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HomeMy Public PortalAboutC-92-002 - Thomas Safran & Associates Disposition and Development AgreementV N. /c) CD cel -(Zr { CoOffDy DISPOSITION AND DEVELOPMENT AGREEMENT By and Between CARSON REDEVELOPMENT AGENCY ("Agencyl') ► and THOMAS SAFRAN & ASSOCIATES, a Sole Proprietorship 920707 plw b559-3.jar (1) ("Developer"). Exhibit Wo. 7 r A TABLE OF CONTENTS Page ARTICLE 1. SUBJECT OF AGREEMENT . . . . . . . . . . . . . . 1 1.1 Purpose of Agreement . . . . . . . . . . . . . . 1 1.2 The Site . . . . . . . . . . . . . . . . . . 1 1.3 Parties to the Agreement . . . . . . . . . . . . 1 1.3.1 The Agency . . . . . . . . . . . . . . . 1 1.3.2 The Developer . . . . . . . . . . . 2 1.4 Limitation on Rights, Duties, and Obligations . . 2 ARTICLE 2. AGENCY LOAN . . . . . . . . . . . . . . . . . . . 2 2.1 Agency Loan . . . . . . . . . . . . . . . . . . . 2 2.2 Reduction of Agency's Funding Obligation . . . . 2 2.3 Funding of Agency Loan and Disbursement of Agency Loan Proceeds . . . . . . . . . . . . . . 2 2.3.1 Conditions to Funding Loan for Purchase of Site . . . . . . . . . . . 3 2.4 Interest on, and Maturity of, Agency Loan . . . . 3 2.5 Repayment of Agency Loan . . . . . . . . . . . . 4 2.5.1 Annual Payments . . . . . . . . . . . . 4 2.5.2 Refinancing Payments . . . . . . . . . . 4 2.5.3 Appreciated Value Payments . . . . . . . 4 2.5.4 Developer's Right to Encumber 5 2.5.5 Limitation on Payments . . . . . . . . . 5 2.6 Definitions . . . . . . . . . . . . . . . . . . . 5 2.7 Security for Agency Loan . . . . . . . . . . . . . 8 2.8 Subordination of Agency Deed of Trust and Regulatory Agreement . . . . . . . . . . . . . 8 2.8.1 . . . . . . . . . . . . . . . . . . . . . 8 2.8.2 . . . . . . . . . . . . . . . . . . . . . 8 ARTICLE 3. FINANCIAL OBLIGATIONS OF DEVELOPER . . . . . . . 9 3.1 Alternate Funding Sources . . . . . . . . . . . . 9 3.2 Front -End Costs . . . . . . . . . . . . . . . . . 10 3.2.1 Initial Front -End Costs . . . . . . . . 10 3.2.2 Additional Front -End Costs . . . . . . . 10 3.2.3 [intentionally omitted] . . . . _ . . . 11 3.2.4 Reimbursement of Initial and Additional Front -End Costs in Certain Circumstances . . . 3.2.5 Cancellation and Forgiveness of Agency Loan . . . . . . . . . . . . . . 11 ARTICLE 4. ACQUISITION OF SITE . . . . . . . . . . . . . . . 11 4.1 Purchase . . . . . . . . . . . . . . . . . 11 4.2 Remediation of Existing Hazardous Condition . . . 12 4.3 Lot -Tie Agreement . . . . . . . . . . . . . . . . 12 920707 plw b559.3.jar (1) — i — ARTICLE 5. DISPOSITION OF THE SITE . . . . . . . . . . . . . 12 5.1 Sale and Purchase . . . . . . . . . . . . . . . 12 5.2 Developer's Purchase Price . . . . . . . . . . . 12 5.2.1 Deposit . . . . . . . . . . . . . . 13 5.2.2 Balance of Purchase Price . . . . . . . 13 5.3 Escrow . . . . . . . . . . . . . . . . . . . . . 13 5.3.1 Instructions . . . . . . . . . . . . . . 13 5.3.2 Recordation of Deed(s) . . . . . . . . . 13 5.3.3 Fees, Charges and Costs . . . . . . . . 13 5.3.4 Escrow Holder's Authority . . . . . . . 13 5.3.5 Termination of Escrow . . . . . . . . . 13 5.3.6 [intentionally omitted] . . . . . . . . 15 5.3.7 Amendments . . . . . . . . . . . . . . . 15 5.3.8 Notices . . . . . . . . . . . . . . . . 15 5.3.9 Liability of Escrow Holder . . . . . . . 15 5.4 Conveyance of Title and Delivery of Possession 15 5.5 Form of Deed . . . . . . . . . . . . . . . . . 16 5.6 Condition of Title . . . 5.6.1 Restrictions and Subordination Thereof . 16 5.6.2 Title and Exceptions Thereto . . . . . . 16 5.6.3 Easements and Dedications . . . . . . . 17 5.7 Time and Place of Delivery of Deed(s) . . . . . . 17 5.8 Title Insurance . . . . . . . . . . . . . . . . . 17 5.9 Taxes and Assessments . . . . . . . . . . . . . . 17 5.10 Occupants of the Site . . . . . . . . . . . . . . 17 5.11 Zoning of the Site . . . . . . . . . . . . . . . 17 5.12 Condition of the Site . . . . . . . . . . . 17 5.12.1 Release of Liability . . . . . . . . . . 18 5.12.2 Completion of Investigations, Tests and Analysis . . . . . . . . . . . . . . 18 5.12.3 Clean-up of Sherry Property . . . . . . 18 5.13 Pre -Construction Work by the Developer . . . . . 19 5.13.1 License . . . . . . . . . . 19 5.13.2 Access to Information . . . . . . . . . 20 5.13.3 Access of Third Parties . . . . . . . . 20 5.13 .4 Permits . . . . . . . . . . . . . . . . 20 5.13.5 Limitation on Improvements and Work 20 5.13.6 Liens . . . . . . . . 20 5.13.7 Reimbursement of Pre -Construction Costs . 21 5.14 Conditions Precedent . .. . . . . . . . . 21 5.15 Agency's Remedies and Rights of Termination Prior to Conveyance . . . . . . . . . 22 ARTICLE 6. DEVELOPMENT OF THE SITE . . . . . . . . . . . . . 22 6.1 Development of the Site by Developer . . . . . . 22 6.1.1 Scope of Development . . . . . . . . . . 22 6.1.2 Schematic Design Documents . . . . . . . 23 6.1.3 Landscaping and Finish Grading Plans 23 6.1.4 Construction Drawings and Related Documents . . . . . . . . . . . 23 6.1.5 Coordination Between Agency and Developer . . . . . . . . . . . . . . . 24 920707 p1w b559-3.j8r (1) 920707 plw b559.3.jar {1) — i ii — 6.1.6 Agency Approval of Plans, Drawings and Related Documents . . . . . . . . . 24 6.2 Construction Contract . . . . . . . . . . . . 24 6.3 Off-site Improvements . . . . . . . . . . . . . . 24 6,4 Plans and Drawings for Off-site Improvements . . 24 6.5 [intentionally omitted] . . . . . . . .25 6.6 Compliance with Project Development Schedule 25 6.7 Completion Bonds . . . . . , . . . . , 25 6.8 Bodily Injury and Property Damage Insurance . . . 26 6.9 City and Other Governmental Agency Permits . . . 27 6.10 Rights of Access . . . . . . . . . . . . 27 6.11 Local, State and Federal Laws . . . . . . . . 27 6.12 Nondiscrimination During Construction . . . . . . 27 6.13 Waiver of Governmental Fees . . . . . . . . . . . 27 6.14 [intentionally omitted] . . . . . . 28 6.15 Taxes and Assessments. . . . . . . . . . . . . . 28 6.16 Security Financing; Rights of Holder . . . . . . 28 6.16.1 Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holder; Right to Cure . . . . . . . . . 28 6.16.2 Failure of Holder to Complete Improvements . . . . . . . . . . . . . . 29 6.16.3 Right of Agency to Cure Default under Mortgage, Deed of Trust, Other Security Interest or Other Conveyance for Financing . . . . . . . . 29 6.16.4 Right of Agency to Satisfy Other Liens on the Property After Title Passes . . . . . . . . . . . . . . 30 6.16.5 Certificate of Completion . . . . . . . 30 6.17 Collateral Assignment of Disposition and Development Agreement and Agency Consent Thereto 31 6.18 Developer Fee and Payment Thereof . . . . .. 32 6.19 Cost Overruns . . . . . . . . . . . . . . . . . 33 6.19.1 Sharing of Cost Overruns . . . . . . . . 33 6.19.2 Approval and Expenditure of Contingency Reserves . . . . . . . . . . 33 6.20 Sharing of Cost Savings . . . . . . . 33 6.21 Governmental Approvals . . . . . . . . . . . 34 6.22 Cost Certification/Agency Audit . . . . . . . 34 6.22.1 . . . . . . . . . . . . . . 34 6.22.2 . . . . . . . . . . . . . . 34 6,22.3 . . . . . . . 34 6.22,4 . . . . 35 . 6.22.5 . . 35 6.22.6 35 6.23 Liens. 35 6.24 Certificate ofOccupancy 36 ARTICLE 7. [INTENTIONALLY OMITTED] : . . . . . . 36 ARTICLE 8. USE AND RENTAL OF THE SITE . . . . . . . . . . . 36 8.1 Uses . . . . . . . . . . . . . . . . . . . . . . 36 920707 plw b559.3.jar {1) — i ii — Ll 8.2 Rental Restrictions . . . . . . . . . . . . 36 8.2.1 Units Restricted to Senior Citizen Rentals . . . . . . . . . . . . . . . 36 8.2.2 Restrictions on Rental of Very Low/Lower Income Units . . . . . . . . . 36 8.2.3 Restrictions on Rental of Moderate Income Units . . . . . . . . . . . . . . 36 8.2.4 Definitions . . . . . . . . . . . . . . 37 8.2.5 Initial Rent . . . . . . . . . . . . . . 37 8.2.6 Annual Rent Increases . . . . . . . . . 37 8.2.7 Limitation on Rent Increases . . . . . . 39 8.2.8 Successor Tenants Rents . . . . . . . . 39 8.2.9 Annual Report . . . . . . . . . . . . . 40 8.3 Rental Subsidy . . . . . . . . . . . . . . . . . 40 8.4 Rental Subsidy Program . . . . . . . . . . . . . 40 8.4.1 Payment of Subsidy . . . . . . . . . . . 40 8.4.2 Carryover of Subsidy . . . . . . . . . . 40 8.4.3 Accounting for Subsidy Payments . . . . 40 8.5 Rights of Agency . . . . . . . . . . 41 8.6 Obligation to Refrain from Discrimination . . . . 42 8.7 Form of Nondiscrimination and Non -segregation Clauses . . . . . . . . . . . . . . . . . . . . . 42 8.8 Effect and Duration of Covenants . . . . . . . . 43 ARTICLE 9. MANAGEMENT OF THE PROPERTY . . . . . . . . . . . 43 9.1 Operation, Maintenance and Repair . . . . . . . . 43 9.2 Leasing and Occupancy . . . . . . . . . . . . . . 44 9.3 Pre -Leasing . . . . . . . . . . . . . . . . . . . 44 9.4 Management of Project . . . . . . . . . . . . . . 44 9.5 Management Fee . . . . . . . . . . . . . . . . . 45 9.6 Management Agency's Failure to Perform . . . . . 45 9.7 Public Agency Rights of Access for Construction, Repair and Maintenance of Public Improvements and Facilities . . . . . . 45 ARTICLE 10. DEFAULTS, REMEDIES AND TERMINATION . . . . . . . 46 10.1 Defaults46 10.2 Non -Waiver of Rights or Remedies 46 10.3 Legal Actions . . . . . . . . . . . . . . . . . . 46 10.3.1 Applicable Law . . . . . . . . . . . . . 46 30.3.2 Service of Process . . . . . . . . . . . 46 10.4 Rights and Remedies are Cumulative . . . . . . . 47 ARTICLE 11. GENERAL PROVISIONS . . . . . . . . . . . . . . . 47 11.1 Notices, Demands and Communications Between the Parties . . . . . . . . . . . . . . . . 47 11.2 Conflict of Interests . . . . . . . . . . . . 47 11.3 Warranty Against Payment of Consideration for Agreement . . . . . . . . . . . . . . . . . . 47 11.4 Nonliability of Agency Officials and Employees 47 920707 plw 6559-3.}er {l} — iv — 11.5 Enforced Delay; Extension of Times of Performance . . . . . . . . . . . . . . . . . 47 11.6 Inspection of Books and Records . . . . . . . . . 48 11.7 Approvals by Agency and Developer . . . . . . . . 48 11.8 Plans and Data . . . . . . . . . . . . . . . . . 48 11.9 Brokerage Commissions. . . . . . . . . . . . . . 48 ARTICLE 12. SPECIAL PROVISIONS . . . . . . . . . . . . . . . 49 12.1 Agency Approval of Covenants, Conditions and Restrictions . . . . . . . . . . . . . . . . . . 49 12.2 Approvals in writing . . . . . . . . . . . . . . 49 ARTICLE 13. ENTIRE AGREEMENT, WAIVERS AND AMENDMENT . . . . 49 ARTICLE 14. TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY . . . 49 ARTICLE 15. ASSIGNMENT, TRANSFER AND SALE . . . . . . . . . 49 15.1 In General . . . . . . . . . . . . 49 15.2 Consent Prior to Issuance of Certificate of Completion . . . . . . . . . . . . . . . . . . 49 15.3 Consent During 5 Years After Issuance of Certificate of Completion . . . . . . . . . . 50 15.4 Consent After 5 Years After Issuance of Certificate of Completion . . . . . . . . . . 50 15.5 Transfer Without Consideration . . . . . . . . . 50 15.6 Assumption of Obligations . . . . . . . . . . . . 50 920707 plw b559-3.jer (1) — 0 ATTACHMENTS Page Attachment No. 1 Site Map . . . . . . . . . . . . . . . . 1 Attachment No. 2 Legal Description . . . . . . . . . . . . 1 Attachment No. 3 Disbursement Schedule . . . . . . . . . . 2 Attachment No. 4 Promissory Note . . . . . . . . . . . . . . 8 Attachment No. 5 Deed of Trust . . . . . . . . . . . . . . . 8 Attachment No. 6 Subordination Agreement . . . . . . . . . . 9 Attachment No. 7 Front -End Costs Payable By Developer . . 10 Attachment No. 8 California Environmental ltr. to Sa€ran . 12 Attachment No. 9 California Environmental ltr. to Hannifin 12 Attachment No. 10 Grant Deed . . . . . . . . . . . . . . . 16 Attachment No. 11 Project Development Schedule . . . . . . 22 Attachment No. 12 Scope of Development . . . . . . . . . . 22 Attachment No. 13 Collateral Assignment of Disposition and Development Agreement and Consent to Assignment . . . . . . . . 31 & 32 Attachment No. 14 Development Pro Forma . . . . . . . . . . 33 Attachment No. 15 Regulatory Agreement . . . . . . . . . . 16 Attachment No. 16 Senior Citizen Rental Assistance Program 40 Attachment No. 17 Management Plan . . . . . . . . . . . . . 44 Attachment No. 18 Rental Agreements . . . . . . . . . . . . 44 Attachment No. 19 Management Agreement . . . . . . . . . . 45 920707 plw b559-3.jer (1) — vi DISPOSITION AND DEVELOPMENT AGREEMENT THIS AGREEMENT (the "Agreement") is entered into by and between the CARSON REDEVELOPMENT AGENCY, a public body, corporate and politic ("Agency"), and THOMAS L. SAFRAN d.b.a. THOMAS SAFRAN & ASSOCIATES, a Sole Proprietorship, or his permitted assigns ("Developer"). Agency and Developer agree as follows: ARTICLE 1. SUBJECT OF AGREEMENT 1.1 Put -pose of Agreement. The purpose of this Agreement is to effectuate the provisions of the Housing Element of the General Plan of the City of Carson ("City") and the Community Redevelopment Law by providing for the development of very low and moderate income senior citizen housing on a site mutually agreeable to Agency and Developer (the "Site"). The proposed purchase and development of the Site ("Project") pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of the City of Carson, California (the "City") and the health, safety, and welfare of its residents will effectuate Agency's Redevelopment Plan, as amended, for the Carson Redevelopment Project Area No. 2 , adopted by Ordinance No. 74-295 on February 19 , 19 74 and is in accord with the public purposes and provisions of applicable federal, state, and local laws and requirements. Agency is a public body authorized to acquire property by eminent domain pursuant to applicable laws. However, nothing in this agreement constitutes any commitment to acquire any property by eminent domain. All references herein to acquisition of property by Agency relate solely to acquisition through a consensual transaction. 1.2 The Site. The "Site' agreed upon is that certain real property shown on the 'Site Map" which is attached hereto and incorporated herein as Attachment No. 1. The Site consists of two separately owned parcels of land, located at 22127 So. Avalon Boulevard (currently owned by Allan A. Sherry and hereinafter referred to as the "Sherry Property") and 22113 So. Avalon Boulevard (currently owned by Michael J. and Peggy Quagletti hereinafter referred to as the "Quagletti Property") in the City of Carson which are identified on the Site Map. A legal description of the parcels which comprise the Site is attached hereto and incorporated herein as Attachment No. 2. 1.3 Parties to the Agreement. 1.3.1 The Agency. Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California. The principal office of the Agency for purposes of this Agreement is CARSON REDEVELOPMENT AGENCY, 701 East Carson Street, Carson, California 920707 plw b559-3.jer (1) 90745. "Agency", as used in this Agreement, includes the Carson Redevelopment Agency, and any assignee of or successor to its rights, powers and responsibilities. 1.3.2 The Developer. Developer is Thomas L. Safran, an individual, d.b.a. THOMAS SAFRAN & ASSOCIATES a sole proprietorship. The principal office of Developer for purposes of this Agreement is THOMAS SAFRAN & ASSOCIATES, 11812 San Vicente Boulevard, Suite 600, Los Angeles, California 90049, or such other address as Developer may designate from time to time. 1.4 Limitation on Rights, Duties and Obligations. Except as provided in Sections 3.2 and 4.1 and Articles, 10, 11, 14 and 15, the rights, duties and obligations created and imposed by this Agreement shall be of no force or effect unless and until the Sherry and Quagletti properties are acquired pursuant to the terms and conditions of this Agreement. ARTICLE 2. AGENCY LOAN 2.1 Agency Loan. Agency agrees to loan the Developer Five Million Dollars ($5,000,000.00), or so much thereof as is necessary (the "Agency Loan"), for the purposes of acquiring the Site, constructing thereon the improvements described herein (the "Improvements"), and for the payment of costs and expenses related to the development of the Project. 2.2 Reduction of Agency's Fundin obligation. Developer intends to use his best efforts to obtain a construction loan (the "Construction Loan") from a conventional lender (the "Construction Lender") to finance, with the proceeds of the Agency Loan, the construction of the Improvements. If, and to the extent, Developer is able to obtain funds pursuant to Section 3.1 which is consistent with the purposes of the Project and approved by Agency, the maximum amount to be loaned by Agency shall be reduced by the net amount obtained from such source. 2.3 Funding of Agency Loan and Disbursement of Agency Loan Proceeds. Developer shall use reasonable efforts to cause the Construction Lender to enter into an agreement to disburse the proceeds from the Agency Loan, as well as the proceeds from the Construction Loan, on terms and conditions mutually agreeable to Agency, Developer and the Construction Lender. If the Construction Lender fails or refuses to enter into an agreement to disburse the proceeds from the Agency Loan, then Agency shall disburse the proceeds from the Agency Loan to Developer in accordance with the terms and conditions of the "Disbursement Schedule", attached hereto and incorporated herein as Attachment No. 3. Agency and Developer agree that the proceeds of the Construction Loan and Agency Loan shall not be commingled and that the ratio of (i) the proceeds of any disbursement requested under the Agency Loan to (ii) the proceeds of any disbursement requested under the Construction Loan, shall be the same as the ratio of (a) the total principal amount of the Agency Loan to (b) 920707 pLw b559-3.jer (1) — 2 — the total principal amount of the Construction Loan allocated Hard Costs (as defined below). 2.3.1 Conditions to Funding Loan for Purchase of Site. The following conditions precedent must be satisfied or waived by Agency before Agency shall be obligated to fund the Purchase Price and sell the Site in accordance with this Agreement: (i) Developer shall have obtained a binding commitment from a Construction Lender of Developer's choice committing to make a Construction Loan to Developer for construction of the Improvements, on terms and conditions acceptable to Developer in Developer's reasonable discretion, and approved by Agency provided that Agency's approval shall not be unreasonably withheld if the Construction Loan documentation contains provisions giving Agency the rights set forth in Subsections 6.16.2, 6.16.3, 6.16.4 and if the terms and conditions are acceptable to Developer and are consistent with the prevailing rates, fees and requirements of commercial lenders at the time the Construction Loan is made; and Developer shall have obtained a binding commitment from a lender of Developer's choice committing to make a permanent loan to Developer to discharge and fully satisfy the Construction Loan upon the due date of the Construction Loan, or earlier, on terms and conditions acceptable to Developer in Developer's reasonable discretion, and approved by Agency provided that Agency's approval shall not be unreasonably withheld if such terms and conditions are consistent with the prevailing rates, fees and requirements of commercial lenders at the time the loan is made ("the Permanent Loan"). 2.4 Interest on, and Maturity of, Ao_ency Loan. The principal balance of the Agency Loan from time to time outstanding shall bear 5% simple interest from the date on which the certificate of occupancy (the "Certificate of Occupancy") is issued with respect to the Project until repaid in full. The outstanding balance of the Agency Loan, and all accrued but unpaid interest thereon, shall be due and payable on the 30th anniversary of the date on which the Certificate of occupancy is issued (the "Maturity Date"), or January 1, 2025, whichever first occurs. If the Developer defaults on the Agency Loan or breaches this Agreement, or if due to no fault of the Agency the Certificate of occupancy is not issued by January 1, 1995, then all sums outstanding on the Agency Loan shall become immediately due and payable at the option of the Agency. 920707 plw b559-3.jar (1) — 3 — 2.5 Repayment of Agency Loan. 2.5.1 Annual Payments. Developer shall make annual payments ("Annual Payments") during the term of the Agency Loan equal to the "Agency's Percentage" (defined in Subsection 2.6.i below) of "Positive Net Cash Flow" (defined below) derived from the operation of the Project, and Developer shall be entitled to retain the remainder of such Positive Net Cash Flow. The first Annual Payment shall be due one year after the issuance of the Certificate of Occupancy and each Annual Payment thereafter shall be due on the yearly anniversary of the date on which the first Annual Payment was due. Any such Annual Payments shall be applied first to accrued but unpaid interest on the Agency Loan, and the remainder, if any, shall be applied in reduction of the principal balance of the Agency Loan. Positive Net Cash Flow shall be deposited monthly into an interest bearing account and interest earned thereon shall be added to such Positive Cash Flow. Notwithstanding the foregoing, from the date of issuance of the Certificate of Occupancy through the first anniversary of issuance of the Certificate of Occupancy, Positive Net Cash Flow (and accrued interest thereon) may be expended for Total Project Costs (as defined in Section 5.18); thus, the first Annual Payment from such Positive Net Cash Flow shall be reduced in an amount equal the product of Agency's Percentage times the amount of Positive Net Cash Flow expended through the first anniversary of the issuance of the Certificate of Occupancy to pay some or all of the Total Project Costs. Developer shall pay the Agency's Percentage of such Positive Net Cash Flow, plus Agency's share of interest earned thereon, annually, on such anniversary date of issuance of the Certificate of Occupancy, and Developer shall retain the remainder of such Positive Net Cash Flow, plus Developer's share of interest earned thereon. Agency shall not be entitled to receive any portion of the Positive Net Cash Flow following repayment in full of the Agency Loan and all accrued but unpaid interest thereon. 2.5.2 Refinancing Payments. In the event of any "Refinancing" (defined below), Developer shall pay the Agency's Percentage of the "Excess Proceeds" (defined below) derived from such Refinancing, to the extent that the Agency Loan, and all accrued but unpaid interest thereon, have not previously been paid in full, and Developer shall be entitled to retain the remainder of such Excess Proceeds. Any payment made to Agency from such Excess Proceeds (a "Refinancing Payment") shall be made at the close of the refinancing and shall be applied first to accrued but unpaid interest on the Agency Loan, and the remainder, if any, in reduction of the principal balance of the Agency Loan. 2.5.3 Appreciated_ Value Payments. In the event of any "Sale" (defined below), Developer shall pay the Agency's Percentage of the Excess Proceeds from such Sale, to the extent that the Agency Loan, and all accrued but unpaid interest thereon, have not previously been paid in full, and Developer 920707 plw b559-3.jsr (1) " 4 — shall be entitled to retain the remainder of such Excess Proceeds. Any payment made to Agency from such Excess Proceeds (an "Appreciated Value Payment") shall be made at the close of the Sale and shall be applied first to accrued but unpaid interest on the Agency Loan, and the remainder, if any, in reduction of the principal balance of the Agency Loan. 2.5.4 Developer's Right to Encumber. Subject to the limitations of this Subsection 2.5.4, Developer may, at any time and from time to time, with Agency's consent first had and obtained, which consent shall not be unreasonably withheld, mortgage, hypothecate, grant control of, or encumber all or a specific portion of the Site, the Project, the Improvements, Developer's interest in this Agreement or any of the foregoing, or any interest in Developer or any partner of Developer. Notwithstanding the foregoing, Developer shall not enter into any Refinancing transaction which (i) would cause the aggregate amount of indebtedness (the repayment of which is secured by an interest in the Site, the Project, the Improvements, or the Developer's interest in any of the foregoing) to exceed 80% of the fair market value of the property so encumbered, or (ii) cause Developer's net operating income derived from the operation of the Project (computed without deduction for debt service) to be less than 110% of all debt service which will be payable following such Refinancing transaction. 2.5.5 Limitation on Payments. Notwithstanding anything to the contrary contained herein, Developer shall not be required to make any payments hereunder (including without limitation the Annual Payments, the Refinancing Payments, or the Appreciated Value Payments described in this Section 2.5) to the extent that the outstanding principal balance of the Agency Loan, and all accrued but unpaid interest thereon, has previously been paid in full. 2.6 Definitions. As used herein, the following terms shall have the meanings ascribed below: a. "Refinancing" shall mean any act or process by which Developer borrows any funds, credit or allowance, repayment or reimbursement of which is secured in whole or in part by Developer's interest in the Site or the Project, or by any direct or indirect interest in Developer. Refinancing shall include any so-called "convertible mortgage", pursuant to which any person or entity receives an option or right to acquire any interest in the Site, the Project, the Improvements, or Developer's interest therein in lieu of repayment. Refinancing shall not include (i) any Sale or other transfer of all or any part of the Site, the Project, the Improvements, Developer's interest in any of the foregoing, or any interest in Developer or any partner of Developer (including any transfer of limited partnership interests or transfers to facilitate the syndication of interests in the Developer or the 920707 p(w b559-3.1er (1) — 5 — Project) except as collateral securing the performance of any obligation, or (ii) the Construction Loan. b. "Excess Proceeds" with respect to any Refinancing shall mean (i) any and all proceeds, credits, offsets and allowances directly or indirectly received by or allowed to Developer from or by any source in any way, relating to any Refinancing, minus (ii) the sum of (aa) Deductible Expenses relating to such Refinancing, and (bb) the sum of principal and interest paid from the proceeds of such refinancing on account of any and all loans made by any person or entity (other than a governmental or quasi -governmental entity), repayment of which is secured by a mortgage or deed of trust encumbering all or any part of the Improvements, the Site or any interest therein. C. The term "Excess Proceeds" with respect to any Sale shall mean (i) the Gross Sales Proceeds, minus (ii) the sum of (aa) Deductible Expenses relating to such Sale, and (bb) the sum of principal and interest paid with the proceeds of such Sale on account of any and all loans made by any person or entity (other than a governmental or quasi -governmental entity), repayment of which is secured by a mortgage or deed of trust encumbering all or any part of the Improvements, the Site or any interest therein. d. "Deductible Expenses" shall mean reasonable, customary and usual expenses actually paid by or on behalf of Developer in connection with any Refinancing or Sale, including without limitation reasonable (1) mortgage brokerage or sale commissions, (2) legal fees, (3) title insurance and survey fees, (4) escrow fees, (5) transfer and recording taxes and fees, (6) loan commitment fees, (7) points and/or (8) prepayment penalties. e. "Gross Sales Proceeds" shall mean in the case of a Sale, the gross sales consideration (adjusted for customary prorations and security deposit credits) realized from the Sale; provided, however, that if the Sale involves any seller financing, then the Appreciated Value Payment attributable to payments made pursuant to such seller financing shall be paid to Agency only as and if Developer actually receives such payments (i.e., Agency agrees that Developer shall not be responsible for making any Appreciated Value Payment from a portion of Gross Sales Proceeds which might otherwise be attributable to any payment made pursuant to the terms of any purchase money financing until and unless Developer actually receives such payment). f. "Fair Market Value" shall mean the appraised fair market value of the Site based on an all-cash sale of the Site, as of a date not earlier than 30 days prior to the Maturity Date, performed by an MAI appraiser selected by Developer and Agency. Such appraiser shall have not less than 10 years experience in appraising residential rental apartment 920707 plw b559-3.jar (1) — 6 — properties in the geographic market area in which the Site is situated. In the event that Developer and Agency are unable to agree upon such MAI appraiser within 10 days after request is made for such agreement, Developer and Agency shall each designate in writing within five days thereafter an MAI appraiser experienced in appraising residential apartment properties in such geographic market area, and the two appraisers so designated shall, within 10 days after such designation, choose another appraiser meeting the qualification requirements set forth above, which third appraiser shall perform such appraisal. If either Developer or Agency shall fail to designate an appraiser within the applicable time period, then the single appraiser designated shall perform the appraisal. The appraiser, however selected, shall complete the appraisal no later than 60 days after the date of request therefor, and such appraisal shall be binding and conclusive upon the parties. g. "Positive Net Cash Flow" shall mean the revenues (without regard to the source) derived from the operation of the Project minus (i) all real estate and personal property taxes and assessments, insurance premiums and reasonable costs of maintenance, operation and management (including without limitation the management fee provided for in Section 9.5) incurred by Developer in connection with the operation and maintenance of the Project, and (ii) the costs of servicing all loans (other than the Agency Loan) or other sources of financing. All loans or other sources of financing shall be commercially reasonable and shall be subject to Agency's approval in accordance with this Agreement. h. "Sale" shall mean any sale, land sale contract, ground lease or any transfer of fee title to all or any part of the Site, the Project or the Improvements. The term Sale shall not include (i) encumbrance of the Site pursuant to the Construction Loan, the Permanent Loan or any Refinancing, (ii) any transfer of all or any part of the Site, the Project, the Improvements, Developer's interest in any of the foregoing, or any interest in Developer or any partner of Developer as collateral securing performance of any obligation, or (iii) any transfer of limited partnership interests or transfers to facilitate the syndication of interests in the Developer or the Project. i. "Agency's Percentage" shall be calculated according to the following ratio, where "AP" equals the Agency's Percentage, and "AL" equals the principal amount of the Agency Loan at the time of such calculation (provided, however, that reductions in the principal amount of the Agency Loan as a result of payments from Positive Net Cash Flow, pursuant to Subsection 2.5.1 hereof, shall be calculated once each year, on January 1, and reductions in the principal amount of the Agency Loan as a result of any other payment hereunder shall be effective as of the date of such payment); 920707 plw b559.3.jer (1) — 7 — AL $5.000.000 AP 60% For example: Assume AL = $4,000,000 $4.000.400 • $5,000.000 AP 60% AP = 48% 2.7 Security for -Agency Loan. The amounts loaned by Agency as provided in Section 2.1 above shall be evidenced by a promissory note and deed of trust in the form attached hereto and incorporated herein as Attachments Nos. 4 and 5. 2.8 Subordination of Agency Deed of Trust and Regulatory Agreement. Agency shall, upon Developer's reasonable request, subordinate the lien of the Agency's Deed of Trust and the encumbrance of the Regulatory Agreement (as described in Section 5.6.1 hereof) to the lien of a deed of trust securing repayment of the Construction Loan and the deed of trust securing any Permanent Loan, subject to the following terms and conditions: 2.8.1 With respect to the Construction Loan, the deed of trust securing the Construction Loan shall contain provisions giving Agency the rights set forth in Subsections 6.16.2, 6.16.3 and 6.16.4 hereof. 2.8.2 The Construction and Permanent Lenders' deeds of trust shall provide: 1. that Agency shall have the right, but not the obligation, to do any act or thing required of Developer in connection with such loan, following a default by Developer thereunder and Developer's failure to cure same within 30 days after Developer's receipt of notice of such default (except in the case of emergency, in which case Agency may act within a reasonable time following the notice of default), 2. that upon any default by Developer (and/or any successors of Developer to the Site) of any or all of its obligations with respect to the repayment by Developer of the loan, the Lender shall provide written notice of said default to Agency, and Agency shall be given the right (but shall have no obligation) to cure the default prior to the expiration of the statutory period to cure defaults; such notice shall be delivered to Agency within the earlier of (A) thirty (30) days after the date Developer fails to pay any amount due under the applicable Construction or Permanent Loan (as the case may be), or (B) concurrently with delivery of any notice of default delivered to Developer, 920707 ptw b559-3.jor (1) — 8 3. that the Lender shall negotiate with Agency for up to thirty (30) days following receipt by Agency of the written notice of default described above, regarding the obligations of Agency in curing or otherwise satisfying the default, 4. that if title to the Site and Improvements is taken by Agency, whether by voluntary or involuntary transfer, and if Agency timely cures any default on the loan within the period provided above following a default by Developer on the loan, then the Lender shall refrain from exercising any right it may have to accelerate the loan by reason of the transfer of title to Agency, 5. that Agency shall have the right to purchase the Site and Improvements from Developer at any time after a default on the loan which continues beyond any applicable cure period, and may take title to the Site and Improvements subject to the Lender's deed of trust and other loan documents, and 6. that Agency's acquisition of the Site and Improvements shall not be a default on the loan, and any due on transfer provision in the Lender's loan documents shall not apply to a transfer of the Site and Improvements to Agency. Agency shall have the right to approve the terms and conditions of any such subordination agreement, which approval shall not be unreasonably withheld. To effect each such subordination as a matter of record, Agency shall execute and deliver, without cost to Developer, a Subordination Agreement in the form attached hereto and incorporated herein as Attachment No. 6. ARTICLE 3. FINANCIAL OBLIGATIONS OF DEVELOPER 3.1 Alternate Funding Sources. Developer shall investigate and attempt to obtain other funding from federal or state grant programs or other federal or state programs designed to fund affordable housing projects, for the purpose of funding the Project. Any such alternate funding shall be approved by Agency and shall be consistent with the purposes of the Project and Agency's agreed subsidy thereof. If and to the extent Developer is successful in obtaining such approved alternate funding, Developer shall be entitled to the amount of fees, if any, allowed by the funding source. Any amount of such funding invested in the Project shall reduce the amount to be loaned by Agency. If permitted by law, Agency shall supplement from the Agency Loan, any fee allowed by the funding source so that the total fee to be paid to Developer shall equal 15% of the funding. In no event shall Developer be entitled to a•fee (whether paid by the funding agency and/or from the Agency Loan) in excess of 15% of the amount of such funding. Any fee payable under this Section 3.1 shall be in addition to the Developer Fee provided for in Section 6.18. 920707 ptw b559-3.jar (1) ; 9 3.2 Front -End Costs. 3.2.1 Initial Front -End Costs. Upon and after the execution of this Agreement, Developer will expend up to $210,000 to pay the front-end costs listed in Attachment No. 7 hereto (the "Initial Front -End Costs"). In the event that Agency acquires the Site pursuant to this agreement, then upon the transfer of fee title to the Site to Developer, Agency shall reimburse Developer for the Initial Front -End Costs. Any funds so reimbursed shall constitute an advance under the Agency Loan. 3.2.2 Additional Front -End Costs. Developer shall request Agency's preapproval in the event that Developer expects to expend more than $210,000.00 in reasonable front-end costs for the acquisition and/or development of the Site (any such preapproved excess reasonable front-end costs are referred to as "Additional Front -End Costs") at any time prior to the acquisition by Developer of fee title to the Site. Developer shall request such preapproval in increments of up to $100,000.00. Any such request shall be made in writing and shall include a reasonably detailed description of the purpose for which such Additional Front -End Costs shall be incurred, the amount(s) thereof and the estimated payment date of each category of Additional Front -End Costs. Within ten (10) business days following its receipt of any such request for preapproval, Agency shall give Developer written notice of Agency's decision either to preapprove or reject the inclusion of such costs in Additional Front -End Costs. If Agency fails to timely notify Developer of its decision in this regard, Developer shall give Agency a second notice and if within ten (10) business days of such second notice Agency shall not have given Developer written notice of Agency's decision then Agency shall be deemed to have elected to pre - approve the inclusion of such costs in Additional Front -End Costs. (i) If Agency rejects the inclusion of such costs in Additional Front -End Costs, Agency shall provide Developer with a reasonably detailed description of the reason for such rejection; provided, however, that in such event nothing contained herein shall prevent Developer from incurring reasonable costs, and funding such costs from the proceeds of the Agency Loan, following acquisition of fee title to the Site by Developer. (ii) If Agency preapproves (or is deemed to have preapproved) the inclusion of such costs in Additional Front -End Costs, then at the time of Agency's notice of approval (or upon request, if,_Agency is deemed to have approved such Additional Front -End Costs) Agency shall deliver to Developer the amount of such preapproved Additional Front -End Costs then due from Developer to third parties, and thereafter, Agency shall deliver to Developer the amount of any other preapproved Additional Front -End Costs as and when same become due from Developer to third parties. Developer shall expend such funds in 920707 p1w b559-3.jor (1) — 10 — payment of such Additional Front -End Costs. Any funds so advanced shall constitute an advance under the Agency Loan. The Purchase Price of the Site, or any portion thereof, shall not constitute either an Initial Front -End Cost or an Additional Front -End Cost for purposes of this Agreement. 3.2.3 [intentionally omitted] 3.2.4 Reimbursement of Initial and Additional Front -End Costs in Certain Circumstances. In the event that the Agency fails to acquire the Site and transfer the same to Developer in accordance herewith, or in the event Developer elects not to acquire the Site pursuant to any right granted Developer in Sections 5.12.3 and 5.14 hereof, then promptly following written request therefor (accompanied by reasonable evidence of expenditure), Agency shall reimburse Developer for all reasonable Initial Front -End Costs, not to exceed the $210,000 limit provided for in Subsection 3.2.1. Agency shall also reimburse or pay (upon presentation of reasonable evidence of an expenditure or obligation incurred by Developer) any preapproved Additional Front -End Costs paid or incurred by Developer, to the extent that such Additional Front -End Costs have not been previously funded by Agency (that is, to the extent that such Additional Front -End Costs have not previously been paid from and treated as a portion of the Agency Loan). 3.2.5 Cancellation and Forgiveness of Agency Loan. In the event that the Agency fails to acquire the Site and transfer the same to Developer in accordance herewith, or in the event Developer elects not to acquire the Site pursuant to any right granted Developer in Sections 5.12.3 and 5.14 hereof, then Agency agrees to cancel and forgive the outstanding balance of Agency Loan. Agency's obligation to make the payments described in Section 3.2.4 and Agency's agreement to forgive the outstand- ing balance of Agency Loan is subject to the following conditions precedent: (aa) Developer shall have complied with the requirements of Section 11.8 hereof; (bb) Developer shall give, assign or otherwise transfer to Agency any and all right, title and interest of Developer to all property which Developer then may own and which was acquired with the Initial or preapproved Additional Front -End Costs; and (cc) Developer shall not have breached any term or condition of this Agreement on Developer's part to be performed and failed to cure such breach within the time periods provided herein. ARTICLE 4. ACQUISITION OF SITE 4.1 Purchase. Agency agrees to use reasonable efforts to acquire the parcels which comprise the Site for their appraised values and pursuant to the terms and conditions of the Purchase and Sale Agreements to be negotiated with the owners of the parcels which comprise the Site. Notwithstanding anything provided herein to the contrary, Agency shall have no liability to any person or entity (including Developer) if it does not 920707 plw b559 -3 -jar (1) — 11 — purchase the parcels that comprise the Site, except as provided in Sections 3.2 and 4.1, and Articles 10, 11 and 15. If Agency is unable to enter into agreements to acquire the parcels by January 1, 1993, then this Agreement shall terminate. 4.2 Remediation of Existina Hazardous Condition. In the event that Agency enters into an agreement to acquire the Sherry property pursuant to this Agreement, then to the extent of Developer's ability and right to perform hereunder (including without limitation the right to enter onto the Site) Developer shall monitor and direct the performance of the tasks described in (i) the letter, dated August 14, 1991, from California Environmental to Thomas Safran & Associates, and (ii) the letter, dated November 27, 1991, from California Environmental to Bret Hannifin (the "Clean-up Work") attached hereto and incorporated herein as Attachments 8 and 9 in connection with the remediation of the existing hazardous condition described in the Phase 1 report prepared by California Environmental. Developer shall be paid a fee equal to five percent (5%) of the purchase price of the Sherry Property for the services described in this Section 4.2, and such fee shall be charged against the Agency Loan. Such fee shall be payable at the close of escrow for the purchase of the Sherry Property. Any fee payable under this Section 4.2 shall be in addition to the Developer Fee provided for in Section 5.18 hereof. 4.3 Lot -Tie Agreement. In the event Agency acquires the Sherry and Quagletti Properties, pursuant to this Agreement, then, prior to the Closing Date, Agency shall use reasonable efforts to cause a lot -tie agreement, in form and substance reasonably acceptable to Developer (the "Lot -Tie Agreement"), to be entered into with respect to the Sherry and Quagletti Properties. The Lot -Tie Agreement shall be processed according the City ordinances, rules and policies then in effect, and Developer pledges to Agency and the City its reasonable cooperation and assistance in the processing thereof. ARTICLE 5. DISPOSITION OF THE SITE 5.1 Sale and Purchase. In accordance with and subject to all the terms, covenants and conditions of this Agreement, Agency agrees to transfer the Site to the Developer and Developer agrees to develop the Site for the consideration and subject to the terms, conditions and provisions set forth herein. 5.2 Developer's Purchase Price. Developer shall pay a purchase price (the "Purchase Price") for the Site equal to the sum of (1) the purchase prices, (2) closing costs and (3) costs of hazardous substance remediation funded by the Agency, which the Agency has agreed to pay for the Sherry and Quagletti Properties; provided, however, that the Purchase Price shall in no event exceed $500,000.00 without Developer's prior written consent. Developer shall pay the Purchase Price to Agency as follows: 920707 p[w b559-3.jar (1) — 12 — 5.2.1 Deposit. $1,000 in cash (the "Deposit") shall be deposited with the Escrow Holder (defined below) by Developer upon the opening of the Escrow (defined below). Such Deposit shall be held by Escrow in an interest bearing account, in a state or national bank which is a member of the FDIC or a savings and loan institution which is a member of the FSLIC. Interest earned on the Deposit shall accrue for the account of Developer. Upon the close of the Escrow, such Deposit, plus all accrued interest thereon, shall be applied against the Purchase Price. 5.2.2 Balance of Purchase Price. The balance of the Purchase Price shall be delivered into Escrow on or before one business day before the Closing Date (defined below), in cash or by confirmed wire transfer in immediately available funds. Such balance shall be funded from the Agency Loan. 5.3 Escrow. Agency and Developer agree to open an escrow (the "Escrow") for transfer of the Site with Chicago Title Company (the "Escrow Holder"), upon the later to occur of (i) the execution and delivery of this Agreement by each of the parties hereto, or (ii) twenty (20) business days following execution of agreements between Agency and owners of the parcels that comprise the Site whereby Agency is entitled to acquire said parcels. 5.3.1 Instructions. Joint escrow instructions shall be executed by Agency and Developer with respect to the transfer of the Site and a duplicate original of this Agreement shall be delivered to the Escrow Holder upon the opening of Escrow. Agency and Developer shall execute such other escrow instructions as shall be reasonably necessary and consistent with this Agreement. 5.3.2 Recordation of Deed(s). The transfer of title to the Site to Developer shall be made by Grant Deed (defined below). Upon delivery of the Grant Deed to the Escrow Holder by Agency pursuant to Section 5.7 of this Agreement (or, at the Agency's election to transfer by direct deed from each owner to Developer, upon delivery of appropriate Grant Deeds) in either case transferring title to the Site to Developer, the Escrow Holder shall record such Grant Deed(s) when title can be vested in the Developer in accordance with the terms and provisions of this Agreement. The Escrow Holder shall cause any transfer taxes required by law to be paid. 5.3.3 fees, Charges and Costs. Developer shall pay in Escrow to the Escrow Holder all of the normal and reasonable fees, charges, and costs of Escrow Holder or otherwise associated with closing the transaction contemplated hereby, promptly after the Escrow Holder has notified Developer of the amount of such fees, charges and costs, but not earlier than tern (10) days prior to the date for the close of escrow for the Site. Such fees, charges and costs shall include, but not be limited to the following: 920707 plu b559-3.jar (1) — 13 — a. Costs necessary to place the title in the condition required by the provisions of this Agreement; b. The escrow fee; C. Notary fees; d. Any State, County, or city Documentary Stamps; e. The premium for the title insurance policy provided for in Section 5.8 of this Agreement; and f. Any prorated Ad valorem taxes, upon the Site for any time subsequent to conveyance of title. Notwithstanding the foregoing, Agency shall use reasonable efforts to cause the entity or entities which transfer fee title to the Site to Developer to pay for all fees, charges and costs which are normally and customarily paid by a seller in transactions involving real property in Los Angeles County, California (such fees, charges and costs will include the following, without limitation: (i) costs necessary to place the title in the condition required by the provisions of this Agreement; (ii) one-half of Escrow Holder's fees; (iii) documentary transfer taxes; and (iv) the costs of the title insurance policy provided for in Section 5.8 (provided, however, that if Developer elects to require an ALTA policy of title insurance, Developer shall pay for the costs of upgrading such policy from CLTA coverage to ALTA coverage)). In any event, any amount which either Developer or Agency is required to pay in connection herewith shall be deemed to be part of the Front -End costs described in Section 3.2 hereof, and shall be funded from the proceeds of the Agency Loan. 5.3.4 Escrow Holder's Authority. The Escrow Holder is authorized to: 1. Pay, and charge Developer for any fees, charges and costs payable under this Section 5.3 of this Agreement. Before such payments are made, the Escrow Holder shall notify Developer and obtain Developer's approval of the fees, charges and costs necessary to clear and convey title which approval shall not be withheld if the amounts of such charges are reasonable and necessary. 2. Disburse funds and deliver documents to the party or parties entitled thereto when the conditions of the Escrow have been fulfilled by Agency and Developer. 3. Record any instruments delivered through Escrow if necessary or proper to vest title in the Developer or its nominee in accordance with the terms and provisions of this Agreement. 5.3.5 Termination of Escrow. If Escrow is not in condition to permit the conveyance of title before the time 920707 plw b559-3.jar (1) — 14 — established therefor in Section 5.4 of this Agreement, either party who then shall have fully performed the acts to be performed before the conveyance of title may, in writing, terminate this Agreement and demand the return of its money, papers, or documents. No termination or demand for return shall be recognized until ten (10) days after the Escrow Holder shall have mailed copies of such demand to the other party at the address of its principal place of business. If any objections are raised within the 10 -day period, the Escrow Holder is authorized to hold all money, papers and documents until instructed by mutual agreement of the parties or upon failure thereof, by judgement or order of a court of competent jurisdiction. If no such demands are made, the Escrow Holder shall perform all acts required by the escrow instructions for the sale and purchase of the Site as soon as possible. Notwithstanding the foregoing, any termination by a non - defaulting party shall not terminate the non -defaulting party's right to receive damages against the defaulting party for breach hereof, but damages recoverable by a non -defaulting party shall be limited to actual damages, and the non -defaulting party shall not be entitled to recover any consequential damages such as lost profits. 5.3.6 [intentionally omitted] 5.3.7 Amendments. Any amendment to the escrow instructions shall be in writing and signed by both Agency and Developer. At the time of any amendment the Escrow Holder shall agree to carry out its duties as Escrow Holder under such amendment. 5.3.8 Notices. All communications from the Escrow Agent to Agency or Developer shall be directed to the appropriate address as set forth in Section 1.3 of this Agreement, and in the manner established in Section 11.1 of this Agreement for notices, demands, and communications between Agency and Developer. 5.3.9 Liability of Escrow Holder. The liability of the Escrow Holder under this Agreement is limited to performance of the obligations imposed upon it under Subsections 5.2.1, 5.3.2, 5.3.4, 5.3.5, 5.3.6, 5.4, 5.5, 5.6, 5.7, 5.8, 5.9, and 5.14 of this Agreement. 5.4 Conveyance of Title and Delivery of Possession. Subject to any mutually agreed upon extension of time, conveyance of title to the Site in accordance with the provisions of Subsection 5.3.2 of this Agreement shall be completed no later than 3 business days after (i) Agency has notified Developer that Agency is in a position to close escrow on both parcels which comprise the Site, (ii) all of the terms and conditions of Subsection 2.3.1 and Section 5.14 have been satisfied (the "Closing Date"). Developer shall accept title to and possession of the Site on the Closing Date. Agency and Developer agree to 920707 plu b559-3.jar 0 ) — 15 — perform all acts reasonably necessary to cause fee title to the Site to be conveyed to Developer in accordance with the foregoing provisions. Except as otherwise provided in this Agreement, possession of the Site shall be delivered to Developer concurrently with the conveyance of title, except that access and entry may be granted before conveyance of title as permitted pursuant to Subsection 5.13.1 of this Agreement. 5.5 Form of Deed. Subject to the terms and provisions hereof, the Agency shall timely and properly execute, acknowledge, and deliver to Developer, or its approved assignee, fee title to the Site by its grant deed or by grant deeds directly from each owner of the Sherry and Quagletti Properties, in the condition provided in Section 5.6 of this Agreement, in the form attached hereto and incorporated herein as Attachment No. 10 (the "Grant Deed") 5.6 Condition of Title. The Agency shall convey, or cause to be conveyed, to Developer, or its approved assignee, fee simple title to the Site subject to all recorded liens, encumbrances, assessments, easements, agreements to be recorded pursuant to the terms and conditions of this Agreement, and other matters which are not objected to by Developer pursuant to Subsection 5.6.2 hereof. 5.6.1 Restrictions and Subordination Thereof. Developer acknowledges and agrees that Agency shall restrict, by deed and/or the Regulatory Agreement attached hereto and incorporated herein as Attachment No. 16, or other appropriate means reasonably acceptable to Developer, the Site for use of senior citizens (defined herein) of very low, lower, or moderate income (defined herein) for thirty (30) years from issuance of the Certificate of Occupancy. The ownership and operation of the Project shall be subject to, and governed by, the terms and conditions of the Regulatory Agreement. Such Regulatory Agreement shall be recorded concurrently with Developer's acquisition of the Site. 5.6.2 Title and Exceptions Thereto. Agency shall furnish Developer and its counsel within twenty (20) business days after the final agreement of the parties on the legal description of the Site a current preliminary title report and legible copies of the documents reported as exceptions therein affecting the Site (collectively, the "Preliminary Title Report"). Developer may elect to obtain an ALTA survey (the "Survey") of the Site, including all easements, liens and/or encumbrances thereon. The Preliminary Title Report and the Survey (if Developer elects to obtain such Survey) are collectively referred to herein as the "Title Documents"; provided, however, that if Developer fails to obtain such Survey on or before twenty (20) business days after the final agreement of the parties on the legal description of the Site, then the Survey shall be deemed not to constitute a part of the Title Documents. Developer shall notify Agency in writing within ten 920707 plu b559-3.jar (1) — 16 — (10) business days after receipt of all of the Title Documents of Developer's disapproval of any matter disclosed therein and Agency shall have twenty (20) business days following receipt of such notice to correct or cure, or cause to be corrected or cured, any matter objected to by Developer. If Agency fails or refuses to correct or cure, or have corrected or cured, such objected to matter within the applicable time period, then Developer may: (i) terminate the transaction described herein, and thereafter neither party hereto shall have any further liability to the other hereunder; or (ii) waive the objected to exceptions and complete this transaction. Any matter not disapproved within the applicable time period shall be deemed approved. Any costs incurred in complying with the requirements of this Subsection 5.6.2 shall be funded from the Agency Loan as a part of the Front -End costs provided for in Section 3.2. Developer shall not disapprove any matter of record that will not unreasonably interfere with the financing, development and use of the Site for the purposes of this Agreement. 5.6.3 Easements and Dedications. Developer acknowledges and agrees that the Agency may reserve from its grant easements for utility purposes (in locations reasonably acceptable to Developer) and may obtain dedications of portions of the Site for public purposes. 5.7 Time -and Place of Delivery of Deed(s7. Subject to any mutually agreed upon extension of time, Agency shall deposit or caused to be deposited the Grant Deed or Deeds with the Escrow Holder on or before the Closing Date. 5.8 Title Insurance. Concurrently with recordation of the Grant Deed(s) conveying fee title to the Site to Developer, the Title Company shall provide and deliver to Developer, or its assignee, a CLTA owner's policy of title insurance, in the amount of the Purchase Price plus the amounts of the Agency Loan (to the extent that the Agency Loan is not used to fund the Purchase Price), and the Construction Loan, or in such greater amount as Developer may specify subject to approval of Agency, and to the Agency an LP -1 (ALTA) Lender's Policy of Title Insurance in the aggregate amount of the Agency Loan, insuring that the fee title to the Site is vested in Developer, or its assignee, in the condition required by Section 5.6 of this Agreement, and insuring the priority of the Agency's Deed of Trust; provided, however, that Developer may elect to obtain an ALTA Extended Coverage Policy of Title Insurance on the condition that Developer (i) provides Title Company with an ALTA survey of the Site, and (ii) pays the difference in insurance premiums attributable to obtaining an ALTA policy of title insurance instead of a CLTA policy of title insurance (any such payment to be funded from the Agency Loan). Title Company shall provide Developer with an endorsement to insure the amount of Developer's estimated costs of constructing the Improvements. 920707 p(w h559-3.jar (1) — 17 — 5.9 Taxes and Assessments. Ad valorem taxes and assessments, if any, on the Site or a part of the Site and taxes upon this Agreement or any rights hereunder, levied, assessed, or imposed for any period commencing prior to the conveyance of title to Developer shall be borne by Agency or Developer's predecessor in title. All ad valorem taxes and assessments levied or imposed for any period commencing after closing of Escrow through which title is transferred to Developer, or its assignee, shall be paid by Developer or its assignee as provided in Section 6.15. 5.10 Occupants of the Site. The Site shall be conveyed free of any possession or right of possession except that of Developer, or its assignee. 5.11 Zoning of the Site. As of the Closing Date, the zoning of the Site shall be such as to permit development and construction of the Improvements in accordance with the provisions of this Agreement. 5.12 Condition of the Site. 5.12.1 Release of Liability. The Site shall be conveyed by Agency to Developer, or its assignee, in an "as is" condition with no warranty, express or implied, and Developer and its successors and assigns, releases Agency from any and all liability to Developer resulting from the condition of the soil, its geology, the presence of known or unknown faults and/or hazardous substance conditions of any kind or character. It shall be the sole responsibility of Developer at its expense to investigate and determine the soil and seismic conditions of the Site and the suitability of the Site for the development to be constructed thereon. If the soil conditions are not in all respects entirely suitable for the use or uses to which the Site will be put, then subject only to Subsection 5.12.3, it is the sole responsibility and obligation of Developer to take such action as may be necessary to place the Site in a condition entirely suitable for its development. Developer shall be responsible for the removal and clearance of any improvements, paving and debris as well as surface and subsurface obstructions on or in the Site. 5.12.2 Completion of Investigations. Tests and Analysis. Any investigations, tests, and analysis with respect to the Sherry property shall be completed by Developer within sixty (60) days after Developer is notified that an agreement has been executed with the owner of the Sherry property which permits Developer the rights provided for in Subsection 5.13.1. Any investigations, tests and analysis with respect to the Quagletti property shall be completed by Developer within sixty (60) days after Developer is notified that an agreement has been executed with the owner of the Quagletti property which permits Developer the rights provided for in Subsection 5.13.1. 920707 plw b559-3.jar (1) — .18 5.12.3 Clean-up of Sherry Property. Notwithstanding the provisions of Subsection 5.12.1, Developer may, after 20 days notice to Agency, terminate this Agreement, and the parties shall have no further liability one to the other hereunder, except as provided in Section 3.2 hereof, if escrow has not closed for sale and transfer of the Site to Developer, and if either (i) Sherry fails to achieve Cleanup Completion (defined below) of the Sherry Property within one year from the date on which this Agreement is executed by both Developer and Agency, or (ii) the total cost of achieving Cleanup Completion exceeds $214,200.00 by an amount which in the commercially reasonable judgment of Developer makes completion of the proposed Project commercially and/or economically impracticable; provided, however, that Agency may, by written notice to Developer given within said 20 days, elect to pay all or any portion of the cost of achieving Cleanup Completion in excess of $214,200, in which event Developer shall not have the right to terminate this Agreement pursuant to the terms of this Subsection 5.12.3. As used herein, the term "Cleanup Completion" shall be deemed to have occurred as of the date on which (1) California Environmental (or an alternate environmental engineer or consultant mutually agreeable to Agency and Developer) certifies for the benefit of Developer that all of the work and tasks described in Attachments 8 and 9 have been completed, (2) appropriate governmental and quasi -governmental agencies having jurisdiction have issued certificates or other evidence that the Sherry property complies with all applicable environmental requirements, and, (3) any excavation shall have been refilled and the ground shall have been leveled to its prior condition (provided, however, that at Developer's election and with reasonable notice to Agency the ground shall be graded to contours directed by the Developer and consistent with plans to construct a subterranean garage as a portion of the Project, so long as any costs of such grading, in excess of the costs which would be incurred to fill and level the ground to its prior condition, shall be borne by Developer as part of the Additional Front -End Costs). Developer shall not have the right to terminate this Agreement pursuant to the terms of this Subsection 5.12.3 if the certificates have been applied for prior to the expiration of such one year period provided that such certificates are issued within one and one-half years of the date on which this Agreement was executed by both Developer and Agency. 5.13 Pre -Construction WoXX by tbg Dgvp1ggeX. 5.13.1 License. Prior to the conveyance to Developer of fee title to the Site, Agency shall use reasonable efforts to obtain for Developer the right to enter upon the Site, from time -to -time, at all reasonable times, for the purpose of obtaining data, making surveys and tests necessary to carry out this Agreement and commence Site development work pursuant to and in compliance with Section 5.12 hereof. Developer shall 920707 plx b559-3.jar (l) — 19 indemnify, defend, protect and hold harmless Agency and the owners of the Site for an losses, costs, or liabilities incurred or arising by reason of such entries by Developer. 5.13.2 Access to Information. Developer shall have access to all non -confidential or non -privileged data and information on the Site available to Agency provided that Developer shall first submit a written request for such information. Agency shall make such information available but does not warrant its accuracy or completeness. 5.13.3 Access of Third Parties. Developer shall not cause any other party except Developer's duly authorized representatives, employees, agents and independent contractors to enter on or use the Site without the prior written consent of Agency. Developer shall insure that no fires are lighted on the Site by Developer or its employees, agents, or authorized representatives and agrees to pay all utility charges, if any, allocable to its use of the Site. 5.13.4 Permits. Agency shall cooperate with Developer in obtaining all governmental permits and authorizations required by any governmental agencies for the performance of Developer's investigative work on the Site. All persons who enter upon the Site pursuant to Subsections 5.13.1 and 5.13.3 shall do so at their own risk and shall comply with any and all instructions and directions of the Agency. Developer shall cause to be prepared and submitted to the City of Carson, or other appropriate governmental agency, and Agency shall cooperate with Developer in the diligent prosecution to completion or issuance (as the case may be), of any environmental or mitigation reports, authorizations, licenses and/or permits (including, without limitation an environmental impact report or a negative declaration) (collectively, the "Environmental Permits") which may be necessary in connection with the development of the Site in accordance with the terms of this Agreement. 5.13.5 Limitation on Improvements and Work. Prior to the Closing Date, no structure, signs or other improvements of any kind shall be constructed on the Site by or on behalf of Developer, and no grading or moving of earth shall be undertaken on the Site by or on behalf of Developer, without the express prior written permission of Agency. Upon completion of any approved grading, excavation or any soil test boring or excavation, any exposed opening shall be backfilled and any disturbed ground shall be leveled to its prior condition. 5.13.6 Liens. Developer agrees that it shall not permit or suffer any mechanic's or materialmen's or other liens of any kind or nature to be recorded and/or enforced against the Site for work done or materials furnished or authorized by Developer, and Developer shall indemnify and hold harmless Agency and the Site from and against any and all liens, 920707 plw b559-3.jar (1) — 20 — claims, demands, costs and expenses related to work done, labor performed or materials furnished in connection with Developer's entry on the Site, including without limitation any attorney fees or costs incurred by Agency in connection therewith. 5.13.7 Reimbursement of Pre -Construction Costs. The fees, costs and other expenses incurred by Developer pursuant to this Section 5.13 shall be a part of the Front -End costs described in Section 3.2 hereof (if incurred prior to the date on which title to the Site is transferred to Developer), and in any event shall be funded from the proceeds of the Agency Loan. 5.14 Conditions Precedent. The following conditions precedent must be satisfied or waived by Developer before Developer becomes obligated to purchase and/or develop the Site in accordance with this Agreement: (i) Developer's approval of the Title Documents described in Subsection 5.6.2 hereof; (ii) Developer's approval of soils, toxic waste and hazardous substance tests and analyses or such other inspections, tests and analyses as Developer may perform pursuant to Subsection 5.12.2 hereof, provided, however, that Developer must disapprove the condition of the Site within the time period provided in Subsection 5.12.2; (iii) Cleanup Completion as provided in Subsection 5.12.3 has occurred; (iv) the Lot -Tie Agreement described in section 4.3 hereof has been recorded; (v) Developer shall have obtained a binding commitment from a lender of Developer's choice committing to make the Construction Loan to Developer, on terms and conditions acceptable to Developer in Developer's reasonable discretion, and approved by Agency provided that Agency's approval shall not be unreasonably withheld (aa) if the Construction Loan documentation contains provisions giving Agency the rights set forth in Subsections 6.16.2, 6.16.3, and 6.16.4, and (bb) if such terms and conditions are consistent with the prevailing rates, fees and requirements of commercial lenders at the time the Construction Loan is made. Developer shall use reasonable efforts to obtain such commitment; and 920707 ply b559-3.jar (1) " 1 — (vi) Developer shall have obtained a binding commitment from a lender of Developer's choice committing to make the Permanent Loan to Developer to discharge and fully satisfy the Construction Loan upon the due date of the Construction Loan, or earlier, on terms and conditions acceptable to Developer in Developer's reasonable discretion, and approved by Agency provided that Agency's approval shall not be unreasonably withheld if such terms and conditions are consistent with the prevailing rates, fees and requirements of commercial lenders at the time the Permanent Loan is made. Developer shall use reasonable efforts to obtain such commitment. 5.15 Agency's Remedies -and Rights of Termination Prior to Conve ance. In the event that prior to the conveyance of fee title to the Site to Developer, and in violation of this Agreement: (i) Developer does not submit schematic design documents, construction drawings or related documents as required by this Agreement; or (ii) Developer does not (1) pay the Purchase Price, and (2) take title to the Site when conveyance is tendered pursuant to this Agreement; and if any default referred to in subdivisions (i) and (ii) of this Section 5.15 shall not be cured by Developer within thirty (30) days after the date of written demand by Agency, then this Agreement and any rights of Developer or any assignee or transferee in this Agreement may, at the option of Agency, be terminated by Agency by written notice thereof to Developer and any such assignee or transferee, and Agency shall have no obligation or liability to Developer by reason of this Agreement. ARTICLE 6. DEVELOPMENT OF THE SITE 6.1 Development of the Site by Develo er. 6.1.1 Scone of Development. Developer shall develop the Site within the time limits established in the Project Development Schedule attached hereto and incorporated herein as Attachment No. 11 and in accordance with and within the limitations established in the "Scope of Development" attached hereto and incorporated herein as Attachment No. 12, and plans approved by Agency pursuant hereto. The Improvements shall consist of approximately 88, apartment units (including a manager's unit which shall not be rented), with each unit averaging approximately 600 square feet. The Site shall be developed with the number of parking spaces approved by the 920707 plw b559-3.jor (1) " 22 — Planning Commission and City Council of the City of Carson. Provisions shall be made for ingress and egress by physically disabled persons in accordance with state and local law. Developer shall have complete and sole discretion with respect to the selection of each architect, subcontractor, engineer, consultant or other professional engaged to perform work in connection with the development of the Site. Agency shall have the right to approve the general contractor selected by Developer which approval shall not be unreasonably withheld. 6.1.2 Schematic Design Development Documents. Developer shall prepare and submit to Agency preliminary Schematic Design Development Documents illustrating the general scope, scale and relationship of Project components. These preliminary Schematic Design Development Documents shall include conceptual site and building placement; preliminary sections and elevations; preliminary selection of building systems and materials; and approximate dimensions, areas and volumes. Upon Agency approval of such drawings and related documents, Developer and Agency shall initial and date each page of such drawings and documents. The Site shall be developed as finally established in the final Schematic Design Documents, except as changes may be mutually agreed upon in writing between Developer and Agency. Any such changes shall be within the limitations of the Scope of Development. 6.1.3 Landscaping and Finish Grading Plans. Developer shall prepare and submit to Agency for its approval preliminary and final landscaping and finish grading plans for the Site. The landscaping plans shall be prepared by a professional landscape architect, and the finish grading plans by a registered civil engineer, either or both of whom may be in the same firm as Developer's architect. These plans shall be prepared, submitted, and approved within the times established therefor in the Project Development Schedule as it may be amended from time to time by agreement of Agency and Developer. 6.1.4 Construction Drawings and Related Documents. Developer shall prepare and submit final Schematic Design Development Documents and Construction Documents to Agency for review and written approval (including, but not limited to, architectural approval) as and at the times established in the Project Development Schedule. Such documents may be approved by the Executive Director of Agency. (a) Schematic Design Development Documents are hereby defined as drawings and other documents to fix and describe the size and character of the entire development, including but not limited to plans, sections, and elevations, exterior material samples, and landscape plans with outline specifications or material lists to establish final scope and preliminary details for landscape work. 920707 plw b554-3.411 (1) t 2-3 — (b) Construction Documents are hereby defined as drawings and other documents setting forth in detail the requirements for construction, bidding and contracting for the construction of the Improvements, and obtaining building permits for the Improvements. Approval of progressively more detailed drawings and specifications will be promptly given by Agency if they substantially conform to drawings or specifications theretofore approved. Any items so submitted and approved in writing by Agency shall not be subject to subsequent disapproval. 6.1.5 Coordination Between Agency and Developer. During the preparation of all drawings and plans, Agency and Developer shall hold regular progress meetings to coordinate the preparation and review of construction plans and related documents. Agency and Developer shall communicate and consult informally as frequently as is necessary to insure that the formal submittal of any documents to Agency can receive prompt and speedy consideration. If any revisions or correction of plans approved by Agency shall be required by any governmental official, agency, department or bureau having jurisdiction, or any lending institution involved in financing, Developer and Agency shall cooperate in efforts to enable Developer to develop a mutually acceptable modification or alternative to any required revision or correction. 6.1.6 Agency Approval of Plans. Drawings and Related Documents. Subject to the terms of this Agreement, Agency shall have the right of reasonable review and approval of all plans and submissions, including any changes therein. Developer shall have the obligation to timely submit all plans and submissions, including any changes therein, for Agency's review and approval and to clearly indicate in a transmittal document the date by which Agency approval or disapproval is required under the Project Development Schedule. Agency shall approve or disapprove the plans, drawings and related documents referred to in Subsections 6.1.2 through 6.1.4 of this Agreement and any proposed changes therein within the times established in the Project Development Schedule. Failure by Agency to either approve or disapprove within the times established in the Project Development Schedule and in the body of this Agreement shall be deemed an approval. Any disapproval shall state in writing the reasons for disapproval. Developer, upon receipt of a disapproval based upon powers reserved by Agency hereunder, shall revise the plans and drawings and related documents and shall resubmit such revised documents to Agency within thirty (30) days after receipt of the notice of disapproval. 6.2 Construction Contract. The Project shall be built under a negotiated fixed price construction contract with a general contractor chosen by Developer and approved by Agency. The contractor shall be bonded as provided in Section 6.7 unless 920707 plw b559-3.jar (1) 4 the Agency's attorney approves a Letter of Credit arrangement to insure completion of the Project. 6.3 Off-site Improvements. Agency shall pay for and cause to be constructed for the benefit of the Site all reasonably necessary and customary off-site improvements such as storm drains, street lights, curbs, gutters, traffic mitigation measures, utility installations (up to the point of rough -in connection) and off-site landscaping. The cost of off-site improvements shall not constitute a portion of the Agency Loan. The cost of construction of all Improvements other than as set forth above shall be borne by Developer. Agency shall cause such offsite improvement work to be performed at times reasonably approved by Developer in order to coordinate such offsite improvements with other development efforts at the Site to avoid scheduling or design conflicts. 6.4 Plans and Drawincis for Off-site Improvements. Developer shall prepare and submit for Agency and City approval detailed plans and drawings for all reasonably necessary and customary off-site improvements that are shown as the Agency's responsibility in the Scope of Development, in accordance with the terms hereof. Such plans and drawings shall be prepared in conformance with the technical specifications of the City and any other public agencies that have jurisdiction thereof. Except as otherwise expressly provided for herein, upon approval of such plans and drawings and as part of development of the Site, Agency, or at Agency's election, Developer shall construct or cause to be constructed all such off-site improvements which Agency agrees to provide. 6.5 (intentionally omitted] 6.6 Compliance with Project Development Schedule. After the conveyance of title to the Site, Developer and Agency shall each promptly begin and thereafter diligently prosecute to completion all work to be done by each party, respectively, pursuant to this Agreement. In addition, Developer and Agency shall begin and complete all construction and development within the times specified in the Project Development Schedule or such extension of said dates as may be agreed upon between Developer and Agency; provided, however, regardless of the Project Development Schedule, after commencement of such work any cessation of the work for thirty (30) consecutive days shall be a breach hereof. The Project Development Schedule is subject to revision from time -to -time as mutually agreed upon in writing between Developer and Agency. The parties expressly acknowledge that their mutual performance hereunder is dependent upon timely performance by the other party of its duties and obligations as described in this Agreement and in the Project Development Schedule. In the event that either party is delayed or is unable to perform his or its duties and obligations on a timely basis, the other party is likely to experience delays in completing the work which such other party is obligated to perform pursuant to 920707 ptw b559-3.jar (1) — 25 — this Agreement, and the Project Development Schedule shall be revised to reflect such delays. In addition, such delays by either party may cause the other party to incur certain costs and expenses (including, by way of example and not limitation, unanticipated interest costs, additional office overhead costs and unexpected loan fees). On or before 20 business days prior to the date on which either party is to have completed performance of any task, in accordance with the requirements of this Agreement and the Project Development Schedule, the other party shall deliver notice of the estimated costs and expenses which such other party anticipates are likely to be incurred in the event that the party receiving such notice is delayed in completing such tasks on a timely basis; provided, however, that any such notice shall constitute an estimate only, and shall not be binding as to the nature, extent and amount of such costs and expenses. Promptly following receipt of written request therefor, accompanied by reasonable evidence of expenditure, the party responsible for any delay shall reimburse the other party for all reasonable costs and expenses actually incurred by the other party as a reasonable result of such delay provided the party responsible for any delay has been furnished the notice required by this Section 6.6. 6.7 Completion Bonds. Prior to the commencement of construction of the Improvements by Developer at the Site, Developer shall obtain or cause its general contractor to obtain a "Performance Bond" and a "Labor and Material Payment Bond" or other instruments of assurance as approved by Agency in the amount of the cost of completion of the improvements, naming the Agency as a co -obligee. The terms of such bonds or instruments of assurance shall be subject to approval by the Executive Director of the Agency. The cost of such instrument of assurance shall be included in Total Project Costs, and shall be funded from the Construction Loan. 6.8 Bodily Injury and Property Damage Insurance. Prior to the commencement of construction on the Site or any Portion thereof, including, without limitation, any preliminary work, Developer and/or general contractor shall maintain and have in full force and effect a "Broad Form Comprehensive General Liability Policy" in a combined single limit of not less than $10 million dollars and which shall contain a contractual liability endorsement and a "Builders and Theft policy" in an amount not less than the agreed costs of constructing the Project as shown in the Development Pro Forma (as amended from time to time). Such insurance shall be maintained and kept in force and copies of such policies, or other evidence thereof satisfactory to Agency shall be on file with Agency at all times until Agency has issued its Certificate of Completion for the entire Site. Thereafter, Developer shall maintain the insurance coverage required by the Deed of Trust securing the Agency Loan until the full reconveyance of such Deed of Trust. Agency shall be named an additional insured on any such policies of insurance required by this Section 6.8. Such insurance policies shall contain an 920707 piw b559-3.jar (t) — 2 6 — endorsement providing that the policy shall not be canceled or the coverage reduced without a prior 30 day written notice to Agency. 6.9 City and other Governmental Agencv Permits. Before commencement of construction or development by Developer, its general contractor and sub -contractors of any buildings, structures or other work of improvement upon the Site, Developer shall secure or cause to be secured any and all permits which may be required by the City or any other governmental agency having jurisdiction over such construction, development or work. Developer shall pay costs of engineers and others necessary to prepare applications for permits. Agency shall provide all proper assistance to Developer in securing such permits. The costs of such permits (and the costs and fees of engineers and others incurred in connection therewith) shall be a cost of construction, and shall be included in the Front End costs described in Section 3.2 hereof. 6.10 Rights of Access. Representatives of Agency and the City shall have the right of reasonable access to the Site or any part thereof without charge or fee, at normal construction hours during the period of construction, for the purposes of this Agreement, including but not limited to the inspection of the work being performed in constructing the Improvements. Such representatives of Agency or the City shall be those who are so identified in writing by the Executive Director of Agency. 6.11 Local, State and FedeFa_1__Laws. Developer shall carry out the construction of the Improvements in conformity with all applicable laws, including all applicable federal and state labor standards and prevailing wage laws. 6.12 NondiscriZination Duriag Construction. Developer for itself, its successors and assigns, agrees that in the construction of the Improvements on the Site provided for in this Agreement, Developer will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, religion, creed, or national origin or ancestry. 6.13 waiver of Governmental Fees. Agency agrees to cooperate with Developer to obtain waivers of any fees which do not result in a reduction of the City's revenues or funds. Agency shall waive any fee or charge which it might otherwise impose in connection with the permits referred to in Subsection 5.13.4 and Section 6.9, and shall cooperate with Developer to request any other governmental or quasi -governmental entity having jurisdiction to waive its or their fees or charges in connection therewith; provided, however, that no fee or charge payable to, or for the benefit of the City shall be waived, and Developer shall be responsible for paying all such City fees and charges (which fees and charges shall be included in Total Project Costs hereunder). For example, if school fees can be waived because this is a senior citizens' project and such waiver 920707 plw b559-3.jsr (1) — 27 — does not result in a monetary loss to the City, then Agency agrees to use its best efforts to obtain such a waiver. 6.14 (intentionally omitted] 6.15 Taxes and Assessments. Developer shall pay when due all real estate taxes and assessments on the Site assessed and levied subsequent to conveyance of fee title to the Site to Developer, which shall be funded from the proceeds of the Agency Loan prior to the issuance of a Certificate of Occupancy and shall be paid from the gross income of the Project thereafter. Nothing herein contained shall be deemed to prohibit Developer from contesting the validity or amounts of any tax, assessment, encumbrance or lien, nor to limit the remedies available to Developer in respect thereto. 6.16 Security Financin • Rights of Holder. 6.16.1 Notice of Default to Mortgage. Deed of Trust or Other Security Interest Holder: Right to _Cure. Whenever Agency shall deliver any notice or demand to Developer with respect to any breach or default by Developer in construction of the Improvements, Agency shall at the same time deliver a copy of such notice or demand to each holder of record of any mortgage, deed of trust or other security interest authorized by this Agreement, of which Agency has written notice. Each such holder shall (insofar as the rights of Agency are concerned) have the right at its option within sixty (60) days after the receipt of the notice, to cure or remedy or commence to cure or remedy any such default and to add the cost thereof to the security interest debt and the lien securing its security interest. Nothing contained in this Agreement shall be deemed to permit or authorize any such holder to undertake or continue the construction or completion of the Improvements (beyond the extent necessary to conserve or protect the Improvements already constructed) without first having expressly assumed by written agreement satisfactory to Agency all of Developer's obligations to Agency, with respect to the Site, including, but not limited to, this Agreement and all agreements attached hereto, incorporated herein, or implementing the provisions hereof. 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, and submit evidence satisfactory to Agency that it has the qualifications and financial responsi- bility necessary to perform such obligations. Any such holder executing such assumption shall succeed to Developer's rights with respect to construction of the improvements and the remaining proceeds of the Agency Loan and upon properly completing such improvements in accordance with the terms and conditions of this Agreement shall be entitled, upon written request made to Agency, to a Certificate of Completion from Agency with respect to such improvements. 920707 plw b559-3.jar (1) — 8 — 6.16.2 Failure of Holder. to _Q=Rlete Improvements. In any case where, sixty (60) days after default by Developer in construction of improvements under this Agreement, the holder of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon any portion - of the Site has not exercised the option referred to in Subsection 6.16.1 or has not proceeded diligently with construction, Agency may purchase the mortgage, deed of trust or other security interest, by paying to the holder the amount of the unpaid debt, plus any accrued and unpaid interest. If the ownership of the Site has vested in the holder, Agency, if it so desires, shall be entitled to a conveyance from the holder to Agency upon payment to the holder of an amount equal to the sum of the following: (a) The unpaid mortgage, deed of trust or other security interest debt at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of any rentals and other income received during foreclosure proceedings); (b) All reasonable expenses incurred with respect to foreclosure, not to exceed the amounts provided in Civil Code Section 2924c; (c) The net expenses, if any (exclusive of general overhead) incurred by the holder as a direct result of any subsequent management of the Site; (d) The costs of any improvements made by such holder, provided such improvements are in accordance with the plans, drawings and related documents approved by the Agency pursuant to Section 6.1; (e) An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts in (a), (b), (c) and (d) above become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency. Agency shall exercise such right to purchase the Site from the holder within 180 days after the holder's acquisition of fee title to the Site, and if Agency does not tender the required amounts within such 180 day period, Agency shall thereafter no longer have any right to purchase the Site. 6.16.3 Right of Agency to Cure Default under Mortgage. Q2ed of Trust,Other Security Interest or Other S-anve ance fog Einancing. In the event of a default or breach by Developer of a mortgage, deed of trust or other security instrument with respect to the Site or any part thereof prior to the completion of development of Improvements thereon Agency may (but shall not be obligated to) cure the default prior to the completion of any foreclosure. In such event, Agency shall be 920707 plw b559-3.jer (1) — 29 entitled to reimbursement from Developer of all sums paid and all costs and expenses incurred by Agency in curing the default. Agency shall be subrogated to all the benefits of the superior lien upon the Site (including the lien of the superior lien holder) to the extent of such costs and disbursements paid by Agency. 6.16.4 Right of Agency to Satisfy other Liens on the Site After Title Passes. Developer agrees that it will pay or cause to be paid all costs for work done by it or caused to be done by it on the Site after the conveyance of fee title of the Site to Developer and prior to the recordation of a Certificate of Completion for the construction and development of the Project, and Developer will keep the Site free and clear of all mechanic's liens and other liens on account of work done for Developer or persons claiming under it. If Developer shall fail to pay any charge for which a mechanic's lien claim and suit to foreclose the lien have been filed, which claim arises in connection with work performed after the conveyance of fee title of the Site to Developer but prior to the recordation of a Certificate of Completion for the construction and development of the Project, Developer shall within sixty (60) days after the filing of such claim either (i) pay and satisfy the same, or (ii) provide Agency with adequate security for the value, or in the amount, of the claim, plus estimated costs and interest thereon, or a bond of a responsible corporate surety in such amount, conditioned on the discharge of the lien. If Developer fails to either pay or satisfy such lien, or provide Agency with security to protect the Site against such claim of lien, Agency shall have the right (but not the obligation) to pay the amount of any such lien or encumbrance, and add the amount so paid to the amount the of indebtedness secured by the deed of trust held by Agency; provided, however, that nothing in this Agreement shall require Developer to pay or make provision for the payment of any tax, assessment, lien or charge so long as Developer in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Site (or any portion thereof) to forfeiture or sale. 6.16.5 Certificate of Completion. Promptly after completion of all construction and development to be completed by Developer on the Site, as required by this Agreement, Agency shall furnish Developer with a certificate of completion (the "Certificate of Completion") upon written request therefor by Developer. Agency shall not unreasonably withhold the Certificate of Completion. Such Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction required by this Agreement on the Site but shall not constitute a waiver of Agency's right to require correction of defects in labor, materials or equipment furnished. The Certificate of Completion shall be in such form as to permit it to be recorded in the Recorder's Office of Los Angeles County, California. 920707 plu b559-3.1er (1) — 30 After the recordation of the Certificate of Completion, any party then owning or thereafter purchasing, leasing, or otherwise acquiring any interest in the Site shall not (because of such ownership, purchase, lease, or acquisition) incur any obligation or liability pursuant to, or under, this Agreement with respect to the construction or other development of the Project. Notwithstanding the foregoing, such party shall be bound by any covenants and obligations contained in this Agreement or the Regulatory Agreement, deed, lease, mortgage, deed of trust, contract, any applicable CC&R's or other instrument of transfer not related to construction and development of the Project. If Agency refuses or fails to furnish a Certificate of Completion after written request from Developer, Agency shall, within thirty (30) days of the written request, provide Developer with a written statement of the reasons Agency refused or failed to furnish a Certificate of Completion and the action Developer must take to obtain a Certificate of Completion. If the reason for such refusal is confined to specific items or materials for landscaping and the estimated cost thereof shall not exceed $50,000, Agency will issue its Certificate of Completion upon the posting of a bond by Developer with Agency in an amount repre- senting a fair value of the work not yet completed. If Agency fails to respond to Developer's first request for such Certificate of Completion within thirty (30) days after written request therefor, Developer shall have the right to deliver a second request for such Certificate of Completion to Agency; provided, however, that if Agency fails to provide Developer with a Certificate of Completion (or fails to provide Developer with a written statement of the reasons for such failure) on or before the expiration of such second thirty (30) day period, then Developer shall be deemed to be entitled to, and Agency shall be deemed to have executed, such Certificate of Completion. If Developer fails to deliver the second request described in this Subsection, then Developer shall not be deemed to be entitled to, and Agency shall not be deemed to have executed, such Certificate of Completion but developer shall not be precluded from requesting a Certificate of Completion at any future date, in which event the terms and conditions of this subsection 6.16 shall once again apply. 6.17 Collateral Assignment of Dis osition and evelopment Agreement and Agency Consent Thereto. Developer may be required to execute a "Collateral Assignment of Disposition and Development Agreement" as a condition of obtaining the construction financing necessary to complete the Improvements required herein. The Collateral Assignment of Disposition and Development Agreement and Consent to Assignment shall be in the general form contained in Attachment No. 13 hereof subject to reasonable modifications as may be required by the Construction Lender. Agency agrees to consent to such assignment to a Construction Lender approved by Agency if such Construction Lender agrees to the provisions of Subsections 6.16.2, 6.16.3, 920707 ply b559 -3 -jar (I) — 3 1 and 6.16.4. Such consent shall be generally in the form contained in Attachment No. 13 hereof. 6.18 Developer Fee and Payment Thereof. Developer shall be entitled to a fee (the "Developer Fee") equal to ten percent (10%) of the Total Project Costs (defined below), excluding the amount of the Purchase Price of the Site. Also, the fee shall not apply to the off-site Improvements referred to in Section 6.3 unless Agency elects to have Developer construct, or cause to be constructed, such improvements for the Site. The Developer Fee shall be payable as follows: one-third (1/3) based upon Developer's good faith estimate, at such time, of the Total Project Costs upon the funding of the Construction Loan; one- third (1/3) based upon Developer's good faith estimate, at such. time, of the Total Project Costs payable monthly during the construction of the Project, based upon the percentage of completion of the Project; and the remainder, less a 10% retention of the total Developer fee, upon the issuance of a Certificate of Occupancy. The 10% retention shall be payable after Developer and Agency have complied with Section 6.22. The Developer Fee described herein is in addition to, and not in lieu of, the fee described in Sections 3.1 and 4.2 of this Agreement. As used herein, the term "Total Project Costs" is an amount equal to the sum of (a) the Purchase Price, plus (b) the total of reasonable amounts expended or paid by or for the account of Developer for Hard Costs and Soft Costs as generally consistent with the Development Pro -Forma which shall be approved by Agency. "Hard Costs" means all direct costs actually paid by or on behalf of Developer for goods, materials and/or labor (whether performed or stored on or off of the Site) in the construction and development of the Project (including without limitation the grading and site preparation of the Site), which (i) are not included in Soft Costs, (ii) are not reimbursed or reimbursable by others, and (iii) which otherwise would normally be considered in the construction trade to be "hard costs" for the construction of the Project. Without limiting the generality of the foregoing, Hard Costs shall include all direct costs for labor, materials and subcontract performance that are used in the construction of or thereafter incorporated into the Project, actual construction costs, equipment costs, contractor's fees and/or cost overruns (but only if Agency has approved a cost overrun in excess of the agreed construction costs plus Developer's contingencies) for any of the foregoing. "Soft Costs" shall mean all indirect costs actually paid by or on behalf of Developer for construction and development of the Project, which either (i) are not reimbursed or reimbursable by others, (ii) are not included in Hard Costs, and (iii) would otherwise normally be considered in the construction trade to be "soft costs" for the construction of the Project. Without limiting generality of the foregoing, Soft Costs shall include reasonable fees paid to attorneys, architects, engineers, accountants, consultants and other professionals to the extent directly attributable to the construction of the Project, the amount of interest incurred or accrued and actually paid by 9ZD707 p(w b559-3.jer (1) — 32 Developer with respect to financing obtained in connection with the construction of the Project excluding any interest on Agency Loan, fees, if any, paid by (but not to) Developer in connection with raising debt and/or equity capital for the development of the Project, employee salaries paid for tasks normally associated with the development of projects similar to the Project and which would be customarily performed by independent third parties (but only to the extent such salaries do not exceed the amount which would have been reasonably and ordinarily paid to an independent third party for performing the same tasks), and/or cost overruns (but only if Agency has approved in writing a cost overrun in excess of the agreed construction costs plus Developer's contingencies) for any of the foregoing. 6.19 Cost Overruns. 6.19.1 Sharing of Cost Overruns. If the Agency lends Developer the full $5,000,000.00 principal amount of the Agency Loan, then Developer shall be responsible for cost overruns out of the "Contractor" and "Developer" contingency reserves provided for in the "Development Pro Forma" attached hereto and incorporated herein as Attachment No. 15. If the Agency lends Developer less than the full $5,000,000.00 principal amount of the Agency Loan, then Agency and Developer shall each be responsible for 50% of any cost overruns incurred in connection with the development of the Project and Agency's contribution shall be added to and treated as a part of Agency Loan under this Agreement, provided, however, that in no event shall Agency be required to provide more than $5,000,000.00 in total loan funding for the Project not including the cost of off- site improvements. In the event Agency elects to fund any portion of a cost overrun in excess of its $5,000,000 limit on funding, such amount of funding shall be added to or treated as a part of Agency Loan for all purposes of this Agreement. 6.19.2 AA2aroval_and Expenditure of Contingency Reserves. Developer shall have the right to determine, subject to Agency's approval which shall not be unreasonably withheld, the amount of the contingency reserves. Developer may apply and expend all or any portion of any such contingency reserves for Developer's share of any cost overrun incurred in connection with the development of the Project. 6.20 Sharing of Cost Savings. Any cost savings based upon the Construction Contract negotiated by Developer and approved by Agency and resulting from the development of the Project pursuant to this Agreement shall be split on a 50/50 basis between Agency and Developer; provided, however, that Developer may, in its sole discretion, determine to expend any such cost savings on improvement of the Project, in which case Agency and Developer shall have no right to receive any portion of such cost savings. Any such expenditure of savings shall constitute a portion of the Total Project Costs. The Agency and Developer shall share cost savings, if any, which shall be 920707 plw B59.3.jar (1) — 33 — calculated only after Developer pays any contractor and/or subcontractor its or their negotiated percentage of cost savings, and shall be paid only upon funding of the Permanent Loan. Any cost savings paid to Agency shall reduce Agency's Loan. 6.21 Governmental Approvals. Nothing herein is intended to indicate that the Project is not to be subject to the same Planning Commission and City Council review and approval procedures as are applicable to developments similar to the Project. Approval of any aspect of the Project is not to be inferred from any provision of this Agreement, or any Attachment hereto. 6.22 Cost Certification/Agency Audit. 6.22.1 No fewer than 30 days prior to the date on which Agency is obligated to pay the final installment of the Developer Fee, Developer shall deliver to Agency a Preliminary Cost Certification in a form reasonably acceptable to Agency and Developer together with pertinent materials relating to Total Project Costs then incurred and an estimate of costs, if any, to be incurred and paid subsequent to the issuance of the Certificate of Occupancy. Prior to the release of any funds retained pursuant to Section 6.18 hereof, Developer shall deliver to Agency a Final Cost Certification for the Project. Agency shall have the right to audit or cause an audit to be made (the "Agency's Audit") of all accounts, books and records of Developer respecting the development of the Project, in order to ascertain the actual amount of the Total Project Costs. Developer shall reasonably cooperate with and assist in such audit, and make all of its accounts, books and records respecting the development of the Project available to Agency or its auditor for inspection and copying in accordance herewith. Agency agrees to cooperate with Developer in scheduling and conducting Agency's Audit, if any, so as not unreasonably to interfere with Developer's business operation. 6.22.2 Developer shall pay the reasonable cost and expense of Agency's Audit if Agency's Audit discloses (or, in the event that Developer contests Agency Audit, if the independent certified public accountant determines) that the Total Project Costs for the Project as certified by Developer were overstated by more than four percent (4%) of the actual amount of such Total Project Costs. In all other cases Agency shall be solely responsible for the cost and expense of Agency's Audit. 6.22.3 If Agency's Audit discloses (or, in the event that Developer contests the Agency's Audit, if the independent certified public accountant determines) that Agency has overpaid or underpaid the Developer's Fee, Agency shall promptly notify Developer of such fact. If Agency has underpaid the Developer Fee, then at the time Agency delivers such notice Agency shall also pay Developer the amount necessary to correct 920707 plw b559-3.jar (1) — 34 any such prior underpayment. If Agency has overpaid the Developer Fee, Developer shall promptly (but in no event more than 30 days) pay Agency the amount necessary to correct such prior overpayment. 6.22.4 Developer shall have the right to contest, at Developer's sole cost and expense, the accuracy of Agency's Audit. If Developer in its reasonable discretion determines to contest Agency's Audit, Developer must deliver to Agency written notice of its intent to contest within 20 business days after Agency notifies Developer of the results of the Agency's Audit. If Developer fails to deliver such contest notice to Agency within such 20 business day period, then Developer shall be deemed to have waived its right to contest the Agency's Audit. If Developer timely delivers such contest notice to Agency, then the issue of the amount and accuracy of Agency's Audit shall be submitted to an independent certified public accountant mutually acceptable to Agency and Developer, with reasonable experience in audits similar to Agency's Audit in scope, complexity and subject matter, and the finding of such accountant shall be final. The estimated cost of the independent certified public accountant selected by the parties shall be split equally between the parties and each party shall pay his or its share in advance to the independent certified public accountant and shall pay his, or its, remaining share, if any, not covered by the advance payment to the independent public accountant promptly upon receiving a bill therefor. 6.22.5 If the independent certified public accountant so selected by the parties determines that the Total Project Costs for the Project as certified by Developer were overstated by four percent (0), or less, of the actual amount of such Total Project Costs, then Agency shall promptly reimburse Developer for the reasonable fees and expenses paid by Developer in contesting Agency's Audit, including Developer's share of the costs and expenses of the independent certified public accountant. If the independent certified public accountant so selected by the parties determines that the Total Project Costs for the Project as certified by Developer were overstated by more than four percent (4%) of the actual amount of such Total Project Costs, then Developer shall promptly reimburse Agency for the reasonable fees and expenses paid by Agency in defending Agency's Audit, including Agency's share of the costs and expenses of the independent certified public accountant. 6.22.6 The retention amount described in Section 6.18 shall be paid to Developer after the provisions of Subsections 6.22.1 through 6.22.4 have been complied with. 6.23 Liens. Developer agrees that it shall not permit or suffer any mechanic's or materialmen's or other liens of any kind or nature to be recorded and/or enforced against the Site for work done or materials furnished or authorized by Developer, and Developer shall indemnify and hold harmless Agency and the 920707 plu b559.3.jar (t) — 35 Site from and against any and all liens, claims, demands, costs and expenses related to work done, labor performed or materials furnished in connection with its entry on the Site, including without limitation any attorney fees or costs incurred by Agency in connection therewith. 6.24 Certificate of Occupancy. Upon completion of construction, Developer shall obtain a Certificate of Occupancy from the City of Carson prior to the occupancy of any of the dwelling units of the Project. In the event a Certificate of Occupancy is not issued by January 1, 1995, then any date which is determined and measured from the date of issuance of the Certificate of Occupancy (i.e., for purposes of Sections 2.4, 6.15, 8.1, 8.2, 8.3 and Subsections 2.5.1, 5.6.1 and 8.4.1) shall be January 1, 1995, instead of the date of issuance of the Certificate of Occupancy. ARTICLE 7. (INTENTIONALLY OMITTED] ARTICLE S. USE AND RENTAL OF THE SITE 8.1 Uses. Developer covenants and agrees for himself, his successors, assignees, and every successor in interest that during construction and thereafter for a period of thirty (30) years from the date of issuance of a Certificate of occupancy on the Project, Developer, such successors, assignees and successor(s) in interest shall devote the Site only to the uses specified in the Grant Deed, the Regulatory Agreement, and this Agreement. 8.2 Rental Restrictions. Developer covenants and agrees for himself, his successors, assignees, and every successor in interest, that rental of the Project shall be restricted as provided in this Section 8.2 for a period of thirty (30) years from the date of issuance of a Certificate of Occupancy on the Project. 8.2.1 Units Restricted to Senior Citizen Rentals. All (except the manager's Unit) of the Units in the Project ("rentable units") shall be rented exclusively to senior citizens of very low, lower, or moderate income and only such persons shall be entitled to occupy the Units. 8.2.2 Restrictions on Rental of Very Law Lower Income Units. Forty-three (43) of the rentable units shall be rented exclusively to senior citizens of very low, or lower income (as defined in Subsection 8.2.4) and only such persons shall be entitled to occupy such Units. The maximum number of persons who may reside in a Unit is two. 8.2.3 Restrictions on Rental of Moderate Inco a Units. The remaining forty-four (44) rentable Units shall be rented exclusively to senior citizens of moderate income (as defined in Subsection 8.2.4) and only such persons shall be 920707 plw b559-3.jer (1) — 36 -- entitled to occupy such Units. The maximum number of persons who may reside in a Unit is two. 8.2.4 Definitions. (i) "Senior Citizens of very low, lower, or moderate income" means persons whose income do not exceed the amounts set forth in California Health and Safety Code Sections 50105 (very low income), 50079.5 (lower income) and 50093 (moderate income) for persons and families who have incomes not greater than the applicable percent of the area median income (adjusted for family size as appropriate for the Unit) for the very low, lower, or moderate income categories. (ii) "Area median income" shall mean the area median income for Los Angeles County as published by the Department of Housing and Community Development pursuant to California Health and Safety Code Section 50093. (iii) "Family size appropriate to the Unit" shall mean a household of two persons for a one -bedroom unit. (iv) "Affordable rent (including a reasonable utility allowance) for very low, lower, or moderate income person" means the rent determined under California Health & Safety Code Section 50053(b) based upon area median income (adjusted for family size appropriate for the Unit) for the very low, lower, or moderate income household. (v) The terms defined in this Subsection 8.2.4 are further defined in Title 25 of the California Code of Regulations Section 6910, et sea., as from time to time amended, and any successor regulations thereto. The terms and provisions of California Health and Safety Code Sections 50093, 50105, 50079.5, and 50053 and Title 25 of the California Code of Regulations Section 6910, et sett., as amended, and any successor statutes or regulations thereto, are incorporated herein by this reference. (vi) For purposes of this Agreement "senior citizens" shall mean persons over sixty-two (62) years of age. 8.2.5 Initial Rent. The initial rent for the Units of the Project shall be as follows: (a) The initial rental rate for each of the 43 very low/lower income Units shall be $390 per month unless such rent is lowered by agreement of the parties hereto to comply with the requirements of other financing sources contemplated and permitted by Sections 2.2 and 3.1 of this Agreement; and (b) The initial rental rate for each of the 44 moderate income Units shall be $410 per month. 8.2.6 Annual Rent increases. Developer shall submit a request for an increase in rents to the Housing 920707 plw b559-3.jar (1) — 37 — Committee of the Human Relations Commission of the City of Carson (the "Housing Committee") for review and approval sixty (60) days prior to each yearly anniversary of the initial occupancy of the Project ("the Anniversary") and each year thereafter. The Housing Committee shall review the Developer's request and notify Developer of either of the following actions within thirty (30) days after submission: (i) Developer shall be allowed to increase the then current rental rate of the Units by 2% each year; or (ii) Annual increases in the then current rent of the Units in excess of 2% per year shall be allowed if the percentage increase in the "CPI Adjusted Rent" and the "HUD Factor Adjusted Rent" (each as defined below), divided by two, exceeds 2% per year in accordance with the following computations: (a) As used herein, the "CPI Adjusted Rent" shall mean the then existing rent rate for any Unit, plus an amount equal to the product of (A) the then existing rent rate for such Unit, multiplied by (B) the percentage increase, if any, of the Consumer Price Index - All Items (1982-1984=100) - All Urban Consumers - Los Angeles -Anaheim -Riverside, California, as published by the United States Department of Labor, Department of Labor Statistics ("the Index"). Such percentage increase shall be determined by (i) subtracting the Index for the month which is 15 months prior to the month in which such calculation is to be made, from the Index for the month which is three months prior to the month in which such calculation is to be made, and (ii) dividing the remainder by the Index for the month which is 15 months prior to the month in which such calculation is to be made. An example of the calculation provided for above is as follows: Assume that the rent for a Unit is to be adjusted as of April 1, 1992, and prior to April 1, 1992, the rent for such Unit was $390.00. Further assume that the Index for January, 1991 (15 months prior to the month in which such calculation is to be made) was 139.9 and the Index for January, 1992 (three months prior to the month in which such calculation is to be made) was 144.3. Based upon these assumptions the percentage increase in the Index would be calculated by (i) subtracting the Index for the month of January, 1991 from the Index for the month of January 1992 i.e. 144.3-139.9=4.4, and (ii) dividing 4.4 by 139.9=0.031. The CPI Adjusted Rent would be calculated by multiplying (A) the then existing rent rate ($390.00) by (B) the percentage increase in the Index (.031$), and adding the result to the then effective rent rate ($390.00), i.e., $390.00 multiplied by .031%=$12.09 and $12.09 + $390.00=$402.09; and (b) As used herein, the "HUD Factor Adjusted Rent" shall mean the product of (i) the then existing rent rate for such Unit, multiplied by (ii) the Automatic Annual Adjustment Factor in effect on the date an which such calculation is to be made for the Los Angeles -Long Beach, California areas, calculated as if the rent for such apartment unit excluded the highest cost utility for such Unit. The Automatic Annual Adjustment Factor shall mean the Annual Adjustment Factors established pursuant to Section 8(c)(ii)(A) of the United States Housing Act of 1937 (42 920707 plw b559-3.jar (1) — 38 — U.S.C. 1437f(c)(ii)(A)), as published annually in the Federal Register (24 CFR 888.202). An example of the calculation provided for above is as follows: Assume that the Automatic Annual Adjustment Factor in effect on April 1, 1992 is 1.058. The HUD Factor Adjusted Rent would be calculated by multiplying (i) the then existing rent rate ($390.00) by (ii) the Automatic Annual Adjustment Factor (1.058), i.e., $390.00 multiplied by 1.058=$412.62. Based upon the examples set forth in (a) and (b) above, the CPI Adjusted Rent ($402.09), added to the HUD Factor Adjusted Rent ($412.62), and the sum then divided by 2, equals $407.36. The increase in rent from $390.00 to $407.36 would be an increase of $17.36, which exceeds 2% of $390.00 ($7.80). Accordingly, in this example of the calculation to be used in determining annual rent increases pursuant to this Subsection 8.2.6, Developer would be allowed to raise the then applicable rent for the subject Unit to $407.36, despite the fact that such increase is in excess of 2%. Notwithstanding the foregoing, Developer may not increase the annual rent for any unit by more than six percent (6%) in any single year. Annual increases approved by the Housing Committee may be implemented in full or in part at the Developer's sole discretion and option. Nothing contained herein shall obligate Developer to make annual increases in rent, to the extent that Developer, at Developer's sole and absolute discretion, believes that such increases may be detrimental to the operation of the Project. Permitted rent increases shall be effective on the Anniversary or on the expiration of any rental increase notice period required by law, whichever is later. 8.2.7 Limitation on Rent Increases. Notwithstanding the provisions of Subsection 6.2.6, any rental increase permitted by Subsection 8.2.6 shall not be made if, and to the extent, the rent to be charged any person who is in occupancy of a Unit at the time of a rent increase permitted by Subsection 8.2.6 exceeds the current affordable rent (including a reasonable allowance for utilities) that may be charged for very low, lower, or moderate income persons under Health & Safety Code Section 50053. The rental category (i.e. very low, lower, or moderate income) under which the occupant of the Unit originally qualified to rent the Unit shall govern the "affordable rent" (as defined in Subsection 8.2.4) to be charged for rental of the Unit. 8.2.8 Successor Tenants Rents. The rent for qualified successor tenants (applicants approved for occupancy) upon the vacancy of a Unit shall be equal to the rent paid for such Unit by the tenant immediately prior to'the vacancy, provided, however, that if the vacant Unit is to be rented to a senior citizen in a different income category (e.g., from a lower income former tenant to a moderate income successor tenant or vice versa) then the rent to be paid for such Unit by the 920707 piw b559.3.jar (1) — 39 — successor tenant shall be equal to the current rent being paid for Units in the same income category (i.e. very low, lower, or moderate income) at the time the vacancy is filled. 8.2.9 Annual Report. Developer shall submit to Agency annually, on or before June 30 of each calendar year, a report setting forth the rental rate of all Units and the income and number of known occupants of all Units. The income information required by this Section shall be supplied by the tenants of the Units in a certified statement on a form from time to time provided by the Agency. 8.3 Rental Subsidy. Agency agrees to provide a rental subsidy to the Project of $155,760 per year, in accordance with the terms and conditions of the Rental Subsidy Program set forth in Section 8.4 hereof. Such subsidy shall continue for a period of thirty (30) years from the date of the issuance of a Certificate of Occupancy on the Project. Agency shall review the amount of such subsidy at least once each five years, commencing no later than the fifth anniversary of the date on which the first Unit is rented, in order to consider whether or not it is appropriate to increase such subsidy to reflect increases in consumer prices or other inflation in the costs of housing; provided, however, that in no event shall the amount of such subsidy decrease and in no event shall Agency be required to increase the subsidy but may do so. 8.4 Rental Subsidy Program. 8.4.1 Payment of Subsidy. Subject to the provisions of the Senior Citizens Rental Assistance Program (which is attached hereto and incorporated herein as Attachment No. 17), Agency agrees to pay a monthly rental subsidy of not more than one -twelfth (1/12th) of the annual subsidy provided for in Section 8.3. The subsidy shall commence on the date of the issuance of a Certificate of Occupancy on the Project. Agency's subsidy obligation shall be reduced by $200 per unit per month for any Unit(s) that are vacant more than thirty (30) days. Agency shall receive a rebate of any subsidy over payments resulting from vacancies. 8.4.2 Carryover of Subsidy. Any rebate that Agency may be entitled to at any year-end may be used to subsidize units in a later year (in addition to the total yearly subsidy obligation provided for in Section 8.3 hereof) or may be withdrawn by Agency if Agency shall elect to do so. Any rebate due to Agency shall be paid to Agency within 30 days of the due date of the accounting report referred to in Subsection 8.4.3. 8.4.3 Accounting for Subsidy PayMents. Developer shall provide Agency an accounting report showing the rents and periods of time each unit was rented. The report shall include a reconciliation of the total subsidy drawn during the applicable period and the amount of any subsidy to be rebated for 920707 plw b559-3.jar (1) — 4 0 such period. The first accounting period for which a report shall be made shall end on the last day of the month in which all of the Units have been initially rented to the first occupants. An accounting shall be made to Agency within 30 days of such date. Thereafter, an annual accounting shall be made within 30 - days of the yearly anniversary of the end of the month for which the first accounting report was made. Developer shall maintain a complete and accurate rent roll listing all rental units, with the forty-three (43) very low/lower units and the forty-four (44) moderate Units listed separately, the names of all tenants, the dates of their tenancies and the amounts of rents charged and collected. Such records shall be subject to examination by Agency, through its authorized designee, from time to time at reasonable times during business hours. 8.5 Ri hts of Agency. Agency or the Housing Committee shall have the continuing right during the period provided for in Section 8.2 to verify that the restrictions, limitations and requirements of this Article 8 are being complied with and to establish and/or continue a low and moderate income (as defined in California Health and Safety Code Section 50093) Housing Program at the project in accordance with the "Senior Citizens Rental Assistance Program" as it may be amended from time to time by Agency provided such amendments are consistent with the provisions of this Agreement. The Senior Citizens Rental Assistance Program shall provide inter alias (a) that it is to benefit senior citizens over sixty-two (62) years of age, (b) that senior citizens who have resided in the City of Carson for at least one (1) year prior to occupancy at the Project shall be given a priority in renting the Units, (c) that senior citizens who have resided in the City of Carson and who are determined by the Housing Commission to be displaced shall be given a priority in renting the Units, (d) that senior citizens of very low income shall be given a priority in renting the forty-three (43) Units referred to in Subsection 8.2.2, and (e) that senior citizens of moderate income who have incomes not exceeding 100 percent (instead of up to 120 percent) of area median income shall be given a priority in renting the forty-four (44) Units referred to in Subsection 8.2.3. Any priority provided for above and in the Senior Citizen Rental Assistance Program shall only be considered if the person to which the priority applies otherwise qualifies under the rental criteria established by Developer and approved by Agency for rental of the Units. 920707 ptw b559-3.jar (1) — 41 — 8.6 Obligation to Refrain from Discrimination. There shall be no discrimination against any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part thereof, and Developer (or any person or entity claiming under or through Developer) covenants and agrees not to establish or permit any such practice or practices of discrimination with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants or sublessees of the Site or any part thereof. The Developer also agrees to refrain from any form of discrimination as set forth above pertaining to deeds, leases or contracts. 8.7 Form of Nondiscrimination and Non -segregation Clauses. The Developer shall refrain from restricting the rental, sale or lease of the Site, or any portion thereof, on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. All 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, his 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 sex, marital status, race, color, religion, creed, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed or the improvements thereon or to be constructed thereon, nor shall the grantee himself or any person claiming under or through the grantee, 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 in the land herein conveyed or such improvements. The foregoing covenants shall run with the land." 2. In leases: "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, 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 sex, marital status, race, color, religion, creed, national origin or ancestry, in the leasing, subleasing, transferring, use, or enjoyment of the land herein leased or the 920707 plu b559-3.jar (1) — 42 — improvements thereon or to be constructed thereon, nor shall the lessee himself, or any person claim- ing under or through the lessee, 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 of the land herein leased or such improvements." 3. In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land or the improvements thereon or to be constructed thereon, nor shall the transferee himself or any person claiming under or through the transferee, 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 land or such improvements." 8.8 Effect and Duration of Covenants. The covenants established in this Agreement shall without regard to technical classification or designation, be binding on Developer, his successors, assignees, and every successor in interest to the Site, or any part thereof, for the benefit and in favor of Agency, its successors and assigns, and the City of Carson. Except as set forth in the following sentence, the covenants contained in this Agreement shall remain in effect until the expiration of the period set forth in Section 8.2, unless this Agreement provides for their earlier or later termination. The covenants against discrimination set forth in Sections 8.6 and 8.7 shall remain in perpetuity. ARTICLE 9. MANAGEMENT OF THE PROPERTY 9.1 Operation, Maintenance and Repair. Developer shall have full responsibility for the operation and maintenance of the Improvements throughout the duration of the period provided for in Section 8.2, and shall perform all repairs, maintenance and replacements necessary to maintain and preserve the Improvements in a first class, safe and sanitary condition, in a manner satisfactory to the Agency and in compliance with all applicable laws. Developer's responsibilities shall include, but not limited to, hiring and discharge of employees, salary of employees, maintenance and repairs including capital expenditures, the financial operations of the Project, the rental of the apartment units and all operational, maintenance and management responsibilities of an owner of a multi -residential housing project. 9ZD707 plw b559-3.jar (1) — 43 — Developer shall maintain the Improvements and landscaping within the public rights of way which may abut the Site throughout the term of this Agreement without expense to the Agency, and shall perform all repairs and replacements necessary to maintain and preserve said Improvements and landscaping in a first-class, decent, safe, sanitary, attractive, and healthy condition in a manner reasonably satisfactory to the Agency and in compliance with all applicable laws, and shall keep the Site free from any accumulation of debris or waste materials. The complete work of any reconstruction or replacement shall be at least equal in value, quality and utility to the condition of the Improvements or landscaping before the event giving rise to the work. 9.2 Leasina and Occupancy.. The leasing and occupancy of the Units shall be in accordance with the approved Management Plan, attached hereto as Attachment 18. Any modifications or changes to the Management Plan shall be submitted to the Housing Committee for approval. The Management Plan shall include the tenant selection criteria, procedures for tenant selection and the establishment and maintenance of waiting lists, the lease and rental agreement, a copy of the House and Ground Rules adopted for the Project and all policies and procedures to be used to ensure compliance with the age, income, and any other requirements set forth as conditions for eligibility or occupancy in the Project and shall be consistent with the terms and conditions of this Agreement. The units shall be leased under Rental Agreements substantially in the form attached hereto and incorporated herein as Attachment 19, as supplemented by the provisions and requirements of Section 8.7. Any modifications or changes in the Rental Agreements shall be submitted to the Housing Committee for approval. Agency shall review and approve all policies and procedures established for the successful management of the Project. Subject to the rights of the occupants of the Units, Agency shall have the right to perform an annual on-site inspection of the Units, common areas and grounds and to perform an annual tenant file review to ensure that Developer is managing the Project in accordance with the eligibility requirements set forth for occupancy. 9.3 Pre -Leasing. Developer shall perform all advertising and related pre -leasing work as set forth in the approved Management Plan. 9.4 Management of Project. Developer shall be completely responsible for the management, administration and operation of the Project including, but not limited to the hiring and discharge of employees, salaries and all other related project expenses, maintenance and repairs, including capital expenditures, the financial operations of the Project, the rental and re -rental of the apartment units in accordance with the 920707 plw b559-3.jar (1) — 44 — occupancy requirements set forth in this Agreement and all operational, maintenance and management responsibilities of an owner in a typical multi -family residential housing project. 9.5 Management Fee. Developer may employ a management company (the "Management Agency") to perform certain obligations of Developer hereunder with respect to the management and operation of the Project consistent with the Management Agreement attached hereto and incorporated herein as Attachment 20 and any approved amendments thereto. Developer currently anticipates that it will employ Thomas Safran & Associates, Inc. as the Management Agency. Any such employment shall not relieve Developer of any obligation or responsibility imposed upon Developer by this Agreement or the Regulatory Agreement. As consideration for performing the management tasks described herein, Developer shall be entitled to receive 8% of monthly gross income (for this purpose the monthly subsidy provided for in Article 8 shall be deemed a part of monthly gross income) derived from the operation of the Project (the "Management Fee"). The Management Fee is intended to cover all of Management Company's office overhead and administration expenses associated with the supervision and oversight of the management of the property, including without limitation, secretarial, accounting, telephone, travel, etc.. However, the Management Fee does not include the costs of on-site management expenses, including the cost of an on-site property manager and on-site maintenance and other operational expenses normally associated with the property. The Management Fee may be withdrawn by Developer monthly as a cost of operation. Developer shall not be entitled to receive a management fee in excess of the percentage permitted in this Section 9.5 during the period provided for in Section 8.2. 9.6 Management Agency's Failure to Perform. In the event the Management Agency appointed by Developer fails to perform the obligations imposed upon Developer by this Article 9 such failure shall constitute a default under Section 10.1 and if Developer shall fail to cure such default as provided in Section 10.1., then Agency shall have the right, in addition to any other remedies of Agency, to require Developer to appoint a substitute Management Agency, reasonably acceptable to both Agency and Developer. 9.7 Public Agency Rights of Access for Construction. Repair and Maintenance of Public Improvenents and Facilities. Agency for itself and for the City and/or other public agencies at their respective sole risk and expense, reserves the right to enter the Site or any part thereof, at all reasonable times and with as little interference as possible, for'the purposes of construction, reconstruction, maintenance, repair or service of any public facilities located or to be located on the Site. Any such entry shall be made only after reasonable notice to Developer. Any damages or injury to the Site or to the 920707 plw b559-3.jar (1) — 45 — improvements thereon resulting from such entry shall be the responsibility of the public agency making or in whose behalf the entry is made. ARTICLE 10. DEFAULTS, REMEDIES AND TERMINATION 10.1 Defaults. The following events shall constitute a default hereunder: failure of either party to timely perform any of the provisions of this Agreement; or the filing of a petition in bankruptcy by or against Developer or appointment of a receiver or trustee of any property of Developer; or an assignment by Developer for the benefit of creditors; or adjudication that Developer is insolvent by a court, and the failure of Developer to cause such petition, appointment or assignment to be removed or discharged within ninety (90) days; or recordation of a Notice of Default under any mortgage, deed of trust, or security instrument encumbering the Site. If the default is not commenced to be cured within thirty (30) days after service of the notice of default and is not cured promptly in a continuous and diligent manner within a reasonable period of time after commencement, the nondefaulting party may thereafter (but not before) commence such action(s) against the nondefaulting party as it may be entitled to bring under the law. 10.2 Non -Waiver of Rights or Remedies. 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 such default, or of any such right or remedies, or deprive either 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. 10.3 Legal Actions. 10.3.1 Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 10.3.2 Service of Process. In the event that any legal action is commenced by Developer against Agency, service of process on Agency shall be made by personal service upon the Executive Director or Secretary of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Developer or its successor or assignee, (i) if Developer or its successor or assignee is a partnership, service of process shall be made by personal service upon any person who is a direct or indirect general partner thereof, or in such other manner as may be provided by law, or by personal service upon any corporate officer of a corporation that is a direct or indirect general partner thereof, or (ii) if Developer or its successor or assignee is a corporation, service of process shall be made by 920707 plw b559-3.jar (1) — 46 — personal service upon a corporate officer of Developer or its successor or assignee, as the case may be, or in such other manner as may be provided by law, whether made within or without the State of California. 10.4 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of each party 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 time or different times, of any other rights or remedies for the same default or any other default by the other party. ARTICLE 11. GENERAL PROVISIONS 11.1 Notices Demands and Communications Between the Parties. Formal written notices, demands, correspondence and communications between Agency and Developer shall be deemed sufficiently given two (2) days after deposit in a sealed envelope in the United States Mail, postage prepaid, by registered or certified mail, return receipt requested, to the principal offices of Agency or Developer as set forth in Subsections 1.3.1 and 1.3.2 of this Agreement, respectively. Such written notices, demands and communications may be sent in the same manner to such other addresses as the party to be notified may from time -to -time designate as provided in the first sentence of this Section 11.1. 11.2 Conflict of Interests. No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. 11.3 Warranty Against Payment of Consideration for Agreement. Developer warrants that it has not paid or given, and will not pay or give, any third person, including, but not limited to, the City Council of Carson, the Agency, the City of Carson, or any member, official or employee thereof, any money or other consideration for obtaining this Agreement. 11.4 Nonliability of Agency Offi,,gi at is and Em llooyees.. No member, official or employee of Agency or the City of Carson shall be personally liable to Developer, or any assignee or successor in interest, in the event of any default or breach by Agency or for any amount which may become due to Developer or any assignee or successor in interest, or on any obligation under the terms of this Agreement. 11.5 Enforced Dela • Extension of Times of Performance. Performance by either party hereunder shall not be deemed to be in default where delays or failure to perform are due to war, 920707 plu b559.3.jar (1) — 47 — insurrection, strike, lock -out, riot, flood, earthquake, fire, casualty, act of God, act of the public enemy, epidemic, quaran- tine restriction, freight embargo, lack of transportation, unusually severe weather, inability to secure necessary labor, materials or tools, act of the other party, or any other cause beyond the reasonable control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause shall only be for the period of the enforced delay, which period shall commence to run from the time of the commencement of the cause provided that written notice of such cause is given to the other party within ten (10) days after the commencement of the cause. Times of performance under this Agreement may also be extended in writing by mutual agreement of Agency and Developer. Failure of Developer to obtain financing for the Project or Developer's financial inability to obtain such financing shall not be grounds for excuse or extension. 11.6 Inspection of Books and Records. The Agency has the right at all reasonable times, upon twenty-four hours advance written notice setting forth the reason therefor, to inspect the books and records of Developer pertaining to the Site and development thereof as pertinent to the purposes of this Agreement. The Developer also has the right at all reasonable times to inspect the books and records of Agency pertaining to the Site and development thereof as pertinent to the purpose of this Agreement. 11.7 Approvals by Agency and Develo er. Wherever this Agreement requires Agency or Developer to approve any contract, document, plan, proposal, specification, drawing or other matter, such approval, or if appropriate, disapproval, shall be in writing and shall not be unreasonably withheld or delayed. 11.8 Plans and Data. If Developer does not proceed with the purchase or development of the Site, and this Agreement is terminated with respect thereto for any reason, Developer shall deliver to Agency any and all plans, soil tests and data concerning the Site and any proposed improvements thereto, and Agency or any person or entity designated by Agency shall have the right to use such plans and data without charge by, or obligation to, Developer. Developer's obligation hereunder is subject to Agency's compliance with the requirements of Section 3.2.3(ii) hereof. 11.9 Brokerage Commissions. Agency shall not be liable for any real estate commission or brokerage fees which may arise here from. Each party represents that he or it has engaged no broker, agent, or finder in connection with this transaction. Agency agrees to hold Developer harmless from any claim made by any broker, agent or finder claiming compensation by reason of any dealing with Agency, and Developer agrees to hold Agency harmless from any claim by any broker, agent or finder claiming compensation by reason of any dealing with Developer. 920707 p[w b559-3.j*r (1) � 48 — ARTICLE 12. SPECIAL PROVISIONS 12.1 agency AporovalgZ Covenants. Conditions and P,estr gtigns. Developer shall submit to Agency for approval any proposed covenants, conditions and restrictions ("CC&R's") affecting any and all portions of the Site. Such CC&R's shall incorporate all provisions of this Agreement which run with the land or are binding on Developer's successors, administrators, assigns or lessees pursuant to this Agreement. 12.2 Approvals in Writing. Any approvals required or permitted under the terms of this Agreement shall be in writing and signed by the party hereto against whom such approval is asserted, or its or his designed representative, with the right to approval. ARTICLE 13. ENTIRE AGREEMENT, WAIVERS AND AMENDMENT This Agreement is executed in six (5) duplicate originals, each of which is deemed to be an original. This Agreement includes Fifteen Articles ( 52 ) pages and plus attachments Nos. 1 through 19 which constitute the entire understanding and agreement of the parties related to the Project. This Agreement supersedes all negotiations or previous agreements between the parties with respect to all or any part of the subject matter hereof. ARTICLE 14. TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY This Agreement, when executed by Developer and delivered to Agency, may be withdrawn by the Developer on written notice to Agency if not executed and delivered by Agency within 30 days after the date of submission of the executed Agreement to Agency. The date of this Agreement shall be the date when this Agreement is signed by the Agency. ARTICLE 15. ASSIGNMENT, TRANSFER AND SALE 15.1 In General. Except as herein provided to the contrary, Developer shall not assign, transfer, or sell this Agreement or any interest in the Site, the Project, the Improvements, or any interest in Developer or any partner of Developer (collectively, a "Transfer"), without Agency's prior written consent first had and obtained. Any attempted Transfer in violation hereof shall be ineffective and void and shall constitute a default and breach of this Agreement by Developer, and shall terminate any further obligations of Agency hereunder. 15.2 Consent _.F_r`iorto Issuance of Certificate of COM21eti2ll. For the period from the date hereof through the date of issuance of the Certificate of Completion, Agency may withhold its:consent to any Transfer in Agency's sole and absolute discretion; provided, however, Agency shall not unreasonably withhold its consent to a Transfer by Developer, prior to 920707 plw b659-3.jor (1) — 4 9 issuance of a Certificate of Completion, of all of his rights and interest in this Agreement and the Project to any entity controlled, directly or indirectly, by Developer (including without limitation any corporation in which Developer has a controlling interest, or any partnership in which Developer is a general partner, provided that Developer is responsible for the day-to-day management of the partnership), provided that the assignee or transferee assumes all obligations of the Agreement on Developer's part and delivers a copy of such assumption to Agency, and further provided that Developer shall jointly and severally with such transferee remain responsible for the performance of this Agreement on Developer's part until the issuance of a Certificate of Completion. If the transferee is a limited partnership, then the sale of limited partnership interests in such limited partnership shall not require Agency's prior consent. 15.3 Consent During 5 -years After Issuance Certificate of Completion* For the period from the issuance of the Certificate of Completion through the date that is five (5) years after issuance of the Certificate of Completion, Agency may withhold its consent to any Transfer in the Agency's sole and absolute discretion. 15.4 Consent After 5 Years After Issuance o .Certificate of Congletion. For the period from the date that is five (5) years after issuance of the Certificate of Completion through the end of the term hereof, Agency shall not unreasonably withhold its consent to any Transfer. 15.5 Transfer Without consideratioll. Notwithstanding the provisions of Sections 15.1, 15.2, 15.3, and 15.4, Agency agrees to consent to any Transfer made by Developer without Developer's receipt of any consideration of all, or substantially all of the assets of Developer, to any entity which is beneficially or legally owned by Thomas L. Safran, his spouse, child, father, mother or grandchild, or a trustee or custodian acting principally for the benefit of Mr. Safran or for his lineal issue; provided however, if such Transfer occurs prior to the issuance of the Certificate of Completion, Developer shall remain jointly and severally liable with such transferee for the performance of Developer's obligations set forth in this Agreement. 15.6 Assumption of obligations. No Transfer permitted by this Article 15 or otherwise made by Developer at any other time, shall be effective unless and until the transferee (or any subsequent assignee(s) or transferee(s)) assumes Developer's obligations and agrees to be bound by the terms of this Agreement in a writing duly executed by such assignee or transferee and delivered to Agency. 920707 piw b559-3.Jsr (t) 50 — IN WITNESS WHEREOF, the parties have entered into this Agreement as of the 91"th- day of CARSON REDEVELOPMENT AGENCY a public body, corporate and politic., By:W4-k�-' Its a'rperson Attest: Its Seci-etary Approved as to Form: RICHARDS, WATSON & GERSHON Agency Counsel r 920707 plv b559-3.jar (1) — 51 — u:nu 1Ab L. SAk' a, THOMAS SAFRAN S IATES, a Sole Proprie or ip State of California } County of OnyG `'/ i. , 19 q� , before me, aN,✓.7L' 14F' Gl1c�iA- , a Notary Public, personally appeared I personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (1, Live 4= A)�z (seal) State of California County of On KENNETH JAN WOLF COMM. #923604 -s Notary hbk-ca ftrria Z LOS ANGELES COUNTY i My comm. expires JUN 09,1995 Mit SAN VICEMT BLV^ 75M Las ANGELES, CA 90049 , 19 , before me, a Notary Public, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Signature (seal) WITNESS my hand and official seal. - 52 - Attachment No. 16 CITY OF CARSON REDEVELOPMENT AGENCY ENIOR CITIZEN RENTAL ASSISTANCE PROGRAM I. PROGRAM„DEFINITION This document constitutes the Senior Citizen Rental Assistance Program for the City of Carson Redevelopment Agency and the guidelines for implementation of the Program ("Program Guidelines") established in the Disposition and Development Agreement ("DDA") executed by Owner and the Carson Redevelopment Agency. The purpose of the Program is to provide rental assistance in fixed amounts to senior citizen tenants ("Tenants") whose incomes do not exceed the qualifying limits established in the DDA. The California Legislature has declared that there continues to exist throughout the State a seriously inadequate supply of safe and sanitary dwelling accommodations for persons and families of low income. Section 33449 of the California Health and Safety Code provides that redevelopment agencies may provide subsidies to, or for the benefit of, persons and families of very low, low -or moderate income to assist them in obtaining housing in the community. This Program and the Program Guidelines are designed to facilitate the provision of housing for senior citizens who are of very low or low income, as defined in the DDA. _I. ELIGIBILITY REQUIREMENTS A Tenant applicant is eligible to receive rental assistance under this Program ("Rental Assistance Payment") if such applicant satisfies all of the following conditions: (1) The Tenant applicant must be a resident of the City of Carson prior to approval for occupancy in the Carson Senior Housing Project. (Z) The Tenant applicant must be 62 years of age or older. (3) The Tenant applicant's income shall not exceed the amounts set forth in the California Health and Safety Code for persons in the very low, lower and moderate income cateacries. III. RENTAL ASSISTANCE PAYMENTS A. Source of Funds This Program shall be funded through funds set aside by the Agency which have been allocated for the provision of housing in accordance with the purpose of this program. B. TOM Of the Rental Assistance Proar Rental Assistance Payments for this Program shall be for a period set forth in the DDA. Rental Assistance Payments under this Program commence the first day of occupancy of the first eligible Tenant, and shall continue to the end of the term of the provided for in the DDA. C. Maximum Rental Assistance PayMent The Agency may make Rental Assistance Payments in accordance with the provisions of this Program for the benefit of those tenants meeting the eligibility requirements established in Section II hereof, and provided that all conditions herein are met. The initial Rental Assistance Payment to any eligible Tenant ("Maximum Payment") shall be $295 per unit per month. D. Computation of Rental Assistance yajaMt The Owner shall compute the maximum Rental Assistance payment for each eligible Tenant. "Tenant Rent" for eligible Tenants shall equal the monthly gross rent minus the Rental Assistance payment approved by Agency. The owner shall submit the assistance computation and request for assistance payments to the Agency for recordation and approval. E. Review of Rental subsidy The amount of rental subsidy being provided by Agency shall be reviewed every five (5) years as provided in Section 8.3 of the DDA. IV. PROCEDURES FOR OCCUPANCY A. Certification of Eligibility A tenant may not receive rental assistance pursuant to this Program unless and until the Tenant has been approved by the Owner and accepted for residency in the Carson senior Housing Project. The Owner shall complete and have available in the tenant file for Agency review all information obtained and used by the Owner in qualifying the Tenant for residency. Said information shall include the name, age and gender of the Tenant and each member of Tenant's household; address and phone number of Tenant; verified amount and sources of Tenant's income and that of each member of Tenant's household; place of residency; Tenant's current housing situation; and any special needs or circumstances of the Tenant. Notice to an ineligible Tenant applicant is required and shall include the reason for ineligibility and the right to appeal the determination with a higher level management company official. The Owner's certification of a Tenant's eligibility to receive Rental Assistance Payments shall be for a period of one year commencing on the first day of occupancy of the dwelling unit by the Tenant, and ending one year from such day. ae Owner shall review the eligibility status of each Tenant on a yearly basis, and shall recertify a Tenant's eligibility as appropriate. Tenants must update income information and submit such other information and records as will be required by the Owner. The Owner shall notify the Tenant of such recertification and of any change in the amount of the Agency's Rental Assistance Payment. The Owner may also review the eligibility status of a Tenant on an interim basis if there is a substantial change in the composition of the Tenant's household or an increase in income of the Tenant's household. Each eligible Tenant shall be required to notify the Owner of any such substantial change. If a tenant recertification reveals that they are over the income eligibility allowed for the Rental Assistance Program, the tenant shall be notified in writing that their rent will be increased to the then prevailing rent paid by the non -assisted tenants. In this event, the Owner shall determine whether any other current tenants qualify for subsidy and shall make adjustments to ensure that the assistance is being paid on behalf of the lowest income tenant. B. Rental Assistance Payments To Owner Rental Assistance Payments shall be paid to the Owner on the first day of each month on behalf of the Tenant based upon the monthly rent roll submitted by the Owner. Rental Assistance Payments shall be due and owing :rom the date of occupancy by an eligible Tenant, through the last day of the month in which the Tenant vacates the dwelling unit; except that the Agency shall not be obligated to pay a Rental Assistance Payment for any month or portion thereof where the Tenant has vacated the dwelling unit and the Owner did not give notice to the Agency as required by Section V.A. below. Owner shall not request a subsidy for any Unit that is vacant more than 30 days. V. VACATED DWELLING_UNIT BY TENANT A. Notice -to Agency by Owner If a Tenant, receiving rental assistance vacates a dwelling unit for any reason, the Owner shall notify the Agency immediately upon learning of the vacancy or prospective vacancy, but in any event within 5 days after the Owner learns of the vacancy. If a tenant vacates a dwelling unit pursuant to the terms of a lease or tenancy agreement between Tenant and Owner, Owner's notice.to the Agency shall be within 5 days after the Owner receives notice of the vacancy or prospective vacancy under the provisions of the lease or tenancy agreement. B. Rental Assistance payments to Owner After Vacancy `he Owner shall be entitled to retain the whole of a Rental Assistance Payment made by the Agency for a month whether or not the Tenant resides in the dwelling unit for the entire month. The Owner shall not, however, be entitled to retain such Payment, or portion thereof, for any period a dwelling unit is vacant and the Owner did not notify the Agency as required by Section V.A above. If the Owner fails to notify the Agency as required by Section V.A, the Owner shall be required to prorate the Rental Assistance Payment and retain only that portion applicable to the period that the dwelling unit was occupied by the Tenant and to return the balance to the Agency. VI. FILLING OF VACANCIES.OF RENTAL ASSISTED DWELLING OMITS If a Tenant receiving Rental Assistance Payments vacates a dwelling unit, the Owner shall fill the vacancy from the waiting list established and maintained by the Owner for those applicants meeting the low income eligibility requirement. Upon completing the income certification and other eligibility criteria review, the Owner shall notify the Agency of the new resident approved for rental assistance. A priority shall be given to those Tenant applicants who qualify under the criteria set forth in Section 8.5 of the DDA_ Rtv. June 30, 1992 CarsanV4ssista2.prc