HomeMy Public PortalAbout2009.10.22 USDA Ground Lease RIder Lot 4EXHIBIT A
United States Department of Agriculture
Rural Development, Rural Housing Service, Single Family Housing
USDA Ground Lease Rider
THIS GROUND LEASE RIDER ("Rider") is made this 22 day of October, 2009, and is
incorporated into, and shall be deemed to amend and supplement the Amended and Restated
Ground Lease V2 ("Ground Lease") dated August 27, 2009 by and between The City of McCall
as lessor (the "Lessor") and Bradley Kraushaar, as lessee (the "Lessee").
The Ground Lease covers the leased premises at Lot 4, Block 3, Greystone Village No. 3, 1543
McCall Avenue, McCall, Valley County, Idaho (the "Leased Premises"), as further described
therein. The Ground Lease, as amended by this Rider, shall hereafter be referred to as the
"Lease," unless otherwise indicated.
This Rider amends the Ground Lease for the purpose of enabling the Lessee to secure USDA
Rural Development guaranteed financing in the form of a mortgage or deed of trust given this
day of 22, October, by Lessee to Wells Fargo Bank (the "Specified Mortgage"). The Specified
Mortgage is recognized by Lessor as a "Permitted Mortgage" (or as such concept is otherwise
defined) under the Ground Lease, and the holder of the Specified Mortgage (the "Specified
Mortgagee") is recognized as a "Permitted Mortgagee" (or as such concept is otherwise defined)
under the Ground Lease.
AMENDMENTS
1. The first paragraph of Section One is replaced with the following:
Lessor leases to Lessee and Lessee leases from Lessor, for the purposes of using in and
on the Premises, defined below, community/workforce housing and, except as provided
further herein, for no other purpose, that certain real property, situated in McCall, Valley
County, Idaho, and more particularly described in the exhibit attached to and made a part of
this Lease as Exhibit 1 (the "Real Property").
Lessee is purchasing certain buildings, structures, fixtures and other improvements
("Improvements") now located or to be located, constructed, or placed on the Real Property
during the term of this Lease. Title to the Improvements shall remain in the Lessee, subject
to the provisions and restrictions in this Lease, including but not limited to provisions
regarding the disposition of Improvements, the grant of an option to Lessor to purchase the
Improvements, and a covenant not to sever or remove the Improvements from the Real
Property.
As used in this Lease, the term "Premises" refers to the Real Property and to any and all
appurtenances to and Improvements located on the Real Property from time to time during
the term of this Lease. Use and/or occupancy of the Premises as housing by person(s) not
qualified to rent community/workforce housing, as provided further herein, shall be
permitted so long as Lessee pays the Additional Rent defined below.
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October 22, 2009
2. Section One Part A is amended to read as follows:
A. Qualified Persons. To qualify for and be eligible to lease the Real Property without
having to pay additional annual rent equal to five percent (5%) of the value of the Real Property,
at least one member of the household residing in the Premises must meet the following criteria
and evidence of the following must be provided to Lessor:
3. Section One, Part C is amended to read as follows: "To remain eligible to reside on the
Premises without having to pay additional annual rent equal to five percent (5%) of the value
of the Real Property, the Lessee must meet the criteria set forth in Section 1(A)(2) or 1(B)
above".
4. Section One Part A and Section Eight are amended to provide that the requirement for non-
vacation/continued occupancy of the Premises by the Lessee is met through occupancy by the
minor children, immediate family members of other dependents of the Lessee.
5. Section Nine is amended to limit the Right of Entry by the Lessor (acting as Lessor, and not
acting in its governmental capacity) to the Lease Premises exterior to the living and garage
areas unless Lessor is confirming compliance with Subpart 2 of Section One Part B.
6. Sections Seventeen (C), Eighteen, Nineteen, and Twenty -Two are amended to provide that the
sections are suspended during any time that the United States, acting through one or more of
its agencies, becomes the owner of the Improvements, is appointed receiver for the Lessee, or
is substituted as the Lessee.
7. Section Thirty -Six is amended to read: "This Lease shall be governed by, construed and
enforced in accordance with federal law and with the laws of Idaho."
8. Section Thirty -Eight is amended to require notice to and written consent of the Specified
Mortgagee.
ADDITIONAL COVENANTS. Notwithstanding anything to the contrary contained in
the Ground Lease, and in addition to the covenants and agreement made in the Ground Lease,
the Lessor and the Lessee further covenant and agree, so long (but only so long) as the Specified
Mortgagee, its successors and assigns shall have an interest in the Leased Premises, as a holder
of the Specified Mortgage or as an owner of the Lessee's interest pursuant to any sale after or in
lieu of foreclosure the following provisions shall apply to the Ground Lease as modifications
thereof:
Section Forty. Grant Purchase Option to Lessor. Upon the expiration of the term of this
Lease, as such term may be extended or sooner terminated (including due to default by Lessee)
in accordance with this Lease, the Lessee shall surrender the Improvements to the Lessor.
Ownership of the Improvements shall vest in Lessor, provided that Lessor promptly pay to
Lessee as consideration for the Improvements, an amount equal to the lesser of the current
market value of the Improvements, as determined by an appraisal, or the original purchase price
allocated to the Improvements.
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Section Forty-one. No Assignment or Transfer. The making of the Specified Mortgage shall
not be deemed to constitute an assignment or transfer of the Lease or leasehold estate so as to
require the Specified Mortgagee to assume the performance of any of the Lessee's obligations
under the Lease.
Section Forty-two. Status of the Fee Estate. The Lessor represents and warrants that, except
as specified and approved by Rural Development, there is no existing mortgage on the fee estate,
and so long as the Specified Mortgage shall remain on the Leased Premises, the Lessor and the
Lessee shall not subordinate the Lease to any mortgage or lien that may hereafter be place on the
fee estate. Notwithstanding the foregoing, a state- or local -government entity ("Government
Entity") may hold a prior recorded interest (represented by recorded covenants, a mortgage or
deed of trust, other lien) on the fee estate if the Government Entity has entered into an agreement
(which agreement has been approved in writing by the Specified Mortgagee) that provides,
among other conditions, in the event the Government Entity (including its successors and
assigns) succeeds to the interest of the Lessor under the Lease by any remedy available to the
Government Entity by law or pursuant to its lien, the Government Entity and the Lessee agree to
recognize one another under all the terms of the Lease and this Rider. Such recognition must
include, but is not limited to, the provisions of this Rider whereby all provisions of the Lease
regarding (a) occupancy of the Leased Premises as a primary residence by the Lessee, (b)
limitation on assignment of, or sublease under, the Lease, (c) the price at which the leasehold
estate may be transferred, and (d) the income of successive transferees, assignees or successors,
shall, in the event of foreclosure or assignment in lieu of foreclosure of the Specified Mortgage,
be of no further force or effect with respect to such Specified Mortgagee or its successive
transferees, assignees or successors. The Specified Mortgage shall, unless otherwise pre -
approved in writing by rural Development, constitute a first leasehold lien on the Leased
Premises, and shall have priority over the lessor's reversionary interest. If the Lessor conveys
title to the fee estate while the Specified Mortgage remains on the Leased Premises, the Lease
shall remain in effect with the same priority thereto.
Section Forty-three. Termination, Forfeiture and Modification of Lease. There shall be no
termination, forfeiture, or modification of the Lease, except as provided in this Rider, without
the prior written consent of the Specified Mortgagee. The Lessor and Lessee shall amend the
Lease from time to time as reasonably requested by the Specified Mortgagee, as long as the
requested changes do not change the periodic fee, charge or payment due the Lessor for the
rights accorded the Lessee under the Lease (the "Rent"), and do not materially or adversely
affect the rights of Lessor or Lessee or their respective interests in the Leased Premises. An
adjustment of the Rent may be made by the Lessor as provided in the Lease, without prior
approval of the Specified Mortgagee, so long as written notice has been delivered to the
Specified Mortgagee at least 60 days prior to the effective date of such adjustment with respect
to adjustments other than those (i) that were scheduled at the time the Specified Mortgage was
given, and (ii) reflecting routine, periodic updates to variable expenses such as property taxes
and liability insurance premiums; provided, however, that the Specified Mortgagee shall have the
right to arbitrate (as provided herein) any dispute as to an adjustment of the Rent.
Section Forty-four. New Lease. In the event the Lessee's interest in the Lease has been
terminated, forfeited, or surrendered as provided in the Lease, and the Specified Mortgage
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remains outstanding, a new Lease shall automatically be created between the Lessor and the
Specified Mortgagee, which Lease shall be for the remainder of the term of the Lease, with the
same priority thereto, and shall be subject to the same terms of the Lease as would be applicable
pursuant to Section E.1, below where the Specified Mortgagee had accelerated its note,
foreclosed on the Specified Mortgage, taken an assignment in lieu of foreclosure, or exercised
its other remedies for default.
Section Forty-five. Mortgage Default or Foreclosure. Subject to the following, upon the
occurrence of an event of default under the Specified Mortgage (as determined by the Specified
Mortgagee —an "Event of Default"), and without the consent of the Lessor, the Specified
Mortgagee shall be permitted to accelerate its note, foreclose on the Specified Mortgage, take an
assignment in lieu of foreclosure, or exercise its other remedies for default. Further:
1. Upon the occurrence of an Event of Default under the Specified Mortgage, the Lessee shall
immediately notify the Lessor of such Event of Default and shall submit to Lessor copies of
all notices the Lessee received from the Specified Mortgagee relating thereto. The Specified
Mortgagee and the Lessor shall endeavor to communicate and cooperate in efforts to deal
with the circumstances of the Event of Default and the actions the parties may take relating
thereto: provided, however, the Specified Mortgagee shall have no obligation to give formal
legal notice of the Event of Default to the Lessor.
2. The Lessee and the Specified Mortgagee agree that the Lessor shall have the right, but not
the obligation, to cure an Event of Default in the Lessee's name and on the Lessee's behalf.
If such cure is not effective and continuing, nothing herein shall be construed to prevent or
delay the Specified Mortgagee from its pursuit of foreclosure and any other available
remedies. The Lessee shall be responsible to the Lessor for all payments made, and
expenses incurred, by the Lessor in curing such default.
3. Should the Lessor not choose to cure an Event of Default as specified above, the Lessor shall
nevertheless have the option to purchase the leasehold estate from the Specified Mortgagee
for the full amount owing to the Specified Mortgagee under the Specified Mortgage as of
the date of closing of the purchase, upon written notice given by the Specified Mortgagee
(the "Mortgagee Option Notice") not later than 60 days following acquisition of title to the
leasehold estate by the Specified Mortgagee by foreclosure or by an assignment in lieu of
foreclosure; provided, however, the Specified Mortgagee may give such written notice
following the occurrence of an Event of Default under the Specified Mortgage and prior to
the completion of foreclosure proceedings. If the Lessor elects to exercise such option to
purchase, the Lessor shall give written notice to the Specified Mortgagee of the Lessor's
intent to purchase the leasehold estate (the "Lessor Option Notice") within 45 days
following the Specified Mortgagee's giving of the Mortgagee Option Notice; provided,
however, at the option of the Lessor, in the event the Mortgagee Option Notice is given prior
to the completion of foreclosure proceedings by the Specified Mortgagee, the Lessor shall,
within such 45-day period, be able to give a written notice to the Specified Mortgagee that it
will delay giving the lessor Option Notice until a date that is not later than 30 days following
written notice from the Specified Mortgagee of its acquisition of title to the leasehold estate.
The Lessor shall within 30 days of giving the Lessor Option Notice issue a commitment by
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Way of a Letter of Intent to Purchase the Leasehold Estate and the Lessor shall complete the
purchase of the leasehold estate within 60 days of giving such Lessor Option Notice. If the
Lessor does not complete the purchase within the allotted 60 days, the Specified Mortgagee
shall be free to sell the leasehold estate to another person or entity. Further, if the Lessor
does not complete the purchase within the allotted 60 days, the Lessor agrees to pay to the
Specified Mortgagee its costs of holding the property from the date of the Lessor Option
Notice until the expiration of such 60-day period. If the Lessor does not purchase the
leasehold estate as described herein, the leasehold estate may be transferred, mortgaged and
sublet an unlimited number of times, and the Lessor shall not require a credit review or
impose other qualifying criteria on any such transferee, mortgagee or sublessee. In the event
of foreclosure or assignment in lieu of foreclosure, which results in the conveyance of the
leasehold estate from the Lessee, any adjustment of the Rent to reflect then current fair
market rental value as provided in the Lease shall be subject to the approval of the Specified
Mortgagee. The Specified Mortgagee and the Lessor shall attempt to resolve any dispute
concerning such adjustment of the Rent, through the normal interaction of the parties, or
through formal mediation as the case may warrant. If the dispute remains unresolved, the
Specified Mortgagee and the Lessor shall submit the dispute as to the fair market rental
value to binding arbitration.
4. In the event the Specified Mortgagee acquires title to the leasehold estate through
foreclosure or assignment in lieu of foreclosure of the Specified Mortgage, all provisions of
the Lease regarding (a) occupancy of the Leased Premises as a primary residence by the
Lessee, (b) any limitation on the assignment of, or sublease under, the Lease, (c) any
obligation to target certain populations in marketing the leasehold estate to potential
transferees, (d) the price at which the leasehold estate may be transferred, and (e) the income
of successive transferees, and their successors and assigns, shall be of no further force or
effect with respect to such Specified Mortgagee or its successive transferees, assignees or
successors. The foregoing sentence shall not be construed to invalidate other Lease
provisions regarding permitted use of the Leased Premises. Any transfer or assignment of
the property encumbered by the Specified Mortgage as provided for in this paragraph shall
be deemed a permitted sale, transfer or assignment of the Lease and the leasehold estate.
Further, in such event, the leasehold estate may be transferred, mortgaged and sublet an
unlimited number of times, and the Lessor shall not require a credit review or impose other
qualifying criteria on any such transferee, mortgagee or sublessee.
Section Forty-six. Lease Default. There shall be no forfeiture or termination of the Lease
except for (i) the nonpayment of amounts due under the Lease, and (ii) violation of one or more
provisions of the Lease addressing the following: (a) prohibition or restrictions on the sale or
transfer of the Lessee's interest (however, non -sale transfers resulting from marriage, divorce,
death of a spouse, or a transfer otherwise permitted by applicable federal law, may not constitute
a basis for default under the Lease, though the Lessor may require such transferee to agree to
assume the transferor's obligations under the Lease), and (b) requirement that the Lessee occupy
the Leased Premises as primary residence. Provided, however, such forfeiture or termination
shall be subject to the Specified Mortgagee's right to cure a monetary default, or otherwise
foreclose or take an assignment of the Leasehold estate in lieu of foreclosure with respect to the
Lessee's monetary or non -monetary default. Notwithstanding the foregoing, nothing herein
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shall be construed to require the Specified Mortgagee to cure any non -monetary default.
Further, the Specified Mortgagee shall become subrogated to any and all rights of the Lessee
with respect to such curing of a default. If the Lessee's default shall be cured as provided in the
Lease, and the Specified Mortgagee shall discontinue its foreclosure or assignment in lieu of
foreclosure proceedings, the Lease shall continue in full force and effect as if the Lessee had not
defaulted. A default by the Lessee under the Lease shall constitute a default under the Specified
Mortgage.
Section Forty-seven. Lease Default Notice. Notwithstanding the notice requirements
provided in the Lease, no default notice by the Lessor shall be deemed to have been given unless
and until a copy thereof shall have been so given to the Specified Mortgagee.
Section Forty-eight. Insurance. All insurance policies covering the Improvements shall be
endorsement name of the Specified Mortgagee as an additional insured and loss payee, and
provide the Specified Mortgagee with 30 day's cancellation notice.
Section Forty-nine. Casualty and Condemnation. If the Leased Premises are destroyed or
taken to such an extent that the Lease is to be terminated, the insurance proceeds or
condemnation award, as the case may be, shall be applied first in an amount sufficient to satisfy
the Specified Mortgage. Upon the termination of the Lease as a result of a partial destruction or
a condemnation of less than the entire Leased Premises, the total insurance proceeds or
condemnation award, as the case may be, shall be paid to an appointed trustee, who shall first
apply such insurance proceeds or condemnation award in accordance with the Specified
Mortgage for restoration of the Improvements (if such trustee determines that the Improvements
may reasonably be restored to a residential use consistent with the Lease), with the balance of
such insurance proceeds or condemnation award to be allocated between the Lessor and Lessee
as otherwise provided in the Lease. The Specified Mortgagee shall be entitled to participate in
(i) the adjustment of all casualty losses and (ii) all condemnation proceedings and settlement
discussions. Any insurance proceeds or condemnation award shall be applied in accordance
with the Specified Mortgage. The Specified Mortgagee shall also be entitled to participate in
the adjustment of the Rent as a result of a partial destruction of taking.
Section Fifty. Force Majeure. The Lessee shall not be in default where performance is
delayed or prevented by "Acts of God," war, civil commotion, strikes, labor disputes or the like.
Section Fifty-one. Easements and Alterations. Additions to and alterations in the
Improvements may be made as provided in the Lease, as long as the value of the Leased
Premises and the Improvements is not diminished. The Lessor, as owner of the Leased Premises
only, shall join in all easements, permits and applications necessary for such development of the
Leased Premises and the Improvements as is permitted under the Lease, provided that the Lessor
shall have no liability or obligation under such easement, permit or application.
Section Fifty-two. Arbitration. The Specified Mortgagee is to be notified of any arbitration
or legal proceedings between the Lessor and the Lessee. Any arbitration proceedings shall be
conducted in accordance with arbitration statutes applicable in the state where the Leased
Premises are located.
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Section Fifty-three. Merger. If the estates of the Lessor and Lessee are at any time owned by
the same person, so long as the Specified Mortgagee has any interest in the security or in the
Specified Mortgage, such person shall take all necessary steps to ensure that the Specified
Mortgage constitutes a first lien on the combined estate. If the Specified Mortgage is a Rural
Development leveraged or participation loan, then such person shall take all necessary steps to
ensure that the Specified Mortgage retains the same or better lien position on the combined
estate as it did before merger.
Section Fifty-four. Sublease. There shall be no modification, cancellation, or surrender of
any subleases, or prepayment of rent thereunder without the consent of the Specified Mortgagee.
If the Specified Mortgagee forecloses on the Lease Premises, or takes an assignment in lieu of
foreclosure, all subtenants shall attorn to such Specified Mortgagee or its assignee.
Section Fifty-five. Estoppel Certificate. The Lessor shall, from time to time, with 10 days
written notice from the Specified Mortgagee, certify by written instrument, duly executed and
acknowledged, to such Specified Mortgagee that the Lease has not been amended, the Lease is
in full force and effect, that neither party is in default thereunder, and shall certify as to the
existence of any offsets, counterclaims or defenses on the part of the Lessee.
Section Fifty-six. Conflict. In the event of a conflict between the terms and provisions of this
Rider and the terms and provisions of the Lease, the terms and provisions of this Rider shall
control.
BY SIGNING BELOW, the Lessor and the Lessee accept and agree to the terms and
conditions of this Rider.
IN WITNESS WHEREOF, the parties have executed this Rider a
on the day and year first written above.
LESSOR:
By:
Attest:
LESSEE:
Bradley Kraushaar
Ground Lease Rider
October 22, 2009
f
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Page 7of8
STATE OF IDAHO, )
: ss:
County of Valley, )
On this 7 day of (1 (_�% , 2009, before me, Y If( 't'a' Y /"1,
a Notary Public in and for said State, personally appeared Bert Kulesza nd BessieJo Wagner
known or identified to me to be the Mayor and the City Clerk of the City of McCall, ID,
respectively, the Idaho municipal corporation that executed the instrument or the person that
executed the instrument on of behalf of said municipal corporation, and the person who attested
the Mayor's signature to the instrument, and acknowledged to me that such municipal
corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the
day and year in this certificate first above written.
(SEAL) ®``` 1 06_0. ••• .414) ••.••
tIOTAR N• Zi
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Notary Public fo Idaho
Commission Expires: l4 ` z1 / ,7)C i/
STATE OF IDAHO, )
: ss:
County of Valley, )
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On this day of , 2009, before me, `,��o a1'' jj �t',(' err p'1..111
a Notary Public in and for said State, personally appeared Bradley Kt ushaar, known or
identified to me to be the person that executed the instrument and acknowledged to me that he
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the
day and year in this certificate first above written.
(SEAL) .`4�' O d?
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Notary Public for Idaho
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Ground Lease Rider
October 22, 2009
My Commission Expires:
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