.
On and after the Escrow Closing Date, Developer shall pay to City all costs
and expenses including, without limitation, reasonable attorney's fees and costs, incurred
by City in connection with enforcement of the aforementioned environmental indemnity.
Section 5.11 Insurance. On and after the Escrow Closing Date, Developer,
to protect City, and City Personnel against any and all claims and liability for death, injury,
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March 19, 2019 Item #3.1
loss and damage resulting from Developer's actions in connection with this Agreement,
the Property and the Project, shall secure and maintain the insurance coverage,
described in and required by this Section 5.11. Developer shall pay any deductibles and
self-insured retentions under all insurance policies issued in satisfaction of the terms of
this Agreement.
(a) Workers' Compensation Insurance Requirement. On and after the
Escrow Closing Date, Developer shall submit written proof, if Developer has employees,
that Developer is insured against liability for workers' compensation in accordance with
the provisions of Section 3700 of the Labor Code. By executing this Agreement,
Developer makes the following certification, required by Section 1861 of the Labor Code:
"I am aware of the provisions of section 3700 of the Labor
Code which require every employer to be insured against
liability for workers' compensation or to undertake self-
insurance in accordance with the provisions of that code, and
I will comply with such provisions before commencing the
performance of the work of the Agreement."
(1) On and after the Escrow Closing Date, Developer shall require
each contractor and sub-contractor performing work on the Project or the Property to
provide workers' compensation coverage for all of such contractor's or sub-contractor's
employees, unless the contractor's or sub-contractor's employees are covered by
workers' compensation insurance provided by Developer. If any class of employees
engaged in work or services performed in connection with the Project is not covered by
Labor Code Section 3700, Developer shall provide and/or require each contractor or sub-
contractor to provide adequate workers' compensation insurance covering such
employees.
(b) Liability and Permanent Insurance Requirements.
(1) On and after the Escrow Closing Date, Developer shall
maintain in full force and effect, until the Project Completion Date, subject to
subsection (e), the following insurance coverage:
Commercial General Liability Insurance coverage, including,
but not limited to, Premises-Operations, Contractual Liability
Insurance (specifically covering the indemnity obligations of
Developer pursuant to this Agreement), Products-Completed
Operations Hazards, Personal Injury (including bodily injury
and death), and Property Damage for liability arising out of the
construction of the Project and/or the Developer's operation
of the Property or the Project.
(i) Commercial general liability insurance coverage shall
have minimum limits for Bodily Injury and Property Damage liability of FIVE MILLION
882/012782-0020
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March 19, 2019 Item #3.1
DOLLARS ($5,000,000) each occurrence and TEN MILLION DOLLARS ($10,000,000)
aggregate.
(ii) Automobile Liability Insurance against claims of
Personal Injury (including bodily injury and death) and Property Damage covering all
owned, leased, hired and non-owned vehicles used by Developer with minimum limits for
Bodily Injury and Property Damage of ONE MILLION DOLLARS ($1,000,000) each
occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such insurance shall
be provided by a business or commercial vehicle policy.
(iii) If Developer hires a consultant to provide design
services, such as architectural or engineering services in connection with the Project, or
any portion of the Project, Developer shall require each such consultant to provide
Professional Liability (Errors and Omissions) Insurance, for liability arising out of, or in
connection with, the performance of such design services, with limits of not less than ONE
MILLION DOLLARS ($1,000,000).
(c) On and after the Escrow Closing Date, Developer shall require that
each contractor performing work on the Project maintain the following insurance
coverage, as specified below:
(1) Each General Contractor shall maintain Builder's Risk
Insurance to be written on an All Risk Completed Value form, in an aggregate amount
equal to 100% of the completed insurable value of the Project.
(2) Each General Contractor and each sub-contractor shall
maintain Commercial General Liability Insurance with limits of not less than FIVE
MILLION DOLLARS ($5,000,000) per occurrence and TEN MILLION DOLLARS
($10,000,000) aggregate to protect the Developer during the construction of the Project
from claims involving bodily injury and/or death and damage to the property of others.
(3) Each General Contractor and each sub-contractor shall
maintain Automobile Liability Insurance against claims of personal injury (including bodily
injury and death) and property damage covering all owned, leased, hired and non-owned
vehicles used in the performance of the contractor's obligations with minimum limits for
bodily injury and property damage of ONE MILLION DOLLARS ($1,000,000) each
occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such insurance shall
be provided by a business or commercial vehicle policy.
(d) The Commercial General Liability Insurance required in
subsection (b)(1 )(i) above, shall include an endorsement naming City and City Personnel
as additional insureds for liability arising out of this Agreement and any operation related
to this Agreement.
(e) If any of the insurance coverage required under this Agreement is
written on a claims-made basis, such insurance policy shall provide an extended reporting
period continuing through the fifth (5th) anniversary of the Project Completion Date.
The requirements of this subsection (e) shall survive any expiration or termination of this
882/012782-0020 ,W96t"J2!3/15/19 -34-
March 19, 2019 Item #3.1
Agreement and the recordation of the City Grant Deed and City's issuance of the Release
of Construction Covenants for the Project.
(f) Receipt by City of evidence of insurance that does not comply with
the above requirements shall not constitute a waiver of the insurance requirements of this
Agreement.
(g) Subject to subsection (e), the above required insurance coverage
shall be maintained by Developer or its contractors, as required by the terms of this
Agreement, shall not be reduced, modified, or canceled without, at least, thirty (30) days
prior written notice to City. Also, phrases such as "endeavor to" and "but failure to mail
such notice shall impose no obligation or liability of any kind upon the company" shall not
be included in the cancellation wording of any Certificates of Insurance or any coverage
for City and City Personnel. Developer shall immediately obtain replacement coverage
for any insurance policy that is terminated, canceled, non-renewed, or whose policy limits
are exhausted or upon insolvency of the insurer that issued the policy.
(h) All insurance to be obtained and maintained by Developer under this
Agreement shall be issued by a company or companies listed in the then current "Best's
Key Rating Guide" publication with a minimum of an "A; IX" rating and be admitted to
business in the State of California by the State of California Department of Insurance.
(i) City will not accept self-insurance in satisfaction of the insurance
requirements of this Section 5.11.
U) All insurance obtained and maintained by Developer in satisfaction
of the requirements of this Agreement shall be primary to and not contributing to any
insurance maintained by any of City and City Personnel.
(k) Insurance coverage in the minimum amounts set forth in this
Agreement shall not be construed to relieve Developer of any liability, whether within,
outside, or in excess of such coverage, and regardless of solvency or insolvency of the
insurer that issues the coverage; nor shall it preclude City from taking such other actions
as are available to it under any other provision of this Agreement or otherwise at law.
(I) Failure by Developer to maintain all insurance required by this
Agreement in effect at all times shall be an Event of Default by Developer. City, at its sole
option, may exercise any remedy available to ii in connection with such an Event of
Default. Additionally, City may purchase such required insurance coverage and City shall
be entitled to immediate payment from Developer for any premiums and associated costs
paid by City for such insurance coverage. Any election by City to purchase or not to
purchase insurance for Developer shall not relieve Developer of its obligation to obtain
and maintain the insurance coverage required by this Agreement.
Section 5.12 Developer CC&Rs. Prior to City's issuance of a final certificate of
occupancy for any of individual residential dwelling units in the Residential Development,
Developer shall have submitted to City, obtained City's approval of (such approval not to
be unreasonably withheld, conditioned or delayed), and recorded against the underlying
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real property a declaration of covenants, conditions, and restrictions that (i) establishes a
homeowners' association, (ii) is necessary to create a condominium regime for the
condominiums described on the condominium plan to be recorded in accordance with all
applicable laws (for any portion of the Residential Development developed with
condominium-style units); and (iii) clearly sets forth the maintenance obligations of the
owners of the residential dwelling units (the "Developer CC&Rs"). The Developer
CC&Rs shall provide that the City is a third party beneficiary thereof with the right, but not
the obligation, to enforce the terms thereof which are required by this Section 5.12 (the
"City Required Provisions"), and shall require that (a) any proposed amendments to the
Developer CC&Rs that would amend any of the City Required Provisions must be
provided to City, (b) City shall have the right, in City's reasonable discretion, to provide a
written objection to any such proposed amendment, within thirty (30) days after City's
receipt of the proposed amendment, and (c) if no objection is provided by City within such
thirty (30) day period, the proposed amendment may be approved.
Section 5.13 Release of Construction Covenants.
(a) Following the completion of the Residential Development or Retail
Development (either of the foregoing, a "Project Component"), excluding any normal
and minor building "punch-list" items to be completed by Developer, and upon written
request from Developer for issuance of a Release of Construction Covenants, City shall
inspect the Project Component to determine whether or not the Project Component has
been completed in substantial conformance with this Agreement. If City determines that
the Project Component is complete and in substantial conformance with this Agreement,
which determination shall not be unreasonably withheld, City shall furnish Developer with
a Release of Construction Covenants for the Project Component. If City determines that
the Project Component is not in substantial conformance with this Agreement, City shall
send written notice of each non-conformity to Developer, pursuant to Section 5.13(c).
(b) A Release of Construction Covenants shall be evidence of City's
conclusive determination of satisfactory completion of the Project Component pursuant
to the terms of this Agreement. After the recordation of a Release of Construction
Covenants for the Project Component, any person then owning or thereafter purchasing,
leasing or otherwise acquiring any interest in the portion of the Property improved with
the Project Component shall not (because of such ownership, purchase, lease or
acquisition) incur any obligation or liability under this Agreement regarding construction
of the Project Component, except that such person shall be bound by any reservations,
covenants, conditions, restrictions and other interests affecting the such portion of the
Property pursuant to this Agreement.
(c) If City in its reasonable discretion fails or refuses to issue a Release
of Construction Covenants for a Project Component, following a written request from
Developer, City shall, within fifteen (15) calendar days following City's receipt of
Developer's written request or within three (3) calendar days after the next regular
meeting of the City Council, whichever date occurs later, provide Developer with a written
statement setting forth in reasonable detail the reasons for City's failure or refusal to issue
a Release of Construction Covenants. The statement shall also contain City's opinion of
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the action(s) Developer must take to obtain a Release of Construction Covenants from
City. If the reason for Developer's failure to complete the Project Component is confined
to the immediate unavailability of specific items or materials for construction or
landscaping at a price reasonably acceptable to Developer or other minor building
"punch-list" items, City may issue its Release of Construction Covenants upon the posting
of a bond or irrevocable standby letter of credit by Developer in a form reasonably
acceptable to City in an amount representing the fair value of the work on the Project
Component remaining to be completed, as reasonably determined by City. If City fails to
provide such written statement, within the specified time period, Developer shall be
deemed, conclusively and without further action of City, to have satisfied the requirements
of this Agreement with respect to the Project Component, as if a Release of Construction
Covenants had been issued by City pursuant to this Agreement.
(d) A Release of Construction Covenants shall not be deemed to
constitute a Notice of Completion under Section 3093 of the California Civil Code, nor
shall it act to terminate the continuing covenants, restrictions or conditions contained in
the City Grant Deed or any other instruments recorded against the Property or set forth
in this Agreement or otherwise. A Release of Construction Covenants is not evidence of
the compliance of the Project Component with any Governmental Requirements. A
Release of Construction Covenants shall not evidence the satisfaction of any obligation
of Developer to City under this Agreement or otherwise, except Developer's obligation to
construct the Project Component.
(e) Notwithstanding anything in this Section 5.13 to the contrary, at such
time as Developer has completed construction of a residential dwelling unit comprising a
portion of the Residential Development, as evidenced by City's issuance of a certificate
of occupancy for said dwelling unit, City agrees to execute a document in a form
reasonably acceptable to the Title Company terminating the Memorandum of Agreement
with respect to such dwelling unit.
Section 5.14 Comprehensive Retail Development; Phasing. Developer
represents to City that as of the Effective Date, Developer has negotiated in good faith
with the owners of various properties adjacent to the Retail Parcels to acquire those
parcels on commercially reasonable terms. During the term of this Agreement, Developer
shall continue to diligently pursue acquisition of suitable real properties, and attempt to
plan and design a Comprehensive Retail Development. Commencing on the first day of
the first calendar quarter following the Effective Date, Developer shall provide written
updates to the City Manager, on a quarterly basis, describing in reasonable detail
Developer's efforts during the immediately preceding quarter with respect to planning and
designing a Comprehensive Retail Development, and the outcome of such efforts.
(a) The Parties acknowledge and agree that the "Project" as defined in
this Agreement contemplates that Developer will fully develop the Comprehensive Retail
Development. Upon the Close of Escrow, Developer shall commence, and diligently
proceed to completion, the "Phase 1 Retail Development Work," as described in the
Scope of Development. If Developer is unable to plan and design a Comprehensive
Retail Development within two (2) years following the Effective Date, Developer and City
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shall meet and confer regarding an appropriate alternative development as the
Comprehensive Retail Development (an "Alternative Development"). If by the third
(3'd) anniversary of the Effective Date (the "Third Anniversary"), Developer has not been
able to plan and design a Comprehensive Retail Development, and the Parties have not
agreed on an appropriate Alternative Development, then City shall have a right to
purchase the Retail Parcels from Developer ("City's Retail Parcels Purchase Right")
for the greater of (i) the outstanding amount owed on the City Note, or (ii) eighty percent
(80%) of the appraised value of the Retail Parcels as of that date (the "Retail Parcels
Purchase Price"). City shall exercise City's Retail Parcels Purchase Right by providing
a written notice to Developer, within sixty (60) days after the Third Anniversary, staling
City's intention to exercise City's Retail Parcels Purchase Right, and purchase the Retail
Parcels ("City's Notice of Exercise"). The appraised value of the Retail Parcels shall be
determined by an appraisal conducted by an MAI appraiser selected by City and
reasonably acceptable to Developer. At such lime as the Parties receive the appraisal,
City shall have the right to terminate its prior election to exercise City's Retail Parcels
Purchase Right ("City's Right of Termination"). City shall exercise City's Right of
Termination by providing a written notice to Developer, within thirty (30) days after the
Parties receive the appraisal. Notwithstanding anything in this Section 5.14 to the
contrary, the following shall apply if City elects to not exercise City's Retail Parcels
Purchase Right: If at any time within the three (3) year period after such election by City
Developer desires to develop the Retail Parcels with a residential development or sell the
Retail Parcels, as a condition to either of such action, Developer shall be required to pay
to City fifty percent (50%) of the difference between (a) the appraised value of the Retail
Parcels for residential use, determined by an appraisal conducted by an MAI appraiser
selected by City and reasonably acceptable to Developer, and (b) One Million Seven
Hundred Thousand Dollars ($1,700,000), which is the portion of the Purchase Price
attributable to the Retail Parcels.
(b) The provisions of this subparagraph (b) shall apply in the event City
exercises City's Retail Parcels Purchase Right, and does not exercise City's Right of
Termination. The provisions of this subparagraph (b) shall also apply in the event City
exercises its right of first refusal pursuant to Section 10.6 below, except to the extent the
provisions in this subparagraph (b) conflict with the Acceptable Terms or Acceptable Offer
(as applicable), as reasonably determined by the City Manager, in which case the
conflicting provisions of the Acceptable Terms or Acceptable Offer (as applicable) shall
control.
(1) Within thirty (30) business days after City exercises City's
Retail Parcels Purchase Right, Developer and City shall cause an escrow ("City's
Repurchase Escrow") to be opened with the Escrow Holder for the conveyance of the
Retail Parcels by Developer to City. City's Repurchase Escrow shall be deemed opened
on the date City delivers to Escrow Holder (a) a copy of this Section 5.14, and (b) a copy
of City's Notice of Exercise, accompanied by a written certification from City that City has
not exercised City's Right of Termination ("Opening of City's Repurchase Escrow").
Escrow Holder shall notify Developer and City in writing of the date of the Opening of
City's Repurchase Escrow promptly following the opening of City's Repurchase Escrow.
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(2) City's Repurchase Escrow shall close on or before the date
that is sixty (60) days after the Opening of City's Repurchase Escrow ("City's
Repurchase Escrow Closing Date"). The terms "Close of City's Repurchase Escrow"
and/or the "City's Repurchase Escrow Closing" shall mean the date the "City's
Repurchase Grant Deed" (as that term is defined in paragraph (6) below) conveying fee
title to the Retail Parcels to City is recorded in the Office of the County Recorder of San
Diego County, California. Possession of the Retail Parcels shall be delivered to City at
the Close of City's Repurchase Escrow free and clear of all tenancies, lessees,
occupants, and all possessory rights of any kind or nature.
(3) This Section 5.14, together with any standard instructions of
Escrow Holder, shall constitute the joint escrow instructions of Developer and City to
Escrow Holder as well as an agreement between Developer and City with respect to
Developer's conveyance to City of the Retail Parcels. In the event of any conflict between
the provisions of this Section 5.14 and Escrow Holder's standard instructions, this
Section 5.14 shall prevail.
(4) Developer shall convey and City shall accept fee simple title
to the Retail Parcels free and clear of all recorded and unrecorded monetary liens,
encumbrances, easements, leases, covenants, conditions, restrictions, and other
exceptions to or defects in title, excepting only the following: (a) the title exceptions listed
in City's Title Policy with respect to the Retail Parcels; (b) current taxes not yet delinquent;
(c) the lien of any construction loan obtained by Developer for construction of the Project
that has been approved by City; and (d) those additional title exceptions as may be
approved in writing by City in its sole and absolute discretion.
(5) Developer shall be responsible for all of the escrow fees,
recording fees, documentary transfer taxes, and any other costs and expenses of escrow,
and any property taxes and assessments and all costs required to place title in the
condition described in paragraph (4) above. Concurrently with the conveyance of the
Retail Parcels to City, and as a condition to City's acceptance of said conveyance,
Developer shall cause the Title Company to deliver to City an AL TA standard owner's
policy of title insurance showing title vested in City in the condition described in paragraph
(4) above with insurance coverage in the amount of the Retail Parcels Purchase Price
("City's Repurchase Title Policy"). Developer shall pay the premium for the City's
Repurchase Title Policy. City shall pay for any additional coverage or endorsements to
the City's Repurchase Title Policy.
(6) On or before 1 :00 p.m. on the last business day preceding the
scheduled City's Repurchase Escrow Closing Date, City shall deposit or cause to be
deposited with Escrow Holder the following: the Retail Parcels Purchase Price, and any
and all additional instruments or other documents required from City (executed and
acknowledged if appropriate) as may be necessary in order to effect the transfer of the
Retail Parcels to City. On or before 1 :00 p.m. on the last business day preceding the
scheduled City's Repurchase Escrow Closing Date, Developer shall deposit or cause to
be deposited with Escrow Holder the following: (a) an executed and acknowledged grant
deed conveying the Retail Parcels to City substantially in the form of the City Grant Deed
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("Retail Parcels Grant Deed"); (b) all escrow fees and closing costs; and (c) any and all
additional funds, instruments, or other documents required from Developer (executed and
acknowledged if appropriate), as may be necessary in order to effect the transfer of the
Retail Parcels to City.
(7) On or before the City's Repurchase Escrow Closing Date, and
when Escrow Holder has received all of the documents and funds listed in paragraph
(6) above, and Escrow Holder is in a position to cause the City's Repurchase Title Policy
referred to in paragraph (5) above to be issued to City, and provided City has approved
the physical condition of the Retail Parcels, Escrow Holder shall close the City's
Repurchase Escrow by (i) recording the Retail Parcels Grant Deed in the Office of the
Official Records of San Diego County, California, (ii) delivering the recorded Retail
Parcels Grant Deed to City, (iii) causing the City's Repurchase Title Policy to be issued
to City, and (iv) delivering the Retail Parcels Purchase Price to Developer.
Section 5.15 City Option to Repurchase Residential Parcels.
(a) Grant of Option .• Developer hereby grants to City an option to
repurchase all or any portion of the Residential Parcels not yet then completed. as
evidenced by City's issuance of a certificate of occupancy ("Residential Parcels
Repurchase Option") on the terms set forth in this Section 5.15. The term of the
Residential Parcels Repurchase Option shall commence on the Close of Escrow and shall
extend to the Project Completion Date (the "Residential Parcels Repurchase Option
Period"). City's rights under the Residential Parcels Repurchase Option are in addition
to and are not limited by the City"s Retail Parcels Purchase Right granted to City pursuant
to Section 5.14 above.
(b) Conditions to Exercise of Repurchase Option. City shall be entitled
to exercise the Residential Parcels Repurchase Option during the Residential Parcels
Repurchase Option Period in the event of the occurrence of any of the following events
(any such event, a "Residential Parcels Repurchase Option Event"):
(1) Developer's failure to commence vertical construction of the
First Phase of the Residential Development on the Residential Parcels within the time
frame therefor set forth in the Schedule of Performance, subject to the notice and right to
cure provisions set forth in Section 9.2(a) below, unless such failure is a result of an
"Adverse Market Condition" (as that term is defined below) or Unavoidable Delay.
(2) Developer's failure to diligently and continuously develop the
Residential Parcels and construct, complete and market residential units within the
Residential Parcels. Without limitation of the following, any period of inactivity in actually
conducting material construction work on the Residential Development within the
Residential Parcels until completion for more than forty five (45) days, subject to the notice
and right to cure provisions set forth in Section 9.2(a) below, unless such delays are
caused by an Adverse Market Condition or Unavoidable Delay.
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As used in this Section 5.15, the term "Adverse Market Condition"
shall mean and refer to adverse changes in economic conditions of the market for new
homes in general or in the City of Poway in particular. In the event of an Adverse Market
Condition that results in the occurrence of one of the failures described in paragraph (1)
or (2) above, Developer shall provide reasonable evidence thereof to City.
(c) Exercise of Residential Parcels Repurchase Option. City may, but
shall not be obligated to, exercise its Residential Parcels Repurchase Option following
the occurrence of any Residential Parcels Repurchase Option Event (but in no event later
than six (6) months following the occurrence of such Residential Parcels Repurchase
Option Event), City shall do so by delivery of written notice ("Residential Parcels
Repurchase Option Notice") thereof to Developer.
(d) Residential Parcels Repurchase Price. The price at which City shall
be entitled to repurchase the Residential Parcels ("Residential Parcels Repurchase
Price") shall be the lesser of (a) ninety percent (90%) of the appraised value of the
Residential Parcels or portion thereof which City is entitled, and elects, to purchase or (b)
the sum of (i) the "Base Price" plus (ii) the "Design and Hard Construction Costs" (as
those terms are defined below), if any, actually paid by Developer with respect to the
construction of improvements on the Residential Parcels or portion thereof which City is
entitled, and elects, to purchase, provided such Design and Hard Construction Costs
have been verified to City's reasonable satisfaction. Developer will present City with paid
invoices or other reasonable evidence to support the calculation of such costs. For the
purpose of this Section 5.15, the following defined terms shall have the following
meanings:
(i) "Base Price" means the applicable portion of Purchase Price
paid by Developer to City and to private parties for the acquisition of the Residential
Parcels or portion thereof which City is entitled, and elects, to purchase, and
(ii) "Design and Hard Construction Costs" means actual out
of pocket construction costs paid by Developer to any contractor (including but not
limited to the Contractor) or subcontractor for construction costs and materials and
inspection, payments made to consultants, architects, engineers, or other design
professionals, and building permit and similar fees actually paid by Developer to City or
other governmental agency for the construction of the Residential Development or
portion thereof which City is entitled, and elects, to purchase. Design and Hard
Construction Costs specifically exclude, without limitation, (1) salaries and other charges
for office personnel, (2) office expenses, (3) overhead and general expense of any kind,
(4) interest or return on capital, financing costs or expenses, or depreciation, (5)
insurance expenses, (6) sales and marketing expenses, (7) legal and accounting fees
and expenses, (8) taxes or assessments of any kind, or (9) any costs or expenses
attributable to the negligence or misconduct of Developer of its employees, agents, or
contractors.
(e) The appraised value of the Residential Parcels or portion thereof
which City is entitled, and elects, to purchase, shall be determined by an appraisal
conducted by an MAI appraiser selected by City and reasonably acceptable to
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March 19, 2019 Item #3.1
Developer. At such time as the Parties receive the appraisal, City shall have the right to
terminate its prior election to exercise City's Residential Parcels Repurchase Option
("City's Residential Parcels Repurchase Option Right of Termination"). City shall
exercise City's Residential Parcels Repurchase Option Right of Termination by providing
a written notice to Developer, within thirty (30) days after the Parties receive the
appraisal. In the event City does not timely deliver its Residential Parcels Repurchase
Option Notice or in the event the City delivers the City's Residential Parcels Repurchase
Option Right of Termination, then the City's Residential Parcels Repurchase Option shall
be deemed terminated and of no further force or effect.
(f) The provisions of this subparagraph (f) shall apply in the event City
timely delivers its Residential Parcels Repurchase Option Notice and does not exercise
City's Residential Parcels Repurchase Right of Termination. The provisions of this
subparagraph (f) shall also apply in the event City exercises its right of first refusal
pursuant to Section 10.6 below, except to the extent the provisions in this subparagraph
(f) conflict with the Acceptable Terms or Acceptable Offer (as applicable), as reasonably
determined by the City Manager, in which case the conflicting provisions of the
Acceptable Terms or Acceptable Offer (as applicable) shall control.
(1) Within thirty (30) days after receipt of the appraisal, Developer
and City shall cause an escrow ("City's Residential Parcels Repurchase Escrow") to
be opened with the Escrow Holder for the conveyance of the Residential Parcels or
portion thereof which City has the right, and elects, to purchase, by Developer to
City. City's Residential Parcels Repurchase Escrow shall be deemed opened on the date
City delivers to Escrow Holder (a) a copy of this Section 5.15, and (b) a copy of City's
Notice of Exercise, accompanied by a written certification from City that City has not
exercised City's Right of Termination ("Opening of City's Residential Parcels
Repurchase Escrow"). Escrow Holder shall notify Developer and City in writing of the
date of the Opening of City's Residential Parcels Repurchase Escrow promptly following
the opening of City's Residential Parcels Repurchase Escrow.
(2) City's Residential Parcels Repurchase Escrow shall close on
or before the date that is sixty (60) days after the Opening of City's Residential Parcels
Repurchase Escrow ("City's Residential Parcels Repurchase Escrow Closing
Date"). The terms "Close of City's Residential Parcels Repurchase Escrow" and/or
the "City's Residential Parcels Repurchase Escrow Closing" shall mean the date the
"City's Residential Parcels Repurchase Grant Deed" (as that term is defined in
paragraph (6) below) conveying fee title to the Residential Parcels or portion thereof
which City has the right, and elects, to purchase, to City is recorded in the Office of the
County Recorder of San Diego County, California. Possession of the Residential Parcels
or portion thereof which City has the right, and elects, to purchase, shall be delivered to
City at the Close of City's Residential Parcels Repurchase Escrow free and clear of all
tenancies, lessees, occupants, and all possessory rights of any kind or nature.
(3) This Section 5.15, together with any standard instructions of
Escrow Holder, shall constitute the joint escrow instructions of Developer and City to
Escrow Holder as well as an agreement between Developer and City with respect to
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March 19, 2019 Item #3.1
Developer's conveyance to City of the Residential Parcels or portion thereof which City
has the right, and elects, to purchase. In the event of any conflict between the provisions
of this Section 5.15 and Escrow Holder's standard instructions, this Section 5.15 shall
prevail.
(4) Developer shall convey and City shall accept fee simple title
to the Residential Parcels or portion thereof which City has the right, and elects, to
purchase, free and clear of all recorded and unrecorded monetary liens, encumbrances,
easements, leases, covenants, conditions, restrictions, and other exceptions to or defects
in title, excepting only the following: (a) the title exceptions listed in Developer's
Title Policy with respect to the Residential Parcels; (b) current taxes not yet delinquent;
(c) the lien of any construction loan obtained by Developer for construction of the Project
that has been approved by City; and (d) those additional title exceptions as may be
approved in writing by City in its sole and absolute discretion.
(5) Developer shall be responsible for all of the escrow fees,
recording fees, documentary transfer taxes, and any other costs and expenses of escrow,
and any property taxes and assessments and all costs required to place title in the
condition described in paragraph (4) above. Concurrently with the conveyance of the
Residential Parcels or portion thereof which City has the right, and elects, to purchase, to
City, and as a condition to City's acceptance of said conveyance, Developer shall cause
the Title Company to deliver to City an AL TA standard owner's policy of title insurance
showing title vested in City in the condition described in paragraph (4) above with
insurance coverage in the amount of the Residential Parcels Repurchase Price ("City's
Residential Parcels Repurchase Title Policy"). Developer shall pay the premium for
the City's Residential Parcels Repurchase Title Policy. City shall pay for any additional
coverage or endorsements to the City's Residential Parcels Repurchase Title Policy.
(6) On or before 1 :00 p.m. on the last business day preceding the
scheduled City's Residential Parcels Repurchase Escrow Closing Date, City shall deposit
or cause to be deposited with Escrow Holder the following: the Residential Parcels
Repurchase Price, and any and all additional instruments or other documents required
from City (executed and acknowledged if appropriate) as may be necessary in order to
effect the transfer of the Residential Parcels or portion thereof that City has the right, and
elects, to purchase, to City. On or before 1 :00 p.m. on the last business day preceding
the scheduled City's Residential Parcels Repurchase Escrow Closing Date, Developer
shall deposit or cause to be deposited with Escrow Holder the following: (a) an executed
and acknowledged grant deed conveying the Residential Parcels or portion thereof which
City has the right, and elects, to purchase, to City substantially in the form of the City
Grant Deed ("Residential Parcels Repurchase Grant Deed"); (b) all escrow fees and
closing costs; and (c) any and all additional funds, instruments, or other documents
required from Developer (executed and acknowledged if appropriate), as may be
necessary in order to effect the transfer of the Residential Parcels or portion thereof which
City has a right, and elects, to purchase, to City.
(7) On or before the City's Residential Parcels Repurchase
Escrow Closing Date, and when Escrow Holder has received all of the documents and
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March 19, 2019 Item #3.1
funds listed in paragraph (6) above, and Escrow Holder is in a position to cause the City's
Residential Parcels Repurchase Title Policy referred to in paragraph (5) above to be
issued to City, and provided City has approved the physical condition of the Residential
Parcels or portion thereof which City has the right, and elects, to purchase, Escrow Holder
shall close the City's Residential Parcels Repurchase Escrow by (i) recording the
Residential Parcels Repurchase Grant Deed in the Office of the Official Records of San
Diego County, California, (ii) delivering the recorded Residential Parcels Repurchase
Grant Deed to City, (iii) causing the City's Repurchase Parcels Title Policy to be issued
to City, and (iv) delivering the Residential Parcels Repurchase Price to Developer.
ARTICLE VI
USE AND OPERATION OF THE PROJECT
Section 6.1 Encumbrances and Liens. Developer shall not record and shall not
allow to be recorded against the Property or any portion of the Property any mortgage,
trust deed, deed of trust, encumbrance or lien not expressly authorized by this
Agreement. Developer shall remove, or shall have removed, any unauthorized lien,
encumbrance, mortgage, levy or attachment made or recorded against the Property or
any portion of the Property, or shall assure the satisfaction thereof to the satisfaction of
City. The covenants of Developer set forth in this Section 6.2 regarding the placement of
any unauthorized mortgage, trust deed, deed of trust, encumbrance or lien on the
Property shall only remain in effect until the Project Completion Date.
Section 6.2 Nondiscrimination. In addition to any other nondiscrimination
provisions applicable to the Property under federal, state or local law, Developer
covenants by and for itself and any successors in interest that there shall be no
discrimination against or segregation of any person, or group of persons on 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 Property, or
any part thereof, nor shall Developer, 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,
subtenants, sublessees or vendees of the Property, or any part thereof. The foregoing
covenants shall run with the land.
Developer agrees for itself and any successor in interest that Developer shall
refrain from restricting the rental, sale, or lease of any portion of the Property, or contracts
relating to the Property, on the basis of race, color, creed, religion, sex, marital status,
ancestry, or national origin of any person. All such deeds, leases or contracts shall
contain or be subject to substantially the following nondiscrimination or nonsegregation
clauses:
1. 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
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March 19, 2019 Item #3.1
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."
2. 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. The foregoing covenants shall
run with the land"
3. 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."
Section 6.3 Effect of Covenants. The covenants established in this Agreement
shall, without regard to technical classification and designation, be binding for the benefit
and in favor of City and City's successors and assigns, and any successor in interest to
the Property, together with any property acquired by Developer pursuant to this
Agreement, or any part thereof. The covenants against discrimination shall remain in
effect in perpetuity.
Section 6.4 Taxes and Assessments. Developer shall pay prior to delinquency
all real estate taxes and assessments on the Property, so long as Developer retains any
ownership interest therein. Developer shall remove or have removed any levy or
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March 19, 2019 Item #3.1
attachment made on the Property or any part thereof, or assure the satisfaction thereof
within a reasonable time but in any event prior to any sale or transfer of all or any portions
thereof. Notwithstanding the above, Developer shall have the right to contest the validity
or amounts of any tax, assessment, or encumbrance available to Developer in respect
thereto, and nothing herein shall limit the remedies available to Developer in respect
thereto.
Section 6.5 Developer Covenant to Defend this Agreement. Developer
acknowledges that City is a "public entity" and/or a "public agency" as defined under
applicable California law. Therefore, City must satisfy the requirements of certain
California statutes relating to the actions of public entities, including, without limitation,
CEQA. Also, as a California municipal corporation, City's action in approving this
Agreement may be subject to proceedings to invalidate this Agreement or mandamus.
Developer assumes the risk of delays and damages that may result to Developer from
any third-party legal actions related to City's approval of this Agreement or the pursuit of
the activities contemplated by this Agreement, including, without limitation, City's approval
of any Project approvals and issuance of any permits required for development of the
Project, even in the event that an error, omission or abuse of discretion by City is
determined to have occurred. If a third-party files a legal action regarding City's approval
of this Agreement or the pursuit of the activities contemplated by this Agreement,
including, without limitation, City's approval of any Project approvals and issuance of any
permits required for development of the Project, City may terminate this Agreement on
thirty (30) days written notice to Developer of City's intent to terminate this Agreement,
referencing this Section 6.6, without any further obligation to perform the terms of this
Agreement and without any liability to Developer resulting from such termination, unless
Developer unconditionally agrees to indemnify and defend City and City Personnel, with
legal counsel acceptable to City, against such third-party legal action, as provided
hereinafter in this Section 6.6 Within 30 days of receipt of City's notice of intent to
terminate this Agreement, as provided in the preceding sentence, Developer may in
Developer's sole and absolute discretion offer to defend City, with legal counsel
acceptable to City, in the third-party legal action and pay all of the court costs, attorney
fees, monetary awards, sanctions, attorney fee awards, expert witness and consulting
fees, and the expenses of any and all financial or performance obligations resulting from
the disposition of the legal action. At the request of Developer, City shall cooperate with
and assist Developer in its defense of any such third-party legal action, provided that City
shall not be obligated to incur any expense in connection with such cooperation or
assistance.
ARTICLE VII
RIGHTS OF HOLDERS OF APPROVED SECURITY INTERESTS IN PROPERTY
Notwithstanding anything to the contrary in this Agreement, the provisions in this
Article VII shall automatically terminate upon City's issuance of a Release of Construction
Covenants for the Project.
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Section 7.1 No Encumbrances Except Mortgages. Deeds of Trust. or Sale and
Lease-Back for Development. Mortgages, deeds of trust, and sales and leases-back or
any other method of financing shall be permitted before the completion of the Project only
for the purpose of securing loans of funds to be used for financing the construction of the
Project, if necessary, and only if such loans are provided by an Institutional Lender or
other acceptable person or entity reasonably acceptable to City, on commercially
reasonable terms. Developer shall notify City in advance of any mortgage, deed of trust,
sale and lease-back or other form of conveyance for financing if Developer proposes to
enter into the same. Any such form of conveyance (i) shall only encumber the Residential
Parcels, and (ii) may be in a first-priority lien position. Any such construction loan may
include terms that convert the loan to a term loan upon completion of construction of the
Project. Developer shall not enter into any such conveyance that will encumber the Retail
Parcels without the prior written approval of City, which approval City may withhold in its
sole and absolute discretion.
Section 7 .2 Holder Not Obligated to Construct Project. The holder of any
mortgage or deed of trust authorized by this Agreement shall not be obligated by the
provisions of this Agreement to construct, repair, or complete the Project or any portion
thereof, or to guarantee such construction or completion; nor shall any covenant or any
other provision in this Agreement be construed so to obligate such holder. Nothing in this
Agreement shall be deemed to construe, permit or authorize any such holder to devote
the Property to any uses or to construct any improvements thereon, other than those uses
or improvements provided for or authorized by this Agreement.
Section 7 .3 Notice of Default to Mortgagee or Deed of Trust Holders: Right to
Cure. With respect to any mortgage or deed of trust granted by Developer as provided
herein, whenever City may deliver any notice or demand to Developer with respect to any
breach or default by Developer in completion of construction of the Project, City shall at
the same time deliver a copy of such notice or demand to each holder of record of any
mortgage or deed of trust authorized by this Agreement who has previously requested
such notice in writing. Each such holder shall (insofar as the rights granted by City are
concerned) have the right, at its option, but not the obligation, within thirty (30) days after
the receipt of the notice, to cure or remedy or commence to cure or remedy and thereafter
to pursue with due diligence the cure or remedy of any such default and to add the cost
thereof to the mortgage debt and the lien of its mortgage. Nothing contained in this
Agreement shall be deemed to permit or authorize such holder to undertake or continue
the construction or completion of the Project, or any portion thereof (beyond the extent
necessary to conserve or protect the improvements or construction already made) without
first having expressly assumed Developer's obligations to City by written agreement
satisfactory to City. The holder, in that event, must agree to complete, in the manner
provided in this Agreement, the improvements to which the lien or title of such holder
relates. Any such holder properly completing such improvement shall be entitled, upon
compliance with the requirements of this Section 7.3, to a Release of Construction
Covenants. It is understood that a holder shall be deemed to have satisfied the thirty
(30) day time limit set forth above for commencing to cure or remedy a Developer default
which requires title and/or possession of the Property (or portion of this Agreement) if and
to the extent any such holder has within such thirty (30) day period commenced
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March 19, 2019 Item #3.1
proceedings to obtain title and/or possession and thereafter the holder diligently pursues
such proceedings to completion and cures or remedies the default.
Section 7.4 Right of City to Cure Mortgage or Deed of Trust Default. In the
event of a mortgage or deed of trust default or breach by Developer prior to the completion
of construction of the Project or any part of this Agreement, Developer shall immediately
deliver to City a copy of any mortgage holder's notice of default. If the holder of any
mortgage or deed of trust has not exercised its option to construct, City shall have the
right but no obligation to cure the default. In such event, City shall be entitled to
reimbursement from Developer of all proper costs and expenses incurred by City in curing
such default. City shall also be entitled to a lien upon the Property to the extent of such
costs and disbursements. Any such lien shall be junior and subordinate to the mortgages
or deeds of trust permitted pursuant to Section 7 .1.
Section 7.5 Right of City to Satisfy Other Liens on the Property. After the Close
of Escrow and prior to the completion of construction, and after Developer has had written
notice and has failed, after a reasonable time, to challenge, cure, or satisfy any other liens
or encumbrances on the Property, City shall have the right but no obligation to satisfy any
such other liens or encumbrances.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF DEVELOPER
Section 8.1 Representations and Warranties by Developer. Developer makes
the following representations, covenants and warranties, which shall be deemed to have
been given on the Effective Date and on each date thereafter until the Project Completion
Date, and acknowledges that the execution of this Agreement by City is made in material
reliance by City on such covenants, representations and warranties of Developer:
(a) Developer has taken all requisite action and obtained all requisite
consents in connection with entering into this Agreement, such that this Agreement is
valid and enforceable against Developer in accordance with its terms and each instrument
to be executed by Developer pursuant to or in connection with this Agreement will, when
executed, be valid and enforceable against Developer in accordance with its terms.
No approval, consent, order or authorization of, or designation or declaration of any other
person, is required in connection with the valid execution, delivery or performance of this
Agreement by Developer.
(b) If Developer becomes aware of any act or circumstance that would
change or render incorrect, in whole or in part, any representation or warranty made by
Developer under this Agreement, whether as of the date given or any time thereafter,
whether or not such representation or warranty was based upon Developer's knowledge
and/or belief as of a certain date, Developer will give immediate written notice of such
changed fact or circumstance to City.
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March 19, 2019 Item #3.1
ARTICLE IX
DEFAULTS, REMEDIES AND TERMINATION
Section 9.1 Defaults -General.
(a) Subject to any extensions of time provided for in this Agreement,
failure or delay by either Party to perform any term or provision of this Agreement within
thirty (30) calendar days after receipt of written notice from the injured Party specifying
such default, or if such default cannot reasonably be cured within thirty (30) days, to
commence to cure, correct or remedy such default and to diligently and continuously
prosecute such cure, correction or remedy to completion, shall constitute a default under
this Agreement.
(b) Delay in giving such written notice shall not constitute a waiver of any
default nor shall it change the time of default.
(c) Any failure or delays by either Party in asserting any of their rights
and/or remedies as to any default shall not operate as a waiver of any default or of any
such rights or remedies. Delays by either Party in asserting any of their rights and/or
remedies shall not deprive either Party of its right to institute and maintain any actions or
proceedings that ii may deem necessary to protect, assert or enforce any such rights or
remedies.
Section 9.2 Events of Default. In addition to other acts or omissions of
Developer that may constitute a default or breach of this Agreement, the occurrence of
any of the following specific events, prior to the issuance of a Release of Construction
Covenants for the Project, shall constitute an "Event of Default" under this Agreement
and shall not be subject to the provisions of Section 9.1:
(a) Any default by Developer of any of the non-monetary covenants and
conditions of this Agreement that is not cured within thirty (30) days following written
notice of the default to Developer from City or the expiration of an applicable shorter cure
period set forth in this Agreement, or if such default cannot reasonably be cured within
the applicable cure period, to commence to cure, correct or remedy such and to diligently
and continuously prosecute such cure, correction or remedy to completion.
(b) Any representation, warranty or disclosure made to City by
Developer regarding this Agreement or the Project is materially false or misleading at the
time it is made.
(c) Developer fails to make any payment or deposit of funds required
under this Agreement, or to pay any other charge set forth in this Agreement, following
seven (7) days' written notice to Developer from City of such failure.
(d) Any material deviation in the work of improvement of the Project from
the approved Scope of Development, other than Minor Field Changes, without the prior
written approval of City, which approval shall not be unreasonably withheld or delayed,
or the appearance, during the course of initial construction, of materially defective
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March 19, 2019 Item #3.1
workmanship or materials and such material defects are not corrected or substantially
corrected, within thirty (30) days after receipt of written notice thereof from City to
Developer, subject to a time extension as required in order to address any subcontractor
disputes, design a "fix" for the defects and to allow the same to be so repaired.
(e) The construction of the Project is delayed or suspended, or the
development of the Project does not proceed with reasonable due diligence, pursuant to
the Schedule of Performance, subject to the occurrence of Unavoidable Delays.
(f) The Developer sells, Transfers, hypothecates, encumbers or assigns
its interest in this Agreement, the Property or any portion thereof, whether voluntarily or
involuntarily or by operation of law, in violation of the terms and conditions of this
Agreement; it being agreed that Permitted Transfers shall not be in violation hereof.
Section 9.3 Liquidated Damages to City.
(a) UPON THE OCCURRENCE, PRIOR TO THE CLOSE OF
ESCROW, OF AN EVENT OF DEFAULT, OR OTHER MATERIAL DEFAULT OF
DEVELOPER UNDER THIS AGREEMENT THAT IS NOT CURED WITHIN THE
APPLICABLE CURE PERIOD SET FORTH IN THIS AGREEMENT, CITY MAY
TERMINATE THIS AGREEMENT AND CANCEL THE ESCROW, PURSUANT TO
SECTION 4.10, WITHOUT ANY LIABILITY OF CITY TO DEVELOPER OR ANY OTHER
PERSON ARISING FROM SUCH ACTIONS. CITY AND DEVELOPER
ACKNOWLEDGE THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICAL, IF NOT
IMPOSSIBLE, TO ASCERTAIN THE AMOUNT OF DAMAGES THAT WOULD BE
SUFFERED BY CITY, IN THE EVENT OF A TERMINATION OF THIS AGREEMENT
DUE TO THE OCCURRENCE, PRIOR TO THE CLOSE OF ESCROW, OF AN EVENT
OF DEFAULT, OR OTHER MATERIAL DEFAULT OF DEVELOPER UNDER THIS
AGREEMENT THAT IS NOT CURED WITHIN THE APPLICABLE CURE PERIOD SET
FORTH IN THIS AGREEMENT. HAVING MADE DILIGENT BUT UNSUCCESSFUL
ATTEMPTS TO ASCERTAIN THE ACTUAL DAMAGES CITY WOULD SUFFER, IN THE
EVENT OF A TERMINATION OF THIS AGREEMENT DUE TO THE OCCURRENCE,
PRIOR TO THE CLOSE OF ESCROW, OF AN EVENT OF DEFAULT, OR OTHER
MATERIAL DEFAULT OF DEVELOPER UNDER THIS AGREEMENT THAT IS NOT
CURED WITHIN THE APPLICABLE CURE PERIOD SET FORTH IN THIS
AGREEMENT, CITY AND DEVELOPER AGREE THAT A REASONABLE ESTIMATE OF
CITY'S DAMAGES IN SUCH EVENT IS THE EARNEST MONEY DEPOSIT OF TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000). THEREFORE, UPON THE
TERMINATION OF THIS AGREEMENT BY CITY DUE TO THE OCCURRENCE, PRIOR
TO THE CLOSE OF ESCROW, OF AN EVENT OF DEFAULT, OR OTHER MATERIAL
DEFAULT OF DEVELOPER UNDER THIS AGREEMENT THAT IS NOT CURED
WITHIN THE APPLICABLE CURE PERIOD SET FORTH IN THIS AGREEMENT,
ESCROW HOLDER SHALL IMMEDIATELY CANCEL THE ESCROW AND CITY SHALL
BE ENTITLED TO RETAIN THE EARNEST MONEY DEPOSIT. RETENTION OF THE
EARNEST MONEY DEPOSIT SHALL BE CITY'S SOLE AND EXCLUSIVE REMEDY
UPON THE OCCURRENCE, PRIOR TO THE CLOSE OF ESCROW, OF AN EVENT OF
DEFAULT OR OTHER MATERIAL DEFAULT OF DEVELOPER UNDER THIS
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March 19, 2019 Item #3.1
AGREEMENT THAT IS NOT CURED WITHIN THE APPLICABLE CURE PERIOD SET
FORTH IN THIS AGREEMENT.
(b) CITY ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE
SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS
SECTION 9.3, WHICH CIVIL CODE SECTION READS AS FOLLOWS:
A general release does not extend to claims which the creditor
or releasing party does not know or suspect to exist in his or
her favor at the time of executing the release and that, if
known by him or her, would have materially affected his or her
settlement with the debtor or released party.
(c) BY INITIALING BELOW, CITY KNOWINGLY AND VOLUNTARILY
WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE
WAIVERS AND RELEASES OF THIS SECTION 9.3:
CITY'S INITIALS
Section 9.4 Developer's Limitation on Recovery of Damages Prior to Close of
Escrow.
(a) IN THE EVENT OF ANY MATERIAL BREACH OF THIS
AGREEMENT BY CITY PRIOR TO THE CLOSE OF ESCROW, DEVELOPER'S
REMEDIES SHALL BE LIMITED TO A CHOICE BETWEEN (1) SPECIFIC
PERFORMANCE OR (2) TERMINATION OF THIS AGREEMENT AND RECOVERY OF
THE EARNEST MONEY DEPOSIT. DEVELOPER WAIVES ANY RIGHT TO RECOVER
ANY OTHER SUMS FROM CITY ARISING FROM A MATERIAL BREACH OF THIS
AGREEMENT BY CITY PRIOR TO THE CLOSE OF ESCROW. NOTWITHSTANDING
THE FOREGOING OR ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, IF SPECIFIC PERFORMANCE OF THIS AGREEMENT IS NOT
AVAILABLE TO DEVELOPER BECAUSE (A) CITY HAS SOLD, OR GRANTED AN
OPTION AS TO, THE PROPERTY TO A THIRD PARTY, OR (B) CITY HAS
MORTGAGED OR OTHERWISE BY AFFIRMATIVE ACTION OF CITY ENCUMBERED
THE PROPERTY, AND IS UNWILLING OR UNABLE TO REMOVE SUCH MORTGAGE
OR ENCUMBRANCE (IT BEING UNDERSTOOD THAT IF CITY IS UNWILLING OR
UNABLE TO REMOVE SUCH MORTGAGE OR ENCUMBRANCE, DEVELOPER SHALL
HAVE THE RIGHT TO REMOVE SUCH MORTGAGE OR ENCUMBRANCE THROUGH
PAYMENT ON BEHALF OF CITY AND TO OBTAIN A CREDIT TOWARDS THE
PURCHASE PRICE IN THE AMOUNT OF SUCH PAYMENT), THEN IN ADDITION TO
THE RETURN OF THE EARNEST MONEY DEPOSIT, CITY SHALL REIMBURSE
DEVELOPER FOR DEVELOPER'S ACTUAL OUT-OF-POCKET, THIRD PARTY
COSTS IN CONNECTION WITH ITS DUE DILIGENCE INVESTIGATION AND
RELATED ACTIVITIES AND ITS LEGAL FEES IN NEGOTIATING AND DRAFTING
THIS AGREEMENT AND RELATED DOCUMENTS, SUCH AMOUNT NOT TO EXCEED
TWO HUNDRED THOUSAND DOLLARS ($200,000) IN TOTAL, WHICH EXPENSES
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March 19, 2019 Item #3.1
SHALL BE IDENTIFIED ON A WRITTEN SCHEDULE (TOGETHER WITH
REASONABLY SUFFICIENT BACK-UP DOCUMENTATION EVIDENCING THE
EXPENSES INCURRED) DELIVERED BY DEVELOPER TO CITY. DEVELOPER
ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SECTION 1542 RELATIVE
TO THE WAIVER AND RELEASE CONTAINED IN THIS SECTION 9.4, WHICH CIVIL
CODE SECTION READS AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.
(b) BY INITIALING BELOW, DEVELOPER KNOWINGLY AND
VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN
CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 9.4:
DEVELOPER'S INITIALS
Section 9.5 Legal Actions.
(a) In addition to any other rights or remedies and subject to the
restrictions set forth in this Agreement, following the Close of Escrow, either Party may
institute an 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
(subject to the restriction on Developer's rights to recover monetary damages against City
set forth in the final clause of this sentence), or to obtain any other remedy consistent with
the purpose of this Agreement; provided, however, that notwithstanding anything in the
foregoing to the contrary, with the exception of Developer's rights pursuant to Section 9.4
above, in no event shall Developer be entitled to obtain monetary damages of any kind
from City, including but not limited to damages for economic loss, lost profits, or any other
economic or consequential damages of any kind. Such legal actions must be instituted
in the Superior Court of the State of California in and for the County of San Diego,
California, in any other appropriate court within the County of San Diego, California, or in
the United States District Court for the Central District of California.
(b) The laws of the State of California shall govern the interpretation and
enforcement of this Agreement. The Parties acknowledge and agree that this Agreement
is entered into, is to be fully performed in and relates to real property located in the City
of Poway, County of San Diego, California.
Section 9.6 Rights and Remedies are Cumulative. Except as otherwise
expressly stated in this Agreement, the rights and remedies of the Parties as set forth in
this Section 9.6 are cumulative and the exercise by either Party of one or more of such
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rights or remedies shall not preclude the exercise by ii, at the same or different times, of
any other rights or remedies for the same default or any other default by the other Party.
Section 9. 7 Attorneys' Fees. If either Party to this Agreement is required to
initiate or defend litigation in any way connected with this Agreement, the prevailing Party
in such litigation, in addition to any other relief which may be granted, whether legal or
equitable, shall be entitled to reasonable attorneys' fees. If either Party to this Agreement
is required to initiate or defend litigation with a third party because of the violation of any
term or provision of this Agreement by the other Party, then the Party so litigating shall
be entitled to reasonable attorneys' fees from the other Party to this Agreement.
Attorneys' fees shall include attorney's fees on any appeal, and in addition a Party entitled
to attorney's fees shall be entitled to all other reasonable costs for investigating such
action, retaining expert witnesses, taking depositions and discovery, and all other
necessary costs incurred with respect to such litigation. All such fees shall be deemed to
have accrued on commencement of such action and shall be enforceable whether or not
such action is prosecuted to judgment.
Section 9.8 Developer Indemnification of the City. In addition to any other
specific indemnification or defense obligations of the Developer set forth in this
Agreement, the Developer agrees to indemnify, defend (upon written request by the City
and with counsel reasonably acceptable to the City) and hold harmless the City and City
Personnel from any and all losses, liabilities, charges, damages, claims, liens, causes of
action, awards, judgments, costs and expenses, including, but not limited to reasonable
attorney's fees of counsel retained by the City, expert fees, and investigation costs, of
whatever kind or nature (collectively, "Claims"), that are in any manner directly or
indirectly caused, occasioned or contributed to in whole or in part, through any act,
omission, fault or negligence, whether active or passive, of Developer or Developer's
officers, agents, employees, independent contractors, subcontractors of any tier,
or authorized representatives, relating in any manner to this Agreement, any work to be
performed by Developer related to this Agreement, the Project, or any authority or
obligation exercised or undertaken by Developer under this Agreement, except to the
extent any such Claims are caused by the willful misconduct or active negligence of any
of City and City Personnel. Without limiting the generality of the foregoing, Developer's
obligation to indemnify City shall include injury or death to any person or persons, damage
to any property, regardless of where located, including the property of City, any workers'
compensation or prevailing wage determination, claim or suit or any other matter arising
from or connected with any goods or materials provided or services or labor performed
regarding the Project or the Property on behalf of Developer by any person or entity.
ARTICLEX
GENERAL PROVISIONS
Section 10.1 Notices. Demands and Communications Between the Parties.
(a) Any and all notices, demands or communications submitted by any
Party to another Party pursuant to or as required by this Agreement shall be proper, if in
writing and dispatched by messenger for immediate personal delivery, by a nationally
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March 19, 2019 Item #3.1
recognized overnight courier service or by registered or certified United States mail,
postage prepaid, return receipt requested, to the principal office of City or Developer, as
applicable, as designated in subsection (b). Such written notices, demands and
communications may be sent in the same manner to such other addresses as either Party
may from time to time designate. Any such notice, demand or communication shall be
deemed to be received by the addressee, regardless of whether or when any return
receipt is received by the sender or the date set forth on such return receipt, on the day
that it is delivered by personal delivery, on the date of delivery by a nationally recognized
overnight courier service or three (3) calendar days after it is placed in the United States
mail, as provided in this Section 10.1 (a).
(b) The following are the authorized addresses for the submission of
notices, demands or communications to the Parties:
To the Developer: Poway Commons, LLC
c/o Meridian Development, LLC
9988 Hibert Street, Suite 210
San Diego, CA 92131
Attention: Guy Asaro
With copy to: Higgs, Fletcher & Mack, LLP
401 West "A" Street, Suite 2600
San Diego, CA 92101
Attention: Tim Waters, Esq.
To the City: City of Poway
13325 Civic Center Drive
Poway, CA 92064
Attention: City Manager
With copies to: Rutan & Tucker, LLP
611 Anton Blvd., Suite 1400
Costa Mesa, CA 92626
Attention: Alan Fenstermacher, Esq.
Rutan & Tucker, LLP
611 Anton Blvd., Suite 1400
Costa Mesa, CA 92626
Attention: John A. Ramirez, Esq.
Section 10.2 Conflict of Interest. No member, official or employee of City having
any conflict of interest, direct or indirect, related to this Agreement or the development of
the Project shall participate in any decision relating to this Agreement. The Parties
represent and warrant that they do not have knowledge of any such conflict of interest.
Section 10.3 Warranty Against Payment of Consideration for Agreement.
Developer warrants that it has not paid or given, and will not pay or give, any third party
any money or other consideration for obtaining this Agreement. Third parties, for the
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March 19, 2019 Item #3.1
purposes of this Section 10.3, shall not include persons to whom fees are paid for
professional services, if rendered by attorneys, financial consultants, accountants,
engineers, architects and the like when such fees are considered necessary by
Developer.
Section 10.4 Non-liability of City Officials and Employees. No member, official
or employee of City shall be personally liable to Developer, or any successor in interest,
in the event of any default or breach by City under this Agreement or for any amount that
may become due to Developer or to its successor, or on any obligations under the terms
of this Agreement, except as may arise from the gross negligence or willful acts of such
member, official or employee.
Section 10.5 Unavoidable Delay: Extension of Time of Performance.
(a) Subject to specific provisions of this Agreement, performance by
either Party under this Agreement shall not be deemed to be in default, or considered to
be a default, where any such delays or defaults are due to an Unavoidable Delay that is
not attributable to the fault of the Party claiming an extension of time to perform. An
extension of time for any Unavoidable Delay shall be for the period of the Unavoidable
Delay and shall commence to run from the date of occurrence of the Unavoidable Delay,
but only if the Party asserting the existence of the Unavoidable Delay has first provided
the other Party with written notice of the occurrence of the Unavoidable Delay, within ten
(10) days of the commencement of such asserted Unavoidable Delay.
(b) The Parties expressly acknowledge and agree that changes in either
general economic conditions or changes in the economic assumptions of either of them
that may have provided a basis for entering into this Agreement and that occur at any
time after the execution of this Agreement, do not constitute an Unavoidable Delay and
do not provide any Party with grounds for asserting the existence of an Unavoidable Delay
in the performance of any covenant or undertaking arising under this Agreement. Each
Party expressly assumes the risk that changes in general economic conditions or
changes in such economic assumptions relating to the terms and covenants of this
Agreement could impose an inconvenience or hardship on the continued performance of
such Party under this Agreement.
Section 10.6 Right of First Refusal. Upon the Close of Escrow, City shall have
a right of first refusal with respect to any sale of the Property, pursuant to the following
process:
If at any time prior to the Project Completion Date, Developer (i) receives an offer
acceptable to Developer for the purchase of the Property (or any portion thereof not
completed) (an "Acceptable Offer"), or (ii) determines terms on which Developer is
willing to sell the Property (or applicable portion thereof) ("Acceptable Terms"), then
Developer shall forthwith forward a copy of such Acceptable Offer or Acceptable Terms
(as applicable) to City.
882/012782-0020
s!f'c5f'32~"15"' -55-March 19, 2019 Item #3.1
City shall have a period of sixty (60) days after receiving such copy of the
Acceptable Offer or Acceptable Terms (as applicable) within which to notify Developer
that City elects to purchase the Property (or applicable portion thereof) on the terms
contained therein (except, with respect to an Acceptable Offer, any terms not relevant to
City's purchase of the Property (or applicable portion thereof), such as contingency
clauses, etc.) (a "Right of First Refusal Exercise Notice"). Any Right of First Refusal
Exercise Notice shall be accompanied by any earnest money required under the terms of
the Acceptable Offer (if applicable), and collectively with the Acceptable Offer or
Acceptable Terms (as applicable) shall then constitute a contract between City and
Developer.
If City does not provide a Right of First Refusal Notice within the sixty (60) day
period stated in the immediately preceding paragraph, City shall be deemed to have
waived its right of first refusal with respect to the foregoing Acceptable Offer or Acceptable
Terms, and City shall upon request execute and deliver an instrument in recordable form
appropriate to evidence City's relinquishment of its rights under this Section 10.6 with
respect to such transaction. Notwithstanding any such relinquishment, City's rights under
this Section 10.6 shall remain in effect if the transaction contemplated by the Acceptable
Offer or a transaction pursuant to the Acceptable Terms (as applicable) fails for any
reason to close, with respect to any subsequent offer to purchase the Property (or
applicable portion thereof). Nothing in this Section 10.6 authorizes Developer to sell any
portion of the Property in violation of the provisions of Section 1.3 of this Agreement.
Section 10.7 Real Estate Commissions. City shall not be liable for any real
estate commissions, brokerage fees or finder fees that may arise from or be related to
this Agreement. Developer shall pay any fees or commissions or other expenses related
to its retention or employment of real estate brokers, agents or other professionals.
Section 10.8 Binding on Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
Section 10.9 Entire Agreement. This Agreement integrates all of the terms and
conditions mentioned in this Agreement or incidental to this Agreement, and supersedes
all negotiations or previous agreements between the Parties with respect to the Property
and the Project.
Section 10.10 No Merger. None of the terms, covenants, agreements or
conditions set forth in this Agreement shall be deemed to be merged with any deed
conveying title to the Property, and this Agreement shall continue in full force and effect
before and after such conveyances.
Section 10.11 Waivers. All waivers of the provisions of this Agreement and all
amendments to this Agreement must be in writing and signed by the authorized
representative(s) of both City and Developer.
882/012782-0020
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March 19, 2019 Item #3.1
Section 10.12 Survival of Indemnity Obligations. All general and specific
indemnity and defense obligations of the Parties set forth in this Agreement shall survive
the expiration or termination of this Agreement and the execution or recordation of the
City Grant Deed and/or City's issuance of a Release of Construction Covenants for the
Project for a period of three (3) years.
Section 10.13 City Approvals and Actions. City shall maintain authority of this
Agreement and the authority to implement this Agreement through the City Manager (or
his or her duly authorized representative). The City Manager shall have the authority to
make approvals, issue interpretations, execute documents, waive provisions, and/or
enter into certain amendments of this Agreement on behalf of City so long as such actions
do not materially or substantially change the basic business terms hereof, change the
uses or development permitted on the Property, or add to the costs incurred or to be
incurred by City as specified herein, and such approvals, interpretations, waivers and/or
amendments may include extensions of time to perform as set forth in Section 5.5. All
other material and/or substantive interpretations, waivers, or amendments shall require
the consideration, action and written consent of the City Council.
Section 10.14 Developer Termination. In the event that prior to the Close of
Escrow all or a portion of the Property is condemned or there is a written threat of
condemnation issued by a governmental authority or there is a spill or release of any
Hazardous Substances not caused by Developer upon the Property, then Developer shall
have the right, but not the obligation and upon written notice to City, to terminate the
Agreement and be refunded the Earnest Money Deposit.
Section 10.15 Possession. Upon the Escrow Closing Date, City shall deliver
possession of the Property to Developer (or its assignee) free and clear of all rights or
claims to possession and use.
Section 10.16 Termination. Except where expressly set forth herein, Developer's
obligations hereunder shall terminate upon the issuance of the Release of Construction
Covenants.
Section 10.17 Counterparts. This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement binding on both Parties
hereto, notwithstanding that both Parties are not signatories to the same counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
882/012782-0020
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March 19, 2019 Item #3.1
IN WITNESS WHEREOF, City and Developer have executed this Purchase, Sale,
and Development Agreement by and through the signatures of their duly authorized
representative(s) set forth below:
ATTEST:
Faviola Medina, City Clerk
APPROVED AS TO FORM:
RUT AN & TUCKER, LLP
Alan Fenstermacher, City Attorney
882/012782-0020
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"City"
CITY OF POWAY,
a California municipal corporation
By:
Tina M. White, City Manager
"Developer":
POWAY COMMONS, LLC, a Delaware limited
liability company
By:
Guy Asaro, Manager
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March 19, 2019 Item #3.1
A.
ATTACHMENT NO. 1
LEGAL DESCRIPTIONS
Legal Description of City-Owned Property
13029 1/2 Poway Road: Real property in the City of Poway, County of San Diego,
State of California, described as follows:
PARCEL A:
PARCEL 2, IN THE CITY OF POWAY, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, AS SHOWN AT PAGE 8847 OF PARCEL MAPS, FILED IN THE
OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JUNE 21, 1979.
EXCEPTING THAT PORTION DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHEAST CORNER OF SAID PARCEL 2; THENCE
WESTERLY ALONG THE SOUTHERLY LINE THEREOF A DISTANCE OF 100.29
FEET; THENCE LEAVING SAID SOUTHERLY LINE NORTH 0° 51' 30" EAST OF 0.40
FEET; THENCE SOUTH 89° 08' 30" EAST PARALLEL WITH SAID SOUTH LINE A
DISTANCE OF 19.80 FEET; THENCE SOUTH 88° 59' 58" EAST 80.49 FEET TO THE
INTERSECTION WITH THE EASTERLY LINE OF SAID PARCEL 2; THENCE
SOUTHERLY ALONG SAID EASTERLY LINE A DISTANCE OF 0.20 FEET TO THE
POINT OF BEGINNING.
PARCEL B:
AN EASEMENT FOR ROAD AND PUBLIC UTILITY PURPOSES OVER, UNDER,
ALONG AND ACROSS THE WESTERLY 30.00 FEET OF PARCEL 1, IN THE COUNTY
OF SAN DIEGO, STATE OF CALIFORNIA, AS SHOWN AT PAGE 8847 OF PARCEL
MAPS, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, JUNE 21, 1979.
PARCEL C:
AN EASEMENT FOR ROAD AND PUBLIC UTILITY PURPOSES OVER, UNDER,
ALONG AND ACROSS A STRIP OF LAND 30.00 FEET IN WIDTH LYING WITHIN THE
NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 13,
TOWNSHIP 14 SOUTH, RANGE 2 WEST, SAN BERNARDINO MERIDIAN, IN THE
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL
PLAT THEREOF, THE EASTERLY LINE OF SAID STRIP BEING THE MOST
WESTERLY LINE OF PARCELS 1 AND 2 AS SHOWN AT PAGE 8847 OF PARCEL
MAPS, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, JUNE 21, 1979.
APN: 317-472-25
882/012782-0020
7f'c5f'32f3115119 March 19, 2019 Item #3.1
13053 Poway Road: Real property in the City of Poway, County of San Diego, State of
California, described as follows:
PARCEL A:
THE SOUTHERLY 100.00 FEET OF THE NORTHERLY 315.00 FEET OF THE
EASTERLY 133.495 FEET OF THE WESTERLY 466.99 FEET OF THE NORTHWEST
QUARTER OF THE SOUTHWEST QUARTER OF SECTION 13, TOWNSHIP 14
SOUTH, RANGE 2 WEST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN
DIEGO, STATE OF CALIFORNIA, ACCORDING TO OFFICIAL PLAT THEREOF.
PARCEL B:
AN EASEMENT FOR ROAD AND PUBLIC UTILITY PURPOSES TO BE USED IN
COMMON WITH OTHERS OVER, UNDER, ALONG, AND ACROSS A STRIP OF LAND
60.00 FEET IN WIDTH LYING WITHIN THE NORTHWEST QUARTER OF THE
SOUTHWEST QUARTER OF SECTION 13, TOWNSHIP 14 SOUTH, RANGE 2 WEST,
SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO OFFICIAL PLAT THEREOF, THE CENTER LINE OF
SAID 60.00 FOOT STRIP BEING DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWESTERLY CORNER OF PARCEL 1 ABOVE; THENCE
NORTHERLY ALONG THE WESTERLY LINE OF SAID PARCEL 1 AND THE
NORTHERLY EXTENSION OF SAID WESTERLY LINE 265.00 FEET TO THE SOUTH
LINE OF THE NORTH 50.00 FEET OF THE SAID NORTHWEST QUARTER OF THE
SOUTHWEST QUARTER OF SECTION 13.
EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL A
HEREINABOVE DESCRIBED.
PARCEL C:
AN EASEMENT FOR PUBLIC UTILITY PURPOSES OVER, UNDER, AND
ACROSS THE SOUTHERLY 5.00 FEET OF THE NORTHERLY 315.00 FEET OF
THAT PORTION OF THE NORTHWEST QUARTER OF THE SOUTHWEST
QUARTER OF SECTION 13, TOWNSHIP 14 SOUTH, RANGE 2 WEST, SAN
BERNARDINO MERIDIAN, IN THE COUNTY OF SAN DIEGO, , STATE OF
CALIFORNIA, ACCORDING TO OFFICIAL PLAT THEREOF, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER
OF SAID SECTION 13; THENCE ALONG THE WESTERLY LINE OF SAID
SOUTHWEST QUARTER, SOUTH 00° 49' 00" WEST,
614.99 FEET TO THE MOST WESTERLY NORTHWEST CORNER OF LAND
DESCRIBED IN DEED TO RUDOLPH WALTER MATZ, ET AL, RECORDED
SEPTEMBER 13, 1956 IN BOOK6255. PAGE 520 OF OFFICIAL RECORDS; THENCE
ALONG THE BOUNDARY OF SAID MATZ'S LAND AS FOLLOWS: SOUTH 89° 08'
30" EAST, 733.99 FEET, AND NORTH 01° 07' 00" EAST, 615.00 FEET TO THE
NORTHERLY LINE OF THE SOUTHWEST QUARTER OF SAID SECTION 13;
882/012782-0020
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March 19, 2019 Item #3.1
THENCE ALONG THE NORTHERLY LINE OF SAID SOUTHWEST QUARTER,
NORTH 89° 08' 30" WEST TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM THE WESTERLY 466.99 FEET.
THEREFROM THE EASTERLY 134.26 FEET.
PARCEL D:
EXCEPTING
THAT PORTION OF PARCEL 2, IN THE COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, AS SHOWN AT PAGE 8847 OF PARCEL MAPS, FILED IN THE OFFICE
OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JUNE 21, 1979, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHEAST CORNER OF SAID PARCEL 2; THENCE ALONG
THE SOUTHERLY LINE OF SAID PARCEL2 NORTH 89°08' 30"WEST, 100.29 FEET;
THENCE LEAVING SAID SOUTHERLY LINE NORTH 00° 51' 30" EAST. 0.40 FEET;
THENCE PARALLEL WITH THE SOUTHERLY LINE OF SAID PARCEL 2, SOUTH 89°
08' 30' EAST, 19.80 FEET; THENCE SOUTH 88° 59' 58" EAST, 80.49 FEET TO THE
EASTERLY LINE OF SAID PARCEL 2; THENCE ALONG SAID EASTERLY LINE
SOUTH 00° 49' 00" WEST,
0.20 FEET TO THE POINT OF BEGINNING.
APN: 317-472-24
882/012782-0020
·nf '&¥'321'11
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March 19, 2019 Item #3.1
13033 Poway Road: Real property in the City of Poway, County of San Diego, State of
California, described as follows:
PARCEL 1:
LOT 2 AND THAT PORTION OF LOT 1 OF K.N.Q. DEVELOPMENT IN THE COUNTY
OF SAN DIEGO, STATE OF CALIFORNIA ACCORDING TO MAP THEREOF NO. 8019
FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,
SEPTEMBER 12, 1974, BEING A PORTION OF THE NORTHWEST QUARTER OF THE
SOUTHWEST QUARTER OF SECTION 13, TOWNSHIP 14 SOUTH, RANGE 2 WEST,
SAN BERNARDINO MERIDIAN, ACCORDING TO THE U.S. GOVERNMENT SURVEY
APPROVED NOVEMBER 19, 1880, BEING MORE PARTICULARLY DESCRIBED AS
FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 2 OF MAP NO. 8019:
THENCE ALONG THE SOUTHERLY LINE OF SAID MAP 8019 SOUTH 89°08'30"
EAST 281.73 FEET; THENCE NORTH 1 °07'00" EAST 270.00 FEET TO THE NORTH
LINE OF SAID LOT 1; THENCE NORTH 89°08'30" WEST 149.67 FEET TO A
TANGENT 30.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY; THENCE
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90°00'00" A DISTANCE OF
47.12 FEET; THENCE NORTH 89°08'30" WEST 103.50 FEET TO THE WEST LINE
OF SAID MAP 8019: THENCE SOUTH 0°49'00" WEST 300.00 FEET TO THE POINT
OF BEGINNING.
PARCEL 2:
AN EASEMENT AND RIGHT OF WAY FOR ROAD AND PUBLIC UTILITY PURPOSES
OVER. UNDER, ALONG AND ACROSS A STRIP OF LAND 60.00 FEET IN WIDTH,
LYING WITHIN THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF
SECTION 13, TOWNSHIP 14 SOUTH, RANGE 2 WEST, SAN BERNARDINO BASE
AND MERIDIAN, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO UNITED STATES GOVERNMENT SURVEY APPROVED
NOVEMBER 19, 1880, THE CENTER LINE OF SAID STRIP OF LAND BEING THE
EASTERLY LINE OF THE SOUTHERLY 265.00 FEET OF THE NORTHERLY
315.00 FEET OF THE WEST HALF OF THE EASTERLY 266.99 FEET OF THE
WESTERLY 466.99 FEET OF THAT PORTION OF THE NORTHWEST QUARTER
OF THE SOUTHWEST QUARTER OF SECTION 13, TOWNSHIP 14 SOUTH,
RANGE 2 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF
SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO UNITED STATES
GOVERNMENT SURVEY APPROVED NOVEMBER 19, 1880, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF
SAID SECTION 13; THENCE ALONG THE WESTERLY LINE OF SAID SOUTHWEST
QUARTER, SOUTH 00°49'00" WEST, 614.99 FEET TO THE MOST WESTERLY
NORTHWEST CORNER OF LAND DESCRIBED IN DEED TO RUDOLPH WALTER
MATZ, ET AL., RECORDED SEPTEMBER 13, 1956, IN BOOK 6255, PAGE 520 OF
OFFICIAL RECORDS; THENCE ALONG THE BOUNDARY OF SAID MATZ'S LAND AS
882/012782-0020
7!J''Jf'32~3/15119 -4-
March 19, 2019 Item #3.1
FOLLOWS: SOUTH 89°08'30" EAST, 733.99 FEET, AND NORTH 01'07'00" EAST,
615.00 FEET TO THE NORTHERLY LINE OF THE SOUTHWEST QUARTER OF SAID
SECTION 13; THENCE ALONG THE NORTHERLY LINE OF SAID SOUTHWEST
QUARTER, NORTH 89°08'30" WEST TO THE POINT OF BEGINNING.
APN: 317-472-18
882/012782-0020
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March 19, 2019 Item #3.1
Real property in the City of Poway, County of San Diego, State of California, described
as follows:
PARCEL 2 OF PARCEL MAP NO. 9105. IN THE CITY OF POWAY, COUNTY OF SAN
DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN DIEGO COUNTY, AUGUST 30, 1979 AS INSTRUMENT NO.
79-366067 OF OFFICIAL RECORDS.
APN: 317-472-23
882/012782-0020
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March 19. 2019 Item #3.1
B. Legal Description of City-Owned Mixed Property
13100 Poway Road: The land referred to herein is situated in the State of California,
County of San Diego and is described as follows:
That portion of the Southwest Quarter of the Northwest Quarter of Section 13, Township
14 South, Range 2 West, San Bernardino Base and Meridian, in the City of Poway,
County of San Diego, State of California, according to Official Plat thereof described as
follows:
Beginning at a point on the Southerly line of said Southwest Quarter of the Northwest
Quarter, distant, thereon South 89°08'30" East 332.00 feet from the Southwest corner
thereof, said point being the Southeast corner of land conveyed to James Albert Silkwood
and wife, by deed recorded in Book 5316, Page 83 of Official Records; thence continuing
South 89°08'30" East 281.00 feet; thence parallel with the West line of said Northwest
Quarter North 01 °26'1 O" East 50 feet to the North line of the South 50 feet of said
Northwest Quarter being the True Point of Beginning; thence along said line South
89°08'30" East 176.48 feet to a tangent 20 foot radius curve, concave Northwesterly in
the Westerly line ofTarascan Drive as shown on Heritage Hills according to Map No. 5934
filed in the Office of the County Recorder of San Diego County; thence along the boundary
line of said Map No. 5934, Northeasterly along said curve 31.17 feet; thence tangent to
said curve North 1 °33'47" East 320.27 feet; thence North 89°08'30" West 68 feet; thence
leaving said boundary North 89°08'30" West 129 feet to a line which bears North
01 °26'1 O" East parallel with said West line from the True Point of Beginning; thence South
01 °26'1 O" West 340.02 feet to the True Point of Beginning.
APN: 317-101-06
882/012782-0020
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March 19, 2019 Item #3.1
C. Legal Description of Authority-Owned Property
13021 Poway Road: Real property in the City of Poway, County of San Diego, State of
California, described as follows:
THE WEST 200.00 FEET OF THAT PORTION OF THE NORTHWEST QUARTER OF
THE SOUTHWEST QUARTER OF SECTION 13, TOWNSHIP 14 SOUTH, RANGE 2
WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE CITY OF POWAY,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE UNITED
STATES GOVERNMENT SURVEY APPROVED NOVEMBER 19, 1880, DESCRIBED
AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF
SAID SECTION 13 HEREIN DESCRIBED; THENCE SOUTH 0° 49' 00" WEST, 614.99
FEET; THENCE SOUTH 89° 08' 30" EAST, 733.99 FEET TO THE SOUTHWEST
CORNER OF THAT PORTION OF PROPERTY CONVEYED TO RUDOLPH WALTER
MATZ ET AL, ON SEPTEMBER 13, 1956 IN BOOK 6255, PAGE 520 OF OFFICIAL
RECORDS; THENCE ALONG THE WESTERLY LINE OF THE PROPERTY CONVEYED
TO MATZ, NORTH 1° 07' 00" EAST, 615.00 FEET TO THE NORTH LINE OF SAID
SOUTHWEST QUARTER OF SECTION 13 HEREIN DESCRIBED; THENCE ALONG
THE NORTH LINE OF THE SOUTHWEST QUARTER, NORTH 89° 08' 30" WEST TO
THE POINT OF BEGINNING. EXCEPTING THEREFROM THE NORTH 50.00 FEET OF
THE WEST 200.00 FEET OF THE NORTHWEST QUARTER OF THE SOUTHWEST
QUARTER OF SECTION 13, TOWNSHIP 14 SOUTH, RANGE 2 WEST.
APN: 317-472-01
882/012782-0020
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March 19, 2019 Item #3.1
13031 Poway Road: Real property in the City of Poway, County of San Diego, State of
California, described as follows:
PARCEL 1:
THE SOUTHERLY 100.00 FEET OF THE NORTHERLY 315.00 FEET OF THE WEST
HALF OF THE EASTERLY 266.99 FEET OF THE WESTERLY 466.99 FEET OF THAT
PORTION OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF
SECTION 13, TOWNSHIP 14 SOUTH, RANGE 2 WEST, SAN BERNARDINO BASE
AND MERIDIAN, IN THE CITY OF POWAY, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO THE UNITED STATES GOVERNMENT SURVEY,
APPROVED NOVEMBER 19, 1880, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF
SAID SECTION 13; THENCE ALONG THE WESTERLY LINE OF SAID SOUTHWEST
QUARTER SOUTH 00° 49' 00" WEST, 614.99 FEET TO THE MOST WESTERLY
NORTHWEST CORNER OF LAND DESCRIBED IN DEED TO RUDOLPH WALTER
MATZ, ET AL, RECORDED SEPTEMBER 13, 1956, IN BOOK 6255, PAGE 520 OF
OFFICIAL RECORDS; THENCE ALONG THE BOUNDARY OF SAID MATZ'S LAND AS
FOLLOWS: SOUTH 89° 08' 30" EAST, 733.99 FEET AND NORTH 01 ° 07' 00" EAST,
615.00 FEET TO THE NORTHERLY LINE OF THE SOUTHWEST QUARTER OF SAID
SECTION 13; THENCE ALONG THE NORTHERLY LINE OF SAID SOUTHWEST
QUARTER, NORTH 89° 08' 30" WEST TO THE POINT OF BEGINNING.
PARCEL 2:
AN EASEMENT FOR ROAD AND PUBLIC UTILITY PURPOSES, TO BE USED IN
COMMON WITH OTHERS OVER, UNDER, ALONG, AND ACROSS A STRIP OF LAND
60 FEET WIDE IN THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER
OF SECTION 13, TOWNSHIP 14 SOUTH, RANGE 2 WEST, SAN BERNARDINO
MERIDIAN, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING
TO UNITED STATES GOVERNMENT SURVEY APPROVED, NOVEMBER 19, 1880,
THE CENTER LINE OF SAID
60 FOOT STRIP BEING DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHEASTERLY CORNER OF PARCEL 1 ABOVE; THENCE
NORTHERLY ALONG THE EASTERLY LINE OF SAID PARCEL 1 AND THE
NORTHERLY EXTENSION OF SAID EASTERLY LINE, 265 FEET TO THE SOUTH
LINE OF THE NORTH 50 FEET OF THE SAID NORTHWEST QUARTER OF THE
SOUTHWEST QUARTER OF SECTION 13. EXCEPTING THEREFROM THAT
PORTION INCLUDED WITH PARCEL 1
ABOVE.
APN: 317-472-06-00
882/012782-0020
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March 19, 2019 Item #3.1
882/012782-0020 sf9Jfj21 3/15/19
ATTACHMENT NO. 2A
AREA SITE MAP
ATTACHMENT2A
March 19, 2019 Item #3.1
ATTACHMENT 28
PROPOSED SUBDIVISION MAP
PROPOSED SUBDIVISION MAP
P ·OWAY C ·OMl\lIONS
ls '5;) RETAIL AREA -Approx 2 .3 gross acres
[:::::;:;::1 AFFO RDABLE A REA -Approx 0.9 gross acres
111111 RES1DENTIALAREA-Approx 6 .1gross ac res
882/012782-0020
8~96J°32!31 15119 March 19, 2019 Item #3.1
ATTACHMENT NO. 3
SCOPE OF DEVELOPMENT
(Total Project Site area includes approximately 9.6 gross acres)
The Project will consist of:
• A retail land area on the Retail Parcels comprising approximately 2.2 acres that
could include approximately 25,000 square feet of retail. The Phase1 Retail
Development Work shall include: (i) establishment of at least two legal lots
defining the approximately 2.2 acre Retail Parcels area; (ii) completing remedial,
rough and finish grading to an approved City plan, in accordance with compaction
standards, (iii) installing wet and dry backbone utility services to ultimately service
the future retail project, and (iv) stabilizing the Retail Parcels in accordance with
the City's storm water standards.
• A residential component that will include development of approximately 98 units of
for-sale housing. All units are contemplated to be type V non-rate wood framed.
Architectural style is "Gill/ Monterrey style," subject to City approval. The units are
generally described as follows:
o Approximately 38 units of two-story attached condominiums. Unit size
generally ranges from 1400-1600 square footage. The units will be
configured 2-3 bedrooms, with approximately 2.5 baths. Each unit will have
an attached two-car garage.
o Approximately 54 units configured in three-story buildings. Product consists
of three-story attached buildings, containing two-story townhomes and flat
condominiums. Unit size generally ranges from 1700-2200 square footage.
The units will be configured 3 bedrooms/lofts with 2 to 3 baths. Each unit
will have an attached two-car garage.
o Approximately 6 units of three-story attached condominiums. Unit size
generally ranges from 1300-1800 square footage. The units will be
configured 2-3 bedrooms, 2.5 baths. Each unit will have an attached two-
car garage. This product will include a small live/work space associated with
the units along Poway Road.
Land development consists of demolition of approximately 59,000 square feet of
existing structures, grading and remediation of soils, installation of wet & dry utilities and
surface improvements.
882/012782-0020 s:fs6r3~~3115/19 March 19, 2019 Item #3.1
ATTACHMENT NO. 4
SCHEDULE OF PERFORMANCE
Task/Event Time for Performance
1. Open of Escrow
2. Developer submits tentative map application and Within 120 days of Escrow opening
design review package.
3. After City staff approval* and within 60 days of Within 150 days of submittal
said approval, City Council's approval of le ntative
map and design review package.
4. Developer submits grading plan Within 30 days of tentative map
and design review approval
5. City Staff approval of grading plans Within 120 days of submittal
6. Close of Escrow. Developer submits improvement Within 30 days of grading plan
plans and final map. approval
7. Developer posts bonds for grading, pulls Within 30 days of Close of Escrow
grading permit, and after City staff
approval* commences grading.
8. Developer post bonds for improvement plans. City Within 150 days of submittal
Staff approval* of public improvement plans. City after City staff approval Council approval offinal map after City staff approval.
9. Developer commences improvements and submtts Within 60 days of City's approval of
residential building plans final map
10. Developer completes all public improvements Within 150 days of Developer start
required in the public improvement plans and rough of improvements
grading and for first phase of all residential and retail
-,
11. Developer obtains building permits and commences Within 30 days after Developer's
construction of first phase of Residential completion of first phase stte
Development. improvements
• City staff approval is contingent upon developer addressing all staff corrections.
Developer hereby advises City that the residential units comprising the Residential
Development are expected to sell at a rate of 4.0/ units per month. The pace of
construction and completion of units after the first phase of the Residential Development
will be commensurate with sales performance, bank covenants on sales, inventory,
backlog and other lending guidelines as well as general economic conditions.
882/012782-0020
alf 9Jf"321'1151
" March 19, 2019 Item #3.1
882/012782-0020
aJ 98f32~3115
'"
ATTACHMENT NO. 5
FORM OF CITY GRANT DEED
[SEE ATTACHED]
March 19, 2019 Item #3.1
RECORDING REQUESTED BY:
AND WHEN RECORDED MAIL TO:
(Space above for Recorder's Use Only)
Documentary transfer tax $ _____ _
Computed on the consideration of the full value of property conveyed
[Exempt from recorder's fee pursuant to
Government Code Section 27383]
The undersigned declares exemption under
the following:
Exempt from fee per Government Code
Section 27388.1 (a)(2).1 (a)(2);
recorded concurrently in connection with a
transfer subject to the imposition of
documentary transfer tax
GRANT DEED
For valuable consideration, the receipt of which is hereby acknowledged, the CITY
OF POWAY, a California municipal corporation (the "City"), hereby grants to POWAY
COMMONS, LLC, a Delaware limited liability company (the "Grantee"), the real property
legally described in Exhibit "A" attached hereto and made a part hereof (the "Property"),
subject to all matters of record and subject to the following:
Grantee, on behalf of itself and its successors and assigns to all or any portion of
the Property, covenants and agrees as follows:
Section 1. Nondiscrimination Covenants. That there shall be no discrimination
against or segregation of any person, or group of persons on 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
882/012782-0020
5ij''Jf'32~3/15119 March 19, 2019 Item #3.1
(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 Property, or any part
thereof, nor shall Grantee, 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, subtenants,
sublessees or vendees of the Property, or any part thereof. The foregoing covenants
shall run with the land.
Section 2. Nondiscrimination Clauses in Agreements. Grantee agrees for itself
and any successor in interest that Grantee shall refrain from restricting the rental, sale, or
lease of any portion of the Property, or contracts relating to the Property, on the basis of
race, color, creed, religion, sex, marital status, ancestry, or national origin of any person.
All such deeds, leases or contracts shall contain or be subject to substantially the
following nondiscrimination or nonsegregation clauses:
i. 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."
ii. 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."
iii. In contracts relating to the sale. transfer. or leasing of the land or any
interest therein: "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
882/012782-0020
af•&f"32~"' '" • -2-
March 19, 2019 Item #3.1
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."
The foregoing nondiscrimination covenants shall remain in effect in perpetuity.
IN WITNESS WHEREOF, the City has caused this Grant Deed to be executed by
its authorized representative(s) on this_ day of , 20
City:
CITY OF POWAY, a California municipal
corporation
By: _____________ _
Tina M. White, City Manager
By execution below, Grantee accepts and agrees to be bound by all of the covenants,
restrictions, and obligations set forth in this Grant Deed.
Grantee:
POWAY COMMONS, LLC, a Delaware
limited liability company
By: __________ _
Guy Asaro, Manager
882/012782-0020
d1!'96¥'32~3115119 -3-
March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of _________ _
On ___________ , before me,------------
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ____________ _ (Seal)
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of _________ _ )
On ___________ , before me,------------
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature. ____________ _ (Seal)
882/012782-0020
s~·Jf'32~"'s"· March 19, 2019 Item #3.1
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
Real property in the City of Poway, County of San Diego, State of California, described
as follows:
882/012782-0020
9lf 9Jf"j2f"15
'
19
March 19, 2019 Item #3.1
882/012782-0020
9Jf "Jf 32:i'3115/19
ATTACHMENT NO. 6
FORM OF MEMORANDUM OF AGREEMENT
[SEE ATTACHED]
March 19, 2019 Item #3.1
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Poway
13325 Civic Center Drive
Poway, CA 92064
Attn: City Clerk
(Space above for Recorder's Use Only)
[Recordation of this Document
is Exempt From Fees Payable to the Recorder
Under Government Code Section 27383]
CITY OF POWAY
MEMORANDUM OF AGREEMENT
(PURCHASE. SALE. AND DEVELOPMENT AGREEMENT)
This MEMORANDUM OF AGREEMENT (PURCHASE, SALE, AND
DEVELOPMENT AGREEMENT) ("Memorandum") is entered into as of this_ day of
____ , 2019, by and between POWAY COMMONS, LLC, a Delaware limited liability
company (the "Developer") and the CITY OF POWAY, a California municipal corporation
(the "City").
This Memorandum is made with reference to the following:
1. Developer is the owner in fee of that certain real property located in the City
of Poway, County of San Diego, State of California, more particularly described in the
legal description attached hereto as Exhibit "A" and incorporated herein by this reference
("Property").
2. On or about , 2019, City and Developer entered into that certain
Purchase, Sale, and Development Agreement ("PSDA") which provides for, among other
things, Developer to develop a development with detached single family
residential units and common area improvements and amenities to serve such units, and
a retail development.
3. The PSDA provides City with (i) a right of first refusal to purchase the
Property (or certain portions thereof) if Developer desires to sell the Property, and (ii) a
right to purchase the retail portion of the Property on the occurrence of certain, specified
events, all as more fully described in the PSDA.
4. The PSDA provides for City and Developer to enter into this Memorandum
and to record the same in the Official Records of San Diego County, California, to provide
notice to all persons of the existence of said PSDA, which PSDA is binding on Developer
and Developer's successors-in-interest as to the Property.
882/012782-0020
s:i'"Jf:i:1,"''1,. March 19, 2019 Item #3.1
5. A copy of the PSDA is on file with the City Clerk of City and is available for
inspection and copying by interested persons as a public record of City during the regular
business hours of City.
6. This Memorandum may be executed in several counterparts, and all so
executed shall constitute one agreement binding on both parties hereto, notwithstanding
that both parties are not signatories to the original or the same counterpart.
THIS MEMORANDUM OF AGREEMENT is dated as of , 20_, and
has been executed on behalf of Developer and City by and through the signatures of their
authorized representative(s) set forth below. This Memorandum of Agreement may be
executed in counterparts and when fully executed each counterpart shall be deemed to
be one original instrument.
ATTEST:
Faviola Medina, City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Alan Fenstermacher, City Attorney
882/012782-0020
9J'&t°:i2!'" '119
-2-
"City"
CITY OF POWAY, a California municipal
corporation
By:
Tina M. White, City Manager
"Developer"
POWAY COMMONS, LLC, a Delaware
limited liability company
By:
Guy Asaro, Manager
March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of _________ _ )
On ___________ , before me,------------
(insert name and title of the officer)
Notary Public, personally appeared------------------
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature. ____________ _ (Seal)
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of _________ _
On ___________ , before me, ___________ _
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature. ____________ _ (Seal)
882/012782-0020
9lf'J¥':i21"1
"
1
' March 19, 2019 Item #3.1
EXHIBIT "A"
PROPERTY LEGAL DESCRIPTION
Real property in the City of Poway, County of San Diego, State of California, described
as follows:
882/012782-0020
9~9c5f'32!""'19
March 19, 2019 Item #3.1
882/012782-0020
9lf'Jf'32~3/15119
ATTACHMENT NO. 7
CITY NOTE
[SEE ATTACHED]
March 19, 2019 Item #3.1
PROMISSORY NOTE SECURED BY DEED OF TRUST
$1,700,000 Poway, California
______ , 2019 (the "Note Date")
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to the CITY
OF POWAY, a California municipal corporation ("Holder"), at 13325 Civic Center Drive,
Poway, CA 92064, or at such other address as Holder may direct from time to time in
writing, One Million Seven Hundred Thousand Dollars ($1,700,000) (the "Note Amount"),
together with interest thereon as hereafter set forth. All sums hereunder shall be payable
in lawful money of the United States of America. This Promissory Note Secured by Deed
of Trust (the "Promissory Note" or "Note") is secured by a Deed of Trust with Assignment
of Rents and Rider to Deed of Trust Attached Hereto of even date herewith, executed by
Maker as Trustor in favor of Holder as Beneficiary (the "Deed of Trust").
1. Purchase, Sale, and Development Agreement. This Promissory Note is
made and delivered pursuant to and in implementation of that certain Purchase, Sale,
and Development Agreement entered into between Holder and Maker on or about
_______ , 2019 (the "Agreement"), a copy of which is on file as a public record
with Holder and is incorporated herein by reference. Pursuant to the terms of the
Agreement, Holder sold to Maker certain real property located at in the City of Poway,
County of San Diego, State of California (the "Property"), for a purchase price of Six
Million Four Hundred Twenty Thousand Five Hundred Dollars ($6,420,500).(the
"Purchase Price"). At the close of the escrow under the Agreement, Maker paid to Holder
a portion of the Purchase Price, in the amount of Four Million Seven Hundred Twenty
Thousand Five Hundred Dollars ($4,720,500), in cash. Holder agreed to loan to Maker
the balance of the Purchase Price, which is the Note Amount.
2. Interest. Interest on the Note Amount shall accrue at the "Applicable
Rate", which shall be the sum of (i) the rate published by the United States Department
of the Treasury, as the interest rate for its Five-Year Treasury Bill, plus (ii) two and one-
quarter percent (2.25%), compounded monthly. With respect to repayment of the Note
Amount, the Applicable Rate shall be determined on the date that is fourteen (14) days
prior to the date such repayment is due.
3. Time and Amount of Payment. The Note Amount, and all accrued interest
thereon, shall be paid on the fourth (4 1h) anniversary of the Note Date.
4. Default Rate. Any amounts (including but not limited to amounts of
principal and interest on the Note Amount) which Maker does not pay when otherwise
due under the terms of this Note, shall bear interest at the rate of the lesser of ten percent
(10%) or the maximum rate allowed per law per annum ("Default Rate"), simple interest,
from the date which is ten (10) days after such amount would otherwise be due until the
date paid.
882/012782-0020
9f 9c5f32:f 3115119 March 19, 2019 Item #3.1
5. Events of Acceleration. The entire outstanding principal balance of this
Note, together with any outstanding interest and other amounts payable hereunder, shall,
at the election of Holder and upon notice to Maker thereof, become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Maker, if:
a. Notwithstanding the payment terms set forth in Section 3 above,
upon the occurrence of any "Event of Default" as set forth in Section 10 below; or
b. Maker effects an assignment of this Note and/or sells or transfers
any or all of its interests in the Property in violation of the terms and conditions of the
Agreement.
6. Security for Note. This Promissory Note is secured by the Deed of Trust.
7. Prepayment of Note. Maker may prepay all or any portion of the
outstanding principal or interest due under this Note to Holder without penalty.
8. Holder May Assign. Holder may, at its option and without obtaining the
consent of Maker, assign its right to receive payment under this Promissory Note.
9. Maker Assignment. In no event shall Maker assign or transfer any portion
of the Property or this Promissory Note except in compliance with the terms and
conditions of the Agreement. Any assignment prohibited by this Section 9 shall be null
and void.
10. Events of Default. The occurrence of any of the following shall, after the
giving of any notice and expiration of any applicable cure period as described herein,
constitute an event of default by Maker hereunder ("Event of Default"):
a. The failure of Maker to pay or perform any monetary covenant or
obligation under the terms of this Note without curing such failure within ten (10) days
after receipt of written notice of such default from Holder (or from any party authorized by
Holder to deliver such notice as identified by Holder in writing to Maker);
b. The failure of Maker to perform any non-monetary covenant or
obligation under this Note or the Deed of Trust without curing such failure within thirty
(30) days after receipt of written notice of such default from Holder (or from any party
authorized by Holder to deliver such notice as identified by Holder in writing to Maker)
specifying the nature of the event or deficiency giving rise to the default and the action
required to cure such deficiency. Provided, however, that if any default with respect to a
non-monetary obligation is such that it cannot be cured within a thirty (30) day period, it
shall be deemed cured if Maker commences the cure within said thirty (30) day period
and diligently prosecutes such cure to completion thereafter. Notwithstanding anything
herein to the contrary, the herein described notice requirements and cure periods shall
not apply to any Event of Default described in Sections 10(c) or 10(d) below;
882/012782-0020
gif96¥'32!'115/19 -2-March 19, 2019 Item #3.1
c. Maker shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of its property, (ii) fail to pay or admit in writing
its inability to pay its debts generally as they become due, (iii) make a general assignment
for the benefit of creditors, (iv) be adjudicated bankrupt or insolvent or (v) commence a
voluntary petition that is not withdrawn within ten (10) days of the filing thereof or answer
seeking an arrangement with creditors or an order for relief or seeking to take advantage
of any insolvency law or file an answer admitting the material allegations of a petition filed
against it in any bankruptcy or insolvency proceeding;
d. If without the application, approval or consent of Holder, a
proceeding shall be instituted in any court of competent jurisdiction, under any law relating
to bankruptcy, in respect of Holder, for an order for relief or an adjudication in bankruptcy,
a composition or arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator or custodian or the like of Holder or of all or any substantial
part of Holder's assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by Holder, in good faith, the
same shall (i) result in the entry of an order for relief or any such adjudication or
appointment, or (ii) continue undismissed, or pending and unstayed, for any period of
ninety (90) consecutive days; or
e. Maker shall be in default under any of the terms of any loan obtained
by Maker that is secured by the Property, unless the default is cured within the cure
period, if any, applicable thereto under the terms and obligation which is in default.
f. Maker shall be in default under any of the terms of the Agreement,
unless the default is cured within the cure period, if any, applicable thereto under the
Agreement.
11. Holder Remedies. Upon the occurrence and during the continuance of an
Event of Default hereunder, Holder may, in its sole discretion, take any one or more of
the following actions:
a. Declare the entire then unpaid outstanding balance due under this
Note immediately due and payable, and the same shall become due and payable without
further demand, protest or further notice of any kind, all of which are expressly waived.
Upon such declaration, outstanding principal and (to the extent permitted by law) interest
and any other sums outstanding in connection with this Note shall thereafter bear interest
at the Default Rate, payable from the date of such declaration until paid in full;
b. Take any and all actions and do any and all things which are allowed,
permitted or provided by law, in equity or by statute, in the sole discretion of Holder, to
collect the amounts then due and thereafter to become due hereunder, to exercise its
rights under the Deed of Trust, and to enforce performance and observance of any
obligation, agreement or covenant of Maker under this Note;
No remedy herein conferred upon or reserved to Holder is intended to be exclusive
of any other available remedy or remedies, but each such remedy shall be cumulative
882/012782-0020
9§'96f'32~3115119 -3-
March 19, 2019 Item #3.1
and shall be in addition to every other remedy given under this Note or now existing at
law or in equity or by statute; and may be exercised in such number, at such times and in
such order as Holder may determine in its sole discretion. No delay or omission to
exercise any right or power upon the occurrence of any Event of Default hereunder shall
impair any such right or power or shall be construed to be a waiver thereof, but any such
right and power may be exercised from time to time and as often as may be deemed
expedient by Holder. In order to entitle Holder to exercise any right or remedy reserved
to it under this Note, no notice shall be required except as expressly provided herein.
12. Agreement to Pay Attorneys' Fees and Expenses. In the event that
Holder brings any action or files any proceeding in connection with the enforcement of its
rights under this Note or the Deed of Trust, as a consequence of any breach by Maker of
its obligations hereunder or thereunder, the prevailing party in such action or proceeding
shall be entitled to have its reasonable attorneys' fees and out-of-pocket expenditures
paid by the losing party. The attorneys' fees so recovered shall include fees for
prosecuting or defending any appeal and shall be awarded for any supplemental
proceedings until the final judgment is satisfied in full. In addition to the foregoing award
of attorneys' fees, the prevailing party in any lawsuit on this Note or the Deed of Trust
shall also be entitled to its reasonable attorneys' fees incurred in any post judgment
proceedings to collect or enforce the judgment. In addition to the foregoing, Maker agrees
to pay or reimburse Holder, upon demand by Holder, for all costs incurred by Holder in
connection with enforcement of this Note or the Deed of Trust, including without limitation,
reasonable attorneys' fees and costs, if there shall be filed by or against Maker any
proceedings under any federal or state bankruptcy or insolvency laws, whether Holder is
a creditor in such proceedings or otherwise.
13. Amendments. This Note may not be modified or amended except by an
instrument in writing expressing such intention executed by the parties sought to be
bound thereby, which writing must be so firmly attached to this Note so as to become a
permanent part thereof.
14. Maker's Waivers. Maker waives any rights to require the Holder to:
(a) demand payment of amounts due (known as "presentment"), (b) give notice that
amounts due have not been paid (known as "notice of dishonor"), and (c) obtain an official
certification of nonpayment (known as "protest").
15. Notice. Any notice that must be given to Maker under this Note shall be in
writing and shall be effective when personally delivered or delivered by reputable
overnight courier that provides a receipt with the date and time of delivery, or forty-eight
(48) hours after deposit in the United States Mail, as certified or registered mail, return
receipt requested, first-class postage and fees prepaid, addressed to Maker at: City of
Poway, 13325 Civic Center Drive, Poway, CA 92064, Attn: , or such
other address as Maker shall direct from time to time in writing, and to Holder at Holder's
address stated in the preamble to this Note. Failure or delay in giving any notice required
hereunder shall not constitute a waiver of any default or late payment, nor shall ii change
the time for any default or payment.
882/012782-0020
1!fo2lJt:i13'15'" -4-March 19, 2019 Item #3.1
16. Successors Bound. This Promissory Note shall be binding upon the
parties hereto and their respective heirs, successors and assigns.
17. Severability. The invalidity or unenforceability of any one or more
provisions of this Note will in no way affect any other provisions.
18. Interpretation. Whenever the context requires, all words used in the
singular will be construed to have been used in the plural, and vice versa, and each
gender will include any other gender. The captions of the paragraphs of this Note are for
convenience only and do not define or limit any terms or provisions. Time is of the
essence in the performance of this Note by Maker. Maker has been represented by
counsel in the negotiation of this Note, and it shall not be interpreted in favor of or against
any party on account of relative responsibilities in drafting. Notwithstanding any other
provision of this Note, nothing in this Section 18 or elsewhere in this Note shall be deemed
to require Maker to pay interest in an amount in excess of any applicable usury law or
other legal limitation on interest, and the terms of this Note shall be interpreted to require
in each instance the lesser of (a) the amount stated in this Note, and (b) the maximum
applicable legal limit.
19. No Waiver; Consents. Any waiver by Holder must be in writing and will
not be construed as a continuing waiver. No waiver will be implied from any delay or
failure by Holder to take action on account of any default of Maker. Consent by Holder to
any act or omission by Maker will not be construed to be a consent to any other or
subsequent act or omission or to waive the requirements for Holder's consent to be
obtained in any future or other instance.
20. Governing Law. This Note shall be governed by the internal laws of the
State of California without regard to conflict of law principles.
[End -Signature Page Follows]
882/012782-0020
1ll't2~1:i13''5/19 -5-
March 19, 2019 Item #3.1
IN WITNESS WHEREOF, Maker has executed this Promissory Note.
"Maker"
POWAY COMMONS, LLC, a Delaware
limited liability company
By:
Guy Asaro, Manager
882/012782-0020
1!1'22 ~{313"'119 -6-
Dated: ------------
March 19, 2019 Item #3.1
882/012782-0020
1 !l'f tl'l:113'15119
ATTACHMENT NO. 8
CITY DEED OF TRUST
[SEE ATTACHED]
March 19, 2019 Item #3.1
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Poway
13325 Civic Center Drive
Poway, California 92064
Attn: Cit Clerk
(Space Above This Line For Recorder's Use)
(Exempt From Recording Fees Pursuant To Government Code Section 27383)
DEED OF TRUST WITH ASSIGNMENT OF RENTS
AND RIDER ATTACHED HERETO
NOTE: RIDER ATTACHED TO THIS DEED OF TRUST CONTAINING TERMS
INCLUDING SECURITY AGREEMENT AND FIXTURE FILING.
This DEED OF TRUST WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED
HERETO ("Deed of Trust"), is made , 2019, between
POWAY COMMONS, LLC, a Delaware limited liability company, herein called
TRUSTOR, whose address is , FIRST AMERICAN TITLE
INSURANCE COMPANY, a California corporation, herein called TRUSTEE, and CITY
OF POWAY, a California municipal corporation, herein called BENEFICIARY.
WITNESSETH: That Truster grants to Trustee in trust, with power of sale, Truster's
estate, dated on or about the date hereof, in that property in the City of Poway, County of
San Diego, State of California, described in Exhibit "A" (the "Property"),
together with the rents, issues and profits thereof, subject, however, to the right, power
and authority hereinafter given to and conferred upon Beneficiary to collect and apply
such rents, issues and profits for the purpose of securing (1) payment of the sum of ONE
MILLION SEVEN HUNDRED THOUSAND DOLLARS ($1,700,000), with interest thereon
according to the terms of a promissory note or notes of even date herewith made by
Truster, payable to order of Beneficiary, and extensions or renewals thereof; (2) the
performance of each agreement of Truster incorporated by reference or contained herein;
and (3) payment of additional sums and interest thereon which may hereafter be loaned
to Truster, or its successors or assigns, when evidenced by a promissory note or notes
reciting that they are secured by this Deed of Trust.
To protect the security of this Deed of Trust, and with respect to the Property above
described, Truster expressly makes each and all of the agreements, and adopts and
agrees to perform and be bound by each and all of the terms and provisions set forth in
subdivision A, and it is mutually agreed that each and all of the terms and provisions set
forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17,
1964, and in all other counties August 18, 1964, in the book and at the page of Official
882/012782-0020
1!f42~1:i1!"'" March 19, 2019 Item #3.1
Records in the office of the county recorder of the county where said property is located,
noted below opposite the name of such county, namely:
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE
Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187
Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762
Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621
Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2067 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56
Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585
Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183
Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595
El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108
Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160
Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 2607 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16
Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693
Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774
shall inure to and bind the parties hereto, with respect to the property above described.
Said agreements, terms and provisions contained in said subdivisions A and B (identical
in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto,
incorporated herein and made a part of this Deed of Trust for all purposes as fully as if
set forth at length herein, and Beneficiary may charge for a statement regarding the
obligation secured hereby, provided the charge therefor does not exceed the maximum
allowed by law.
The undersigned Truster, requests that a copy of any notice of default and any notice of
sale hereunder be mailed to him at his address hereinbefore set forth.
SEE RIDERS ATTACHED TO THIS DEED OF TRUST
By: POWAY COMMONS, LLC,
a Delaware limited liability company
By:
Guy Asarao, Manager
882/012782-0020
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March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of _________ _ )
On ___________ , before me,------------
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ____________ _ (Seal)
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19 March 19, 2019 Item #3.1
DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing
Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security ofthis Deed of Trust, Trustor agrees:
I) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore
promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all
claims for labor perfonned and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or
improvements to be made thereon; not to commit or pennit waste thereof; not to commit, suffer or pennit any act upon said property in violation
of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably
necessary, the specific enumerations herein not excluding the general.
2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary The
amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order
as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such
application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such
action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed.
4) To pay: at least ten ( JO) days before delinquency all taxes and assessments affecting said property, including assessments on
appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior
or superior hereto; all costs, fees and expenses of this Trust
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to
do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such
manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said
property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior
or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his or her reasonable fees.
5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from the date of
expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof
regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when
said statement is demanded.
B It is mutually agreed:
I) That any award in connection with any condemnation for public use ofor injury to said property or any part thereof is hereby
assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as
above provided for disposition of proceeds of fire or other insurance
2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right either to require
prompt payment when due of all other sums so secured or to declare default for failure so to pay.
3) That at any time or from time to time, without liability therefor and without notice, upon \',Titten request of Beneficiary and
presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness
secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement
thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof.
4) That upon \',Titten request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this
Deed and said note to Trustee for cancellation and retention or other disposition as Tmstee in its sole discretion may choose and upon payment of
its fees, Trustee shall reconvey, without v.arranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall
be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled
thereto"
5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the
continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor
in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues and profits
as they become due and payable. Upon any such default (beyond any applicable cure period, and during the continuance of such default),
Beneficiary may at any time without notice, either in person, by agent, or be a receiver to be appointed by a court, and without regard to the
adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in its own name
882/012782-0020
1!lfl:\'l:i13'"11
' March 19, 2019 Item #3.1
sue for or othenvise collect such rents, issues, and profits, includmg those past due and unpaid, and apply the same, less costs and expenses of
operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may
determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as
aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
6) That upon default by Trustor in payment of any indebtedness secured hereby or in the perfonnance of any agreement
hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default
and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed
for record. Beneficiary also shall deposit "'ith Trustee this Deed, said note and alt documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having
been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of
sale, either as a whole or in separate parcels, and in such order as it may detennine, at public auction to the highest bidder for cash in lawful money
ofthe United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time
and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement.
Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The
recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or
Beneficiary as hereinafter defined, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale,
Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the
amount allowed by law in effect at the date hereof; alt other sums then secured hereby; and the remainder, if any, to the person or persons legally
entitled thereto.
7) Beneficiary, or any successor in ovmership of any indebtedness secured hereby, may from time to time, by instrument in
\',Titing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and
duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated shall be conclusive proof of
proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title,
estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and
page where this Deed is recorded and the name and address of the new Trustee
8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether
or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and
the singular number includes the plural.
9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by
Jaw. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which
Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.
DO NOT RECORD REQUEST FOR FULL RECONVEY ANCE
TO ____________ , TRUSTEE:
The undersigned is the legal mvner and holder of the note or notes and of all indebtedness secured by the foregoing Deed of Trust. Said
note or notes, together with all other indebtedness secured by said Deed ofTrust, have been fully paid and satisfied; and you are hereby requested
and directed, on payment to you of any sums owing to you under the tenns of said Deed of Trust, to cancel said note or notes above mentioned, an
all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together v..ith the said Deed of Trust, and to reconvey,
without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same
Dated ________________ _
Please mail Deed of Trust,
Note and Reconveyance to __________________________________ _
Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before
reconveyance will be made.
882/012782-0020
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March 19, 2019 Item #3.1
Exhibit A
LEGAL DESCRIPTION OF PROPERTY
Real property in the City of Poway County of San Diego, State of California, described as
follows:
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19 March 19, 2019 Item #3.1
RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS
This RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS ("Rider") is
executed this day of , 2019, by POWAY
COMMONS, LLC, a Delaware limited liability company, herein "Trustor," in favor of the
CITY OF POWAY, a California municipal corporation, herein "Beneficiary," the same
parties to that certain form Deed of Trust With Assignment of Rents, of even date hereto,
to which this Rider is attached. This Rider is made a part of and is incorporated into said
Deed of Trust. This Rider shall supersede any conflicting term or provision of the form
Deed of Trust to which it is attached.
Reference is made to that certain Promissory Note executed by Trustor on or about
the date set forth above, the repayment of which by Trustor is secured by this Deed of
Trust ("City Note")
The parties hereto agree:
1. Property. The estate subject to this Deed of Trust is Trustor's fee estate in
the real property legally described in the foregoing Deed of Trust to which this Rider is
attached (the "Property").
2. Obligations Secured. Trustor makes this grant and assignment for the
purpose of securing the following obligations ("Secured Obligations"):
a. Payment to Beneficiary of all indebtedness at any time owing under
the terms of the City Note;
b. Payment and performance of all obligations of Trustor under this
Deed of Trust;
c. All modifications, extensions and renewals of any of the obligations
secured hereby, however evidenced.
3. Obligations. The term "obligations" is used herein in its broadest and most
comprehensive sense and shall be deemed to include, without limitation, all interest and
charges, prepayment charges, late charges and fees at any time accruing or assessed
on any of the Secured Obligations.
4. Incorporation. All terms of the City Note and the Secured Obligations are
incorporated herein by this reference. All persons who may have or acquire an interest
in the Property shall be deemed to have notice of the terms of all of the foregoing
documents.
5. Mortgagee-in-Possession. Neither the assignment of rents set forth in the
Deed of Trust nor the exercise by Beneficiary of any of its rights or remedies hereunder
shall be deemed to make Beneficiary a "mortgagee-in-possession" or otherwise liable in
any manner with respect to the Property, unless Beneficiary, in person or by agent,
assumes actual possession thereof. Nor shall appointment of a receiver for the Property
882/012782-0020
H0ifll'l:i13'"'" March 19, 2019 Item #3.1
by any court at the request of Beneficiary or by agreement with Trustor, or the entering
into possession of the Property by such receiver, be deemed to make Beneficiary a
"mortgagee-in-possession" or otherwise liable in any manner with respect to the Property.
6. No Cure. In the event Beneficiary collects and receives any rents under the
Deed of Trust upon any default hereof, such collection or receipt shall in no way constitute
a curing of the default, except if and to the extent the same are sufficient to cure all
monetary defaults and no other defaults then exist.
7. Possession Upon Default. Upon the occurrence of and during the
continuation of a default, Beneficiary, after having given notice and the applicable cure
periods having expired with the default having not been cured (hereinafter, a "default"),
may, at its option, without any action on its part being required and without in any way
waiving such default, take possession of the Property in accordance with applicable law
and have, hold, manage, lease and operate the same, on such terms and for such period
of time as Beneficiary may deem proper, and may collect and receive all rents and profits,
with full power to make, from time to time, all commercially reasonable alterations,
renovations, repairs or replacements thereto as may seem proper to Beneficiary, and to
apply such rents and profits to the payment of (a) the cost of all such alterations,
renovations, repairs and replacements, and all costs and expenses incident to taking and
retaining possession of the Property, and the management and operation thereof, and
keeping the same properly insured; (b) all taxes, charges, claims, assessments, and any
other liens which may be prior in lien or payment of the City Note, and premiums for
insurance, with interest on all such items; and (c) the indebtedness secured hereby,
together with all costs and attorney's fees, in such order or priority as to any of such items
as Beneficiary in its sole discretion may determine, any statute, law, custom or use to the
contrary notwithstanding. Any amounts received by Beneficiary or its agents in the
performance of any acts prohibited by the terms of this assignment, including, but not
limited to, any amounts received in connection with any cancellation, modification or
amendment of any lease prohibited by the terms of this assignment and any rents and
profits received by Trustor after the occurrence of a default shall be held by Trustor as
trustee for Beneficiary and all such amounts shall be accounted for to Beneficiary and
shall not be commingled with other funds of the Trustor. Any person receiving any portion
of such trust funds shall receive the same in trust for Beneficiary as if such person had
actual or constructive notice that such funds were impressed with a trust in accordance
therewith.
8. Receiver. In addition to any and all other remedies of Beneficiary set forth
under this Deed of Trust or permitted at law or in equity, if a default shall have occurred
and not have been cured within any applicable cure period, Beneficiary, to the extent
permitted by law and without regard to the value, adequacy or occupancy of the security
for the Note and other sums secured hereby, shall be entitled as a matter of right if it so
elects to the appointment of a receiver to enter upon and take possession of the Property
and to collect all rents and profits and apply the same as the court may direct, and such
receiver may be appointed by any court of competent jurisdiction by ex parte application
and without notice, notice of hearing being hereby expressly waived. The expenses,
882/012782-0020
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-2-
March 19, 2019 Item #3.1
including receiver's fees, attorneys' fees, costs and agent's compensation, incurred
pursuant to the power herein contained shall be secured by this Deed of Trust.
9. Notice to Beneficiary. Notices to Beneficiary shall be sent to Beneficiary
addressed to:
City of Poway
13325 Civic Center Drive
Poway, CA 92064
Attn: City Clerk
[End -Signature page follows]
882/012782-0020
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'
-3-
March 19, 2019 Item #3.1
IN WITNESS WHEREOF, Truster has executed this Rider on the date of Truster's
acknowledgment herein below, to be effective for all purposes as of the day and year first
set forth above.
Dated: -------~-· 2019
882/012782-0020
H0:l'~l313'1
"
19 -4-
POWAY COMMONS, LLC, a Delaware
limited liability company
By:
Guy Asaro, Manager
March 19, 2019 Item #3.1
Poway Commons, LLC
Preliminary Project Cost Budget
I. Project Description
Site Area
Average Unit Size
Number of Units
Future Retail Pads
II. Development Costs
A. Direct Costs
Site Improvements
Direct Vertical Construction
Other/Contingency
Total Direct Costs
B. Indirect Costs
Engineering
Permits & Fees
ATTACHMENT NO. 9
PROJECT BUDGET
Other Soft Costs (Prop Tax, Title, Escrow,
Bonding)
G&A
Selling & Marketing Costs
Other Indirects
Total Indirect Costs
C. Financing Costs
D. Developer Land Cost
E. Total Development Costs
9.30 Acres
1,721 SF
98 Units
2.30 Acres
$6,451,000
$20,100,034
$2,340,260
$28,891,294
$1,092,000
$2,205,000
$1,335,667
$2,376,340
$5,391,933
$950,000
$13,350,939
$2,233,416
$8,300,000
$52,775,649
*These are preliminary budget estimates based on preliminary site plans. Subject to change with
entitlement, project conditions and approved plans.
882/012782-0020
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"
19
March 19, 2019 Item #3.1
882/012782-0020
1'¥'5"~1~13''5/19
ATTACHMENT NO. 10
FORM OF RELEASE OF CONSTRUCTION COVENANTS
[SEE ATTACHED]
March 19, 2019 Item #3.1
RECORDING REQUESTED BY:
AND WHEN RECORDED MAIL TO:
(Space above for Recorder's Use Only)
CITY OF POWAY
RELEASE OF CONSTRUCTION COVENANTS
A. POWAY COMMONS, LLC, a Delaware limited liability company
("Developer"), is the owner of fee title to that certain real property legally described in
Exhibit "A" attached hereto and incorporated herein by reference (the "Site"); and
B. By a Purchase, Sale, and Development Agreement (hereinafter referred to
as the "Agreement") dated , 2019, by and between Developer and the City of
Poway, a California municipal corporation ("City"), the Developer has redeveloped the
Site in accordance with the Agreement; and
C. Pursuant to Section 5.13 of the Agreement, promptly after Developer's
completion of the "Project" (as that term is defined in the Agreement) upon the Site, and
upon request by Developer, City shall furnish Developer with a Release of Construction
Covenants in such form as to permit it to be recorded in the Official Records of the County
of San Diego; and
D. The issuance by City of the Release of Construction Covenants shall be
conclusive evidence that Developer has complied with the terms of the Agreement
pertaining to the development of the Site; and
E. Developer has requested that City furnish Developer with the Release of
Construction Covenants; and
F. City has conclusively determined that the development of the Site has been
satisfactorily completed as required by the Agreement.
NOW, THEREFORE:
882/012782-0020
H"s2~1:if3'1s'" March 19, 2019 Item #3.1
1. As provided in the Agreement, City does hereby certify that development of
the Site has been fully and satisfactorily performed and completed, and that such
development is in full compliance with said Agreement.
2. This Release of Construction Covenants shall not constitute evidence of
compliance with or satisfaction of any obligation of Developer to any holder of a mortgage,
or any insurer of a mortgage, securing money loaned to finance construction work on the
Site, or any part thereof.
3. This Release of Construction Covenants is not a Notice of Completion as
referred to in California Civil Code Section 3093.
4. Except as stated herein, nothing contained in this instrument shall modify in
any way any other provisions of the Agreement or any other provisions of any agreements
or documents referenced therein.
IN WITNESS WHEREOF, City has executed this Release of Construction
Covenants as of this~-day of , 20 .
City Manager, City of Poway
ATTEST:
City Clerk, City of Poway
882/012782-0020
H'f~/313'"11
•
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March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of _________ _
On ___________ , before me,------------
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ____________ _ (Seal)
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of _________ _
On ___________ , before me,------------
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature. ____________ _ (Seal)
March 19, 2019 Item #3.1
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
Real property in the City of Poway, County of San Diego, State of California, described
as follows:
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i1/'g'g'/~13''5/19 March 19, 2019 Item #3.1
Exhibit C to City Resolution
PROPERTY EXCHANGE IMPLEMENTATION AGREEMENT
This PROPERTY EXCHANGE IMPLEMENTATION AGREEMENT (this
"Agreement") is entered into as of the _ day of , 2019 (the "Effective
Date"), by and between CITY OF POWAY, a California municipal corporation ("City"),
and CITY OF POWAY HOUSING AUTHORITY, a public body, corporate and politic
("Authority").
RECITALS
A. City owns fee title to certain real property located generally at 13100 Poway
Road, in the City of Poway, County of San Diego, State of California, commonly known
as APN 317-101-06 (the "City Exchange Property"). The City Exchange Property
comprises approximately nine tenths (.9) acres, and is depicted in Exhibit "A", which is
attached hereto and incorporated herein by this reference.
B. Authority owns fee title to certain real property located south of Poway
Road, in the City of Poway, County of San Diego, State of California, commonly known
as APN 317-472-01 & 06 (the "Authority Exchange Property"). The Authority Exchange
Property comprises approximately two and ninety-one hundredths (2.91) acres, and is
depicted in Exhibit "A", which is attached hereto and incorporated herein by this reference.
C. In furtherance of Poway's Long Range Property Management Plan, City
staff have been negotiating with Poway Commons, LLC, a Delaware limited liability
company (the "Developer") for the proposed sale by City to Developer of various parcels
of real property owned in fee by City, for Developer's development thereon of a residential
and retail development project (the "Residential/Retail Project").
D. To maximize the financial viability of a Residential/Retail Project, the
Developer has recommended that the Authority Exchange Property be included with the
property contemplated to be developed with the Residential/Retail Project.
E. Authority staff have been negotiating with Developer regarding the
development of an affordable housing development (an "Affordable Project"), to occur
concurrently with the development of the Residential/Retail Project. The Developer has
recommended that the Affordable Project be developed on the City Exchange Property.
F. To facilitate the development of each of the Residential/Retail Project and
Affordable Project, City staff have negotiated with Developer the terms of a Purchase,
Sale, and Development Agreement (the "PSDA"). To facilitate the development of the
Affordable Project, Authority staff have negotiated with Developer the terms of an
Affordable Housing and Property Disposition Agreement (the "AHPDA"). The PSDA and
AHPDA are being considered by the City Council and Authority Board, respectively,
concurrently with the City Council's and Authority Board's consideration of this
Agreement.
882/012782-0020
12ti''<1ir j~~'11
' March 19, 2019 Item #3.1
G. In order to effect the property transfers contemplated under the PSDA and
AHPDA, City and Authority would need to (i) exchange the City Exchange Property and
Authority Exchange Property, and (ii) provide for the deposit into Authority's low and
moderate income housing asset fund (the "LMIHAF") the sum of One Million Four
Hundred Ninety-Three Thousand Three Hundred Five Dollars ($1,493,305) (the "Excess
Value"), which is the difference between the value of the Authority Exchange Property
and the value of the City Exchange Property.
NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS,
WHICH ARE INCORPORATED HEREIN BY THIS REFERENCE, AND THE MUTUAL
PROMISES CONTAINED IN THIS AGREEMENT, CITY AND AUTHORITY AGREE AS
FOLLOWS:
AGREEMENT
1. Exchange. City and Authority agree that if the close of escrow occurs under
both of the PSDA and AHPDA, then concurrently with said closings, (i) City will transfer
and convey the City Exchange Property to Authority, for Authority's sale to the Developer
under the AHPDA, and (ii) Authority will transfer and convey the Authority Exchange
Property to City, for City's sale to the Developer under the PSDA.
2. Deposit of Excess Value into LMIHAF. Promptly after the closings under
the PSDA and AHPDA, City will provide to Authority the Excess Value, and Authority will
deposit the Excess Value into the LMIHAF.
3. Termination. If the closings under the PSDA and AHPDA have not occurred
by June 30, 2020, this Agreement shall automatically terminate, unless City and Authority
each agree, in writing, to extend the term.
4. Approvals and Actions. City shall maintain authority of this Agreement and
the authority to implement this Agreement through the City Manager (or his or her duly
authorized representative). Authority shall maintain authority of this Agreement and the
authority to implement this Agreement through the Executive Director (or his or her duly
authorized representative). Each of the City Manager and Executive Director shall have
the authority to make approvals, issue interpretations, execute documents, waive
provisions, and/or enter into certain amendments of this Agreement on behalf of their
respective party so long as such actions do not materially or substantially change the
basic business terms hereof, and such approvals, interpretations, waivers and/or
amendments may include extensions of time to perform.
5. Time. Time is of the essence of this Agreement.
6. Captions. The captions of the sections/paragraphs of this Agreement are
for convenience and reference only, and the words contained in the captions shall in no
way be held to explain, modify, amplify or aid in the interpretations, constructions or
meaning of the provisions of this Agreement.
8821012782-0020
12r b't' 3'!B'119 -2-March 19, 2019 Item #3.1
7. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall constitute one and
the same Agreement.
8. Entire Agreement. This Agreement contains the entire agreement between
the parties respecting the matters set forth herein, and supersedes all prior agreements
between the parties respecting such matters.
[SIGNATURES ON FOLLOWING PAGE]
882/012782-0020
12~6b'f j~~5119 -3-
March 19, 2019 Item #3.1
IN WITNESS WHEREOF, City and Authority have executed this Agreement as of
the Effective Date.
ATTEST:
By: ___________ _
Faviola Medina, City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Alan Fenstermacher, City Attorney
ATTEST:
By: ___________ _
Faviola Medina, Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Alan Fenstermacher, Authority Counsel
882/012782-0020
f~~'b'r a'll~,11,
"City"
CITY OF POWAY, a California municipal
corporation
By: _________ _
Tina M. White, City Manager
"Authority"
CITY OF POWAY HOUSING AUTHORITY,
a public body, corporate and politic
By: ___________ _
Tina M. White, Executive Director
-4-
March 19, 2019 Item #3.1
882 /0 12782-0020
1~~6b1r 3,35/19
EXHIBIT "A"
DEPICTION OF CITY EXCHANGE PROPERTY
AND AUTHORITY EXCHANGE PROPERTY
Future City P creels
Future Affor dcbl e Site
-5-
March 19, 2019 Item #3.1
RESOLUTION NO. 19-
A RESOLUTION OF THE CITY OF POWAY HOUSING
AUTHORITY (I) APPROVING AN AFFORDABLE HOUSING AND
PROPERTY DISPOSITION AGREEMENT WITH POWAY
COMMONS, LLC, FOR THE SOUTHERLY APPROXIMATELY
NINE TENTHS ACRE OF ASSESSOR'S PARCEL NUMBER 317-
101-06, AND A PROPERTY EXCHANGE IMPLEMENTATION
AGREEMENT BETWEEN THE HOUSING AUTHORITY AND THE
CITY, AND (II) DECLARING ASSESSOR'S PARCEL NUMBERS
317-420-01 & 06, AND THE SOUTHERLY APPROXIMATELY .9
ACRES OF ASSESSOR'S PARCEL NUMBER 317-101-06 NOT
NEEDED FOR FORESEEABLE NEEDS
WHEREAS, the City of Poway Housing Authority ("Authority") is a public body, corporate
and politic, organized and existing under the Housing Authorities Law (Health & Safety Code
§34200 et seq.) (the "HAL");
WHEREAS, a fundamental purpose of the HAL is to expand the supply of low-and
moderate-income housing (Health & Safety Code, § 33071);
WHEREAS, Authority staff have negotiated an Affordable Housing and Property
Disposition Agreement ("AHPDA") with Poway Commons, LLC ("Master Developer"), pursuant to
which (i) the Master Developer would apply for and receive entitlements to develop on the
southerly approximately .9 acres of the property generally located at 13100 Poway Road bearing
Assessor's Parcel Number 317-101-06 (the "Affordable Parcel"), which property is currently
owned by the City, a 44 unit affordable senior housing development at rental levels affordable to
low and very low-income households (the "Affordable Project"), (ii) Authority would sell the
Affordable Parcel to the Master Developer for the purchase price of $1,200,000 (iii) the Master
Developer would grade the Affordable Parcel and provide public utilities to the Affordable Parcel,
(iv) the Master Developer would sell the Affordable Parcel to a limited partnership established by
Chelsea Investment Company, an experienced affordable housing developer, or similarly
qualified affordable housing developer acceptable to the Authority (an "Affordable Developer"), at
such time as the Affordable Developer has secured various sources of financing, including a
commercial loan and California Debt Limit Allocation 4% Tax Credit, and processed plans for the
Affordable Project through the City, and (v) the Authority would provide to the Affordable
Developer a loan in an amount not to exceed $2,200,000, with $1,500,000 of the loan to be
provided in cash, for the development of the Affordable Project, and an amount not to exceed
$700,000 to be provided as a credit, to pay City development impact fees, with such loan to be
evidenced by a promissory note requiring the Affordable Developer to repay the loan amount all
as more particularly described in the AHPDA;
WHEREAS, pursuant to the AHPDA, as a condition to Authority's sale of the Affordable
Parcel and provision of the Authority financial assistance, Developer and Authority would record
against the Affordable Parcel an affordable housing regulatory agreement substantially in the form
attached to the AHPDA (the "Regulatory Agreement"), that restricts the use of the Affordable
Parcel, for a period of fifty-five (55) years, as a senior affordable rental housing project;
WHEREAS, concurrently with the negotiation of the AHPDA, City staff have negotiated a
Purchase, Sale, and Development Agreement with the Master Developer (the "PSDA"), pursuant
to which the City would sell to Developer certain real property, including, among other parcels,
125 of 323 Attachment B March 19, 2019 Item #3.1
Resolution No. 19-
Page
real property generally located at 13021 and 13031 Poway Road, comprising approximately 2.91
acres and bearing Assessor's Parcel Numbers 317-472-01 & 06, in the City of Poway, County of
San Diego, State of California (the "Authority Exchange Parcels"), which parcels are currently
owned by Authority, for the Master Developer's development thereon of a residential and retail
development;
WHEREAS, City and Authority staff have determined that the proposed AHPDA and
PSDA reflect the optimal development potential of the various parcels owned by the City and
Authority on or adjacent to Poway Road, including the Affordable Parcel and Authority Exchange
Properties;
WHEREAS, to facilitate the implementation of the AHPDA and PSDA, City and Authority
staff have prepared a Property Exchange Implementation Agreement, pursuant to which,
concurrently with the close of escrow under the AHPDA and PSDA, (i) the City would transfer the
Affordable Parcel to Authority, (ii) Authority would transfer the Authority Exchange Parcels to the
City, and (iii) the City would deposit into the Authority's Low and Moderate Income Housing Asset
Fund the sum of One Million Four Hundred Ninety-Three Thousand Three Hundred Five Dollars
($1,493,305), which amount represents the difference in the purchase price to be received by
Authority and the City for said parcels;
WHEREAS, Authority staff recommends that the Housing Authority determine that the
Authority Exchange Parcels and the Affordable Parcel are not required for the Authority's
foreseeable needs;
WHEREAS, the Authority has considered all the information and evidence set forth in the
staff report presented by Authority staff and presented by persons wishing to appear and be heard
concerning the impact of each of the AHPDA and Property Exchange Implementation Agreement
on the Authority;
WHEREAS, each of the AHPDA and Property Exchange Implementation Agreement will
increase, improve, and preserve affordable housing in the City of Poway; and
WHEREAS, Authority staff recommend that the Poway Housing Authority find and
determine that the environmental impacts of the contemplated development of the parcels subject
to the AHPDA and PSDA (the "Project") are fully analyzed in and covered by the previously
certified Poway Road Specific Plan ("PRSP") environmental impact report ("EIR"; SCH#
2017031035), and that the Authority, by approving this resolution, is not committing itself nor the
City Council to approve any of the entitlements required for the Project, and instead both bodies
retain the discretion to deny the Project, which will still be subject to further environmental review
pursuant to the California Environmental Quality Act ("CEQA") to ensure the PRSP EIR covers all
of the Project's impacts, and no conditions set forth in Public Resources Code section 21166 and
CEQA Guidelines section 15162 exist.
NOW, THEREFORE, BE IT RESOLVED by the Poway Housing Authority as follows:
Section 1:
part of this Resolution.
The foregoing recitals are true and correct and are a substantive
Section 2: The Poway Housing Authority has received and heard all oral and
written objections to the Authority's proposed AHPDA and Property Exchange Implementation
126 of 323 March 19, 2019 Item #3.1
Resolution No. 19-
Page
Agreement, and to other matters pertaining to this negotiation, and (finding such objections to be
without merit) all such oral and written objections are hereby rejected.
Section 3. That the Poway Housing Authority resolves as follows
a. The environmental impacts of the Project are fully analyzed in and covered
by the previously certified PRSP EIR (SCH# 2017031035), and no conditions set forth in
Public Resources Code section 21166 and CEQA Guidelines section 15162 exist.
b. Notwithstanding the foregoing, the Authority understands that the City
Council retains all discretion to deny any entitlements required for the Project, and to the
extent any entitlements are required from the Authority, the Authority retains all discretion
to deny the same. The Project will be subject to further environmental review pursuant to
CEQA to ensure the PRSP EIR covers all of the Project's impacts, and no conditions set
forth in Public Resources Code section 21166 and CEQA Guidelines section 15162 exist.
c. Each of the AHPDA and Property Exchange Implementation Agreement is
in the best interests of the citizens of the City of Poway.
d. Authority's sale of the Affordable Parcel (as shown on Exhibit A) will provide
housing for very low and low--income persons, and will further the Authority's goal of
increasing, improving and preserving the supply of affordable housing in the City of Poway.
Section 4: The AHPDA and Property Exchange Implementation Agreement, copies
of which are on file with the Authority Secretary, and are attached hereto as Exhibit B and Exhibit
C, respectively, are hereby approved, and the Poway Housing Authority hereby determines that
the Authority Exchange Parcels and Affordable Parcel are not needed for foreseeable needs of
the Poway Housing Authority.
Section 5: The Poway Housing Authority authorizes and directs its Executive
Director and Authority counsel to make final modifications to the AHPDA and Property Exchange
Implementation Agreement that are consistent with the substantive terms of the AHPDA and
Property Exchange Implementation Agreement approved hereby, and to thereafter sign the
AHPDA and Property Exchange Implementation Agreement on behalf of Authority.
Section 6: The Poway Housing Authority authorizes and directs its Executive
Director to (i) sign such other and further documents, including but not limited to escrow
instructions, that require Authority's signature, and (ii) take such other and further actions, as may
be necessary and proper to carry out the terms of the AHPDA and Property Exchange
Implementation Agreement.
Section 7: This Resolution shall take effect upon the date of its adoption.
PASSED, ADOPTED AND APPROVED by the Poway Housing Authority of the City of
Poway, California, at a regular meeting this 19th day of March 2019.
Steve Vaus, Chairman
ATIEST:
127 of 323 March 19, 2019 Item #3.1
Resolution No. 19-
Page
Faviola Medina, Poway Housing Authority Secretary
STATE OF CALIFORNIA )
) ss
COUNTY OF SAN DIEGO )
I, Faviola Medina, Poway Housing Authority Secretary, Poway California, do hereby certify
under penalty of perjury that the foregoing Resolution No. 19-*** was duly adopted by the City
Council at a meeting of said City Council held on the 19th day of March 2019, and that it was so
adopted by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
128 of 323
Faviola Medina City Clerk
Poway Housing Authority Secretary City of
Poway
March 19, 2019 Item #3.1
129 of 323
Exhibit A
Affordable Parcel
Resolution No. 19-
Page
March 19, 2019 Item #3.1
Exhibit B to Housing Authority Resolution
AFFORDABLE HOUSING AND PROPERTY DISPOSITION AGREEMENT
By and Between
CITY OF POWAY HOUSING AUTHORITY
and
POWAY COMMONS, LLC
Dated as of ______ , 2019
882/012782-0020
1~1f'b't' 3'!1~5119 March 19, 2019 Item #3.1
AFFORDABLE HOUSING AND PROPERTY DISPOSITION AGREEMENT
THIS AFFORDABLE HOUSING AND PROPERTY DISPOSITION AGREEMENT
(the "Agreement") is made and entered into as of , 2019 (the
"Effective Date"), by and between the CITY OF POWAY HOUSING AUTHORITY, a
public body, corporate and politic (the "Authority"), and POWAY COMMONS, LLC, a
Delaware limited liability company (the "Developer"). Authority and Developer are
sometimes referred to hereinafter individually as a "Party" and collectively as the "Parties."
RECITALS
A Authority is the City of Poway Housing Authority, a public body, corporate
and politic, organized and existing pursuant to and under the general laws of the State of
California.
B. Developer is Poway Commons, LLC, a Delaware limited liability company.
C. Concurrently with the execution of this Agreement, Authority is entering into
an agreement with the City of Poway to acquire the southernmost approximately nine-
tenths (.9) acres portion (the "Property") of that certain real property located in the City
of Poway, County of San Diego, State of California, commonly known as APN 317-101-
06 (the "City-Owned Mixed Property"). The City-Owned Mixed Property is legally
described in Attachment No. 1A, which is attached hereto and incorporated herein by this
reference. The City-Owned Mixed Property, including the portion thereof proposed to
comprise the Property, are depicted on the area site map attached hereto and
incorporated herein as Attachment No. 1 B.
D. This Agreement sets forth the terms and conditions on which (i) Authority
shall sell fee title to the Property to Developer, and (ii) Developer shall develop and
subsequently operate on the Property a forty-four (44) unit senior affordable apartment
community (the "Project").
E. The sale of the Property to Developer and Developer's development and
subsequent operation of the Project on the Property pursuant to this Agreement, and the
fulfillment generally of this Agreement, are in furtherance of Authority's goals to provide
affordable housing in the City of Poway, are in the vital and best interests of the City of
Poway and the welfare of its residents, and are in accordance with the public purposes
and provisions of applicable federal, state, and local laws and requirements under which
the Project has been undertaken.
NOW, THEREFORE, for and in consideration of the foregoing Recitals, which are
incorporated herein by this reference, and the mutual promises, covenants, and
conditions herein contained, Authority and Developer hereto agree as follows:
882/012782-0020
1~!f'b'f1 j'\B'1
"
-1-March 19, 2019 Item #3.1
1. DEFINITIONS
As used in this Agreement, capitalized terms are defined where first used or as set
forth in this Section 1 . Capitalized terms used in an attachment attached hereto and not
defined therein shall also have the meanings set forth in this Section 1.
"Affiliate" means any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Developer which,
if Developer is a partnership or limited liability company, shall include each of the
constituent members or partners, respectively thereof. The term "control" as used in the
immediately preceding sentence, means, with respect to a person that is a corporation,
the right to the exercise, directly or indirectly, of more than fifty percent (50%) of the voting
rights attributable to the shares of the controlled corporation, and, with respect to a person
that is not a corporation, the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of the controlled person.
"Annual Financial Statement" shall mean the financial statements prepared by
Developer for each calendar year, including a balance sheet, income statement,
statement of retained earnings, statement of cash flow, and footnotes thereto, prepared
in accordance with generally accepted accounting principles consistently applied, as
audited by an independent certified public accountant.
"Authority" means the City of Poway Housing Authority.
"Authority Deed of Trust" means a deed of trust substantially in the form
attached hereto and incorporated herein as Attachment No. 8, to be executed by
Developer pursuant to Section 10.2 in order to secure repayment of the Authority Note.
Authority/Lender Subordination Agreement" means, with respect to the
Partnership Transfer/Financing Closing, (i) a subordination agreement between Authority
and the Construction Lender, pursuant to which Authority agrees to subordinate the
Authority Loan to the Construction Loan Security Documents, and the Construction
Lender agrees to subordinate the Construction Loan Security Documents to the Authority
Regulatory Agreement, and, with respect to the closing of the Take-Out Loan at
conversion, (ii) a subordination agreement between Authority and the Take-Out Lender,
pursuant to which Authority agrees to subordinate the Authority Loan to the documents
securing the Take-Out Loan, and the Take-Out Lender agrees to subordinate the
documents securing the Take-Out Loan to the Authority Regulatory Agreement.
Authority/Master Developer Work Construction Lender Subordination
Agreement" means a subordination agreement between Authority and the Master
Developer Work Construction Lender, pursuant to which the Master Developer Work
Construction Lender agrees to subordinate any instrument securing its loan, including,
without limitation, a deed of trust, to the Authority Regulatory Agreement; provided,
however, that notwithstanding anything to the contrary in this Agreement, an
Authority/Master Developer Work Construction Lender Subordination Agreement shall
882/012782-0020
1~!f'b7f'3~~5/19 -2-
March 19, 2019 Item #3.1
only be required if the Master Developer Work Construction Lender will record a security
instrument against the Property on the Closing Date.
"Authority Loan" has the meaning set forth in Section 10.2 of this Agreement.
"Authority Note" means a promissory note substantially in the form attached
hereto and incorporated herein as Attachment No. 7, to be executed by Developer in favor
of Authority to evidence the obligation of Developer to repay the Authority Loan.
"Authority Regulatory Agreement" means a regulatory agreement substantially
in the form attached hereto and incorporated herein as Attachment No. 10, which will
establish certain restrictive covenants against the Property.
"Authority Title Policy" has the meaning set forth in Section 9.2(r) of this
Agreement.
"Building Permit" means all permits issued by the City and required for
commencement of construction of the Project.
"CDLAC" means the California Debt Limit Allocation Committee.
"CEQA" means the California Environmental Quality Act, Public Resources Code
Section 21000, et seq.
"CEQA Claims" means any appeals or protests (including litigation) taken or filed
with respect to Authority's (or the Poway Planning Commission's, as applicable) findings,
determinations, and/or certifications pursuant to CEQA in connection with Authority's
approval of this Agreement and in connection with the City's approval, conditional
approval, or denial, of the Entitlements.
"Chelsea" means Chelsea Investment Corporation, a California corporation, or
another entity (i) experienced in the development and operation of affordable housing
with requirements and restrictions similar to those set forth in the Authority Regulatory
Agreement, and (ii) acceptable to Authority in Authority's reasonable discretion.
"City" means the City of Poway, a California municipal corporation.
"Closing" shall mean the conveyance of the Property from Authority to Developer
through the Escrow.
"Closing Date" shall mean the date that the Grant Deed is recorded in the Official
Records, which shall occur, if at all, no later than the Outside Closing Date.
"Construction Contract" has the meaning set forth in Section 9.4(e) of this
Agreement.
"Construction Lender" means the first trust deed lender that holds Tax-Exempt
Bonds issued to finance the Project through the construction period (e.g., until a
8821012782-0020
1~!'b'f1 j?f1
"
-3-
March 19, 2019 Item #3.1
"conversion date"). The Construction Lender may or may not also be the Take-Out
Lender. The Construction Lender shall be an Institutional Lender.
"Construction Loan" means the proceeds of Tax-Exempt Bonds issued to
finance the Project through the construction period (e.g., until a "conversion date"), in the
anticipated amount of approximately Eight Million Four Hundred Thousand Dollars
($8,400,000). The Construction Loan is secured by the Construction Loan Security
Documents.
"Construction Loan Security Documents" means the documents and
instruments required by the Construction Lender to secure the Construction Loan.
"County" means the County of San Diego, California.
"Conversion Date" has the meaning set forth in the Construction Loan Security
Documents, or, if such term is not defined therein, means the date the Construction Loan
converts from a construction loan to a permanent loan.
"Developer" has the meaning set forth in the opening paragraph of this
Agreement.
"Developer Title Policy" has the meaning set forth in Section 6.3(e) of this
Agreement.
"Escrow" means the escrow through which the Closing is conducted.
"Escrow Holder" means First American Title Insurance Company, with its offices
located at 4380 La Jolla Village Drive, Suite 200, San Diego, CA 92122, or such other
escrow company as may be agreed to by Developer and the Executive Director.
"Event of Default" has the meaning set forth in Section 14.1 of this Agreement.
"Executive Director" means the person duly appointed to the position of
Executive Director, or his or her designee. The Executive Director shall represent
Authority in all matters pertaining to this Agreement. Whenever a reference is made
herein to an action or approval to be undertaken by Authority, the Executive Director is
authorized to act unless this Agreement specifically provides otherwise or the context
should otherwise require.
"Final Construction Documents" means the final plans, drawings and
specifications upon which the Building Permit is issued.
"Final Map" has the meaning set forth in Section 4 of this Agreement.
"FIRPTA Affidavit" means and refers to an affidavit complying with Section 1445
of the United States Internal Revenue Code ("IRC 1445") evidencing that neither
Developer nor Escrow Holder is required to withhold Authority's closing funds pursuant
to IRC 1445.
882/012782-0020
1~1l'b't' j~~5/19
-4-March 19, 2019 Item #3.1
"Form 593" means and refers to a California Franchise Tax Board Form 593-W
evidencing that neither Developer nor Escrow Holder is required to withhold Authority's
closing funds pursuant to California Revenue and Taxation Code Section 18662e).
"General Contractor" has the meaning set forth in Section 9.4(d) of this
Agreement.
"Governmental Requirements" means all laws, ordinances, statutes, codes,
rules, regulations, requirements, orders and decrees, of the United States, the State of
California, the County of San Diego, Authority, and of any other political subdivision,
agency or instrumentality exercising jurisdiction over Authority, Developer, the Property,
and/or the Project.
"Grant Deed" means a grant deed substantially in the form attached hereto and
incorporated herein as Attachment No. 5, by which Authority will transfer fee title to the
Property to Developer at the Closing.
"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", "acutely 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) asbestos, (vii)
polychlorinated biphenyls, (viii) listed under Article 9 or defined as "hazardous" or
"extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of
Regulations, 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), (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., (xii) methyl-tertiary butyl ether, (xiii)
perchlorate or (xiv) any other substance, whether in the form of a solid, liquid, gas or any
other form whatsoever, which by any Governmental Requirements either requires special
handling in its use, transportation, generation, collection, storage, handling, treatment or
disposal, or is defined as "hazardous" or harmful to the environment. For purposes
hereof, "Hazardous Materials" excludes materials and substances in quantities as are
commonly used in the construction and operation of an apartment complex, provided that
such materials and substances are used in accordance with all applicable laws.
882/012782-0020
1~!f'b't' :!'!1~5119 -5-March 19, 2019 Item #3.1
"HUD" means the United States Department of Housing and Urban Development.
"lndemnitees" means Authority and the City and their respective officers, officials,
members, employees, representatives, agents and volunteers.
"Institutional Lender" means any of the following institutions having assets or
deposits in the aggregate of not less than One Hundred Million Dollars ($100,000,000): a
California chartered bank; a bank created and operated under and pursuant to the laws
of the United States of America; an "incorporated admitted insurer'' (as that term is used
in Section 1100.1 of the California Insurance Code); a "foreign (other state) bank" (as that
term is defined in Section 1700(1) of the California Financial Code); a federal savings and
loan association (Cal. Fin. Code Section 8600); a commercial finance lender (within the
meaning of Sections 2600 et seq. of the California Financial Code); a "foreign (other
nation) bank" provided it is licensed to maintain an office in California, is licensed or
otherwise authorized by another state to maintain an agency or branch office in that state,
or maintains a federal agency or federal branch in any state (Section 1716 of the
California Financial Code); a bank holding company or a subsidiary of a bank holding
company which is not a bank (Section 3707 of the California Financial Code); a trust
company, savings and loan association, insurance company, investment banker; college
or university; pension or retirement fund or system, either governmental or private, or any
pension or retirement fund or system of which any of the foregoing shall be trustee,
provided the same be organized under the laws of the United States or of any state
thereof; and a Real Estate Investment Trust, as defined in Section 856 of the Internal
Revenue Code of 1986, as amended, provided such trust is listed on either the American
Stock Exchange or the New York Stock Exchange.
"Investor" means the limited partner of the Partnership.
"Land Use Entitlements" has the meaning set forth in Section 4 of this
Agreement.
"Land Use Entitlement Approval Date" means the date that all of the Land Use
Entitlements have been approved by each required governmental agency with jurisdiction
over the Property and/or the construction of the Project, and all appeal and protest periods
have expired with no appeals or protests (including litigation) taken or filed ("Land Use
Entitlement Claims"), or, if any are so taken or filed, then upon the resolution of the Land
Use Entitlement Claims upon terms acceptable to each of Authority and Developer, in
their respective sole and absolute discretion.
"Management Agreement" has the meaning set forth in Section 9.4(n) of this
Agreement.
"Notice of Affordability" means a Notice of Affordability Restrictions on Transfer
of Property substantially in the form attached hereto and incorporated herein as
Attachment No. 11, to be executed by Authority and Developer and recorded in the Official
Records to notify members of the public regarding the affordability restrictions for the
Project.
882/012782-0020
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"Notices" has the meaning set forth in Section 15 of this Agreement.
"Official Records" means the Official Records of the County.
"Outside Closing Date" " means and refers to the earliest of: (1) a date two (2)
business days after the date that Developer is issued the first grading permit for the
Project, (2) thirty (30) calendar days after the Land Use Entitlement Approval Date, or (3)
nine (9) months after the Effective Date; provided, however, if any of such dates is not a
business day (meaning a day that documents can be placed of record in San Diego
County), then the applicable date shall be extended to the second such business day
thereafter. Developer shall have the right, but not the obligation and upon five (5) days
advance written notice to City, to extend the Outside Closing Date for two successive
periods of one (1) month each.
"Partnership" has the meaning set forth in Section 6.1 of this Agreement.
"Partnership Agreement" has the meaning set forth in Section 9.4(a) of this
Agreement.
"Partnership Transfer/Financing Closing" has the meaning set forth in Section
9.4 of this Agreement.
"Partnership Transfer/Financing Escrow" has the meaning set forth in Section
9.4 of this Agreement.
"Permitted Poway Commons Transfer" means and refers to any of the following
types of Transfer, where the Person to which such Transfer is made, acquires the
Property or a portion thereof (if such Permitted Poway Commons Transfer occurs after
the Closing) and expressly assumes the obligations of Poway Commons under this
Agreement with respect to the Property so Transferred in a written instrument satisfactory
to Authority or acquires an equity interest in Poway Commons:
(1) Any Transfer of stock or equity of Poway Commons that does
not change management or operational control of the day to day operations in the
development of the Property or the Project or is less than a 49% interest, as set forth in
Section (1) of the definition of Transfer.
(2) Any Transfer of any interest in Poway Commons irrespective
of the percentage of ownership (i) to any other owner of any interest in Poway Commons;
or (ii) to any Affiliate, or (iii) to any other Person in which any holder of an interest
(including any beneficial interest) in Poway Commons as a manager, officer or partner or
in which any of the aforementioned is a shareholder, member or partner (including a
beneficial owner).
(3) The pledge of any interest in the Property as security for a
loan that has been approved by Authority pursuant to the terms of this Agreement.
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March 19, 2019 Item #3.1
(4) Any foreclosure or deed in lieu of foreclose under the
documents evidencing and securing repayment of a loan that has been approved by
Authority pursuant to the terms of this Agreement.
(5) Any Property Transfer to an entity in which Poway Commons
(or an Affiliate) has an ownership interest and which is formed with a third party to fund
the development of the Project, and the exercise of any and all remedies under the
applicable entity documents.
(6) The recordation of replacemenVpermanent financing to
replace a loan that has been approved by Authority pursuant to the terms of this
Agreement.
(7) The granting of easements and licenses in the ordinary
course of the development and ownership of the Property and the Project.
A Permitted Poway Commons Transfer also includes a Transfer of Poway
Commons' rights and obligations under this Agreement with respect to the entitlement
and grading of the Property to an entity in which Poway Commons or an Affiliate thereof
maintains management or operational control of the day to day operations of such entity.
"Person" means and refers to any association, corporation, governmental entity or
agency, individual, joint venture, joint-stock company, limited liability company,
partnership, trust, unincorporated organization, or other entity of any kind.
"Poway Commons" means Poway Commons, LLC, a Delaware limited liability
company.
"Project" means Developer's construction of a senior affordable rental housing
development consisting of forty-four (44) residential dwelling units and all required on-site
improvements necessary to serve the development in accordance with this Agreement,
including, without limitation, in accordance with the Scope of Development, the Land Use
Entitlements, and the Final Construction Documents. The Project is depicted in the Site
Plan.
"Project Architect" means, The McKinley Associates, Inc., or such other architect
or architectural firm as may be approved by the Executive Director.
"Project Budget" shall mean that certain budget attached hereto and incorporated
herein as Attachment No. 9.
"Project Costs" means all costs of any nature incurred in connection with the
planning, design, and development of the Project.
"Project Financing" has the meaning set forth in Section 10.1 of this Agreement.
"Property" has the meaning set forth in Recital C of this Agreement.
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March 19, 2019 Item #3.1
"PSDA" means that certain Purchase, Sale, and Development Agreement entered
into between Developer and the City on or about the Effective Date, pursuant to which
the City has agreed to sell to Developer the PSDA Property, and Developer has agreed
to develop thereon a residential condominium and retail development.
"PSDA Property" means that certain real property described in the PSDA as the
"City Parcels."
"Purchase Price" means the purchase price to be paid by Developer to Authority
for the purchase of the Property. The Purchase Price is One Million Two Hundred
Thousand Dollars ($1,200,000).
"Release of Construction Covenants" means a release document substantially
in the form attached hereto and incorporated herein as Attachment No. 12, to be executed
by Authority and recorded in the Official Records upon Developer's completion of the
Project, as described in Section 11.17.
"Request for Notice" has the meaning set forth in Section 6.2(p) of this
Agreement
"Schedule of Performance" means the Schedule of Performance attached
hereto and incorporated herein as Attachment No. 3. The Schedule of Performance sets
forth the times by which the Parties are required to perform certain obligations set forth in
this Agreement.
"Scope of Development" means the Scope of Development attached hereto and
incorporated herein as Attachment No. 4.
"Sources and Uses of Funds Statement" means the Sources and Uses of
Funds statement attached to the Project Budget.
"Site Plan" means the site plan attached hereto and incorporated herein as
Attachment No. 2A.
"Take-Out Lender" means the institution that holds or institutions that hold the
Tax-Exempt Bonds that remain outstanding from and after the construction period (e.g.,
from and after a "conversion date"). The Take-Out Lender shall be an Institutional Lender.
"Take-Out Loan" means the proceeds of the Tax-Exempt Bonds that remain
outstanding from and after the construction period (e.g., from and after a "conversion
date").
"Tax Credits" has the meaning set forth in Section 10.1 (b) of this Agreement.
"Tax Credit Program" means the low-income housing tax credit program
authorized pursuant to Internal Revenue Code Section 42, California Health and Safety
Code Sections 50199.6-50199.19, Revenue and Taxation Code Sections 17057.5,
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17058, 23610.4, 23610.5, and applicable federal and State regulations such as 4
California Code of Regulations Sections 10300-10340.
"Tax-Exempt Bonds" shall mean tax-exempt multi-family housing revenue bonds,
in the approximate amount of Eight Million Four Hundred Thousand Dollars ($8,400,000).
"TCAC" means the California Tax Credit Allocation Committee.
"Tentative Map" means and refers to a tentative map subdividing the Property and
PSDA Property into multiple legal parcels, as necessary to accomplish the development
of the Project and the development project contemplated under the PSDA. The proposed
subdivisions and locations of the Property and PSDA Property are depicted on the
proposed subdivision map attached hereto and incorporated herein as Attachment No.
2B (the "Proposed Subdivision Map"); provided, however, that the Property is
designated thereon as the "Affordable Area," and the "PSDA Property" is designated
thereon as the "Retail Area" and the "Residential Area."
"Title Company" means First American Title Insurance Company, with its offices
located at 4380 La Jolla Village Drive, Suite 200, San Diego, CA 92122, or such other
title insurance company as may be agreed to by Developer and the Executive Director.
"Transfer" means and refers to any of the following:
(a) Any total or partial sale, assignment, conveyance, trust, power, or
transfer in any other mode or form, by Developer of more than a 49% interest in
Developer's interest in this Agreement, the Property, or the Project or a series of such
sales, assignments and the like that, in the aggregate, result in a disposition of more than
a 49% interest in Developer's interest in this Agreement, the Property, or the Project; or
(b) Any total or partial sale, assignment, conveyance, or transfer in any
other mode or form, of or with respect to any interest in Developer or a series of such
sales, assignments and the like that, in the aggregate, result in a disposition of more than
a 49% interest in any interest in Developer; or
(c) Any merger, consolidation, sale or lease of all or substantially all of
the assets of Developer or a series of such sales, assignments and the like that, in the
aggregate, result in a disposition of more than a 49% interest of all or substantially all of
the assets of Developer; or
(d) Any Property transfer; or
(e) The recordation of any deed of trust, mortgage, lien or similar
encumbrance against all or any portion of the Property or the Project other than a loan
that has been approved by Authority pursuant to the terms of this Agreement.
8821012782-0020
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-10-March 19, 2019 Item #3.1
2. PARTIES
2.1 Authority. Authority is the City of Poway Housing Authority, a public body,
corporate and politic, organized and existing pursuant to and under the general laws of
the State of California.
2.2 Developer. Developer is Poway Commons, LLC, a Delaware limited liability
company, and any successor to its rights, powers, and responsibilities. Developer's
principal offices are located at 9988 Hibert Street, Suite 210, San Diego, CA 92131. As
further set forth in Section 6.1, Developer contemplates assigning all of its right, title and
interest in and to this Agreement to the Partnership.
3. OPENING OF ESCROW; INDEPENDENT CONTRACT CONSIDERATION
Within five (5) days after the Effective Date, the Parties shall open the Escrow, by
delivering a copy of this Agreement, fully executed, to Escrow Holder. Concurrently with
the opening of the Escrow, Developer shall deposit with Escrow Holder the sum of One
Hundred Dollars ($100) in cash or other immediately available funds (the "Independent
Contract Consideration"). The Independent Contract Consideration shall be released
immediately to Authority as consideration for Authority's execution and delivery of this
Agreement and Developer's right to approve or disapprove any Developer contingencies
set forth in this Agreement with respect to the Property. The Independent Contract
Consideration is in all respects nonrefundable to Developer.
4. LAND USE ENTITLEMENTS
Within the time set forth in the Schedule of Performance, Developer shall submit
to the City and thereafter diligently process an application or applications for all
discretionary governmental permits as may be necessary to allow Developer to develop
the Project in the manner required by this Agreement including, without limitation, a
Development Review and Tentative Map (collectively, the "Land Use Entitlements").
Authority, without any cost or expense to Authority other than as may be expressly
provided in the Project Budget, agrees to reasonably assist Developer to secure said
Land Use Entitlements. Notwithstanding the foregoing, Authority shall sign (or shall
cause City to sign, as applicable), as the "Owner," all such applications to be submitted
by Developer pursuant to this paragraph. Authority and Developer acknowledge and
agree that as of the Effective Date the Property does not comprise a legal parcel. Within
the time set forth in the Schedule of Performance, Developer shall obtain approval of and
record a final map consistent with the proposed subdivisions depicted in Attachment No.
28 attached hereto (the "Final Map"). Notwithstanding that as of the Effective Date the
Property does not constitute a legal parcel, the Parties acknowledge and agree that
Authority has the legal right to convey the Property to Developer using a metes and
bounds legal description.
The approval of this Agreement by Authority shall not constitute a pre-commitment
by Authority or the City or the City Council of City regarding any approvals required for
development of the Project, including, without limitation, all required analysis under
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March 19, 2019 Item #3.1
CEQA. Developer obtains no right or entitlement to construct the Project by virtue of this
Agreement. The City retains unfettered discretion to approve, conditionally approve, or
deny any entitlements and/or other approvals required for the Project and all proceedings
and decisions in connection therewith. This Agreement shall not be construed as a grant
of development rights or land use entitlements to construct the Project on the Property.
All design, architectural, and building plans for the Project shall be subject to the review
and approval of the City and any other governmental agency with jurisdiction over the
Property and/or Project. By its execution of this Agreement, Authority is not committing
itself to or agreeing to undertake any acts or activities requiring the subsequent
independent exercise of discretion by the City or any agency or department thereof.
Within ten (10) days after the City takes final action with respect to all of the Land
Use Entitlements, Developer shall notify Authority in writing whether Developer approves
or disapproves the Land Use Entitlements, including all of the terms and conditions
pertaining thereto. Any disapproval shall be in writing and shall state the reasons therefor.
If Developer fails to timely notify Authority in writing of Developer's approval or
disapproval of the Land Use Entitlements, Developer shall be conclusively deemed to
have approved the same. If Developer timely disapproves the Land Use Entitlements,
this Agreement shall be terminated unless the Parties mutually agree to approve an
extension of time for reconsideration of Authority's actions with respect to the Land Use
Entitlements, with each Party reserving the right to approve or disapprove the same in its
sole and absolute discretion.
5. DUE DILIGENCE PERIOD; PERMISSION TO ENTER PROPERTY; AS-IS;
PHYSICAL AND ENVIRONMENTAL CONDITION
5.1 Due Diligence Period. Authority represents to Developer that prior to the
Effective Date, Authority and/or City has provided Developer with hard copies, electronic
files, or other access to all reports, plans, studies and other similar records with respect
to the Property (collectively, "Property Reports") that are in Authority's and/or City's
possession and reasonably known to Authority and/or City. Developer acknowledges and
agrees that (i) although Authority and City have reviewed their real property files for
Property Reports, neither Authority or City has conducted a comprehensive search of all
Authority and/or City files for Property Reports, and (ii) the Property Reports are provided
for information and disclosure purposes only, without any representation or warranty.
Authority shall permit Developer and Developer's representatives and agents to enter
onto the Property commencing on the Effective Date and continuing for a period of one
hundred twenty (120) days thereafter ("Due Diligence Period"), for purposes of enabling
Developer to examine, inspect, and investigate the physical and environmental condition
of the Property, including any foundations, soil, subsurface soils, drainage, seismic and
other geological and topographical matters, location of asbestos, toxic substances,
Hazardous Materials, if any, and, at Developer's sole and absolute discretion, to enable
Developer to determine whether the Property is acceptable to Developer and suitable for
Developer's intended use; provided, however, in no event shall Developer conduct any
intrusive testing procedures on the Property without the prior written consent of Authority,
which consent may not be unreasonably withheld. Developer and Developer's
representatives and agents shall also be entitled to enter onto the Property to conduct
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March 19, 2019 Item #3.1
additional examinations and investigations at any time after expiration of the Due
Diligence Period and through the Closing.
As a condition to Developer's entry onto the Property prior to the Closing, whether
before or after the expiration of the Due Diligence Period, Developer shall provide to
Authority a copy of all reports, studies and test results prepared by Developer's
consultants, without representation or warranty. Developer shall notify Authority, in
writing, at least twenty-four (24) hours prior to any entry by Developer or Developer's
representatives on the Property. Authority shall have the right, but not the obligation, to
accompany Developer during such investigations. As an additional condition of such
entry, Developer shall (i) conduct all work or studies in a diligent, expeditious, and safe
manner and not allow any dangerous or hazardous conditions to occur on the Property
during or after the investigation; (ii) obtain any required governmental permits and comply
with all applicable laws and governmental regulations; (iii) keep the Property free and
clear of all materialmen's liens, lis pendens and other liens arising out of the entry and
work performed under this paragraph; (iv) maintain or assure maintenance of workers'
compensation insurance (or state approved self-insurance) for all persons entering the
Property in the amounts required by the State of California; and (v) provide to Authority
prior to initial entry a certificate of insurance evidencing that Developer and/or the persons
entering the Property have procured and have in effect commercial general liability
insurance that satisfies the requirements set forth in Section 11.8 hereof. Developer shall,
in a timely manner, repair any and all damage to the Property caused by such inspections
or investigations and shall indemnify, defend, and hold harmless the lndemnitees from
and against any claims, liabilities, and losses arising from the entries of Developer and
its representatives and agents on the Property pursuant to this Section 5.1.
Notwithstanding Developer's right to enter the Property after expiration of the Due
Diligence Period pursuant to the second sentence in the first paragraph of this Section
5.1, Developer shall notify Authority in writing on or before the expiration of the Due
Diligence Period of Developer's approval or disapproval of the physical and
environmental condition of the Property and Developer's investigations with respect
thereto. Developer's disapproval shall constitute Developer's election to terminate this
Agreement and cancel the Escrow. Developer's failure to deliver notice to Authority on
or before the expiration of the Due Diligence Period shall be conclusively deemed
Developer's approval thereof.
5.2 "AS-IS". Developer acknowledges and agrees that it has been provided
with copies of the Property Reports, including the Phase 1 and Phase 2, and that
Developer is purchasing the Property from Authority solely in reliance on its own
investigation, and that no representations and/or warranties of any kind whatsoever,
express or implied, have been made by Authority or by any of Authority's officers, officials,
members, employees, representatives or agents. Developer further acknowledges and
agrees that Developer will be purchasing the Property in "AS IS" condition with all faults
and conditions then existing in and on the Property, whether known or unknown.
Notwithstanding the foregoing, Authority acknowledges and agrees that neither this
Section 5.2, nor any other term, provision or condition of this Agreement obligates
Developer, prior to the Closing, to remediate, or to incur any cost to remediate, any
882/012782-0020
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March 19, 2019 Item #3.1
Hazardous Materials that were released or existed on the Property prior to the Closing.
Developer acknowledges and agrees that, as between it and Authority, nothing in this
Agreement or in the Authority Regulatory Agreement shall ever be deemed, construed,
or interpreted to obligate Authority to remediate, or to incur any expense to remediate,
any Hazardous Materials discovered on the Property either before or after the Closing
unless and until Authority expressly agrees to do so in writing.
5.3 Developer Indemnity and Release. Upon the Closing, Developer shall
indemnify, defend, and hold the lndemnitees harmless from and against any and all
claims, suits, penalties, expenses, losses, damages, attorney's fees, judgments, or any
other action or damage of any kind or nature arising out of or related to any of the matters
described in Section 5.2, except for (i) the presence on the Property or any portion thereof
of Hazardous Materials placed or otherwise caused to be placed thereon by Authority, or
(ii) any defect or adverse physical or environmental condition of the Property directly
caused by Authority or the City. Subject to the foregoing limitation, notwithstanding any
other provision of this Agreement to the contrary, Developer's indemnification as set forth
in this Section 5.3 shall survive any termination of this Agreement and the Closing and
shall continue in perpetuity; provided, however, that Authority shall cooperate, at no cost
to Authority, in Developer's defense under this Section 5.3.
With the exception of the presence on the Property or any portion thereof
of Hazardous Materials placed or otherwise caused to be placed thereon by Authority,
Developer shall be deemed conclusively to have released and discharged the
lndemnitees from any and all damages, losses, demands, claims, debts, liabilities,
obligations, causes of action and rights, whether known or unknown, by Developer
regarding the physical condition of the Property, including, but not limited to, the
environmental condition of the Property.
Developer agrees that, with respect to the General Release contained in
the immediately preceding paragraph, the general release extends to all matters
regarding the Property, whether or not claimed or suspected, to and including the date of
execution hereof, and constitutes a waiver of each and all the provisions of the California
Civil Code § 1542, which reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER
MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR."
DEVELOPER'S INITIALS: __ _
Developer herein acknowledges that the effect and import of the provisions
of Civil Code § 1542 have been explained to it by its own counsel. Developer understands
and acknowledges the significance and the consequence of such specific waiver of
unknown claims and hereby assumes full responsibility for any injuries, damages, losses
or liabilities that it may hereinafter incur from the waiver of these unknown claims.
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March 19, 2019 Item #3.1
5.4 Materiality. Developer acknowledges and agrees that the defense,
indemnification, protection and hold harmless obligations of Developer for the benefit of
Authority set forth in this Agreement are a material element of the consideration to
Authority under this Agreement, and that Authority would not have entered into this
Agreement unless Developer's obligations were as provided for herein.
5.5 Review of Title of Site. Within thirty (30) days after the Effective Date,
Authority shall cause the Title Company to deliver to Developer a standard preliminary
title report dated no earlier than the Effective Date (the "Preliminary Title Report") with
respect to the title to the Property, together with legible copies of the documents
underlying the exceptions ("Title Exceptions") set forth in the Preliminary Title Report.
Developer shall have the right to approve or disapprove the Title Exceptions and any
proposed encumbrances to the Property in the exercise of its sole discretion; provided,
however, that Developer hereby approves the following Title Exceptions:
(a) The standard printed exceptions and exclusions contained in the
Preliminary Title Report.
(b) The lien of any non-delinquent property taxes and assessments (to
be prorated at Closing).
(d) All documents to be recorded at the Closing pursuant to this
Agreement.
Developer shall have fifteen (15) days after the later of (i) the date of its receipt of the
Preliminary Title Report, or (ii) the date Developer receives the documents underlying the
Title Exceptions, to give written notice to Authority and Escrow Holder of Developer's
approval or disapproval of any of such Title Exceptions. Developer's failure to give written
disapproval of any of the Title Exceptions in the Preliminary Title Report within such time
limit shall be deemed Developer's approval of the Preliminary Title Report. If Developer
notifies Authority of its disapproval of any Title Exceptions in the Preliminary Title Report,
Authority shall have the right, but not the obligation, to remove any such disapproved Title
Exceptions within thirty (30) days after receiving written notice of Developer's disapproval
or provide assurances satisfactory to Developer that such disapproved Title Exception(s)
will be removed on or before the Closing. If Authority cannot or does not agree to remove
any of the disapproved Title Exceptions before the Closing, Developer shall have fifteen
(15) days after the expiration of such thirty (30) day period to either give Authority written
notice that Developer elects to proceed with the purchase of the Property subject to the
disapproved Title Exceptions or to give Authority written notice that Developer elects to
terminate this Agreement. Developer's failure to give written notice of its election within
such fifteen (15) day period shall be deemed to be an election to proceed with the
purchase of the Property subject to the disapproved Title Exceptions. The condition of
title, including all of the Title Exceptions approved (or deemed approved) by Developer
as provided herein shall hereinafter be referred to as the "Condition of Property Title."
From and after the Effective Date hereof, and continuing until the earlier of (i) the Closing,
or (ii) termination of this Agreement, Authority shall not further encumber the Property
with additional Title Exceptions without Developer's prior written consent. Developer shall
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-15-March 19, 2019 Item #3.1
have the right to approve or disapprove any further Title Exceptions reported by the Title
Company after Developer has approved the Condition of Property Title (which are not
created by Developer). Developer and the Executive Director, on behalf of Authority, shall
have the authority to extend the foregoing fifteen (15) day period by written agreement.
6. DISPOSITION OF PROPERTY TO MASTER DEVELOPER
6.1 Agreement to Sell Property to Developer. Authority, subject to the
conditions set forth in Section 6.2 below, agrees to sell the Property to Developer, and
Developer, subject to the conditions set forth in Section 6.3 below, agrees to purchase
the Property from Authority. Subject to each Party's reserved rights hereunder, the
Parties shall cooperate with one another and shall exercise commercially reasonable
diligence in an effort to ensure that the conditions precedent set forth in Sections 6.2 and
6.3 are timely satisfied.
Authority and Developer acknowledge and agree that Authority's disposition of the
Property to Developer pursuant to Sections 6, 7, and 8 is intended as an interim
conveyance, whereby Developer, in its capacity as the "master developer," will
undertake certain site improvement work, including demolition, grading, and installation
of utility infrastructure (collectively, the "Master Developer Work"). Authority and
Developer contemplate that at such time as the Master Developer Work has been
completed, as determined by the City's Director of Development Services, and the
conditions set forth in Section 9.4 have all been satisfied, or waived by Authority,
Developer will transfer the Property, and transfer and assign this Agreement, to Poway
Commons Affordable CIC, LP, a California limited partnership (the "Partnership"), which
will assume all of Developer's remaining obligations under this Agreement, and proceed
to develop and operate the Project.
6.2 Conditions for Authority's Benefit. Authority's obligation to sell and convey
the Property to Developer shall be subject to satisfaction of all of the following conditions
precedent or Authority's written waiver of such conditions precedent in its sole and
absolute discretion:
(a) Organizational Documents. The Executive Director shall have
received and approved a copy of such portions of the organizational documents of
Developer or Developer's successor-in-interest as the Executive Director deems
reasonably necessary to document the power and authority of Developer to perform its
obligations set forth in this Agreement. Developer shall have made full disclosure to
Authority of the names and addresses of all persons and entities that have a beneficial
interest in Developer.
(b) Insurance. Developer shall have submitted to Authority and
Authority shall have approved Developer's evidence of the liability insurance required
pursuant to Section 11.8 hereof.
(c) Land Use Entitlements. The City shall have approved the Land Use
Entitlements for the Project, in accordance with Section 4, and Developer shall have
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March 19, 2019 Item #3.1
approved or be deemed to have approved the same, including without limitation all terms
and conditions applicable thereto.
(d) Completion of CEQA Analysis. Developer, at its sole cost and
expense, shall have provided to Authority all studies, reports, data, and supporting
materials necessary for Authority to conduct all required analysis under CEQA, Authority
shall have completed such analysis, and the Authority Board of Directors or City Planning
Commission (as applicable), in its sole and absolute discretion, shall have made all
requisite findings, determinations, and/or certifications necessary to enable the Project to
move forward.
(e) Evidence of Master Developer Work Financing. The Executive
Director shall have received and reasonably approved commitments from all Master
Developer Work financing sources, as evidenced by letters of commitment and/or true
and complete copies of loan documents, and all of such financing shall close concurrently
with the Closing.
(f) Master Developer Work General Contractor. The general contractor
for the Master Developer Work (the "Master Developer Work General Contractor") shall
have been approved by the Executive Director. The Authority hereby approves Meridian
Building Services, Inc. as the Master Developer Work General Contractor.
(g) Master Developer Work Construction Contract. Authority shall have
received a true and complete copy of a contract by and between Developer and the
Master Developer Work General Contractor pursuant to which the Master Developer
Work General Contractor has agreed to construct the Master Developer Work at a cost
consistent with the costs set forth therefor in Project Budget for the Master Developer
Work (the "Master Developer Work Construction Contract") and the Executive Director
shall have approved said Master Developer Work Construction Contract.
(h) Master Developer Work Construction Documents. Authority shall
have approved the final plans, drawings and specifications for the Master Developer Work
and Authority shall have received a full set thereof.
(i) Completion Bond. If the lender (if any) providing financing for the
Master Developer Work (the "Master Developer Work Construction Lender") requires
that a completion bond be posted by the Master Developer Work General Contractor,
then such completion bond shall name Authority as a co-obligee, unless the Master
Developer Work Construction Lender provides a written objection thereof to Authority,
indicating with specificity the basis for the objection.
U) Completion Guaranty. If the Master Developer Work Construction
Lender (if any) requires a completion guaranty from Developer, or any Affiliate thereof,
then Authority shall have also received a completion guaranty from Developer in similar
form and content, unless the Master Developer Work Construction Lender provides a
written objection thereof to Authority, indicating with specificity the basis for the objection.
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(k) Gap Financing. Developer shall have deposited the sum of Four
Hundred Eighty-Seven Thousand Dollars ($487,000) (the "Gap Financing") with
Authority or provided a bond or other security in the amount of the Gap Financing
reasonably acceptable to the Authority Executive Director.
(I) City Permits. Developer shall have obtained all City permits required
to complete the rough grading of the Property.
(m) Master Developer Work to Commence. The Executive Director shall
be reasonably satisfied that construction of the Master Developer Work will commence
not later than thirty (30) days after the Closing and thereafter will be pursued to completion
in a diligent and continuous manner.
(n) Assignment of Master Developer Work Construction Documents.
Developer shall have conditionally assigned to Authority the final construction documents
for the Master Developer Work by an instrument substantially in the form attached hereto
and incorporated herein as Attachment No. 6, which assignment shall be subordinated to
any pledge or assignment to the Master Developer Work Construction Lender (if any).
Developer shall have also delivered to Authority the written consent of the other Party to
each such final construction document to said assignment in the form included as part of
said Attachment No. 6, including, without limitation, to the use by Authority of the final
construction documents, as well as the ideas, designs, and concepts contained within
them.
(o) Assignment of Master Developer Work Construction Contract.
Developer shall have conditionally assigned to Authority the Master Developer Work
Construction Contract by an instrument substantially in the form attached hereto and
incorporated herein as Attachment No. 6, including obtaining the consent thereto of the
Master Developer Work General Contractor, which assignment shall be subordinated to
any pledge or assignment to the Master Developer Work Construction Lender (if any).
(p) Request for Notice of Default. Escrow Holder shall be ready to
record a request for notice of default pursuant to Civil Code Section 2924(b), requesting
that any beneficiaries of liens securing the Master Developer Work financing notify
Authority of any default under the instrument creating the lien (the "Request for Notice").
(q) Documents Executed. Developer shall have duly executed the Grant
Deed, Authority Regulatory Agreement, Notice of Affordability, and Authority/Master
Developer Work Construction Lender Subordination Agreement, with signatures
acknowledged (as applicable) and deposited them into Escrow.
(r) Developer's Acquisition of City Parcels. The escrow under the PSDA
shall have closed and Developer shall have acquired fee title to the City Parcels.
(s) Developer's Acquisition of Private Parcels. The escrow under the
"Private Parcels Purchase Agreements" shall have closed and Developer shall have
acquired fee title to the "Private Parcels" (as those terms are defined in the PSDA).
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(t) Settlement Statement. Authority shall have reasonably approved the
Escrow Holder's final estimated closing/settlement statement.
(u) Delivery by Developer. Developer shall have deposited all of the
items into the Escrow required by Section 7.1.
(v) Performance by Developer. Developer shall have performed all of
its material obligations required to be performed by Developer under this Agreement prior
to the Closing; and is not in default of any of its obligations under this Agreement.
(w) Representations and Warranties. The representations of Developer
contained in this Agreement shall be correct in all material respects as of the Closing as
though made on and as of that date and, if requested by the Executive Director, Authority
shall have received a certificate to that effect signed by Developer.
(x) No Default. No Event of Default by Developer shall then exist, and
no event shall then exist which, with the giving of notice or the passage of time or both,
would constitute an Event of Default by Developer and, if requested by the Executive
Director, Authority shall have received a certificate to that effect signed by Developer.
6.3 Conditions for Developer's Benefit. Developer's obligation to purchase the
Property from Authority shall be subject to satisfaction of all of the following conditions
precedent or Developer's written waiver of such conditions precedent in its sole and
absolute discretion:
(a) Land Use Entitlements. Developer shall have approved, or have
been deemed to have approved, the Land Use Entitlements for the Project, in accordance
with Section 4.
(b) Condition of Property. Developer shall have approved, or have been
deemed to have approved, the condition of the Property, in accordance with Section 5.1,
and no material changes shall have occurred after the Effective Date with respect to the
condition of the Property.
(c) Evidence of Master Developer Work Financing. Developer shall
have received commitments for all Master Developer Work financing, and all of such
financing shall close concurrently with the Closing.
(d) City Permits. Developer shall have obtained all City permits required
to complete the rough grading of the Property.
(e) Title Insurance. The Title Company shall be unconditionally
committed to issue its AL TA owner's form policy of title insurance, with liability in the
amount not less than the Purchase Price, showing fee title to the Property and fee title to
the improvements located thereon vested in Developer, in the Condition of Property Title,
with no other encumbrances or title exceptions, except (i) the lien of any financing
obtained by Developer for the Master Developer Work, and (ii) the standard conditions
and exceptions contained in an AL TA standard owner's policy of title insurance that is
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regularly issued by the Title Company in transactions similar to the one contemplated by
this Agreement; provided, however that Developer shall have the right, at Developer's
sole cost, to elect to obtain title endorsements and/or an extended coverage ALT A
owner's policy (the "Developer Title Policy"). The Title Company shall provide Authority
with a copy of Developer Title Policy.
(f) No Termination. Developer shall not have timely elected to terminate
the Escrow and this Agreement pursuant to the provisions in Section 5.1.
(g) Land Use Entitlement Approval Date. The occurrence of the Land
Use Entitlement Approval Date.
(h) Delivery by Authority. Authority shall have deposited all of the items
into the Escrow required by Section 7.2.
(i) Settlement Statement. Developer shall have reasonably approved
the Escrow Holder's final estimated closing/settlement statement.
U) Authority Acquisition of the Property. Authority shall have acquired
fee title to the Property.
(k) Acquisition of Other Property. The escrow under the PDSA shall
have closed, and Developer shall have acquired fee title to the "Residential Parcels," the
"Retail Parcels," and the "Private Parcels," (as those terms are defined in the PDSA).
(I) Property Vacant. The Property shall have been vacated and shall
be free from occupancy.
(m) Performance by Authority. Authority shall have performed all of its
material obligations required to be performed by Authority under this Agreement prior to
the Closing; and is not in default of any of its obligations under this Agreement.
(n) No Default. No Event of Default by Authority shall then exist, and no
event shall then exist which, with only the giving of notice or the passage of time or both,
would constitute an Event of Default by Authority.
6.4 Developer Right to Terminate. If, by the time provided in the Schedule of
Performance, any of the conditions set forth in Section 6.3 have not been satisfied, or
waived by Developer, then Developer, provided that it is not then in material default under
this Agreement (subject to the notice and cure provisions of Section 14.1 ), may terminate
this Agreement by giving thirty (30) days' written notice to Authority.
6.5 Authority Right to Terminate. If, by the time provided in the Schedule of
Performance, any of the conditions set forth in Section 6.2 have not been satisfied, or
waived by Authority, then Authority, provided that it is not then in material default under
this Agreement (subject to the notice and cure provisions of Section 14.1 ), may terminate
this Agreement by giving thirty (30) days' written notice to Developer.
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6.6 Waiver of Conditions. The conditions set forth in Section 6.2 are for
Authority's benefit only and the Executive Director may waive all or any part of such rights
by written notice to Developer. The conditions set forth in Section 6.3 are for Developer's
benefit only and Developer may waive all or any part of such rights by written notice to
Authority.
7. CLOSING; ESCROW EXPENSES
7.1 Developer's Escrow Deposits. Following satisfaction or waiver of each of
Developer's conditions to the Closing set forth in Section 6.3, at least one (1) business
day prior to the Closing Date scheduled by the Escrow Holder in a writing delivered to
each of the Parties, Developer shall deposit the following funds and documents into the
Escrow and, concurrently, provide a copy of each such document to Authority:
(a) Purchase Price. The Purchase Price, plus any additional funds
required to be deposited into the Escrow by Developer under the terms of this Agreement
to close the Escrow, all in immediately available funds;
(b) Closing Documents. The Grant Deed, Authority Regulatory
Agreement, Notice of Affordability, and Authority/Master Developer Work Construction
Lender Subordination Agreement, with signatures acknowledged (as applicable); and
(c) PCO Report. A Preliminary Change of Ownership Report executed
by the authorized representative(s) of Developer ("PCO Report").
7 .2 Authority's Escrow Deposits. Following satisfaction or waiver of each of
Authority's conditions to Closing set forth in Section 6.2, at least one (1) business day
prior to the Closing Date scheduled by the Escrow Holder in a writing delivered to each
of the Parties, Authority shall deposit the following funds and documents into the Escrow
and, concurrently, provide a copy of each such document to Developer:
(a) Closing Documents. The Grant Deed, Authority Regulatory
Agreement, Notice of Affordability, and Authority/Master Developer Work Construction
Lender Subordination Agreement, with signatures acknowledged (as applicable);
(b) FIRPTA Affidavit. The FIRPT A Affidavit completed and executed by
the authorized representative( s) of Authority; and
(c) Form 593. A Form 593 executed by the authorized representative(s)
of Authority.
7.3 Closing. Upon receipt by the Escrow Holder of all funds and documents
required to conduct the Closing in accordance with this Agreement, and when the
conditions precedent described in Section 6.2 have been satisfied, or waived by the
Executive Director, and the conditions precedent described in Section 6.3 have been
satisfied, or waived by Developer, the Escrow Holder shall insert the Closing Date into
the Grant Deed, Authority Regulatory Agreement, Notice of Affordability, and
Authority/Master Developer Work Construction Lender Subordination Agreement and any
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other documents Escrow Holder has received from Authority or Developer as appropriate,
and take all of the following actions:
(a) Recordation. Escrow Holder shall file the PCO Report with the
County Recorder of San Diego County and record the following documents in the Official
Records in the following order:
(i) the Grant Deed;
(ii) the Authority Regulatory Agreement;
(iii) the Notice of Affordability;
(iv) the Authority/Master Developer Work Construction
Lender Subordination Agreement (if applicable);
(v) the deed of trust securing the loan provided by the
Master Developer Work Construction Lender (if any), and any other
documents to be recorded in connection with such loan;
(vi) the Request for Notice; and
(vii) such other documents required to close the Escrow
in accordance with this Agreement;
(b) Deliveries to Authority. Escrow Holder shall deliver to Authority a
conformed copy of each of the documents recorded pursuant to paragraph (a) above.
(c) Deliveries to Developer. Escrow Holder shall deliver to Developer:
(i) Developer Title Policy;
(ii) The FIRPTA Report;
(iii) The Form 593; and
(iv) a conformed copy of each of the documents recorded
pursuant to paragraph (a) above.
(d) Purchase Price. Deliver the Purchase Price to Authority, less the
sum of (i) the Independent Contract Consideration, and (ii) any other charges to the
account of Authority, and return all remaining funds held by the Escrow Holder for the
account of Developer to Developer, less Developer's share of the Escrow closing costs,
and less any other charges chargeable to the account of Developer under the terms of
this Agreement.
7.4 Closing. The Closing shall occur on or before the Outside Closing Date. If
for any reason the Closing has not occurred on or before the Outside Closing Date, then
any Party not then in default of this Agreement may cancel the Escrow and terminate this
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Agreement, without liability to the other Party or any other person for such cancellation
and termination, by delivering written notice of termination to both the other Party and the
Escrow Holder and, thereafter, the Parties shall proceed pursuant to Section 7.5. Without
limiting the right of either Party to cancel the Escrow and terminate this Agreement
pursuant to the preceding sentence, if the Escrow does not close on or before the Escrow
Closing Date, and neither Party has exercised its contractual right to cancel the Escrow
and terminate this Agreement before such time, then the Escrow shall close as soon as
reasonably possible following the first date on which the Escrow Holder is in a position to
close the Escrow, pursuant to the terms and conditions of this Agreement.
7 .5 Escrow Cancellation Charges. If the Escrow fails to close due to Authority's
material default under this Agreement, Authority shall pay all ordinary and reasonable
cancellation charges relating to the Escrow and the Developer Title Policy. If the Escrow
fails to close due to Developer's material default under this Agreement, or for any reason
other than the material default of Authority, Developer shall pay all ordinary and
reasonable cancellation charges relating to the Escrow and the Developer Title Policy.
7.6 Escrow Cancellation. If the Escrow is cancelled and this Agreement is
terminated pursuant to a contractual right granted to a Party in this Agreement to cancel
the Escrow and terminate this Agreement, other than due to the default of another Party,
the Parties shall do each of the following:
(a) Cancellation Instructions. The Parties shall, within three (3) business
days following receipt of the Escrow Holder's written request, execute any reasonable
Escrow cancellation instructions requested by the Escrow Holder;
(b) Return of Funds and Documents. Within ten (10) days following
receipt by the Parties of a settlement statement from the Escrow Holder of cancellation
charges regarding the Escrow, and the Developer Title Policy, if any: (i) Developer or the
Escrow Holder shall return to Authority any documents previously delivered by Authority
to Developer or the Escrow Holder regarding the Escrow, (ii) Authority or the Escrow
Holder shall return to Developer all documents previously delivered by Developer to
Authority or the Escrow Holder regarding the Escrow; and (iii) the Escrow Holder shall
return to Developer any funds deposited into the Escrow, except as otherwise provided
in this Agreement, less the customary and reasonable Escrow and title order cancellation
charges regarding the Escrow and the Developer Title Policy, if any.
7.7 Land Use Entitlement Claims: CEQA Claims. If any Land Use Entitlement
Claims and/or CEQA Claims are taken or filed, then Developer shall have the right to
elect to either defend the same or not defend the same, at Developer's cost, including,
without limitation, all of the court costs, attorney fees, monetary awards, sanctions,
attorney fee awards, expert witness and consulting fees, and the expenses of any and all
financial or performance obligations resulting from the disposition of the legal action.
If Developer elects to so defend the same, then Developer shall appoint counsel and
direct strategy; provided, however, that such counsel shall be acceptable to Authority. If
Developer elects not to so defend, then either Authority or Developer shall have the right
to terminate this Agreement.
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7 .8 Escrow Closing Costs. Developer and Authority shall each pay half of the
documentary transfer taxes, Escrow fees, and such other costs as the Escrow Holder
may charge for the conduct of the Escrow. The Escrow Holder shall notify Developer and
Authority of the costs to be borne by each of Developer and Authority at the Close of
Escrow by delivering the Escrow Holder's estimated closing/settlement statement to both
Authority and Developer, at least, four (4) business days prior to the Closing Date.
Authority shall pay the premium charged by the Title Company for the Developer Title
Policy, with standard coverage; provided, however, that Developer shall pay the costs of
any endorsements or other supplements to the coverage of the Developer Title Policy
that may be requested by Developer, including the additional cost for extended AL TA
coverage, if such coverage is elected by Developer. Authority shall pay any and all
recording fees, and any and all other charges, fees and taxes levied by a governmental
authority relative to the conveyance of the Property through the Escrow.
7.9 Instruction to Escrow Holder Regarding Waiver of Transfer Taxes and
Recording Fees. The Escrow Holder is hereby instructed to seek such waivers and
exemptions from transfer taxes and recording fees as are available pursuant to Revenue
and Taxation Code Section 11922 and Government Code Sections 6103 and 27383,
respectively.
7.10 Broker's Commissions. Developer represents and warrants to Authority
that Developer has not engaged any broker, agent or finder in connection with this
Agreement, and Developer agrees to indemnify, protect, hold harmless, and defend the
lndemnitees from any claim by any brokers, agents or finders retained by Developer.
Authority represents and warrants to Developer that Authority has not engaged any
broker, agent, or finder in connection with this Agreement, and Authority agrees to
indemnify, protect, hold harmless, and defend Developer and its officers, officials,
members, employees, representatives, agents, and volunteers from any claim by any
brokers, agents, or finders retained by Authority.
8. OTHER ESCROW INSTRUCTIONS
8.1 Funds in Escrow. All funds received in the Escrow shall be deposited by
the Escrow Holder in a general escrow account with any state or national bank doing
business in the State of California and reasonably approved by the Executive Director
and Developer, and such funds may be combined with other escrow funds of the Escrow
Holder. All disbursements shall be made on the basis of a thirty (30) day month.
8.2 Failure to Close. If the Closing does not occur on or before the Outside
Closing Date, either Party not then in default may, in writing, demand the return of its
money, papers, or documents from the Escrow Holder. No demand for return shall be
recognized until fifteen (15) days after the Escrow Holder (or the Party making such
demand) shall have mailed copies of such demand to the other Party. Objections, if any,
shall be raised by written notice to the Escrow Holder and to the other Party within the
fifteen (15) day period, in which event the Escrow Holder is authorized to hold all money,
papers and documents until instructed by mutual agreement of the Parties or, upon failure
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March 19, 2019 Item #3.1
thereof, by a court of competent jurisdiction. If no such demands are made, the Escrow
Holder shall conduct the Closing as soon as possible.
If objections are raised in the manner provided above, the Escrow Holder shall not
be obligated to return any such money, papers or documents except upon the written
instructions of both the Executive Director and Developer, or until the Party entitled
thereto has been determined by a final decision of a court of competent jurisdiction. If no
such objections are made within said fifteen (15) period, the Escrow Holder shall
immediately return the demanded money, papers or documents.
8.3 Amendments. Any amendment to these Escrow instructions shall be in
writing and signed by the Executive Director or legal counsel to Authority and Developer.
At the time of any amendment, the Escrow Holder shall agree to carry out its duties as
the Escrow Holder under such amendment.
8.4 Notices. All Notices from the Escrow Holder to Authority or Developer shall
be given in the manner provided in Section 15.
8.5 Liability. The liability of the Escrow Holder under this Agreement is limited
to performance of the obligations imposed upon it under Section 3, and Sections 6, 7 and
8 and such additional general or special instructions as may be prepared by the Escrow
Holder and approved and executed by the Parties.
9. MASTER DEVELOPMENT WORK; TRANSFER AND ASSIGNMENT TO
PARTNERSHIP
9.1 Land Use Approvals. Within the time set forth in the Schedule of
Performance and as one of Authority's conditions to the Closing, Developer shall obtain
all land use and other entitlements required for development of the Project, including,
without limitation, approval of a Development Review and Tentative Map.
9.2 Completion of Master Developer Work. Subject to Section 18.12 below,
Developer shall commence and complete construction of the Master Developer Work by
the respective times established therefor in the Schedule of Performance.
9.3 Applicability of Article 11. All of the provisions of Article 11 shall be
applicable to Developer's performance and construction of the Master Developer Work,
except and only to the extent that a particular provision cannot reasonably apply to such
work, with such determination to be made by the Executive Director, in his or her
reasonable discretion.
9.4 Authority Conditions to Transfer and Assignment to Partnership. Developer
has represented to Authority that Developer will perform and complete the Master
Developer Work and thereafter transfer the Property, and transfer and assign its rights
and obligations under this Agreement and the Authority Regulatory Agreement, to the
Partnership. Notwithstanding any provisions to the contrary in this Agreement, Developer
may only transfer the Property, and transfer and assign its rights and obligations under
this Agreement and the Authority Regulatory Agreement, (a) to the Partnership, and (b)
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March 19, 2019 Item #3.1
at such time as all of the conditions set forth below have been satisfied, or waived by
Authority. Any such waiver shall be in writing and shall be provided in Authority's sole
and absolute discretion. The consummation of such transfers and assignment to the
Partnership shall hereafter be referred to as the "Partnership Transfer/Financing
Closing" and shall be conducted by Escrow Holder, either as a sub-escrow to the Escrow,
or as a new escrow (either of the foregoing, the "Partnership Transfer/Financing
Escrow"). Upon the Partnership Transfer/Financing Closing, the Partnership shall be the
"Developer" hereunder.
(a) Organizational Documents. The Executive Director shall have
received and approved a copy of such portions of the organizational documents of the
Partnership and the entities comprising the Partnership as the Executive Director deems
reasonably necessary to document the power and authority of the Partnership to perform
the obligations of Developer set forth in this Agreement, including, without limitation, a
copy of the limited partnership agreement of the Partnership, as amended (the
"Partnership Agreement"). The Partnership shall have made full disclosure to Authority
of the names and addresses of all persons and entities that have a beneficial interest in
the Partnership.
(b) Insurance. The Partnership shall have submitted to Authority and
Authority shall have approved the Partnership's evidence of the liability insurance
required pursuant to Section 11.8 hereof.
(c) Evidence of Project Financing. Developer shall have received a
reservation of Tax Credits and an allocation of Tax-Exempt Bonds, and the Executive
Director shall have received and reasonably approved commitments from all Project
Financing sources, as evidenced by letters of commitment and/or true and complete
copies of loan documents, and such financing shall be prepared to close concurrently
with the Partnership Transfer/Financing Closing. The Executive Director shall be required
to approve any such commitments provided they are from reputable entities on
commercially reasonable terms.
(d) General Contractor. The general contractor for the Project (the
"General Contractor") shall have been approved by the Executive Director. The
Authority hereby approves Emmerson Construction, Inc. as the General Contractor.
(e) Construction Contract. Authority shall have received a true and
complete copy of a contract by and between the Partnership and the General Contractor
pursuant to which the General Contractor has agreed to construct the Project at a cost
consistent with the costs set forth therefor in the Project Budget (the "Construction
Contract") and the Executive Director shall have reasonably approved said Construction
Contract.
(f) Final Construction Documents. Authority shall have approved the
Final Construction Documents for the Project and Authority shall have received a full set
thereof.
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March 19, 2019 Item #3.1
(g) Completion Bond. If the Construction Lender or the Investor require
that a completion bond be posted by the General Contractor, then such completion bond
shall name Authority as a co-obligee.
(h) Completion Guaranty. If the Construction Lender or the Investor
require a completion guaranty from the Partnership, or any Affiliate thereof, then Authority
shall have also received a completion guaranty from the Partnership in similar form and
content.
(i) Building Permit. The Building Permit for the Project shall have issued
or shall be ready to issue subject only to the payment of applicable fees, the posting of
required security, or both.
(j) Construction to Commence. The Executive Director shall be
reasonably satisfied that construction of the Project will commence not later than thirty
(30) days after the Partnership Transfer/Financing Closing and thereafter will be pursued
to completion in a diligent and continuous manner.
(k) Assignment of Final Construction Documents. The Partnership shall
have conditionally assigned to Authority (to be effective as of the Partnership
Transfer/Financing Closing) the Final Construction Documents for the Project by an
instrument substantially in the form attached hereto and incorporated herein as
Attachment No. 6, which assignment shall be subordinated to any pledge or assignment
to the Construction Lender. The Partnership shall have also delivered to Authority the
written consent of the other party to each such Final Construction Document to said
assignment in the form included as part of said Attachment No. 6, including, without
limitation, to the use by Authority of the Final Construction Documents, as well as the
ideas, designs, and concepts contained within them.
(I) Assignment of Construction Contract. The Partnership shall have
conditionally assigned to Authority (to be effective as of the Partnership
Transfer/Financing Closing) the Construction Contract by an instrument substantially in
the form attached hereto and incorporated herein as Attachment No. 6, including
obtaining the consent thereto of the General Contractor, which assignment shall be
subordinated to any pledge or assignment to the Construction Lender.
(m) Management Plan. The Partnership shall have submitted a
comprehensive management plan for the Project to the Executive Director in accordance
with Section 7 of the Authority Regulatory Agreement and the Executive Director shall
have reasonably approved the same.
(n) Management Agreement. The Partnership shall have submitted an
executed agreement by and between the Partnership and a property manager approved
by Authority for management of the Project (the "Management Agreement"), which
Management Agreement shall be consistent with this Agreement and the requirements
of Section 7 of the Authority Regulatory Agreement, and the Executive Director shall have
reasonably approved the same.
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(o) Resident Services Plan. The Partnership shall have submitted a
detailed resident services plan for the Project to the Executive Director, including any
specialized supportive services to be provided to targeted populations, if applicable, and
the Executive Director shall have reasonably approved the same.
(p) Request for Notice of Default. Escrow Holder shall be ready to
record a request for notice of default pursuant to Civil Code Section 2924(b), requesting
that any beneficiaries of liens securing the Project Financing notify Authority of any default
under the instrument creating the lien (the "Partnership Transfer/Financing Closing
Request for Notice").
(q) Documents Executed. Developer and the Partnership shall have
duly executed (in recordable form) an assignment and assumption agreement in a form
approved by Authority legal Counsel, with signatures acknowledged, pursuant to which
Developer shall assign to the Partnership and the Partnership shall assume from
Developer, all of Developer's rights and obligations under this Agreement, the Authority
Regulatory Agreement, and the Notice of Affordability, and the Partnership shall have
duly executed the Authority Note and Authority Deed of Trust, with signatures
acknowledged (as applicable), and all of the foregoing documents shall have been
deposited into the Partnership Transfer/Financing Escrow.
(r) Title Policy. Title Company is prepared to issue a lender's policy of
title insurance naming Authority as the insured, in a policy amount not less than the
principal amount of Authority Loan, showing the Partnership as holding fee title to the
Property and insuring the Authority Deed of Trust to be a valid lien on the Property subject
only to exceptions approved by Authority (the "Authority Title Policy"). The Partnership
shall be deemed to have approved the Project Documents to be recorded against the
Property at the Partnership Transfer/Financing Closing.
(s) Final Project Budget. Authority shall have received, approved, and
initialed, a proposed final Project Budget, submitted by and initialed by Chelsea. Such
final Project Budget shall replace, in its entirety, the preliminary version of the Project
Budget attached to this Agreement on the Effective Date.
(t) Total Project Cost. Nothing shall have come to the attention of
Developer, the Partnership, and/or Authority to indicate that the Project cannot be
completed at a cost consistent with the Project Budget and, if there has been such an
indication, Developer and/or the Partnership (as applicable) has provided evidence,
reasonably satisfactory to the Executive Director, of the availability of funding sources
other than Authority to complete the Project. If Developer becomes aware of any such
information, Developer shall promptly give notice thereof to Authority.
(u) Representations and Warranties. The Partnership shall have
submitted to the Executive Director a written certification, signed by the Partnership,
containing the following representations and warranties:
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(i) the Partnership represents and warrants that (a) it is
validly existing and in good standing under the laws of the State of
California, (b) it has all requisite authority to conduct its business
and own its properties, (c) it has all requisite authority to execute of
the documents listed in paragraph q above (collectively, the
"Partnership Transfer/Financing Closing Documents"), and
upon the Partnership Transfer/Financing Closing, to perform its
obligations under this Agreement, (d) upon the Partnership
Transfer/Financing Closing, this Agreement shall be binding upon
the Partnership in accordance with its terms, and (e) the individuals
executing the Partnership Transfer/Financing Closing Documents
on behalf of the Partnership are duly authorized to execute and
deliver such documents on behalf of the Partnership.
(ii) the Partnership represents and warrants that there
are no actions, lawsuits or proceedings pending or, to the best of
the Partnership's knowledge, threatened against or affecting the
Partnership, the adverse outcome of which could have a material
adverse effect on the Partnership's ability to perform its obligations
under this Agreement.
(v) No Default. No Event of Default by Developer shall then exist, and
no event shall then exist which, with the giving of notice or the passage of time or both,
would constitute an Event of Default by Developer and, if requested by the Executive
Director, Authority shall have received a certificate to that effect signed by Developer.
10. FINANCING PLAN FOR THE PROJECT
10.1 Financing Plan. It is contemplated that the Partnership (in its role as
Developer) will finance the Project (the "Project Financing") through a combination of
funds from the proceeds of the following:
(a) Construction Loan. The Construction Loan;
(b) 4% Tax Credits. Equity, consisting of equity raised by the
syndication to reputable investors of state and/or federal low-income housing credit and
obtained pursuant to 26 U.S.C. §42, in the anticipated amount of approximately Five
Million Six Hundred Sixty-Nine Thousand Five Hundred Nine Dollars ($5,669,509) (the
"Tax Credits");
(c) Authority Loan. The Authority Loan, as more particularly provided in
Section 10.2 below;
(d) Take-Out Loan. The Take-Out Loan; and
(e) Master Developer Loan. A loan from Poway Commons to the
Partnership in the approximate amount of Two Million Twenty-Two Thousand Dollars
($2,022,000), reflecting the financing of reimbursements payable by the Partnership to
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March 19, 2019 Item #3.1
Poway Commons for infrastructure costs incurred by Poway Commons for the benefit of
the Project (the "Master Developer Loan").
Notwithstanding the foregoing, Developer shall cause the Partnership to
continue to pursue additional sources of funds that may be available to assist with the
costs of developing the Project, including, without limitation, funds from the San Diego
Innovative Housing Trust Fund Program. To the extent Developer receives funding from
any such additional source, the Authority Loan shall be reduced on a dollar-for-dollar
basis by the amount of such additional funding, unless Developer provides evidence that
the full amount of the Authority Loan is still required to make the Project financially
feasible.
10.2 Authority Loan. Subject to the terms and conditions of this Agreement,
Authority agrees to make a loan to the Partnership, in its role as Developer after the
Partnership Transfer/Financing Closing, in an amount of up to Two Million Two Hundred
Thousand Dollars ($2,200,000) (the "Authority Loan"). The Authority Loan is comprised
of a cash loan in the amount of One Million Five Hundred Thousand Dollars ($1,500,000),
and a loan in an amount of up to Seven Hundred Thousand Dollars ($700,000) to cover
the cost of impact fees payable for the Project. The Authority Loan shall be evidenced
by the Authority Note, and shall be secured by the Authority Deed of Trust, at the
Partnership Transfer/Financing Closing. If the Partnership provides evidence satisfactory
to the Executive Director in his or her reasonable discretion that some or all of the Gap
Financing is necessary to make the Project financially viable, Authority shall retain such
portion of the Gap Financing as is necessary to fund the difference between the amount
of the Project Financing and the total Project Costs, and the Authority Loan shall be
increased by such amount. If at the Partnership Transfer/Finance Closing, the
Partnership determines that no portion, or less than all, of the Gap Financing is necessary
for Project financial feasibility, with the approval of the Executive Director, the Authority
shall return any such unneeded portion of the Gap Financing to Poway Commons.
10.3 Applications to CDLAC and TCAC . Within the time set forth in the Schedule
of Performance, Developer shall cause the Partnership to (i)(a) prepare for filing in the
name of the California Municipal Finance Authority or other reputable issuer acceptable
to Authority a complete application to CDLAC for an allocation for the Tax-Exempt Bonds;
and (b) apply to reputable institutional lenders for the third party credit enhancement or
private placement of the Tax-Exempt Bonds in order to provide the Construction Loan
and Take-Out Loan for the Project; and (ii)(a) prepare and submit a complete application
to TCAC for an allocation of 4% Tax Credits; and (b) apply to reputable institutional
investors and syndicators qualified to act as the Investor.
Developer agrees to promptly submit to Authority all of the following documents
not less than ten (10) days prior to submittal by the Partnership to TCAC or other
applicable body or when such documents are received by the Partnership, as applicable
(any documents submitted prior to the Effective Date of this Agreement shall also have
been submitted by Developer to Authority and reviewed by Authority prior to the Effective
Date of this Agreement):
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March 19, 2019 Item #3.1
(1) A true and correct copy of the preliminary reservation letter from
TCAC, a copy of the letter of intent from the Investor reflecting the total amount of the
syndication proceeds and the timing of the payment of such proceeds.
(2) A complete copy of the Tax Credit Regulatory Agreement (4
California Code of Regulations§ 10340(c)). (As more fully discussed in Section 4.14 of
Authority Regulatory Agreement, should Authority be prevented by a final order of a court
of competent jurisdiction, applicable and binding appellate opinion, or regulatory body
with jurisdiction from enforcing, for any reason, the affordability restrictions set forth in this
Agreement, Authority shall be a third-party beneficiary under said agreement and shall
have full authority to enforce any breach or default by the Partnership, in its role as
Developer thereunder, in the same manner as though it were a breach or default under
this Agreement.)
(3) Complete copies of all correspondence or transmittals from TCAC or
other jurisdiction (such as the Internal Revenue Service) containing any notification
regarding the Project's noncompliance with applicable provisions of the Tax Credit
Program.
10.4 Project Budget. The Project Budget includes all of the following: (i) a
detailed budget; (ii) a Sources and Uses of Funds Statement; (iii) a Cash Flow Projection;
and (iv) a First Year Operating Budget.
10.5 Developer Submittals.
Promptly upon the Partnership's receipt of a notification of an award of any of the
financing described in the Project Budget, Developer shall submit to the Executive
Director copies of all of the correspondence and other documentation received by the
Partnership in connection with the same.
Within five (5) days after the Effective Date, Developer shall provide to Authority a
copy of Chelsea's most recently prepared Annual Financial Statement, and a copy of
Chelsea's most recent internally prepared, unaudited financial statement, which shall
include a balance sheet, income statement, statement of retained earnings, statement of
cash flows, and footnotes thereto, prepared in accordance with generally accepted
accounting principles consistently applied.
10.6 Financing Commitments. Not later than the time provided in the Schedule
of Performance, Developer shall submit to the Executive Director for approval preliminary
commitments obtained by Chelsea for the Project Financing, including, without limitation,
bids received from qualified parties for the Tax Credits. The Executive Director shall be
required to approve any such commitments provided they are from reputable entities on
commercially reasonable terms.
11. DEVELOPMENT OF THE PROJECT
11.1 Scope of Development. Developer shall construct the Project on the
Property in accordance with all applicable Governmental Requirements, the approved
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Land Use Entitlements, and the Scope of Development. In the event of any conflict
between the approved Land Use Entitlements and the Scope of Development, the
approved Land Use Entitlements shall govern and control. Subject to Section 17.12
below, Developer shall commence and complete construction of the Project on the
Property by the respective times established therefor in the Schedule of Performance.
The Scope of Development shall be deemed to include any plans and specifications
submitted to the Authority and/or Authority for approval, and shall incorporate or show
compliance with all mitigation measures.
11.2 Architectural Plans. Within the time set forth in the Schedule of
Performance, Developer shall prepare or cause to be prepared and submit to the City
and to Authority for review and approval the architectural plans and related documents
for the Project, and Developer shall exercise reasonable diligence to obtain the City's and
Authority's approval of same. The architectural plans shall include the sizes, heights, and
locations of all buildings; building elevations; construction materials; construction colors;
site plan configuration/dimensions; parking; conceptual landscape and irrigation plan; and
lighting concept.
11.3 Final Construction Drawings. Within the lime set forth in the Schedule of
Performance, Developer shall submit or cause to be submitted to the City and to Authority
for review and approval a complete set of final construction drawings, plans and
specifications for the Project, in conformity with the previously approved architectural
plans. The final plans and drawings shall contain all information required to obtain a
Building Permit.
11.4 Additional Governmental Permits and Approvals.
(a) Before commencement of construction or development of any
buildings, structures or other works of improvement upon the Property by Developer,
Developer shall, at its own expense, secure or cause to be secured any and all permits
and approvals not included in the Land Use Entitlements which may be required by the
City or any other governmental agency affected by or with jurisdiction over such
construction, development or work.
(b) The landscaping and finish grading plans shall be prepared by a
professional landscape architect or registered civil engineer who may be the same firm
as Developer's architect or civil engineer. During the preparation of all drawings and
plans, staff of Authority and Developer shall hold regular progress meetings to coordinate
the preparation of, submission to, and review of drawings, plans and related documents
by the City and by Authority. The staff of Authority and Developer shall communicate and
consult informally as frequently as is necessary to insure that the formal submittal of any
documents to the City and to Authority can receive prompt and speedy consideration.
Developer shall be responsible to cause representatives of the Partnership to attend such
meetings and participate in any such communications.
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(c) Developer shall pay or cause to be paid all necessary fees and timely
submit or cause to be submitted to the City Final Construction Documents with final
corrections required by the City to obtain a Building Permit.
11.5 Review and Approval of Plans. Drawings. and Related Documents. If
Authority determines that any submittal by Developer is not substantially complete or not
in accordance with procedures, such tender shall not be deemed to constitute a submittal
for purposes of satisfying the Schedule of Performance. If Developer desires to make
any changes in the construction plans after their approval by Authority, Developer shall
submit or cause to be submitted the proposed change to Authority for approval. If the
construction plans, as modified by the proposed change, conform to the requirements of
this Section 11.5, the Land Use Entitlements, the Scope of Development, and all
Governmental Requirements, Authority shall approve the proposed change, and shall
notify Developer in writing within thirty (30) days after submission to Authority.
11.6 Cost of Development. Developer acknowledges and agrees that all Project
Costs shall be borne exclusively by Developer. Developer shall also bear all costs related
to discharging the duties of Developer set forth in this Agreement. Developer shall also
be responsible for all fees associated with development of the Project, including, but not
limited to, development impact fees.
11. 7 Indemnity. Developer shall defend (by counsel satisfactory to Authority),
assume all responsibility for and hold the lndemnitees harmless from all claims or suits
for, and damages to, property and injuries to persons, including accidental death
(including expert witness fees, attorney's fees and costs), which may be caused by the
activities or performance of Developer or any of Developer's employees, agents,
representatives, contractors, or subcontractors under or with respect to (i) this
Agreement, (ii) the making of the Authority Loan; (iii) a claim, demand or cause of action
that any person has or asserts against Developer; (iv) any act or omission of Developer,
any of Developer's contractors, subcontractors or material suppliers, engineers,
architects or other persons with respect to the Property; or (v) the ownership, occupancy
or use of the Property by Developer, whether such damage shall accrue or be discovered
before or after termination of this Agreement. The obligations and indemnifications in this
Section 11 shall constitute covenants running with the land.
11.8 Insurance Requirements.
(a) Commencing on the date of the Closing and continuing in perpetuity,
Developer shall procure and maintain, at its sole cost and expense, in a form and content
satisfactory to the Executive Director, the following policies of insurance:
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(i) Commercial General Liability Insurance covering
bodily injury, property damage, personal injury and advertising
injury written on a per-occurrence and not a claims-made basis
containing the following minimum limits: (i) general aggregate limit
of Five Million Dollars ($5,000,000); (ii) products-completed
operations aggregate limit of Three Million Dollars ($3,000,000);
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March 19. 2019 Item #3.1
(iii) personal and advertising injury limit of Three Million Dollars
($3,000,000); and (iv) each occurrence limit of Three Million Dollars
($3,000,000). Said policy shall include the following coverages: (i)
blanket contractual liability (specifically covering the
indemnification clause contained in Section 11. 7 hereof); (ii)
products and completed operations; (iii) independent contractors;
(iv) Owner's broad form property damage; (v) severability of
interest; (vi) cross liability; and (vii) property damage liability arising
out of the so-called "XCU" hazards (explosion, collapse and
underground hazards). The policy shall be endorsed to have the
general aggregate apply to this Project only.
(ii) A policy of worker's compensation insurance in such
amount as will fully comply with the laws of the State of California
and which shall indemnify, insure, and provide legal defense for
Authority and Developer against any loss, claim or damage arising
from any injuries or occupational diseases occurring to any worker
employed by or any persons retained by Developer in the course
of carrying out the work or services contemplated in this
Agreement, and Employers Liability Insurance in an amount not
less than One Million Dollars ($1,000,000) combined single limit for
all damages arising from each accident or occupational disease.
(iii) A policy of comprehensive automobile liability
insurance written on a per-occurrence basis in an amount not less
than Two Million Dollars ($2,000,000) combined single limit
covering all owned, non-owned, leased and hired vehicles used in
connection with the work.
(b) Commencing on the date of the Closing and continuing until Authority
issues a Release of Construction Covenants for the Project, Developer shall procure and
maintain, at its sole cost and expense, in a form and content reasonably satisfactory to
the Executive Director, Builder's Risk (course of construction) insurance coverage in an
amount equal to the full cost of the hard construction costs of the Project. Such insurance
shall cover, at a minimum: all work, materials, and equipment to be incorporated into the
Project; the Project during construction; the completed Project until such time as (i) the
Authority issues a final certificate of occupancy, and (ii) Authority issues a Release of
Construction Covenants, for the Project, and storage and transportation risks. Such
insurance shall protect/insure the interests of Developer/owner and all of Developer's
contractor(s), and subcontractors, as each of their interests may appear. If such
insurance includes an exclusion for "design error," such exclusion shall only be for the
object or portion which failed. Authority shall be a loss payee under such policy or policies
and such insurance shall contain a replacement cost endorsement.
(c) Prior to commencing any activities hereunder, Developer shall cause
any general contractor with whom it has contracted for the performance of work on the
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March 19, 2019 Item #3.1
Property to secure and thereafter to maintain insurance that satisfies all of the
requirements of this Section 11.8.
(d) Commencing on the date Authority issues a Release of Construction
Covenants, and continuing in perpetuity, Developer shall procure and maintain, at its sole
cost and expense, in a form and content satisfactory to the Executive Director, the
following types of insurance:
(i) Insurance against fire, extended coverage,
vandalism, and malicious mischief, and such other additional perils,
hazards, and risks as now are or may be included in the standard
"all risk" form in general use in San Diego County, California, with
the standard form fire insurance coverage in an amount equal to
full actual replacement cost thereof, as the same may change from
time to time. The above insurance policy or policies shall include
coverage for earthquakes to the extent generally and commercially
available at commercially reasonable rates, if such insurance is
generally obtained for affordable housing developments in the
Counties of San Diego and Orange County. Authority shall be a
loss payee under such policy or policies and such insurance shall
contain a replacement cost endorsement.
(ii) Business interruption and extra expense insurance to
protect Developer and Authority covering loss of revenues and/or
extra expense incurred by reason of the total or partial suspension
or delay of, or interruption in, the operation of the Project caused
by loss or damage to, or destruction of, any part of the insurable
real property structures or equipment as a result of the perils
insured against under the all risk physical damage insurance.
covering a period of suspension, delay or interruption of at least
twelve (12) months, in an amount not less than the amount required
to cover such business interruption and/or extra expense loss
during such period.
(iii) Boiler and machinery insurance in the aggregate
amount of the full replacement value of the equipment typically
covered by such insurance.
(e) The following additional requirements shall apply to all of the above
policies of insurance:
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(i) All of the above policies of insurance shall be primary
insurance and, except the Worker's Compensation, Employer
Liability insurance, and automobile liability insurance, shall name
the lndemnitees as additional insureds on an ISO Form CG 20:10
(current version) or substantially similar form and not an ISO Form
CG 20:09. The insurer shall waive all rights of subrogation and
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March 19, 2019 Item #3.1
contribution it may have against the lndemnitees and their
respective insurers. All of said policies of insurance shall provide
that said insurance may not be amended or cancelled without
providing thirty (30) days' prior written notice to Authority. In the
event any of said policies of insurance are cancelled, Developer
shall, prior to the cancellation date, submit new evidence of
insurance in conformance with this Section to the Executive
Director. Not later than the Effective Date, Developer shall provide
the Executive Director with Certificates of Insurance or appropriate
insurance binders evidencing the above insurance coverages and
said Certificates of Insurance or binders shall be subject to the
reasonable approval of the Executive Director.
(ii) The policies of insurance required by this Agreement
shall be satisfactory only if issued by companies of recognized
good standing authorized to do business in California, rated "A-" or
better in the most recent edition of Best Rating Guide, The Key
Rating Guide or in the Federal Register, and only if they are of a
financial category Class VII or better, unless such requirements are
waived by the Executive Director due to unique circumstances.
(iii) The Developer agrees that the provisions of this
Section shall not be construed as limiting in any way Authority's
right to indemnification or the extent to which Developer may be
held responsible for the payment of damages to any persons or
property resulting from Developer's activities or the activities of any
person or persons for which Developer is otherwise responsible.
11.9 Remedies for Defaults Re: Insurance. In addition to any other remedies
Authority may have, if Developer commits a default hereunder by failing to provide or
maintain any insurance policies or policy endorsements to the extent and within the time
herein required, Authority may at its sole option, obtain such insurance and invoice the
Developer for the amount of said premium. Exercise of the remedy set forth herein,
however, is an alternative to other remedies Authority may have and is not the exclusive
remedy for Developer's failure to maintain insurance or secure appropriate
endorsements.
11.10 Obligation to Repair and Restore Damage Due to Casualty Covered by
Insurance. If the Project shall be totally or partially destroyed or rendered uninhabitable
by fire or other casualty required to be insured against by Developer, Developer shall,
subject to the rights of the Construction Lender, promptly proceed to obtain all available
insurance proceeds and, to the extent proceeds are available, take all steps necessary
to begin reconstruction and, immediately upon receipt of insurance proceeds, to promptly
and diligently commence the repair or replacement of the Project to substantially the
same condition as it existed prior to the casualty, and Developer shall complete or cause
to be completed the same as soon as possible thereafter so that the Project can be
operated in accordance with this Agreement. Authority shall cooperate with Developer,
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March 19, 2019 Item #3.1
at no expense to Authority, in an effort to obtain any governmental permits required for
such repair, replacement, or restoration.
11.11 Rights of Access. For purposes of assuring compliance with this
Agreement, representatives of Authority shall have the right of access to the Property
without charges or fees, at normal business hours during the construction of the Project
(subject to reasonable job safety rules as may be imposed by Developer, the Master
Developer Work General Contractor, or the General Contractor (as applicable)),
including, but not limited to, the inspection of the work being performed in constructing
the Project, so long as they comply with all safety rules. Such representatives of Authority
shall be those who are so identified in writing by the Executive Director.
11.12 Compliance with Laws; Compliance with Prevailing Wage Laws.
(a) Compliance with Laws. Developer shall carry out the construction,
development and operation of the Project in conformity with all Governmental
Requirements, including without limitation all applicable labor standards, City zoning and
development standards, building, plumbing, mechanical and electrical codes, 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., Government Code Section 11135, et seq., and the Unruh Civil
Rights Act, Civil Code Section 51, et seq.
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"
(b) Compliance with Prevailing Wage Laws.
(i) Developer shall carry out the construction through
completion of the Project and the overall development of the
Property in conformity with all applicable Governmental
Requirements relating to the payment of prevailing wages and
compliance with prevailing wage rules, including, without limitation,
if applicable, the requirements to pay prevailing wages under
federal law (the Davis-Bacon Act, 40 U.S.C. Section 3141, et seq.,
and the regulations promulgated thereunder set forth at 29 CFR
Part 1 (collectively, "Davis-Bacon")) and California law (Labor
Code Section 1720, et seq.) ("California Prevailing Wage Law").
The Parties acknowledge that a financing structure utilizing certain
federal and/or state funding sources and financing scenarios may
trigger compliance with applicable state and federal prevailing
wage laws and regulations. Developer shall determine the
applicability of federal, state, and local prevailing wage laws based
upon the final financing structure and sources of funding of the
Project, as approved by the Executive Director.
(ii) Developer shall be solely responsible, expressly or
impliedly and legally and financially, for determining and
effectuating compliance with all applicable federal, state, and local
public works requirements, prevailing wage laws, and labor laws
-37-
March 19, 2019 Item #3.1
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1ti1f'b't' 3~~S/J 9
and standards, and Authority makes no representation, either
legally and/or financially, as to the applicability or non-applicability
of any federal, state, and local laws to the construction of the
Project. Developer expressly, knowingly, and voluntarily
acknowledges and agrees that Authority has not previously
represented to Developer or to any representative, agent, or
Affiliate of Developer, or any contractor(s) or any subcontractor(s)
for the construction or development of the Project, in writing or
otherwise, in a call for bids or otherwise, that the work and
construction of the Project is (or is not) a "public work," as defined
in Section 1720 of the Labor Code or under Davis-Bacon.
(iii) Developer knowingly and voluntarily agrees that
Developer shall have the obligation to provide any and all
disclosures or identifications as required by Labor Code Section
1781 and/or by Davis-Bacon, as the same may be amended from
time to time, or any other similar law or regulation. Developer shall
indemnify, protect, pay for, defend, and hold harmless the
lndemnitees, with legal counsel reasonably acceptable to
Authority, from and against any and all loss, liability, damage,
claim, cost, expense, and/or "increased costs" (including
reasonable attorney's fees, court and litigation costs, and fees of
expert witnesses) which, in connection with the development,
construction (as defined by applicable law) and/or operation of the
Project, including, without limitation, any and all public works (as
defined by applicable law), results or arises in any way from any of
the following: (i) the noncompliance by Developer or its contractor
with any applicable local, state, and/or federal law or regulation,
including, without limitation, any applicable federal and/or state
labor laws or regulations (including, without limitation, if applicable,
the requirement to pay state and/or federal prevailing wages and
hire apprentices); (ii) the implementation of Section 1781 of the
Labor Code and/or of Davis-Bacon, as the same may be amended
from time to time, or any other similar law or regulation; and/or (iii)
failure by Developer to provide any required disclosure or
identification as required by Labor Code Section 1781 and/or by
Davis-Bacon, as the same may be amended from time to time, or
any other similar law or regulation. It is agreed by the Parties that,
in connection with the development and construction (as defined
by applicable law or regulation) of the Project, including, without
limitation, any and all public works (as defined by applicable law or
regulation), Developer shall bear all risks of payment or non-
payment of prevailing wages under applicable federal, state, and
local law or regulation and/or the implementation of Labor Code
Section 1781 and/or by Davis-Bacon, as the same may be
amended from time to time, and/or any other similar law or
regulation. The foregoing indemnity shall survive termination of
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March 19, 2019 Item #3.1
this Agreement and shall continue after completion of the
construction and development of the Project by Developer.
(iv) "Increased costs," as used in this Section 11.12, shall
have the meaning ascribed to it in Labor Code Section 1781, as
the same may be amended from time to time.
11.13 Anti-Discrimination. Developer for itself and its successors and assigns,
agrees, that in the construction of the Project on the Property or other performance under
this Agreement, Developer shall not discriminate against any employee or applicant for
employment on 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. Notwithstanding the immediately preceding
sentence, with respect to familial status, the immediately preceding sentence 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
sentence 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,
Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of
Section 12955 of the Government Code shall apply to the immediately preceding
sentence.
11.14 Taxes and Assessments. After the Closing, Developer shall pay prior to
delinquency all real estate taxes and assessments on the Property so long as Developer
retains any interest therein. Notwithstanding the above, Developer shall have the right to
contest the validity or amounts of any tax, assessment, or encumbrance available to
Developer in respect thereto, or obtain any available exemptions.
11.15 Right of Authority to Satisfy Other Liens on the Property(s). At any time
prior to the completion of construction, and after Developer has had written notice and
has failed after a reasonable time, but in any event not less than twenty (20) days, to
challenge, cure, adequately bond against, or satisfy any liens or encumbrances on the
Property which are not otherwise permitted under this Agreement, Authority shall have
the right but no obligation to satisfy any such liens or encumbrances. Notwithstanding
the above, Developer shall have the right to contest the validity or amounts of any tax,
assessment, or encumbrance available to Developer in respect thereto.
11.16 Non-liability of Authority. Developer acknowledges and agrees that:
(a) Authority neither undertakes nor assumes any responsibility to
review, inspect, supervise, approve (other than for aesthetics) or inform Developer of any
matter in connection with the Project, including matters relating to: (i) the Final
Construction Documents, (ii) architects, contractors, subcontractors and materialmen, or
the workmanship of or materials used by any of them, and/or (iii) the progress of the
Project and its conformity with the Final Construction Documents; and Developer shall
rely entirely on its own judgment with respect to such matters and acknowledges that any
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March 19, 2019 Item #3.1
review, inspection, supervision, approval or information supplied to Developer by
Authority in connection with such matters is solely for the protection of Authority and that
neither Developer nor any third party is entitled to rely on it;
(b) Authority is not a partner, joint venturer, alter-ego, manager,
controlling person or other business associate or participant of any kind of Developer and
Authority does not intend to ever assume any such status; and Authority shall not be
deemed responsible for or a participant in any acts, omissions or decisions of Developer;
(c) Authority shall not be directly or indirectly liable or responsible for
any loss or injury of any kind to any person or property resulting from any construction
on, or occupancy or use of, the Property whether arising from: (i) any defect in any
building, grading, landscaping or other onsite or offsite improvement; (ii) any act or
omission of Developer or any of Developer's agents, employees, contractors, licensees
or invitees; or (iii) from and after the Closing any accident on the Property or any fire or
other casualty or hazard thereon not caused by the lndemnitees; and
(d) By accepting or approving anything required to be performed or
given to Authority under this Agreement, including any certificate, financial statement,
survey, appraisal or insurance policy, Authority shall not be deemed to have warranted or
represented the sufficiency or legal effect of the same, and no such acceptance or
approval shall constitute a warranty or representation by Authority to anyone.
11.17 Release of Construction Covenants. Promptly after completion of
construction of the Project by Developer in conformity with this Agreement, Authority shall
furnish Developer with a Release of Construction Covenants upon written request
therefor by Developer. Authority shall not unreasonably withhold such Release of
Construction Covenants. Such Release of Construction Covenants shall be a conclusive
determination of satisfactory completion of the construction required by this Agreement
and the Release of Construction Covenants shall so state. The Release of Construction
Covenants shall be in the form attached hereto as Attachment No. 12 or such other similar
form as to permit it to be recorded in the Official Records. If Authority refuses or fails to
furnish a Release of Construction Covenants for the Project after written request from
Developer, Authority shall, within fifteen (15) days of written request therefor, provide
Developer with a written statement of the reasons Authority refused or failed to furnish
the requested Release of Construction Covenants. The statement shall also contain
Authority's opinion of the actions Developer must take to obtain the Release of
Construction Covenants. If the reason for such refusal is confined to the immediate
unavailability of specific items of materials for landscaping or other minor "punch list"
items, Authority shall issue its Release of Construction Covenants upon the posting of
cash, a bond, or other security acceptable to Authority in Authority's sole discretion by
Developer with Authority in an amount representing the fair value of the work not yet
completed, and Developer shall thereafter complete the "punch list" work with reasonable
diligence and in no event later than sixty (60) days after Authority's issuance of the
Release of Construction Covenants. A Release of Construction Covenants shall not
constitute evidence of compliance with or satisfaction of any obligation of Developer to
any holder of any mortgage or any insurer of a mortgage securing money loaned to
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March 19, 2019 Item #3.1
finance the improvements, or any part of this Agreement, or a release of any obligations
under this Agreement which survives issuance of the Release of Construction Covenants.
A Release of Construction Covenants is not a notice of completion as referred to in the
California Civil Code Section 3093.
11.18 Developer Fee. The Parties acknowledge and agree that an Affiliate of
Chelsea shall be entitled to the maximum development fee permitted by TCAC for
developing the Project, the amount of which shall be set forth in the Project Budget.
11.19 Cost Savings Obligation. Subject to the requirements of TCAC and other
lenders providing loans to the Project that have been approved by Authority, Developer
hereby agrees to provide and pay to each of Authority and Poway Commons a "Cost
Savings" payment for the Project in an amount to be determined based on the "Audit" (as
those terms are described in subparagraph (a) below) to be conducted upon completion
of construction of the Project.
(a) Audit to Determine Cost Savings Amount. The actual amount of Cost
Savings to be paid to Authority and Poway Commons shall be determined after the Audit,
as hereafter described, and the amount of such Cost Savings shall be equal to the amount
by which the total sources of permanent financing for the Project (which financing
includes, but is not limited to, the Authority Loan, the Take-Out Loan, the Master
Developer Loan, the Gap Financing (to the extent applicable) and the equity raised by the
sale of the Tax Credits) exceed the costs of development incurred for the Project (which
costs include, but are not limited to, the hard and soft costs incurred by Developer to
perform predevelopment activities and construct the Project, and the amount spent to
reduce the principal balance of the Construction Loan to the principal balance of the Take-
Out Loan). Within sixty (60) days following the receipt of the final equity installment from
the Investor, Developer shall cause its certified public accountant(s) to perform a final
audit of the costs of development of the Project in accordance with the requirements of
the Tax Credits and generally accepted accounting principles ("GAAP") and generally
accepted auditing standards (herein referred to as "Audit"). If the Audit determines that
the total sources of permanent financing for the Project (which financing includes, but is
not limited to, the Authority Loan, the Take-Out Loan, the Master Developer Loan, the
Gap Financing (to the extent applicable) and the equity raised by the sale of the Tax
Credits) exceed Developer's total costs to develop the Project (which costs include, but
are not limited to, the hard and soft costs incurred by Developer to perform
predevelopment activities and construct the Project, and the amount spent to reduce the
principal balance of the Construction Loan to the principal balance of the Take-Out Loan),
such excess shall be considered the "Cost Savings" for the Project. Notwithstanding
anything to the contrary in this Section 11.19, the phrase "the hard and soft costs incurred
by Developer to perform predevelopment activities and construct the Project" shall not
include any costs incurred by Poway Commons, LLC ("Poway Commons").
(b) Cost Savings Payment as Payment of Principal on Authority Loan;
Master Developer Share. Subject to the requirements of TCAC and other lenders
providing loans to the Project that have been approved by Authority, the Cost Savings for
the Project, once determined by the Audit pursuant to Section 10.8(a) above and subject
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to Section 10.8(c) below, shall be allocated between Authority and Poway Commons, in
its capacity as the master developer, as follows: (i) to Poway Commons, to the extent of
the Gap Financing, and (ii) if there are Cost Savings remaining after payment pursuant to
the foregoing clause (i), (a) Fifty percent (50%) of such remaining Cost Savings for the
Project shall be paid by Developer to Authority and allocated and credited as a principal
payment on the Authority Loan, as and when paid; and (b) fifty percent (50%) of such
remaining Cost Savings for the Project shall be paid by Developer to Poway Commons,
to be utilized by Poway Commons for repayment of its Master Developer Loan.
(c) Timing of Payment of Cost Savings. The Cost Savings for the
Project shall become due and payable by Developer to Authority and Poway Commons,
as set forth in Section 11.19(b) above, upon the later of (i) one hundred twenty (120) days
after receipt by Developer of the final Tax Credit equity, and (ii) completion of construction
of the Project, as evidenced by Authority's issuance of a Release of Construction
Covenants.
11.20 Authority's Right to Reacquire Property. Notwithstanding anything in this
Agreement to the contrary, in the event Authority's conditions precedent to the
Partnership Transfer/Financing Closing have not been satisfied, or waived by Authority,
and the Partnership Transfer/Financing Closing has not occurred, by the date that is
twelve (12) months after the Closing Date (the "Outside Partnership
Transfer/Financing Closing Date"), Authority shall reacquire the Property pursuant to
the terms of this Section 11.20.
Notwithstanding the foregoing, if at any time prior to the Outside Partnership
Transfer/Financing Closing Date, Developer discovers that the Partnership will not be
able to satisfy all of Authority's conditions precedent to the Partnership Transfer/Financing
Closing by the Outside Partnership Transfer/Financing Closing Date, Developer shall
promptly notify Authority, in writing, of such discovery. Developer's notice may request
an extension to the Outside Partnership transfer/Financing Closing Date and/or
permission to transfer the Property and transfer and assign Developer's rights and
obligations under this Agreement and under the Authority Regulatory Agreement to
another limited partnership with experience in developing and operating affordable
housing with requirements and restrictions similar to those set forth in the Authority
Regulatory Agreement. Authority may grant or deny any such request in its sole and
absolute discretion, in a written response to Developer. If Authority grants any such
request, Authority shall designate in its written response the new Outside Partnership
Transfer/Financing Closing Date, and the Parties shall reasonably cooperate to execute
an implementation agreement or amendment to this Agreement, as necessary to effect
Authority's determination.
(a) Within ten (10) business days after the Outside Partnership
Transfer/Financing Closing Date, Developer and Authority shall cause an escrow
("Authority's Reacquisition Escrow") to be opened with the Escrow Holder for the
conveyance of the Property by Developer to Authority. The Authority's Reacquisition
Escrow shall be deemed opened on the date that Authority delivers to Escrow Holder a
copy of this Section 11.20 ("Opening of Authority's Reacquisition Escrow"). Escrow
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Holder shall notify Developer and Authority in writing of the date of the Opening of
Authority's Reacquisition Escrow promptly following the opening of Authority's
Reacquisition Escrow.
(b) Authority's Reacquisition Escrow shall close on or before the date
that is sixty (60) days after the Opening of Authority's Reacquisition Escrow ("Authority's
Reacquisition Escrow Closing Date"). The terms "Close of Authority's
Reacquisition Escrow" and/or the "Authority's Reacquisition Escrow Closing" shall
mean the date the "Authority's Reacquisition Grant Deed" (as that term is defined in
paragraph (f) below) conveying fee title to the Property to Authority is recorded in the
Official Records. Possession of the Property shall be delivered to Authority at the Close
of Authority's Reacquisition Escrow free and clear of all tenancies, lessees, occupants,
and all possessory rights of any kind or nature.
(c) This Section 11.20, together with any standard instructions of
Escrow Holder, shall constitute the joint escrow instructions of Developer and Authority
to Escrow Holder as well as an agreement between Developer and Authority with respect
to Developer's conveyance to Authority of the Property. In the event of any conflict
between the provisions of this Section 11.20 and Escrow Holder's standard instructions,
this Section 11.20 shall prevail.
(d) Developer shall convey and Authority shall accept fee simple title to
the Property free and clear of all recorded and unrecorded monetary liens,
encumbrances, easements, leases, covenants, conditions, restrictions, and other
exceptions to or defects in title, excepting only the following: (a) the title exceptions listed
in the Authority Title Policy with respect to the Property; (b) current taxes not yet
delinquent; (c) the lien of any construction loan obtained by Developer for construction of
the Project that has been approved by Authority; and (d) those additional title exceptions
as may be approved in writing by Authority in its sole and absolute discretion.
(e) Developer shall be responsible for all of the escrow fees, recording
fees, documentary transfer taxes, and any other costs and expenses of escrow, and any
property taxes and assessments and all costs required to place title in the condition
described in paragraph (d) above. Concurrently with the conveyance of the Property to
Authority, and as a condition to Authority's acceptance of said conveyance, Developer
shall cause the Title Company to deliver to Authority an AL TA standard owner's policy of
title insurance showing title vested in Authority in the condition described in paragraph (d)
above with insurance coverage in the amount of the fair market value of the Property as
reasonably determined by Authority ("Authority's Reacquisition Title Policy").
Developer shall pay the premium for the Authority's Reacquisition Title Policy. Authority
shall pay for any additional coverage or endorsements to the Authority's Reacquisition
Title Policy.
(f) On or before 1 :00 p.m. on the last business day preceding the
scheduled Authority's Reacquisition Escrow Closing Date, Authority shall deposit or
cause to be deposited with Escrow Holder the following: (1) funds in the amount of the
"Authority Reacquisition Price" (as that term is defined below), and (2) any and all
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additional instruments or other documents required from Authority (executed and
acknowledged if appropriate) as may be necessary in order to effect the transfer of the
Property to Authority. On or before 1 :00 p.m. on the last business day preceding the
scheduled Authority's Reacquisition Escrow Closing Date, Developer shall deposit or
cause to be deposited with Escrow Holder the following: (a) an executed and
acknowledged grant deed conveying the Property to Authority substantially in the form of
the Grant Deed ("Authority's Grant Deed"); (b) all escrow fees and closing costs; and
(c) any and all additional funds, instruments, or other documents required from Developer
(executed and acknowledged if appropriate), as may be necessary in order to effect the
transfer of the Property to Authority. As used herein, the term "Authority Reacquisition
Price" shall mean the lesser of (i) One Million Two Hundred Thousand Dollars
($1,200,000), and (ii) the appraised value of the Property at the time of Authority's
reacquisition. The appraised value of the Property shall be determined by an appraisal
conducted by an MAI appraiser selected by Authority and reasonably acceptable to
Developer.
(g) On or before the Authority's Reacquisition Escrow Closing Date, and
when Escrow Holder has received all of the documents and funds listed in paragraph (f)
above, and Escrow Holder is in a position to cause the Authority's Reacquisition Title
Policy referred to in paragraph (e) above to be issued to Authority, and provided Authority
has approved the physical condition of the Property, Escrow Holder shall close the
Authority's Reacquisition Escrow by recording the Authority's Grant Deed in the Official
Records, and delivering the recorded Authority's Grant Deed to Authority, and causing
the Authority's Reacquisition Title Policy to be issued to Authority.
12. AFFORDABILITY COVENANTS
As more particularly provided in the Authority Regulatory Agreement, five (5) of the
dwelling units in the Project shall be rented to qualified senior households whose incomes
do not exceed fifty percent (50%) of the area median income for San Diego County,
adjusted for household size; and thirty-eight (38) of the dwelling units in the Project shall
be rented to qualified senior households whose incomes do not exceed sixty percent
(60%) of the area median income for San Diego County, adjusted for household size, with
all of such dwelling units rented at an affordable rent, pursuant to Health and Safety Code
Section 50053(b). One (1) unit in the Project shall be an unrestricted manager's unit.
13. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
13.1 Developer's Formation, Qualification and Compliance. Developer
represents and warrants that (a) it is validly existing and in good standing under the laws
of the State of California, (b) it has all requisite authority to conduct its business and own
its properties, (c) ii has all requisite authority to execute and perform its obligations under
this Agreement, (d) this Agreement is binding upon Developer in accordance with its
terms, and (e) the individuals executing this Agreement on behalf of Developer are duly
authorized to execute and deliver this Agreement on behalf of Developer.
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13.2 Litigation. Developer represents and warrants that there are no actions,
lawsuits or proceedings pending or, to the best of Developer's knowledge, threatened
against or affecting Developer, the adverse outcome of which could have a material
adverse effect on Developer's ability to perform its obligations under this Agreement.
13.3 Authority. Authority represents and warrants that (a) it is validly existing
and in good standing under the laws of the State of California, (b) it has all requisite
authority to conduct its business and own and sell its properties, (c) it has all requisite
authority to execute and perform its obligations under this Agreement, (d) this Agreement
is binding upon Authority in accordance with its terms, and (e) the individuals executing
this Agreement on behalf of Authority are duly authorized to execute and deliver this
Agreement on behalf of Authority.
14. DEFAULTS AND REMEDIES
14.1 Event of Default. Any of the following events or occurrences with respect
to either Party shall constitute a material breach of this Agreement and, after the
expiration of any applicable cure period, shall constitute an "Event of Default" by such
Party:
(a) The failure by either Party to pay any amount in full when it is due
under this Agreement, if the failure has continued for a period of ten (10) days after the
Party entitled to payment demands in writing that the other Party cure that failure.
(b) The failure by either Party to perform any other obligation under this
Agreement, if the failure has continued for a period of thirty (30) days after demand in
writing that such Party cure the failure, or such shorter time period as may be provided
for in one of the other Project Documents. If, however, by its nature the failure cannot
reasonably be cured within said time period, such Party may have such longer period of
time as is reasonably necessary to cure the failure, provided that such Party commences
said cure within said thirty (30)-day period, and thereafter diligently prosecutes said cure
to completion.
14.2 No Waiver. Except as otherwise expressly provided in this Agreement, any
failure or delay by either Party in asserting any of its rights or remedies as to any default
shall not operate as a waiver of any default, or of any such rights or remedies, or deprive
any 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.
14.3 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 rights or remedies shall not preclude the
exercise by it, at the same lime or different times, of any other rights or remedies for the
same default or any other default by the other Party.
14.4 Attorneys' Fees. If either Party to this Agreement is required to initiate or
defend litigation in any way connected with this Agreement, the prevailing Party in such
litigation, in addition to any other relief which may be granted, whether legal or equitable,
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shall be entitled to reasonable attorneys' fees. If either Party to this Agreement is required
to initiate or defend litigation with a third party because of the violation of any term or
provision of this Agreement by the other Party, then the Party so litigating shall be entitled
to reasonable attorneys' fees from the other Party to this Agreement. Attorneys' fees
shall include attorney's fees on any appeal, and in addition a Party entitled to attorney's
fees shall be entitled to all other reasonable costs for investigating such action, retaining
expert witnesses, taking depositions and discovery, and all other necessary costs
incurred with respect to such litigation. All such fees shall be deemed to have accrued
on commencement of such action and shall be enforceable whether or not such action is
prosecuted to judgment.
14.5 Reimbursement of Authority. Within fifteen (15) days after its receipt of
written demand from Authority, Developer shall reimburse Authority for all costs
reasonably incurred by Authority (including the reasonable fees and expenses of
attorneys, accountants, appraisers and other consultants) in connection with Authority
enforcement of the Project Documents and all related matters, including, without
limitation, the following: (a) Authority's commencement of, appearance in, or defense of
any action or proceeding purporting to affect the rights or obligations of the Parties to any
Project Document; and (b) all claims, demands, causes of action, liabilities, losses, and
other costs against which any of the lndemnitees is indemnified under the Project
Documents. Such reimbursement obligations shall bear interest from the date occurring
fifteen (15) days after Authority makes written demand to Developer at the rate of ten
percent (10%) per annum or the maximum legal rate, whichever is less. Such
reimbursement obligations shall survive termination of this Agreement.
15. NOTICES
All notices, consents, demands, approvals and other communications (the
"Notices") that are given pursuant to this Agreement shall be in writing to the appropriate
Party and shall be deemed to have been fully given when delivered, including personal
delivery, delivery by reputable commercial delivery service that provides a receipt with
the time and date of delivery, or if deposited in the United States mail, certified or
registered, postage prepaid, within two (2) days after deposit. All Notices shall be
addressed as follows:
If to Developer:
with copies to:
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Poway Commons, LLC
c/o Meridian Development, LLC
9988 Hibert Street, Suite 210
San Diego, CA 92131
Attention: Guy Asaro
Higgs, Fletcher & Mack, LLP
401 West "A" Street, Suite 2600
San Diego, CA 92101
Attention: Tim Waters, Esq.
-46-
March 19, 2019 Item #3.1
and
and
If to Authority:
with a copy to
and
Chelsea Investment Corporation
6339 Pasea del Lago
Carlsbad, CA 92008
Attention: Cheri Hoffman
Odu & Associates, PC
2195 Queensberry Road
Pasadena, CA 91104
Attention: Nkechi C. Odu, Esq
City of Poway Housing Authority
13325 Civic Center Drive
Poway, CA 92064
Attn: Executive Director
Rutan & Tucker, LLP
611 Anton, Suite 1400
Costa Mesa, CA 92626
Attn: Alan Fenstermacher, Esq.
Rutan & Tucker, LLP
611 Anton, Suite 1400
Costa Mesa, CA 92626
Attn: John A. Ramirez, Esq.
Addresses for notice may be changed from time to time by notice to the other Party.
Notwithstanding that Notices shall be deemed given when delivered, the non-receipt of
any Notice as the result of the intended recipient's refusal of delivery, or of a change of
address of which the sending Party was not notified shall be deemed receipt of such
Notice.
16. ASSIGNMENT
16.1 Generally Prohibited. Except for Permitted Poway Commons Transfers as
otherwise expressly provided to the contrary in this Agreement, Developer shall not
Transfer any of its rights or delegate any of its duties under this Agreement, nor shall any
changes occur with respect to the ownership and/or control of Developer, including,
without limitation, stock transfers, or transfers, sales or issuances of membership or
ownership interests, or statutory conversions, without the prior written consent of the
Executive Director, which consent may be withheld in his or her sole and absolute
discretion. Any such Transfer or delegation without such consent shall, at Authority's
option, be void. Notwithstanding the foregoing, however, on and after the Partnership
Transfer/Financing Closing, (i) the Investor may be admitted to the Partnership as an up
to 99.99% Tax Credit limited partner without obtaining any consent, and such Investor
may assign its interests as an up to 99.99% Tax Credit limited partner to a subsequent
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March 19, 2019 Item #3.1
reputable institutional investor without any consent; (ii) the Investor may remove any
general partner for a default under the Partnership Agreement, provided any replacement
general partner that is not an Affiliate of the Investor is reasonably acceptable to Authority,
and (iii) Developer may transfer partnership interests in the Project to an Affiliate under
the purchase option and right of first refusal set forth in the Partnership Agreement or
related documents with the Investor. For purposes of this Section 16.1, if the Investor
transfers to an entity in which the Investor or an Affiliate of the Investor is the
administrative general partner or managing member such transferee entity shall be
deemed to be a "reputable institutional investor." This Section 16.1 shall not be applicable
to the leasing of individual dwelling units to income eligible senior households in
accordance with the Authority Regulatory Agreement.
16.2 Assignment by Poway Commons. Notwithstanding any provision to the
contrary in Section 16.1, Poway Commons may make Permitted Poway Commons
Transfers.
16.3 Release of Developer. Upon any such assignment made in compliance
with Section 9.4, 16.1, or 16.2 above which is evidenced by a written assignment and
assumption agreement in a form approved by Authority legal counsel in his or her
reasonable discretion, the transferor shall be released from any liability under this
Agreement arising from and after the effective date of such assignment, shall have no
obligation to pay the Authority Loan or the Authority Note, and shall have no further
obligations with respect to the Project, except with respect to any actions and/or
omissions of the transferor occurring, and/or claims arising, prior to the date of such
assignment. In the event Authority legal counsel does not approve the form of assignment
and assumption agreement presented, such counsel shall inform the assignor in writing
within thirty (30) days of receipt of the reasons for such disapproval.
17. ADMINISTRATION
Following approval of this Agreement by Authority, this Agreement shall be
administered and executed on behalf of Authority by the Executive Director. The
Executive Director shall have the authority to issue interpretations, waive terms and
conditions, enter into one or more Authority/Lender Subordination Agreements, enter into
subordination agreements with public funding sources where the public funding source's
regulations require such subordination, and enter into implementing agreements and
amendments of this Agreement (including, without limitation, to the Project Budget and
the Schedule of Performance) on behalf of Authority provided that such actions do not
substantially change the uses or development permitted on the Property, materially add
to the costs or obligations, increase the risk of liability, or impair the rights or remedies, of
Authority provided herein, or materially decrease the revenues or other compensation to
be received by Authority hereby. All other waivers or amendments shall require the formal
consent of the Housing Authority Board.
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18. MISCELLANEOUS
18.1 Counterparts. This Agreement may be executed in counterparts, all of
which, taken together, shall be deemed to be one and the same document.
18.2 Prior Agreements: Amendments. This Agreement contains the entire
agreement between Authority and Developer with respect to the Project and the Property,
and all prior negotiations, understandings and agreements are superseded by this
Agreement. No modification of this Agreement (including waivers of rights and
conditions) shall be effective unless in writing and signed by the Party against whom
enforcement of such modification is sought, and then only in the specific instance and for
the specific purpose given. Authority agrees to consider in good faith making reasonable
modifications to this Agreement that are necessary to finance the development of the
Project.
18.3 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of California, without regard to
conflict of law principles.
18.4 Acceptance of Service of Process. In the event that any legal action is
commenced by Developer against Authority, service of process on Authority shall be
made by personal service upon the Executive Director or in such other manner as may
be provided by law. In the event that any legal action is commenced by Authority against
Developer, service of process on Developer shall be made in such manner as may be
provided by law.
18.5 Severability of Provisions. No provision of this Agreement that is held to be
unenforceable or invalid shall affect the remaining provisions if and to the extent that the
primary purposes of this Agreement can still be accomplished without materially impairing
the rights or increasing the obligations or risks of each Party, as reasonably determined
by that Party.
18.6 Interpretation. Both Parties have participated in the drafting of this
Agreement and any ambiguities in this Agreement shall not be construed for or against
either Party on account of the authorship or presumed authorship hereof. Article and
section headings are included in this Agreement for convenience of reference only and
shall not be used in construing this Agreement. Any defined term used in the plural in
this Agreement shall refer to all members of the relevant class and any defined term used
in the singular shall refer to any of the members of the relevant class. References herein
to Articles, Sections, and Attachments shall be construed as references to this Agreement
unless a different document is named. References to subparagraphs shall be construed
as references to the same Section in which the reference appears. The terms "including"
and "include" mean "including (include) without limitation."
18.7 Accounting Principles. Any accounting term used and not specifically
defined in this Agreement shall be construed, and all financial data required to be
submitted under this Agreement shall be prepared, in conformity with generally accepted
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March 19, 2019 Item #3.1
accounting principles applied on a consistent basis or in accordance with such other
principles or methods as are reasonably acceptable to Authority.
18.8 Attachments Incorporated. All attachments to this Agreement, as now
existing and as the same may from time to time be modified, are incorporated herein by
this reference.
18.9 Time of the Essence. Time is of the essence of this Agreement.
18.10 Warranty Against Payment of Consideration. Developer warrants that it has
not paid or given, and will not pay or give, any third person any money or other
consideration for obtaining this Agreement.
18.11 Non-liability of Authority Officials and Employees. No member, director,
officer, employee, or volunteer of Authority shall be personally liable to Developer, or any
successor in interest, in the event of any default or breach by Authority or for any amount
which may become due to Developer or successor, or on any obligation under the terms
of this Agreement.
18.12 Force Majeure. In addition to specific provisions of this Agreement,
performance by either Party hereunder shall not be deemed to be in default where delays
or defaults are due to war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires;
casualties; acts of God or other deities; acts of the public enemy; epidemics; quarantine
restrictions; freight embargoes; litigation beyond the reasonable control of a Party;
unusually severe weather; inability, despite commercially reasonable efforts, to secure
necessary labor, materials or tools; delays of any contractor, subcontractor or supplier
beyond the reasonable control of a Party; acts of the other Party; acts or the failure to act
of any public or governmental entity (except that acts or the failure to act of Authority shall
not excuse performance by Authority); or any other acts or causes beyond the reasonable
control of the Party claiming an extension of time to perform. An extension of time for any
such cause shall be for the period of the enforced delay and shall commence to run from
the time of the commencement of the cause, if notice by the Party claiming such extension
is sent to the other Party within thirty (30) days of the commencement of the cause. Force
Majeure shall serve also to extend the time by which any condition, for the benefit of either
Party, shall be satisfied under this Agreement. Notwithstanding any provision of this
Agreement to the contrary, in no event shall adverse market conditions, interest rates, the
lack of funding or difficulty obtaining the financing necessary to complete the Project
constitute grounds of enforced delay pursuant to this Section.
18.13 Developer Covenant to Defend this Agreement. Developer acknowledges
that Authority is a "public entity" and/or a "public agency" as defined under applicable
California law. Therefore, Authority must satisfy the requirements of certain California
statutes relating to the actions of public entities, including, without limitation, CEQA. Also,
as a California public body, Authority's action in approving this Agreement may be subject
to proceedings to invalidate this Agreement or mandamus. Developer assumes the risk
of delays and damages that may result to Developer from any third-party legal actions
related to Authority's approval of this Agreement or the pursuit of the activities
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March 19, 2019 Item #3.1
contemplated by this Agreement, including, without limitation, the City's approval of any
Project approvals and issuance of any permits required for development of the Project,
even in the event that an error, omission or abuse of discretion by Authority is determined
to have occurred. If a third-party files a legal action regarding Authority's approval of this
Agreement or the pursuit of the activities contemplated by this Agreement, including,
without limitation, the City's approval of any Project approvals and issuance of any
permits required for development of the Project, Authority may terminate this Agreement
on thirty (30) days written notice to Developer of Authority's intent to terminate this
Agreement, referencing this Section 18.13, without any further obligation to perform the
terms of this Agreement and without any liability to Developer resulting from such
termination, unless Developer unconditionally agrees to indemnify and defend Authority
and City and Authority and City Personnel, with legal counsel acceptable to Authority,
against such third-party legal action, as provided hereinafter in this Section 18.13. Within
30 days of receipt of Authority's notice of intent to terminate this Agreement, as provided
in the preceding sentence, Developer may in Developer's sole and absolute discretion
offer to defend Authority and the City, with legal counsel acceptable to Authority, in the
third-party legal action and pay all of the court costs, attorney fees, monetary awards,
sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of
any and all financial or performance obligations resulting from the disposition of the legal
action. At the request of Developer, Authority shall cooperate with and assist Developer
in its defense of any such third-party legal action, provided that Authority shall not be
obligated to incur any expense in connection with such cooperation or assistance.
18.14 Nondiscrimination Covenants.
(a) Developer covenants by and for itself and any successors in interest
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 Property, 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 Property. The foregoing covenants shall run
with the land.
(b) Notwithstanding paragraph (a), with respect to familial status,
paragraph (a) 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
paragraph (a) 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, Section 4760, and Section 6714 of the Civil Code, and subdivisions (n), (o), and (p)
of Section 12955 of the Government Code shall apply to paragraph (a).
(c) Developer shall refrain from restricting the rental, sale or lease of the
Property on any of the bases listed above in this Section 18.13. All such deeds, leases
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or contracts shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
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(i) In deeds:
(A) "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."
(B) Notwithstanding paragraph (a), with respect to familial
status, paragraph (a) 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 paragraph (a) 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, Section 4760, and Section 6714 of the
Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the
Government Code shall apply to paragraph (a).
(ii) 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:
(A) "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
-52-
March 19, 2019 Item #3.1
segregation with reference to the selection, location, number, use, or
occupancy, of tenants, lessees, sublessees, subtenants, or vendees
in the premises herein leased."
(B) Notwithstanding paragraph (a), with respect to familial
status, paragraph (a) 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 paragraph (a) 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, Section 4760, and Section 6714 of the
Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the
Government Code shall apply to paragraph (a).
(iii) In contracts:
(A) "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, sub lessees, or vendees
in the premises herein conveyed. The foregoing covenants shall run
with the land."
(B) Notwithstanding paragraph (a), with respect to familial
status, paragraph (a) 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 paragraph (a) 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, Section 4 760, and Section 6714 of the
Civil Code, and subdivisions (n), (o), and (p) of Section 12955 of the
Government Code shall apply to paragraph (a).
The covenants established in this Section 18.13 shall, without regard to technical
classification and designation, be binding for the benefit and in favor of Authority and its
successors and assigns, and shall remain in effect in perpetuity.
8821012782-0020 1'!l!'li't' 3,3,,1, -53-
March 19, 2019 Item #3.1
18.15 Consents and Approvals. Unless otherwise expressly set forth in this
Agreement, any consents or approvals to be given by a Party under this Agreement shall
not be unreasonably withheld, conditioned or delayed.
18.16 No Third Party Beneficiaries. No person or entity other than Authority and
Developer and the permitted successors and assigns of each of them, shall be authorized
to enforce the provisions of this Agreement.
[End of Agreement -Signature page follows]
882/012782-0020
1tist'b'f' :!~~5119 -54-
March 19, 2019 Item #3.1
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed.
Attest:
By: _________ _
Faviola Medina, Authority
Secretary
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
By:. __________ ~
Alan Fenstermacher, Authority
Counsel
"Authority"
CITY OF POWAY HOUSING AUTHORITY,
a public body, corporate and politic
By:-------------
Tina M. White, Executive Director
"Developer"
POWAY COMMONS, LLC a Delaware limited
liability company
By: -------------
Guy Asaro, Manager
-55-
March 19, 2019 Item #3.1
ATTACHMENTS
1A Legal Description of City-Owned Mixed Property
1 B Depiction of City-Owned Mixed Property and Property
2A Site Plan
2B Proposed Subdivision Site Map
3 Schedule of Performance
4 Scope of Development
5 Form of Grant Deed
6 Form of Assignment of Architectural Agreements
7 Form of the Authority Note
8 Form of the Authority Deed of Trust
9 Project Budget
10 Form of Authority Regulatory Agreement
11 Form of Notice of Affordability Restrictions
12 Form of Release of Construction Covenants
8821012782-0020
1ti~'b't' j~~5119
-56-
March 19, 2019 Item #3.1
ATTACHMENT NO. 1A
LEGAL DESCRIPTION OF CITY-OWNED MIXED PROPERTY
13100 Poway Road: The land referred to herein is situated in the State of California,
County of San Diego and is described as follows:
That portion of the Southwest Quarter of the Northwest Quarter of Section 13, Township
14 South, Range 2 West, San Bernardino Base and Meridian, in the City of Poway,
County of San Diego, State of California, according to Official Plat thereof described as
follows:
Beginning at a point on the Southerly line of said Southwest Quarter of the Northwest
Quarter, distant, thereon South 89°08'30" East 332.00 feet from the Southwest corner
thereof, said point being the Southeast corner of land conveyed to James Albert
Silkwood and wife, by deed recorded in Book 5316, Page 83 of Official Records; thence
continuing South 89°08'30" East 281.00 feet; thence parallel with the West line of said
Northwest Quarter North 01 °26'1 O" East 50 feet to the North line of the South 50 feet of
said Northwest Quarter being the True Point of Beginning; thence along said line South
89°08'30" East 176.48 feet to a tangent 20 foot radius curve, concave Northwesterly in
the Westerly line of Tarascan Drive as shown on Heritage Hills according to Map No.
5934 filed in the Office of the County Recorder of San Diego County; thence along the
boundary line of said Map No. 5934, Northeasterly along said curve 31.17 feet; thence
tangent to said curve North 1°33'47" East 320.27 feet; thence North 89°08'30" West 68
feet; thence leaving said boundary North 89°08'30" West 129 feet to a line which bears
North 01 °26'1 O" East parallel with said West line from the True Point of Beginning;
thence South 01 °26'1 O" West 340.02 feet to the True Point of Beginning.
APN: 317-101-06
882/012782-0020
1ijf~/31f15119 ATTACHMENT NO. 1A
March 19, 2019 Item #3.1
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882/012782-0020
1ij§6~f-3!3'15/19
ATTACHMENT NO. 1 B
DEPICTION OF CITY-OWNED MIXED PROPERTY AND PROPERTY
ATTACHMENT 18
ATIACHMENT NO. 1B
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March 19, 2019 Item #3.1
Ci1':1l l
88210 12782 -0020
1§§6~/313'15/19
A TT ACHM ENT NO. 2A
SITE PLAN
NOT A PART
81
Fl
ATTACHMENT NO. 2A
.n.o rr h
~~
March 19, 2019 Item #3.1
ATTACHMENT NO. 28
PROPOSED SUBDIVISION SITE MAP
POWAY C ,OMMONS
l S: SJ RETAIL AREA -Approx 2.3 gross acres
I : : : : :1 AFFORDABLE AREA -Approx 0.9 gross acres
U J ! 11 RESIDENTIAL AREA -Approx 6.1 gross acres
ss2101 21s2-1iD of 323
13 106627.7 aOJ/15/19 ATTACHMENT NO. 28 March 19, 2019 Item #3.1
1.
2.
3
4
5
6
7
8
9
10
11
ATTACHMENT NO. 3
SCHEDULE OF PERFORMANCE
Task/Event Time for Performance
Completion of architectural drawings for June 1, 2020
the project
Building Permit Application submitted to August 1, 2020
City. Copy of Construction Drawings
submitted to the Authority
Partnership to obtain financing September 1, 2020
commitments for construction and
permanent financing, including tax
credit equity
Submission of application to CDLAC for October 2020
an allocation of Tax-Exempt Bonds
Submission of application to TCAC for October 2020
an allocation of 4% Tax Credits
Secure CDLAC Allocation and TCAC December 2020
Reservation
Issuance of Building Permit-ready letter February 1 , 2021
by the City
Partnership Transfer/Financing Closing February 15, 2021
and Acquisition of the Site from Poway
Commons, LLC
Commencement of Construction of the March 1, 2021
Project
March 1 , 2022
Completion of Construction of the
Project
100% Qualified Occupancy May 1, 2022
882/0\2782-0020
ATTACHMENT NO. 3
-1-1~!\6'8t' j'!z~5119
March 19, 2019 Jtem #3.1
It is expressly understood and agreed by the Parties that the foregoing schedule
of performance is subject to all of the terms and conditions set forth in the text of the
Agreement including, without limitation, extension due to Force Majeure. Times of
performance under the Agreement may be extended by request of any Party
memorialized by a mutual written agreement between the Parties, which agreement may
be granted or denied in the non-requesting Party's sole and absolute discretion (subject
to events of force majeure set forth in this Agreement.
882/0\2782-0020
1ij~'b't1 j'lz~5119
ATTACHMENT NO. 3
-2-
March 19, 2019 Item #3.1
ATTACHMENT NO. 4
SCOPE OF DEVELOPMENT
The Project is a 44-unit new construction development servicing seniors age 62 and older.
The preliminary work to be conducted by Poway Commons consists of (i) establishing the
Property as a legal parcel, (ii) completing remedial, rough and finish grading to an
approved City plan, in accordance with compaction standards, (iii) installing wet and dry
backbone utility services to ultimately service the future affordable housing development,
and (iv) stabilizing the Property in accordance with the City's storm water standards.
The affordable housing development will be comprised of 35 one-bedroom, one bathroom
units, and 9 two-bedroom, one bathroom units. One of the two-bedroom units will be
reserved for an on-site manager and will be unrestricted with regards to affordability and
age. The one-bedroom units consist of approximately 520 net square feet and the two-
bedroom units are approximately 750 net square feet. Each unit will have a kitchen
equipped with refrigerator, stove, dishwasher and sink.
The Project will be constructed on grade and consist of a single three-story type-VA wood-
framed building served by an elevator. The Project will include 44 surface parking spaces
to serve residents and guests.
The units will be equipped with a storage closet, window coverings, sustainable vinyl
plank flooring and energy star rated appliances. The Project will include an approximate
1400 square foot community building with common area space that includes a
kitchenette, a community laundry room, and management office. Sufficiently landscaped
outdoor common area space will be provided.
The Project will be designed in accordance with CTCAC and CDLAC
requirements, design and sustainability requirements.
882/012782-0020
~~~'b't'j~/35/19 ATTACHMENT NO. 4 March 19, 2019 Item #3.1
882/012782-0020
1~lt'b't1 3,35119
ATTACHMENT NO. 5
GRANT DEED
[See following document]
ATTACHMENT NO. 5
March 19, 2019 Item #3.1
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Poway Commons, LLC
c/o Meridian Development, LLC
9988 Hibert Street, Suite 210
San Diego, CA 92131
Attention: Guy Asaro
AND ALL TAX STATEMENTS TO:
SAME AS ABOVE
DOCUMENTARY TRANSFER TAX IS
$ Computed on the consideration or
value of property conveyed.
(Space Above for Recorder's Use)
Exempt from Recordation Fee per Gov. Code§ 27383
The undersigned declares exemption under the
following: Exempt from fee per Government Code
Section 27388.1 (a)(2); recorded concurrently in
connection with a transfer subject to the
imposition of documentary transfer tax
GRANT DEED
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
CITY OF POWAY HOUSING AUTHORITY, a public body, corporate and politic
("Grantor"), hereby grants to POWAY COMMONS, LLC, a Delaware limited liability
company ("Grantee"), the real property located in the City of Poway, County of San Diego,
State of California, described on Exhibit 1 attached hereto and made a part hereof (the
"Property"), with all improvements thereon, subject to all matters of record and subject
to the following:
Grantee, on behalf of itself and its successors and assigns to all or any portion of
the Property, covenants and agrees as follows:
1. Nondiscrimination Covenants.
(a) That there shall be no discrimination against or segregation of any
person, or group of persons on 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 Property, or any part thereof,
nor shall Grantee, 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,
subtenants, sub lessees or vendees of the Property, or any part thereof.
8821012782-0020
1~~'b't' j~~l/19
-1-
March 19, 2019 Item #3.1
(b) Notwithstanding paragraph (a), with respect to familial status,
paragraph (a) 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 paragraph (a) 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, Section 4760, and Section 6714 of the Civil
Code, and subdivisions (n), (o), and (p) of Section 12955 of the Government Code
shall apply to paragraph (a)."
(c) The foregoing covenants shall run with the land.
2. Nondiscrimination Clauses in Agreements. Grantee agrees for itself and
any successor in interest that Grantee shall refrain from restricting the rental, sale, or
lease of any portion of the Property, or contracts relating to the Property, on the basis of
race, color, creed, religion, sex, marital status, ancestry, or national origin of any person.
All such deeds, leases or contracts shall contain or be subject to substantially the
following nondiscrimination or nonsegregation clauses:
882/012782-0020
1~1f'b't' :i,35119
(a) In deeds:
(i) ''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."
(ii) Notwithstanding paragraph (i), with respect to familial status,
paragraph (i) 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 paragraph (i) 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, Section 4760, and
Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section
12955 of the Government Code shall apply to paragraph (i)."
(iii) The foregoing covenants shall run with the land."
-2-
March 19, 2019 Item #3.1
(b) In leases:
(i) "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."
(ii) Notwithstanding paragraph (i), with respect to familial status,
paragraph (i) 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 paragraph (i) 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, Section 4760, and
Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section
12955 of the Government Code shall apply to paragraph (i)."
(c)
interest therein:
In contracts relating to the sale. transfer. or leasing of the land or any
882/0 [ 2782-0020
1~'f'li't' 3'!!~5119
(i) "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."
(ii) Notwithstanding paragraph (i), with respect to familial status,
paragraph (i) 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 paragraph (i) shall be construed to affect Sections
-3-
March 19, 2019 Item #3.1
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, Section 4760, and
Section 6714 of the Civil Code, and subdivisions (n), (o), and (p) of Section
12955 of the Government Code shall apply to paragraph (i)."
The foregoing nondiscrimination covenants shall remain in effect in perpetuity.
[Signatures on next page)
882/012782-0020
1~!'8t13~~5119 -4-
March 19, 2019 Item #3.1
Dated: ________ _
ATTEST:
GRANTOR:
CITY OF POWAY HOUSING AUTHORITY,
a public body, corporate and politic
By: ___________ _
Tina M. White, Executive Director
By:-----------
Faviola Medina, Authority Secretary
APPROVED AS TO FORM:
RUTAN &TUCKER, LLP
Alan Fenstermacher, Authority Counsel
Dated: ________ _
882/0 l 2782-0020
1ij1f'b't' 3':!1:3'119
GRANTEE:
POWAY COMMONS, LLC, a Delaware limited
liability company
By: ___________ _
Guy Asaro, Manager
-5-
March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of San Diego
)
)
On ___________ , before me,------------
(insert name and titre of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature. ____________ _ (Seal)
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of San Diego
On ___________ , before me, ___________ _
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ____________ _ (Seal)
8821012782-0020
2ti1f'b'f1 j'\,B'11
' March 19, 2019 Item #3.1
Exhibit 1 to Grant Deed
Legal Description
Real property in the City of Poway, County of San Diego, State of California, described
as follows:
882/012782-0020
2tilf'b't' j,35119 -2-
March 19, 2019 Item #3.1
8821012782-0020
2ti~'b't' :!~~5119
ATTACHMENT NO. 6
ASSIGNMENT OF ARCHITECTURAL AGREEMENTS
[See following document]
ATTACHMENT NO. 6
March 19, 2019 Item #3.1
ASSIGNMENT OF ARCHITECTURAL AGREEMENTS
AND PLANS AND SPECIFICATIONS
FOR VALUE RECEIVED, the undersigned, , L.P., a
California limited partnership ("Developer"), assigns to City of Poway Housing Authority,
a public body, corporate and politic ("Authority"), all of its right, title and interest in and
to:
1. All architectural, design, engineering and development agreements, and
any and all amendments, modifications, supplements, addenda and general conditions
thereto (collectively, "Architectural Agreements"), and
2. All plans and specifications, blueprints, sketches, shop drawings, working
drawings, landscape plans, utilities plans, soils reports, noise studies, environmental
assessment reports, and grading plans, and all amendments, modifications, changes,
supplements, general conditions and addenda thereto (collectively, "Plans and
Specifications"), heretofore or hereafter entered into or prepared by any architect,
engineer or other person or entity (collectively, "Architect"), for or on behalf of Developer
in connection with the Real Property described on Exhibit "A" attached hereto. The Plans
and Specifications, as of the date hereof, are those which Developer have heretofore, or
will hereafter deliver to Authority. The Architectural Agreements include, but are not
limited to, the architectural agreement or contract between and
_________ ,dated ______ _
This ASSIGNMENT OF ARCHITECTURAL AGREEMENTS AND PLANS AND
SPECIFICATIONS ("Assignment") constitutes a present, absolute and unconditional
assignment to Authority.
Developer acknowledges that by accepting this Assignment, Authority does not
assume any of Developer's obligations under the Architectural Agreements with respect
to the Plans and Specifications.
Developer represents and warrants to Authority that: (a) no default by Developer,
or event which would constitute a default by Developer after notice or the passage of
time, or both, exists with respect to said Architectural Agreements, and (b) all copies of
the Architectural Agreements and Plans and Specifications delivered to Authority are
complete and correct. Developer has not assigned any of its rights under the Architectural
Agreements or with respect to the Plans and Specifications. Notwithstanding the
foregoing, this Assignment shall be subordinated to any assignment required to be made
by Developer to the "Construction Lender'' (as that term is defined in that certain
Affordable Housing and Property Disposition Agreement entered into by and between
Authority and Developer on or about (the "AHPDA")) at the "Closing" (as
that term is defined in the AHPDA). Further, as long as no Event of Default by Developer
has occurred under the AHPDA, Developer shall have the right to exercise all of its rights
under the Architectural Agreements. Authority shall not exercise its rights under this
882/012782-0020
2ti!'b't' 3'!1~5119 -1-March 19, 2019 Jtem #3.1
Assignment until the occurrence and during the continuation of an Event of Default under
the AHPDA. Upon the occurrence and during the continuation of such an Event of
Default, Authority may, at its option, upon written notice to Architect, exercise all of its
rights granted under this Assignment.
This Assignment shall be governed by the laws of the State of California, except
to the extent that federal laws preempt the laws of the State of California, and Developer
consents to the jurisdiction of any federal or state court within the State of California
having proper venue for the filing and maintenance of any action arising hereunder and
agrees that the prevailing party in any such action shall be entitled, in addition to any
other recovery, to reasonable attorneys' fees and costs.
This Assignment shall be binding upon and inure to the benefit of the heirs, legal
representatives, assigns, and successors-in-interest of Developer and Authority.
The attached Architect's/Engineer's Consent and Exhibit "A" are incorporated by
reference.
Executed by _____ on _________ , 20_.
Date.: _________ , 20_
Attest:
By: _________ _
Faviola Medina, Authority
Secretary
8821012782-0020
2tiit'b't1 j':B'119
"Developer"
------------' L.P.,
a California limited partnership
By: --------------
Its: ---------------
"Authority"
CITY OF POWAY HOUSING AUTHORITY,
a public body, corporate and politic
By:-------------
Tina M. White, Executive Director
-2-
March 19, 2019 Item #3.1
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
By: __________ _
Alan Fenstermacher, Authority
Counsel
882/0 l 2782-0020
2ti1f'b't1 j'\,B'11
'
-3-
March 19, 2019 Item #3.1
ARCHITECT'S/ENGINEER'S CONSENT
The undersigned architect and/or engineer (collectively referred to as "Architect")
hereby consents to the foregoing Assignment to which this Architect's/Engineer's
Consent ("Consent") is a part, and acknowledges that there presently exists no unpaid
claims due to the Architect/Engineer arising out of the preparation and delivery of the
Plans and Specifications to and/or the performance of the Architect's
obligations under the Architectural Agreements described in the Assignment.
Architect agrees that, by virtue of the foregoing Assignment, Authority has
succeeded to all of 's right, title and interest in, to and under the
Architectural Agreements and the Plans and Specifications and, therefore, so long as the
Architect continues to receive the compensation called for under the Architectural
Agreements, Authority and its successors and assigns may, at their option, use and rely
on the Plans and Specifications for the purposes for which they were prepared, and
Architect will continue to perform its obligations under the Architectural Agreements for
the benefit and account of Authority and its successors and assigns in the same manner
as if performed for the benefit or account of in the absence of the
Assignment.
Architect warrants and presents that it/he has no knowledge of any prior
assignment(s) of any interest in either the Plans and Specifications and/or the
Architectural Agreements. Except as otherwise defined herein, the terms used herein
shall have the meanings given them in the Assignment.
Executed on ___________ , 20_
882/0 l 2782-0020
2ti1f'b't' j,35119
"Architect"
a ________________ _
By:-------------
Name: -------------
Its: --------------
Architect's Address:
Phone No.: ~--> _______ _
Fax No.: ) _______ _
-4-
March 19, 2019 Item #3.1
882/012782-0020
:ztit·b't' j~~5119
EXHIBIT "A"
PROPERTY DESCRIPTION
-5-
March 19, 2019 Item #3.1
882/012782-0020
2ti~'b't' j'lB'1
"
ATTACHMENT NO. 7
AUTHORITY NOTE
[See following document]
ATTACHMENT NO. 7
March 19, 2019 Item #3.1
$2,200,000
AUTHORITY PROMISSORY NOTE
(Poway Commons)
San Diego, California
FOR VALUE RECEIVED, , LP., a California limited
partnership ("Borrower"), as maker and obliger, promises to pay to the CITY OF POWAY
HOUSING AUTHORITY, a public body, corporate and politic ("Authority"), as holder and
beneficiary, or order, at Authority's office at 13325 Civic Center Drive, Poway, CA 92064,
or such other place as Authority may designate in writing, the sum of (a) Two Million Two
Hundred Thousand Dollars ($2,200,000), or so much thereof as may be disbursed
hereunder ("Note Amount"), and (b) all costs and expenses payable hereunder, in
currency of the United States of America, which at the time of payment is lawful for the
payment of public and private debts.
1. Agreement. This Authority Promissory Note ("Note") is given in
accordance with that certain Affordable Housing and Property Disposition Agreement
executed by Authority and Poway Commons, LLC, a Delaware limited liability company
("PC, LLC"), as "Developer", and thereafter assigned by PC, LLC to Borrower, as of
("Agreement"). The rights and obligations of Borrower and
Authority under this Note shall be governed by the Agreement and by the additional terms
set forth in this Note. In the event of any inconsistencies between the terms of this Note
and the terms of the Agreement or any other document related to the Note Amount, the
terms of this Note shall prevail. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to them in the Agreement. An Event of Default
by Developer under any of the provisions of the Agreement, and/or a default under any
and all attachments and all breakout documents executed, attested and/or recorded in
implementation of the Agreement, including, without limitation, the Authority Deed of
Trust, Authority Regulatory Agreement, or the income and/or rent restrictions as set forth
in the regulatory agreement which may be required to be recorded against the Property
with respect to the issuance of Tax Credits for the Project and/or the regulatory agreement
with the institutional lender responsible for placing the Tax-Exempt Bonds (collectively,
the "Transaction Documents") shall, after the expiration of any cure period under the
respective agreement or document, be a default under this Note (a "Default"), and a
default under this Note, after notice and expiration of a ten (10) day cure period, shall be
an Event of Default under the Agreement and a default under the Transaction Documents.
Notwithstanding anything to the contrary set forth herein, Authority shall not exercise any
right hereunder without providing the limited partner of Borrower with not less than thirty
(30) days prior written notice and right to cure any default giving rise to the exercise of
said remedy. Authoity agrees that any cure tendered by the limited partner of Borrower
shall be accepted or rejected on the same terms and conditions as if tendered directly by
Borrower.
2091of231Wl
13106627.7 a03/15/19 -1-March 19, 2019 Item #3.1
2. Disbursement of Note Amount.
(a) Impact Fee Portion. Borrower acknowledges and agrees that a
portion of the Note Amount, in an amount up to Seven Hundred Thousand Dollars
($700,000) (the "Impact Fee Portion") is being loaned to Borrower to cover the impact
fees required to be paid by Borrower in connection with the Project. The Impact Fee
Portion shall be provided in the form of a credit rather than through an actual cash
disbursement of funds to Borrower. The Project would not be feasible without Authority's
provision of the Impact Fee Portion of the Note Amount and, accordingly, the Impact Fee
Portion is being provided to Borrower for the development and construction of the Project.
(b) Cash Portion. The portion of the Note Amount to be provided in the
form of cash disbursements, in an amount of up to One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Cash Portion") shall be disbursed pursuant to the following
disbursement schedule: (i) Sixty percent (60%) shall be disbursed upon the Partnership
Transfer/Financing Closing City's issuance of a building permit for the Project; (ii) Thirty
percent (30%) shall be disbursed upon the City's issuance of a certificate of occupancy
for the Project; and (iii) Ten percent (10%) shall be disbursed upon Authority's recordation
of a Release of Construction Covenants for the Project. Notwithstanding the foregoing,
however, in no event shall Authority have any obligation to disburse any amount for any
item in excess of the amount allocated to such item in the Project Budget, unless
approved, in writing, by the Executive Director; provided, however, that upon Borrower's
completion and payment of all work for a particular line item, Borrower may move any
amounts remaining in such line to any other line item where payment for work has not
been completed, and no Authority consent shall be required therefor. Disbursement shall
be made only upon Borrower's written request in a form reasonably approved by the
Executive Director (a "Disbursement Request") showing all costs that Borrower intends
to fund with such disbursement, itemized in such detail as the Executive Director may
reasonably require, accompanied in each case by (a) invoices and lien releases (if such
work could give rise to mechanic's or materialmen's liens) reasonably satisfactory to the
Executive Director, including in any event conditional lien releases executed by each
contractor and subcontractor who has received any payment for work performed, and (b)
all other documents and information reasonably required by the Executive Director.
Authority agrees to fund each Disbursement Request within twenty-one (21) days after
Authority's receipt of the Disbursement Request in completed form with all required
supporting documentation, and reasonable determination by Authority that all of the
conditions to disbursement set forth in this Section 2(b) have been satisfied, or waived by
Authority. Authority shall make disbursements by wire transfer.
3. Interest. The Note Amount shall bear simple interest at three percent (3%)
per annum.
4. Repayment of Note Amount. The Note Amount shall be paid by the
Borrower's annual payment to Authority of fifty percent (50%) of the Residual Receipts
from operation of the Project, as determined by a Residual Receipts calculation from the
882/012782-0020
2~1f'b't'j~~51\9 -2-
March 19, 2019 Item #3.1
operation of the Project the preceding calendar year; provided, however, that said fifty
percent (50%) shall be divided proportionately with any other lenders with loans payable
from Residual Receipts or net cash flow, if any such loans are obtained by Developer.
Annual Residual Receipts payments shall be made by the Borrower by cashier's
check and shall be delivered on or before May 1'1 for each year during the term of this
Note commencing in the first fiscal year following the date construction of the Project has
been completed, and continuing until the Note Amount and all unpaid interest thereon
has been repaid in full. Additionally, the Note Amount shall be paid by any or all of the
following: (i) one hundred percent (100%) of the Refinancing Net Proceeds immediately
upon any refinancing of the loans secured by the Property (or any part thereof), (ii) one
hundred percent (100%) of the Transfer Net Proceeds immediately upon any transfer in
whole or in part of the Project, and (iii) any Cost Savings, pursuant to Section 6.8 of the
Agreement. Notwithstanding the foregoing, in the event of a re-syndication of the Project
by an affiliate of the Borrower after the expiration of the Tax Credit compliance period,
Authority may, in its sole and absolute discretion, agree to allow the Authority Loan to be
assumed and remain outstanding.
As used herein, "Affiliate" means any person or entity directly or indirectly, through
one or more intermediaries, controlling, controlled by or under common control with
Borrower which, if Borrower is a partnership or limited liability company, shall include each
of the constituent members or general partners, respectively thereof. The term "control"
as used in the immediately preceding sentence, means, with respect to a person that is
a corporation, the right to the exercise, directly or indirectly, of more than fifty percent
(50%) of the voting rights attributable to the shares of the controlled corporation, and, with
respect to a person that is not a corporation, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the controlled
person.
As used herein, "Annual Financial Statemenf' shall mean each certified financial
statement of Borrower for the Project using generally accepted accounting principles
("GAAP"), as separately accounted for this Project, including Operating Expenses and
Annual Project Revenue, prepared annually at Borrower's expense, by an independent
certified public accountant reasonably acceptable to Authority.
As used herein, "Annual Project Revenue" means all gross income and all
revenues of any kind from the Project in a calendar year, of whatever form or nature,
whether direct or indirect, with the exception of the items excluded below, actually
received by or paid to or for the account or benefit of Borrower or any Affiliate of Borrower
or any of their agents or employees, from any and all sources, resulting from or
attributable to the ownership, operation, leasing and occupancy of the Project, determined
on the basis of generally accepted accounting principles applied on a consistent basis,
and shall include, but not be limited to: (i) gross rentals paid by tenants of the Project
under leases, and payments and subsidies of whatever nature, including without limitation
any payments, vouchers or subsidies from the U.S. Department of Housing and Urban
Development or any other person or organization, received on behalf of tenants under
882/012782-0020
2~!f'b'f' j'l!~5/i 9 -3-
March 19, 2019 Item #3.1
their leases, (ii) amounts paid by residents of the Project to Borrower or any Affiliate of
Borrower on account of Operating Expenses for further disbursement by Borrower or such
Affiliate to a third party or parties, (iii) late charges and interest paid on rentals, (iv) rents
and receipts from licenses, concessions, vending machines, coin laundry and similar
sources, (v) other fees, charges or payments not denominated as rental but payable to
Borrower in connection with the rental of office, retail, storage, or other space in the
Project, (vi) consideration received in whole or in part for the cancellation, modification,
extension or renewal of leases, and (vii) interest and other investment earnings on
security deposits, reserve accounts and other Project accounts to the extent disbursed
for other than the purpose of the reserve. Notwithstanding the foregoing, gross income
shall not include the following items: (a) security deposits from tenants (except when
applied by Borrower to rent or other amounts owing by tenants); (b) capital contributions
to Borrower by its members, partners or shareholders (including capital contributions
required to pay any Deferred Developer Fee); (c) condemnation or insurance proceeds;
(d) funds received from any source actually and directly used for initial development of
the Project; (e) receipt by an Affiliate of management fees or other bona fide arms-length
payments for reasonable and necessary Operating Expenses associated with the Project;
(f) Transfer Net Proceeds; or (g) Refinancing Net Proceeds.
As used herein "Capital Replacement Reserve" shall have the meaning ascribed
thereto in the Authority Regulatory Agreement.
As used herein, "CPI Adjustment'' means the increase in the cost of living index,
as measured by the Consumer Price Index for All Urban Consumers, Los Angeles-
Riverside-San Diego County statistical area, all items (1982-84 = 100) published by the
United States Department of Labor, Bureau of Labor Statistics ("CPI") in effect as of the
date on which the Certificate of Occupancy is issued for the Project to the CPI in effect
as of the date on which an adjustment is made. If such index is discontinued or revised,
such other index with which such index is replaced (or if not replaced, another index which
reasonably reflects and monitors consumer prices) shall be used in order to obtain
substantially the same results as would have been obtained if the discontinued index had
not been discontinued or revised. If the CPI is changed so that the base year is other
than 1982-84, the CPI shall be converted in accordance with the conversion factor
published by the United States Department of Labor, Bureau of Labor Statistics.
As used herein, "Debt Service" shall mean payments made in a calendar year
pursuant to the approved Construction Loan or the Take-Out Loan, as applicable,
obtained for the construction/development, and ownership of the Project, as set forth in
the Project Budget, or any permitted refinancing or modification thereof, but excluding
payments made pursuant to this Note.
As used herein, "Deferred Developer Fee" shall mean the portion of the Borrower's
development fee, if any, that is payable out of the Annual Project Revenue and not from
capital sources, as set forth in the Project Budget. Disbursement of the Deferred
Developer Fee (all or any part thereof) shall be subject to the provisions of the next
paragraph.
882/012782-0020
2~ ''b't' j'\!':1'119 -4-March 19, 2019 Item #3.1
In connection with Borrower's eligibility to disburse all or any part of the Deferred
Developer Fee, in the event the cost of completing the Project exceeds the amount set
forth in the final Budget; then, to the extent necessary, the funds otherwise available to
pay the developer fee from capital sources shall be expended and used to pay the
remaining costs of completing the Project to the extent necessary to ensure the
completion of the Project and the balance of the developer fee shall be paid as Deferred
Developer Fee in accordance with the priority set forth in the Partnership Agreement,
and/or payable from the proceeds of any approved refinancing or transfer of the Property
and/or the Project. In no event shall Borrower be eligible for disbursement of the Deferred
Developer Fee or any part thereof prior to completion of the Project, as approved by the
Executive Director as evidenced by the issuance by Authority of the Release of
Construction Covenants.
As used herein, "Operating Expenses" shall mean actual, reasonable and
customary (for comparable high quality rental Projects in San Diego County) costs, fees
and expenses directly incurred, paid, and attributable to the operation, maintenance and
management of the Project in a calendar year, which are in accordance with the annual
Operating Budget approved by Authority pursuant to Section 9 of Authority Regulatory
Agreement, including, without limitation, painting, cleaning, repairs, alterations,
landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges,
real and personal property taxes, assessments, insurance, security, advertising and
promotion, janitorial services, cleaning and building supplies, purchase, repair, servicing
and installation of appliances, equipment, fixtures and furnishings, fees and expenses of
property management, fees and expenses of accountants, attorneys and other
professionals, and other actual, reasonable and customary operating costs which are
directly incurred and paid by Borrower, but which are not paid from or eligible to be paid
from the Operating Reserve or any other reserve accounts. In addition, Operating
Expenses shall include payment annually of (a) asset management fees payable to
Borrower's partners in an amount not to exceed, cumulatively, Ten Thousand Dollars
($10,000), increased by three percent (3%) each year following the first year of operation;
(b) a property management fee in an amount not to exceed Fifty Dollars ($50) per unit,
increasing by three and five-tenths percent (3.5%) each year following the first year of
operation; and (c) a social services fee in an amount not to exceed Eleven Thousand
Dollars ($11,000) per year, increasing by three percent (3%) each year following the first
year of operation, provided Borrower provides the social services described in (a) the
Tenant Services Agreement that was included in Borrower's tax credit application, and
(b) the Scope of Development. Operating Expenses shall not include any of the following:
(i) salaries of employees of Borrower or Borrower's general overhead expenses, or
expenses, costs and fees paid to an Affiliate of Borrower, to the extent any of the
foregoing exceed the expenses, costs or fees that would be payable in a bona fide arms'
length transaction between unrelated parties in the San Diego County area for the same
work or services; (ii) any amounts paid directly by a tenant of the Project to a third party
in connection with expenses which, if incurred by Borrower, would be Operating
Expenses; (iii) optional or elective payments with respect to the Construction Loan; (iv)
any payments with respect to any Project-related loan or financing that has not been
approved by Authority; (v) expenses, expenditures, and charges of any nature
whatsoever arising or incurred by Borrower prior to completion of the Project with respect
882/012782-0020
2~ !'b't' 3'\B'1
"
-5-March 19, 2019 Item #3.1
to the development of the Project, or any portion thereof, including, without limitation, all
predevelopment and preconstruction activities conducted by Borrower in connection with
the Project, including without limitation, the preparation of all plans and the performance
of any tests, studies, investigations or other work, and the construction of the Project and
any on site or off site work in connection therewith; or (vi) depreciation, amortization, and
accrued principal and interest expense on deferred payment debt.
As used herein, "Operating Reserve" shall have the meaning ascribed thereto in
the Authority Regulatory Agreement.
As used herein, "Partnership Agreemenf' means the agreement which sets forth
the terms of the Borrower's limited partnership, as such agreement may be amended from
time to time.
As used herein, "Refinancing Net Proceeds" means the proceeds of any approved
refinancing of the Construction Loan or other approved financing secured by the Property,
net of the following actual costs and fees incurred: (i) the amount of the financing which
is satisfied out of such proceeds, (ii) reasonable and customary costs and expenses
incurred in connection with the refinancing, (iii) the balance, if any, of the Deferred
Developer Fee, (iv) the balance, if any, of authorized loans to the Project made by the
limited partners of Borrower, including interest at the rate set forth in the Partnership
Agreement for such loans, (v) the balance, if any, of authorized operating loans or
development loans made by the general partners of a limited partnership that succeeds
to Borrower's interest in the Agreement and the Project, including interest at the rate set
forth in the Partnership Agreement for such loans, (vi) the return of capital contributions,
if any, to the Project made by the general partners of a limited partnership that succeeds
to Borrower's interest in the Agreement and the Project that were used to pay the Deferred
Developer Fee, and (vii) the amount of proceeds required to be reserved for the repair,
rehabilitation, reconstruction or refurbishment of the Project.
As used herein, "Reserve Deposits" shall mean any payments to the Capital
Replacement Reserve account and payments to the Operating Reserve account pursuant
to Sections 10 and 11, respectively, of Authority Regulatory Agreement or such higher
amounts as may be otherwise required by (i) any lender of a Project-related loan that has
been approved by Authority, or (ii) the Investor, pursuant to the terms of the Partnership
Agreement.
As used herein, "Residual Receipts" shall mean Annual Project Revenue less the
sum of:
(i) Operating Expenses;
(ii) Debt Service;
(iii) Reserve Deposits to the Capital Replacement Reserve;
(iv) Reserve Deposits to the Operating Reserve;
(v) Deferred Developer Fees;
882/012782-0020
:H ~'b't' j'!z~'/" -6-March 19, 2019 Item #3.1
(vi) Unpaid Tax Credit adjustment amounts, if any, pursuant to the Partnership
Agreement;
(vii) Repayment of loans to the Project, if any, made by the limited partner(s) of
Borrower pursuant to the Partnership Agreement, including interest at the rate set forth in
the Partnership Agreement, for eligible development and/or operating expense deficits or
other eligible loans (provided that if made during the compliance period Borrower shall
provide to Executive Director documentation showing the propriety of such loan(s) and if
made subsequent to the expiration of the compliance period each such loan must be
reasonably approved by the Executive Director before being provided to the Project after
review of documentation provided by Borrower showing propriety of such loans);
(viii) Repayment to the administrative and/or managing general partners of
Borrower for loans to the Project for development advance(s) pursuant to the Partnership
Agreement, operating deficit advance(s) pursuant to the Partnership Agreement), credit
adjuster payment(s) pursuant to the Partnership Agreement), and/or development fee
advance(s) pursuant to the Partnership Agreement, and with all such loans to be repaid
without interest (provided that if made during the compliance period Borrower shall
provide to Executive Director documentation showing the propriety of such loan(s) and if
made subsequent to the expiration of the compliance period each such loan must be
reasonably approved by the Executive Director before being provided to the Project after
review of documentation provided by Borrower showing propriety of such loans);
(ix) Repayment to the administrative and/or managing general partners of
Borrower of certain loans made to the Project after the expiration or earlier termination of
the Partnership Agreement to cover shortfalls in funding for Operating Expenses in
excess of the Operating Expenses included in the approved annual Operating Budget for
the year in which such loan is made (if at all), all such loans to be repaid without interest
(provided that if made during the compliance period Borrower shall provide to Executive
Director documentation showing the propriety of such loan(s) and if made subsequent to
the expiration of the compliance period each such loan must be reasonably approved by
the Executive Director before being provided to the Project after review of documentation
provided by Borrower showing propriety of such loans); and
(x) Capital contributions to the Project, if any, made by the general partners of
Borrower that were used to pay developer fee.
In the event any calculation of Annual Project Revenue less subsections (i) through
(x) inclusive above results in a negative number, then Residual Receipts shall be zero
($0) for that year and shall not carry over to the next or any other subsequent year.
In addition, none of the fees, costs, expenses, or items described above in
calculation of Residual Receipts shall include any duplicate entry/item, or double
accounting for a cost item. The calculation of Residual Receipts shall be conducted at
Borrower's sole cost and expense, by a third party auditor and submitted to Borrower
annually, along with Borrower's payment of Residual Receipts.
882/012782-0020
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March 19, 2019 Item #3.1
As used herein, "Transfer Net Proceeds" shall mean the proceeds of any sale or
other transfer, in whole or part, of the Property or Borrower's interests therein, net only of
(i) the reasonable and customary costs and expenses incurred in connection with such
transfer; (ii) the amount of the financing which is satisfied out of such proceeds, (iii) the
balance, if any, of the Deferred Developer Fee, (iv) the balance, if any, of loans to the
Project made by the limited partners of Borrower, including interest thereon as provided
in the Partnership Agreement, (v) the balance, if any, of operating loans or development
loans made by the general partners of Borrower, including interest thereon as provided
in the Partnership Agreement, and (vi) the return of capital contributions, if any, to the
Project made by the general partners of Borrower that were used to pay the Deferred
Developer Fee.
5. Security. Borrower's obligations under this Note and the Agreement shall,
at all times during which any amount remains outstanding hereunder, be secured by the
Authority Deed of Trust, which Authority Deed of Trust shall only be subordinated to the
approved deed(s) of trust for the Construction Loan and Take-Out Loan, and such
encumbrances approved by Authority in writing, pursuant to a written subordination
agreement in a form approved by the Authority Attorney. Upon execution of the same,
the terms of the Authority Deed of Trust are incorporated herein and made a part hereof
to the same extent and with the same force and effect as if fully set forth herein.
6. Maturity. This Note shall be due and payable on the fifty-fifth (551h)
anniversary of the date the Construction Loan converts to a Take-Out Loan.
7. Application of Payments. All payments shall be applied (i) first, to costs
and fees owing under this Note, (ii) second, to the payment of unpaid accrued interest
owing under this Note for each calendar year in which no payment was made by Borrower
pursuant to Section 4 above, (iii) third, to the payment of accrued interest for the preceding
calendar year, and (iv) fourth, to payment of principal.
8. Waivers.
(a) Borrower expressly agrees that this Note or any payment hereunder
may be extended from time to time at Authority's sole discretion and that Authority may
accept security in consideration for any such extension or release any security for this
Note at its sole discretion all without in any way affecting the liability of Borrower.
(b) No extension of lime for payment of this Note made by agreement
by Authority with any person now or hereafter liable for the payment of this Note shall
operate to release, discharge, modify, change or affect the original liability of Borrower
under this Note, either in whole or in part.
(c) The obligations of Borrower under this Note shall be absolute and
Borrower waives any and all rights to offset, deduct or withhold any payments or charges
due under this Note for any reasons whatsoever.
(d) Borrower waives presentment, demand, notice of protest and
nonpayment, notice of default or delinquency, notice of acceleration, notice of costs,
882/012782-0020
2~1f'b't' 3'!1~5119 -8-
March 19, 2019 Item #3.1
expenses or leases or interest thereon, notice of dishonor, diligence in collection or in
proceeding against any of the rights or interests in or to properties securing this Note, and
the benefit of any exemption under any homestead exemption laws, if applicable.
(e) No previous waiver and no failure or delay by Authority in acting with
respect to the terms of this Note or the Authority Deed of Trust shall constitute a waiver
of any breach, default, or failure or condition under this Note, the Authority Deed of Trust
or the obligations secured thereby. A waiver of any term of this Note, the Authority Deed
of Trust or of any of the obligations secured thereby must be made in writing and shall be
limited to the express written terms of such waiver.
9. Attorneys' Fees and Costs. Borrower agrees that if any amounts due
under this Note are not paid when due, Borrower will pay all costs and expenses of
collection and reasonable attorneys' fees paid or incurred in connection with the collection
or enforcement of this Note, whether or not suit is filed.
10. Joint and Several Obligation. This Note is the joint and several obligation
of all makers, sureties, guarantors and endorsers, and shall be binding upon them and
their heirs, successors and assigns.
11. Amendments and Modifications. This Note may not be changed orally,
but only by an amendment approved by Authority and evidenced in a writing signed by
Borrower and by Authority.
12. Authority May Assign. Authority may, at its option, assign its right to
receive payment under this Note without necessity of obtaining the consent of the
Borrower.
13. Borrower Assignment Prohibited. In no event shall Borrower assign or
transfer any portion of this Note without the prior express written consent of Authority,
which consent shall not unreasonably be withheld, except pursuant to a transfer that is
authorized under Section 15 of the Agreement.
14. Acceleration and Other Remedies. Upon the occurrence of a Default,
Authority may, at Authority's option, declare the outstanding principal amount of this Note,
together with the then accrued and unpaid interest thereon and other charges hereunder,
and all other sums secured by the Authority Deed of Trust, to be due and payable
immediately, and upon such declaration, such principal and interest and other sums shall
immediately become and be due and payable without demand or notice, all as further set
forth in the Authority Deed of Trust. All costs of collection, including, but not limited to,
reasonable attorneys' fees and all expenses incurred in connection with protection of, or
realization on, the security for this Note, may be added to the principal hereunder, and
shall accrue interest as provided herein. Authority shall at all times have the right to
proceed against any portion of the security for this Note in such order and in such manner
as Authority may consider appropriate, without waiving any rights with respect to any of
the security. Any delay or omission on the part of Authority in exercising any right
hereunder, under the Agreement or under the Authority Deed of Trust shall not operate
882/012782-0020
2~f'b't' 3'l!~5119 -9-March 19, 2019 Item #3.1
as a waiver of such right, or of any other right. No single or partial exercise of any right
or remedy hereunder or under the Agreement or any other document or agreement shall
preclude other or further exercises thereof, or the exercise of any other right or remedy.
The acceptance of payment of any sum payable hereunder, or part thereof, after the due
date of such payment shall not be a waiver of Authority's right to either require prompt
payment when due of all other sums payable hereunder or to declare a Default for failure
to make prompt or complete payment.
15. Alternate Rate. Upon the occurrence of any Default, or upon the maturity
hereof (by acceleration or otherwise), the entire unpaid principal sum, at the option of
Authority, shall bear interest, from the date of occurrence of such Default or maturity and
after judgment and until collection, at the "Alternate Rate", such rate being the highest
interest rate then permitted by law. Interest calculated at the Alternate Rate, when and if
applicable, shall be due and payable immediately without notice or demand. Borrower
agrees that in the event of any Default, Authority will incur additional expense in servicing
the loan evidenced by this Note and will suffer damage and loss resulting from such
Default. Borrower agrees that in such event Authority shall be entitled to damages for the
detriment caused thereby, which damages are extremely difficult and impractical to
ascertain. Therefore, Borrower agrees that the Alternate Rate (as applied to the unpaid
principal balance, accrued interest, fees, costs and expenses incurred) is a reasonable
estimate of such damages to Authority, and Borrower agrees to pay such sum on
demand.
16. Consents. Borrower hereby consents to: (a) any extension (whether one
or more) of the time of payment under this Note, (b) the release or surrender or exchange
or substitution of all or any part of the security, whether real or personal, or direct or
indirect, for the payment hereof, (c) the granting of any other indulgences to Borrower,
and (d) the taking or releasing of other or additional parties primarily or contingently liable
hereunder. Any such extension, release, surrender, exchange or substitution may be
made without notice to Borrower or to any endorser, guarantor or surety hereof, and
without affecting the liability of said parties hereunder.
17. Interest Rate Limitation. Authority and Borrower stipulate and agree that
none of the terms and provisions contained herein or in any of the loan instruments shall
ever be construed to create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate in excess of the maximum interest rate permitted
to be charged by the laws of the State of California. In such event, if any holder of this
Note shall collect monies which are deemed to constitute interest which would otherwise
increase the effective interest rate on this Note to a rate in excess of the maximum rate
permitted to be charged by the laws of the State of California, all such sums deemed to
constitute interest in excess of such maximum rate shall, at the option of such holder, be
credited to the payment of the sums due hereunder or returned to Borrower.
18. Successors and Assigns. Whenever"Authority" is referred to in this Note,
such reference shall be deemed to include Authority and its successors and assigns,
including, without limitation, any successor to its rights, powers, and responsibilities, and
any subsequent assignee or holder of this Note. All covenants, provisions and
882/012782-0020
~~1f'b't' 3,35119 -10-
March 19, 2019 Item #3.1
agreements by or on behalf of Borrower, and on behalf of any makers, endorsers,
guarantors and sureties hereof which are contained herein shall inure to the benefit of
Authority and Authority's successors and assigns.
19. Miscellaneous. Time is of the essence hereof. This Note shall be
governed by and construed under the laws of the State of California except to the extent
Federal laws preempt the laws of the State of California. Borrower irrevocably and
unconditionally submits to the jurisdiction of the Superior Court of the State of California
for the County of San Diego or the United States District Court of the Southern District of
California, as Authority may deem appropriate, in connection with any legal action or
proceeding arising out of or relating to this Note. Borrower also waives any objection
regarding personal or in rem jurisdiction or venue.
20. Non-Recourse Obligation. Borrower and its partners shall not be
personally liable for the payment of this Note or for the payment of any deficiency
established after judicial foreclosure or trustee's sale; provided, however, that the
foregoing shall not in any way affect any rights Authority may have (as a secured party or
otherwise) hereunder or under the Agreement or the Authority Deed of Trust to recover
directly from Borrower any amounts, or any funds, damages or costs (including without
limitation reasonable attorneys' fees and costs) incurred by Authority as a result of fraud,
intentional misrepresentation or bad faith waste, and any costs and expenses incurred by
Authority in connection therewith (including without limitation reasonable attorneys' fees
and costs).
21. Accounting.
(a) Accounting Terms and Determinations. Unless otherwise
specified herein, (i) all accounting terms used herein shall be interpreted, (ii) all
accounting determinations hereunder shall be made, and (c) all books, records and
financial statements required to be delivered hereunder shall be prepared, in accordance
with GAAP, consistently applied, except for changes approved by Authority.
(b) Financial Reporting and Accounting Covenants. Borrower shall
permit the representatives of Authority at any time or from time to time, upon three (3)
business days' notice and during normal business hours, to inspect, audit, and copy all
of Borrower's books, records, and accounts relating to the Property. Borrower shall
furnish or cause to be furnished to Authority the following:
(i) Annual Financial Statement. Borrower shall submit to
Authority, on or before May 1 of each year commencing in the first year after the issuance
of the first certificate of occupancy for the Project, an Annual Financial Statement, with
respect to the Project that has been reviewed by an independent certified public
accountant, together with an expressed written opinion of the certified public accountant
that such Annual Financial Statement presents the financial position, results of
operations, and cash flows of the Project fairly and in accordance with GAAP.
8821012782-0020
2~ ~'b'f' 3~~5119
-11-March 19, 2019 Item #3.1
(ii) Tax Returns. As soon as available, but in no event later than
thirty (30) days after the time of filing with the Internal Revenue Service, the federal tax
returns (and supporting schedules, if any) of Borrower.
(iii) Audit Reports. Not later than ten (10) days after receipt
thereof by Borrower, copies of all reports submitted to Borrower by independent public
accountants in connection with each annual, interim or special audit of the financial
statements of Borrower, made by such accountants, including the comment letter
submitted by such accountants to management in connection with their annual audit. If
any such audit report results in Borrower restating Residual Receipts upward for any fiscal
year, then Borrower shall accompany delivery of such audit report to Authority with the
additional payment to Authority resulting from said restatement pursuant to Section 4 of
this Note. If any such audit report results in Borrower restating Residual Receipts
downward for any fiscal year, Borrower may carry forward the overpayment made to
Authority pursuant to such Section 4 as a credit against payments thereunder in
subsequent fiscal years.
(c) Late Payment. If any annual payment required pursuant to Section
4 above is not received by Authority within ten (10) calendar days after payment is due,
Borrower shall pay to Authority a late charge of five percent (5%) of such payment, such
late charge to be immediately due and payable without demand by Authority.
(d) Dispute Regarding Annual Financial Statement. If Authority
disputes any Annual Financial Statement, Authority shall notify Borrower of such dispute
within sixty (60) days after receipt of an Annual Financial Statement and the parties shall
cause their representatives to meet and confer concerning the dispute and to use all
reasonable efforts to reach a mutually acceptable resolution of the matter in question
within thirty (30) days after Authority's notice of such dispute. If the parties are unable to
reach a mutually acceptable resolution within such thirty (30) day period, then, within
twenty (20) days after the expiration of such period, Borrower and Authority shall appoint
a national firm of certified public accountants to review the dispute and to make a
determination as to the matter in question within thirty (30) days after such appointment.
If the parties cannot, within ten (10) days, agree upon the firm to be appointed, then, upon
the application of either party, such firm shall be appointed by the Presiding Judge of the
Superior Court for the County of San Diego, California. Such firm's determination shall
be final and binding upon the parties. Such firm shall have full access to the books,
records and accounts of Borrower and the Property.
(e) Underpayment. If any audit by Authority reports an underpayment
by Borrower on this Note, Borrower shall pay the amount of such underpayment, together
with the late charge set forth in Section 21 (c) of this Note, to Authority within ten (10) days
after written notice thereof to Borrower or, in the event of a dispute, after timely notice to
Borrower of the resolution of such dispute by the independent firm of certified public
accountants, as the case may be, and if such underpayment amounts to more than five
percent (5%) of the disputed payment for the period audited, then, notwithstanding
anything to the contrary in this section, Borrower shall pay to Authority, within ten (10)
882/012782-0020
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March 19, 2019 Item #3.1
days after written demand, Authority's reasonable costs and expenses in conducting such
audit and exercising its rights under this Section 21 of this Note.
[End of document -Signature page follows]
BORROWER:
_____________ , LP.,
a California limited partnership
Date: ________ , 20_ By:
Its:
882/012782-0020
2~!f'b't' :l'!l~'/19 -13-
March 19, 2019 Item #3.1
8821012782-0020
2~''b't' j'J!~5119
ATTACHMENT NO. 8
AUTHORITY DEED OF TRUST
[See following document]
ATTACHMENT NO. 8
March 19, 2019 Item #3.1
RECORDING REQUESTED BY:
AND WHEN RECORDED RETURN TO:
City of Poway Housing Authority
13325 Civic Center Drive
Poway, CA 92064
Attn: City Clerk
APN: _____ _ [Free Recording Requested
Government Code Sections 6103 and 27383]
DEED OF TRUST
WITH ASSIGNMENT OF RENTS
NOTE: RIDER ATTACHED TO THIS DEED OF TRUST CONTAINING TERMS
INCLUDING SECURITY AGREEMENT AND FIXTURE FILING.
This DEED OF TRUST WITH ASSIGNMENT OF RENTS AND RIDER ATIACHED
HERETO ("Deed of Trust"), is made , , between
_________ , a California Limited Partnership, herein called TRUSTOR,
whose address is , CA , FIRST
AMERICAN TITLE INSURANCE COMPANY, a California corporation, herein called
TRUSTEE, and CITY OF POWAY HOUSING AUTHORITY, a public body, corporate and
politic, herein called BENEFICIARY.
WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, Trustor's
estate, dated on or about the date hereof, in that property in the City of Poway, County of
San Diego, State of California, described in Exhibit "A" (the "Property"),
together with the rents, issues and profits thereof, subject, however, to the right, power
and authority hereinafter given to and conferred upon Beneficiary to collect and apply
such rents, issues and profits for the purpose of securing (1) payment of the sum of TWO
MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000), with interest thereon
according to the terms of a promissory note or notes of even date herewith made by
Trustor, payable to order of Beneficiary, and extensions or renewals thereof; (2) the
performance of each agreement of Trustor incorporated by reference or contained herein;
and (3) payment of additional sums and interest thereon which may hereafter be loaned
to Trustor, or its successors or assigns, when evidenced by a promissory note or notes
reciting that they are secured by this Deed of Trust.
To protect the security of this Deed of Trust, and with respect to the Property above
described, Trustor expressly makes each and all of the agreements, and adopts and
agrees to perform and be bound by each and all of the terms and provisions set forth in
subdivision A, and it is mutually agreed that each and all of the terms and provisions set
forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17,
1964, and in all other counties August 18, 1964, in the book and at the page of Official
882/012782-0020
:z~?'b't' j'lz~5/l 9 -1-March 19, 2019 Item #3.1
Records in the office of the county recorder of the county where said property is located,
noted below opposite the name of such county, namely:
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE
Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187
Alpine 3 130-Lake 437 110 Plumas 166 1307 Siskiyou 506 762
31
Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621
Butte 1330 513 Los T-874 Sacramento 5039 124 Sonoma 2067 427
Angeles 3878
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56
Colusa 323 391 Marin 1849 122 San 6213 768 Sutter 655 585
Bernardino
Contra 4684 1 Mariposa 90 453 San A-804 596 Tehama 457 183
Costa Francisco
Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595
El Dorado 704 635 Merced 1660 753 San Luis 1311 137 Tulare 2530 108
Obispo
Fresno 5052 623 Modoc 191 93 San Diego 4778 175 Tuolumne 177 160
Glenn 469 76 Mono 69 302 Santa 2065 881 Ventura 2607 237
Barbara
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16
Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693
Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 San Diego 7182 18 San Diego SERIES 5 Book 1964, Page
149774
shall inure to and bind the parties hereto, with respect to the property above described.
Said agreements, terms and provisions contained in said subdivisions A and B (identical
in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto,
incorporated herein and made a part of this Deed of Trust for all purposes as fully as if
set forth at length herein, and Beneficiary may charge for a statement regarding the
obligation secured hereby, provided the charge therefor does not exceed the maximum
allowed by law.
The undersigned Trustor, requests that a copy of any notice of default and any notice of
sale hereunder be mailed to him at his address hereinbefore set forth.
SEE RIDERS ATTACHED TO THIS DEED OF TRUST
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-2-
March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of _________ _
On ___________ , before me,------------
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capaAuthority(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature. ____________ _ (Seal)
882!012782-0020
2~1f'b't1 j':\'1
" March 19, 2019 Item #3.1
DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in
each county in California as stated in the foregoing Deed of Trust and incorporated by
reference in said Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security of this Deed of Trust, Truster agrees:
1) To keep said property in good condition and repair, not to remove or
demolish any building thereon; to complete or restore promptly and in a good and
workmanlike manner any building which may be constructed, damaged or destroyed
thereon and to pay when due all claims for labor performed and materials furnished
therefor, to comply with all laws affecting said property or requiring any alterations or
improvements to be made thereon; not to commit or permit waste thereof; not to commit,
suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize,
fumigate, prune and do all other acts which from the character or use of said property
may be reasonably necessary, the specific enumerations herein not excluding the
general.
2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to
and with loss payable to Beneficiary. The amount collected under any fire or other
insurance policy may be applied by Beneficiary upon any indebtedness secured hereby
and in such order as Beneficiary may determine, or at the option of Beneficiary the entire
amount so collected or any part thereof may be released to Trustor. Such application or
release shall not cure or waive any default or notice of default hereunder or invalidate any
act done pursuant to such notice.
3) To appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and
expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in
any such action or proceeding in which Beneficiary or Trustee may appear, and in any
suit brought by Beneficiary to foreclose this Deed.
4) To pay: at least ten (10) days before delinquency all taxes and assessments
affecting said property, including assessments on appurtenant water stock; when due, all
encumbrances, charges and liens, with interest, on said property or any part thereof,
which appear to be prior or superior hereto; all costs, fees and expenses of this Trust.
Should Truster fail to make any payment or to do any act as herein provided, then
Beneficiary or Trustee, but without obligation so to do and without notice to or demand
upon Trustor and without releasing Trustor from any obligation hereof, may: make or do
the same in such manner and to such extent as either may deem necessary to protect
the security hereof, Beneficiary or Trustee being authorized to enter upon said property
for such purposes; appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest
or compromise any encumbrance, charge or lien which in the judgment of either appears
882/012782-0020
2~1f'b't' 3'!1~5/19 March 19, 2019 Item #3.1
to be prior or superior hereto; and, in exercising any such powers, pay necessary
expenses, employ counsel and pay his or her reasonable fees.
5) To pay immediately and without demand all sums so expended by
Beneficiary or Trustee, with interest from the date of expenditure at the amount allowed
by law in effect at the date hereof, and to pay for any statement provided for by law in
effect at the date hereof regarding the obligation secured hereby any amount demanded
by the Beneficiary not to exceed the maximum allowed by law at the time when said
statement is demanded.
B. It is mutually agreed:
1) That any award in connection with any condemnation for public use of or
injury to said property or any part thereof is hereby assigned and shall be paid to
Beneficiary who may apply or release such moneys received by him in the same manner
and with the same effect as above provided for disposition of proceeds of fire or other
insurance.
2) That by accepting payment of any sum secured hereby after its due date,
Beneficiary does not waive its right either to require prompt payment when due of all other
sums so secured or to declare default for failure so to pay.
3) That at any time or from time to time, without liability therefor and without
notice, upon written request of Beneficiary and presentation of this Deed and said note
for endorsement, and without affecting the personal liability of any person for payment of
the indebtedness secured hereby, Trustee may: reconvey any part of said property;
consent to the making of any map or plat thereof; join in granting any easement thereon,
or join in any extension agreement or any agreement subordinating the lien or charge
hereof.
4) That upon written request of Beneficiary stating that all sums secured
hereby have been paid, and upon surrender of this Deed and said note to Trustee for
cancellation and retention or other disposition as Trustee in its sole discretion may choose
and upon payment of its fees, Trustee shall reconvey, without warranty, the property then
held hereunder. The recitals in such reconveyance of any matters or facts shall be
conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be
described as "the person or persons legally entitled thereto".
5) That as additional security, Trustor hereby gives to and confers upon
Beneficiary the right, power and authority, during the continuance of these Trusts, to
collect the rents, issues and profits of said property, reserving unto Trustor the right, prior
to any default by Trustor in payment of any indebtedness secured hereby or in the
performance of any agreement hereunder, to collect and retain such rents, issues and
profits as they become due and payable. Upon any such default (beyond any applicable
cure period, and during the continuance of such default), Beneficiary may at any time
without notice, either in person, by agent, or be a receiver to be appointed by a court, and
without regard to the adequacy of any security for the indebtedness hereby secured, enter
882/012782-0020
2~f'b'f1 j':z~'1
"
-2-
March 19, 2019 Item #3.1
upon and take possession of said property or any part thereof, in its own name sue for or
otherwise collect such rents, issues, and profits, including those past due and unpaid,
and apply the same, less costs and expenses of operation and collection, including
reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as
Beneficiary may determine. The entering upon and taking possession of said property,
the collecting of such rents, issues and profits and the application thereof as aforesaid,
shall not cure or waive any default or notice of default hereunder or invalidate any act
done pursuant to such notice.
6) That upon default by Truster in payment of any indebtedness secured
hereby or in the performance of any agreement hereunder, Beneficiary may declare all
sums secured hereby immediately due and payable by delivery to Trustee of written
declaration of default and demand for sale and of written notice of default and of election
to cause to be sold said property, which notice Trustee shall cause to be filed for record.
Beneficiary also shall deposit with Trustee this Deed, said note and all documents
evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the
recordation of said notice of default, and notice of sale having been given as then required
by law, Trustee, without demand on Truster, shall sell said property at the time and place
fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order
as it may determine, at public auction to the highest bidder for cash in lawful money of
the United States, payable at time of sale. Trustee may postpone sale of all or any portion
of said property by public announcement at such time and place of sale, and from time to
time thereafter may postpone such sale by public announcement at the time fixed by the
preceding postponement. Trustee shall deliver to such purchaser its deed conveying the
property so sold, but without any covenant or warranty, express or implied. The recitals
in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.
Any person, including Truster, Trustee, or Beneficiary as hereinafter defined, may
purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including
cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale
to payment of: all sums expended under the terms hereof, not then repaid, with accrued
interest at the amount allowed by law in effect at the date hereof; all other sums then
secured hereby; and the remainder, if any, to the person or persons legally entitled
thereto.
7) Beneficiary, or any successor in ownership of any indebtedness secured
hereby, may from time to time, by instrument in writing, substitute a successor or
successors to any Trustee named herein or acting hereunder, which instrument, executed
by the Beneficiary and duly acknowledged and recorded in the office of the recorder of
the county or counties where said property is situated shall be conclusive proof of proper
substitution of such successor Trustee or Trustees, who shall, without conveyance from
the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said
instrument must contain the name of the original Truster, Trustee and Beneficiary
882/012782-0020
2~l'b't' j':!~5119 -3-
March 19, 2019 Item #3.1
hereunder, the book and page where this Deed is recorded and the name and address
of the new Trustee.
8) That this Deed applies to, inures to the benefit of, and binds all parties
hereto, their heirs, legatees, devisees, administrators, executors, successors and
assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of
the note secured hereby, whether or not named as Beneficiary herein. In this Deed,
whenever the context so requires, the masculine gender includes the feminine and/or
neuter, and the singular number includes the plural.
9) That Trustee accepts this Trust when this Deed, duly executed and
acknowledged, is made a public record as provided by law. Trustee is not obligated to
notify any party hereto of pending sale under any other Deed of Trust or of any action or
proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by
Trustee.
DO NOT RECORD -REQUEST FOR FULL RECONVEYANCE
TO _____________ , TRUSTEE:
The undersigned is the legal owner and holder of the note or notes and of all
indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with
all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied;
and you are hereby requested and directed, on payment to you of any sums owing to you
under the terms of said Deed of Trust, to cancel said note or notes above mentioned, an
all other evidences of indebtedness secured by said Deed of Trust delivered to you
herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the
parties designated by the terms of said Deed of Trust, all the estate now held by you
under the same.
Dated-----------------
Please mail Deed of Trust,
Note and Reconveyance to
Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be
delivered to the Trustee for cancellation before reconveyance will be made.
882/012782-0020
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March 19, 2019 Item #3.1
882/012782-0020
13106627.7 a03/15119
230 of 323
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
March 19, 2019 Item #3.1
RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS
This RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS ("Rider") is
executed this _ day of by , L.P., a
California limited partnership, herein "Truster," in favor of the CITY OF POWAY
HOUSING AUTHORITY, a public body, corporate and politic, herein "Beneficiary," the
same parties to that certain form Deed of Trust With Assignment of Rents, of even date
hereto, to which this Rider is attached. This Rider is made a part of and is incorporated
into said Deed of Trust. This Rider shall supersede any conflicting term or provision of
the form Deed of Trust to which it is attached.
Reference is made to (i) that certain Authority Promissory Note executed by
Truster on or about the date set forth above, the repayment of which by Truster is secured
by this Deed of Trust ("Authority Note"), (ii) that certain Affordable Housing and Property
Disposition Agreement between Poway Commons, LLC, a Delaware limited liability
company and Beneficiary dated for identification purposes only as of as
assigned to and assumed by the Truster (collectively, the "Agreement"), and (iii) that
certain Affordable Housing Regulatory Agreement, by and between Truster and
Beneficiary, for the benefit of Beneficiary, and recorded in the Office of the San Diego
County Recorder ("Authority Regulatory Agreement").
The parties hereto agree:
1. Property. The estate subject to this Deed of Trust is Trustor's fee estate in
the real property legally described in the foregoing Deed of Trust to which this Rider is
attached (the "Property").
2. Obligations Secured. Truster makes this grant and assignment for the
purpose of securing the following obligations ("Secured Obligations"):
882/012782-0020
13106627.7 a03/15119
231 of 323
a. Payment to Beneficiary of all indebtedness at any time owing under
the terms of the Authority Note;
b. Payment and performance of all obligations of Truster under this
Deed of Trust;
c. Payment and performance of all obligations of Truster under the
Agreement and the Authority Regulatory Agreement.
d. Payment and performance of all future advances and other
obligations of Truster or any other person, firm, or entity with the
approval of Truster, may agree to pay and/or perform (whether as
principal, surety or guarantor) for the benefit of Beneficiary, when the
obligation is evidenced by a writing which recites that it is secured by
this Deed of Trust; and
-1-
March 19, 2019 Item #3.1
e. All modifications, extensions and renewals of any of the obligations
secured hereby, however evidenced.
3. Obligations. The term "obligations" is used herein in its broadest and most
comprehensive sense and shall be deemed to include, without limitation, all interest and
charges, prepayment charges, late charges and fees at any time accruing or assessed
on any of the Secured Obligations.
4. Incorporation. All terms of the Authority Note, Agreement, and Authority
Regulatory Agreement, and the Secured Obligations are incorporated herein by this
reference. All persons who may have or acquire an interest in the Property shall be
deemed to have notice of the terms of all of the foregoing documents.
5. Mortgagee-in-Possession. Neither the assignment of rents set forth in the
Deed of Trust nor the exercise by Beneficiary of any of its rights or remedies hereunder
shall be deemed to make Beneficiary a "mortgagee-in-possession" or otherwise liable in
any manner with respect to the Property, unless Beneficiary, in person or by agent,
assumes actual possession thereof. Nor shall appointment of a receiver for the Property
by any court at the request of Beneficiary or by agreement with Truster, or the entering
into possession of the Property by such receiver, be deemed to make Beneficiary a
"mortgagee-in-possession" or otherwise liable in any manner with respect to the Property.
6. No Cure. In the event Beneficiary collects and receives any rents under the
Deed of Trust upon any default hereof, such collection or receipt shall in no way constitute
a curing of the default, except if and to the extent the same are sufficient to cure all
monetary defaults and no other defaults then exist.
7. Possession Upon Default. Upon the occurrence of and during the
continuation of a default, Beneficiary, after having given notice and the applicable cure
periods having expired with the default having not been cured (hereinafter, a "default"),
may, at its option, without any action on its part being required and without in any way
waiving such default, take possession of the Property in accordance with applicable law
and have, hold, manage, lease and operate the same, on such terms and for such period
of time as Beneficiary may deem proper, and may collect and receive all rents and profits,
with full power to make, from time to lime, all commercially reasonable alterations,
renovations, repairs or replacements thereto as may seem proper to Beneficiary, and to
apply such rents and profits to the payment of (a) the cost of all such alterations,
renovations, repairs and replacements, and all costs and expenses incident to taking and
retaining possession of the Property, and the management and operation thereof, and
keeping the same properly insured; (b) all taxes, charges, claims, assessments, and any
other liens which may be prior in lien or payment of the Authority Note, and premiums for
insurance, with interest on all such items; and (c) the indebtedness secured hereby,
together with all costs and attorney's fees, in such order or priority as to any of such items
as Beneficiary in its sole discretion may determine, any statute, law, custom or use to the
contrary notwithstanding. Any amounts received by Beneficiary or its agents in the
performance of any acts prohibited by the terms of this assignment, including, but not
limited to, any amounts received in connection with any cancellation, modification or
882/012782-0020
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March 19, 2019 Item #3.1
amendment of any lease prohibited by the terms of this assignment and any rents and
profits received by Truster after the occurrence of a default shall be held by Truster as
trustee for Beneficiary and all such amounts shall be accounted for to Beneficiary and
shall not be commingled with other funds of the Truster. Any person receiving any portion
of such trust funds shall receive the same in trust for Beneficiary as if such person had
actual or constructive notice that such funds were impressed with a trust in accordance
therewith.
8. Receiver. In addition to any and all other remedies of Beneficiary set forth
under this Deed of Trust or permitted at law or in equity, if a default shall have occurred
and not have been cured within any applicable cure period, Beneficiary, to the extent
permitted by law and without regard to the value, adequacy or occupancy of the security
for the Note and other sums secured hereby, shall be entitled as a matter of right if it so
elects to the appointment of a receiver to enter upon and take possession of the Property
and to collect all rents and profits and apply the same as the court may direct, and such
receiver may be appointed by any court of competent jurisdiction by ex parte application
and without notice, notice of hearing being hereby expressly waived. The expenses,
including receiver's fees, attorneys' fees, costs and agent's compensation, incurred
pursuant to the power herein contained shall be secured by this Deed of Trust.
9. Notice to Beneficiary. Notices to Beneficiary shall be sent to Beneficiary
addressed to:
City of Poway Housing Authority
13325 Civic Center Drive
Poway, CA 92064
Attn: Executive Director
Reference: Poway Commons Affordable Senior Project
10. Limited Partner Cure Rights. Notwithstanding anything to the contrary set
forth herein, Beneficiary shall not exercise any right hereunder without providing the
limited partner of Truster with not less than thirty (30) days prior written notice and right
to cure any default giving rise to the exercise of said remedy. Beneficiary agrees that any
cure tendered by the limited partner of Truster shall be accepted or rejected on the same
terms and conditions as if tendered directly by Truster.
11. Subordination Acknowledgement. Beneficiary hereby acknowledges that
the loan secured by this Deed of Trust is also subordinate to the extended use agreement
required to be executed by Borrower pursuant to Section 42(h)(6)(B) of the Internal
Revenue Code, for purposes of the low-income housing tax credits to be allocated to
Truster. In addition, Beneficiary hereby acknowledges that the loan secured by this Deed
of Trust is further subordinate to Section 42(h)(6)(e)(ii) of the Internal Revenue Code,
which prohibits the eviction or termination of a tenancy, other than for good cause, of an
existing tenant of any low-income housing tax credit unit or any increase in the gross rent
with respect to such unit, not otherwise permitted under Section 42, for a period of three
(3) years after the date the Property is acquired by Beneficiary through foreclosure or
instrument in lieu of foreclosure.
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[signatures on next page]
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March 19, 2019 Item #3.1
IN WITNESS WHEREOF, Trustor has executed this Rider on the date of Truster's
acknowledgment herein below, to be effective for all purposes as of the day and year first
set forth above.
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TRUSTOR:
---------' L.P.,
a California Limited Partnership
By: ---------------
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March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of _________ _ )
On ___________ , before me,---------,,,---
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capaAuthority(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature __________________ _ (Seal)
882/012782-0020
2~~'b't' 3'!!~5/19 March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of _________ _
On ___________ , before me,------------
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capaAuthority(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ____________ _ (Seal)
882(0 l 2782-0020
2~1f'b't13~135119 March 19, 2019 Item #3.1
882/012782-0020
2~if'b't1 3'!B'11
'
ATTACHMENT NO. 9
PROJECT BUDGET
[see following pages]
ATTACHMENT NO. 9
March 19, 2019 Item #3.1
Poway Commons, LLC
Affordable Master Developer Costs
I. Project Description
Site Area 1.00 Acres
Average Unit Size 900 SF
Number of Units 44 Units
II. Development Costs
A. Direct Costs
Engineering $31,250
Entitlement $20,000
Mapping $15,000
Legal $20,000
Site Demolition $87,120
Grading $40,000
Back Bone Utilities $100,000
Strom water/ Misc $35,000
Total Direct Costs $348,370
*These are preliminary budget estimates based on preliminary site plans. Subject to change with
entitlement, project conditions and approved plans.
882/012782-0020
2~1f'8t' 3~~5119
ATTACHMENT NO. 9
March 19, 2019 Item #3.1
Poway Common s Seniors Affordable I-lousing 44 Units : 4% Credits & Bond Financing
Ho us ing A utho rity Impact Fee Loan and Authority $1 ,500,000 S ubsidy Loan
Maste r Developer Land Contribution and Reim bursement Note
2/1/2019
PRELIMINARY SOURCES AND USES SUMMARY SUBJECT TO REVISION -
Development Costs
Acquisition
Land Cost $0/unit $ 1.00
Basis eligible acqlisition $45 ,9 67/unlt 2,022,537
Subtotal Acquisition $45,967/unlt 2,022,538
Hard Costs -preliminary estimates
Design Assist (exduded from contingency) $0/unit 0
Offsites -completed by Seller $0/unit 0
Sitework -induded below with Vertical 792,744
Onsite and Vertical Cons1ruction Costs $1 3 7 ,564/unit 6,052,821
GC Contingecy $3 ,890/unit 171,139
Overhead , Profit , General Conditions $22.326/un it 982,339
Owner Hard Costs Contingency $9,090/unit 399,952
Subtotal Hard Costs $303.21/gsf $190,886/unlt 8,398,995
A&E $12.727/unit 560,000
Financing Fees and hterest $21 ,5 54 /unit 948,376
Legal Fees $4 ,943/unit 217,500
Reserves $2,745/unit 120,783
Development Impact and Pem,it Fees $16.722/unit 735,765
Developer Fee $1,000,000 Pllid Fee $38 ,398/unit 1,689 ,531
Remain ing Development Soft costs $3 ,309/unit 145 ,609
Owner Soft Costs Contingency $1 .459/unit 64 ,210
Subtotal Soij Costs $101 ,869/unlt 4,481,775
Total Development Costs $338,712/unlt 1419031308
Sources
Federal LIHTC Eqlity 38% 5,669,509
State LIHTC Equity 0% 0
Permanent Loan (Tranche A) 26% 3,830,000
Deferred Developer Fee 5% 689 ,531
Financing Gap .. 2% 370 ,009
Poway Housing Authority mpact Fee Loan $14,091/l.nit 4% 619 ,989
Poway Housing Authority Cash Subsidy Loan $34 ,091/tnt " 10% 1,500,000
Master Developer lnfrastrucit.r'e Note $45 ,967 A.rlit 14% 2,022,537
Residual Receipt Loans Acaued hterest 1% 201 ,733
0%
Total Development Sources 100% 1419031308
882/0 12782-0020
L
2~~6b7t7 3~~5/19 ATTACHMENT NO . 9
March 19, 2019 Item #3.1
ATTACHMENT NO. 10
HOUSING AUTHORITY REGULATORY AGREEMENT
[See following document]
882/012782-0020
2~ff 'b't 1 j'!B'11
'
ATTACHMENT NO. 10
March 19, 2019 Item #3.1
REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Poway Housing Authority
13325 Civic Center Drive
Poway, CA 92064
Attention: City Clerk
This document is exempt from a recording fee pursuant to
Government Code Sections 6103 and 27383.
AFFORDABLE HOUSING REGULATORY AGREEMENT
This AFFORDABLE HOUSING REGULATORY AGREEMENT (this "Regulatory
Agreement"), dated for purposes of identification only as of (the
"Date of Regulatory Agreement"), is entered by and between the CITY OF POWAY
HOUSING AUTHORITY, a public body, corporate and politic (the "Authority"), and
POWAY COMMONS, LLC, a Delaware limited liability company (the "Developer").
Authority and Developer are hereinafter referred to individually as a "Party" and
collectively as the "Parties."
RECITALS
The following recitals are a substantive part of this Regulatory Agreement; all
capitalized terms set forth in the Recitals shall have the meanings ascribed to such terms
in Section 1 hereof.
A. Authority is a California municipal corporation, organized and existing
pursuant to and under the general laws of the State of California.
B. Authority owns fee title to that certain real property located in the City of
Poway, County of San Diego, State of California more particularly described
in Exhibit "A", which is attached hereto and incorporated herein by this
reference (the "Property").
C. Authority entered into an Affordable Housing and Property Disposition
Agreement with Developer dated as of ("Agreement").
D. The Agreement provides for Authority to sell the Property to Developer and
for Developer to subsequently transfer and convey the Property to a limited
partnership for the limited partnership to construct and operate thereon a
forty-four (44) unit senior affordable rental apartment project with all but one
(1) of such units restricted, in perpetuity, for occupancy by income-qualified
senior households (the "Project"). The Agreement further provides that the
Parties execute and record this Regulatory Agreement against the Property,
to ensure that the Property shall be operated continuously as a senior
affordable rental apartment complex in accordance with the terms hereof.
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NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. DEFINITIONS.
"50% Income Household" means those person(s) or households whose income
does not exceed fifty percent (50%) of AMI.
"60% Income Household" means those person(s) or households whose income
does not exceed sixty percent (60%) of AMI.
"50% Income Unit" means an Affordable Unit designated for occupancy by a 50%
Income Household.
"60% Income Unit" means an Affordable Unit designated for occupancy by a 60%
Income Household.
"Additional Regulatory Agreements" means the Tax Credit Regulatory
Agreement, the Bond Regulatory Agreement, and any other regulatory agreement
Developer is required to execute as a condition to obtaining financing to develop and/or
operate the Project.
"Affiliate" means any person or entity directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Developer which,
if Developer is a partnership or limited liability company, shall include each of the
constituent members or general partners, respectively thereof. The term "control" as used
in the immediately preceding sentence, means, with respect to a person that is a
corporation, the right to the exercise, directly or indirectly, of more than fifty percent (50%)
of the voting rights attributable to the shares of the controlled corporation, and, with
respect to a person that is not a corporation, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the controlled
person.
"Affordable Rent" means the maximum Monthly Rent that may be charged to and
paid by 50% Income Households and 60% Income Households, as applicable, for the
Affordable Units, as annually determined pursuant to Health and Safety Code Section
50053(b), as of the date hereof, and the regulations promulgated pursuant to and
incorporated therein.
"Affordable Units" means the following forty-three (43) rental units in the Project:
(i) Thirty-six (36), one (1) bedroom, one (1) bath units; and
(ii) Seven (7), two (2) bedroom, one (1) bath units.
"Agreement" is defined in Recital C hereof.
"AMI" means the median family income (adjusted for household size) for the San
Diego County Area promulgated and published annually by HCD pursuant to Title 25,
Section 6932 of the California Code of Regulations. If HCD ceases to annually publish
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March 19, 2019 Item #3.1
median incomes, the Parties shall agree upon an adequate substituted manner for
determining AMI.
"Annual Project Revenue" has the meaning ascribed thereto in the Authority
Note.
"Approved Financing" means the financing approved by Authority pursuant to
the Agreement, as set forth in the Project Budget attached to the Agreement, obtained by
Developer for Developer's acquisition of the Property and the construction/development
and ownership of the Project. In addition, "Approved Financing" shall include any
refinancing of the Approved Financing which has been approved by Authority.
"Approved Pro Forma" means that certain proforma created in connection with
the Project Budget attached to the Agreement.
"Authority" means the City of Poway Housing Authority, a public body, corporate
and politic.
"Authority and City and Authority and City Personnel" means Authority and the
City of Poway, and their respective officers, officials, directors, members, employees,
agents, and representatives.
"Authority Deed of Trust" means that certain deed of trust executed by
Developer, as "Truster," in favor of Authority, as "Beneficiary," securing Developer's
repayment under the Authority Note.
"Authority Loan" means the loan provided by Authority to Developer pursuant to
the Agreement to assist the Developer with the costs Developer incurs in acquiring the
Property and developing the Project.
"Authority Note" means that certain Authority Promissory Note executed by
Developer on or about the same date hereof, that evidences Developer's obligation to
repay the Authority Loan.
"Bond Regulatory Agreement" means the regulatory agreement with the
Institutional Lender responsible for placing the Tax-Exempt Bonds.
"Capital Replacement Reserve" means a capital replacement reserve for the
Project, to be set aside in a separate interest-bearing trust account, consisting of annual
deposits of Two Hundred Fifty Dollars ($250) per Unit (e.g., $11,000) of Annual Project
Revenue, increased annually after the first year of operation by three and five tenths
percent (3.5%) (unless otherwise agreed to by Developer and Authority) or as required
under the Partnership Agreement (or such greater amount required under any Additional
Regulatory Agreement, or under the Partnership Agreement).
"Certification of Continuing Program Compliance" means an annual
recertification form substantially in the form attached hereto and incorporated herein as
Exhibit E.
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"Certificate of Occupancy" means the final certificate of occupancy issued by
the City of Poway for the completion of construction of the Project.
"Closing" means the time and day that the Grant Deed, Deed of Trust, Project
Financing, and this Regulatory Agreement are filed for record with the San Diego County
Recorder.
"Closing Date" means the date on which the Closing occurs.
"Construction Financing" means the proceeds of Tax-Exempt Bonds issued to
finance the Project through the construction period (e.g., until a "conversion date"), in the
anticipated amount of approximately Eight Million Four Hundred Thousand Dollars
($8,400,000).
"County" means the County of San Diego.
"CPI Adjustment" means the percentage increase in the cost of living index, as
measured by the Consumer Price Index for all urban consumers, San Diego-Carlsbad
statistical area, all items (1982-84 = 100) published by the United States Department of
Labor, Bureau of Labor Statistics ("CPI") between the CPI figure in effect as of the date
on which the Certificate of Occupancy is issued and the CPI figure in effect as of the date
on which an adjustment is made. If such index is discontinued or revised, such other
index with which such index is replaced (or if not replaced, another index which
reasonably reflects and monitors consumer prices) shall be used in order to obtain
substantially the same results as would have been obtained if the discontinued index had
not been discontinued or revised. If the CPI is changed so that the base year is other
than 1982-84, the CPI shall be converted in accordance with the conversion factor
published by the United States Department of Labor, Bureau of Labor Statistics.
"Date of Regulatory Agreement" is defined in the initial paragraph hereof.
"Default" means the failure of a Party to perform any action or covenant required
by the Agreement or hereunder within the time periods provided in the Agreement or
hereunder, respectively, following notice and opportunity to cure, as set forth in Section
13.1 of the Agreement and Section 16.01 hereof, respectively.
"Developer" means Poway Commons, LLC, a Delaware limited liability company,
and any permitted assignees of Developer.
"Eligible Tenant" means a household which satisfies all of the following
requirements: (i) at least one member of the household is a "qualifying resident" or "senior
citizen" (as those terms are defined in California Civil Code Section 51.3(b)(1 )) that is
sixty-two (62) years of age or older; (ii) each other member of the household is either a
"qualifying resident" or "senior citizen" that is sixty-two (62) years of age or older, or is a
"qualified permanent resident" or "permitted health care resident" within the meaning of
California Civil Code section 51.3(b)(2), (3), and (7); and (iii) such household qualifies as
a 50% Income Household or as a 60% Income Household.
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March 19, 2019 Item #3.1
"Environmental Laws" means (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. §1317), (vii)
Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 el seq.
(42 U.S.C. §6903) or (viii) Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. §9601 et seq.
"Executive Director" means the person duly appointed to the position of
Executive Director, or his or her designee. The Executive Director shall represent
Authority in all matters pertaining to this Regulatory Agreement. Whenever a reference
is made herein to an action or approval to be undertaken by Authority, the Executive
Director is authorized to act unless this Regulatory Agreement specifically provides
otherwise or the context should otherwise require.
"Governmental Requirements" means all laws, ordinances, statutes, codes,
rules, regulations, orders and decrees, of the United States, the State of California, the
County, City, and any other political subdivision, agency, instrumentality, or other entity
exercising jurisdiction over Authority, Developer, the Project, or the Property.
"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", "acutely 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) asbestos, (vii)
polychlorinated biphenyls, (viii) listed under Article 9 or defined as "hazardous" or
"extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of
Regulations, 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), (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., (xii) methyl-tertiary butyl ether, (xiii)
perchlorate, or (xiv) any other substance, whether in the form of a solid, liquid, gas or any
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March 19, 2019 Item #3.1
other form whatsoever, which by any Governmental Requirements either requires special
handling in its use, transportation, generation, collection, storage, handling, treatment or
disposal, or is defined as "hazardous" or harmful to the environment. For purposes
hereof, "Hazardous Materials" excludes materials and substances in quantities as are
commonly used in constructing and operating apartment complexes, provided such
materials and substances are used in accordance with all applicable laws.
"Hazardous Materials Contamination" means the contamination (whether
presently existing or hereafter occurring) of the improvements, facilities, soil,
groundwater, air or other elements on, in or of the Property by Hazardous Materials, or
the contamination of the buildings, facilities, soil, groundwater, air or other elements on,
in or of any other property as a result of Hazardous Materials at any time emanating from
the Property.
"HCD" means the California Department of Housing and Community
Development.
"HUD" means the United States Department of Housing and Urban Development.
"Institutional Lender" means any of the following institutions having assets or
deposits in the aggregate of not less than One Hundred Million Dollars ($100,000,000): a
California chartered bank; a bank created and operated under and pursuant to the laws
of the United States of America; an "incorporated admitted insurer'' (as that term is used
in Section 1100.1 of the California Insurance Code); a "foreign (other state) bank" (as that
term is defined in Section 1700(1) of the California Financial Code); a federal savings and
loan association (Cal. Fin. Code Section 8600); a commercial finance lender (within the
meaning of Sections 2600 et seq. of the California Financial Code); a "foreign (other
nation) bank" provided it is licensed to maintain an office in California, is licensed or
otherwise authorized by another state to maintain an agency or branch office in that state,
or maintains a federal agency or federal branch in any state (Section 1716 of the
California Financial Code); a bank holding company or a subsidiary of a bank holding
company which is not a bank (Section 3707 of the California Financial Code); a trust
company, savings and loan association, insurance company, investment banker; college
or university; pension or retirement fund or system, either governmental or private, or any
pension or retirement fund or system of which any of the foregoing shall be trustee,
provided the same be organized under the laws of the United States or of any state
thereof; and a Real Estate Investment Trust, as defined in Section 856 of the Internal
Revenue Code of 1986, as amended, provided such trust is listed on either the American
Stock Exchange or the New York Stock Exchange. Each of
and are
hereby deemed to be an Institutional Lender.
"Legal Description" means that certain legal description of the Property which is
attached hereto and incorporated herein as Exhibit "A".
"Map" means a map depicting the Property which is attached hereto and
incorporated herein as Exhibit "B".
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March 19, 2019 Item #3.1
"Marketing Plan" means a marketing plan for the rental of the Affordable Units
which provides, to the extent authorized by applicable federal, state and local laws and
regulations, that a preference be given to tenants who are currently residents of the City
and/or currently work in the City. The Marketing Plan shall include a tenant selection
system in conformance with fair housing laws and the Tax Credit Rules which establishes
a chronological waiting list system for selection of tenants. Authority shall have approved
the Marketing Plan, in its reasonable discretion, as one of Authority's conditions to the
Closing.
"Monthly Rent" means the total of monthly payments for (a) use and occupancy
of each Affordable Unit and land and facilities associated therewith, (b) any separately
charged fees or service charges assessed by Developer which are required of all tenants,
other than security deposits, (c) a reasonable allowance for an adequate level of service
of utilities not included in (a) or (b) above, including garbage collection, sewer, water,
electricity, gas and other heating, cooking and refrigeration fuels, but not including
telephone or cable service, and (d) possessory interest, taxes or other fees or charges
assessed for use of the land and facilities associated therewith by a public or private entity
other than Developer. In the event that all utility charges are paid by the landlord rather
than the tenant, no utility allowance shall be deducted from the rent.
"Notice" means a notice in the form prescribed by Section 17.01 hereof.
"Official Records" means the Official Records of the County of San Diego,
California.
"Operating Budget" means an operating budget for the Project, which budget
shall be subject to the annual written approval of Authority in accordance with Section
9.01 hereof.
"Operating Expenses" has the meaning ascribed thereto in the Authority Nole.
"Operating Reserve" means an operating reserve for the Project (i) initially
consisting of not less than the sum necessary to cover three (3) months of debt service
and three (3) months of deposits into the Capital Replacement Reserve (or such greater
amount required under any Additional Regulatory Agreement, under the Partnership
Agreement, or by any lender of a Project-related loan that has been approved by
Authority) set aside in a separate interest-bearing trust account, commencing upon the
rental of the Affordable Units, and (ii) replenished from annual deposits of the Annual
Project Revenue, to the extent available, such that the balance of the Operating Reserve
consists of not less than three (3) months of projected Operating Expenses, adjusted
annually by the CPI Adjustment (unless otherwise agreed to by Developer and Authority)
or as required under the Partnership Agreement (or such greater amount required under
any Additional Regulatory Agreement, or under the Partnership Agreement), provided in
no event shall the balance in such account exceed a sum equal to one (1) year of debt
service for the Project (or such greater amount required under any Additional Regulatory
Agreement, pursuant to any of the Approved Financing or under the Partnership
Agreement). Developer's requirement to maintain the Operating Reserve shall terminate
at such time as the Project has achieved a minimum annual debt service ratio of 1.15 for
three (3) years following the date Developer has initially rented ninety-five percent (95%)
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of the Affordable Units to Eligible Tenants in accordance with the terms of this Regulatory
Agreement.
"Partnership Agreement" means the agreement which sets forth the terms of
Developer's limited partnership, as such agreement may be amended from time to time.
"Permanent Financing" means a loan in an amount not to exceed the amount of
the Construction Financing from an Institutional Lender to be secured by a deed of trust
against the Property which replaces the Construction Financing upon Developer's
completion of the construction of the Project.
"Project" means a senior affordable rental Project consisting of forty-four (44)
residential dwelling units and all required on-site improvements necessary to serve the
Project.
"Property" means that certain real property (i) consisting of approximately (1)
acre, (ii) located in the City of Poway, County of San Diego, State of California, (iii)
depicted on the Map, and (iv) described in the Legal Description.
"Regulatory Agreement" means this Regulatory Agreement.
"Release of Construction Covenants" means the document which evidences
Developer's satisfactory completion of construction of the Project, as set forth in Section
10.15 of the Agreement, substantially in the form which is attached thereto as Attachment
No. 12 and incorporated therein by reference.
"Restricted Unit Matrix" means that certain affordability matrix attached hereto
and incorporated herein as Exhibit "F".
"Scope of Development" means that certain Scope of Development which is
attached to the Agreement as Attachment No. 4 and incorporated therein by reference.
The Scope of Development describes the scope, amount and quality of the construction
to be done by Developer pursuant to the terms and conditions of the Agreement and this
Regulatory Agreement.
"Tax Credits" means Low Income Housing Tax Credits, in the anticipated amount
of Five Million Nine Hundred Thirty-Five Thousand Eighty-Three Dollars ($5,935,083),
granted pursuant to Section 42 of the Internal Revenue Code and/or California Revenue
and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health
and Safety Code Section 50199, et seq.
"Tax Credit Regulatory Agreement" means the regulatory agreement which may
be required to be recorded against the Property with respect to the issuance of Tax
Credits for the Project.
"Tax Credit Rules" means Section 42 of the Internal Revenue Code and/or
California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5
and California Health and Safety Code Section 50199, et seq., and the rules and
regulations implementing the foregoing, as the same may be amended from time to time.
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"Tax-Exempt Bonds" means tax-exempt multi-family housing revenue bonds, in
the approximate amount of Eight Million Four Hundred Thousand Dollars ($8,400,000).
"TCAC" means the California Tax Credit Allocation Committee.
SECTION 2. COVENANTS REGARDING CONSTRUCTION OF THE
IMPROVEMENTS.
Developer shall carry out the design, construction, and operation of the Project in
compliance with applicable Governmental Requirements and all of the terms and
conditions set forth in the Agreement.
SECTION 3. COVENANTS REGARDING USE.
3.01 Covenants To Use In Accordance With Agreement. Developer covenants
and agrees for itself, its successors, assigns, and every successor in interest to
Developer's interest in the Property or any part thereof, that Developer shall devote the
Property to the uses specified in this Regulatory Agreement. The foregoing covenants
shall run with the land.
3.02 Covenant Regarding Specific Uses. Developer covenants and agrees for
itself, its successors, assigns, and every successor in interest to Developer's interest in
the Property or any part thereof, that Developer shall use the Property to operate the
Project.
3.03 Covenants Regarding Term And Priority Of Agreement. This Regulatory
Agreement shall remain in effect in perpetuity, notwithstanding the payment in full of the
Authority Loan. Developer's performance under this Regulatory Agreement is secured
by the Authority Deed of Trust, and Developer shall not be entitled to a reconveyance of
the Authority Deed of Trust prior to the expiration of the Affordability Period; provided that,
upon Developer's repayment of the Authority Loan, Developer shall be entitled to a partial
reconveyance of the Authority Deed of Trust solely to release therefrom Developer's
obligations to repay the Authority Loan. This Regulatory Agreement shall unconditionally
be and remain at all times prior and superior to the liens created by the Construction
Financing, the Permanent Financing, the Tax Credit Regulatory Agreement, Bond
Regulatory Agreement, any other Additional Regulatory Agreement, and any other
documents related to any of the foregoing and all of the terms and conditions contained
therein, and to the lien of any new mortgage debt which is for the purpose of refinancing
all or any part of the Construction Financing or Permanent Financing.
SECTION 4. COVENANTS REGARDING AFFORDABLE UNITS.
Developer shall provide for the Affordable Units in accordance with this Section.
4.01 Residential Use. Without Authority's prior written consent, which consent
may be given or withheld in Authority's sole and absolute discretion, none of the
Affordable Units in the Project will at any time be utilized on a transient basis or will ever
be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house,
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nursing home, hospital, sanitarium, or trailer court or park, nor shall the Affordable Units
be used as a place of business except as may otherwise be allowed by applicable law.
4.02 Provision of Affordable Units. Developer shall make available, restrict
occupancy to, and rent the Affordable Units to Eligible Tenants at Affordable Rents, in
compliance with the Restricted Unit Matrix, throughout the Affordability Period.
4.03 Selection of Tenants. Developer shall be responsible for the selection of
tenants for the Affordable Units in compliance with all lawful and reasonable criteria, as
set forth in the Marketing Plan. Developer shall not refuse to lease to (i) a holder of a
certificate of family participation under 24 CFR part 882 (Rental Certificate Program) or a
rental voucher under 24 CFR part 887 (Rental Voucher Program) or to the holder of a
comparable document evidencing participation in a Section 8 program or other tenant-
based assistance program, who is otherwise qualified to be a tenant in accordance with
the approved tenant selection criteria, or (ii) an applicant who would be qualified to be a
tenant in accordance with the approved tenant selection criteria but for a poor credit rating
resulting from a foreclosure of a mortgage on a single family home previously owned by
the applicant.
4.04 Occupancy By Eligible Tenant. An Affordable Unit occupied by an Eligible
Tenant who qualified as an Eligible Tenant at the commencement of the occupancy shall
be treated as occupied by an Eligible Tenant until a recertification of such Eligible
Tenant's income in accordance with Section 4.08 below demonstrates that such tenant
no longer qualifies as an Eligible Tenant at the applicable income level. An Affordable
Unit previously occupied by an Eligible Tenant and then vacated shall be considered
occupied by an Eligible Tenant until the Affordable Unit is reoccupied, provided Developer
uses its best efforts to re-lease the vacant Affordable Unit to an Eligible Tenant. Any
vacated Affordable Unit shall be held vacant until re-leased to an Eligible Tenant.
Developer shall take any or all of the following actions, as necessary, to locate Eligible
Tenants for the Project: (i) notification to the Authority of the available Affordable Unit; (ii)
advertisement of the available Affordable Unit in a newspaper of general circulation in
San Diego County, and (iii) outreach and marketing activities typically used by Chelsea
or limited partnerships in which Chelsea is the managing general partner to fill unoccupied
or vacated units, including available units, if any, for which a specified target population
will receive a preference.
4.05 Occupancy Restrictions. The maximum number of occupants that may
reside in an Affordable Unit shall be as follows: three (3) persons in a one (1) bedroom
Affordable Unit; and five (5) persons in a two (2) bedroom Affordable Unit. Developer
shall comply with all applicable minimum occupancy restrictions promulgated by HUD,
TCAC, and/or any other applicable funding source.
4.06 Income Computation and Certification. Immediately prior to an Eligible
Tenant's occupancy of an Affordable Unit, Developer shall obtain an Income Computation
and Certification Form in the form attached hereto and incorporated herein as Exhibit "C",
or on a similar form required by any Additional Regulatory Agreement if such form
requires inclusion of the same information as required in Exhibit "C", from each such
Eligible Tenant dated no more than 90 days prior to the date of initial occupancy in the
Project by such Eligible Tenant. In addition, Developer shall provide such further
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information as may be reasonably required in the future by Authority for purposes of
verifying a tenant's status as an Eligible Tenant. Developer shall use good faith efforts to
verify that the income provided by an applicant is accurate by taking the following steps
as a part of the verification process:(i) obtain three (3) pay stubs for the most recent pay
periods; (ii) obtain a written verification of income and employment from the applicant's
current employer; (iii) obtain an income verification form from the Social Security
Administration, California Department of Social Services, and/or California Employment
Development Department if the applicant receives assistance from any of said agencies;
(iv) if an applicant is unemployed or did not file a tax return for the previous calendar year,
obtain other evidence and/or verification of such applicant's total income received during
the calendar year from any source, taxable or nontaxable, or such other information as is
satisfactory to Authority. Developer shall maintain in its records each Income
Computation and Certification Form obtained pursuant to this section for a minimum of
five (5) years.
4.07 Rental Priority. Subject to all applicable Governmental Requirements, and
any funding obtained by Developer to operate and/or develop the Project that has been
approved by Authority, during the term of this Regulatory Agreement, Developer shall use
its reasonable commercial efforts to lease the Affordable Units to credit-worthy Eligible
Tenants in the following order of priority: (a) Eligible Tenants who have been or will be
displaced by an activity of Authority, or (b) Eligible Tenants who live and/or work in the
City of Poway. Should multiple tenants be equally eligible (as to income, credit history,
and other nondiscriminatory criteria) and qualified to rent a unit, Developer shall rent
available Affordable Units to Eligible Tenants on a first-come, first-served basis or a lottery
system established by Developer and approved by Authority.
4.08 Recertification. Within sixty (60) days prior to the first anniversary date of
the occupancy of an Affordable Unit by an Eligible Tenant, and on each anniversary date
thereafter, Developer shall recertify the income of such Eligible Tenant by obtaining a
completed Income Recertification Form, in the form attached hereto and incorporated
herein as Exhibit "D", based upon the current income of each known occupant of the
Affordable Unit; provided, however, that if any Additional Regulatory Agreement requires
Developer to obtain a recertification form which requires inclusion of the same information
as required in Exhibit "D", then Developer shall not be deemed to be in default hereunder
if during the term of such Additional Regulatory Agreement Developer obtains from each
Eligible Tenant the recertification form required pursuant to said Additional Regulatory
Agreement.
If, after renting a 50% Income Unit, the household income increases above the
income level permitted for the 50% Income Unit, but meets the income level permitted for
a 60% Income Unit, the household shall continue to be permitted to reside in such Unit
provided that Developer shall increase the rent for that 50% Income Unit to the rent level
designated for a 60% Income Unit, and shall restrict and designate as a 50% Income Unit
the next available Affordable Unit with the same number of bedrooms that is not already
designated hereunder as a 50% Income Unit.
If, after renting an Affordable Unit, the household income increases above the
income level permitted for a 60% Income Unit, that household may not be permitted to
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remain in the unit unless requiring such household to move will violate the Tax Credit
Rules. In such event, Developer shall notify Authority in writing of such occurrence, and
shall inform Authority of (1) its plans for removing the household from the Affordable Unit,
or (2) the specific rule in the Tax Credit Rules that prohibits such action providing written
evidence of the same.
4.09 Certification of Continuing Program Compliance. During the term of this
Regulatory Agreement, on or before each May 1 '1 following the date Authority issues a
Release of Construction Covenants for the Project, Developer shall annually advise
Authority of the occupancy of the Project during the preceding calendar year by delivering
a Certification of Continuing Program Compliance in the form attached hereto and
incorporated herein as Exhibit "E", stating (i) the Affordable Units of the Project which
have been rented to and are occupied by Eligible Tenants and (ii) that to the knowledge
of Developer either (a) no unremedied default has occurred under this Regulatory
Agreement, or (b) a default has occurred, in which event said certification shall describe
the nature of the default and set forth the measures being taken by Developer to remedy
such default.
4.10 Leases: Rental Agreements for Affordable Units. Developer shall submit a
standard lease form, which shall comply with the requirements of this Regulatory
Agreement, to Authority for its approval. Authority shall reasonably approve such lease
form upon finding that such lease form is consistent with this Regulatory Agreement.
Developer shall enter into a written lease, in the form approved by Authority, with each
tenant/tenant household of the Affordable Units. Developer shall not make any material
changes to such form of lease without obtaining Authority's prior written consent. Any
proposed increase in the monthly rent to be charged to an Eligible Household is hereby
deemed material and shall require Authority's written consent prior to imposition of the
same.
4.11 Reliance on Tenant Representations. Each tenant lease shall contain a
provision to the effect that Developer has relied on the income certification and supporting
information supplied by the tenant in determining qualification for occupancy of the
Affordable Unit, and that any material misstatement in such certification {whether or not
intentional) will be cause for immediate termination of such lease.
4.12 Monitoring and Record Keeping. Representatives of Authority shall be
entitled to enter the Property during normal business hours, upon not less than twenty-
four (24) hours' notice, to monitor compliance with this Regulatory Agreement, to inspect
the records of the Property, and to conduct an independent audit or inspection of such
records. Developer agrees to cooperate with Authority in making the Property and all
Affordable Units thereon available for such inspection or audit. Developer agrees to
maintain records in a businesslike manner, and to maintain copies of original tenant
certifications for fifteen (15) years (or such longer period as required under the Tax Credit
Rules) and all other records pertaining to the Project for five (5) years.
4.13 Remedy For Violation of Rental Requirements.
(a) It shall constitute a default for Developer to charge or accept for any
Affordable Unit rent amounts in excess of the amount provided for in Section 4.02 of this
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Regulatory Agreement. In the event that Developer charges or receives such higher
rental amounts, Developer shall be required to reimburse the tenant that occupied said
Affordable Unit at the time the excess rent was received for the entire amount of such
excess rent received, provided that such tenant can be found following reasonable
inquiry, and to pay to such tenant interest on said excess amount, at the rate of six percent
(6%) per annum, for the period commencing on the date the first excess rent was received
from said tenant and ending on the date reimbursement is made to the tenant. For
purposes of this Section 4.13, "reasonable inquiry" shall include Developer's review of
information provided by the tenant as part of the tenant's application, and forwarding
information provided by the tenant, and Developer's reasonable attempts to contact the
tenant and any other persons listed in either of such documents. If, after such reasonable
inquiry, Developer is unable to locate the tenant, Developer shall pay all of such amounts
otherwise to be paid to the tenant to Authority.
(b) Except as otherwise provided in this Regulatory Agreement, it shall
constitute a default for Developer to knowingly (or without investigation as required
herein) initially rent any Affordable Unit to a tenant who is not an Eligible Tenant. In the
event Developer violates this Section, in addition to any other equitable remedy Authority
shall have for such default, Developer, for each separate violation, shall be required to
pay to Authority an amount equal to (i) the greater of (A) the total rent Developer received
from such ineligible tenant, or (B) the total rent Developer was entitled to receive for
renting that Affordable Unit, plus (ii) any relocation expenses incurred by Authority as a
result of Developer having rented to such ineligible person. The terms of this Section
shall not apply if Developer rents to an ineligible person as a result of such person's fraud
or misrepresentation.
(c) It shall constitute a default for Developer to knowingly (or without
investigation as required herein) rent an Affordable Unit in violation of the leasing
preference requirements of Section 4.07 of this Regulatory Agreement. In the event
Developer violates this Section, in addition to any other equitable remedy Authority shall
have for such default, Developer, for each separate violation, shall be required to pay
Authority an amount equal to two (2) months of rental charges.
THE PARTIES HERETO AGREE THAT THE AMOUNTS SET FORTH IN THIS SECTION
4.13 (THE "DAMAGE AMOUNTS") CONSTITUTE A REASONABLE APPROXIMATION
OF THE ACTUAL DAMAGES THAT AUTHORITY WOULD SUFFER DUE TO THE
DEFAULTS BY DEVELOPER SET FORTH IN THIS SECTION 4.13, CONSIDERING ALL
OF THE CIRCUMSTANCES EXISTING ON THE DATE OF REGULATORY
AGREEMENT, INCLUDING THE RELATIONSHIP OF THE DAMAGE AMOUNTS TO
THE RANGE OF HARM TO AUTHORITY AND ACCOMPLISHMENT OF AUTHORITY'S
PURPOSE OF ASSISTING IN THE PROVISION OF AFFORDABLE HOUSING TO
ELIGIBLE TENANTS THAT REASONABLY COULD BE ANTICIPATED AND THE
ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR
INCONVENIENT. THE AMOUNTS SET FORTH IN THIS SECTION 4.13 SHALL BE THE
SOLE MONETARY DAMAGES REMEDY FOR THE DEFAULTS SET FORTH IN THIS
SECTION 4.13, BUT NOTHING IN THIS SECTION 4.13 SHALL BE INTERPRETED TO
LIMIT AUTHORITY'S REMEDY FOR SUCH DEFAULT TO SUCH A DAMAGES
REMEDY AND IN THAT REGARD AUTHORITY MAY DECLARE A DEFAULT UNDER
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THE TERMS OF THE AUTHORITY NOTE, THE AGREEMENT, OR OTHER
AGREEMENTS ENTERED INTO BY AND BETWEEN AUTHORITY AND DEVELOPER.
IN PLACING ITS INITIALS AT THE PLACES PROVIDED HEREINBELOW, EACH
PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE
ABOVE AND THE FACT THAT EACH PARTY HAS BEEN REPRESENTED BY
COUNSEL WHO HAS EXPLAINED THE CONSEQUENCES OF THE LIQUIDATED
DAMAGES PROVISION AT OR PRIOR TO THE TIME EACH EXECUTED THIS
REGULATORY AGREEMENT.
DEVELOPER'S INITIALS: AUTHORITY'S INITIALS:
4.14 Relationship to Additional Regulatory Agreements. Notwithstanding any
other provisions set forth in this Regulatory Agreement and subject to the following
sentence, to the extent that the provisions related to tenant selection, tenant income
levels and unit rent levels set forth in any Additional Regulatory Agreement are less
restrictive than those provisions set forth in this Section 4, then the provisions set forth in
this Section 4 shall govern and control. To the extent of any inconsistency between this
Regulatory Agreement and any Additional Regulatory Agreement regarding Affordable
Rent for the Affordable Units, the more restrictive agreement or covenants shall prevail
unless compliance with such more restrictive provisions would violate the provisions of
the less restrictive document.
Developer agrees to perform all of Developer's obligations under this Regulatory
Agreement, and under each of the Additional Regulatory Agreements. In the event
Authority is prevented by a final, non-appealable order of a court of competent jurisdiction
in a lawsuit involving the Project, or by an applicable and binding published appellate
opinion, or by a final, non-appealable order of a regulatory body having jurisdiction, from
enforcing, for any reason, the affordability restrictions set forth in this Regulatory
Agreement or in the Agreement, then in such event Authority shall be a third-party
beneficiary under the Additional Regulatory Agreements, and shall have full authority to
enforce any breach or default by Developer thereunder in the same manner as though it
were a breach or default hereunder. Without Authority's prior written consent, which
consent may be withheld in Authority's sole and absolute discretion, Developer shall not
consent to any amendment of or modification to any of the Additional Regulatory
Agreements which (i) shortens the term of the affordability restrictions on the Affordable
Units or (ii) modifies the affordability mix in a manner inconsistent with the Restricted Unit
Matrix.
SECTION 5. COVENANT TO PAY TAXES AND ASSESSMENTS.
Developer shall pay prior to delinquency all ad valorem real estate taxes, special
taxes, assessments and special assessments levied against the Property, subject to
Developer's right to contest any such tax in good faith and any property tax exemption.
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SECTION 6. COVENANTS REGARDING MAINTENANCE.
Developer shall maintain the Property and all improvements thereon, including
lighting and signage, in good condition, free of debris, waste and graffiti, and in
compliance with all applicable laws and regulations, including, without limitation, HUD's
Housing Quality Standards. Developer shall maintain the improvements and landscaping
on the Property in accordance with the "Maintenance Standards," as hereinafter defined.
Such Maintenance Standards shall apply to all buildings, signage, lighting, landscaping,
irrigation of landscaping, architectural elements identifying the Property and any and all
other improvements on the Property. To accomplish the maintenance, Developer shall
either staff or contract with and hire licensed and qualified personnel to perform the
maintenance work, including the provision of labor, equipment, materials, support
facilities, and any and all other items necessary to comply with the requirements of this
Regulatory Agreement.
Developer and its maintenance staff, contractors or subcontractors shall comply
with the following standards (the "Maintenance Standards"):
(a) The Property shall be maintained in good condition and in
accordance with the custom and practice generally applicable to comparable high quality,
well-managed apartment complexes, including but not limited to painting and cleaning of
all exterior surfaces and other exterior facades comprising all private improvements and
public improvements to the curbline.
(b) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub
pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural
appearance and safe road conditions and visibility, and irrigation coverage; replacement,
as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground
covers, or other planted areas; and staking for support of trees.
(c) Clean-up maintenance shall include, but not be limited to:
maintenance of all sidewalks, paths, and other paved areas in clean and weed-free
condition; maintenance of all such areas clear of dirt, mud, trash, debris, or other matter
which is unsafe or unsightly; removal of all trash, litter, and other debris from
improvements and landscaping prior to mowing; clearance and cleaning of all areas
maintained prior to the end of the day on which the maintenance operations are performed
to ensure that all cuttings, weeds, leaves, and other debris are properly disposed of by
maintenance workers.
Upon Authority's written notification to Developer of any maintenance deficiency,
Developer shall have thirty (30) days within which to correct, remedy or cure the
deficiency, or such longer period as is reasonably necessary to complete the cure,
provided Developer commences the correction, remedy, or cure within such thirty (30)
day period and diligently pursues such correction, remedy, or cure to completion.
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SECTION 7. COVENANTS REGARDING MANAGEMENT.
Developer shall provide for the management of the Project in accordance with this
Section.
7.01 Property Manager. Developer shall manage or cause the Project, and all
appurtenances thereto that are a part of the Project, to be managed in a prudent and
business-like manner, consistent with property management standards for other
comparable high quality, well-managed rental housing projects and commercial
developments in San Diego County, California. Developer may contract with a property
management company or property manager to operate and maintain the Project in
accordance with the terms of this Section ("Property Manager"); provided, however, the
selection and hiring of the Property Manager (and each successor or assignee) is and
shall be subject to prior written approval of Authority. Developer shall conduct due
diligence and background evaluation of any potential outside property manager or
property management company to evaluate experience, references, credit worthiness,
and related qualifications as a property manager. Any proposed property manager shall
have prior experience with projects and properties comparable to the Project and the
references and credit record of such manager/company shall be investigated (or caused
to be investigated) by Developer prior to submitting the name and qualifications of such
proposed property manager to Authority for review and approval. A complete and true
copy of the results of such background evaluation shall be provided to Authority. Approval
of a Property Manager by Authority shall not be unreasonably withheld or delayed and
shall be in Authority's reasonable discretion, and Authority shall use good faith efforts to
respond as promptly as practicable in order to facilitate effective and ongoing
management of the Project. Furthermore, the identity and retention of any approved
Property Manager shall not be changed without the prior written approval of Authority,
which approval shall not be unreasonably delayed, and shall be in Authority's reasonable
discretion. The selection by Developer of any new Property Manager also shall be subject
to the foregoing requirements.
7.02 Management Plan. Prior to and as one of Authority's conditions to the
Closing under the Agreement, Developer shall have prepared and submitted to the
Executive Director for review and approval an updated and supplemented management
plan which includes a detailed plan and strategy for long-term marketing for the Affordable
Units, operation, maintenance, repair, and security of the Project, method of selection of
tenants, rules and regulations for tenants, and other rental policies for the Affordable Units
(the "Management Plan"). Subsequent to approval of the Management Plan by the
Executive Director, the ongoing management and operation of the Project shall be in
compliance with the approved Management Plan. Developer and Property Manager may
from time to time submit to the Executive Director proposed amendments to the
Management Plan, which are also subject to the prior written approval of the Executive
Director.
7.03 Social Services. Prior to and as one of Authority's conditions to the Closing
under the Agreement, Developer shall have prepared and submitted to the Executive
Director for review and approval a resident services plan (the "Resident Services Plan").
Developer shall provide a variety of social services at the Project, as set forth in the
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Resident Services Plan. No changes may be made to the Resident Services Plan without
the prior written approval of the Executive Director, which shall be given or withheld in his
or her reasonable discretion. Developer's social service program shall be targeted to the
needs of the senior residents of the Project which shall include, but not be limited to the
following services: exercise classes, social programs, events and celebrations, nutrition
classes, health and wellness and financial education (budgeting, fraud prevention,
governmental programming/benefits). Developer shall ensure that all personnel
providing or coordinating all social services shall be adequately trained and counseled,
including with respect to the appropriate means and methods of communicating and
interacting with residents. If Developer intends to partner with a third party to provide the
social services required pursuant to this Section 7.03, Developer shall obtain Authority's
prior written approval of Developer's proposed social service provider, which approval
shall not be unreasonably withheld, conditioned or delayed. Any substantive change in
the scope, amount, or type of supportive services to be provided at the Property, whether
or not such change requires a change to the Resident Services Plan, shall be subject to
prior reasonable approval of Authority. Authority shall respond to any such proposed
changes within thirty (30) days after submittal to Authority by Developer.
7.04 Gross Mismanagement. In the event of "Gross Mismanagement" (as that
term is defined below) of the Affordable Units or any part of the Project, Authority shall
have and retain the authority to direct and require any condition(s), acts, or inactions of
Gross Mismanagement to cease and/or be corrected immediately, and further to direct
and require the immediate removal of the Property Manager and replacement with a new
qualified and approved Property Manager, if such condition(s) is/are not ceased and/or
corrected after expiration of thirty (30) days from the date of Notice from Authority. If such
condition(s) acts, or inactions of gross mismanagement do persist beyond such period,
Authority shall have the sole and absolute right to immediately and without further notice
to Developer (or to Property Manager or any other person/entity) replace the Property
Manager with a new property manager of Authority's selection at the sole cost and
expense of Developer. If Developer takes steps to select a new property manager that
selection is subject to the requirements set forth above for selection of a Property
Manager.
For purposes of this Regulatory Agreement, the term "Gross Mismanagement"
shall mean management of any part of the Project in a manner which materially violates
the terms and/or intention of this Regulatory Agreement to operate a high quality, well-
managed residential complex, and shall include, but is not limited to, any one or more of
the following:
(a) knowingly leasing Affordable Units to tenants who exceed the
prescribed income levels and/or otherwise fail to qualify as an Eligible Tenant;
(b) knowingly allowing the tenants of Affordable Units to exceed the
prescribed occupancy levels without taking immediate action to stop such overcrowding;
(c) underfunding Capital Replacement or Operating Reserve accounts,
unless funds are not available to deposit in such accounts;
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(d) failing to timely maintain the Project in accordance with the
Management Plan and the manner prescribed herein;
(e) failing to submit timely and/or adequate annual reports to Authority
as required herein;
(f) committing fraud or embezzlement with respect to Project funds,
including without limitation funds in the reserve accounts;
(g) failing to reasonably cooperate with law enforcement in its attempts
to maintain a safe, crime-free environment within the Project;
(h) spending funds from the Capital Reserve account(s) for items that
are not defined as capital costs under the standards imposed by generally accepted
accounting principles (GAAP) (and/or, as applicable, generally accepted auditing
principles).
Notwithstanding the requirements of the Property Manager to correct any condition
of Gross Mismanagement as described above, Developer is obligated and shall use its
best efforts to correct any defects in property management or operations at the earliest
feasible time and, if necessary, to replace the Property Manager as provided above.
Developer shall include advisement and provisions of the foregoing requirements and
requirements of this Regulatory Agreement within any contract between Developer and
its Property Manager.
7.05 Authority Inspections. Authority and Authority employees and authorized
agents shall have the right to conduct inspections of the Project and the individual
Affordable Units, both exterior and interior, at reasonable times and upon reasonable
notice (not less than 48 hours prior notice) to Developer and/or an individual tenant. If
such notice is provided by Authority or its representative(s) to Developer, then Developer
(or its Property Manager) shall immediately and directly advise tenants of such upcoming
inspection and cause access to the area(s) and/or units to be made available and open
for inspection. Developer shall include express advisement of such inspection rights
within the lease/rental agreements for each Affordable Unit in order for each and every
tenant and tenant household to be aware of this inspection right.
7.06 Drug Free Covenant. Developer shall use its best efforts to maintain a drug
free environment on the Property. Developer covenants to Authority that Developer shall
use its best efforts to ensure that all persons working or residing on the Property shall not
unlawfully manufacture, distribute, dispense, possess or use controlled substances, as
said term is defined in 21 United States Code Section 812 and California Health and
Safety Code Section 11007 (or successor statutes) on the Property.
SECTION 8. COVENANTS REGARDING NONDISCRIMINATION.
Developer covenants by and for itself and any successors in interest that there
shall be no discrimination against or segregation of any person, or group of persons on
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)
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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 Property, or
any part thereof, nor shall Developer, 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,
subtenants, sublessees, or vendees of the Property, or any part thereof. The foregoing
covenants shall run with the land.
Developer agrees for itself and any successor in interest that Developer shall
refrain from restricting the rental, sale, or lease of any portion of the Property, or contracts
relating to the Property, on the basis of race, color, creed, religion, sex, marital status,
ancestry, or national origin of any person. All such deeds, leases, or contracts 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."
(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."
(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
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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."
The covenants established in this Regulatory Agreement shall, without regard to
technical classification and designation, be binding for the benefit and in favor of
Authority, its successors and assigns, and any successor in interest to the Property,
together with any property acquired by Developer pursuant to this Regulatory Agreement,
or any part thereof. The covenants against discrimination shall remain in effect in
perpetuity.
SECTION 9. OPERATING BUDGET OR ANNUAL BUDGET; ANNUAL AND
QUARTERLY REPORTS
9.01 Operating Budget. Developer shall submit to Authority on or before
November 1st of each year during the Affordability Period an operating budget for the
Project ("Operating Budget" or "Annual Budget"), which budget, including the format
thereof, shall be subject to the written approval of the Executive Director or designee,
which approval shall not be unreasonably withheld or conditioned so long as such budget
is not inconsistent with this Regulatory Agreement. The Executive Director's discretion
in review and approval of each proposed annual Operating Budget or Annual Budget shall
include, without limitation, authority to review individual categories, line items, and
accounts, such as the following: property and other taxes and assessments imposed on
the Project; premiums for property damage and liability insurance; utility services not paid
for directly by the tenants, including (as applicable), but not limited to, water, sewer, trash
collection, gas, and electricity; maintenance and repairs including but not limited to pest
control, landscaping and grounds maintenance, painting and decorating, cleaning,
common systems repairs, general repairs, janitorial supplies; resident services pursuant
to the Resident Services Plan; additional supportive services necessary to help residents
maintain personal or household stability and housing status; any license or certificates of
occupancy fees required for operation of the Project; general administrative expenses,
including, but not limited to, advertising, marketing, security services and systems,
professional fees for legal, audit, accounting and tax returns, and other; property
management fees and reimbursements including on-site manager expenses, not to
exceed fees and reimbursements which are standard in the industry and pursuant to a
management contract approved by Authority (which such approval will not be
unreasonably withheld); asset management fees; annual cash deposited into the Capital
Replacement Reserve in an amount of up to $250 dollars per unit per year (increased by
3.5% per year), provided any changes to the amount deposited into the Capital
Replacement Reserve will require Authority approval; cash deposited into the Operating
Reserve for the Project and such other reserves as may be required by Developer's senior
lender or tax credit investor; and debt service payments of loans in senior position to this
loan. In the event Developer requires an amendment to an approved Annual Budget
during an applicable year of the Affordability Period, then Developer shall submit a written
request to the Executive Director explaining the requested amendment and reasons
therefor; the Executive Director shall reasonably review and approve (or disapprove) each
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request for an amendment to an approved Annual Budget. The Executive Director shall
communicate to Developer his or her reasonable approval or disapproval of a proposed
annual Operating Budget or Annual Budget within thirty (30) days after receipt thereof; as
to each amendment, the Executive Developer shall communicate to Developer his or her
reasonable approval or disapproval within fifteen (15) days after receipt of a complete
submittal requesting an amendment to an approved Annual Budget. In the event the
Executive Director fails to approve a proposed annual Operating Budget or Annual
Budget within thirty (30) days after receipt thereof, Developer may operate the Project in
accordance with such proposed annual Operating Budget or Annual Budget until the
Executive Director notifies Developer that such proposed annual Operating Budget or
Annual Budget is not approved; provided, however, that in such case any expenditure
made by Developer after expiration of the aforementioned thirty (30) days period but prior
to the Executive Director's notification that the proposed annual Operating Budget or
Annual Budget is not approved shall be deemed an approved expenditure.
9.02 Annual Reports. Developer covenants and agrees to submit to Authority an
annual report (the "Annual Report"), which shall include the information required by
California Health & Safety Code Section 33418.The Annual Report shall include for each
Affordable Unit the rental rate and the income and family size of the occupants. The
Developer shall submit the Annual Report on or before May 1st of the year following the
year covered by the Annual Report. The Developer shall provide for the submission of
household information and certification in its leases with tenants.
9.03 Quarterly Reports. Upon execution of this Regulatory Agreement and until
permanent loan conversion, Developer shall also submit on a quarterly basis a quarterly
report for the management of the Property (the "Quarterly Report"). The Quarterly
Report shall describe the Project-related tasks performed in the past 3 months and the
expected Project-related tasks to be performed in the upcoming 3 months. The report
should include an updated Project schedule, including a schedule for completing
milestones and/or tasks, and should indicate the status of the Project in relationship to
this limeline. Developer shall document any changes from the timeline submitted with
the most recent funding application. From lime to time, Authority may request from
Developer an updated Project proforma which shall include a development budget with
sources and uses, debt sizing, calculations and pricing for the Tax Credits, 30-year
operating proforma, base year income projection, and maintenance and operating
expenses; Developer will have thirty (30) days to satisfy such request. The Quarterly
Report shall be in a form that is reasonably acceptable to the Executive Director. The
Executive Director, in his/her sole discretion may waive the requirement of the Quarterly
Report for one or more quarterly reporting periods. However, such waiver shall not
operate to waive any subsequent requirement of the Quarterly Report. After receipt of
such certified financial statements for the Project, Authority may request additional
financial analysis or obtain a third party review at Authority's own expense, of financial
statements for the Project to verify the accuracy of the payments by Developer on the
Authority Note or the required deposits into the Capital Replacement Reserve.
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SECTION 10. COVENANTS REGARDING CAPITAL REPLACEMENT RESERVE.
Upon the closing of the Take-Out Loan or conversion of the Construction Loan,
Developer shall establish the Capital Replacement Reserve. Funds in the Capital
Replacement Reserve shall be used only for capital repairs, improvements, and
replacements to the Project fixtures and equipment which are normally capitalized under
generally accepted accounting principles. The non-availability of funds in the Capital
Replacement Reserve does not in any manner relieve or lessen Developer's obligation
to undertake any and all necessary capital repairs, improvements, or replacements and
to continue to maintain the Project in the manner prescribed herein. Not less than once
per year, Developer, at its expense, shall submit to Authority an accounting for the Capital
Replacement Reserve. Capital repairs to and replacement of the Project shall include
only those items with a long useful life, including, without limitation, the following: carpet
and drape replacement; appliance replacement; exterior painting, including exterior trim;
hot water heater replacement; plumbing fixtures replacement, including tubs and
showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement;
asphalt repair and replacement, and seal coating; roofing repair and replacement;
landscape tree replacement; irrigation pipe and controls replacement; sewer line
replacement; water line replacement; gas line pipe replacement; lighting fixture
replacement; elevator replacement and upgrade work; miscellaneous motors and
blowers; common area furniture replacement; and common area repainting.
SECTION 11. COVENANTS REGARDING OPERATING RESERVE.
Upon the closing of the Take-Out Loan or conversion of the Construction Loan,
Developer shall establish the Operating Reserve. The Operating Reserve shall be used
to cover shortfalls between Annual Project Revenue and actual operating expenses, but
shall in no event be used to pay for capital items or capital costs properly payable from
the Capital Replacement Reserve. Developer shall, not less than once per every twelve
(12) months, submit to Authority evidence reasonably satisfactory to Authority of
compliance herewith.
SECTION 12. EFFECT OF VIOLATION OF THE TERMS AND PROVISIONS OF
THIS REGULATORY AGREEMENT AFTER COMPLETION OF
CONSTRUCTION.
Authority is deemed the beneficiary of the terms and provisions of this Regulatory
Agreement and of the covenants running with the land, without regard to whether
Authority has been, remains or is an owner of any land or interest therein in the Property
or in the Project. Authority shall have the right, if this Regulatory Agreement or any of the
covenants herein 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 Regulatory Agreement and
covenants may be entitled. The County is hereby deemed to be a third party beneficiary
of this Regulatory Agreement and the covenants contained herein with the right, but not
the obligation, to enforce the terms hereof. Except as provided in the following sentence,
the covenants contained in this Regulatory Agreement shall remain in effect until the
expiration of the Affordability Period. The covenants regarding discrimination as set forth
in Section 8 shall remain in effect in perpetuity.
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SECTION 13. COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS.
13.01 Compliance With Laws. Developer shall comply with (i) all Governmental
Requirements applicable to the Project and/or Property, (ii) any permit issued pursuant
to the National Pollutant Discharge Elimination System ("NPDES") and applicable to the
Project and/or Property; and (ii) all rules and regulations of any assessment district of the
City with jurisdiction over the Property.
13.02 Indemnity. Developer shall save, protect, defend, indemnify and hold
harmless Authority and City and Authority and City Personnel from and against any and
all liabilities, suits, actions, claims, demands, penalties, damages (including, without
limitation, penalties, fines, and monetary sanctions), losses, costs or expenses (including,
without limitation, consultants' fees, investigation and laboratory fees, reasonable
attorneys' fees, and remedial and response costs) (the foregoing are hereinafter
collectively referred to as "Liabilities") which may now or in the future be incurred or
suffered by any of Authority and City and Authority and City Personnel by reason of,
resulting from, in connection with, or existing in any manner whatsoever as a direct or
indirect result of (i) Developer's placement on or under the Property of any Hazardous
Materials or Hazardous Materials Contamination, (ii) the escape, seepage, leakage,
spillage, discharge, emission or release from the Property of any Hazardous Materials or
Hazardous Materials Contamination that occurs after the Closing Date, (iii) Developer's
failure to comply with any applicable NPDES permit, or (iv) any Liabilities incurred under
any Governmental Requirements relating to the acts described in the foregoing clauses
(i), (ii) and (iii).
13.03 Duty to Prevent Hazardous Material Contamination. Developer shall take
commercially reasonable action to prevent the release of any Hazardous Materials into
the environment. Such precautions shall include compliance with all Governmental
Requirements with respect to Hazardous Materials. In addition, Developer shall install
and utilize such equipment and implement and adhere to such procedures as are
consistent with the standards generally applied by apartment complexes in San Diego
County, California as respects the disclosure, storage, use, removal, and disposal of
Hazardous Materials.
13.04 Obligation of Developer to Remediate Premises. Notwithstanding the
obligation of Developer to indemnify Authority and County and Authority and County
Personnel pursuant to Section 13.02, and provided no Hazardous Materials exist on the
Property as a result of Authority's actions, Developer shall, at its sole cost and expense,
promptly take (i) all actions required by any federal, state, regional, or local governmental
agency or political subdivision or any Governmental Requirements and (ii) all actions
necessary to make full economic use of the Property for the purposes contemplated by
this Regulatory Agreement and the Agreement, which requirements or necessity arise
from the presence upon, about or beneath the Property, of any Hazardous Materials or
Hazardous Materials Contamination. Such actions shall include, but not be limited to, the
investigation of the environmental condition of the Property, the preparation of any
feasibility studies or reports and the performance of any cleanup, remedial, removal or
restoration work.
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13.05 Environmental Inquiries. Developer, when it has received any notices of
violation, notices to comply, citations, inquiries, clean-up or abatement orders, or cease
and desist orders related to Hazardous Materials or Hazardous Materials Contamination,
or when Developer is required to report to any governmental agency any violation or
potential violation of any Governmental Requirement pertaining to Hazardous Materials
or Hazardous Materials Contamination, shall concurrently notify the Executive Director,
and provide to him/her a copy or copies, of the environmental permits, disclosures,
applications, entitlements, or inquiries relating to the Property, the notices of violation,
notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist
orders, reports filed pursuant to self-reporting requirements, and reports filed or
applications made pursuant to any Governmental Requirement relating to Hazardous
Materials and underground tanks, and Developer shall report to the Executive Director,
as soon as possible after each incident, any unusual, potentially important incidents.
In the event of a responsible release of any Hazardous Materials into the
environment, Developer shall, as soon as possible after it becomes aware of the release,
furnish to the Executive Director a copy of any and all reports relating thereto and copies
of all correspondence with governmental agencies relating to the release. Upon request
of the Executive Director, Developer shall furnish to the Executive Director a copy or
copies of any and all other environmental entitlements or inquiries relating to or affecting
the Property including, but not limited to, all permit applications, permits and reports
including, without limitation, those reports and other matters which may be characterized
as confidential.
SECTION 14. INSURANCE REQUIREMENTS.
14.01 Commercial General Automobile Liability: Worker's Compensation.
Commencing on the Closing Date and continuing in perpetuity, Developer shall procure
and maintain, at its sole cost and expense, in a form and content satisfactory to the
Executive Director, the following policies of insurance:
(a) Commercial General Liability Insurance covering bodily injury,
property damage, personal injury and advertising injury written on a per-occurrence and
not a claims-made basis containing the following minimum limits:(i) general aggregate
limit of Five Million Dollars ($5,000,000.00); (ii) products-completed operations aggregate
limit of Three Million Dollars ($3,000,000.00); (iii) personal and advertising injury limit of
Three Million Dollars ($3,000,000.00); and (iv) each occurrence limit of Three Million
Dollars ($3,000,000.00).Said policy shall include the following coverages:(i) blanket
contractual liability (specifically covering the indemnification clause contained below); (ii)
products and completed operations; (iii) independent contractors; (iv) Owner's broad form
property damage; (v) severability of interest; (vi) cross liability; and (vii) property damage
liability arising out of the so-called "XCU" hazards (explosion, collapse and underground
hazards). The policy shall be endorsed to have the general aggregate apply to this
Project only.
(b) A policy of worker's compensation insurance in such amount as will
fully comply with the laws of the State of California and which shall indemnify, insure, and
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provide legal defense for Authority and Developer against any loss, claim or damage
arising from any injuries or occupational diseases occurring to any worker employed by
or any persons retained by Developer in the course of carrying out the work or services
contemplated in this Regulatory Agreement, and Employers Liability Insurance in an
amount not less than One Million Dollars ($1,000,000) combined single limit for all
damages arising from each accident or occupational disease.
(c) A policy of comprehensive automobile liability insurance written on a
per-occurrence basis in an amount not less than Two Million Dollars ($2,000,000.00)
combined single limit covering all owned, non-owned, leased and hired vehicles used in
connection with the Work.
14.02 Builder's Risk. Commencing on the Closing Date and continuing until
Authority issues a Release of Construction Covenants for the Project, Developer shall
procure and maintain, at its sole cost and expense, in a form and content satisfactory to
the Executive Director, Builder's Risk (course of construction) insurance coverage in an
amount equal to the full cost of the hard construction costs of the Project. Such insurance
shall cover, at a minimum: all work, materials, and equipment to be incorporated into the
Project; the Project during construction; the completed Project until such time as the
Authority issues a final certificate of occupancy for the Project, and storage and
transportation risks. Such insurance shall protecUinsure the interests of Developer/owner
and all of Developer's contractor(s), and subcontractors, as each of their interests may
appear. If such insurance includes an exclusion for "design error," such exclusion shall
only be for the object or portion which failed. Authority shall be a loss payee under such
policy or policies and such insurance shall contain a replacement cost endorsement.
14.03 Property: Business Interruption: Boiler and Machinery Insurance.
Commencing on the date Authority issues a Release of Construction Covenants for the
Project and continuing in perpetuity, Developer shall procure and maintain, at its sole cost
and expense, in a form and content satisfactory to the Executive Director, the following
insurance:
(a) Insurance against fire, extended coverage, vandalism, and malicious
mischief, and such other additional perils, hazards, and risks as now are or may be
included in the standard "all risk" form in general use in San Diego County, California,
with the standard form fire insurance coverage in an amount equal to full actual
replacement cost thereof, as the same may change from time to time. The above
insurance policy or policies shall include coverage for earthquakes to the extent generally
and commercially available at commercially reasonable rates, if such insurance is
generally obtained for affordable Projects in the counties of San Diego and Los Angeles.
Authority shall be a loss payee under such policy or policies and such insurance shall
contain a replacement cost endorsement.
(b) Business interruption and extra expense insurance to protect
Authority and Developer covering loss of revenues and/or extra expense incurred by
reason of the total or partial suspension or delay of, or interruption in, the operation of the
Project caused by loss or damage to, or destruction of, any part of the insurable real
property structures or equipment as a result of the perils insured against under the all risk
physical damage insurance, covering a period of suspension, delay or interruption of at
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least twelve (12) months, in an amount not less than the amount required to cover such
business interruption and/or extra expense loss during such period.
(c) Boiler and machinery insurance in the aggregate amount of the full
replacement value of the equipment typically covered by such insurance.
14.04 Contract Insurance Requirements. Developer shall cause any general
contractor with whom it has contracted for the performance of work on the Property to
secure, prior to commencing any activities hereunder and maintain insurance that
satisfies all of the requirements of this Section 14.
14.05 Additional Requirements. The following additional requirements shall apply
to all of the above policies of insurance:
(a) All of the above policies of insurance shall be primary insurance and,
except the Worker's Compensation, Employer Liability insurance, and automobile liability
insurance, shall name Authority and City and Authority and City Personnel as additional
insureds on an ISO Form CG 20:10 (current version) or substantially similar form and not
an ISO Form CG 20:09. The insurer shall waive all rights of subrogation and contribution
it may have against any of Authority and City and Authority and City Personnel and their
respective insurers. All of said policies of insurance shall provide that said insurance may
not be amended or cancelled without providing thirty (30) days' prior written notice to
Authority. In the event any of said policies of insurance are cancelled, Developer shall,
prior to the cancellation date, submit new evidence of insurance in conformance with this
Section to the Executive Director. Not later than the Effective, Developer shall provide
the Executive Director with Certificates of Insurance or appropriate insurance binders
evidencing the above insurance coverages and said Certificates of Insurance or binders
shall be subject to the reasonable approval of the Executive Director.
(b) The policies of insurance required by this Regulatory Agreement
shall be satisfactory only if issued by companies of recognized good standing authorized
to do business in California, rated "A-" or better in the most recent edition of Best Rating
Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial
category Class VII or better, unless such requirements are waived by the Executive
Director due to unique circumstances.
(c) The Executive Director is hereby authorized to reduce or otherwise
modify Developer's insurance requirements set forth herein in the event he or she
determines, in his or her sole and absolute discretion, that such reduction or modification
is consistent with reasonable commercial practices.
(d) The Developer agrees that the provisions of this Section shall not be
construed as limiting in any way Authority's right to indemnification or the extent to which
Developer may be held responsible for the payment of damages to any persons or
property resulting from Developer's activities or the activities of any person or persons for
which Developer is otherwise responsible.
14.06 Indemnification. Developer shall defend (by counsel satisfactory to
Authority), assume all responsibility for and hold Authority and City and Authority and City
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Personnel harmless from all claims or suits for, and damages to, property and injuries to
persons, including accidental death (including expert witness fees, attorney's fees and
costs), which may be caused by the activities or performance of Developer or any of
Developer's employees, agents, representatives, contractors, or subcontractors under (i)
this Regulatory Agreement, (ii) a claim, demand or cause of action that any person has
or asserts against Developer; (iii) any act or omission of Developer, any contractor,
subcontractor or material supplier, engineer, architect or other person with respect to the
Property; or (iv) the ownership, occupancy or use of the Property by Developer. The
obligations and indemnifications in this Section 14.06 shall constitute covenants running
with the land.
SECTION 15. ASSIGNMENT.
15.01 Generally Prohibited. Except as otherwise expressly provided to the
contrary in this Regulatory Agreement, Developer shall not assign any of its rights or
delegate any of its duties under this Regulatory Agreement, nor shall any changes occur
with respect to the ownership and/or control of Developer, including, without limitation,
stock transfers, sales of issuances, or transfers, sales or issuances of membership or
ownership interests, or statutory conversions, without the prior written consent of the
Executive Director, which consent may be withheld in his or her sole and absolute
discretion. Any such assignment or delegation without such consent shall, at Authority's
option, be void. Notwithstanding the foregoing, however, (i) Developer may admit
Developer's Tax Credit investor as an up to 99.99% Tax Credit limited partner without
obtaining any consent, and such Tax Credit investor may assign its interests as an up to
99.99% Tax Credit limited partner to a subsequent reputable institutional investor without
any consent; and (ii) the Tax Credit investor may remove the general partner for a default
under the Partnership Agreement, provided the replacement general partner is
reasonably acceptable to Authority. For purposes of this Section 15.01, if the Tax Credit
investor transfers to an entity in which the Tax Credit investor or an Affiliate of the Tax
Credit investor is the general partner or managing member such transferee entity shall
be deemed to be a "reputable institutional investor." This Section 15.01 shall not be
applicable to the leasing of Affordable Units to Eligible Tenants in accordance with this
Regulatory Agreement.
15.02 Release of Developer. Upon any such assignment made in compliance
with Section 15.01 above which is evidenced by a written assignment and assumption
agreement in a form approved by Authority's counsel, Developer shall be released from
any liability under this Regulatory Agreement arising from and after the date of such
assignment.
SECTION 16. DEFAULTS AND REMEDIES.
16.01 Default. Subject to the extensions of time set forth in Section 17.02 of this
Regulatory Agreement, failure by either Party to perform any action or covenant required
by this Regulatory Agreement or under the Agreement within the time periods provided
herein and therein following Notice and failure to cure as described hereafter, constitutes
a "Default" under this Regulatory Agreement. A Party claiming a Default shall give written
Notice of Default to the other Party specifying such Default. Except as otherwise
expressly provided in this Regulatory Agreement or in the Agreement, the claimant shall
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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, cures, corrects or
remedies such failure or delay, or if such Default cannot reasonably be cured within thirty
(30) days, such Party commences such cure within thirty (30) days of receipt of such
Notice and thereafter diligently prosecutes such cure to completion.
16.02 Remedies; Institution of Legal Actions. Developer's sole remedy for
Authority's breach of this Regulatory Agreement shall be to institute an action at law or
equity to seek specific performance of the terms of this Regulatory Agreement. Developer
shall not be entitled to recover damages for any Default of Authority hereunder. Authority
shall be entitled to seek any remedy available at law and in equity for Developer's breach
of this Regulatory Agreement. All legal actions must be instituted in the Superior Court
of the County of San Diego, State of California, or in the United States District Court for
District of California in which San Diego County is located.
16.03 Termination by Authority. In the event that Developer is in Default of this
Regulatory Agreement or the Agreement, and (i) such Default is material and (ii)
Developer fails to cure such Default within the time set forth in Section 16.01 hereof, then
Authority may, at Authority's option, terminate this Regulatory Agreement.
16.04 Acceptance of Service of Process. In the event that any legal action is
commenced by Developer against Authority, service of process on Authority shall be
made by personal service upon the Executive Director or in such other manner as may
be provided by law. In the event that any legal action is commenced by Authority against
Developer, service of process on Developer shall be made in such manner as may be
provided by law.
16.05 Rights and Remedies Are Cumulative. Except as otherwise expressly
stated in this Regulatory Agreement, the rights and remedies of the Parties are
cumulative, and the exercise by either Party of one or more of such rights 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.
16.06 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.
16.07 Applicable Law. The internal laws of the State of California shall govern the
interpretation and enforcement of this Regulatory Agreement, without regard to conflict of
law principles.
SECTION 17. GENERAL PROVISIONS.
Notices, Demands and Communications Between the Parties. Any notices,
requests, demands, documents, approvals or disapprovals given or sent under this
Regulatory Agreement from one Party to another (collectively, "Notices") may be
personally delivered, delivered by reputable courier that provides a receipt with the date
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and time of delivery, or deposited with the United States Postal Service for mailing,
postage prepaid, to the address of the other Party as stated in this Section, and shall be
deemed to have been given or sent at the time of personal delivery, delivery by courier,
or, if mailed, on the second day following the date of deposit in the course of transmission
with the United States Postal Service. Notices shall be sent as follows:
If to Developer:
with a copy to:
and to
and to
If to Authority:
with a copy to
and to
Poway Commons, LLC
c/o Meridian Development, LLC
9988 Hibert Street, Suite 210
San Diego, CA 92131
Attn: Guy Asaro
Higgs, Fletcher & Mack, LLP
401 West "A" Street, Suite 2600
San Diego, CA 92101
Attn: Tim Waters, Esq.
Chelsea Investment Corporation
6339 Pasea del Lago
Carlsbad, CA 92008
Attn: Cheri Hoffman
Odu & Associates, PC
2195 Queensberry Road
Pasadena, CA 91104
Attn: Nkechi C. Odu, Esq
City of Poway Housing Authority
13325 Civic Center Drive
Poway, CA 92064
Attn: Executive Director
Rutan & Tucker, LLP
611 Anton, Suite 1400
Costa Mesa, CA 92626
Attn: Alan Fenstermacher, Esq.
Rutan & Tucker, LLP
611 Anton, Suite 1400
Costa Mesa, CA 92626
Attn: John A. Ramirez, Esq.
17.01 Enforced Delay; Extension of Times of Performance. In addition to specific
provisions of this Regulatory Agreement, performance by either Party hereunder shall not
be deemed to be in Default, and all performance and other dates specified in this
Regulatory Agreement shall be extended, where delays or Defaults are due to: war;
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insurrection; strikes; lockouts; 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; 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
any public or governmental agency or entity (other than the acts or failures to act of
Authority which shall not excuse performance by Authority); or any other causes beyond
the control or without the fault of the Party claiming an extension of time to perform.
Notwithstanding anything to the contrary in this Regulatory 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 ten (10) days of the commencement of the
cause. Times of performance under this Regulatory Agreement may also be extended in
writing by the mutual agreement of Authority and Developer. Notwithstanding any
provision of this Regulatory Agreement to the contrary, the lack of funding to complete
the construction of the Project shall not constitute grounds of enforced delay pursuant to
this Section.
17.02 Relationship Between Authority and Developer. It is hereby acknowledged
by Developer that the relationship between Authority and Developer is not that of a
partnership or joint venture and that Authority and Developer shall not be deemed or
construed for any purpose to be the agent of the other. Accordingly, with the exception
of any provisions expressly set forth to the contrary in the Agreement, herein, or in the
exhibits hereto, Authority shall have no rights, powers, duties or obligations with respect
to the development, operation, maintenance or management of the Project. Developer
agrees to indemnify, hold harmless and defend Authority from any claim made against
Authority arising from a claimed relationship of partnership or joint venture between
Authority and Developer with respect to the development, operation, maintenance or
management of the Property or the Project, except to the extent occasioned by the active
negligence or willful misconduct of Authority or its designated agents or employees.
17.03 No Third Party Rights. The Parties intend that no rights nor remedies be
granted to any third party as a beneficiary of this Regulatory Agreement or of any
covenant, duty, obligation or undertaking established herein.
17.04 Authority Approvals and Actions. This Regulatory Agreement shall be
administered and executed on behalf of Authority by the Executive Director. The
Executive Director shall have the authority to issue interpretations, waive terms and
conditions, enter into implementing agreements and amendments of this Regulatory
Agreement on behalf of Authority provided that such actions do not substantially change
the uses or development permitted on the Property, materially add to the costs or
obligations, increase the risk of liability, or impair the rights or remedies, of Authority
provided herein, or materially decrease the revenues or other compensation to be
received by Authority hereby. All other waivers or amendments shall require the formal
consent of the Board of Directors of Authority.
17.05 Counterparts. This Regulatory Agreement may be signed in multiple
counterparts which, when signed by all Parties, shall constitute a binding agreement.
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17.06 Integration. This Regulatory Agreement contains the entire understanding
between the parties relating to the transaction contemplated by this Regulatory
Agreement. Each Party is entering this Regulatory 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 Regulatory Agreement constitutes 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.
17.07 Real Estate Brokerage Commission. Authority and 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 this transaction, and each agrees to defend and hold
harmless the other from any claim to any such commission or fee resulting from any action
on its part.
17.08 Attorneys' 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 Regulatory 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, expenses including, without limitation, litigation costs, reasonable attorneys' fees,
and expert witness fees.
17.09 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 Regulatory
Agreement or of any of its terms. Reference to section numbers are to sections in this
Regulatory Agreement, unless expressly stated otherwise.
17.10 Interpretation. As used in this Regulatory 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 Regulatory Agreement shall be
interpreted as though prepared jointly by both Parties.
17.11 No Waiver. All waivers of the provisions of this Regulatory Agreement must
be in writing by the appropriate authorities of Developer and Authority. A waiver by either
Party of a breach of any of the covenants, conditions or agreements under this Regulatory
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 Regulatory Agreement.
17.12 Modifications. Any alteration, change or modification of or to this Regulatory
Agreement, in order to become effective, shall be made in writing and in each instance
signed on behalf of each Party.
17.13 Severability. If any term, provision, condition or covenant of this Regulatory
Agreement or its application to any party or circumstances shall be held, to any extent,
invalid or unenforceable, the remainder of this Regulatory Agreement, or the application
of the term, provision, condition or covenant to persons or circumstances other than those
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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.
17.14 Computation of Time. The time in which any act is to be done under this
Regulatory 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.
17.15 Legal Advice. Each Party represents and warrants to the other the
following: they have carefully read this Regulatory Agreement, and in signing this
Regulatory 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 Regulatory Agreement, or have knowingly chosen not to consult
legal counsel as to the matters set forth in this Regulatory Agreement; and, they have
freely signed this Regulatory 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 Regulatory
Agreement, and without duress or coercion, whether economic or otherwise.
17 .16 Time of Essence. Time is expressly made of the essence with respect to
the performance by Authority and Developer of each and every obligation and condition
of this Regulatory Agreement.
17.17 Cooperation. Each Party agrees to cooperate with the other in this
transaction and, in that regard, to sign any and all documents which may be reasonably
necessary, helpful, or appropriate to carry out the purposes and intent of this Regulatory
Agreement including, but not limited to, releases or additional agreements.
17.18 Non-Liability of Officials and Employees of Authority. No member, official,
officer, employee, or volunteer of Authority shall be personally liable to Developer, or any
successor in interest, in the event of any Default or breach by Authority or for any amount
which may become due to Developer or its successors, or on any obligations under the
terms of this Regulatory Agreement. Developer hereby waives and releases any claim it
may have against any of the Authority and City and Authority and City Personnel with
respect to any Default or breach by Authority or for any amount which may become due
to Developer or its successors, or on any obligations under the terms of this Regulatory
Agreement. Developer makes such release with full knowledge of Civil Code Section
1542 and hereby waives any and all rights thereunder to the extent of this release, if such
Section 1542 is applicable. Section 1542 of the Civil Code provides as follows:
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR OR RELEASING PARTY DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE AND
THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR OR RELEASED PARTY.
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Developer's Initials
[End -signatures on next page]
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IN WITNESS WHEREOF, the parties have executed this Regulatory Agreement
as of the respective dates set forth below.
Date: __________ _
ATTEST:
Faviola Medina, Authority Secretary
APPROVED AS TO FORM
RUTAN & TUCKER, LLP
Alan Fenstermacher,
Counsel
Authority
Date:. _________ _
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"Authority"
CITY OF POWAY HOUSING AUTHORITY, a
public body, corporate and politic
By:------------
Tina M. White, Executive Director
"Developer"
POWAY COMMONS, LLC, a Delaware limited
liability company
By: --------------
Guy Asaro, Manager
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March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California
County of _________ _
On ____________ , before me,-------=--~-=---
(insert name and title of the officer)
Notary Public, personally appeared ----,----------,---,-------
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capaAuthority(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _____________ _
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A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of _________ _ )
On ____________ , before me, ---,,-,-------,-=---=---c=--,----
(insert name and title of the officer)
Notary Public, personally appeared------------------
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capaAuthority(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _____________ _
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A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of _________ _
On ____________ , before me, ----,--,-----,-=-....,,,-cc--,---
(insert name and title of the officer)
Notary Public, personally appeared ------------------
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capaAuthority(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _____________ _
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EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
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EXHIBIT B
[See following page]
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EXHIBIT C
INCOME COMPUTATION AND CERTIFICATION FORM
(See following document)
March 19, 2019 Item #3.1
CITY OF POWAY HOUSING AUTHORITY
13325 Civic Center Drive, Poway, CA 92064
INCOME COMPUTATION AND CERTIFICATION FORM
(Affordable Housing Eligibility for Renter Occupied Unit
PART I. PROPERTY FINANCED WITH GOVERNMENT ASSISTANCE
Property Address: ______________________ _
PART II. TENANT HOUSEHOLD INFORMATION
Date of Soc. Sec.# Relationshi
Birth p
TOTAL NUMBER OF PERSONS IN HOUSEHOLD: ___ (Please list information on other
household members below)
Mailing Address: _________ _ Telephone Numbers: WorkL_)
Home L_) ______ _
PART Ill. GROSS HOUSEHOLD INCOME Complete the following, attach copies of required
verification as specified below. Attach a note explaining any significant changes in household
income between the previous year and the current year. INFORMATION IS REQUIRED FOR
ALL MEMBERS OF THE HOUSEHOLD AGE 18 OR OLDER REGARDLESS OF WHETHER
THEY CONTRIBUTE TO THE COSTS OF THE HOUSEHOLD. If you are not required to file a
tax return, please indicate this in Part V by your signature.
INCOME SOURCES
A. Employment earnings
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ANN
INCOME
for owner
-1-
ANN
INCOME
others in VERIFICATIONS (needed for
hshld file)
Last tax return & last 3 pay
stubs, employer verification
March 19, 2019 Item #3.1
B. Self-employment earnings Last 2 tax returns & current
financial stmt
C. Social Security (OASDI) Annual award letter
D. Supplemental Security Annual award letter
Income (SSI)
E. Public assistance (AFDC, Current benefit statement
general
assistance, unemployment,
etc.)
F. Pension (s) Annual award letter, year end
stmt, W-2
G. Interest income Last 2 statements for all
accounts
H. Investment income (stocks, Last 2 statements for all
bonds, accounts
real estate, etc.)
I. Room rental Rental agreement, copies of
checks, etc.
J. Other income (list
type/source)
K. TOTAL INCOME (sum of A / 12 months=
thru J) mo. income
PART IV. PROPERTY STATUS
Will this property be your primary residence? __ _
Will someone other than the individuals listed above be occupying this property? __ _
If yes -Name of occupants: ---------------------
Telephone Number: _______ Mailing Address: __________ _
My/our housing expenses are as follows:
1.Monthly tenant rent ________ _
2.Average monthly utilities
PART V. TENANT CERTIFICATION
I/We understand that after the initial eligibility determination, completion of monitoring forms is
required on an annual basis. I/We certify that I/we have disclosed all information pertaining to
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March 19, 2019 Item #3.1
my/our application and that the information presented in the foregoing Sections I through IV is
true and accurate to the best of my (our) knowledge.
Tenant Date Tenant Date
For more information regarding this application, please contact management staff at (760)
Information verified
Income category
FOR OFFICE USE ONLY
Maximum allowable annual income (, __ % of median)
Applicant's annual income gross monthly _____ max housing costs
Comments: ___________________________ _
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Management Staff Date
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EXHIBIT D
INCOME RECERTIFICATION FORM
(See following document)
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March 19, 2019 Item #3.1
PART I.
1.
2.
3.
4.
PART II.
5.
6.
PART Ill.
CITY OF POWAY
13325 Civic Center Drive, Poway, CA 92064
INCOME RECERTIFICATION FORM
(Renter Occupied Unit)
GENERAL INFORMATION
Property Owner Name _________________ _
Renter Name ---------------------
Property Address --------------------Poway, CA _____ (Please include P.O. Box No. if applicable)
Has there been a change in ownership of this property during the preceding
12 month period?
Yes() No()
(If yes, please explain)------------------
UNIT INFORMATION
Number of Bedrooms
Number of Occupants
Names:
AFFIDAVIT OF RENTER
I, , and I, , as renters of units
assisted pursuant to the City of Poway Housing Authority ("Authority") Affordable Housing
Program (the "Program"), do hereby represent and warrant that the following computation
includes all income (I/we) anticipate receiving for the 12-month period commencing
on January 1, 20_ (including the renter(s) and all family members of the renters):
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(a) amount of wages, salaries, overtime pay, commissions, fees,
(b)
(c)
(d)
(e)
tips and bonuses, and payments in lieu of earnings, such as
unemployment and disability compensation, worker's compensation
and severance pay (before payroll deduction)
net income from business or profession or rental of property
(without deduction for repayment of debts or expansion of business)
interest and dividends
periodic receipts such as social security, annuities, pensions,
retirement funds, insurance policies, disability or death benefits,
alimony, child support, regular contributions or gifts
from persons not occupying unit
public assistance allowance or grant plus excess of maximum
allowable for shelter or utilities over the actual allowance for
such purposes
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March 19, 2019 Item #3.1
(f) regular and special pay and allowances of a member of
armed services (whether or not living in the dwelling)
who is head of the family or spouse
Subtotal (a) through (f)
LESS: Portion of above items which are income of a family member
who is less than 18 years old or a full-time student ( ____ )
TOTAL ELIGIBLE INCOME
NOTE: The following items are not considered income: casual or sporadic gifts;
amounts specifically for or in reimbursement of medical expenses; lump sum
payment such as inheritances, insurance payments, capital gains and settlement
for personal or property losses; educational scholarships paid directly to the
student or educational institution; government benefits to a veteran for education;
special pay to a serviceman head of family away from home and under hostile fire;
foster child care payments; value of coupon allotments for purpose of food under
Food Stamp Act of 1964 which is in excess of amount actually charged the eligible
household; relocation payments under Title II of Uniform Relocation Assistance
and Real Property Acquisition Policies Act of 1970; payments received pursuant
to participation in the following programs: VISTA, Service Learning Programs, and
Special Volunteer Programs, SCORE, ACE, Retired Senior Volunteer Program,
Foster Grandparent Program, Older American Community Services Program, and
National Volunteer Program to Assist Small Business Experience.
2. This affidavit is made with the knowledge that it will be relied upon by the
Developer and Authority to determine maximum income for eligibility and
(I/we) warrant that all information set forth in this Part Ill is true, correct and
complete and based upon information (I/we) deem reliable and that the
estimate contained in paragraph 1 is reasonable and based upon such
investigation as the undersigned deemed necessary.
3. (I/We) will assist the Developer and Authority in obtaining any information
or documents required to verify the statements made in this Part Ill and
have attached hereto a copy of our federal income tax return for the
last year (20_).
4. (I/We) acknowledge that (I/we) have been advised that the making of any
misrepresentation or misstatement in this affidavit will constitute a material
breach of (my/our) agreement with the Developer to rent the unit and will
additionally enable Authority to initiate and pursue all applicable legal and
equitable remedies with respect to the unit and to me/us.
B. (My/Our) monthly housing expenses are limited to the following:
1. Base rent
2. Average Monthly Utilities
3. Other (explain)
(I/We) understand that completion of monitoring forms is required on an annual basis and
agree to notify Authority in writing of any change in ownership or rental of the unit.(1/We)
do hereby swear under penalty of perjury that the foregoing statements are true and
correct.
Date. ___________ _
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Renter(s). ____________ _
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March 19, 2019 Item #3.1
EXHIBIT E
FORM OF CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
(See following document)
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March 19, 2019 Item #3.1
CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE
The undersigned, being duly authorized to execute this certificate on behalf of
__________ , owner of the Project, hereby
represents and warrants that:
1. He/she has read and is thoroughly familiar with the provisions of the
Affordable Housing Regulatory Agreement between Authority and
2. As of June 30, 20_, the following number of residential units in the Project
(i) are currently occupied by tenants qualifying as Income
Households at Affordable Rents; (ii) are currently occupied by tenants qualifying as
________ Income Households at Affordable Rents; (iii) are currently occupied
by tenants qualifying as Income Households at Affordable Rents;
or (iv) are currently vacant and being held available for occupancy by Eligible Tenants
and have been so held continuously since the date Eligible Tenants vacated such unit,
as indicated:
i.
ii.
iii.
iv.
__ Units occupied by ________ Income Households
__ Units occupied by ________ Income Households
__ Units occupied by ________ Income Households
__ vacant Units
3. The unit number, unit size, rental amount charged and collected, number of
occupants, and the income of the occupants for each Affordable Unit in the Project are
set forth on the attached list. All Affordable Units in the Project are rented at Affordable
Rent.
DEVELOPER NAME
a California limited partnership
Dated.: _________ , 20_ By: _____________ _
(Printed name and title)
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March 19, 2019 Item #3.1
EXHIBIT F
RESTRICTED UNIT MATRIX
Size No. of 50% 60% Mgr
Units Income Income Unit
One bedroom 36 4 32
Two bedrooms 8 1 6 1
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ATTACHMENT N0.11
NOTICE OF AFFORDABILITY RESTRICTIONS
(See following document)
ATTACHMENT N0.11
March 19, 2019 Item #3.1
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Poway
13325 Civic Center Drive
Poway, CA 92064
Attn: Cit Clerk
Exempt From Recording Fee Pursuant to Government Code § 27383
NOTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
Important notice to owners, purchasers, tenants, lenders, brokers,
escrow and title companies, and other persons, regarding affordable
housing restrictions on the real property described in this Notice:
Affordable housing restrictions have been recorded with respect to the
property described below (referred to in this Notice as the "Property") which
require that the Property be developed as an affordable rental housing
development and that all of the units be rented to and occupied by persons
and households of limited income at affordable rents.
Title of Document Containing Affordable Housing Restrictions:
Affordable Housing Regulatory Agreement ("Agreement").
Parties to Agreement: Poway Commons, LLC, a Delaware limited
liability company ("Developer"), and the City of Poway Housing Authority, a
public body, corporate and politic ("Authority").
The Agreement is recorded concurrently with this Notice, in the
Official Records of San Diego County.
Legal Description of Property: See Exhibit "A" attached hereto and
incorporated herein by this reference.
Property Location: Located in the City of Poway, County of San
Diego, State of California.
Assessor's Parcel Numbers of Property:
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Summary of Agreement:
o The Agreement requires Developer to develop a forty-four (44)
unit senior affordable rental Project on the Property;
o The Agreement restricts the rental of (i) five (5) units to
households whose annual income does not exceed the 50% of
the area median income for San Diego County, adjusted for
household size; and thirty-eight (38) units to households whose
annual income does not exceed the 60% of the area median
income for San Diego County, adjusted for household size, all as
established by HUD, and as published periodically by HCD.
o The Regulatory Agreement restricts the rents that may be
charged to such households to the maximum amount of rent,
including a reasonable utility allowance, that does not exceed the
rent permitted to be charged to the applicable household, as the
case may be, determined pursuant to Health and Safety Code
Section 50053(b).
o The Agreement will remain in effect for 55 years.
This Notice does not contain a full description of the details of all of the
terms and conditions of the Agreement. You will need to obtain and read the
Agreement to fully understand the restrictions and requirements which apply
to the Property.
This Notice is being recorded and filed in compliance with Health and
Safety Code Section 33334.3(f)(3) and (4), and shall be indexed against
Developer, who will own fee title to the Property, and Authority.
[signature on next page]
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Date: _______ , 201_
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"Authority"
CITY OF POWAY HOUSING
AUTHORITY, a public body, corporate
and politic
By:
Tina M. White, Executive Director
-3-
March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of _________ _ )
On ___________ , before me,----~-~~----
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capaAuthority(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature. ____ _ (Seal)
882/0\2782-0020
2~Sl'b't' j':;!~5119 March 19, 2019 Item #3.1
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
882/012782-0020
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March 19, 2019 Item #3.1
882/012782-0020
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ATTACHMENT NO. 12
RELEASE OF CONSTRUCTION COVENANTS
(See following document)
ATTACHMENT NO. 12
March 19, 2019 Item #3.1
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Poway Housing Authority
13325 Civic Center Drive
Poway, CA 92064
Attn: City Clerk
(Space Above for Recorder's Use)
Exempt from Recordation Fee per Gov. Code
§ 27383
RELEASE OF CONSTRUCTION COVENANTS
This RELEASE OF CONSTRUCTION COVENANTS ("Release") is made this
__ day of , by the CITY OF POWAY HOUSING AUTHORITY, a
public body, corporate and politic ("Authority"), in favor of
__________ , a California limited partnership ("Developer").
A. Developer owns fee title to that certain real property located in the City of
Poway, County of San Diego, State of California, more particularly described in the legal
description attached hereto as Exhibit "A" ("Property").
B. On or about , Authority and Poway Commons, LLC
("Poway Commons") entered into that certain Affordable Housing and Property
Disposition Agreement ("Agreement") which provides for Poway Commons to develop
on the Property a forty-four (44) unit senior rental affordable housing development, as
more particularly described therein as the "Project." Poway Commons has assigned to
Developer, and Developer has assumed from Poway Commons, all of Poway Common's
rights and obligations in and to the Agreement.
C. Pursuant to the Agreement, Authority is required to furnish Developer with
this Release upon request by Developer after completion of construction of the Project.
D. The issuance by Authority of this Release shall be conclusive evidence that
Developer has complied with the terms of the Agreement pertaining to the construction
of the Project.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are
incorporated herein by this reference, the parties hereto agree as follows:
1. As provided in the Agreement, Authority does hereby certify that the
construction of the Project has been satisfactorily performed and completed, and that
such development and construction work complies with the Agreement.
8821012782-0020
29'1'of'3'23'119 -1-March 19, 2019 Item #3.1
2. This Release does not constitute evidence of compliance with or
satisfaction of any obligation of Developer to any holder of a mortgage or any insurer of
a mortgage security money loaned to finance the work of construction of improvements
and development of the Property, or any part of thereof.
3. This Release is not a notice of completion as referred to in Section 3093 of
the California Civil Code.
4. This Release does not terminate any other agreement or document
executed by Developer in connection with the Agreement, including, without limitation,
that certain Affordable Housing Regulatory Agreement recorded on , as
Instrument No. , in the Official Records of the County of San Diego
(the "Official Records"), and that certain Deed of Trust recorded on , as
Instrument No. , in the Official Records, all of which shall survive
recordation of this Release.
IN WITNESS WHEREOF, Authority has executed this Release as of the date set
forth above.
Date: ____________ _
882/012782-0020
:!~!f'b't' :i,:15119 -2-
CITY OF POWAY HOUSING
AUTHORITY, a public body, corporate
and politic
By:------------
Tina M. White, Executive Director
March 19, 2019 Item #3.1
A Notary Public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of California )
County of _________ _ )
On ___________ , before me, ___________ _
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capaAuthority(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
882/012782·0020
29f'of'3235119
Signature _________ _ (Seal)
March 19, 2019 Item #3.1
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
882/012782-0020
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'
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March 19, 2019 Item #3.1
TABLE OF CONTENTS
1. DEFINITIONS ................................................................................................................. 5
2. PARTIES ....................................................................................................................... 11
2.1 Authority ....................................................................................................... 11
3. SCHEDULE OF PERFORMANCE ............................................................................... 12
4. LAND USE ENTITLEMENTS ..................................................................................... 12
5. DUE DILIGENCE PERIOD; PERMISSION TO ENTER PROPERTY;
AS-IS; PHYSICAL AND ENVIRONMENTAL CONDITION ................................... 12
5.1 Due Diligence Period ................................................................................. 12
5.2 "AS-IS" ......................................................................................................... 13
5.3 Developer Indemnity and Release .......................................................... 14
5.4 Materiality .................................................................................................... 15
5.5 Review of Title of Site ................................................................................ 15
6. FINANCING PLAN FOR THE PROJECT ................................................................ 16
6.1 Financing Plan ............................................................................................ 16
6.2 Authority Loan ............................................................................................. 16
6.3 Applications to CD LAC and TCAC .......................................................... 17
6.4 Project Budget ............................................................................................ 17
6.5 Developer Submittals ................................................................................ 17
6.6 Financing Commitments ........................................................................... 18
6.7 Developer Fee ............................................................................................ 18
7. GROUND LEASE OF PROPERTY ........................................................................... 19
7.1 Agreement ................................................................................................... 19
7.2 Conditions for Authority's Benefit... .......................................................... 19
7.3 Conditions for Developer's Benefit.. ........................................................ 22
7.4 Developer Right to Terminate .................................................................. 23
7.5 Developer's Failure to Satisfy Conditions .............................................. 23
7.6 Waiver of Conditions .................................................................................. 23
8. PROPERTY CLOSING; ESCROW EXPENSES ..................................................... 23
8.1 Closing ......................................................................................................... 23
8.2 Expenses of Developer ............................................................................. 24
8.3 Instruction to Escrow Holder Regarding Waiver of Transfer
Taxes and Recording Fees ....................................................................... 24
8.4 Broker's Commissions ............................................................................... 24
9. OTHER ESCROW INSTRUCTIONS ........................................................................ 25
9.1 Funds in Escrow ......................................................................................... 25
9.2 Failure to Close ........................................................................................... 25
882/012782-0020
30'1''of'3235119 -i-March 19, 2019 Item #3.1
10.
11.
12.
13.
14.
15.
16.
17.
9.3 Amendments ............................................................................................... 25
9 .4 Notices ......................................................................................................... 25
9.5 Liability ......................................................................................................... 25
DEVELOPMENT OF THE PROJECT ....................................................................... 25
10.1 Scope of Development .............................................................................. 25
10.2 Additional Governmental Permits and Approvals ................................. 26
10.3 Review and Approval of Plans, Drawings, and Related
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
Documents .................................................................................................. 26
Cost of Development ................................................................................. 27
Indemnity ..................................................................................................... 27
Insurance Requirements ........................................................................... 27
Remedies for Defaults Re: lnsurance ..................................................... 30
Obligation to Repair and Restore Damage Due to Casualty
Covered by Insurance ............................................................................... 30
Rights of Access ......................................................................................... 30
Compliance with Laws; Compliance with Prevailing Wage Laws ...... 31
Anti-Discrimination ..................................................................................... 32
Taxes and Assessments ........................................................................... 33
Right of Authority to Satisfy Other Liens on the Property(s) ............... 33
Non-liability of Authority ............................................................................ 33
Release of Construction Covenants ........................................................ 34
AFFORDABILITY COVENANTS ............................................................................... 34
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS ............ 35
12.1 Developer's Formation, Qualification and Compliance ........................ 35
12.2 Litigation ....................................................................................................... 35
12.3 Authority ....................................................................................................... 35
DEF AUL TS AND REMEDIES .................................................................................... 35
13.1 Event of Default .......................................................................................... 35
13.2 No Waiver .................................................................................................... 36
13.3 Rights and Remedies are Cumulative .................................................... 36
13.4 Attorneys' Fees ........................................................................................... 36
13.5 Reimbursement of Authority ..................................................................... 36
NOTICES ....................................................................................................................... 36
ASSIGNMENT .............................................................................................................. 37
15.1 Generally Prohibited .................................................................................. 37
15.2 Release of Developer ................................................................................ 38
ADMINISTRATION ...................................................................................................... 38
MISCELLANEOUS ....................................................................................................... 38
882/012782-0020 -ii-3ij~'b't' 3'!!~5119 March 19, 2019 Item #3.1
17.1 Counterparts ............................................................................................... 38
17 .2 Prior Agreements; Amendments .............................................................. 38
17.3 Governing Law ............................................................................................ 39
17.4 Acceptance of Service of Process ........................................................... 39
17 .5 Severability of Provisions .......................................................................... 39
17.6 lnterpretation ............................................................................................... 39
17. 7 Accounting Principles ................................................................................ 39
17.8 Attachments lncorporated ......................................................................... 39
17.9 Time of the Essence .................................................................................. 39
17.10 Warranty Against Payment of Consideration ......................................... 40
17.11 Non-liability of Authority or County Officials and Employees ............. .40
17.12 Force Majeure ............................................................................................. 40
17 .13 Nondiscrimination Covenants ................................................................... 40
17.14 Consents and Approvals .......................................................................... .42
17.15 Third Party Beneficiary ............................................................................. .42
List of Attachments:
1A Legal Description of City-Owned Mixed Property
1 B Depiction of City-Owned Mixed Property and Property
2A Site Plan
2B Proposed Subdivision Site Map
3 Schedule of Performance
4 Scope of Development
5 Form of Grant Deed
6 Form of Assignment of Plans and Contract
7 Form of the Authority Note
8 Form of the Authority Deed of Trust
9 Project Budget
10 Form of Authority Regulatory Agreement
11 Form of Notice of Affordability
12 Form of Release of Construction Covenants
882/012782-0020
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March 19, 2019 Item #3.1
Exhibit C to Housing Authority Resolution
PROPERTY EXCHANGE IMPLEMENTATION AGREEMENT
This PROPERTY EXCHANGE IMPLEMENTATION AGREEMENT (this
"Agreement") is entered into as of the _ day of , 2019 (the "Effective
Date"), by and between CITY OF POWAY, a California municipal corporation ("City"),
and CITY OF POWAY HOUSING AUTHORITY, a public body, corporate and politic
("Authority").
RECITALS
A. City owns fee title to certain real property located generally at 13100 Poway
Road, in the City of Poway, County of San Diego, State of California, commonly known
as APN 317-101-06 (the "City Exchange Property"). The City Exchange Property
comprises approximately nine tenths (.9) acres, and is depicted in Exhibit "A", which is
attached hereto and incorporated herein by this reference.
B. Authority owns fee title to certain real property located south of Poway
Road, in the City of Poway, County of San Diego, State of California, commonly known
as APN 317-472-01 & 06 (the "Authority Exchange Property"). The Authority Exchange
Property comprises approximately two and ninety-one hundredths (2.91) acres, and is
depicted in Exhibit "A", which is attached hereto and incorporated herein by this reference.
C. In furtherance of Poway's Long Range Property Management Plan, City
staff have been negotiating with Poway Commons, LLC, a Delaware limited liability
company (the "Developer") for the proposed sale by City to Developer of various parcels
of real property owned in fee by City, for Developer's development thereon of a residential
and retail development project (the "Residential/Retail Project").
D. To maximize the financial viability of a Residential/Retail Project, the
Developer has recommended that the Authority Exchange Property be included with the
property contemplated to be developed with the Residential/Retail Project.
E. Authority staff have been negotiating with Developer regarding the
development of an affordable housing development (an "Affordable Project"), to occur
concurrently with the development of the Residential/Retail Project. The Developer has
recommended that the Affordable Project be developed on the City Exchange Property.
F. To facilitate the development of each of the Residential/Retail Project and
Affordable Project, City staff have negotiated with Developer the terms of a Purchase,
Sale, and Development Agreement (the "PSDA"). To facilitate the development of the
Affordable Project, Authority staff have negotiated with Developer the terms of an
Affordable Housing and Property Disposition Agreement (the "AHPDA"). The PSDA and
AHPDA are being considered by the City Council and Authority Board, respectively,
concurrently with the City Council's and Authority Board's consideration of this
Agreement.
8821012782-0020
:lti1i''b'f'j,35119
March 19, 2019 Item #3.1
G. In order to effect the property transfers contemplated under the PSDA and
AH PDA, City and Authority would need to (i) exchange the City Exchange Property and
Authority Exchange Property, and (ii) provide for the deposit into Authority's low and
moderate income housing asset fund (the "LMIHAF") the sum of One Million Four
Hundred Ninety-Three Thousand Three Hundred Five Dollars ($1,493,305) (the "Excess
Value"), which is the difference between the value of the Authority Exchange Property
and the value of the City Exchange Property.
NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS,
WHICH ARE INCORPORATED HEREIN BY THIS REFERENCE, AND THE MUTUAL
PROMISES CONTAINED IN THIS AGREEMENT, CITY AND AUTHORITY AGREE AS
FOLLOWS:
AGREEMENT
I. Exchange. City and Authority agree that if the close of escrow occurs under
both of the PSDA and AHPDA, then concurrently with said closings, (i) City will transfer
and convey the City Exchange Property to Authority, for Authority's sale to the Developer
under the AHPDA, and (ii) Authority will transfer and convey the Authority Exchange
Property to City, for City's sale to the Developer under the PSDA.
2. Deposit of Excess Value into LMIHAF. Promptly after the closings under
the PSDA and AHPDA, City will provide to Authority the Excess Value, and Authority will
deposit the Excess Value into the LMIHAF.
3. Termination. If the closings under the PSDA and AHPDA have not occurred
by June 30, 2020, this Agreement shall automatically terminate, unless City and Authority
each agree, in writing, to extend the term.
4. Approvals and Actions. City shall maintain authority of this Agreement and
the authority to implement this Agreement through the City Manager (or his or her duly
authorized representative). Authority shall maintain authority of this Agreement and the
authority to implement this Agreement through the Executive Director (or his or her duly
authorized representative). Each of the City Manager and Executive Director shall have
the authority to make approvals, issue interpretations, execute documents, waive
provisions, and/or enter into certain amendments of this Agreement on behalf of their
respective party so long as such actions do not materially or substantially change the
basic business terms hereof, and such approvals, interpretations, waivers and/or
amendments may include extensions of time to perform.
5. Time. Time is of the essence of this Agreement.
6. Captions. The captions of the sections/paragraphs of this Agreement are
for convenience and reference only, and the words contained in the captions shall in no
way be held to explain, modify, amplify or aid in the interpretations, constructions or
meaning of the provisions of this Agreement.
8821012782-0020
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March 19, 2019 Item #3.1
7. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall constitute one and
the same Agreement.
8. Entire Agreement. This Agreement contains the entire agreement between
the parties respecting the matters set forth herein, and supersedes all prior agreements
between the parties respecting such matters.
[SIGNATURES ON FOLLOWING PAGE]
882/012782-0020
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"
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March 19, 2019 Item #3.1
IN WITNESS WHEREOF, City and Authority have executed this Agreement as of
the Effective Date.
ATTEST:
By:, ___________ _
Faviola Medina, City Clerk
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Alan Fenstermacher, City Attorney
ATTEST:
By: ___________ _
Faviola Medina, Authority Secretary
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
Alan Fenstermacher, Authority Counsel
882/012782-0020
atif'~r j~3"'9
"City"
CITY OF POWAY, a California municipal
corporation
By:, _________ ~
Tina M. White, City Manager
"Authority"
CITY OF POWAY HOUSING AUTHORITY,
a public body, corporate and politic
By:, ____________ _
Tina M. White, Executive Director
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March 19, 2019 Item #3.1
882/0 12782-0020
36 ii6b1r 3~~5/19
EXHIBIT "A"
DEPICTION OF CITY EXCHANGE PROPERTY
AND AUTHORITY EXCHANGE PROPERTY
Future City Pa-eels
Future Affor da:il e Site
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March 19, 2019 Item #3.1
SUMMARY REPORT PURSUANT TO
SECTION 52201 OF
CALIFORNIA GOVERNMENT CODE
IN CONNECTION WITH THE SALE OF PROPERTY
BY AND BETWEEN THE CITY OF POWAY
AND POWAY COMMONS, LLC
The City of Poway is considering the approval of a sale of publicly owned properties within its
Town Center area to create an economic opportunity. The subject parcels are categorized under
the following property groupings (collectively referred to as the "City Parcels"): (portions of) City-
Owned Mixed Property; Housing Authority Property; and City-Owned Property.
The City Parcels are described in greater detail below and are also identified and defined as such
in the Purchase, Sale, and Development Agreement ("PSDA") proposed to be entered into by and
between the City and Poway Commons, LLC, a Delaware limited liability company (the
"Developer"):
Portions of City-Owned Mixed Property
The City-Owned Mixed Property, identified below, is currently vacant, unimproved land and is
approximately 1.54 acres. The City-Owned Mixed Property was acquired by the former Poway
Redevelopment Agency ("RDA") in 2001 and title was transferred to the City pursuant to the Long-
Range Property Management Plan ("LRPMP") of the Successor Agency to the former Poway
Redevelopment Agency ("Successor Agency").
The City and City of Poway Housing Authority ("Housing Authority") contemplate exchanging the
0.9 acres of the southernmost portion of the City-Owned Mixed Property for the Housing Authority
Property pursuant to a property exchange and implementation agreement ("Property Exchange
and Implementation Agreement") proposed to be entered into between the City and Housing
Authority, as described in greater detail in Section IV A of this Report.
The Housing Authority and Developer have negotiated an agreement ("Affordable Housing and
Property Disposition Agreement" or "AHPDA"), separate from the PSDA, which would provide for
the Housing Authority to convey the Affordable Housing Parcel to the Developer for an agreed
upon purchase price of $1,200,000. The remaining .64 acres of the City-Owned Mixed Property
is proposed to be sold to the Developer as contemplated in the PSDA.
13100 Poway Rd (Assessor's Parcel Number ("APN"): 317-101-06), -1.54 Acres
Housing Authority l"HA"l Property
The following properties are currently owned by the Poway Housing Authority ("Housing
Authority") and consist of a mix of vacant and improved land, comprising a total of approximately
2.91 acres. The Housing Authority Property is contemplated to be exchanged with the Affordable
Housing Parcel pursuant to the Property Exchange and Implementation Agreement, as described
in greater detail in Section IV of this Report, to effectuate their development as envisioned under
the PSDA:
13021 Poway Rd (APN: 317-472-01), -2.6 acres
13031 Poway Rd (APN:317-472-06), -.31 acres
309 of 323
_,_
Attachment C March 19, 2019 Item #3.1
Purchase, Sale, and Development Agreement
Summary Report Prepared Pursuant to Government Code 52201
City of Poway
March 5, 2019
City-Owned Property
The following properties consist of a mix of vacant and improved land and comprise a total of
approximately 3.02 acres. The properties were originally acquired by the RDA but were purchased
by the City on March 24, 2018, pursuant to the Successor Agency's approved Long-Range
Property Management Plan:
13033 Poway Rd (APN:317-472-18), -1.83 acres
Poway Rd (APN:317-472-23), -.61 acres
13053 Poway Rd (APN:317-472-24), -.33 acres
13029 Y:z Poway Rd (APN:317-472-25), -.25 acres
This summary report ("Report") for the proposed sale of the City Parcels has been prepared by
the City of Poway ("City") pursuant to California Government Code Section 52201 (a)(2)(B). This
Report sets forth certain details of the proposed PSDA.
I. BACKGROUND
Section 52201(a)(2)(B) of the California Government Code provides that a city, county, or city and
county may sell or lease property to create an economic opportunity. The acquisition, sale, or
lease shall first be approved by the legislative body by resolution after a legally noticed public
hearing. The city, county, or city and county shall also make available a copy of a report that
describes and contains specific elements of the proposed transaction(s) for public inspection prior
to the public hearing.
Pursuant to 52201 (a)(2)(B), the Report must include the following information:
• A copy of the proposed acquisition, sale, or lease agreement.
• A summary that describes and specifies all of the following:
310 of 323
o The cost of the agreement to the city, county, or city and county, including land
acquisition costs, clearance costs, relocation costs, the costs of any improvements
to be provided by the city, county, or city and county, plus the expected interest on
any loans or bonds to finance the agreements.
o For the sale or lease of property, the estimated value of the interest to be conveyed
or leased, determined at the highest and best uses permitted under the general
plan or zoning.
o For the sale or lease of property, the estimated value of the interest to be conveyed
or leased, determined at the use and with the conditions, covenants, and
development costs required by the sale or lease. The purchase price or present
value of the lease payments which the lessor will be required to make during the
term of the lease. If the sale price or total rental amount is less than the fair market
value of the interest to be conveyed or leased, determined at the highest and best
use, then the city, county, or city and county shall provide as part of the summary
an explanation of the reasons for the difference.
-2-
March 19, 2019 Item #3.1
Purchase, Sale, and Development Agreement
Summary Report Prepared Pursuant to Government Code 52201
City of Poway
March 5, 2019
o An explanation of why the acquisition, sale, or lease of the property will assist in
the creation of economic opportunity, with reference to all supporting facts and
materials relied upon in making this explanation.
This Report outlines the primary details of the proposed sale and disposition of the City Parcels
between the City and prospective Developer as outlined in the proposed PSDA and addresses
the requirements pursuant to Government Code Section 52201.
II. REPORT ORGANIZATION
This Report is based upon information provided in connection with the proposed sale and
disposition of the City Parcels and is organized into the following sections:
• Summary of the Proposed Sale & Disposition -This section includes a description of
and other relevant information pertaining to the proposed conveyance of the City Parcels
between the City and prospective Developer under the PSDA;
• Cost of the Agreement to the City -This section summarizes the cost of the agreement
to the City, including land acquisition costs, clearance costs, relocation costs, the costs of
any improvements to be provided by the City, plus the expected interest on any loans or
bonds to finance the agreements;
• Estimated Value of the Interest to be Conveyed Determined at the Highest and Best
Use Permitted Under the General Plan or Zoning -This section estimates the value of
the interest to be conveyed, determined at the highest and best use permitted under the
general plan or zoning for the City Parcels;
• Estimated Value of the Interest to be Conveyed Determined at the Use and with the
Conditions, Covenants, and Development Costs Required by the Sale -This section
estimates the value of the property interest to be conveyed determined at the use and with
the conditions, covenants, and development costs required by the sale or lease of the City
Parcels; The purchase price or present value of the lease payments which the lessor will
be required to make during the term of the lease, as applicable;
• Consideration Received and Comparison with the Established Value -This section
includes an explanation of the reasons for the difference If the sale price or total rental
amount of the City Parcels is less than the fair market value of the interest to be conveyed
or leased, determined at the highest and best use;
• Economic Opportunity-This section describes the existing condition of the City Parcels
and includes an explanation of why the sale or lease of the City Parcels will assist in the
creation of economic opportunity.
This Summary Report sets forth certain details of the proposed sale and disposition of the City
Parcels by the City to the prospective Developer. A copy of the proposed PSDA, which
prospective Developer will be required to execute, in substantially the attached form, to effectuate
the conveyance of the City Parcels is attached to this Summary Report (see Attachment "A"). This
Summary Report is made available for public inspection and copying on the date that the first
-3-
311 of323 March 19, 2019 Item #3.1
Purchase, Sale, and Development Agreement
Summary Report Prepared Pursuant to Government Code 52201
City of Poway
March 5, 2019
notice of the joint public hearing is published, which is March 5, 2019. The public hearing relating
to the proposed sale of the City Parcels is scheduled for Tuesday, March 19, 2019 at 7:00 p.m.,
in the City Council Chambers, at 13325 Civic Center Drive, Poway, CA 92064.
Ill. SUMMARY OF PROPOSED SALE AND DISPOSITION OF CITY PARCELS
Under the terms of the PSDA, the City would sell the City Parcels, which are comprised of (a) the
City-Owned Property, (b) the City-Owned Mixed Property, other than approximately 0.9 acres
located in the southernmost portion of the parcel, and (c) the Housing Authority Property, at fair
market value, to the Developer in "As-ls" condition for a purchase price of $6,420,500 to effectuate
the development of a neighborhood-serving mixed-use commercial and residential project, which
would stimulate local economic activity, job growth, preserve and enhance the City's economic
base, and serve as a catalyst for the revival of the City's Town Center area and mixed-use core.
The following table summarizes the appraised value and agreed upon purchase price per parcel
and categorizes the parcels by their intended use as envisioned for the proposed project and
described in further detail herein:
Ownershi!;!
Address APN Land AC Land SF Original (Post Aeeraised Purchase
Owner Pro(;!erti Value Price
Exchange}
MARKET RATE
TOWN HOMES
13100 Poway Rd 317-101-06 0.64 27,878 City City 756,364 677,381 (Portion)
13033 Poway Rd 317-472-18 1.83 79,715 City City 1,462,766 1,936,887
Poway Rd 317-472-23 0.61 26,572 City City 487,589 645,629
13021 Poway Rd 317-472-01 1.38 60,113 Housing City 1,103,069 1,460,603 (Portion) Authority
SUBTOTAL 4.46 194,278 3,809,787 4,720,500
RETAIL
13021 Poway Rd 317-472-01 1.22 53,143 Housing City 975,177 982,938 (Portion) Authority
13031 Poway Rd 317-472-06 0.31 13,504 Housing City 247,791 249,763 Authority
13053 Poway Rd 317-472-24 0.33 14,375 City City 263,777 265,877
13029 1/2 Poway 317-472-25 0.25 10,890 City City 199,831 201,422 Rd
SUBTOTAL 2.11 91,912 1,686,577 1,700,000
GRAND TOTAL 6.57 286,189 5,496,364 6,420,500
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312 of 323 March 19, 2019 Item #3.1
Purchase, Sale, and Development Agreement
Summary Report Prepared Pursuant to Government Code 52201
City of Poway
March 5, 2019
The Developer's proposed project, as outlined in the PSDA, is a high-quality neighborhood-
serving mixed-use commercial and residential project that generally consists of the development
of approximately 25,000 square feet of retail and approximately 98 units of for-sale housing, of
which approximately 38 units would be two-story attached condominiums, approximately 54 units
would be three-story attached buildings, containing two-story townhomes and flat condominiums,
and approximately 6 units of three-story attached condominiums ("Project").
A summary of the salient points of the PSDA are as follows:
• Developer to close escrow and acquire fee title to adjacent privately-owned properties
located at 13029 Poway Road (APN: 317-472-20), 13117 Poway Rd (APN: 317-472-26),
and 13126 Quale Court (APN: 317-472-19) in the City of Poway ("Private Parcels"), as a
condition to City's sale of the City Parcels.
• Upon satisfaction (or waiver by the appropriate party) of various closing conditions, City
to sell to Developer fee title to the City Parcels, which are comprised of (a) the City-Owned
Property, (b) the City-Owned Mixed Property, other than approximately 0.9-acre located
in the southernmost portion of the parcel, and (c) the Housing Authority Property, in "as-
is" condition.
• Developer to acquire fee title to the City Parcels for a purchase price of $6,420,500, of
which, $4,720,500 will be paid in cash at the close of escrow and the balance of the
purchase price ($1,700,000) will be paid by the Developer pursuant to a promissory note
between the City and Developer as outlined in the PSDA.
• The Developer's proposed Project is currently not entitled, and Developer will be required
to obtain the entitlements necessary for the proposed Project, including all required
environmental review and analysis under the California Environmental Quality Act
("CEQA"), as a condition to the sale of the City Parcels to the Developer.
• Acknowledgement and agreement by City and Developer that the ultimate sale of the City
Parcels to Developer under the PSDA is expressly conditioned upon the review and
approval of all necessary findings and conclusions which the City Council of the City of
Poway ("City Council") is required to make, including all necessary review, findings and
determinations required under CEQA as applicable under relevant state and local land
use provisions and the City has full discretion with regards to such matters that is in no
way constrained by the PSDA.
• City's reservation of the right to exercise its discretion as to all matters with respect to the
PSDA, the entitlements, and the Project which City is, by law, entitled or required to
exercise, at its discretion.
• Developer to construct associated on-site and off-site improvements in accordance with
plans and specifications approved by City and any conditions imposed by City in its
approval of the Developer's development application(s) related to the Project.
• City would not be required to provide any form of financial or other assistance to the
Developer with the construction of the Project.
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Other PSDA Terms:
Escrow Opening Date: Within five (5) days following the effective date of PSDA
Due Diligence Period: 120 days from Escrow Opening Date
Initial Deposit: $125,000 (applicable to purchase price) deposited upon opening of Escrow
Additional Deposit: $125,000 (applicable to purchase price) and deposited upon expiration of the
Due Diligence Period and Developer's delivery of Due Diligence Investigation Conclusion Notice
Note: Total deposit amount ($250,000) to be immediately released to City, but applicable to the
purchase price, upon expiration of the Due Diligence Period and Developer's delivery of Due
Diligence Investigation Conclusion Notice
Escrow Closing Date: The earliest of: (1) a date two (2) business days after the date that
Developer is issued the first grading permit for the Project, (2) five (5) business days following the
one hundred eightieth (180th) calendar day after expiration of the date by which a challenge could
be brought regarding the entitlements, or (3) three hundred sixty-five (365) days after the effective
date of the PSDA. Developer shall have the right, but not the obligation and upon five (5) days
advance written notice to City, to extend the Escrow Closing Date for two successive periods of
one (1) month each.
IV. COST OF THE AGREEMENT TO THE CITY
This section outlines the costs of the PSDA to the City, including land acquisition costs, clearance
costs, relocation costs, the costs of any improvements to be provided by the City, plus the
expected interest on any loans or bonds to finance the agreements. For the purpose of this
Report, the City's costs under the proposed conveyance of the City Parcels in accordance with
the PSDA are comprised of land acquisition costs of the City-Owned Mixed Property, City-Owned
Property, and Housing Authority Property.
A. City-Housing Authority Land Exchange Properties
In order to effectuate the disposition and development of the Housing Authority Property and the
City-Owned Mixed Property, as contemplated under the PSDA, the City and Housing Authority
are considering, concurrently with the City's consideration of the PSDA, a property exchange
implementation agreement ("Property Exchange Implementation Agreement"). Under the
terms of the Property Exchange Implementation Agreement, the Housing Authority
Properties, comprising approximately 2.91 acres, would be exchanged with 0.9 acres of the
southernmost portion of the 1.54-acre City-Owned Mixed Property ("Affordable Housing
Parcel").
The Property Exchange Implementation Agreement also provides that if there's a difference
between the value of the Housing Authority Property and the value of the City-Owned
Mixed Property, the City would deposit the funds associated with that difference ("Excess
Value Deposit") into the low-and moderate-income housing trust fund (the "LMIHTF") to be
utilized for the expansion or preservation of affordable housing and/or other affordable housing
activities of the Housing Authority in accordance with the laws governing the use of
affordable housing monies.
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The following table provides an estimate of the Excess Value Deposit that the City is to deposit
into the LMIHTF, which is approximately $1,493,305 and is based on the agreed upon purchase
price in the PSDA for the properties subject to the Property Exchange Implementation Agreement.
The agreed upon purchase price, as reflected in the following table, is greater than the appraised
value, which was based on an appraisal prepared by lntegra Realty Resources dated as of
February 15, 2019.
City-Owned Mixed Property Appraised Purchase
Value Price
Ownership: City Transfer to Housing Authority (0.90 Acres)
Address: 13100 Poway Rd
APN: 317-101-06
Total Amount $1,063,636 $1,200,000
Acreage 0.90 0.90
Housing Authority Property
Ownership: Housing Authority Transfer to City
Address: 13021 and 13031 Poway Rd
APN: 317-472-01, 317-472-06
Total Amount $2,326,037 $2,693,305
Acreage 2.91 2.91
Excess Value Deposit (Estimate)
Estimated Property Value (Housing Authority Property) $2,326,037 $2,693,305
Estimated Property Value ( .. 9 Acre-Affordable Housing Parcel) $(1,063,636) $(1,200,000)
Estimated "Excess Value" Deposit into LMIHTF $1,262,401 $1,493,305
B. Land Acquisition Costs
City-Owned Mixed Property and City-Owned Property
The City-Owned Mixed Property and City-Owned Property, as identified in the table below, were
originally acquired by the former RDA over a multi-year period prior to the dissolution of the RDA
in 2012. The former RDA sought to acquire them for the purpose of eliminating existing blight
conditions, specifically to eliminate environmental deficiencies, encourage private development
activities, and enhance and renovate existing businesses.
Pursuant to Assembly Bill ("AB")x1 26, AB 1484, and Senate Bill ("SB") 107 (collectively, the
"Dissolution Act"), the Successor Agency included the City-Owned Properties in its Long Range
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Property Management Plan ("LRPMP") that identified the proposed future disposition of the
subject properties, which were designated under the permissible use category For Sale and
Governmental Use. The LRPMP was subsequently approved by the Oversight Board to the
Successor Agency and the State Department of Finance ("DOF") in 2015.
In accordance with the LRPMP and to further the goals and objectives of the former RDA and
ultimate disposition and development of the City-Owned Mixed Property and City-Owned
Property, as contemplated under the PSDA, the Successor Agency sold the City-Owned Property
to the City via a purchase and sale agreement for a purchase price of $5,191,000 on March 24,
2018 and conveyed fee title to the City-Owned Mixed Property to the City in accordance with the
Dissolution Act for Governmental Use.
A breakdown of the former RDA's original cost of acquisition and the City's cost of acquisition
from the Successor Agency by parcel is identified in the following table:
RDA Land City Land
PSDA Property Address APN Acquisition Acquisition
Category/Definition Cost• Cost Per
LRPMP**
City-Owned Mixed 13100 Poway Rd 317-101-06 $1,158,018 $0 Property
City-Owned Property 13029 Y, Poway Rd 317-472-25 $1,497,966 $726,000
City-Owned Property 13053 Poway Rd 317-472-24 $865,895 $824,000
City-Owned Property 13033 Poway Rd 317-472-18 $4,601,382 $3,300,000
City-Owned Property Poway Rd. 317-472-23 $315,000 $340,000
Total: $8,438,261 $5,191,000
.. ·The former RDA acqwred the vanous properties 1denflfled m the above table between 1997 and 2008,
which was prior to the dissolution of the former RDA in 2012 .
.. As part of dissolution of the former RDA, the Successor Agency was mandated by the State to sell and
dispose of the properties identified in the above table through the implementation of the DOF approved
LRPMP. The City opted to acquire the parcels from the Successor Agency on March 24, 2018 as part of
the mandated RDA dissolution process.
Housing Authority Property
The Housing Authority Property, as identified in the table below, were both originally acquired by
the former RDA in 2002 and 2010, respectively. Post dissolution of the RDA and in accordance
with the Dissolution Act, the Housing Authority assumed the housing assets and housing
responsibilities of the former RDA as the housing successor entity of the former RDA.
As required under the Dissolution Act, the Successor Agency prepared, submitted, and received
approval of the Housing Asset Transfer list by the DOF on August 31, 2012, thereby approving
and affirming the transfer of fee title of the Housing Authority Property to the Housing Authority.
As mentioned previously, in conformance with the requirements of the PSDA as proposed, the
Housing Authority Property is contemplated to be exchanged with the Affordable Housing Parcel
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pursuant to the Property Exchange Implementation Agreement, as described in greater detail
herein, to effectuate their development as envisioned under the PSDA.
A breakdown of the former RDA's original cost of acquisition and the Housing Authority's cost of
acquisition by parcel is identified in the following table:
PSDA Property RDA Housing Authority Category/ Address APN Acquisition Cost Acquisition Cost Definition
Housing Authority 13021
Property Poway Rd 317-472-01 $2,228, 140* $0
Housing Authority 13031
Property Poway Rd 317-472-06 $348,021 $0
Total: $2,576,161 $0 . . . ... 'Acqws1t1on cost for 13021 Poway Rd includes land acqws1t1on cost, relocaflon assistance, and cost for
title, escrow, and environmental studies.
C. Agreement Financing
Pursuant to the PSDA, the City and Developer have agreed to a purchase price of $6,420,500 for
the acquisition of the City Parcels. Of which, $4,720,500 will be paid in cash at the closing of the
transaction and the balance of the purchase price ($1,700,000) will be paid by the Developer
pursuant to a promissory note between the City and Developer, which is secured by the Deed of
Trust with Assignment of Rents and Rider to Deed of Trust ("City Note").
The terms of the City Note are as follows:
• Principal Note Amount: $1,700,000
• Term: 4 years
• Interest: Interest shall accrue at the "Applicable Rate", which shall be the sum of (i) the
rate published by the United States Department of the Treasury, as the interest rate for its
Five-Year Treasury Bill, plus (ii) two and one-quarter percent (2.25%), compounded
monthly.
• Time and Amount of Payment: The Note Amount, and all accrued interest thereon, shall
be paid on the fourth (4"') anniversary of the Note Date.
Assuming the terms outlined above, the estimated future value of the City Note at the end of the
term (48 months) would be approximately $2,081,317 (-$381,317 of interest). In terms of the
interest calculation, the analysis assumes interest is compounded monthly and utilizes a
placeholder estimate of 5.07%, which is the sum of: (i) an average over the last twenty (20) years
of the United States Department of the Treasury interest rate for its Five-Year Treasury Bill
(2.82%), plus (ii) two and one-quarter percent (2.25%).
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It should be noted that, pursuant to the City Note, the Applicable Rate shall be determined on the
date that is fourteen (14) days prior to the date such repayment is due, which is the fourth (4th)
anniversary of the Note Date. Therefore, the Applicable Rate applied for purposes of the
estimated future value of the City Note, is subject to change, which may impact the future value
and amount of payment received by the City from the Developer for the City Note.
V. ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED DETERMINED AT THE
HIGHEST AND BEST USE PERMITTED UNDER THE GENERAL PLAN AND ZONING
As described throughout this Report, the City is proposing to sell the City Parcels to the Developer
under the terms of the PSDA. If the PSDA is approved, the City Parcels will be sold in their current
"as is" condition and no express or implied representations have been made to the prospective
Developer by the City regarding suitability for desired use, zoning and land use, subsurface
compaction and/or the existence or non-existence of toxic waste, hazardous materials, and/or
undesirable substances in or on the City Parcels.
The prospective Developer of the City Parcels will be required under the PSDA to secure any and
all land use and other entitlements, permits and approvals, which may be required by the City and
any other governmental agency having jurisdiction over the City Parcels, including all
environmental review and analysis required in connection with any development project
application submitted by the prospective Developer.
The estimated value of the interest to be conveyed for the City Parcels, not including the 0.9-acre
southernmost portion of the City-Owned Mixed Property, determined at the highest and best use
permitted under the current General Plan and zoning code is $5,579,091 based on an appraisal
prepared by lntegra Realty Resources effective February 15, 2019, which conforms with the
Uniform Standards of Professional Appraisal Practice, the Code of Professional Ethics and
Standards of Professional Appraisal Practice of the Appraisal Institute, and applicable state
appraisal regulations. It should be noted that the value conclusion considers specific cost
adjustments to address uncompacted fill, asbestos/lead abatement, and environmental
remediation issues associated with the City Parcels.
VI. ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED AT THE USE AND WITH THE
CONDITIONS, COVENANTS, AND DEVELOPMENT COSTS REQUIRED BY THE SALE
The estimated value of the interest to be conveyed at the use and with the conditions, covenants,
and development costs required by the PSDA for the City Parcels is a purchase price of
$6,420,500, which is higher than the fair market value as determined at the highest and best use
permitted under the City's General Plan and zoning, as identified in Section V.
VII. CONSIDERATION RECEIVED AND COMPARISON WITH THE ESTIMATED VALUE OF
THE INTEREST TO BE CONVEYED AT HIGHEST AND BEST USE
Pursuant to this Section, the City must provide an explanation of the reasons for the difference If
the sale price of the City Parcels is less than the fair market value of the interest to be conveyed,
determined at the highest and best use. The City Parcels, not including the 0.9-acre southernmost
portion of the City-Owned Mixed Property, will be sold for a purchase price of $6,420,500, which
is higher than the fair market value as determined at the highest and best use permitted under
the City's General Plan and zoning, as identified in Section V.
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VIII. ECONOMIC OPPORTUNITY
The former RDA, established in 1983, sought to acquire the City Parcels for the original purpose
of eliminating remaining blight conditions and enhancing and stimulating private investment and
the economic vitality of businesses along the Poway Road corridor. The former RDA specifically
sought, among other goals, to eliminate environmental deficiencies, encourage private
development activities, and enhance and renovate existing businesses.
However, some of the signs of blight that existed prior to the dissolution of the former RDA in
2012 still exist today. The City Parcels are currently comprised of a mix of vacant and improved
parcels, which are underutilized and do not meet their full development and economic potential.
The City envisions the development of the City Parcels as an integral component of the Poway
Road commercial corridor, which, if developed as envisioned in the PSDA, would create an
attractive and quality mixed-use commercial and residential project and provide Poway residents,
youth, and visitors with a lively day and nighttime environment and further the City's efforts to
improve and enhance its local economic base.
In 2017, the City amended the Poway Road Specific Plan ("PRSP") (originally adopted in May
1996) pursuant to a Poway Road Corridor Study ("PRCS"), which includes the City Parcels
within its boundaries, in order to make comprehensive modifications to the existing Specific
Plan that includes district/zoning realignments, refined development standards and development
incentives/bonuses for projects that consolidate lots and provide community benefits. The goals
and objectives contained in the PRSP are as follows:
District Goals/Objectives
• Implement tools to promote a unique sense of place, where the Town Center is the "heart"
of the City.
• Encourage the development of a mixed-use project for the properties north of Poway
Community Park and west of Civic Center Drive.
• Promote pedestrian connections through larger new developments to access public space
and parking areas and specifically, a trail connecting Poway Community Park, Hilleary
Park, and the Poway Community Library.
• Encourage the provision of privately-owned public gathering spaces designed as active
places that provide pedestrian connections, primary building entrances, and views to
Poway Community Park and the Poway Community Library.
• Require pedestrian-oriented uses, such as retail and restaurants, at the ground level of
new development fronting Poway Road.
• Integrate residential uses either as stand-alone or mixed-use projects to provide housing
in walkable proximity to commercial and civic uses.
The proposed sale of the City Parcels to the Developer, as described herein, will create an
economic opportunity by facilitating the development of the City Parcels in alignment with the
PRSP, thereby increasing its revenue base (e.g. property tax, sales tax, etc.), promoting the
increase in the supply of housing, stimulating economic activity and job growth within the City,
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and ultimately serving as a catalyst for the revival of the City's Town Center area and mixed-use
core.
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Attachment D
Proposed Subdivision Map
POWAY COM1VIONS
LSSJ
f::::::::: :I
II I I I I
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RETAIL AREA -Approx 2 .3 gross acres
AFFORDABLE AREA -Approx 0 .9 gros s acres
RESIDEN TIALAREA -Approx 6 .1 gross acres
Attachment D March 19, 2019 Item #3.1
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Vicinity Map
Current Ownership
Property# Ownership
1 Mix ed City Property
2 City-owned
3 City-owned
4 City-owned
5 City-own ed
6 Housing Authority-owned
7 Housing Authority-owned
Attachment E March 19, 2019 Item #3.1
Attachment F
Site Plan -Property Exchange
Future City P creels
FutureAffordcble Site
882/012782-0020
3~~6b't3 3~~5/19 A ttachment F
March 19, 2019 Item #3.1