HomeMy WebLinkAboutMorgan Tower Housing Associates - George H. Waters Nutrition Center Lease - 2019NUTRITION CENTER FUNDING AGREEMENT
(George H. Waters Nutrition Center)
THIS NUTRITION CENTER FUNDING AGREEMENT ("Agreement") is dated as of the 5+11
day of Mart.h , 2019, by and between the City of National City ("City") and the Community
Development Commission -Housing Authority of the City of National City ("Housing Authority").
RECITALS
A. Housing Authority is the fee title owner of that certain real property located at 1317 D
Avenue and 1415 D Avenue in the City of National City, which is more commonly known and
referred to as the Kimball and Morgan Towers.
B. Since 1979 the City has operated, or caused to be operated, the George H. Waters
Nutrition Center ("Nutrition Center") at the Kimball and Morgan Towers.
C. The Kimball and Morgan Towers are "housing projects" as defined in California
Health and Safety Code Section 34212. California Health and Safety Code Section 34212 defines
housing project to include "real or personal property for necessary, convenient or desirable
appurtenances, streets, sewers, water service, parks, site preparation, gardening, administrative,
community, health, recreational, educational, welfare or other purposes." The Nutrition Center
provides important and necessary community, health, recreational educational, welfare and other
benefits to low income residents of Kimball and Morgan Towers housing projects and other low
income persons in the City of National City. As such, the Nutrition Center is a portion of the
housing project for purposes of California Health and Safety Code Section 34212.
D. The Housing Authority is ground leasing the Kimball and Morgan Towers to two (2)
affordable housing project developer/operators, who are required to rehabilitate the Kimball and
Morgan Towers and operate the Kimball and Morgan Towers as low income affordable housing
projects. A portion of the consideration payable by the Kimball and Morgan Towers
developer/operators is in the form of seller carryback notes ("Kimball and Morgan Notes").
E. The Housing Authority and the City believe it will be beneficial to the health and
welfare of the community and the citizens of the City of National City for the Nutrition Center to
continue to be operated by the City for the benefit of its low income residents, rather than having the
Nutrition Center run by private interests. Therefore, as a material consideration for the Housing
Authority's entry into the ground leases for the Kimball and Morgan Towers, the Housing Authority
is requiring the ground lessee of the Morgan Tower (the building in which the Nutrition Center is
located) to enter into a 99 year lease with the City with respect to the Nutrition Center with an annual
rent of $1.00.
F. California Health and Safety Code Section 34312 empowers the Housing Authority to
use its funds to operate housing projects. As part of the foregoing transaction and in lieu of having
the ground lessee of the Morgan Tower operate and pay for the Nutrition Center, the Housing
Authority has agreed to pay to the City a portion of the consideration received annually by the
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Housing Authority from the Kimball and Morgan Notes. Which the City shall use to fund operation
of the Nutrition Center (which is part of a housing project as defined in the California Health and
Safety Code) in furtherance of the City's and the Housing Authority's goal of improving the health
and welfare of the community and the citizens of the City of National City.
AGREEMENT
NOW, THEREFORE, for valid consideration, in furtherance of the recitals stated above, the mutual
covenants set forth below, the City and the Housing Authority agree, promise and declare as follows:
1. Annual Payments. The Housing Authority shall make fifty-five (55) annual payments to the
City. The first such payment shall be in the amount of $475,000.00, and further payments shall be
increased by 3.5% each year thereafter. Such payments shall be made from the proceeds of the
Kimball and Morgan Notes. The first annual payment shall be due and payable by the Housing
Authority to the City ten (10) business days after receiving such annual payments from the Kimball
and Morgan Towers ground lessees.
2. Use of Funds. The City shall use the funds received by the City pursuant to Section 1, above,
solely for the purpose of funding operation of the Nutrition Center (which is part of a housing project
as defined in the California Health and Safety Code). No portion of such funds shall be used for any
purpose other than funding operation of the Nutrition Center without the express written consent of
the Housing Authority, which consent shall be granted only in the event that the use of those funds
by the City is allowed under the Housing Authorities Law, Health and Safety Code Section 34200, et
seq.
3. General Conditions.
(a) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
(b) Captions. The captions in this Agreement are inserted for convenience of reference
and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions
of this Agreement.
(c) Partial Invalidity. Any provision of this Agreement which is unenforceable, invalid,
or the inclusion of which would adversely affect the validity, legality, or enforcement of this
Agreement shall have no effect, but all the remaining provisions of this Agreement shall remain in
full effect.
(d) No Third -Party Rights. Nothing in this Agreement, express or implied, is intended to
confer upon any person, other than the parties to this Agreement and their respective successors and
assigns, any rights or remedies.
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(e) Signature Authority. All individuals signing this Agreement for a party which is a
corporation, limited liability company, partnership or other legal entity, or signing under a power of
attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the each
other party hereto that they have the necessary capacity and authority to act for, sign and bind the
respective entity or principal on whose behalf they are signing.
CITY:
THE CITY OF NATIO ITY
By: Fir) L
Leslie Deese, City Manager
HOUSING AUTHORITY:
COMMUNITY DEVELOPMENT COMMISSION-
HOUSIN HORITY OF THE CITY OF NATIONAL CITY
By:
e 1 eese, xecutive Director
APPROVED AS TO FORM:
AP ' OVED AS TO FORM:
Christensen & Spath LLP
City and Housing Authority Special Counsel
By:
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George H. Waters Nutrition Center
1415 D Avenue, First Floor
National City, California
LEASE
THIS LEASE ("Lease") is dated as of the 27th day of March, 2019, by and between
Morgan Tower Housing Associates, L.P., a California limited partnership ("Landlord"), and the
City of National City ("Tenant").
1. Defmitions.
"Building" means the building commonly known as the Morgan Tower at 1415 D
Avenue, National City, California.
"Building Rules and Regulations" means the rules and regulations which may hereafter
be adopted by Landlord for the care, protection, cleanliness, and operation of the Premises,
Building, Building and Common Areas, and any reasonable modifications or additions to such
rules and regulations adopted by Landlord so long as the same does not negatively impact the
Building or Premises or Tenant's use, occupancy and enjoyment thereof or Tenant's rights under
this Lease. Notwithstanding the foregoing, Landlord and Tenant agree that the terms and
conditions of this Lease shall control the rights and responsibilities of the parties and shall
supersede any and all provisions of the Building Rules and Regulations which may now or in the
future conflict with the terms and conditions of this Lease. Landlord shall not be responsible to
Tenant for failure of any other tenant or occupant of the Building to observe or comply with any
of the Building Rules and Regulations. The term "Building Rules and Regulations" shall be
deemed to include the rules and regulations set forth in Exhibit B hereto and any and all
reasonable amendments made by Landlord to the Building Rules and Regulations after the date
of this Lease as may be required by applicable law or Landlord's financing sources or as
Landlord may deem desirable, in Landlord's reasonable discretion, for the proper and efficient
operation and maintenance of the Building so long as the same does not negatively impact the
Building or Premises or Tenant's use, occupancy and enjoyment thereof or Tenant's rights under
this Lease.
"Commencement Date" means March 27, 2019.
"Common Areas" means all areas, space, equipment and special services provided by
Landlord within the ground floor of the Building for the common or joint use and benefit of the
tenants, their employees, agents, servants, suppliers, customers and other invitees, including, by
way of illustration, but not limitation, landscaped areas, curbs, sidewalks, restrooms, lobbies,
floor corridor hallways, patios, parking facilities, plenums above the ceiling on all floors and all
other areas outside the Building. Notwithstanding the foregoing or anything to the contrary
contained herein, Landlord may determine the nature, size and extent of the Common Areas as
well as make changes to the Common Areas from time to time which, in its opinion, are deemed
desirable so long as the same does not negatively impact the Premises or Tenant's use,
occupancy and enjoyment thereof or Tenant's rights under this Lease and further provided
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Landlord cannot alter the access to the Premises, except as required by applicable law or during
limited periods of construction by the Landlord, provided that alternative means of access are
provided to the Tenant during such limited periods of time and provided further that advance
notice is given to Tenant.
"Hazardous Material" means any hazardous or toxic substance, material or waste which
is or becomes regulated by any local governmental authority, the State of California or the
United State Government. Provided, however, the term "Hazardous Materials" shall not include
substances typically used in the ordinary course of operating and maintaining nutrition centers in
California or small amounts of chemicals, cleaning agents and the like commonly employed in
routine household uses in a manner typical of occupants in other similar properties, provided that
such substances are used in compliance with applicable laws
"Landlord" means Morgan Tower Housing Associates, L.P., a California limited
partnership.
"Premises" means the approximately 6,560 square foot George H. Waters Nutrition
Center, located on the first floor of the Building, depicted on Exhibit A attached hereto,
including a dining room, restrooms, office space, kitchen, storage space, mailbox, trash
enclosure, 10 staff parking spaces, 5 ADA compliant parking spaces, 34 visitor parking spaces
and 4 delivery parking spaces.
"Rent" shall have the meaning ascribed to it in Section 4(a) of this Lease.
"Tenant" means the City of National City.
"Term" shall have that meaning ascribed to it in Section 3(a) of this Lease.
Notwithstanding the foregoing, Landlord and Tenant each acknowledge that the Premises will be
unavailable for the purpose of preparing food for an undetermined period of time during
rehabilitation of the Building. During such period of time, the Landlord shall enter into a lease
("Temporary Kitchen Space Lease") and pay all costs of such Temporary Kitchen Space Lease.
The Temporary Kitchen Space Lease shall be at a location, for a period of time and pursuant to a
lease agreement reasonably approved by the Landlord and the Tenant. The Temporary Kitchen
Space Lease shall be subleased to the Tenant pursuant to a sublease agreement reasonably
approved by the Landlord and the Tenant. For purposes of this Lease, any and all approvals by
the Landlord means approval by the City Manager of the City of National City and such City
Manager is authorized to execute all leases, subleases and other documents reasonably necessary
to effectuate the intent of this paragraph.
2. Lease of the Premises. Landlord leases to Tenant and Tenant leases from Landlord the
Premises. Tenant hereby agrees and acknowledges that Tenant is leasing the Premises "as -is"
from Landlord. Without limiting the generality of the foregoing, Tenant shall be solely
responsible for determining the condition of the Premises. Landlord shall have no obligation to
improve the Premises.
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3. Term and Contingencies.
(a) Term. Unless sooner terminated pursuant to the terms of this Lease, the term of
this Lease shall commence on the Commencement Date (i.e., March 27, 2019) and terminate on
March 27, 2029 ("Term"), except as otherwise provided in Section 3(b), below.
(b) Automatic Extensions. Notwithstanding Section 3(a), above, or anything to the
contrary set forth in this Lease, the Term shall automatically extend and this Lease shall be
automatically renewed for successive five (5) year terms, on the same terms and conditions,
unless this Lease is terminated by ninety (90) days written notice from Tenant to Landlord, until
March 27, 2118. (99 years after the Commencement Date).
(c) Termination by Tenant. Tenant may terminate this Lease, subject to the terms
hereof, by providing Landlord written notice at lease ninety (90) days prior to the date of
termination.
4. Rent.
(a) Rent. The Rent shall be $1.00 per year. The first year's Rent shall be payable
concurrently with the Tenant's execution and delivery of this Lease to the Landlord. Thereafter,
Tenant agrees to pay Rent to Landlord on March 15 in each and every year during the Term. All
Rent may be paid by check and delivered personally or by first class mail to Landlord.
(b) Utilities. Tenant shall be responsible for payment of all separately metered
utilities for the Premises, if any.
(c) No Security Deposit. Tenant shall not be required to pay any security deposit to
Landlord.
(d) Triple Net Lease. This Lease is a "Triple Net Lease" pursuant to which Tenant
shall pay (in addition to Rent) its own utilities, janitorial, trash removal, repairs, maintenance,
and other operating expenses directly relating to the use of the Premises ("Premises Costs").
5. Alterations.
(a) By Landlord. Landlord may install fixtures, make alterations or other changes to
the Building which Landlord determines in its sole and absolute discretion are necessary or
desirable without notice to or consent of the Tenant so long as the same does not negatively
impact the Building or Premises or Tenant's use, occupancy and enjoyment thereof or Tenant's
rights under this Lease. Tenant shall cooperate with Landlord if Landlord elects to make
alterations or other changes to the Premises.
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(b) By Tenant. Tenant may make alterations or other changes to the Premises with
Landlord's prior written consent which shall not be unreasonably delayed or withheld. Any
alterations, improvements or additions shall be constructed without cost to Landlord in a good,
workmanlike and defect -free manner by licensed contractors with experience in construction of
tenant improvements, in commercial properties similar to the Building. Any and all additions,
alterations and improvements which are made or caused to be made by Tenant, before or during
the Term, shall be made at Tenant's sole expense in accordance with the following: (i) if
Landlord requires, such work, including, without limitation, Tenant's final working drawings,
plans and specifications shall be subject to the continuing approval of Landlord, which approval
shall not be unreasonably withheld, unless and to the extent such work constitutes emergency
repairs necessary for the continued operation of Tenant's business or for life safety reasons; (ii)
such work shall not alter, add to or otherwise change the exterior of the Premises, without the
written consent of Landlord; (iii) such work shall not cause or create a dangerous or hazardous
condition and shall not interfere with or disturb other tenants or guests of Landlord Tenant shall
apply for and obtain, any and all permits or licenses required by applicable governmental
authorities necessary or desirable for Tenant to construct and install the same. Notwithstanding
anything to the contrary contained herein, in no event shall Landlord be responsible for repair of
or liability to Tenant for any defects in any alterations, improvements or additions to the
Premises. Tenant shall give Landlord thirty (30) days advance notice before beginning any work
on alterations to permit Landlord to file a Notice of Non -Responsibility and take any other
actions in advance of commencement of any alterations.
(c) Lien Free Construction. All alterations, improvements and additions shall be
constructed free and clear of mechanics' and materialmen's liens; provided that if any such lien
is filed, Tenant shall remove and discharge the same within ten (10) business days of written
notice from the Landlord. Time is of the essence. Failure to timely remove the lien shall
constitute a "Material Default" under the terms of this Lease. Notwithstanding the foregoing,
Tenant may contest the mechanics' and/or materialmens' liens in good faith, at Tenant's own
expense, by appropriate proceedings, provided Tenant posts a bond or furnishes such other
security as may be required by law to prevent any foreclosure proceedings against the Building,
or any part thereof, during the pendency of such contest and removes such lien or stays
enforcement thereof. If Tenant shall fail to discharge such lien within such period or fail to
furnish such security, then, subject to Tenant's right to contest set forth in the preceding
sentence, in addition to all other rights or remedies, Landlord may, but shall not be obligated to,
discharge the same (i) by paying the amount claimed to be due, (ii) by procuring the discharge of
such lien by deposit in court, (iii) by giving security, or (iv) in such other manner as is, or may be
prescribed by law. Any amount paid by Landlord for any of the aforesaid purposes, including all
reasonable attorneys' fees to procure the discharge of such lien with all necessary disbursements
in connection therewith, with interest thereon at the maximum rate permitted by law from the
date of payment, shall be repaid by Tenant to Landlord on demand and, if unpaid, may at
Landlord's election, be treated as additional rent. Nothing herein contained shall imply any
consent or approval by Landlord to the filing of mechanics' lien against the Building or any part
thereof.
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(d) Removal of Improvements. Tenant shall remove from the Premises all of
Tenant's personal property, including without limitation furnishings, machinery, trade fixtures,
equipment, and improvements, but excluding those items which are not listed as "existing"
equipment on the Food Service Equipment Schedule set forth in Exhibit C attached hereto, on or
before the expiration of the Tenn, or as soon as practicable after termination of this Lease, but in
no event later than sixty (60) days after the termination of this Lease. Tenant shall repair any
damage to the Premises or the Building caused by such removal, including without limitation
patching and filling holes, reasonable wear and tear excepted. Notwithstanding the foregoing,
Tenant shall not remove or be required to remove, any HVAC systems, restroom fixtures,
flooring, plumbing, ceilings, walls, or utility or electrical components.
6. Use.
(a) Permitted Use. Tenant shall use the Premises only as a nutrition center, food
preparation, food service operation, social activity center, to provide senior services and for
ancillary health, education, exercise and wellness related uses for seniors. Tenant shall not use
the Premises for any other activity aside from the use permitted in this Section 6(a). The
Premises may only be open for business between 5:00 a.m. and 10:00 p.m., seven (7) days a
week, with food service occurring between the hours of 7:00 a.m. and 8:00 p.m. Tenant shall not
use the Premises as a dwelling for any person.
(b) Additional Use Limitations. Tenant shall not permit the occupancy of the
Premises at any time during the Term to exceed that allowed by the applicable codes and
regulations concerning occupancy. Tenant shall use commercially reasonable efforts to maintain
control over the conduct of its employees and shall not do or permit anything to be done in or
about the Premises which will in any way obstruct or interfere with the rights of other tenants or
occupants of the Building, or Landlord's employees, invitees, consultants, or other licensees or
injure, endanger or annoy them, result in an increase in the number of parking spaces being used
by Tenant and its employees, invitees, guests or licensees, or use or allow the Premises to be
used for any immoral or unlawful purpose, nor shall Tenant cause, maintain or permit any
nuisance in, on or about the Premises. Tenant shall not commit or permit to be committed any
waste in or upon the Premises.
(c) Compliance With Laws, Covenants and Requirements. Tenant represents and
warrants to Landlord, that Tenant, its agents, servants, employees, invitees and licensees, shall
comply with, and shall not use the Premises in any way (or permit or suffer anything to be done
in or about the Premises) which will conflict with: (i) any law, statute, ordinance or
governmental rule or regulation affecting the Building, now in force or which may be hereafter
promulgated, including, but not limited to, the provisions of any city or county zoning codes
regulating the use of the Building; (ii) any covenant, condition or restriction (whether or not of
public record) affecting the Building, now in force or which may hereafter be enacted or
promulgated or any health and food safety requirements, rules and regulations established by any
governmental or quasi -governmental entity that are either voluntarily or involuntarily made
applicable to the Building or the Premises; or (iii) any licensing requirements of any city, county,
or other governmental or quasi -governmental entity regulating Tenant's use of the Premises or
any collective bargaining agreement entered into by Tenant (hereinafter collectively referred to
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as "Applicable Laws, Covenants and Requirements"). Tenant shall promptly notify Landlord of
and shall promptly provide Landlord with true, correct and legible copies of all orders, reports,
notices and correspondence (including those which may be considered confidential) of or
concerning the investigation, compliance, and corrective actions and all complaints, pleadings,
and other legal documents filed against Tenant relating to Tenant's failure to comply with
Applicable Laws, Covenants and Requirements. Tenant shall, at its sole cost and expense,
promptly comply, and shall maintain the Premises and its operations and equipment in such a
way as to comply, with all Applicable Laws, Covenants and Requirements in so far as they relate
to the specific manner of Tenant's use and occupancy of the Premises, and Tenant shall maintain
and pay the cost of all permits, assessments and licenses required to operate Tenant's business.
The judgment of any court of competent jurisdiction or the admission by Tenant in any action
against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
Applicable Laws, Covenants and Requirements, shall be conclusive of the fact as between
Landlord and Tenant. The Building is a non-smoking building and the Tenant shall not allow its
employees, agents, contractors, subcontractors, clients, invitees or others using or occupying the
Premises to smoke while in the Premises.
(d) Hazardous Materials.
(1) Except with respect to commercially packaged products used and stored
by Tenant at the Premises, such as, common cleaning fluids and supplies, Tenant hereby agrees
that neither Tenant, nor Tenant's agents, employees, contractors, invitees or licensees will
engage in any activity in, on or about the Premises or the Building, nor permit others to engage
in any such activity, which will result in the Premises or the Building containing any Hazardous
Material. If at any time it is determined that Tenant or Tenant's agents, employees, contractors,
invitees or licensees, have been responsible for the Premises or the Building containing any
Hazardous Material, then Tenant shall be solely responsible for and shall pay for all costs
incurred in connection with the removal of said Hazardous Materials.
(2) Tenant shall promptly comply with the requirements of Section
25359.7(b) of the California Health and Safety Code and/or any successor or similar statute to
provide Landlord with written notice that any Hazardous Material has come or will come to be
located on or beneath the Premises or the Building if Tenant discovers or has reasonable cause to
believe of the presence of such materials. Should Tenant fail to so notify Landlord, Landlord
shall have all rights and remedies provided for such a failure by such Section 25359.7(b) in
addition to all other rights and remedies which Landlord may have under this Lease or otherwise.
Tenant shall not take any remedial action related to Hazardous Materials located in or about the
Premises or the Building and shall not enter into a settlement, consent decree or compromise in
response to any claim related to Hazardous Materials without the prior written consent of
Landlord, which may be withheld by Landlord in its sole and absolute discretion. Tenant shall
immediately notify Landlord in writing of: (i) any enforcement, clean-up, removal or other
governmental action instituted, completed or threatened with regard to Hazardous Materials at
the Premises or the Building of which Tenant is directly notified; (ii) any claim made or
threatened by any person against Tenant, Landlord, the Premises or the Building related to
damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to
result from any Hazardous Materials of which Tenant is directly notified; and (iii) any reports
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made to any environmental agency arising out of or in connection with any Hazardous Materials
at or removed from the Premises or the Building, including any complaints, notices, warnings or
assertions of any violation in connection therewith of which Tenant is directly notified.
(3) In addition to any other indemnity contained in this Lease, Tenant shall
defend, indemnify and hold Landlord and its partners harmless from and against any and all
losses, liabilities, general, special, consequential and/or incidental damages, injuries costs,
expenses, claims of any and every kind whatsoever (including, without limitation, court costs,
reasonable attorneys' fees, damages to any person, the Premises or the Building or loss of rents)
which at any time or from time to time may be paid, incurred or suffered by or asserted against
Landlord or its partners with respect to, or as a direct or indirect result of: (i) the breach by
Tenant of any of the covenants set forth in this Section 6(d); or (ii) the presence on, under or the
escape, seepage, leakage, spillage, discharge, emission, release from, onto or into the Premises or
the Building, of any Hazardous Material to the extent directly or indirectly caused or allowed by
Tenant, or any agent, employee, contractor, invitee or licensee of Tenant. Tenant's liability
under this Section 6(d) shall extend to any and all Hazardous Materials whether or not such
substance was defined, recognized, or known or suspected of being hazardous, toxic, dangerous
or wasteful at the time of any act or omission giving rise to Tenant's liability.
(e) Additional Prohibited Actions of Tenant. Tenant shall not commit or permit the
commission of any acts on the Premises or the Building, nor use or permit the use of the
Premises or the Building in any way that: (i) violates or conflicts with any law, statute,
ordinance, or governmental rule or regulation, whether now in force or hereinafter enacted,
governing the specific manner of Tenant's use of the Premises or the Building; (ii) obstructs or
interferes with the rights of other tenants or occupants of the Building; or (iii) constitutes the
commission of waste on the Premises or the commission or maintenance of a nuisance as defined
by the laws of the State of California.
(f) Building Rules and Regulations. Tenant shall, and Tenant agrees to cause its
agents, servants, employees, invitees, and licensees to, observe and comply fully and faithfully
with the Building Rules and Regulations. Landlord shall not be responsible to Tenant for failure
of any other tenant or occupant of the Building to observe or comply with any of the Building
Rules and Regulations.
7. Services and Utilities.
(a) Utilities. Tenant shall be responsible for all separately metered utilities provided
to the Premises, including, but not limited to, electric, telecommunications, water, trash, utilities
and gas provided the same are in fact separately metered or submetered.
(b) Breaks In Utility Services. Landlord shall not be liable for and Tenant shall not
be entitled to any abatement or reduction of rent by reason of Landlord's failure to furnish any
utilities and services which are not separately metered, including, without limitation, electricity
and water, when such failure is caused by any of the following, to the extent beyond the
reasonable control of Landlord: (i) accidents, breakage or repairs, (ii) strikes, brownouts,
blackouts, riots, civil disturbances, lockouts or other labor disturbances or labor disputes of any
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character, (iii) governmental regulation, moratorium or other governmental action, (iv)
limitation, rationing, curtailment or restriction on the use of water, electricity, gas heating,
cooling or other forms of service or utility provided to the Premises, or (v) by any other cause,
similar or dissimilar, beyond the reasonable control of Landlord, nor shall such failure under
such circumstances be construed as a constructive or actual eviction of Tenant. Landlord shall
not be liable under any circumstances for loss or injury to property or business, however
occurring, through or in connection with or incidental to Landlord's failure to furnish any of said
service or utilities. Notwithstanding any provision to the contrary herein, in the event Tenant is
prevented from using all or a portion of the Premises as a result of a failure to provide services,
access or utilities and if such failure continues for more than five (5) consecutive business days
after written notice from Tenant, then the Rent shall be abated entirely (in the event Tenant is
prevented from using all of the Premises) or reduced (in the event Tenant is prevented from
using a portion of the Premises), as the case may be, for such time that Tenant continues to be so
prevented from using the Premises or a portion thereof.
8. Taxes. Tenant shall be liable for and agrees to pay all taxes levied upon its personal
property, leasehold improvements, additions, alterations and fixtures, including trade fixtures and
inventory, located on the Premises or elsewhere and any real property taxes assessed on the
Premises or the Property as a result of Tenant's business operations at the Premises. Non-
exempt taxes, if any, with respect to Tenant's possessory interest in the Premises for the first and
final years of the Term shall be prorated between Landlord and Tenant based upon the
commencement and expiration of the Term. Landlord will not be required to pay any penalty,
interest or cost resulting from Tenant's failure to pay non-exempt taxes with respect to Premises,
Tenant's personal property, leasehold improvements, additions, alteration and fixtures and/or the
delinquent payment of such taxes by Tenant. Tenant shall pay and be liable for any tax or fee
(now or hereafter imposed by any governmental entity) applicable to or measured by or on the
Rents or any other charges payable by Tenant under this Lease, including, without limitation,
any gross income tax, gross receipts tax or excise tax with respect to the receipt of such Rent or
other charges on the possession, leasing, operation, use or occupancy of the Premises, and
specifically including any commercial rental tax of the City of National City, if any, that may
now or hereafter be imposed. Landlord acknowledges that Tenant is a tax-exempt public entity.
9. Maintenance.
(a) Landlord's Maintenance and Repair of the Building. At all times during the
Term, Landlord agrees: (i) to maintain the foundation and structural soundness of the Building;
(ii) to keep in good repair plumbing and electrical wiring servicing the Premises, including
without limitation fire sprinkler systems (if any), and mechanical systems serving the Premises;
and (iii) repair and maintain the Common Areas. Landlord shall keep the Common Area and
the sidewalks immediately in front of the Building clean and sanitary, including the removal of
all stains, chewing gum, and other materials. Landlord shall take all steps within the bounds of
reasonable safety and applicable laws to keep the sidewalks in front of the Building free of
loitering. Landlord shall sweep and remove trash and loose debris from the Building and the
Common Area. Landlord shall ensure that any landscaping, planter boxes and flower baskets are
stationed with a catchment basin to prevent water runoff and Landlord shall remove all such
stains from water run off that might occur naturally. Landlord shall keep the top of its
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designated trash bins and the area underneath and immediately surroundings its trash bins clean,
clear and free from trash. Landlord shall make no use of the Tenant's Trash dumpster, bins or
other containers used by Tenant for the storage of its trash. No material shall be placed in trash
bins if disposal in the ordinary and customary manner in National City would violate any
applicable law or ordinance.
(b) Tenant's Maintenance of the Premises. Tenant shall keep the Premises in a neat,
clean and orderly and in good repair condition at all times during the Term, and shall not permit
rubbish, waste or garbage, to accumulate at any time. Tenant shall not commit or permit any
waste of the Premises or any acts to be done in violation of any laws or ordinances. Tenant shall
not use or permit the use of the Premises for any illegal purposes. Tenant shall pay or cause to be
paid all operating expenses of the Premises and the cost of any necessary repairs or replacements
of Tenant's alterations related to Tenant's or any sublessee's occupancy or use thereof. Tenant
shall also be responsible for all costs associated with janitorial and maintenance services,
including professional maintenance of a grease trap, all equipment maintenance including stoves,
refrigerators, dishwashers, hoods and ansul systems. In the event Tenant fails to maintain any of
the foregoing items after receipt of written notice from the Landlord and a reasonable
opportunity to cure, Landlord shall have the right to cause such maintenance to occur. Any
amount paid by Landlord for any of the aforesaid purposes, including all reasonable attorneys'
fees to enforce this Section 9(b), with interest thereon at the maximum rate permitted by law
from the date of payment, shall be repaid by Tenant to Landlord on demand and, if unpaid, may
at Landlord's election, be treated as additional rent.
10. Casualty Damage and Casualty Insurance.
(a) Insured Casualties. In the event the Premises, or any portion thereof, is damaged
or destroyed by any casualty that is covered by the insurance maintained by Landlord, then
Landlord shall rebuild and restore the Premises, as the case may be, and repair the damaged
portion thereof, provided that (i) the amount of insurance proceeds available to Landlord equals
or exceeds the cost of such rebuilding, restoration and repair; (ii) such rebuilding, restoration and
repair can be completed within one hundred eighty (180) days after the work commences in the
opinion of a registered architect or engineer appointed by Landlord; (iii) the damage or
destruction has occurred more than twelve (12) months before the expiration of the Term; and
(iv) such rebuilding, restoration, or repair is then permitted, under applicable governmental laws,
rules and regulations, and by any mortgagee of the Landlord to be done in such a manner as to
return the Premises to substantially its condition immediately prior to the damage or destruction,
including, without limitation, the same net rentable floor area. If any of the circumstances
described in (i) through (iv) above cannot be satisfied, Landlord may, at its option, either (1)
rebuild or restore the Premises or Building, as the case may be, and repair the damaged portion
thereof, or (2) elect not to rebuild or restore and this Lease shall then terminate. To the extent
that insurance proceeds must be paid to a mortgagee or beneficiary under, or must be applied to
reduce any indebtedness secured by, a mortgage or deed of trust encumbering the Premises or the
Building, such proceeds, for the purposes of this Section 10(a), shall be deemed not available to
Landlord unless such mortgagee or beneficiary permits Landlord to use such proceeds for the
rebuilding, restoration, and repair of the Premises or Building. Notwithstanding the foregoing,
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Landlord shall have no obligation to repair any damage to, or to replace any of, Tenant's
personal property, furnishings, fixtures, equipment or other such property or effects of Tenant.
(b) Non -Insured Casualties. In the event the Premises, or any portion thereof, is
materially damaged or destroyed by any casualty not covered by the insurance maintained or
requested to be maintained by Landlord, then Landlord may, at its option, either (i) rebuild or
restore the Premises and repair the damaged portions thereof at Landlord's own expense; or (ii)
terminate this Lease effective as of the date the damage or destruction occurred. If Landlord
does not give Tenant written notice within sixty (60) days after the material damage or
destruction occurs of its election to rebuild or restore the Premises and repair the damaged
portions thereof, Landlord shall be deemed to have elected to terminate this Lease.
Notwithstanding the foregoing, Tenant may terminate this Lease upon thirty (30) days' prior
written notice if Landlord elects to perform such repair or restoration and either (1) such repair or
restoration cannot be completed within one hundred and eighty (180) days or (2) the damage or
destruction occurs within the last twelve (12) months of the Term, unless Tenant's actions or
omissions are the cause of the damage, in such event Tenant shall be liable to and shall
reimburse Landlord for any and all damages caused thereby.
(c) Minor Casualties. If the Premises are not rendered substantially unfit for the
occupancy or use herein contemplated as the result of any insured casualty, subject to the
requirements of Landlord's mortgagees, Landlord shall promptly and diligently restore the
Premises at Landlord's expense to the condition existing prior to the occurrence of the casualty
and the Rent shall not abate during such restoration period, provided the Landlord is prompt and
diligent in connection with the restoration.
(d) Abatement of Rent. Provided this Lease is not terminated as provided in Sections
10(a) or (b), above, Tenant shall be entitled to an abatement of Rent by reason of the damage to
or destruction of the Premises, only to the extent that either: (i) Landlord actually receives
insurance proceeds for loss of rental income attributable to the Premises (Landlord shall not be
required to maintain such insurance, but may in its sole and absolute discretion elect to do so);
(ii) the floor area of the Premises cannot be reasonably used by Tenant for the conduct of its
business, or (iii) Tenant does not have reasonable access to the Premises, in which event the Rent
shall abate in the proportion which the approximate area of the damaged or destroyed portion of
the Premises bears to the total area of the Premises commencing upon the date of the damage to
or destruction of the Premises or Building has occurred until substantial completion of the repair
of such damage or destruction.
(e) Tenant's Waiver of Civil Code Sections 1932 and 1933. Tenant's right to
terminate this Lease in the event of any damage or destruction to the Premises is governed by the
terms of this Section 10 and therefore Tenant hereby expressly waives the provisions of Section
1932, Subdivision 2, and Section 1933, Subdivision 4, of the California Civil Code, and any and
all laws, whether now or hereafter in force, whether created by ordinance, statute, judicial
decision, administrative rules or regulations, or otherwise, that would cause this Lease to be
terminated, or give Tenant a right to terminate this Lease, upon any damage to or destruction of
the Building that occurs.
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11. Waiver of Subrogation. If either party sustains loss or damage to the Premises or the
fixtures, goods, wares, merchandise or any other property located thereon, from which it is
protected by an insurance policy, then, to the extent that such party is so protected, it waives any
right of recovery from the other party. Each party agrees immediately to give to each insurance
company which has issued to it a policy of fire and extended coverage property insurance written
notice of the terms of such mutual waivers, and to cause such insurance policy to be properly
endorsed, if necessary, to prevent the invalidation of such insurance coverage by reason of such
waivers.
12. Insurance.
(a) Tenant Insurance Requirements. Tenant agrees, at Tenant's sole cost and
expense, to maintain in force continuously throughout the Term:
(1) Commercial general public liability and property damage insurance
covering the Premises with limits of not less than $2,000,000.00 for injury to or death of one or
more persons and/or property damage arising out of a single accident or occurrence and
$2,000,000.00 in the aggregate. All such insurance shall name the Landlord as an additional
insured. Upon receipt of written request therefor, Tenant shall furnish Landlord a certificate
from the insurer evidencing such coverage as required by this Section 12(a)(1); and
(2) Fire and extended coverage insurance insuring against loss or damage by a
standard all risk policy, excluding earthquake and flood, to the extent of 100% of the full
replacement value of the Premises. Following the application of such proceeds to the restoration
of the Premises and the Building (if applicable) and to Landlord's costs incurred in connection
with the adjustment or settlement of any claims (including but not limited to reasonable
attorneys' fees), the proceeds from any such policy shall be used by Tenant for the replacement
of Tenant's personal property or the restoration of Tenant's Premises or alterations. The
property insurance policy described in this Section 12(a)(2) shall name Landlord as loss payee;
and
(3) Worker's compensation insurance, with coverage as required by the State
of California, if Tenant has any employees.
(b) Additional Insurance Requirements. Each insurance certificate for casualty
insurance shall indicate that the insurer waives its rights of subrogation against the other party.
In addition, all insurance policies obtained by Tenant shall be written as primary policies, non-
contributing with or in excess of any coverage which Landlord may carry, with loss payable
clauses in favor of Landlord and naming Landlord and any lender of Landlord as additional
insureds. The liability limits of the above -described insurance policies shall in no way limit the
liability of any party under the terms of this Lease. If Tenant fails to maintain and secure the
insurance coverage required under this Section 12, Landlord shall have, in addition to all other
remedies provided herein and by law, the right, but not the obligation, to procure and maintain
such insurance, the cost of which shall be due and payable to Landlord by Tenant on demand.
No policy of insurance required pursuant to this Lease shall contain a deductible exceeding Ten
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Thousand Dollars ($10,000) per occurrence. Tenant shall be solely responsible for the payment
of any deductible.
(c) Landlord Insurance Requirements.
(1) Liability Insurance. Landlord agrees, at Landlord's expense, to maintain
in force continuously throughout the Term, commercial general public liability insurance
covering the Building (including the Premises) with combined single limit coverage of
$2,000,000 or its equivalent, and shall upon Tenant's written request, furnish Tenant a certificate
from the insurer evidencing such coverage.
(2) Property Insurance. Landlord shall maintain all-risk property insurance
covering the Building, Premises and the Building against loss or damage resulting from fire and
other insurable casualties.
13. Hold Harmless. Tenant agrees to indemnify, defend and hold Landlord, its partners,
members, managers, directors, officers, agents, employees, affiliates and consultants entirely
harmless from and against all liabilities, losses, demands, actions, expenses or claims, incurred in
connected with or arising from the use, occupancy or enjoyment of the Building, Common Area
or Premises by Tenant and/or its agents, employees, invitees, licensees or contractors (the
"Tenant's Agents") or any work, activity or other things allowed or suffered by Tenant or
Tenant's Agents to be done in or about the Building, Common Area or Premises; provided,
however, that Tenant shall not be obligated to so indemnify Landlord to the extent any such
matters arise from or are caused by the willful misconduct or negligence of Landlord.
14. Assignment and Sublease. Tenant shall not directly or indirectly, voluntarily or by
operation of law, sublease, sell, assign, encumber, pledge or otherwise transfer or hypothecate all
or any part of the Premises or this Lease, without the written consent of Landlord, not to be
unreasonably withheld, conditioned, or delayed.
15. Eminent Domain.
(a) Total Taking. If all or substantially all of the Premises is condemned or taken in
any manner for public or quasi -public use, including, but not limited to, a conveyance or
assignment in lieu of the condemnation or taking, or if so much of the Premises is so taken or
condemned so as to render the remaining portion of the Premises unusable by Tenant for the
conduct of Tenant's business, as determined by the condemning authority, this Lease shall
automatically terminate on the earlier of the date on which actual physical possession is taken by
the condemnor or the date of dispossession of Tenant as a result of such condemnation or other
taking.
(b) Partial Taking. If less than all or substantially all of the Premises is so
condemned or taken, rendering the remaining portion of the Premises usable by Tenant for the
conduct of its business, as determined by the condemning authority, this Lease shall
automatically terminate only as to the portion of the Premises so taken as of the earlier of the
date on which actual physical possession is taken by the condemnor or the date of dispossession
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of Tenant as a result of such condemnation or taking. If such portion of the Building is
condemned or otherwise taken so as to require, in the opinion of Landlord, a substantial
alteration or reconstruction of the remaining portions thereof, this Lease may be terminated by
Landlord, as of the date on which actual physical possession is taken by the condemnor or
dispossession of Tenant as a result of such condemnation or taking, by written notice to Tenant
within sixty (60) days following notice to Landlord of the date on which such physical
possession is taken or dispossession will occur.
(c) Award. Landlord shall be entitled to the entire award in any condemnation
proceeding or other proceeding for taking for public or quasi -public use, including, without
limitation, any award made for the value of the leasehold estate created by this Lease. No award
for any partial or total taking shall be apportioned, and Tenant hereby assigns to Landlord any
award that may be made in such condemnation or other taking, together with any and all rights of
Tenant now or hereafter arising in or to the same or any part thereof. Although all damages in
the event of any condemnation shall belong to Landlord whether such damages are awarded as
compensation for diminution in value of the leasehold or to the fee of the Premises, Tenant shall
have the right to claim and recover from the condemnor, but not from Landlord, such
compensation as may be separately awarded or recoverable by Tenant in Tenant's own right on
account of damages to Tenant's business by reason of the condemnation and for or on account of
any cost or loss to which Tenant might incur to remove Tenant's merchandise, furniture and
other personal property, fixtures, and equipment or for the interruption of or damage to Tenant's
business.
(d) Rent Abatement. In the event of a partial condemnation or other taking that does
not result in a termination of this Lease as to the entire Premises, the Rent and all other charges
shall abate in proportion to the portion of the Premises taken by such condemnation or other
taking. If this Lease is terminated, in whole or in part, pursuant to any of the provisions of this
Section 15, all Rent and other charges payable by Tenant to Landlord hereunder and attributable
to the Premises taken shall be paid up to the date upon which actual physical possession shall be
taken by the condemnor. Landlord shall be entitled to retain the entire Security Deposit until
such time as this Lease is terminated as to all of the Premises.
(e) Temporary Taking. If all or any portion of the Premises is condemned or
otherwise taken for public or quasi -public use for a limited period of time, this Lease shall
remain in full force and effect and Tenant shall continue to perform all terms, conditions and
covenants of this Lease; provided, however, the Rent and all other charges payable by Tenant to
Landlord hereunder shall abate during such limited period in proportion to the portion of the
Premises that is rendered unusable as a result of such condemnation or other taking. Landlord
shall be entitled to receive the entire award made in connection with any such temporary
condemnation or other taking.
(f) Transfer of Landlord's Interest to Condemnor. Landlord may, without any
obligation to Tenant, agree to sell and/or convey to the condemnor the Premises, the Building, or
any portion thereof, sought by the condemnor, subject to this Lease and the rights of Tenant
hereunder, without first requiring that any action or proceeding be instituted or, if instituted,
pursued to a judgment.
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16. Attorneys' Fees. The parties agree that the prevailing party in litigation for the breach
and/or interpretation and/or enforcement of the terms of this Lease shall be entitled to their
expert witness fees, if any, as part of their costs of suit, and reasonable attorneys' fees as may be
awarded by the court, pursuant to California Code of Civil Procedure ("CCP") Section 1033.5
and any other applicable provisions of California law, including, without limitation, the
provisions of CCP Section 998.
17. Default.
(a) Tenant's Default. The occurrence of any one or more of the following shall
constitute a default hereunder by Tenant:
(1) Tenant fails to pay any Rent, Premises Costs or other charges required to
be paid by Tenant under this Lease when due, where such failure shall continue for a period of
thirty (30) days after written notice thereof from Landlord to Tenant;
(2) Tenant fails to promptly and fully perform any other covenant, condition
or agreement contained in this Lease and such failure continues for thirty (30) days (or such
shorter time provided herein) after written notice thereof from Landlord, provided, however, that
if the term, condition, covenant or obligation to be performed by Tenant is of such nature that the
same cannot reasonably be cured within thirty (30) days and if Tenant commences such
performance within said thirty (30) day period and thereafter diligently undertakes to complete
the same, then such failure shall not be a default hereunder;
(3) A trustee, disbursing agent or receiver is appointed to take possession of
all or substantially all of Tenant's assets or of Tenant's interest in this Lease and Tenant does not
regain possession within sixty (60) days after such appointment; Tenant makes an assignment for
the benefit of creditors; or all or substantially all of Tenant's assets in, on or about the Premises
or Tenant's interest in this Lease are attached or levied upon under execution (and Tenant does
not discharge the same within sixty (60) days thereafter);
(4) A petition in bankruptcy, insolvency or for reorganization or arrangement
is filed by or against Tenant pursuant to any federal or state statute and, with respect to any such
petition filed against it, Tenant fails to secure a stay or discharge thereof within sixty (60) days
after the filing of the same;
(5) Immediately, in the event of any assignment, subletting or other transfer
for which the prior written consent of the Landlord has not been obtained;
(6) Immediately, upon the suspension of Tenant's right to conduct its business
as contemplated by this Lease, caused by the order, judgment, decree, decision or other act of
any court or governmental agency;
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(7) Tenant fails to continuously operate a nutrition center or other permitted use of
the Premises under Section 6(a), and such failure continues for a period of thirty (30) consecutive
days.
(b) Landlord's Remedies. Upon the occurrence of a default by Tenant that is not
cured by Tenant within any applicable grace period, Landlord shall have the following rights and
remedies in addition to all other rights and remedies available to Landlord at law or in equity:
(1) The rights and remedies provided by California Civil Code Section
1951.4, which allows Landlord to continue this Lease in effect and to enforce all of its rights and
remedies under this Lease, including the right to recover Rent and any other additional monetary
charges as they become due, for as long as Landlord does not terminate Tenant's right to
possession; provided, however, if Landlord elects to exercise its remedies described in this
Section 17(b)(1) and Landlord does not terminate this Lease, and if Tenant requests Landlord's
consent to an assignment of this Lease or a sublease of the Premises at such time as Tenant is in
default, Landlord shall not unreasonably withhold its consent to such assignment or sublease.
Acts of maintenance or preservation, efforts to relet the Premises or the appointment of a
receiver upon Landlord's initiative to protect its interest under this Lease shall not constitute a
termination of Tenant's right to possession;
(2) The right to terminate this Lease by giving notice to Tenant in accordance
with applicable law and Section 20(d) hereof; and
(3) The right to have a receiver appointed for Tenant, upon application by
Landlord, to take possession of the Premises and to apply any rental collected from the Premises
and to exercise all other rights and remedies granted to Landlord for Tenant pursuant to this
Section 17.
(c) No Waiver of Indemnification. Neither the termination of this Lease nor the
exercise of any remedy under this Lease or otherwise available at law or in equity shall affect the
right of Landlord to any right of indemnification set forth in this Lease or otherwise available at
law or in equity for any act or omission of Tenant, and all rights to indemnification or other
obligations of Tenant which are intended to be performed after termination of this Lease shall
survive termination of this Lease and termination of Tenant's right to possession under this
Lease.
(d) Landlord's Default. It shall be a default and breach of this Lease by Landlord if
Landlord materially fails to perform or observe any term, condition, covenant or obligation
required to be performed or observed by it under this Lease for a period of thirty (30) days after
receipt of written notice thereof from Tenant; provided, however, that if the term, condition,
covenant or obligation to be performed by Landlord is of such nature that the same cannot
reasonably be performed within such thirty (30) day period, such default shall be deemed to have
been cured if Landlord commences such performance within said thirty (30) day period and
thereafter diligently undertakes to complete the same.
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18. Signage. Tenant, at its own expense, shall have the right to place signage on the exterior
of the Premises for maximum visibility to the extent allowable by the City of National City. The
exact location, size, design and colors of such signage shall be submitted by Tenant to Landlord
and shall be subject to approval of the Landlord, such approval not to be unreasonably withheld,
conditioned, or delayed. The wiring and installation of such signage shall be done at Tenant's
expense, subject to inspection and reasonable approval of Landlord. Any and all signage shall be
subject to applicable sign ordinances and regulations, and appropriate City of National City
approvals regarding number, size, and color. If Landlord revises the signage plan, after Tenant
has erected a sign to which Landlord has granted consent, Tenant agrees, at Landlord's expense,
to make the necessary changes to its sign in order to conform the sign to Landlord's signage
plan, as enacted or revised.
19. Quiet Enjoyment. Upon payment by Tenant of the Rent, the Premises Costs and any
additional rent herein provided, and upon the observance and performance of all the covenants,
terms and conditions on Tenant's part to be observed and performed, Tenant shall peaceably and
quietly hold and enjoy the Premises for the term hereby demised without hindrance or
interruption by Landlord or any other person or persons lawfully or equitably claiming by,
through or under Landlord, subject, nevertheless, to the terms and conditions of this Lease, and
any mortgage and/or deed of trust to which this Lease is subordinate and subject to Landlord's
right from time to time to perform tenant improvement work in other space in the Building,
which will involve, among other things, construction noise, the use of scaffolding, delays in the
use of the Building's elevators, the presence of work crews and the use of the Building's
elevators by work crews, provided, however, that such work does not materially interfere with
Tenant's use of the Premises.
20. Landlord Exclusive Control.
(a) Building Alterations. Landlord shall have the sole and exclusive control of the
Building, as well as the right to make changes to the Building so long as the same does not
negatively impact the Building or Premises or Tenant's use, occupancy and enjoyment thereof or
Tenant's rights under this Lease. Landlord has the right, but not the obligation, to (i) restrain the
use of the Building and/or common areas by unauthorized persons, (ii) utilize from time to time
any portion of the Building and/or common areas for promotional and related matters, (iii)
temporarily close any portion of the Building and/or common areas for repairs, improvements or
alterations, or (iv) change the shape and size of the Building and/or common areas or change the
location of improvements within the Building and/or common areas, including, without
limitation, parking structures and other parking facilities, roadways and curb cuts. Landlord may
determine the nature, size and extent of the common areas as well as make changes to the
common areas from time to time which, in Landlord's opinion, are deemed desirable so long as
the same does not negatively impact the Building or Premises or Tenant's use, occupancy and
enjoyment thereof or Tenant's rights under this Lease.
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(b) Landlord's Rights. Landlord reserves the right to install, use, maintain, repair,
relocate and replace pipes, ducts, conduits, wires and appurtenant meters and equipment included
in the Premises or outside the Premises, change the boundary lines of the Building and install,
use, maintain, repair, alter or relocate, expand and replace any common areas. Such rights of
Landlord shall include, but are not limited to, designating from time to time certain portions of
the common areas as exclusively for the benefit of certain tenants in the Building.
(c) Landlord's Access. Landlord and Landlord's agents shall have the right to enter
the Premises (a) at reasonable times upon reasonable notice, (i) for the purpose of inspecting the
same, (ii) making such alterations, repairs, improvements or additions to the Premises or to the
building located on the Premises as Landlord is obligated or permitted to do under this Lease,
and (iii) showing the same to prospective lenders or purchasers, and (b) within the last 90 days
of the term hereof to prospective lessees. In addition, Landlord, with the prior consent of
Tenant's facility manager which shall not be unreasonably withheld, may use the dining area
located at the Premises at an agreed upon date and time for resident activities, so long as such
use does not interfere with Tenant's operations, is not for political or religious purposes and
provided, further, that Landlord shall return the dining area to the condition it was in prior to
Landlord's use.
(d) Termination and Entry. In the event Landlord terminates this Lease pursuant to
the terms hereof, Landlord may (upon three (3) days' notice as provided in Sections 1161 and
1162 of the California Code of Civil Procedure or upon notice in lieu thereof), re-enter the
Premises and take possession thereof and remove all persons therefrom, and Tenant shall have
no further claim under this Lease. Such termination shall not relieve Tenant of any obligation
hereunder that has accrued prior to the date of such termination. Landlord may take possession
of all personal property of Tenant and of any other person that is located on the Premises, which
property shall be deemed abandoned and in that event such items may be retained by Landlord as
its property or disposed of by Landlord, in such manner as Landlord shall determine, and at
Tenant's expense. Tenant and any sublessee hereby expressly waives any and all rights of
redemption granted by or under present or future laws (including, without limitation, Sections
1174 and 1179 of California Code of Civil Procedure) in the event of Tenant's being evicted or
dispossessed for any cause, or in the event of Landlord's obtaining possession of the Premises by
reason of a default of Tenant under this Lease, or otherwise.
21. Subordination. Tenant agrees that its leasehold interest hereunder is subordinate to any
mortgages now on, or hereafter to be placed on, the Premises, provided that each of Landlord's
mortgagees shall either enter into a subordination, non -disturbance and attornment agreement
upon terms and conditions reasonably acceptable to Tenant, with Tenant, or cause each such
mortgagee to provide that so long as Tenant is not in default under this Lease, Tenant's quiet
possession of the Premises shall remain undisturbed, on the terms, covenants and conditions
stated herein, whether or not the mortgage is in default and notwithstanding any foreclosure or
other action brought by the mortgagee.
22. Estoppel Certificates. Tenant, at any time and from time to time, upon not less than thirty
(30) days' prior written notice from Landlord, agrees to execute and deliver to Landlord (on a
form prepared by Landlord) a statement (a) certifying that this Lease is unmodified and in full
17
force and effect, or, if modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect and the date to which the Rent, Premises Costs
and other charges are paid in advance, if any, and (b) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such
defaults if they are claimed evidencing the status of this Lease.
23. Notices. All notices under this Lease shall be in writing and sent (a) by certified or
registered U.S. mail, return receipt requested, (b) overnight by a nationally recognized overnight
courier such as UPS Overnight or FedEx, or (c) by personal delivery. All notices shall be
effective upon receipt (or refusal to accept delivery). All notices shall be delivered to the
following addresses or such other addresses as changed by any party from time to time by
written notice to the other parties hereto.
Landlord:
Copy to:
Tenant:
Morgan Tower Housing Associates, L.P.
c/o Community HousingWorks
3111 Camino del Rio North, Suite 800
San Diego, CA 92108
Attention: Susan M. Reynolds, President & CEO
And
c/o Mercy Housing California
1500 South Grand Avenue, Suite 100
Los Angeles, CA 90015
Attention: Ed Holder, Regional Vice President of Real
Estate Development
Gubb & Barshay, LLP
505 14th Street, Suite 450
Oakland, CA 94612
Attention: Evan Gross
And to:
U.S. Bancorp Community Development Corporation
1307 Washington Avenue, Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103
USB Project No: 25982
Attention: LIHTC Asset Management
City of National City
1243 National City Boulevard
National City, CA 91950
Attention: City Manager
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24. No Brokers. Landlord and Tenant each represents and warrants to one another that no
broker has been involved in the negotiation or consummation of this Lease. Tenant and
Landlord each agree to indemnify, defend (with an attorney of the indemnitee's choice) and hold
the other harmless from and against all claims, demands, causes of action and liabilities,
including without limitation attorneys' fees and costs, arising out of a claim for a commission by
any other broker purporting to have acted on behalf of the indemnifying party.
25. Force Majeure. Neither party shall be required to perform any term, covenant or
condition of this Lease so long as such performance is delayed or prevented by force majeure,
which shall mean any acts of God, material restriction by any governmental authority, civil riot,
and any other cause not reasonably within the control of such party and which by the exercise of
due diligence such party is unable, wholly or in part, to prevent or overcome.
26. General Conditions.
(a) Counterparts. This Lease may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
(b) Captions. The captions in this Lease are inserted for convenience of reference
and in no way define, describe or limit the scope or intent of this Lease or any of the provisions
of this Lease.
(c) Partial Invalidity. Any provision of this Lease which is unenforceable, invalid, or
the inclusion of which would adversely affect the validity, legality, or enforcement of this Lease
shall have no effect, but all the remaining provisions of this Lease shall remain in full effect.
(d) No Third -Party Rights. Nothing in this Lease, express or implied, is intended to
confer upon any person, other than the parties to this Lease and their respective successors and
assigns, any rights or remedies.
(e) Time Of Essence. Time is of the essence in this Lease.
(f) Relationship. Nothing contained in this Lease shall be deemed or construed by
the parties or by any third person to create a relationship of principal and agent or partnership or
a joint venture between Landlord and Tenant or between either or both of them and any third
party.
(g) Tenant Approval. Whenever a reference is made herein to an action or approval
to be undertaken by the Tenant, the City Manager of the City of National or his or her designee is
authorized to act on behalf of the Tenant (without further approval from the City Council) unless
specifically provided otherwise or the context should require otherwise.
(h) Exhibits Incorporated. All exhibits referred to in and attached to this Lease are
hereby incorporated in this Lease by this reference.
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(i) Further Assurances. Landlord and Tenant agree to execute all such instruments
and documents and to take all actions which are reasonably necessary to carry out this Lease or
accomplish its intent.
(j) Incorporation of Prior Agreements. This Lease contains all agreements of
Landlord and Tenant with respect to any matter mentioned, or dealt with, herein. No prior
agreement or understanding pertaining to any such matter shall be binding upon Landlord or
Tenant.
(k) Amendment. This Lease may only be amended by written agreement signed by
Landlord and by Tenant.
(1) No Waiver. No waiver by either party of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach of the same or any other
provision. Landlord's consent to or approval of any act shall not be deemed to render
unnecessary obtaining such Landlord's consent to or approval of any subsequent act. No waiver
by either party shall be effective unless it is in writing, executed on behalf of such party.
(m) Consents. All consents to be given by either party shall be reasonably and timely
given.
(n) No Leasehold Mortgages. Tenant shall not encumber its leasehold interest in the
Premises, without the prior written approval of the Landlord.
(o) Nondiscrimination. There shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, religion, sex, sexual orientation,
marital status, national origin or ancestry in the leasing, subleasing, renting, transferring, use,
occupancy, tenure or enjoyment of the Premises, nor shall Tenant itself, or any person claiming
under or through it, establish or permit such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
sublessees, subtenants or vendees in the Premises.
(p) Signature Authority. All individuals signing this Lease for a party which is a
corporation, limited liability company, partnership or other legal entity, or signing under a power
of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the
each other party hereto that they have the necessary capacity and authority to act for, sign and
bind the respective entity or principal on whose behalf they are signing.
(q) Approval Rights of Limited Partner and Lenders. Tenant acknowledges that
Landlord may be required to obtain the approval of Landlord's limited partner with respect to the
various matters for which Landlord's approval is required hereunder and with respect to any
amendment, assignment, sublease, modification or voluntary termination for surrender of this
Lease. Tenant further acknowledges that Landlord may have to obtain the consent of its lenders
who hold the Building as collateral with respect to any amendment, modification or voluntary
termination or surrender of this Lease.
20
(r) Applicable Law. This Lease shall be governed by and construed in accordance
with the laws of the State of California.
(s) Attorneys' Fees. If any action is brought by either party against the other party,
the prevailing party shall be entitled to recover from the other party reasonable attorneys' fees,
costs and expenses incurred in connection with the prosecution or defense of such action. For
purposes of this Lease, the term "attorneys' fees" or "attorneys' fees and costs" shall mean the
fees and expenses of counsel to the parties hereto, which may include printing, copying and other
expenses, air freight charges, and fees billed for law clerks, paralegals and other persons not
admitted to the bar but performing services under the supervision of an attorney.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
TENANT:
City of National City
B %k.
Leslie Deese, City Manager
APPROVED AS TO FORM:
B
AP ' ROVED AS TO FORM:
Christensen & Spath LLP
Landlord Sp : ial Counsel
By:
Walter F.
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
21
LANDLORD:
MORGAN TOWER HOUSING ASSOCIATES, L.P.,
a California limited partnership
By: CHW Morgan Development LLC,
Its: managing general partner
By: Community HousingWorks
Its: sole member and manager
By: I► ��
S . Reynolds
President & CEO
By: Mercy Morgan Development LLC
Its administrative general partner
By: Mercy Housing Calwest
Its: sole member and manager
By:
WIQketamcN-
Erika Villablanca,
Vice President
22
Exhibit A
Site Plan/Depiction of the Premises
23
LJ
1111•Mbililucrif
Exhibit A(1)
Site Parking for Nutrition Center
•E' AVMUE
•
MORGAN AP ARTMENTS & NUTRIT13% CaTEF
('Ft. CF WORK)
7 711i1k7ea 1.11
e.
gin
•
•
1 1—
‘J en.e
el14.6-y LcadIngt
Unloading
-fiutr lon Center
4-
tiff Parking
/ENJE
Nutrition Center Parking
34 Miter' parking spaces
,,-----" 10 Staff parking spaces
i= 5 AD A compl4ant parking spaces
- =
Le- ri 1 r—rri 14 1
RIEVOSINKOM,
Exhibit A (2)
Nutrition Center Leased Premises
Exhibit B
RULES & REGULATIONS
1) Landlord shall provide two (2) keys to Tenant for the Premises. Tenant shall provide
one copy to Landlord of all new locks or bolts Tenant install in any door or window of
the Premises within three (3) days of such installation. Upon termination of the Lease,
all keys to the Premises shall be surrendered to Landlord.
2) Tenant shall keep the Premises clean and sanitary.
3) Tenant shall have no access to Landlord's agents for maintenance work in the Premises.
Landlord's agents shall not perform any work other than its regular duties, except when
so directed by Landlord.
4) Tenant shall not disturb, solicit, or canvas any occupant of the Building.
5) Tenant shall store all trash within Tenant's separately designated trash bins inside the
trash room, and dispose of such trash and recycling through regularly scheduled pick-
ups. No trash bins shall be left on the sidewalk. No material shall be placed in trash
bins if disposal in the ordinary and customary manner in National City would violate
any applicable law or ordinance. Tenant shall keep the top of its designated trash bins
and the area underneath and immediately surroundings their trash bins clean, clear and
free from trash. Tenant shall make no use of the Building's trash dumpster, bins or
other containers used by Landlord for the storage of the Building's trash.
6) Any trash bins outside the Premises must be locked at all times.
7) Tenant shall comply with all safety, fire protection and evacuation procedures and
regulations established by Landlord or any governmental agency.
24
Exhibit C
Nutrition Center Facility Equipment
DESCRIPTION
NUTRITION CENTER
PROGRAM PROPERTY
EXISTING
FACILITY PROPERTY
ICE MACHINE AND BIN
X
MOBILE PAN RACK
X
ISLAND PREP TABLE
X
FOOD SLICER
X
FOOD BLENDER
X
PLANETARY MIXER
X
PREP COUNTER WITH HAND SINK
X
S/S SIDE SPLASH FOR HAND SINK
X
SOAP AND TOWEL DISPENSER, WALL -MOUNT
X
MICROWAVE OVEN
X
CONVECTION STEAMER
X
STATIONARY KETTLE
X
COUNTERTOP CHARBROILER
X
FRYER
X
6-OPEN BURNER RANGE
X
DOUBLE CONVECTION OVEN
X
FIRE SUPPRESSION SYSTEM
X
CHEF'S COUNTER
X
HAND SINK WITH SOAP/TOWEL DISPENSER
X
3-COMPARTMENT SINK
X
SOILED DISHTABLE WITH SINK
X
DISPOSER
X
DISHWASHER, LOW -TEMP, ELECTRIC
X
CLEAN DISHTABLE
X
POT/PAN SHELVING
X
WALK-IN COOLER WITH SHELVING
X
WALK-IN FREEZER WITH SHELVING
X
DRY STORAGE SHELVING
X
DECORATIVE LAMP
X
MILK DISPENSER
X
COFFEE BREWER
X
BEVERAGE COUNTER
X
MOP SINK
X
STORAGE SHELVING
X
WASHDOWN HOSE & RACK
X
MOP RACK _
X
S/S SERVING COUNTER
X
SNEEZEGUARD, ADJUSTABLE
X
HOT FOOD WELLS, DROP -IN
X
FILL FAUCET
X
BACK COUNTER
X
UNDERCOUNTER REFRIGERATOR
X
DROP -IN GLASS RACK LOWERATOR
X
DRY STORAGE SHELVING
X
RESOLUTION NO. 2019 — 26
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING
THE CITY MANAGER TO EXECUTE A LEASE AGREEMENT WITH MORGAN TOWER
HOUSING ASSOCIATES, L.P. FOR THE GEORGE H. WATERS NUTRITION CENTER,
LOCATED AT 1415 "D" AVENUE IN NATIONAL CITY, FOR AN INITIAL TERM OF 10 YEARS
WITH AUTOMATIC RENEWALS FOR SUCCESSIVE FIVE (5) YEAR TERMS ENDING 99
YEARS AFTER THE COMMENCEMENT DATE OF THE LEASE AT A RENT OF $1.00 PER
YEAR; AND AUTHORIZING THE CITY MANAGER TO EXECUTE A NUTRITION CENTER
FUNDING AGREEMENT WITH THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING
AUTHORITY OF THE CITY OF NATIONAL CITY FOR THE PURPOSE OF FUNDING THE
OPERATION OF SAID NUTRITION CENTER IN THE AMOUNT OF $475,000 FOR THE FIRST
YEAR AND INCREASED BY 3.5% EACH YEAR THEREAFTER FOR A TOTAL OF FIFTY-FIVE
(55) YEARS
WHEREAS, the Community Development Commission -Housing Authority of the
City of National City ("Housing Authority") is the fee title owner of that certain real property located
at 1317 D Avenue and 1415 "D" Avenue in the City of National City ("City"), which is more
commonly known and referred to as the Kimball and Morgan Towers; and
WHEREAS, since 1979 the City has operated, or caused to be operated, the
George H. Waters Nutrition Center ("Nutrition Center") at the Kimball and Morgan Towers; and
WHEREAS, the Kimball and Morgan Towers are "housing projects" as defined in
California Health and Safety Code Section 34212. California Health and Safety Code Section
34212 defines housing project to include "real or personal property for necessary, convenient or
desirable appurtenances, streets, sewers, water service, parks, site preparation, gardening,
administrative, community, health, recreational, educational, welfare or other purposes." The
Nutrition Center provides important and necessary community, health, recreational, educational,
welfare and other benefits to low income residents of the Kimball and Morgan Towers housing
projects and other low income persons in the City of National City. As such, the Nutrition Center
is a portion of the housing project for purposes of California Health and Safety Code Section
34212; and
WHEREAS, under the Disposition and Development Agreement for Kimball and
Morgan Towers approved by the Housing Authority on June 19, 2018, the Housing Authority is
ground leasing the Kimball and Morgan Towers to two (2) affordable housing project the
developer/operators, who are required to rehabilitate the Kimball and Morgan Towers and operate
the Kimball and Morgan Towers as low income affordable housing projects. A portion of the
consideration payable by the Kimball and Morgan Towers developer/operators is in the form of
seller carryback notes (''Kimball and Morgan Notes"); and
WHEREAS, the Housing Authority and the City believe it will be beneficial to the
health and welfare of the community and the citizens of the City of National City for the Nutrition
Center to continue to be operated by the City for the benefit of its low income residents, rather
than having the Nutrition Center run by private interests. Therefore, as a material consideration
for the Housing Authority's entry into the ground leases for the Kimball and Morgan Towers, the
Housing Authority is requiring Morgan Tower Housing Associates, L.P., ground lessee of the
Morgan Tower, (the building in which the Nutrition Center is located) to enter into a 99 year lease
with the City with respect to the Nutrition Center with an annual rent of $1.00; and
Resolution No. 2019 — 26
Page Two
WHEREAS, Califomia Health and Safety Code Section 34312 empowers the
Housing Authority to use its funds to operate housing projects. As part of the foregoing
transaction and in lieu of having the ground lessee of the Morgan Tower operate and pay for the
Nutrition Center, the Housing Authority has agreed to pay to the City a portion of the consideration
received annually by the Housing Authority from the Kimball and Morgan Notes. The City shall
use the fund for the operation of the Nutrition Center (which is part of a housing project as defined
in the California Health and Safety Code) in furtherance of the City's and the Housing Authority's
goal of improving the health and welfare of the community and the citizens of the City of National
City; and
WHEREAS, under the Nutrition Center Funding Agreement, the Housing Authority
shall make fifty-five (55) annual payments to the City. The first such payment shall be in the
amount of $475,000.00, and further payments shall be increased by 3.5% each year thereafter.
Such payments shall be made from the proceeds of the Kimball and Morgan Notes. The first
annual payment shall be due and payable by the Housing Authority to the City ten (10) business
days after receiving such annual payments from the Kimball and Morgan Towers ground lessees;
and
WHEREAS, the City shall use the funds received by the City pursuant to the
funding agreement referenced herein, solely for the purpose of funding operation of the Nutrition
Center (which is part of a housing project as defined in the California Health and Safety Code).
No portion of such funds shall be used for any purpose other than funding operation of the
Nutrition Center without the express written consent of the Housing Authority, which consent shall
be granted only in the event that the use of those funds by the City is allowed under the Housing
Authorities Law, Health and Safety Code Section 34200, et seq.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
National City authorizes the City Manager to execute a Lease Agreement with Morgan Tower
Housing Associates, L.P. for the George H. Waters Nutrition Center, located at 1415 "D" Avenue
in National City, for an initial term of 10 years with automatic renewals for successive five (5) year
terms ending 99 years after the Commencement Date of the Lease at a rent of $1.00 per year.
BE IT FURTHER RESOLVED that the City Council of the City of National City also
authorizes the City Manager to execute a Nutrition Center Funding Agreement with the
Community Development Commission -Housing Authority of the City of National City for the
purpose of funding the operation of said Nutrition Center in the amount of $475,000 for the first
year and increased by 3.5% each year thereafter for a total of fifty-five (55) years.
BE IT FURTHER RESOLVED that Lease Agreement and Nutrition Center Funding
Agreement will be fully executed prior to the close of escrow with other necessary documents as
may be required by the Disposition and Development Agreement for Kimball and Morgan Towers
dated June 19, 2018. A fully executed copy of the Lease Agreement and the Nutrition Center
Funding Agreement will be on file with the City Clerk after the close of escrow.
Resolution No. 2019 — 26
Page Three
PASSED and ADOPTED this 5th day of March, 201 • /�
41;1
Alejandr
ATTE
Fr. -Michael R. ialla, City Clerk
APPROVED AS TO FOR
An
ttorney
Mayor
Passed and adopted by the Council of the City of National City, California, on
March 5, 2019 by the following vote, to -wit:
Ayes: Councilmembers Cano, Morrison, Quintero, Rios, Sotelo-Solis.
Nays: None.
Absent: None.
Abstain: None.
AUTHENTICATED BY: ALEJANDRA SOTELO-SOLIS
Mayor of the City of National City, California
MICHAEL R. DALLA
City Clerk of the City of National City, California
By:
Deputy
I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of
RESOLUTION NO. 2019-26 of the City of National City, California, passed and adopted
by the Council of said City on March 5, 2019.
City Clerk of the City of National City, California
By:
e�o1 X-H i
CITY OF NATIONAL CITY, CALIFORNIA
COUNCIL AGENDA STATEMENT
MEETING DATE: March 5, 2019
AGENDA ITEM NO.: 14
EM TITLE:
Resolution of the City Council of the City of National City authorizing the City Manager to execute a Lease
Agreement with Morgan Tower Housing Associates, L.P. for the George H. Waters Nutrition Center,
located at 1415 "D" Avenue in National City, for an initial term of 10 years with automatic renewals for
successive five (5) year terms ending 99 years after the Commencement Date of the Lease at a rent of
$1.00 per year; and authorizing the City Manager to execute a Nutrition Center Funding Agreement with
the Community Development Commission -Housing Authority of the City of National City for the purpose
of funding the operation of said Nutrition Center in the amount of $475,000 for the first year and increased
by 3.5% each year thereafter for a total of fifty-five (55) years.
PREPARED BY: Carlos Aguirre, Housing &
Economic Development Manager
PHONE: 619-336-4391
EXPLANATION:
See attached staff report.
Ho
DEPARTMENT: D
APPRO
Ino
-� elo.
46MAIW—
& Economic
menl
FINANCIAL STATEMENT:
ACCOUNT NO.
See attached staff report.
APPROVED: FINANCE
MIS
APPROVED:
ENVIRONMENTAL REVIEW:
The Lease Agreement and Nutrition Center Funding Agreement is not a project and, therefore, not
subject to environmental review.
ORDINANCE: INTRODUCTION FINAL ADOPTION
STAFF RECOMMENDATION:
Adopt the resolution.
BOARD / COMMISSION RECOMMENDATION:
N/A
TACHMENTS:
Staff Report
2. Lease Agreement
3. Nutrition Center Funding Agreement
4. Resolution
less/te ,L 0 abt9-240
CITY COUNCIL OF THE CITY OF NATIONAL CITY
STAFF REPORT
March 5, 2019
Agenda Item
Attachment No. 1
Resolution of the City Council of the City of National City authorizing the City Manager to
execute a Lease Agreement with Morgan Tower Housing Associates, L.P. for the George
H. Waters Nutrition Center, located at 1415 "D" Avenue in National City, for an initial term
of 10 years with automatic renewals for successive five (5) year terms ending 99 years
after the Commencement Date of the Lease at a rent of $1.00 per year; and authorizing
the City Manager to execute a Nutrition Center Funding Agreement with the Community
Development Commission -Housing Authority of the City of National City for the purpose
of funding the operation of said Nutrition Center in the amount of $475,000 for the first
year and increased by 3.5% each year thereafter for a total of fifty-five (55) years.
Background
The George H. Waters Senior Nutrition Center ("Nutrition Center") was built in conjunction
with Morgan Senior Tower and has been operated by the City of National City ("City")
since 1978. The goals of the Nutrition Center are to provide good nutrition, reduce
isolation, and provide sound education and information to meet the needs of older adults,
as well as providing the availability of appropriate exercise classes to enable the target
population to maintain good health. The Nutrition Center provides National City's elderly
population with information about the benefits of good nutrition and exercise as a way to
avoid lengthy illnesses and nursing home confinement. The Nutrition Center serves over
40,000 congregate meals and makes over 17,000 meal deliveries to seniors each year.
The Nutrition Center is funded in part by the City of National City, program donations and
a grant through the federal Older American Act Title III. This federal grant is administered
by both State of California and County of San Diego and is regulated by the California
Department of Agriculture.
Comprehensive Renovation of the Nutrition Center
Since the Nutrition Center had not undergone renovations since it was placed in service
and the facility is well overdue for rehabilitation, the Community Development
Commission -Housing Authority of the City of National City ("Housing Authority") included
the Nutrition Center in the Kimball and Morgan Towers ("Towers") Rehabilitation and
Recapitalization Project ("Project") approved through a Development and Disposition
Agreement ("DDA") on June 19, 2018 by Housing Authority Resolution 2018-66 to ensure
full rehabilitation and financial sustainability of the Nutrition Center. As part of the Project,
the Project developer/operators of the Towers will provide for a comprehensive
rehabilitation and modernization of the Nutrition Center.
1
Attachment No. 1
Nutrition Center Lease Agreement at $1.00 per year
As a material consideration for the Housing Authority's entry into the ground leases for
the Towers as required by the Projects DDA, the Housing Authority is requiring the
ground lessee of the Morgan Tower (the building in which the Nutrition Center is located)
to enter into a 99 year Lease ("Lease") with the City with respect to the Nutrition Center
with an annual rent of $1.00 so that the City may continue to operate the Nutrition Center.
The Lease is a "Triple Net Lease" pursuant to which City shall pay (in addition to Rent)
its own utilities, janitorial, trash removal, repairs, maintenance, and other operating
expenses directly relating to the use of the Nutrition Center. The Lease Agreement for
the Nutrition Center is Attachment No. 2 of this Staff Report.
Annual Payments to the City for Operation of the Nutrition Center
Pursuant to the Project DDA, the Housing Authority is ground leasing the Towers to two
(2) affordable housing project developer/operators, who are required to rehabilitate the
Towers and operate them as low income affordable housing projects. A portion of the
consideration payable by Towers developer/operators is in the form of seller carryback
notes ("Kimball and Morgan Notes").
California Health and Safety Code Section 34312 empowers the Housing Authority to use
its funds to operate housing projects. As part of the foregoing transaction and in lieu of
having the ground lessee of the Morgan Tower operate and pay for the Nutrition Center,
the Housing Authority has agreed to pay to the City a portion of the consideration received
annually by the Housing Authority from annual loan payments received through the
Kimball and Morgan Notes. The City would use said portion of funds received by the
Housing Authority to operate the Nutrition Center (which is part of a housing project as
defined in the California Health and Safety Code) in furtherance of the City's and the
Housing Authority's goal of improving the health and welfare of the community and the
citizens of the City of National City.
Under a Nutrition Center Funding Agreement (Attachment No. 3 of this Staff Report), the
City would receive fifty-five (55) annual payments from the Housing Authority for the
operation of the Nutrition Center. The first such payment shall be in the amount of
$475,000.00, and further payments shall be increased by 3.5% each year thereafter.
Such payments shall be made from the proceeds of the Kimball and Morgan Notes. The
City shall use the funds received by the City from the Housing Authority solely for the
purpose of funding operation of the Nutrition Center (which is part of a housing project as
defined in the California Health and Safety Code). No portion of such funds shall be used
for any purpose other than funding operation of the Nutrition Center without the express
written consent of the Housing Authority, which consent shall be granted only in the event
that the use of those funds by the City is allowed under the Housing Authorities Law,
Health and Safety Code Section 34200, et seq.
2
Attachment No. 1
Financial Statement and Staff Recommendation
As part of the Kimball and Morgan Towers Rehabilitation and Recapitalization Project the
City's Nutrition Center will receive a comprehensive rehabilitation and modernization
without any out-of-pocket contribution from the City or the Housing Authority. The first
annual payment of $475,000 shall be due and payable by the Housing Authority to the
City ten (10) business days after receiving such annual payments from the Kimball and
Morgan Towers developers at closing. The first payment will be made to the City in early
April 2019. The annual payment represents a new revenue source to the Nutrition Center
Fund. This new revenue source offsets the operating support that the City's General Fund
has provided to the Nutrition Center. In anticipation of the receipt of this revenue source
the operating support previously provided from the General Fund was not included in the
Fiscal Year 2019 City budget. City staff recommends that the City of National City
authorize the City Manager to execute the attached Lease Agreement for the George H.
Waters Nutrition Center and the Nutrition Center Funding Agreement at the close of
escrow for the Project.
3
Attachment No. 2
George H. Waters Nutrition Center
1415 D Avenue, First Floor
National City, California
LEASE
THIS LEASE ("Lease") is dated as of the day of , 2019, by and
between Morgan Tower Housing Associates, L.P., a California limited partnership ("Landlord"),
and the City of National City ("Tenant").
1. Definitions.
"Building" means the building commonly known as the Morgan Tower at 1415 D
Avenue, National City, California.
"Building Rules and Regulations" means the rules and regulations which may hereafter
be adopted by Landlord for the care, protection, cleanliness, and operation of the Premises,
Building, Building and Common Areas, and any reasonable modifications or additions to such
rules and regulations adopted by Landlord so long as the same does not negatively impact the
Building or Premises or Tenant's use, occupancy and enjoyment thereof or Tenant's rights under
this Lease. Notwithstanding the foregoing, Landlord and Tenant agree that the terms and
conditions of this Lease shall control the rights and responsibilities of the parties and shall
supersede any and all provisions of the Building Rules and Regulations which may now or in the
future conflict with the terms and conditions of this Lease. Landlord shall not be responsible to
Tenant for failure of any other tenant or occupant of the Building to observe or comply with any
of the Building Rules and Regulations. The term "Building Rules and Regulations" shall be
deemed to include the rules and regulations set forth in Exhibit B hereto and any and all
reasonable amendments made by Landlord to the Building Rules and Regulations after the date
of this Lease as may be required by applicable law or Landlord's financing sources or as
Landlord may deem desirable, in Landlord's reasonable discretion, for the proper and efficient
operation and maintenance of the Building so long as the same does not negatively impact the
Building or Premises or Tenant's use, occupancy and enjoyment thereof or Tenant's rights under
this Lease.
"Commencement Date" means , 20.
"Common Areas" means all areas, space, equipment and special services provided by
Landlord within the ground floor of the Building for the common or joint use and benefit of the
tenants, their employees, agents, servants, suppliers, customers and other invitees, including, by
way of illustration, but not limitation, landscaped areas, curbs, sidewalks, restrooms, lobbies,
floor corridor hallways, patios, parking facilities, plenums above the ceiling on all floors and all
other areas outside the Building. Notwithstanding the foregoing or anything to the contrary
contained herein, Landlord may determine the nature, size and extent of the Common Areas as
well as make changes to the Common Areas from time to time which, in its opinion, are deemed
desirable so long as the same does not negatively impact the Premises or Tenant's use,
occupancy and enjoyment thereof or Tenant's rights under this Lease and further provided
Attachment No. 2
Landlord cannot alter the access to the Premises, except as required by applicable law or during
limited periods of construction by the Landlord, provided that alternative means of access are
provided to the Tenant during such limited periods of time and provided further that advance
notice is given to Tenant.
"Hazardous Material" means any hazardous or toxic substance, material or waste which
is or becomes regulated by any local governmental authority, the State of California or the
United State Government. Provided, however, the term "Hazardous Materials" shall not include
substances typically used in the ordinary course of operating and maintaining nutrition centers in
California or small amounts of chemicals, cleaning agents and the like commonly employed in
routine household uses in a manner typical of occupants in other similar properties, provided that
such substances are used in compliance with applicable laws
"Landlord" means Morgan Tower Housing Associates, L.P., a California limited
partnership.
"Premises" means the approximately 6,560 square foot George H. Waters Nutrition
Center, located on the first floor of the Building, depicted on Exhibit A attached hereto,
including a dining room, restrooms, office space, kitchen, storage space, mailbox, trash
enclosure, 10 staff parking spaces, 5 ADA compliant parking spaces, 34 visitor parking spaces
and 4 delivery parking spaces.
"Rent" shall have the meaning ascribed to it in Section 4(a) of this Lease.
"Tenant" means the City of National City.
"Term" shall have that meaning ascribed to it in Section 3(a) of this Lease.
Notwithstanding the foregoing, Landlord and Tenant each acknowledge that the Premises will be
unavailable for the purpose of preparing food for an undetermined period of time during
rehabilitation of the Building. During such period of time, the Landlord shall enter into a lease
("Temporary Kitchen Space Lease") and pay all costs of such Temporary Kitchen Space Lease.
The Temporary Kitchen Space Lease shall be at a location, for a period of time and pursuant to a
lease agreement reasonably approved by the Landlord and the Tenant. The Temporary Kitchen
Space Lease shall be subleased to the Tenant pursuant to a sublease agreement reasonably
approved by the Landlord and the Tenant. For purposes of this Lease, any and all approvals by
the Landlord means approval by the City Manager of the City of National City and such City
Manager is authorized to execute all leases, subleases and other documents reasonably necessary
to effectuate the intent of this paragraph.
2. Lease of the Premises. Landlord leases to Tenant and Tenant leases from Landlord the
Premises. Tenant hereby agrees and acknowledges that Tenant is leasing the Premises "as -is"
from Landlord. Without limiting the generality of the foregoing, Tenant shall be solely
responsible for determining the condition of the Premises. Landlord shall have no obligation to
improve the Premises.
Attachment No. 2
3. Term and Contingencies.
(a) Term. Unless sooner terminated pursuant to the terms of this Lease, the term of
this Lease shall commence on the Commencement Date (i.e., , 20J and terminate on
, 20_ (10 years after the Commencement Date) ("Term"), except as otherwise
provided in Section 3(b), below.
(b) Automatic Extensions. Notwithstanding Section 3(a), above, or anything to the
contrary set forth in this Lease, the Term shall automatically extend and this Lease shall be
automatically renewed for successive five (5) year terms, on the same terms and conditions,
unless this Lease is terminated by ninety (90) days written notice from Tenant to Landlord, until
, 21_. (99 years after the Commencement Date).
(c) Termination by Tenant. Tenant may terminate this Lease, subject to the terms
hereof, by providing Landlord written notice at lease ninety (90) days prior to the date of
termination.
4. Rent.
(a) Rent. The Rent shall be $1.00 per year. The first year's Rent shall be payable
concurrently with the Tenant's execution and delivery of this Lease to the Landlord. Thereafter,
Tenant agrees to pay Rent to Landlord on March 15 in each and every year during the Term. All
Rent may be paid by check and delivered personally or by first class mail to Landlord.
(b) Utilities. Tenant shall be responsible for payment of all separately metered
utilities for the Premises, if any.
(c) No Security Deposit. Tenant shall not be required to pay any security deposit to
Landlord.
(d) Triple Net Lease. This Lease is a "Triple Net Lease" pursuant to which Tenant
shall pay (in addition to Rent) its own utilities, janitorial, trash removal, repairs, maintenance,
and other operating expenses directly relating to the use of the Premises ("Premises Costs").
5. Alterations.
(a) By Landlord. Landlord may install fixtures, make alterations or other changes to
the Building which Landlord determines in its sole and absolute discretion are necessary or
desirable without notice to or consent of the Tenant so long as the same does not negatively
impact the Building or Premises or Tenant's use, occupancy and enjoyment thereof or Tenant's
rights under this Lease. Tenant shall cooperate with Landlord if Landlord elects to make
alterations or other changes to the Premises.
Attachment No. 2
(b) By Tenant. Tenant may make alterations or other changes to the Premises with
Landlord's prior written consent which shall not be unreasonably delayed or withheld. Any
alterations, improvements or additions shall be constructed without cost to Landlord in a good,
workmanlike and defect -free manner by licensed contractors with experience in construction of
tenant improvements, in commercial properties similar to the Building. Any and all additions,
alterations and improvements which are made or caused to be made by Tenant, before or during
the Term, shall be made at Tenant's sole expense in accordance with the following: (i) if
Landlord requires, such work, including, without limitation, Tenant's final working drawings,
plans and specifications shall be subject to the continuing approval of Landlord, which approval
shall not be unreasonably withheld, unless and to the extent such work constitutes emergency
repairs necessary for the continued operation of Tenant's business or for life safety reasons; (ii)
such work shall not alter, add to or otherwise change the exterior of the Premises, without the
written consent of Landlord; (iii) such work shall not cause or create a dangerous or hazardous
condition and shall not interfere with or disturb other tenants or guests of Landlord Tenant shall
apply for and obtain, any and all permits or licenses required by applicable governmental
authorities necessary or desirable for Tenant to construct and install the same. Notwithstanding
anything to the contrary contained herein, in no event shall Landlord be responsible for repair of
or liability to Tenant for any defects in any alterations, improvements or additions to the
Premises. Tenant shall give Landlord thirty (30) days advance notice before beginning any work
on alterations to permit Landlord to file a Notice of Non -Responsibility and take any other
actions in advance of commencement of any alterations.
(c) Lien Free Construction. All alterations, improvements and additions shall be
constructed free and clear of mechanics' and materialmen's liens; provided that if any such lien
is filed, Tenant shall remove and discharge the same within ten (10) business days of written
notice from the Landlord. Time is of the essence. Failure to timely remove the lien shall
constitute a "Material Default" under the terms of this Lease. Notwithstanding the foregoing,
Tenant may contest the mechanics' and/or materialmens' liens in good faith, at Tenant's own
expense, by appropriate proceedings, provided Tenant posts a bond or furnishes such other
security as may be required by law to prevent any foreclosure proceedings against the Building,
or any part thereof, during the pendency of such contest and removes such lien or stays
enforcement thereof. If Tenant shall fail to discharge such lien within such period or fail to
furnish such security, then, subject to Tenant's right to contest set forth in the preceding
sentence, in addition to all other rights or remedies, Landlord may, but shall not be obligated to,
discharge the same (i) by paying the amount claimed to be due, (ii) by procuring the discharge of
such lien by deposit in court, (iii) by giving security, or (iv) in such other manner as is, or may be
prescribed by law. Any amount paid by Landlord for any of the aforesaid purposes, including all
reasonable attorneys' fees to procure the discharge of such lien with all necessary disbursements
in connection therewith, with interest thereon at the maximum rate permitted by law from the
date of payment, shall be repaid by Tenant to Landlord on demand and, if unpaid, may at
Landlord's election, be treated as additional rent. Nothing herein contained shall imply any
consent or approval by Landlord to the filing of mechanics' lien against the Building or any part
thereof.
Attachment No. 2
(d) Removal of Improvements. Tenant shall remove from the Premises all of
Tenant's personal property, including without limitation furnishings, machinery, trade fixtures,
equipment, and improvements, but excluding those items which are not listed as "existing"
equipment on the Food Service Equipment Schedule set forth in Exhibit C attached hereto, on or
before the expiration of the Term, or as soon as practicable after termination of this Lease, but in
no event later than sixty (60) days after the termination of this Lease. Tenant shall repair any
damage to the Premises or the Building caused by such removal, including without limitation
patching and filling holes, reasonable wear and tear excepted. Notwithstanding the foregoing,
Tenant shall not remove or be required to remove, any HVAC systems, restroom fixtures,
flooring, plumbing, ceilings, walls, or utility or electrical components.
6. Use.
(a) Permitted Use. Tenant shall use the Premises only as a nutrition center, food
preparation, food service operation, social activity center, to provide senior services and for
ancillary health, education, exercise and wellness related uses for seniors. Tenant shall not use
the Premises for any other activity aside from the use permitted in this Section 6(a). The
Premises may only be open for business between 5:00 a.m. and 10:00 p.m., seven (7) days a
week, with food service occurring between the hours of 7:00 a.m. and 8:00 p.m. Tenant shall not
use the Premises as a dwelling for any person.
(b) Additional Use Limitations. Tenant shall not permit the occupancy of the
Premises at any time during the Term to exceed that allowed by the applicable codes and
regulations concerning occupancy. Tenant shall use commercially reasonable efforts to maintain
control over the conduct of its employees and shall not do or permit anything to be done in or
about the Premises which will in any way obstruct or interfere with the rights of other tenants or
occupants of the Building, or Landlord's employees, invitees, consultants, or other licensees or
injure, endanger or annoy them, result in an increase in the number of parking spaces being used
by Tenant and its employees, invitees, guests or licensees, or use or allow the Premises to be
used for any immoral or unlawful purpose, nor shall Tenant cause, maintain or permit any
nuisance in, on or about the Premises. Tenant shall not commit or permit to be committed any
waste in or upon the Premises.
(c) Compliance With Laws, Covenants and Requirements. Tenant represents and
warrants to Landlord, that Tenant, its agents, servants, employees, invitees and licensees, shall
comply with, and shall not use the Premises in any way (or permit or suffer anything to be done
in or about the Premises) which will conflict with: (i) any law, statute, ordinance or
governmental rule or regulation affecting the Building, now in force or which may be hereafter
promulgated, including, but not limited to, the provisions of any city or county zoning codes
regulating the use of the Building; (ii) any covenant, condition or restriction (whether or not of
public record) affecting the Building, now in force or which may hereafter be enacted or
promulgated or any health and food safety requirements, rules and regulations established by any
governmental or quasi -governmental entity that are either voluntarily or involuntarily made
applicable to the Building or the Premises; or (iii) any licensing requirements of any city, county,
or other governmental or quasi -governmental entity regulating Tenant's use of the Premises or
any collective bargaining agreement entered into by Tenant (hereinafter collectively referred to
Attachment No. 2
as "Applicable Laws, Covenants and Requirements"). Tenant shall promptly notify Landlord of
and shall promptly provide Landlord with true, correct and legible copies of all orders, reports,
notices and correspondence (including those which may be considered confidential) of or
concerning the investigation, compliance, and corrective actions and all complaints, pleadings,
and other legal documents filed against Tenant relating to Tenant's failure to comply with
Applicable Laws, Covenants and Requirements. Tenant shall, at its sole cost and expense,
promptly comply, and shall maintain the Premises and its operations and equipment in such a
way as to comply, with all Applicable Laws, Covenants and Requirements in so far as they relate
to the specific manner of Tenant's use and occupancy of the Premises, and Tenant shall maintain
and pay the cost of all permits, assessments and licenses required to operate Tenant's business.
The judgment of any court of competent jurisdiction or the admission by Tenant in any action
against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
Applicable Laws, Covenants and Requirements, shall be conclusive of the fact as between
Landlord and Tenant. The Building is a non-smoking building and the Tenant shall not allow its
employees, agents, contractors, subcontractors, clients, invitees or others using or occupying the
Premises to smoke while in the Premises.
(d) Hazardous Materials.
(1) Except with respect to commercially packaged products used and stored
by Tenant at the Premises, such as, common cleaning fluids and supplies, Tenant hereby agrees
that neither Tenant, nor Tenant's agents, employees, contractors, invitees or licensees will
engage in any activity in, on or about the Premises or the Building, nor permit others to engage
in any such activity, which will result in the Premises or the Building containing any Hazardous
Material. If at any time it is determined that Tenant or Tenant's agents, employees, contractors,
invitees or licensees, have been responsible for the Premises or the Building containing any
Hazardous Material, then Tenant shall be solely responsible for and shall pay for all costs
incurred in connection with the removal of said Hazardous Materials.
(2) Tenant shall promptly comply with the requirements of Section
25359.7(b) of the California Health and Safety Code and/or any successor or similar statute to
provide Landlord with written notice that any Hazardous Material has come or will come to be
located on or beneath the Premises or the Building if Tenant discovers or has reasonable cause to
believe of the presence of such materials. Should Tenant fail to so notify Landlord, Landlord
shall have all rights and remedies provided for such a failure by such Section 25359.7(b) in
addition to all other rights and remedies which Landlord may have under this Lease or otherwise.
Tenant shall not take any remedial action related to Hazardous Materials located in or about the
Premises or the Building and shall not enter into a settlement, consent decree or compromise in
response to any claim related to Hazardous Materials without the prior written consent of
Landlord, which may be withheld by Landlord in its sole and absolute discretion. Tenant shall
immediately notify Landlord in writing of: (i) any enforcement, clean-up, removal or other
governmental action instituted, completed or threatened with regard to Hazardous Materials at
the Premises or the Building of which Tenant is directly notified; (ii) any claim made or
threatened by any person against Tenant, Landlord, the Premises or the Building related to
damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to
result from any Hazardous Materials of which Tenant is directly notified; and (iii) any reports
Attachment No. 2
made to any environmental agency arising out of or in connection with any Hazardous Materials
at or removed from the Premises or the Building, including any complaints, notices, warnings or
assertions of any violation in connection therewith of which Tenant is directly notified.
(3) In addition to any other indemnity contained in this Lease, Tenant shall
defend, indemnify and hold Landlord and its partners harmless from and against any and all
losses, liabilities, general, special, consequential and/or incidental damages, injuries costs,
expenses, claims of any and every kind whatsoever (including, without limitation, court costs,
reasonable attorneys' fees, damages to any person, the Premises or the Building or loss of rents)
which at any time or from time to time may be paid, incurred or suffered by or asserted against
Landlord or its partners with respect to, or as a direct or indirect result of: (i) the breach by
Tenant of any of the covenants set forth in this Section 6(d); or (ii) the presence on, under or the
escape, seepage, leakage, spillage, discharge, emission, release from, onto or into the Premises or
the Building, of any Hazardous Material to the extent directly or indirectly caused or allowed by
Tenant, or any agent, employee, contractor, invitee or licensee of Tenant. Tenant's liability
under this Section 6(d) shall extend to any and all Hazardous Materials whether or not such
substance was defined, recognized, or known or suspected of being hazardous, toxic, dangerous
or wasteful at the time of any act or omission giving rise to Tenant's liability.
(e) Additional Prohibited Actions of Tenant. Tenant shall not commit or permit the
commission of any acts on the Premises or the Building, nor use or permit the use of the
Premises or the Building in any way that: (i) violates or conflicts with any law, statute,
ordinance, or governmental rule or regulation, whether now in force or hereinafter enacted,
governing the specific manner of Tenant's use of the Premises or the Building; (ii) obstructs or
interferes with the rights of other tenants or occupants of the Building; or (iii) constitutes the
commission of waste on the Premises or the commission or maintenance of a nuisance as defined
by the laws of the State of California.
(f) Building Rules and Regulations. Tenant shall, and Tenant agrees to cause its
agents, servants, employees, invitees, and licensees to, observe and comply fully and faithfully
with the Building Rules and Regulations. Landlord shall not be responsible to Tenant for failure
of any other tenant or occupant of the Building to observe or comply with any of the Building
Rules and Regulations.
7. Services and Utilities.
(a) Utilities. Tenant shall be responsible for all separately metered utilities provided
to the Premises, including, but not limited to, electric, telecommunications, water, trash, utilities
and gas provided the same are in fact separately metered or submetered.
(b) Breaks In Utility Services. Landlord shall not be liable for and Tenant shall not
be entitled to any abatement or reduction of rent by reason of Landlord's failure to furnish any
utilities and services which are not separately metered, including, without limitation, electricity
and water, when such failure is caused by any of the following, to the extent beyond the
reasonable control of Landlord: (i) accidents, breakage or repairs, (ii) strikes, brownouts,
blackouts, riots, civil disturbances, lockouts or other labor disturbances or labor disputes of any
Attachment No. 2
character, (iii) governmental regulation, moratorium or other governmental action, (iv)
limitation, rationing, curtailment or restriction on the use of water, electricity, gas heating,
cooling or other forms of service or utility provided to the Premises, or (v) by any other cause,
similar or dissimilar, beyond the reasonable control of Landlord, nor shall such failure under
such circumstances be construed as a constructive or actual eviction of Tenant. Landlord shall
not be liable under any circumstances for loss or injury to property or business, however
occurring, through or in connection with or incidental to Landlord's failure to furnish any of said
service or utilities. Notwithstanding any provision to the contrary herein, in the event Tenant is
prevented from using all or a portion of the Premises as a result of a failure to provide services,
access or utilities and if such failure continues for more than five (5) consecutive business days
after written notice from Tenant, then the Rent shall be abated entirely (in the event Tenant is
prevented from using all of the Premises) or reduced (in the event Tenant is prevented from
using a portion of the Premises), as the case may be, for such time that Tenant continues to be so
prevented from using the Premises or a portion thereof.
8. Taxes. Tenant shall be liable for and agrees to pay all taxes levied upon its personal
property, leasehold improvements, additions, alterations and fixtures, including trade fixtures and
inventory, located on the Premises or elsewhere and any real property taxes assessed on the
Premises or the Property as a result of Tenant's business operations at the Premises. Non-
exempt taxes, if any, with respect to Tenant's possessory interest in the Premises for the first and
final years of the Term shall be prorated between Landlord and Tenant based upon the
commencement and expiration of the Term. Landlord will not be required to pay any penalty,
interest or cost resulting from Tenant's failure to pay non-exempt taxes with respect to Premises,
Tenant's personal property, leasehold improvements, additions, alteration and fixtures and/or the
delinquent payment of such taxes by Tenant. Tenant shall pay and be liable for any tax or fee
(now or hereafter imposed by any governmental entity) applicable to or measured by or on the
Rents or any other charges payable by Tenant under this Lease, including, without limitation,
any gross income tax, gross receipts tax or excise tax with respect to the receipt of such Rent or
other charges on the possession, leasing, operation, use or occupancy of the Premises, and
specifically including any commercial rental tax of the City of National City, if any, that may
now or hereafter be imposed. Landlord acknowledges that Tenant is a tax-exempt public entity.
9. Maintenance.
(a) Landlord's Maintenance and Repair of the Building. At all times during the
Term, Landlord agrees: (i) to maintain the foundation and structural soundness of the Building;
(ii) to keep in good repair plumbing and electrical wiring servicing the Premises, including
without limitation fire sprinkler systems (if any), and mechanical systems serving the Premises;
and (iii) repair and maintain the Common Areas. Landlord shall keep the Common Area and
the sidewalks immediately in front of the Building clean and sanitary, including the removal of
all stains, chewing gum, and other materials. Landlord shall take all steps within the bounds of
reasonable safety and applicable laws to keep the sidewalks in front of the Building free of
loitering. Landlord shall sweep and remove trash and loose debris from the Building and the
Common Area. Landlord shall ensure that any landscaping, planter boxes and flower baskets are
stationed with a catchment basin to prevent water runoff and Landlord shall remove all such
stains from water run off that might occur naturally. Landlord shall keep the top of its
Attachment No. 2
designated trash bins and the area underneath and immediately surroundings its trash bins clean,
clear and free from trash. Landlord shall make no use of the Tenant's Trash dumpster, bins or
other containers used by Tenant for the storage of its trash. No material shall be placed in trash
bins if disposal in the ordinary and customary manner in National City would violate any
applicable law or ordinance.
(b) Tenant's Maintenance of the Premises. Tenant shall keep the Premises in a neat,
clean and orderly and in good repair condition at all times during the Term, and shall not permit
rubbish, waste or garbage, to accumulate at any time. Tenant shall not commit or permit any
waste of the Premises or any acts to be done in violation of any laws or ordinances. Tenant shall
not use or permit the use of the Premises for any illegal purposes. Tenant shall pay or cause to be
paid all operating expenses of the Premises and the cost of any necessary repairs or replacements
of Tenant's alterations related to Tenant's or any sublessee's occupancy or use thereof. Tenant
shall also be responsible for all costs associated with janitorial and maintenance services,
including professional maintenance of a grease trap, all equipment maintenance including stoves,
refrigerators, dishwashers, hoods and ansul systems. In the event Tenant fails to maintain any of
the foregoing items after receipt of written notice from the Landlord and a reasonable
opportunity to cure, Landlord shall have the right to cause such maintenance to occur. Any
amount paid by Landlord for any of the aforesaid purposes, including all reasonable attorneys'
fees to enforce this Section 9(b), with interest thereon at the maximum rate permitted by law
from the date of payment, shall be repaid by Tenant to Landlord on demand and, if unpaid, may
at Landlord's election, be treated as additional rent.
10. Casualty Damage and Casualty Insurance.
(a) Insured Casualties. In the event the Premises, or any portion thereof, is damaged
or destroyed by any casualty that is covered by the insurance maintained by Landlord, then
Landlord shall rebuild and restore the Premises, as the case may be, and repair the damaged
portion thereof, provided that (i) the amount of insurance proceeds available to Landlord equals
or exceeds the cost of such rebuilding, restoration and repair; (ii) such rebuilding, restoration and
repair can be completed within one hundred eighty (180) days after the work commences in the
opinion of a registered architect or engineer appointed by Landlord; (iii) the damage or
destruction has occurred more than twelve (12) months before the expiration of the Term; and
(iv) such rebuilding, restoration, or repair is then permitted, under applicable governmental laws,
rules and regulations, and by any mortgagee of the Landlord to be done in such a manner as to
return the Premises to substantially its condition immediately prior to the damage or destruction,
including, without limitation, the same net rentable floor area. If any of the circumstances
described in (i) through (iv) above cannot be satisfied, Landlord may, at its option, either (1)
rebuild or restore the Premises or Building, as the case may be, and repair the damaged portion
thereof, or (2) elect not to rebuild or restore and this Lease shall then terminate. To the extent
that insurance proceeds must be paid to a mortgagee or beneficiary under, or must be applied to
reduce any indebtedness secured by, a mortgage or deed of trust encumbering the Premises or the
Building, such proceeds, for the purposes of this Section 10(a), shall be deemed not available to
Landlord unless such mortgagee or beneficiary permits Landlord to use such proceeds for the
rebuilding, restoration, and repair of the Premises or Building. Notwithstanding the foregoing,
Attachment No. 2
Landlord shall have no obligation to repair any damage to, or to replace any of, Tenant's
personal property, furnishings, fixtures, equipment or other such property or effects of Tenant.
(b) Non -Insured Casualties. In the event the Premises, or any portion thereof, is
materially damaged or destroyed by any casualty not covered by the insurance maintained or
requested to be maintained by Landlord, then Landlord may, at its option, either (i) rebuild or
restore the Premises and repair the damaged portions thereof at Landlord's own expense; or (ii)
terminate this Lease effective as of the date the damage or destruction occurred. If Landlord
does not give Tenant written notice within sixty (60) days after the material damage or
destruction occurs of its election to rebuild or restore the Premises and repair the damaged
portions thereof, Landlord shall be deemed to have elected to terminate this Lease.
Notwithstanding the foregoing, Tenant may terminate this Lease upon thirty (30) days' prior
written notice if Landlord elects to perform such repair or restoration and either (1) such repair or
restoration cannot be completed within one hundred and eighty (180) days or (2) the damage or
destruction occurs within the last twelve (12) months of the Term, unless Tenant's actions or
omissions are the cause of the damage, in such event Tenant shall be liable to and shall
reimburse Landlord for any and all damages caused thereby.
(c) Minor Casualties. If the Premises are not rendered substantially unfit for the
occupancy or use herein contemplated as the result of any insured casualty, subject to the
requirements of Landlord's mortgagees, Landlord shall promptly and diligently restore the
Premises at Landlord's expense to the condition existing prior to the occurrence of the casualty
and the Rent shall not abate during such restoration period, provided the Landlord is prompt and
diligent in connection with the restoration.
(d) Abatement of Rent. Provided this Lease is not terminated as provided in Sections
10(a) or (b), above, Tenant shall be entitled to an abatement of Rent by reason of the damage to
or destruction of the Premises, only to the extent that either: (i) Landlord actually receives
insurance proceeds for loss of rental income attributable to the Premises (Landlord shall not be
required to maintain such insurance, but may in its sole and absolute discretion elect to do so);
(ii) the floor area of the Premises cannot be reasonably used by Tenant for the conduct of its
business, or (iii) Tenant does not have reasonable access to the Premises, in which event the Rent
shall abate in the proportion which the approximate area of the damaged or destroyed portion of
the Premises bears to the total area of the Premises commencing upon the date of the damage to
or destruction of the Premises or Building has occurred until substantial completion of the repair
of such damage or destruction.
(e) Tenant's Waiver of Civil Code Sections 1932 and 1933. Tenant's right to
terminate this Lease in the event of any damage or destruction to the Premises is governed by the
terms of this Section 10 and therefore Tenant hereby expressly waives the provisions of Section
1932, Subdivision 2, and Section 1933, Subdivision 4, of the California Civil Code, and any and
all laws, whether now or hereafter in force, whether created by ordinance, statute, judicial
decision, administrative rules or regulations, or otherwise, that would cause this Lease to be
terminated, or give Tenant a right to terminate this Lease, upon any damage to or destruction of
the Building that occurs.
Attachment No. 2
11. Waiver of Subrogation. If either party sustains loss or damage to the Premises or the
fixtures, goods, wares, merchandise or any other property located thereon, from which it is
protected by an insurance policy, then, to the extent that such party is so protected, it waives any
right of recovery from the other party. Each party agrees immediately to give to each insurance
company which has issued to it a policy of fire and extended coverage property insurance written
notice of the terms of such mutual waivers, and to cause such insurance policy to be properly
endorsed, if necessary, to prevent the invalidation of such insurance coverage by reason of such
waivers.
12. Insurance.
(a) Tenant Insurance Requirements. Tenant agrees, at Tenant's sole cost and
expense, to maintain in force continuously throughout the Term:
(1) Commercial general public liability and property damage insurance
covering the Premises with limits of not less than $2,000,000.00 for injury to or death of one or
more persons and/or property damage arising out of a single accident or occurrence and
$2,000,000.00 in the aggregate. All such insurance shall name the Landlord as an additional
insured. Upon receipt of written request therefor, Tenant shall furnish Landlord a certificate
from the insurer evidencing such coverage as required by this Section 12(a)(1); and
(2) Fire and extended coverage insurance insuring against loss or damage by a
standard all risk policy, excluding earthquake and flood, to the extent of 100% of the full
replacement value of the Premises. Following the application of such proceeds to the restoration
of the Premises and the Building (if applicable) and to Landlord's costs incurred in connection
with the adjustment or settlement of any claims (including but not limited to reasonable
attorneys' fees), the proceeds from any such policy shall be used by Tenant for the replacement
of Tenant's personal property or the restoration of Tenant's Premises or alterations. The
property insurance policy described in this Section 12(a)(2) shall name Landlord as loss payee;
and
(3) Worker's compensation insurance, with coverage as required by the State
of California, if Tenant has any employees.
(b) Additional Insurance Requirements. Each insurance certificate for casualty
insurance shall indicate that the insurer waives its rights of subrogation against the other party.
In addition, all insurance policies obtained by Tenant shall be written as primary policies, non-
contributing with or in excess of any coverage which Landlord may carry, with loss payable
clauses in favor of Landlord and naming Landlord and any lender of Landlord as additional
insureds. The liability limits of the above -described insurance policies shall in no way limit the
liability of any party under the terms of this Lease. If Tenant fails to maintain and secure the
insurance coverage required under this Section 12, Landlord shall have, in addition to all other
remedies provided herein and by law, the right, but not the obligation, to procure and maintain
such insurance, the cost of which shall be due and payable to Landlord by Tenant on demand.
No policy of insurance required pursuant to this Lease shall contain a deductible exceeding Ten
Attachment No. 2
Thousand Dollars ($10,000) per occurrence. Tenant shall be solely responsible for the payment
of any deductible.
(c) Landlord Insurance Requirements.
(1) Liability Insurance. Landlord agrees, at Landlord's expense, to maintain
in force continuously throughout the Term, commercial general public liability insurance
covering the Building (including the Premises) with combined single limit coverage of
$2,000,000 or its equivalent, and shall upon Tenant's written request, furnish Tenant a certificate
from the insurer evidencing such coverage.
(2) Property Insurance. Landlord shall maintain all-risk property insurance
covering the Building, Premises and the Building against loss or damage resulting from fire and
other insurable casualties.
13. Hold Harmless. Tenant agrees to indemnify, defend and hold Landlord, its partners,
members, managers, directors, officers, agents, employees, affiliates and consultants entirely
harmless from and against all liabilities, losses, demands, actions, expenses or claims, incurred in
connected with or arising from the use, occupancy or enjoyment of the Building, Common Area
or Premises by Tenant and/or its agents, employees, invitees, licensees or contractors (the
"Tenant's Agents") or any work, activity or other things allowed or suffered by Tenant or
Tenant's Agents to be done in or about the Building, Common Area or Premises; provided,
however, that Tenant shall not be obligated to so indemnify Landlord to the extent any such
matters arise from or are caused by the willful misconduct or negligence of Landlord.
14. Assignment and Sublease. Tenant shall not directly or indirectly, voluntarily or by
operation of law, sublease, sell, assign, encumber, pledge or otherwise transfer or hypothecate all
or any part of the Premises or this Lease, without the written consent of Landlord, not to be
unreasonably withheld, conditioned, or delayed.
15. Eminent Domain.
(a) Total Taking. If all or substantially all of the Premises is condemned or taken in
any manner for public or quasi -public use, including, but not limited to, a conveyance or
assignment in lieu of the condemnation or taking, or if so much of the Premises is so taken or
condemned so as to render the remaining portion of the Premises unusable by Tenant for the
conduct of Tenant's business, as determined by the condemning authority, this Lease shall
automatically terminate on the earlier of the date on which actual physical possession is taken by
the condemnor or the date of dispossession of Tenant as a result of such condemnation or other
taking.
(b) Partial Taking. If less than all or substantially all of the Premises is so
condemned or taken, rendering the remaining portion of the Premises usable by Tenant for the
conduct of its business, as determined by the condemning authority, this Lease shall
automatically terminate only as to the portion of the Premises so taken as of the earlier of the
date on which actual physical possession is taken by the condemnor or the date of dispossession
Attachment No. 2
of Tenant as a result of such condemnation or taking. If such portion of the Building is
condemned or otherwise taken so as to require, in the opinion of Landlord, a substantial
alteration or reconstruction of the remaining portions thereof, this Lease may be terminated by
Landlord, as of the date on which actual physical possession is taken by the condemnor or
dispossession of Tenant as a result of such condemnation or taking, by written notice to Tenant
within sixty (60) days following notice to Landlord of the date on which such physical
possession is taken or dispossession will occur.
(c) Award. Landlord shall be entitled to the entire award in any condemnation
proceeding or other proceeding for taking for public or quasi -public use, including, without
limitation, any award made for the value of the leasehold estate created by this Lease. No award
for any partial or total taking shall be apportioned, and Tenant hereby assigns to Landlord any
award that may be made in such condemnation or other taking, together with any and all rights of
Tenant now or hereafter arising in or to the same or any part thereof. Although all damages in
the event of any condemnation shall belong to Landlord whether such damages are awarded as
compensation for diminution in value of the leasehold or to the fee of the Premises, Tenant shall
have the right to claim and recover from the condemnor, but not from Landlord, such
compensation as may be separately awarded or recoverable by Tenant in Tenant's own right on
account of damages to Tenant's business by reason of the condemnation and for or on account of
any cost or loss to which Tenant might incur to remove Tenant's merchandise, furniture and
other personal property, fixtures, and equipment or for the interruption of or damage to Tenant's
business.
(d) Rent Abatement. In the event of a partial condemnation or other taking that does
not result in a termination of this Lease as to the entire Premises, the Rent and all other charges
shall abate in proportion to the portion of the Premises taken by such condemnation or other
taking. If this Lease is terminated, in whole or in part, pursuant to any of the provisions of this
Section 15, all Rent and other charges payable by Tenant to Landlord hereunder and attributable
to the Premises taken shall be paid up to the date upon which actual physical possession shall be
taken by the condemnor. Landlord shall be entitled to retain the entire Security Deposit until
such time as this Lease is terminated as to all of the Premises.
(e) Temporary Taking. If all or any portion of the Premises is condemned or
otherwise taken for public or quasi -public use for a limited period of time, this Lease shall
remain in full force and effect and Tenant shall continue to perform all terms, conditions and
covenants of this Lease; provided, however, the Rent and all other charges payable by Tenant to
Landlord hereunder shall abate during such limited period in proportion to the portion of the
Premises that is rendered unusable as a result of such condemnation or other taking. Landlord
shall be entitled to receive the entire award made in connection with any such temporary
condemnation or other taking.
(f) Transfer of Landlord's Interest to Condemnor. Landlord may, without any
obligation to Tenant, agree to sell and/or convey to the condemnor the Premises, the Building, or
any portion thereof, sought by the condemnor, subject to this Lease and the rights of Tenant
hereunder, without first requiring that any action or proceeding be instituted or, if instituted,
pursued to a judgment.
Attachment No. 2
16. Attorneys' Fees. The parties agree that the prevailing party in litigation for the breach
and/or interpretation and/or enforcement of the terms of this Lease shall be entitled to their
expert witness fees, if any, as part of their costs of suit, and reasonable attorneys' fees as may be
awarded by the court, pursuant to California Code of Civil Procedure ("CCP") Section 1033.5
and any other applicable provisions of California law, including, without limitation, the
provisions of CCP Section 998.
17. Default.
(a) Tenant's Default. The occurrence of any one or more of the following shall
constitute a default hereunder by Tenant:
(1) Tenant fails to pay any Rent, Premises Costs or other charges required to
be paid by Tenant under this Lease when due, where such failure shall continue for a period of
thirty (30) days after written notice thereof from Landlord to Tenant;
(2) Tenant fails to promptly and fully perform any other covenant, condition
or agreement contained in this Lease and such failure continues for thirty (30) days (or such
shorter time provided herein) after written notice thereof from Landlord, provided, however, that
if the term, condition, covenant or obligation to be performed by Tenant is of such nature that the
same cannot reasonably be cured within thirty (30) days and if Tenant commences such
performance within said thirty (30) day period and thereafter diligently undertakes to complete
the same, then such failure shall not be a default hereunder;
(3) A trustee, disbursing agent or receiver is appointed to take possession of
all or substantially all of Tenant's assets or of Tenant's interest in this Lease and Tenant does not
regain possession within sixty (60) days after such appointment; Tenant makes an assignment for
the benefit of creditors; or all or substantially all of Tenant's assets in, on or about the Premises
or Tenant's interest in this Lease are attached or levied upon under execution (and Tenant does
not discharge the same within sixty (60) days thereafter);
(4) A petition in bankruptcy, insolvency or for reorganization or arrangement
is filed by or against Tenant pursuant to any federal or state statute and, with respect to any such
petition filed against it, Tenant fails to secure a stay or discharge thereof within sixty (60) days
after the filing of the same;
(5) Immediately, in the event of any assignment, subletting or other transfer
for which the prior written consent of the Landlord has not been obtained;
(6) Immediately, upon the suspension of Tenant's right to conduct its business
as contemplated by this Lease, caused by the order, judgment, decree, decision or other act of
any court or governmental agency;
Attachment No. 2
(7) Tenant fails to continuously operate a nutrition center or other permitted use of
the Premises under Section 6(a), and such failure continues for a period of thirty (30) consecutive
days.
(b) Landlord's Remedies. Upon the occurrence of a default by Tenant that is not
cured by Tenant within any applicable grace period, Landlord shall have the following rights and
remedies in addition to all other rights and remedies available to Landlord at law or in equity:
(1) The rights and remedies provided by California Civil Code Section
1951.4, which allows Landlord to continue this Lease in effect and to enforce all of its rights and
remedies under this Lease, including the right to recover Rent and any other additional monetary
charges as they become due, for as long as Landlord does not terminate Tenant's right to
possession; provided, however, if Landlord elects to exercise its remedies described in this
Section 17(b)(1) and Landlord does not terminate this Lease, and if Tenant requests Landlord's
consent to an assignment of this Lease or a sublease of the Premises at such time as Tenant is in
default, Landlord shall not unreasonably withhold its consent to such assignment or sublease.
Acts of maintenance or preservation, efforts to relet the Premises or the appointment of a
receiver upon Landlord's initiative to protect its interest under this Lease shall not constitute a
termination of Tenant's right to possession;
(2) The right to terminate this Lease by giving notice to Tenant in accordance
with applicable law and Section 20(d) hereof; and
(3) The right to have a receiver appointed for Tenant, upon application by
Landlord, to take possession of the Premises and to apply any rental collected from the Premises
and to exercise all other rights and remedies granted to Landlord for Tenant pursuant to this
Section 17.
(c) No Waiver of Indemnification. Neither the termination of this Lease nor the
exercise of any remedy under this Lease or otherwise available at law or in equity shall affect the
right of Landlord to any right of indemnification set forth in this Lease or otherwise available at
law or in equity for any act or omission of Tenant, and all rights to indemnification or other
obligations of Tenant which are intended to be performed after termination of this Lease shall
survive termination of this Lease and termination of Tenant's right to possession under this
Lease.
(d) Landlord's Default. It shall be a default and breach of this Lease by Landlord if
Landlord materially fails to perform or observe any term, condition, covenant or obligation
required to be performed or observed by it under this Lease for a period of thirty (30) days after
receipt of written notice thereof from Tenant; provided, however, that if the term, condition,
covenant or obligation to be performed by Landlord is of such nature that the same cannot
reasonably be performed within such thirty (30) day period, such default shall be deemed to have
been cured if Landlord commences such performance within said thirty (30) day period and
thereafter diligently undertakes to complete the same.
Attachment No. 2
18. Signage. Tenant, at its own expense, shall have the right to place signage on the exterior
of the Premises for maximum visibility to the extent allowable by the City of National City. The
exact location, size, design and colors of such signage shall be submitted by Tenant to Landlord
and shall be subject to approval of the Landlord, such approval not to be unreasonably withheld,
conditioned, or delayed. The wiring and installation of such signage shall be done at Tenant's
expense, subject to inspection and reasonable approval of Landlord. Any and all signage shall be
subject to applicable sign ordinances and regulations, and appropriate City of National City
approvals regarding number, size, and color. If Landlord revises the signage plan, after Tenant
has erected a sign to which Landlord has granted consent, Tenant agrees, at Landlord's expense,
to make the necessary changes to its sign in order to conform the sign to Landlord's signage
plan, as enacted or revised.
19. Quiet Enjoyment. Upon payment by Tenant of the Rent, the Premises Costs and any
additional rent herein provided, and upon the observance and performance of all the covenants,
terms and conditions on Tenant's part to be observed and performed, Tenant shall peaceably and
quietly hold and enjoy the Premises for the term hereby demised without hindrance or
interruption by Landlord or any other person or persons lawfully or equitably claiming by,
through or under Landlord, subject, nevertheless, to the terms and conditions of this Lease, and
any mortgage and/or deed of trust to which this Lease is subordinate and subject to Landlord's
right from time to time to perform tenant improvement work in other space in the Building,
which will involve, among other things, construction noise, the use of scaffolding, delays in the
use of the Building's elevators, the presence of work crews and the use of the Building's
elevators by work crews, provided, however, that such work does not materially interfere with
Tenant's use of the Premises.
20. Landlord Exclusive Control.
(a) Building Alterations. Landlord shall have the sole and exclusive control of the
Building, as well as the right to make changes to the Building so long as the same does not
negatively impact the Building or Premises or Tenant's use, occupancy and enjoyment thereof or
Tenant's rights under this Lease. Landlord has the right, but not the obligation, to (i) restrain the
use of the Building and/or common areas by unauthorized persons, (ii) utilize from time to time
any portion of the Building and/or common areas for promotional and related matters, (iii)
temporarily close any portion of the Building and/or common areas for repairs, improvements or
alterations, or (iv) change the shape and size of the Building and/or common areas or change the
location of improvements within the Building and/or common areas, including, without
limitation, parking structures and other parking facilities, roadways and curb cuts. Landlord may
determine the nature, size and extent of the common areas as well as make changes to the
common areas from time to time which, in Landlord's opinion, are deemed desirable so long as
the same does not negatively impact the Building or Premises or Tenant's use, occupancy and
enjoyment thereof or Tenant's rights under this Lease.
Attachment No. 2
(b) Landlord's Rights. Landlord reserves the right to install, use, maintain, repair,
relocate and replace pipes, ducts, conduits, wires and appurtenant meters and equipment included
in the Premises or outside the Premises, change the boundary lines of the Building and install,
use, maintain, repair, alter or relocate, expand and replace any common areas. Such rights of
Landlord shall include, but are not limited to, designating from time to time certain portions of
the common areas as exclusively for the benefit of certain tenants in the Building.
(c) Landlord's Access. Landlord and Landlord's agents shall have the right to enter
the Premises (a) at reasonable times upon reasonable notice, (i) for the purpose of inspecting the
same, (ii) making such alterations, repairs, improvements or additions to the Premises or to the
building located on the Premises as Landlord is obligated or permitted to do under this Lease,
and (iii) showing the same to prospective lenders or purchasers, and (b) within the last 90 days
of the term hereof to prospective lessees. In addition, Landlord, with the prior consent of
Tenant's facility manager which shall not be unreasonably withheld, may use the dining area
located at the Premises at an agreed upon date and time for resident activities, so long as such
use does not interfere with Tenant's operations, is not for political or religious purposes and
provided, further, that Landlord shall return the dining area to the condition it was in prior to
Landlord's use.
(d) Termination and Entry. In the event Landlord terminates this Lease pursuant to
the terms hereof, Landlord may (upon three (3) days' notice as provided in Sections 1161 and
1162 of the California Code of Civil Procedure or upon notice in lieu thereof), re-enter the
Premises and take possession thereof and remove all persons therefrom, and Tenant shall have
no further claim under this Lease. Such termination shall not relieve Tenant of any obligation
hereunder that has accrued prior to the date of such termination. Landlord may take possession
of all personal property of Tenant and of any other person that is located on the Premises, which
property shall be deemed abandoned and in that event such items may be retained by Landlord as
its property or disposed of by Landlord, in such manner as Landlord shall determine, and at
Tenant's expense. Tenant and any sublessee hereby expressly waives any and all rights of
redemption granted by or under present or future laws (including, without limitation, Sections
1174 and 1179 of California Code of Civil Procedure) in the event of Tenant's being evicted or
dispossessed for any cause, or in the event of Landlord's obtaining possession of the Premises by
reason of a default of Tenant under this Lease, or otherwise.
21. Subordination. Tenant agrees that its leasehold interest hereunder is subordinate to any
mortgages now on, or hereafter to be placed on, the Premises, provided that each of Landlord's
mortgagees shall either enter into a subordination, non -disturbance and attomment agreement
upon terms and conditions reasonably acceptable to Tenant, with Tenant, or cause each such
mortgagee to provide that so long as Tenant is not in default under this Lease, Tenant's quiet
possession of the Premises shall remain undisturbed, on the terms, covenants and conditions
stated herein, whether or not the mortgage is in default and notwithstanding any foreclosure or
other action brought by the mortgagee.
22. Estoppel Certificates. Tenant, at any time and from time to time, upon not less than thirty
(30) days' prior written notice from Landlord, agrees to execute and deliver to Landlord (on a
form prepared by Landlord) a statement (a) certifying that this Lease is unmodified and in full
Attachment No. 2
force and effect, or, if modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect and the date to which the Rent, Premises Costs
and other charges are paid in advance, if any, and (b) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such
defaults if they are claimed evidencing the status of this Lease.
23. Notices. All notices under this Lease shall be in writing and sent (a) by certified or
registered U.S. mail, return receipt requested, (b) overnight by a nationally recognized overnight
courier such as UPS Overnight or FedEx, or (c) by personal delivery. All notices shall be
effective upon receipt (or refusal to accept delivery). All notices shall be delivered to the
following addresses or such other addresses as changed by any party from time to time by
written notice to the other parties hereto.
Landlord:
Copy to:
Tenant:
Morgan Tower Housing Associates, L.P.
c/o Conununity HousingWorks
3111 Camino del Rio North, Suite 800
San Diego, CA 92108
Attention: Susan M. Reynolds, President & CEO
And
c/o Mercy Housing California
1500 South Grand Avenue, Suite 100
Los Angeles, CA 90015
Attention: Ed Holder, Regional Vice President of Real
Estate Development
Gubb & Barshay, LLP
505 14th Street, Suite 450
Oakland, CA 94612
Attention: Evan Gross
And to:
U.S. Bancorp Community Development Corporation
1307 Washington Avenue, Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103USB Project No: 25982
Attention: LIHTC Asset Management
City of National City
1243 National City Boulevard
National City, CA 91950
Attention: City Manager
Attachment No. 2
24. No Brokers. Landlord and Tenant each represents and warrants to one another that no
broker has been involved in the negotiation or consummation of this Lease. Tenant and
Landlord each agree to indemnify, defend (with an attorney of the indemnitee's choice) and hold
the other harmless from and against all claims, demands, causes of action and liabilities,
including without limitation attorneys' fees and costs, arising out of a claim for a commission by
any other broker purporting to have acted on behalf of the indemnifying party.
25. Force Majeure. Neither party shall be required to perform any term, covenant or
condition of this Lease so long as such performance is delayed or prevented by force majeure,
which shall mean any acts of God, material restriction by any governmental authority, civil riot,
and any other cause not reasonably within the control of such party and which by the exercise of
due diligence such party is unable, wholly or in part, to prevent or overcome.
26. General Conditions.
(a) Counterparts. This Lease may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
(b) Captions. The captions in this Lease are inserted for convenience of reference
and in no way define, describe or limit the scope or intent of this Lease or any of the provisions
of this Lease.
(c) Partial Invalidity. Any provision of this Lease which is unenforceable, invalid, or
the inclusion of which would adversely affect the validity, legality, or enforcement of this Lease
shall have no effect, but all the remaining provisions of this Lease shall remain in full effect.
(d) No Third -Party Rights. Nothing in this Lease, express or implied, is intended to
confer upon any person, other than the parties to this Lease and their respective successors and
assigns, any rights or remedies.
(e) Time Of Essence. Time is of the essence in this Lease.
(f) Relationship. Nothing contained in this Lease shall be deemed or construed by
the parties or by any third person to create a relationship of principal and agent or partnership or
a joint venture between Landlord and Tenant or between either or both of them and any third
party.
(g) Tenant Approval. Whenever a reference is made herein to an action or approval
to be undertaken by the Tenant, the City Manager of the City of National or his or her designee is
authorized to act on behalf of the Tenant (without further approval from the City Council) unless
specifically provided otherwise or the context should require otherwise.
(h) Exhibits Incorporated. All exhibits referred to in and attached to this Lease are
hereby incorporated in this Lease by this reference.
Attachment No. 2
(i) Further Assurances. Landlord and Tenant agree to execute all such instruments
and documents and to take all actions which are reasonably necessary to carry out this Lease or
accomplish its intent.
(j) Incorporation of Prior Agreements. This Lease contains all agreements of
Landlord and Tenant with respect to any matter mentioned, or dealt with, herein. No prior
agreement or understanding pertaining to any such matter shall be binding upon Landlord or
Tenant.
(k) Amendment. This Lease may only be amended by written agreement signed by
Landlord and by Tenant.
(1) No Waiver. No waiver by either party of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach of the same or any other
provision. Landlord's consent to or approval of any act shall not be deemed to render
unnecessary obtaining such Landlord's consent to or approval of any subsequent act. No waiver
by either party shall be effective unless it is in writing, executed on behalf of such party.
(m) Consents. All consents to be given by either party shall be reasonably and timely
given.
(n) No Leasehold Mortgages. Tenant shall not encumber its leasehold interest in the
Premises, without the prior written approval of the Landlord.
(o) Nondiscrimination. There shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, religion, sex, sexual orientation,
marital status, national origin or ancestry in the leasing, subleasing, renting, transferring, use,
occupancy, tenure or enjoyment of the Premises, nor shall Tenant itself, or any person claiming
under or through it, establish or permit such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
sublessees, subtenants or vendees in the Premises.
(p) Signature Authority. All individuals signing this Lease for a party which is a
corporation, limited liability company, partnership or other legal entity, or signing under a power
of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the
each other party hereto that they have the necessary capacity and authority to act for, sign and
bind the respective entity or principal on whose behalf they are signing.
(q) Approval Rights of Limited Partner and Lenders. Tenant acknowledges that
Landlord may be required to obtain the approval of Landlord's limited partner with respect to the
various matters for which Landlord's approval is required hereunder and with respect to any
amendment, assignment, sublease, modification or voluntary termination for surrender of this
Lease. Tenant further acknowledges that Landlord may have to obtain the consent of its lenders
who hold the Building as collateral with respect to any amendment, modification or voluntary
termination or surrender of this Lease.
Attachment No. 2
(r) Applicable Law. This Lease shall be governed by and construed in accordance
with the laws of the State of California.
(s) Attorneys' Fees. If any action is brought by either party against the other party,
the prevailing party shall be entitled to recover from the other party reasonable attorneys' fees,
costs and expenses incurred in connection with the prosecution or defense of such action. For
purposes of this Lease, the term "attorneys' fees" or "attorneys' fees and costs" shall mean the
fees and expenses of counsel to the parties hereto, which may include printing, copying and other
expenses, air freight charges, and fees billed for law clerks, paralegals and other persons not
admitted to the bar but performing services under the supervision of an attorney.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
TENANT:
City of National City
By:
Leslie Deese, City Manager
APPROVED AS TO FORM:
By:
Angil P Morris -Jones, City Attorney
APPROVED AS TO FORM:
Christensen & Spath LLP
Landlord Special Counsel
By:
Walter F. Spath III
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
Attachment No. 2
LANDLORD:
MORGAN TOWER HOUSING ASSOCIATES, L.P.,
a California limited partnership
By: CHW Morgan Development LLC,
Its: managing general partner
By: Community HousingWorks
Its: sole member and manager
By:
Susan M. Reynolds
President & CEO
By: Mercy Morgan Development LLC
Its administrative general partner
By: Mercy Housing Calwest
Its: sole member and manager
By:
Erika Villablanca,
Vice President
Attachment No. 2
ERIE
•
Exhibit A(1)
Site Parking for Nutrition Center
PIER Elf W0810
N utrttfon Center Parking
34 Visitor parking spaces
10 Staff parking spaces
5 ADA compliant parking spaces
rash Enclosure
utrltlon Center
Delivery Loadingl
Unloading
u r ' on enter
Staff Parking
visvere
Attachment No. 2
Exhibit A (2)
Nutrition Center Leased Premises
Attachment No. 2
Exhibit B
RULES & REGULATIONS
1) Landlord shall provide two (2) keys to Tenant for the Premises. Tenant shall provide
one copy to Landlord of all new locks or bolts Tenant install in any door or window of
the Premises within three (3) days of such installation. Upon termination of the Lease,
all keys to the Premises shall be surrendered to Landlord.
2) Tenant shall keep the Premises clean and sanitary.
3) Tenant shall have no access to Landlord's agents for maintenance work in the Premises.
Landlord's agents shall not perform any work other than its regular duties, except when
so directed by Landlord.
4) Tenant shall not disturb, solicit, or canvas any occupant of the Building.
5) Tenant shall store all trash within Tenant's separately designated trash bins inside the
trash room, and dispose of such trash and recycling through regularly scheduled pick-
ups. No trash bins shall be left on the sidewalk. No material shall be placed in trash
bins if disposal in the ordinary and customary manner in National City would violate
any applicable law or ordinance. Tenant shall keep the top of its designated trash bins
and the area underneath and immediately surroundings their trash bins clean, clear and
free from trash. Tenant shall make no use of the Building's trash dumpster, bins or
other containers used by Landlord for the storage of the Building's trash.
6) Any trash bins outside the Premises must be locked at all times.
7) Tenant shall comply with all safety, fire protection and evacuation procedures and
regulations established by Landlord or any governmental agency.
Attachment No. 2
Exhibit C
Nutrition Center Facility Equipment
DESCRIPTION
NUTRITION CENTER
PROGRAM PROPERTY
EXISTING
FACILITY PROPERTY
ICE MACHINE AND BIN
X
MOBILE PAN RACK
X
ISLAND PREP TABLE
X
FOOD SLICER
X
FOOD BLENDER
X
PLANETARY MIXER
X
PREP COUNTER WITH HAND SINK
X
S/S SIDE SPLASH FOR HAND SINK
X
SOAP AND TOWEL DISPENSER, WALL -MOUNT
X
MICROWAVE OVEN
X
CONVECTION STEAMER
X
STATIONARY KETTLE
X
COUNTERTOP CHARBROILER
X
FRYER
X
6-OPEN BURNER RANGE
X
DOUBLE CONVECTION OVEN
X
FIRE SUPPRESSION SYSTEM
X
CHEF'S COUNTER
X
HAND SINK WITH SOAP/TOWEL DISPENSER
X
3-COMPARTMENT SINK
X
SOILED DISHTABLE WITH SINK
X
DISPOSER
X
DISHWASHER, LOW -TEMP, ELECTRIC
X
CLEAN DISHTABLE
X
POT/PAN SHELVING
X
WALK-IN COOLER WITH SHELVING
X
WALK-IN FREEZER WITH SHELVING
X
DRY STORAGE SHELVING
X
DECORATIVE LAMP
X
MILK DISPENSER
X
COFFEE BREWER
X
BEVERAGE COUNTER
X
MOP SINK
X
STORAGE SHELVING
X
WASHDOWN HOSE & RACK
X
MOP RACK
X
S/S SERVING COUNTER
X
SNEEZEGUARD, ADJUSTABLE
X
HOT FOOD WELLS, DROP -IN
X
FILL FAUCET
X
BACK COUNTER
X
UNDERCOUNTER REFRIGERATOR
X
DROP -IN GLASS RACK LOWERATOR
X
DRY STORAGE SHELVING
X
Attachment No. 3
NUTRITION CENTER FUNDING AGREEMENT
(George H. Waters Nutrition Center)
THIS NUTRITION CENTER FUNDING AGREEMENT ("Agreement") is dated as of the
day of , 2019, by and between the City of National City ("City") and the Community
Development Commission -Housing Authority of the City of National City ("Housing Authority").
RECITALS
A. Housing Authority is the fee title owner of that certain real property located at 1317 D
Avenue and 1415 D Avenue in the City of National City, which is more commonly known and
referred to as the Kimball and Morgan Towers.
B. Since 1979 the City has operated, or caused to be operated, the George H. Waters
Nutrition Center ("Nutrition Center") at the Kimball and Morgan Towers.
C. The Kimball and Morgan Towers are "housing projects" as defined in California
Health and Safety Code Section 34212. California Health and Safety Code Section 34212 defines
housing project to include "real or personal property for necessary, convenient or desirable
appurtenances, streets, sewers, water service, parks, site preparation, gardening, administrative,
community, health, recreational, educational, welfare or other purposes." The Nutrition Center
provides important and necessary community, health, recreational educational, welfare and other
benefits to low income residents of the Kimball and Morgan Towers housing projects and other low
income persons in the City of National City. As such, the Nutrition Center is a portion of the
housing project for purposes of California Health and Safety Code Section 34212.
D. The Housing Authority is ground leasing the Kimball and Morgan Towers to two (2)
affordable housing project developer/operators, who are required to rehabilitate the Kimball and
Morgan Towers and operate the Kimball and Morgan Towers as low income affordable housing
projects. A portion of the consideration payable by the Kimball and Morgan Towers
developer/operators is in the form of seller carryback notes ("Kimball and Morgan Notes").
E. The Housing Authority and the City believe it will be beneficial to the health and
welfare of the community and the citizens of the City of National City for the Nutrition Center to
continue to be operated by the City for the benefit of its low income residents, rather than having the
Nutrition Center run by private interests. Therefore, as a material consideration for the Housing
Authority's entry into the ground leases for the Kimball and Morgan Towers, the Housing Authority
is requiring the ground lessee of the Morgan Tower (the building in which the Nutrition Center is
located) to enter into a 99 year lease with the City with respect to the Nutrition Center with an annual
rent of $1.00.
F. California Health and Safety Code Section 34312 empowers the Housing Authority to
use its funds to operate housing projects. As part of the foregoing transaction and in lieu of having
the ground lessee of the Morgan Tower operate and pay for the Nutrition Center, the Housing
Authority has agreed to pay to the City a portion of the consideration received annually by the
Attachment No. 3
Housing Authority from the Kimball and Morgan Notes. Which the City shall use to fund operation
of the Nutrition Center (which is part of a housing project as defined in the California Health and
Safety Code) in furtherance of the City's and the Housing Authority's goal of improving the health
and welfare of the community and the citizens of the City of National City.
AGREEMENT
NOW, THEREFORE, for valid consideration, in furtherance of the recitals stated above, the mutual
covenants set forth below, the City and the Housing Authority agree, promise and declare as follows:
1. Annual Payments. The Housing Authority shall make fifty-five (55) annual payments to the
City. The first such payment shall be in the amount of $475,000.00, and further payments shall be
increased by 3.5% each year thereafter. Such payments shall be made from the proceeds of the
Kimball and Morgan Notes. The first annual payment shall be due and payable by the Housing
Authority to the City ten (10) business days after receiving such annual payments from the Kimball
and Morgan Towers ground lessees.
2. Use of Funds. The City shall use the funds received by the City pursuant to Section 1, above,
solely for the purpose of funding operation of the Nutrition Center (which is part of a housing project
as defined in the California Health and Safety Code). No portion of such funds shall be used for any
purpose other than funding operation of the Nutrition Center without the express written consent of
the Housing Authority, which consent shall be granted only in the event that the use of those funds
by the City is allowed under the Housing Authorities Law, Health and Safety Code Section 34200, et
seq.
3. General Conditions.
(a) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
(b) Captions. The captions in this Agreement are inserted for convenience of reference
and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions
of this Agreement.
(c) Partial Invalidity. Any provision of this Agreement which is unenforceable, invalid,
or the inclusion of which would adversely affect the validity, legality, or enforcement of this
Agreement shall have no effect, but all the remaining provisions of this Agreement shall remain in
full effect.
(d) No Third -Party Rights. Nothing in this Agreement, express or implied, is intended to
confer upon any person, other than the parties to this Agreement and their respective successors and
assigns, any rights or remedies.
Attachment No. 3
(e) Signature Authority. All individuals signing this Agreement for a party which is a
corporation, limited liability company, partnership or other legal entity, or signing under a power of
attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the each
other party hereto that they have the necessary capacity and authority to act for, sign and bind the
respective entity or principal on whose behalf they are signing.
CITY:
THE CITY OF NATIONAL CITY
By:
Leslie Deese, City Manager
HOUSING AUTHORITY:
COMMUNITY DEVELOPMENT COMMISSION -
HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY
By:
Leslie Deese, Executive Director
APPROVED AS TO FORM:
By:
Angil P Morris -Jones, City Attorney
APPROVED AS TO FORM:
Christensen & Spath LLP
City and Housing Authority Special Counsel
By:
Walter F. Spath III
RESOLUTION NO. 2019 —
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING
THE CITY MANAGER TO EXECUTE A LEASE AGREEMENT WITH MORGAN TOWER
HOUSING ASSOCIATES, L.P. FOR THE GEORGE H. WATERS NUTRITION CENTER,
LOCATED AT 1415 "D" AVENUE IN NATIONAL CITY, FOR AN INITIAL TERM OF 10 YEARS
WITH AUTOMATIC RENEWALS FOR SUCCESSIVE FIVE (5) YEAR TERMS ENDING 99
YEARS AFTER THE COMMENCEMENT DATE OF THE LEASE AT A RENT OF $1.00 PER
YEAR; AND AUTHORIZING THE CITY MANAGER TO EXECUTE A NUTRITION CENTER
FUNDING AGREEMENT WITH THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING
AUTHORITY OF THE CITY OF NATIONAL CITY FOR THE PURPOSE OF FUNDING THE
OPERATION OF SAID NUTRITION CENTER IN THE AMOUNT OF $475,000 FOR THE FIRST
YEAR AND INCREASED BY 3.5% EACH YEAR THEREAFTER FOR A TOTAL OF FIFTY-FIVE
(55) YEARS
WHEREAS, the Community Development Commission -Housing Authority of the
City of National City ("Housing Authority") is the fee title owner of that certain real property located
at 1317 D Avenue and 1415 "D" Avenue in the City of National City ("City"), which is more
commonly known and referred to as the Kimball and Morgan Towers; and
WHEREAS, since 1979 the City has operated, or caused to be operated, the
George H. Waters Nutrition Center ("Nutrition Center") at the Kimball and Morgan Towers; and
WHEREAS, the Kimball and Morgan Towers are "housing projects" as defined in
California Health and Safety Code Section 34212. California Health and Safety Code Section
34212 defines housing project to include "real or personal property for necessary, convenient or
desirable appurtenances, streets, sewers, water service, parks, site preparation, gardening,
administrative, community, health, recreational, educational, welfare or other purposes." The
Nutrition Center provides important and necessary community, health, recreational, educational,
welfare and other benefits to low income residents of the Kimball and Morgan Towers housing
projects and other low income persons in the City of National City. As such, the Nutrition Center
is a portion of the housing project for purposes of California Health and Safety Code Section
34212; and
WHEREAS, under the Disposition and Development Agreement for Kimball and
Morgan Towers approved by the Housing Authority on June 19, 2018, the Housing Authority is
ground leasing the Kimball and Morgan Towers to two (2) affordable housing project the
developer/operators, who are required to rehabilitate the Kimball and Morgan Towers and operate
the Kimball and Morgan Towers as low income affordable housing projects. A portion of the
consideration payable by the Kimball and Morgan Towers developer/operators is in the form of
seller carryback notes ("Kimball and Morgan Notes"); and
WHEREAS, the Housing Authority and the City believe it will be beneficial to the
health and welfare of the community and the citizens of the City of National City for the Nutrition
Center to continue to be operated by the City for the benefit of its low income residents, rather
than having the Nutrition Center run by private interests. Therefore, as a material consideration
for the Housing Authority's entry into the ground leases for the Kimball and Morgan Towers, the
Housing Authority is requiring Morgan Tower Housing Associates, L.P., ground lessee of the
Morgan Tower, (the building in which the Nutrition Center is located) to enter into a 99 year lease
with the City with respect to the Nutrition Center with an annual rent of $1.00; and
Resolution No. 2019 —
Page Two
WHEREAS, California Health and Safety Code Section 34312 empowers the
Housing Authority to use its funds to operate housing projects. As part of the foregoing
transaction and in lieu of having the ground lessee of the Morgan Tower operate and pay for the
Nutrition Center, the Housing Authority has agreed to pay to the City a portion of the consideration
received annually by the Housing Authority from the Kimball and Morgan Notes. The City shall
use the fund for the operation of the Nutrition Center (which is part of a housing project as defined
in the California Health and Safety Code) in furtherance of the City's and the Housing Authority's
goal of improving the health and welfare of the community and the citizens of the City of National
City; and
WHEREAS, under the Nutrition Center Funding Agreement, the Housing Authority
shall make fifty-five (55) annual payments to the City. The first such payment shall be in the
amount of $475,000.00, and further payments shall be increased by 3.5% each year thereafter.
Such payments shall be made from the proceeds of the Kimball and Morgan Notes. The first
annual payment shall be due and payable by the Housing Authority to the City ten (10) business
days after receiving such annual payments from the Kimball and Morgan Towers ground lessees;
and
WHEREAS, the City shall use the funds received by the City pursuant to the
funding agreement referenced herein, solely for the purpose of funding operation of the Nutrition
Center (which is part of a housing project as defined in the California Health and Safety Code).
No portion of such funds shall be used for any purpose other than funding operation of the
Nutrition Center without the express written consent of the Housing Authority, which consent shall
be granted only in the event that the use of those funds by the City is allowed under the Housing
Authorities Law, Health and Safety Code Section 34200, et seq.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
National City authorizes the City Manager to execute a Lease Agreement with Morgan Tower
Housing Associates, L.P. for the George H. Waters Nutrition Center, located at 1415 "D" Avenue
in National City, for an initial term of 10 years with automatic renewals for successive five (5) year
terms ending 99 years after the Commencement Date of the Lease at a rent of $1.00 per year.
BE IT FURTHER RESOLVED that the City Council of the City of National City also
authorizes the City Manager to execute a Nutrition Center Funding Agreement with the
Community Development Commission -Housing Authority of the City of National City for the
purpose of funding the operation of said Nutrition Center in the amount of $475,000 for the first
year and increased by 3.5% each year thereafter for a total of fifty-five (55) years.
BE IT FURTHER RESOLVED that Lease Agreement and Nutrition Center Funding
Agreement will be fully executed prior to the close of escrow with other necessary documents as
may be required by the Disposition and Development Agreement for Kimball and Morgan Towers
dated June 19, 2018. A fully executed copy of the Lease Agreement and the Nutrition Center
Funding Agreement will be on file with the City Clerk after the close of escrow.
Resolution No. 2019 —
Page Three
PASSED and ADOPTED this 5th day of March, 2019.
Alejandra Sotelo-Solis, Mayor
ATTEST:
Michael R. Dalla, City Clerk
APPROVED AS TO FORM:
Angil P. Morris -Jones
City Attorney
CITY OF NATIONAL CITY
Office of the City Clerk
1243 National City Blvd., National City, California 91950-4397
619-336-4228
Michael R. Dalla, CMC - City Clerk
MORGAN TOWER ASSOCIATES
George H. Waters Nutrition Center Lease Agreement
Carlos Aguirre (Housing Authority) has a duplicate original Agreement on file.
CITY OF NATIONAL CITY
Office of the City Clerk
1243 National City Blvd., National City, California 91950-4397
619-336-4228
Michael R. Dalla, CMC - City Clerk
COMMUNITY DEVELOPMENT COMMISSION -HOUSING
AUTHORITY (CDC -HA)
George H. Waters Nutrition Center Funding Agreement
Carlos Aguirre (Housing Authority) has a duplicate original Agreement on file.
3/5/2019
KIMBALL AND MORGAN TOWERS
George H. Waters Nutrition Center Lease
and Funding Agreements
March 5, 2019
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DISPOSITION AND DEVELOPMENT
AGREEMENT (DDA) MILESTONES
▪ Since June 2018, Community HousingWorks and Mercy California
("Developer") have secured all necessary financing to fund the
rehabilitation of the Kimball and Morgan Towers and the Nutrition
Center including 4% tax credit reservations, Section 8 Housing
Assistance Payment ("HAP") contracts, and bond financing.
• The Developer also submitted complete building and engineering
plans for all renovations and has been provided with a permit ready
status letter from the National City Building Department.
• The Developer has met regularly with all Morgan and Kimball
Tower residents and the Nutrition Center to keep them informed of
the rehabilitation and relocation process and get their input on the
proposed design and scope of rehabilitation.
1
3/5/2019 `
FINANCING PLAN- KIMBALL TOWER
• The total development cost for Kimball Tower, net of syndication
costs, is estimated at $60,551,601.
• Funding sources include a private placement lender, a seller note,
General Partner loan (AHP), and equity proceeds from the
syndication of low-income housing federal tax credits.
• The Housing Authority will receive approximately $11,282,218 at
dose of escrow.
• The Housing Authority will provide seller financing ("Kimball Note"),
as required by the DDA, in the amount of $18,767,452.
FINANCING PLAN- MORGAN TOWER
• The total development cost for Morgan Tower, net of syndication
costs, is estimated at $67,919,201.
• Funding sources include a private placement lender, a seller note,
General Partner loan (AHP), and equity proceeds from the
syndication of low-income housing federal tax credits.
• The Housing Authority will receive approximately $19,118,524 at
close of escrow.
• The Housing Authority will provide seller financing ("Morgan Note"),
as required by the DDA, in the amount of $14,311,860.
2
3/5/2019
KMA REVIEW & CLOSE OF ESCROW
• Keyser Marston Associates ("KMA"), the Housing Authority's
financial consultant, completed a financial review of the
Developer's final financial plans for Kimball and Morgan Towers in
February 2019.
• The KMA review concluded that the total value to the Housing
Authority -- consisting of upfront cash payment, cash from
liquidated reserves, and the present value of annual payments of
the seller notes and ground lease payments -- increased from
$40.7 M (May 2018) to $44.4 M (February 2019), a difference of
$3.7 M in additional value to the Housing Authority.
• The close of escrow is scheduled for March 27, 2019. The
rehabilitation of the Nutrition Center is scheduled to be completed
by December 2019 and rehabilitation of both Towers is scheduled
to be completed by July 2020.
tor
NUTRITION CENTER LEASE AGREEMENT
• As consideration for the Housing Authority's entry into the ground
leases for the Towers, the Developer will provide a comprehensive
renovation of the Nutrition Center financed by the Morgan Tower
Project.
• As additional consideration, the Housing Authority is requiring the
ground lessee of the Morgan Tower (the building in which the
Nutrition Center is located) to enter into a 99 year Lease ("Lease")
with the City for $1.00 a year.
• Under the triple net Lease the City shall pay its own utilities,
janitorial, trash removal, repairs, maintenance, and other operating
expenses directly relating to the use of the Nutrition Center.
3
3/5/2019
NUTRITION CENTER FUNDING AGREEMENT
▪ In lieu of having the Developer operate the Nutrition Center, the
Developer will make annual payment to the Housing Authority
totaling $475,000 the first year with a 3.5% annual escalation. The
annual payment will serve as partial repayment of the Morgan and
Kimball Notes.
® Under the Nutrition Center Funding Agreement the City would
receive the annual payments from the Housing Authority to fund
Nutrition Center operations.
▪ Funds provided under the Agreement to the City cannot be used for
any purpose other than supporting the operation of the Nutrition
Center.
Questions?
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