HomeMy Public PortalAbout2023.04.17 Restrictive Covenant - 1 Net Prophet LLCInstrument # 456518
VALLEY COUNTY, CASCADE, IDAHO
04-17-2023 15:46:42 No. of Pages: 6
Recorded for: CITY OF MCCALL
DOUGLAS A. MILLER Fee: $0.00
Ex -Officio Recorder Deputy: NA
Electronically Recorded by Simplifile
Restrictive Covenant
THIS RESTRICTIVE COVENANT is made and entered into between THE CITY OF McCALL,
IDAHO ("McCall") and Net Prophet, LLC hereinafter referred to as the GRANTOR.
RECITALS
WIIEREAS, Grantor is the owner of the following described real Property, to -wit:
Lot B6 of the Running Horse Subdivision, according to the official plat thereof which is
recorded in the Office of Recorder of Valley County, Idaho, Instrument No. 454725
which is zoned for residential use and is hereinafter referred to as "the Property"; and
WHEREAS, there currently exists on the Property a dwelling unit, or Grantor intends to construct
a dwelling unit on the Property; and
WHEREAS, Grantor may rent or sell such unit as part of the Incentive Program with the City of
McCall that involves units for local housing in exchange for valuable consideration;
AGREEMENT
NOW, THEREFORE, the parties do hereby adopt the following restrictive covenant applicable to
the Property, to -wit:
1. RESTRICTIVE COVENANT. Grantor is a participant in the Incentive Program with
McCall in exchange for valuable consideration and intends to rent or sell a dwelling unit on the Property,
and the dwelling unit will be used for local housing only, as defined in this Restrictive Covenant.
2. RECORDING. This Restrictive Covenant will be recorded as a restriction on the Property
following its execution by both parties. Future conveyances of the Property shall include the following
language [information must be added as required to fill in blanks]:
This conveyance is subject to the restriction set forth in that certain Restrictive Covenant
between Net Prophet LLC, as Grantor and The City of McCa11, Idaho, recorded
, as Instrument # , records of
Valley County, Idaho.
3. RESTRICTIONS. Grantor hereby covenants and agrees, and the City of McCa11
approves pursuant to its signature below, that the Property shall be rented or sold subject to certain
restrictions, as follows (collectively "Local Housing Restrictions"):
(1) General Criteria:
(a) General criteria for all tenants or purchasers of the Property ("General Criteria"):
(i) Employed, work minimum 30 hours/week or 1,560 hours/year, for a McCa11
Area Business for a set period (6 consecutive months) or have employment offer from a
McCa11 Business; or
(ii) Senior (age 65 and older) as primary resident as may be further defined in the
applicable McCall Local Housing Policy; or
(iii) Person with disability; and
(iv) No Short -Term Rental or vacation renting or sub -leasing.
RESTRICTIVE COVENANT - 1
Restrictive Covenant
THIS RESTRICTIVE COVENANT is made and entered into between THE CITY OF McCALL,
IDAHO ("McCall ") and Net Prophet, LLC hereinafter referred to as the GRANTOR.
RECITALS
WHEREAS , Grantor is the owner of the following described real Property , to-wit:
Lot B6 of the Running Horse Subdivision, according to the official plat thereof which is
recorded in the Office of Recorder of Valley County , Idaho , Instrument No. 454725
which is zoned for residential use and is hereinafter referred to as "the Property"; and
WHEREAS, there currently exists on the Property a dwelling unit, or Grantor intends to construct
a dwelling unit on the Property ; and
WHEREAS , Grantor ma y rent or sell such unit as part of the Incentive Program with the City of
McCall that inv ol v es units for local housing in exchange for va lu able consideration ;
AGREEMENT
NOW, THEREFORE, the parties do hereby adopt the following restrictive covenant applicable to
the Property, to-wit:
1. RESTRICTIVE COVENANT. Grantor is a participant in the Incentive Program with
McCall in exchange for va lu able consideration and intends to rent or sell a dwelling unit on the Property,
and the dwelling unit will be used for local housing only, as defined in this Restrictive Co venant.
2. RECORDING . This Restrictive Covenant wi ll be recorded as a restriction on the Property
following its execution by both parties. Future conveyances of the Property shall include the following
language [information must be added as required to fill in blanks]:
This conveyance is subject to the restriction set forth in that certain Restrictive Covenant
between Net Prophet LLC , as Grantor and The City of McCall, Idaho , recorded
______________ , as Instrument # __________ , records of
Va ll ey County , Idaho .
3 . RESTRICTIONS. Grantor hereby covenants and agrees , and the City of McCall
approves pursuant to its signature below, that the Property sha ll be rented or sold subject to certain
restrictions, as follows ( collectively "Local Housing Restrictions "):
(1) General Criteria:
(a) Genera l criteria for all tenants or purchasers of the Property ("General Criteria"):
(i) Emp loyed , work minimum 30 hours /week or 1,560 hours/year, for a McCall
Area Business for a set period (6 consecutive months) or have employment offer from a
McCall Business ; or
(ii) Senior (age 65 and older) as primary resident as may be further defined in the
applicab le McCall Local Housing Policy; or
(iii) Person with disability; and
(i v) No Short-Term Rental or vacation renting or sub-leasing.
RESTRICTIVE COVENANT -1
(b) Clarification of General Criteria:
(i) An employer with employees who satisfy the General Criteria may rent or
purchase the Property for rental to such employees, subject to these Local Housing
Restrictions with regard to rentals.
(ii) A "McCall Area Business" is a business that has a physical location within the
boundaries of either the McCall Donnelly School District or the Meadows Valley School
District. (hereinafter the "McCall Area"). Businesses that have multiple physical
locations must have at least one location within the McCall Area to qualify as a McCall
Business. Telework, or other work from home, for a business which is not located within
the McCall Area does not qualify as a McCall Business.
(iii) Short-Term Rentals shall be defined as a rental or lease for thirty (30) days or
less.
(2) Restrictions on Rental of the Property:
(a) Any tenant must meet the General Criteria at the time of commencement of the lease.
(i) The Base Rental Rate for the Property shall be $2,00 0 .00 per month; provided , in
the event that the Property Owner e le cts to rent the Property, the Property Owner shall
notify the City of such intention prior to renting the Property . In such case, the Base
Rental Rate shall be reset to the actual rent charged to the first tenant to rent the Property,
as reflected in a signed lease or rental agreement for the Property. The lease or rental
agreement shall be provided to the City as a precondition of the Base Rental Rate being
reset. The reset Ba se Rental Rate shall be confirmed in an amendment to this Covenant
executed by the Property Owner and the City and recorded with the Valley County Office
of Recorder. The Base Rental Rate shall be adjusted as follows, commencing from the
date on which the Property is rented for the first time :
a. The Base Rental Rate shall be adjusted in the event that the owner of the
Property makes Capital Improvements to the Property . "Capital Improvements"
shall be defined as a permanent structural alteration to or expansion of the
improvements on the Property which require a building permit under prevailing
Ordinances and Codes. In the event of such Capital Improvements , th e Base Rental
Rate shall be increased by a sum equal to the percentage which result s from dividing
the actual cost of the Capital Improvements , as confirmed by the Building Permit , by
the Valley County Assessed valuation of the improvements on the Property prior to
the Capital Improvements. By way of example:
If the assessed va luation of the improvements on the Property, prior to the Capital
Improvements , is $500,000 and the cost of the Capital Improvements is $100,000, the
Base Rental Rate shall be increased by 20%.
An owner proposing to increase the Base Rental Rate shall provide written notice to
the City of McCall of the increase in the Base Rental Rate, together with A copy of
the building permit.
b. The Base Rental Rate (including adjustments for Capital Improvements
as appropriate) will be adjusted annually and according to the percentage increase or
decrease of the Consumer Price Index for All Urban Consumers (CPI-U) for the
twelve calendar months prior to and including the most recent month for which such
Index is available. The base for computing the adjustment is the Consumer Price
Index for All Urban Consumers (CPI-U) as published by the United States
RESTRICTIVE COVENANT - 2
Department of Labor, Bureau of Labor Statistics . Annual increases in the rental rate
for the Property may not exceed the Base Rental Rate (including adjustments for
Capital Improvements , as appropriate) multiplied by the CPI Percentage Increase.
The owner of the Property will use the following formula to compute the calculation
for each year 's Base Rental Rate:
The Current Year's Base Rental Rate= Last Year's Base Rental Rate (adjusted as
appropriate for Capital Improvements) x (The Current CPI / Previous Year's CPI)
Example (without Capital Improvements): For a lease beginning January 1, 2020.
The CPI for December 2018 = 251.233
The CPI for December 2019 = 256.974
Base Rental Rate= $1,000.00
Adjusted Base Rental Rate= $1,023.00 [$1 ,000.00 x (256.974 I 251.233)]. The rent
beginning on January 1, 2020 may not exceed 102 .3% of the 2019 base rental rate,
i .e ., $1 ,023 .00 , except in the case of adjustments to the Base Rental Rate for Capital
Improvements.
Annual increases in the rental rate for the Property may not exceed the Base Rental Rate
(adjusted for Capital Improvements as appropriate) multiplied by the CPI Percentage
Increase.
(b) If a tenant ceases to satisfy the General Criteria during the lease term, they shall not be
required to move out of the Property until the expiration of the term of their lease . Leases
shall have a maximum term of one year; provided that the lease can be renewable on a
year to year basis upon confirmation of qualification of the General Criteria prior to each
renewal period. However, a tenant who ceases to satisfy the General Criteria shall be
required to vacate the premises at the end of their lease and will not be eligible for a
renewal of that lease .
(3) Restrictions on Sale of the Property:
(a) Any purchaser of the Property must meet the General Criteria at the time of
purchase, or they must rent the Property to tenants who satisfy the General
Criteria. Prior to sale, the seller and purchaser shall submit a copy of the
Purchase and Sale Agreement to the City and confirm the information needed to
verify whether the purchaser satisfies the General Criteria .
(b) The Base Valuation for this Property shall be $300 ,000 .00 ; provided, upon the
sale of the Property by Net Prophet, the Base Valuation shall be reset to the
actual purchase price for the Property, as reflected in the signed Purchase and
Sale Agreement for the Property which must be provided to the City immediately
after closing . The reset Base Valuation shall be confirmed in an amendment to
this Covenant executed by Net Prophet and the City and recorded with the Valley
County Office of Recorder prior to the closing of the sale . The Base Valuation,
with the following described adjustments, establishes the maximum price for
which the Property may be resold . The Base Valuation will be adjusted annually
as follows:
(i) In the event that the owner of the Property makes Capital Improvements
to the Property, as defined above, the Base Valuation shall be increased
by the actual cost of the Capital Improvements, as confirmed by the
RESTRICTIVE COVENANT - 3
building permit. The term "Base Valuation" sha ll be deemed to include
all Capital Improvement adjustments which may be made from time to
time .
(ii) The Base Valuation for the Property shall be adjusted according to the
percentage increase of the Consumer Price Index for All Urban
Consumers (CPI-U), as published by the United States Department of
Labor, Bureau of Labor Statistics for the twelve calendar months prior to
and including the most recent month for which such Index is available
The base for computing the adjustment is the CPI-U. The final selling
price of the Property shall not exceed the Base Valuation increased by
the greater of: (i) 3% per year, not compounded; or, (ii) the CPI
Percentage Increase .
(i) The owner of the Property will use the following formula to compute the
calculation for the maximum sa les price at the time of contracting to sell
the Property:
RESTRICTIVE COVENANT -4
Example (without Capital Impro veme nts): Assuming the owner
purchased the Property for $250,000 in December 2018 and contracts
to sell the Property in January 2020 , the app li cable CPI for the month
of the contract (December 20 19 being the most recent month for
which data is available) is 256 .974. The applicable CPI for the month
of purchase (December 2018) was 251.233.
256.974 -251.233 = 5.741 index point change.
5 .741 / 251.233 = .0229 x 100 = 2 .3% CPI percentage increase.
Base va lu ation at the time of purchase was $250,000 .
Maximum sale price: greater of $250,000 x 102 .3%=$255,750 , or
$250,000 x 103% = $257,500 therefore $257,500 .
Example (with Capital Improvements): Assuming the owner
purchased the Property for $250 ,000 in December 2018, immediately
makes Capital Improvements costing $50 ,000 and contracts to sell the
Property in January 2020, the applicable CPI for the month of the
contract (December 2019 being the most recent month for which data
is avai lab le) is 256.974. The applicable CPI for the month of
purchase (December 2018) was 251.233.
256.974 -251.233 = 5.741 index point change.
5.741 / 251.233 = .0229 x 100 = 2.3 % CPI percentage increase.
Base Valuation at the time of purchase was $250 ,000 .
Base Valuation increased by $50,000 in Capital Improvements.
Adjusted Base Valuation: $300,000
Maximum sa le price: greater of $300 ,000 x 10 2.3%=$306 ,900, or
$300,000 x 103% = $309 ,000 therefore $309 ,000.
(c) If an owner who purchases the Property satisfies the General Criteria at the time of
purchase, they shall not be required to sell the Property at such time as they fail to satisfy
the General Criteria. However, they may not lease the Property except pursuant to the
terms of Section (2) above.
(d) If an owner who purchases the Property does not satisfy the General Criteria themselves
at the time of purchase but does rent the Property to tenants who satisfy the General
Criteria , they shall be required to sell the Property at such time as they fail to rent the
Property pursuant to the terms of Section (2) above for a period of longer than 9 months .
(e) Upon the resale of the Property, the Base Valuation shall be reset to the actual purchase
price paid for the Property according to the terms prov ided herein . All future annual
adjustments, and adjustments for Capital Improvements to the Base Valuation shall be
applied to the new Base Valuation established under this Paragraph.
4 . RUN WITH THE LAND . This Restrictive Covenant is perpetual and shall run with the
Property.
5. RECITALS. The above recitals are hereby incorporated into and made a part of thi s
agreement.
6. ENTIRE AGREEMENT. This agreement constitutes the entire agreement between the
parties hereto .
7. REMEDIES . Each party shall have all remedies in law to enforce the provisions of this
agreement including, but not limited to, specific performance or injuncti ve relief.
8 . ATTORNEY FEES: In the event an action is brought to enforce any of the term s or
provisions of this agreement or enforce forfeiture thereof for default thereof by either of the p art ies hereto,
the prevailing party to such action or collection shall be entitled to reco ver from the non-prevailing party a
reasonable attorney fee, together with such other costs as may be authorized by law.
9 . SEVERABILITY: In the event any of the provisions of this agreement sha ll be deemed
illegal or unenforceable, such determination shall not operate to invalidate any of the remaining provisions
of this agreement.
10 . HEADINGS : The capitalized paragraph headings are for convenience only and are not a
part of this agreement and shall not be used in interpreting or construing this agreement.
11 . SITUS: This agreement is established under the laws of the State of Idaho , and all
questions concerning its validity and construction shall be determined under such laws .
12 . AGREEMENT SURVIVES CLOSING : All covenants , agreements and representations
contained in this agreement shall not be deemed to be merged into or waived by the instruments at closing
but shall expressly survive such closing and be binding upon the parties obligated thereb y.
13 . BINDING EFFECT: The provisions and stipulations of this agreement sha ll inure to and
bind the heirs , personal representatives, assigns and successors in intere st of the parties hereto .
IN WITNESS WHEREOF, the parties have executed this agreement.
RESTRICTIVE COVENANT - 5
CITY OF McCALL, IDAHO GRANTOR:
NET PROPHET LLC
By: ~1-------+--.-~.......,.,"""--------
Dated: ¥4 /74-23 Dated: l
STATE OF IDAHO )
:ss
County of Valley )
On this _jl_ day of J4-~1 l , d::'b2,3 , before me, a Notary Public, personally appeared
Robert Giles , the Mayorfthe City of McCall, Idaho , known or identified to me to be the person
whose name is subscribed to the within instrument, and acknowledged to me that he executed the
same on behalf of the City of McCall, Idaho , and was aut oriz d to do so.
BESSIEJO WAGNER
COMM NO . 52467
(SEAL NOTARY PUBLIC
STATE OF IDAHO
MY COMMISSION EXPIRES : JULY 24, 2026
STATE OF IDAHO )
) ss.
County of Valley )
On this S t-h day of ~yj \ , 2023, before me, a Notary Public in and for said State,
personally appeared Ch~Harding, known or identified to me to be the Managing Member of
Net Prophet LLC, the limited liability company that executed the instrument or the person who
executed the instrument on behalf of said limited liability company, and acknowledged to me
that such limited liability company executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affix
year in this certificate first above written.
(SEAL)
EMILY POVEY STARK
COMM NO . 20170212
NOTARY PUBLIC
STATE OF IDAHO
MY COMMISSION EXPIRES : AUG . 03 , 2023
RESTRICTIVE COVENANT -6
NOTARY PU LIC FOR IDWO
My Commission Expires: ~ ?/Z