HomeMy WebLinkAbout2022 CON D Avenue Associates - Ground Lease Kimball Highland Master Plan Project Site 2GROUND LEASE
(Kimball Highland Master Plan Project Site 2)
By and Between
COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY F THE
CITY OF NATIONAL CITY
"Landlord"
and
D AVENUE HOUSING ASSOCIATES, L.P.
"Tenant"
Dated as of June , 2022
Page 1
GROUND LEASE
THIS GROUND LEASE (the "Lease"), dated, for identification purposes only, as of the
June �, 2022, is entered into by and between the COMMUNITY DEVELOPMENT
COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY, a public body,
corporate and politic ("Landlord" or "CDC -HA"), and D AVENUE HOUSING ASSOCIATES,
L.P., a California limited partnership ("Tenant" or "Developer").
RECITALS
A. WHEREAS, EAS, CDC -HA is a California community development commission acting
to implement the California Housing Authorities Law, Part 2 of Division 24 of the Health and
Safety Code;
B. WHEREAS, Developer is controlled by an experienced owner, developer and
manager of affordable housing for extremely -low, very -low and low-income families;
C. WHEREAS, CDC -CIA is the owner of certain real property situated. in the City of
National City, County of San Diego, State of California, and legally described in Exhibit "A" (the
"Property");
D. WHEREAS, CDC -HA, Centro De Salud De La Connunidad De San Ysidro, Inc.,
dba San Ysidro Health, and Community HousingWorks, a California nonprofit public benefit
corporation, entered into that certain "Disposition and. Development Agreement" dated as of
October 20, 2020, as amended (as amended, the " A")
E. WHEREAS, Developer is the affiliate of Community HousingWorks, a California
nonprofit public benefit corporation, and Developer is the "Site 1 Owner" and the "Site 2 Owner"
as defined in the DDA;
`. WHEREAS, the DDA provided that upon the satisfaction of certain conditions,
Landlord would ground lease the Property to Developer; and
G . WHEREAS, all conditions precedent to the parties entering into this Lease have
been satisfied or waived.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and
conditions herein contained, CDC -HA and Developer agree as follows:
ARTICLE L 1. LEASE OF THE PROPERTY
1,1 Lease of the Property. Landlord leases to Tenant, and Tenant hires from Landlord,
the Property on the terms and conditions as set forth in this Lease.
1.2 Purpose of Lease. The purpose of this Lease is to provide for the construction,
maintenance, management and operation of an 4-unit (which includes one (1) managers' unit),
Page
multi -family, low-income rental housing project and City Senior Center, Tenant will not occupy
or use the Property, or permit the Property to be used or occupied, nor do or permit anything to be
done in or on the Property, in whole or in part, for any other purpose. The foregoing
notwithstanding, after the foreclosure of a Mortgage, or acceptance by a Mortgagee of an
assignment or deed in lieu of foreclosure, the Property may be used for any lawful purpose.
L3 Recorded Encumbrances. This Lease, the interests of Landlord and Tenant
hereunder, and the Property, are in all respects subject to and bound by all of the covenants,
conditions, restrictions, reservations, rights, rights -of -way and easements of record including,
without limitation: the public paseo easement to be recorded concurrently with the execution of
this Lease in the form reasonably approved by CDC -HA and the Tenant and those items shown as
exceptions to title approved by the CDC -IAA. and set forth in a preliminary report for the Property.
1.4 Memorandum of Lease. A short form Memorandum of Lease referring to this
Lease is being executed by Landlord and Tenant concurrently herewith, and recorded in the
Official Records.
1.5 Assignment of Utility Rights. Landlord, by virtue of its fee title to the Property,
may hold certain rights, entitlements or credits with respect to utility capacity, connections, etc.
(the "Utility Rights"). Landlord hereby assigns said Utility Rights to Tenant as an incidence of its
leasehold interest in the Property.
ARTICLE 2. DEFINITIONS
All capitalized terms used herein may be defined where first used in this Lease and/or as
set forth in this Article 2. Unless otherwise defined herein, all capitalized terms shall have the same
meanings ascribed to them in the DDA. For the purpose of supplying such definitions, the DDA,
notwithstanding anything contained therein or herein to the contrary, shall not merge with this
Lease.
"Award" means any compensation or payment made or paid for the Total, Partial or
Temporary Taking of all or anypart of or interest in the Property and/or the Improvements, p y
whether pursuant to judgment, agreement or otherwise.
"Capital Improvements" means all work and improvements with respect to the Property
for which costs and expenses may be capitalized in accordance with GAAP.
"Commencement Date" has the meaning set forth in Article 3 of this Lease.
"Compliance Period" has the meaning set forth in Section 2 i 1 of the Internal Revenue
Code of 1986, as amended.
"Construction" means the initial construction of the Improvements and the Property
pursuant to the Plans, which shall be completed within seventy hundred twenty (720) days
following Construction Loan Closing,
Page 3
"Construction Loan" refers to the loan to the Tenant from the Senior Lender, the proceeds
of which are usedto construct the Project.
"Construction Loan Closing" refers to the date upon which the deed of trust securing the
Construction Loan is recorded in the Official Records.
"Conversion Date" means the date upon which the Construction Loan converts to an
amortii.g term loan in accordance with the terms of the Senior Loan Documents and Senior Loan
Security Documents.
"Environmental Law" means any federal, state or local environmental, health and/or
safety -related law, rule, regulation, requirement, order, ordinance, directive, guideline, permit or
permit condition, currently existing and as amended, enacted, issued or adopted in the future. The
term Environmental Law includes, but is not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, and similar state or local laws.
"Event of Default" has the meaning set forth in Article 21,
"Executive Director" means the Executive Director of Landlord or his/her designee.
"Hazardous Materials" means any chemical, substance, object, condition, material,
waste, or controlled substance which is or may be hazardous to human health or safety or to the
envir-omnent, due to its radioactivity, ignitability, corrosiveness, explosivity, flammability,
reactivity, toxicity, infectiousness, or other harmful or potentially harmful properties or effects,
including, without limitation, all chemicals, substances, materials, or wastes that are now or
hereafter may be listed, defined, or regulated in any manner by any federal, state, or local
government agency or entity, or under any federal, state, or local law, regulation, ordinance, rule,
policy or procedure due to such properties or effects.
"Impositions" means all taxes (including, without limitation, sales and use taxes);
assessments (including, without limitation, all assessments for public improvements or benefits
whether or not commenced or completed prior to the Commencement Date andwhether or not to
be completed within the Term); water, sewer or other rents, rates and charges; excises; levies;
license fees; permit fees; inspection fees and other authorization fees and other charges; in each
case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every
character (including all interests and penalties thereon), which are attributable or applicable le to any
portion of the Term and may be assessed, levied, confirmed or imposed on or in respect of, or be
a lien upon (a) the Property or the Improvements, or any part thereof, or any estate, right or interest
therein, any occupancy, use or possession of or activity conducted on the Property or the
Improveme.ts, or any part thereof, or (c) this Lease. The term "Impositions" shall also include any
and all increases in the foregoing, whether foreseen or unforeseen, ordinary or extraordinary,
including, without limitation, any increase in real property taxes resulting from a sale of the
Property by Landlord.
"Improvements" means all buildings, structures and other improvements, including the
building fixtures thereon, now located on the Property or hereafter constructed on the Property; all
Page 4
landscaping, fencing, walls, paving, curbing, drainage facilities, lighting, parking areas, roadways
and similar site improvements now located or hereafter placed upon the Property.
" Indemni e " means Landlord, the City of National City, California ("city"and their
respective employees, agents, members and officials.
"Insurance Requirements" means all terms of any insurance policy covering or
applicable to the Property or the Improvements, or any part thereof, all requirements imposed by
the issuer of any such policy, and all orders, rules, regulations and other requirements of the
National Board- of Fire Underwriters (or any other body exercising similar functions) applicable to
or affecting the Property or the Improvements, or any part thereof, or any use or condition of the
Property or the Improvements, or any part thereof.
"Lease Year" means the year commencing on the first day of the first full calendar month
following the Co nrnencement Date, or anniversary thereof, and ending at midnight on the last day
of the month in which an anniversary of the Commencement Date occurs.
"Legal equir" means all laws, statutes, codes, acts, ordinances, . orders,
judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and
requirements of and agreements with all governments, departtnents, commissions, boards, courts,
authorities, agents, officials and officers, foreseen or unforeseen, ordinary or extraordinary, which
now or at any time hereafter may be applicable to the Property or the Improvements, or any part
thereof, or to any of the adjoining sidewalks, streets or ways, or to any use or condition of the
Property or the Improvements, or any part thereof.
"Memorandum of Lease" refers to the memorandum of lease which has been recorded as
described in Section 1.4.
"Mortgage" " has the meaning set forth in Section 1 .1.1 of this Lease. "Mortgagee" has
the meaning set forth in Section 1 .1.1 of this Lease.
"Notice of Intended Takirr " means any notice or notification on which a reasonably
prudent person would rely and which said person would interpret as expressing an existing
intention of Taking as distinguished from a mere preliminary inquiry or proposal. It includes,
without limitation, the service of a condemnation summons and complaint on a party to this Lease.
The notice 'is considered to have been received when a party to this Lease receives from the
condemning agency or entity a notice of intent to take, in writing, containing a description or map
of the taking which reasonably defines the extent of the taking.
"Official Records" means the Official Records of San Diego County, California.
"Partial Taking" means any taking of the fee title of the Property and/or the Improvements
that is not either a Total, Substantial or Temporary Taking.
Ply" means the plans and specifications for the Construction, a set of which, initialed
by Tenant, are on file in the offices of Landlord.
Page
"Potential Default" means any condition or event which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
"Pro ect" refers to the Property and the Improvements constructed and maintained thereon.
"Property" has the meaning set forth in Recital " ," above,
"Senior Lender" means Bank of America, I.A. and its successors and assigns.
"Substantial__ Taking" means the taking of so much of the Property and/or the
Improvements that the portion of the Property and/or the Improvements not taken cannot be
repaired or reconstructed, taking into consideration the amount of the Award available for repair
or reconstruction, so as to constitute a complete, rentable structure, capable of producing a
proportionately fair and reasonable net annual income after payment of all operating expenses, and
all other charges payable under this Lease, and after performance of all covenants and conditions
required by Tenant by law and under this Lease.
" is means a taking or damaging, including severance damage, by eminent domain
or by inverse condensation or for any public or quasi -public use under any statute. The taking
may occur as a result of a transfer pursuant to the recording of a final order in condemnation, a
voluntary transfer or conveyance to the taking authority under threat of condemnation, or a transfer
while condemnation proceedings are pending. Unless otherwise provided, the taking shall be
deemed to occur as of the earlier of (a) the date actual physical possession is taken by the
condemnor, or (b) the date on which the right to compensation and damages accrues under the law
applicable to the Property and/or the Improvements. A taking as used in this Lease does not include
the voluntary dedication of any portion of the Property necessary to obtain building permits or to
comply with any other applicable governmental rule, regulation or statute; nor does it include the
enactment of any law, ordinance or regulation which may affect the use or value of the Property
but which does not involve an actual taking of any portion thereof. Eminent domain actions filed
by Landlord against owners of portions of the Property and pending as of the Commencement Date
shall not be deemed, construed or interpreted as a Taking under this Lease.
"Tax Credit Partner" means Bank of America, NA. and Banc of America CDC Special
Holding Company, Inc., and each of their respective successors and assigns.
"Temporary Taking" means a taking of all or any part of the Property and/or the
Improvements for a term certain which term is specified at the time of taking. Temporary Taking
does not include a taking which is to last for an indefinite period or a taking which will terminate
only upon the happening of a specified event unless it can be determined at the time of the taking
substantially when such event will occur. If a taking for an indefinite term should take place, it
shall be treated as a Total, Substantial or Partial Taking in accordance with the definitions set forth
herein.
"Term" has the meaning set forth in Article 3 of this Lease.
Page
"Total T`akin " means the taking of the fee title to all of the Property.
"Unit" means a dwelling unit on the Property.
ARTICLE 3. TERM
The term of this Lease (the "Term") shall commence on the date the Memorandum of
Lease records in the Official Records (th.e "Commencement ent Date"), and shall continue thereafter
until the sixty-fifth (65th) anniversary of the date on which a certificate of occupancy is issued for
the Improvements.
ARTICLE . RENTAL
4.1 Rent The rent shall be a capitalized amount of $3,000,000 based on the appraisal
of leasehold value dated November 17, 2020 (the "Rent"). The Rent shall be payable at the
Construction Loan Closing via a Promissory Note in the amount of $3,000,000 (the "Note"), which
Note shall be secured by a deed of trust (the "Deed of Trust"). The Note shall be for a term of 55
years, bearing simple interest of 3% per annum with a minimum annual payment of $30,000 per
year. The Note and the Deed of Trust shall be in forms reasonably approved by Landlord and
Tenant.
4.2 Right to Audit. Tenant shall keep full and accurate books of account, records and
other pertinent data with respect to operations of the Project. Such books of account, records, and
other pertinent data shall be kept for a period of three years after the end of each Lease Year.
Landlord shall be entitled within two (2) years after the end of each Lease Year to inspect and
examine all Tenant's books of account, records, and other pertinent data. Tenant shall cooperate
fully with Landlord in making the inspection. Landlord shall also be entitled, at the Landlord's
sole cost and expense, also within two 2 years after the end of each Lease Year, to an independent
audit of Tenant's books of account, records, and other pertinent data.
.3 Utilities. Tenant shall be responsible for the payment of all water, gas, electricity
and other utilities used by Tenant on the Property.
4.4 Taxes and Assessments.
4.4.1 Notice of Possessory Interest; Payment of Taxes and Assessments on
Value of Entire Property. In accordance with California Revenue and Taxation Code Section
1 . (a), Landlord states that by entering into this Lease, a possessory interest subject to property
taxesmay be created. Tenant or other party in whom the possessory interest is vested may be
subject to the payment of property taxes levied on such interest.
4. .2 Payment of Taxes. Subject to any applicable exemptions, Tenant shall pay
the real property anddor possessory interest taxes applicable to the Property during the term of this
Lease. All such payments shall be made prior to the delinquency date of such payment. Tenant
shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid or that
Page
an exemption from such taxes has been obtained. If any such taxes paid by Tenant shall cover any
period of time prior to or after the expiration of the Term, Tenant's share of such taxes shall be
equitably prorated to cover only the period of time within the tax fiscal year during which this
Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required. If Tenant shall
fail to ay any such taxes, Landlord shall have the right to ar the same, in which case Tenant
shall repay such amount to Landlord within ten (10) days after demand from Landlord together
with interest at the rate set forth in Section 4.5.
4.4.3 finiti n. As used herein, the term "real property tax" shall include any
form of real estate tax or assessment (including, without limitation, on possessory interests),
general, special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income, or estate taxes)
imposed on the Property or any interest (including, without limitation, possessory interests) therein
by any authority having the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or other improvement
district thereof, as against any legal or equitable interest of Landlord or Tenant in the Property or
in the real property of which the Property are a part, as against Landlord's right to rent or other
income therefrom, and as against Landlord's business of leasing the Property. The term `real
property tax" shall also include any tax, fee, levy, assessment or charge (i) in substitution of,
partially or totally, any tax, fee, levy, assessment or charge hereinabove included within the
definition of "real property tax," or (ii) the nature of which was hereinbefore included within the
definition of "real property tax," or iii which is imposed as a result of a transfer, either partial or
total, of Landlord's interest in the Property or which is added to a tax or charge hereinbefore
included within the definition of real property tax by reason ofsuch transfer, or (v) which is
imposed by reason of this lease transaction, any modifications or changes hereto, or any transfers
hereof.
4.4.4 Personal Properly. Tenant shall pay prior to delinquency all taxes assessed
against: and levied upon trade fixtures, furnishings, equipment and all other personal property of
Tenant contained in the Property or elsewhere. When possible, Tenant shall cause said trade
fixtures, furnishings, equipment and all other personal property to be assessed and billed separately
from the real property of Landlord.
4.4.5 Apportionment. If any of Tenant's said personal property shall be assessed
with Landlord's real property, Tenant shall pay Landlord the taxes attributable to Tenant not later
than the later of (a) ten (10) days after receipt of a written statement setting forth the taxes
applicable to Tenant's property or (b) fifteen 1 days prior to the date said taxes are due and
payable.
4.5 Overdue Interest. Any amount due to Landlord, if not paid when due and before
expiration of the applicable grace period, if any, shall bear interest from the date due until paid at
the lower of: (a) the reference or prime rate of Bank of America, N.T. & S.A., in effect from time
to time plus three percent (3%); orb the highest rate of interest allowed under applicable usury
law.
Page
ARTICLE 5. POSSESSION OF PROPERTY
TY
5.1 acceptance of Premises. Tenant hereby accepts the Property.
.2 Ownership of Improvements. During the term of this Lease title to all
Improvements, now existing or later made, on the Property are and shall be vested in Tenant.
Tenant shall not, however, remove or demolish any Improvements from the Property except as
permitted herein. Concurrently with recordation of the Memorandum of Lease, Landlord shall
execute a grant deed conveying ownership of the Improvements to the Tenant. Upon termination
of this Lease, ownership to the Improvements shall automatically revert back to the Landlord. At
all times during the Term, Tenant alone shall be entitled to all of the tax attributes of ownership of
the Improvements, including, without limitation, the right to claim depreciation and the right to
claim the low-income housing tax credit described in Section 42 of the Internal Revenue Code, as
well as all other benefits for income tax purposes.
5.3 Surrender of Property.
.. l Upon Expiration. Tenant agrees that on expiration or termination of the
Term, the Improvements on the Property shall become the property of Landlord, free from any
liens or claims whatsoever, without any thither compensation therefor from Landlord to Tenant or
any other person.
5.3.2 Condition. On expiration or termination of the Term, Tenant shall
peaceably and quietly leave and surrender the Property and the Improvements to Landlord in good
order, condition and repair, reasonable wear and tear and obsolescence excepted. Tenant shall
leave in place and in good order, condition and repair, all fixtures and machinery; except (if Tenant
is not then in default under this Lease) Tenant shall have the right to remove only Tenant -owned
appliances, other unattached equipment, furniture and merchandise that Tenant shall have
installed, which removal must be done without damage to the Property or Improvements. Landlord
shall have the right to have the Property and the Improvements inspected at Tenant's cost to
determine whether the Property and the Improvements have been properly maintained, repaired
and restored in accordance with the terms of this Lease. That notwithstanding, Tenant shall not be
responsible for the interior condition of individual occupied apartments on the termination or
expiration of this Lease.
. . eli r f ----I xa .. Contemporaneous with the expiration or
termination of the Term, Tenant shall immediately deliver to Landlord the following:
(a) Such documents, instruments and conveyances as Landlord may
reasonably request to enable Landlord's ownership of the Property and the Improvements to be
reflected of record, including, without limitation, a quitclaim deed in recordable form to the
Property and the Improvements.
(b) If requested by Landlord, title insurance, surety bond, or other
security reasonably acceptable to Landlord insuring against all claims and liens against the
Page 9
Property and the Improvements other than those incurred by Landlord or accepted by Landlord in
writing.
(c) All construction plans, surveys, permits and other documents
relating to the Improvements as may be in the possession of Tenant at the time and from time to
time thereafter.
(d) All documents and instruments required to be delivered by Tenant
to Landlord pursuant to this Section shall be in form reasonably satisfactory to Landlord.
5A Abandonment. Tenant shall not abandon or vacate the Property or the
Improvements at any time during the Tenn. If Tenant shall abandon, vacate or otherwise surrender
the Property or the Improvements, or be dispossessed (other than dispossession as the result of a
Substantial Taking or a Taking) thereof by process of law or otherwise, the same shall constitute
a default under this Lease on the part of Tenant and, in addition to any other remedy available on
the part of Landlord, any of Tenant's property left in, upon or about 'the Property or the
Improvements (except for underground storage tanks) shall, at Landlord's option, be deemed to be
abandoned and shall become the property of Landlord. The appointment of a receiver pursuant to
a Mortgagee's exercise of its rights under a Mortgage, or the foreclosure of a Mortgage, shall not
be a default under this Section.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES
6.1 Landlord's Representations. Landlord represents and warrants to Tenant that it
owns the Property in fee simple and has the power and authority to enter into this Lease and
perform all obligations and agreements incidental or pertinent to the Lease. Landlord makes no
representation or warranty with respect to the condition of the Property or its fitness or availability
for any particular use, and Landlord shall not be liable for any latent or patent defect therein.
6.2 Tenant's Representations. Tenant represents and warrants to Landlord that it has
examined the Property and acknowledges that it hereby accepts possession of the Property in its
"AS IS" condition, with all faults and defects, including, without limitation, infestation of or
damage to the Property caused by wood -destroying pests or organisms.
ARTICLE 7. DEVELOPMENT OF THE PROPERTY
7.1 Construction. Within thirty days after the Construction Loan Closing, or such
longer period as the Executive Director may approve, Tenant shall commence the Construction.
All Improvements, together with any off -site improvements, shall be constructed in a good and
workmanlike manner using materials of good quality and in substantial compliance with the Plans
as modified pursuant to this Article 7, and shall comply with all applicable governmental permits,
laws, ordinances and regulations. Any of the Plans, including, without limitation, landscaping
plans, not approved by the Executive Director as of the Construction Loan Closing shall be subject
to the prior approval of the Executive Director.
Page 10
7.2 Construction Cost. Tenant shall bear the cost of the Construction, including all
fees and mitigation measures.
#3 Changes; Landlord Consent. Except as otherwise provided in this Lease, Tenant
shall not make any changes in the Plans without the Executive Director's prior written consent if
such change (a) constitutes a material change in the building material or in the architectural design,
value or quality of any of the Improvements, or (b) would result in an increase in construction
costs in excess of Seventy -Five Thousand Dollars $ ,000. 0 for any single change or in excess
of Three Hundred Thousand Dollars $ 3 00,00 .00 for all such changes. Without limiting the
above, Landlord agrees that Tenant may make minor changes which do not change the Projects
aesthetics without the Executive Director's prior written consent, provided that such changes do
not violate any of the conditions specified herein.
7. .1.1, Sxr rrxlssior� a lulrernent: Tenant shall submit
any proposed material changes in the Plans to the Executive Director at least ten (10) days prior to
the commencement of the Construction relating to such proposed material change. Requests for
any material change which requires consent shall be accompanied by working drawings and a
written description of the proposed change, submitted on a change order form acceptable to the
Executive Director, signed by Tenant and, if required by the Executive Director, also by the Project
architect If a proposed change is approved, then Tenant shall be notified in writing within ten(10)
days after submission. If the Executive Director fails to disapprove a proposed change within said
ten (10)-day period, and state the reason(s) for such disapproval with reasonable particularity, then
the proposed change shall be deemed approved.
.4 Landlord's Review. Landlord does not have, and by this Lease expressly
disclaims, the right to or duty for any review of the Plans for the purpose of determining
compliance with building codes, safety features or standards or for the purpose of determining or
approving engineering or structural design, sufficiency or integrity. Landlord's approval of a
direction or request to change the plans, specifications or drawings submitted by Tenant is not and
shall not be a review or approval of the quality, adequacy or suitability of such plans, specifications
or drawings, nor of the labor, materials, services or equipment to be furnished or supplied in
connection therewith. Landlord does not have and expressly disclaims any right of supervision or
control over the architects, designers, engineers or other draft persons and professionals
responsible for the drafting and formulation of the Plans, or any right of supervision or control of
contractors, builders, trades and other persons engaged in constructing and fabricating the
improvements pursuant to the Plans. Landlord further acknowledges that it shall not have any right
to disapprove any plan, specification or drawing which logically evolves from any previously
approved plan, specification or drawing or to request or require a change in any previously
approved item,
7.5 Soil Conditions. Landlord makes no covenants or warranties respecting the
condition of the soil or subsoil or any other condition of the Property, provided, however, that the
foregoing shall not constitute a release of Landlord under any statute or common law theory.
Page 11
7.6 Piligent Prosecution to Completes. Once the work is begun, Tenant shall, with
reasonable diligence, prosecute the Construction to completion. The Construction shall be
completed and ready for use not later than seven hundred twenty days 2 clays after the
Construction Loan Closing subject to the right to notice andcure set forth in Section 21.1.4);
provided, however, that the time for completion shall be extended for as long as Tenant shall be
prevented from completing the Construction by delays beyond Tenant's control. Additionally,
upon the written request of Tenant, the Executive Director may, at his sole and absolute discretion,
grant one or more extensions of the date by which the Construction must be completed of, in the
aggregate, not more than ninety (90) days. All work shall be performed in a good and workmanlike
manner, shall substantially comply with the Plans, and shall comply with all applicable
governmental permits, laws, ordinances, and regulations.
7.7 RiOat of Access. During normal construction hours, representatives of Landlord
shall have the reasonable right of access to the Property without charges or fees for the purpose of
inspecting the work of the Construction; provided, however, that such representatives shall present
and identify themselves at Tenant's construction office, be accompanied by a representative of
Tenant while on the Property and obey Tenant's, or its contractor's, safety rules and regulations.
In addition, Landlord shall have the right to authorize the City and other public agencies to enter
the Property, upon the same terms after reasonable prior written notice to Tenant, for the purpose
of constructing, reconstructing, maintaining or repairing any public improvements or public
facilities located on the Property. Landlordshall deliver written notice of the identity of its
representatives to Tenant before such representatives enter the Property. Landlord hereby
indemnifies and holds Tenant, and its contractors, subcontractors, agents, representatives and
employees, and the Property, harmless from and against any loss, cost, damage or liability,
including, without limitation, attorneys' fees, which results from the exercise by Landlord, or any
party acting under Landlord's authority, of the rights granted by this Section.
7.8 Governmental Approvals. If requested by Landlord in writing, Tenant covenants
and agrees to deliver to Landlord conformed copies (and certified copies of all recorded
instruments) of all governmental approvals and permits obtained by Tenant for the Construction
in accordance with the Plans. In no event shall Tenant commence Construction of any
Improvements pursuant to the provisions of this Article 7 until such time as Tenant shall have
obtained all necessary governmental approvals and permits to so construct such Improvement,
7. Landlord's Rigl[Discharge Lien, If Tenant does not cause to be recorded the
bond described in California Civil Code Section 3143 or otherwise protect the Property under any
alternative or successor statute, and a final judgment has been entered against Tenant by a court of
competent jurisdiction for the foreclosure of a mechanic's, rnat rial an' , contractor's, or
subcontractor's lien claim, and if Tenant fails to stay the execution ofthe judgment by lawful
means or to pay the judgment, Landlord shall have the right, but not the duty, subject to the notice
and cure rights of Mortgagees and the Tax Credit Partner set forth elsewhere in this Lease, to pay
or otherwise discharge, stay, or prevent the execution of any such judgment or lien or both. Tenant
shall reimburse Landlord for all sums paid by Landlord under this Section, together with all
Landlord's reasonable attorneys' fees and costs, plus interest on those sums, fees, and costs from
the date of payment until the date of reimbursement at the rate set forth in Section 4.5.
Page 1
. 1 o Force Mai cure, All obligations of Tenant to promptly commence and thereafter
diligently prosecute to completion the Construction shall be extended by such number of days as
Tenant shall be delayed by reason of events of force majeure pursuant to Article 24.
7.11 Notice of Non -Responsibility. After the recordation of the Certificate of
Completion for the Improvements in the Official Records, Tenant shall provide Landlord with
prior written notice of not less than fifteen (15) days before commencing construction of any
structural alteration ofthe Improvements, r any non-structural alteration which will cost more
than Twenty -Five Thousand Dollars 2.5,000.00 , and shall permit Landlord to record and post
appropriate notices of non -responsibility r on the Property. The foregoing Twenty -Five Thousand
Dollar 25,000, 0 limitation shall be increased each calendar year by the corresponding
percentage increase in the Index.
7.12 Notice of Completion, On completion of Construction of the Improvements,
Tenant shall file or cause to be filed a notice of completion. Tenant hereby appoints Landlord as
Tenant's attorney -in -fact to file the notice of completion on Tenant's failure to do so after the
Construction work has been substantially completed.
7.13 Subsequent Alterations. Following the Construction in substantial accordance
with the Plans, Tenant may from time to time, at its sole expense, make improvements and other
alterations to the Property which Tenant ieasonabiy determines to be beneficial. Tenant shall not
make any alteration or improvement to the Property the cost of which exceeds Fifty Thousand
Dollars ($50,000.00) without Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed, The foregoing dollar amount limitations shall be increased each
calendar year by the corresponding increase in the Index. Tenant shall timely pay any obligation
incurred by Tenant with respect to any such alterations or improvements that could become a lien
against the. Property and shall defend, indemnify and. hold Landlord harmless in connection
therewith,
ARTICLE 8. USE OF THE PROPERTY, HAZARDOUS MATERIALS, AND NON-
DISCRIMINATION
8.1 Definitions Applicable to this Article. All capitalized terms used in this Article
and not elsewhere defined shall have the following meanings:
"30 % of Median income Tenants" means persons or families with Adjusted.
Income that does not exceed thirty percent (30%) of the Median Income for the Area, adjusted for
household size.
"50% of Median Income Tenants" means persons or families with Adjusted
Income that does not exceed fifty percent (50%) of the Median Income for the Area, adjusted for
household size.
Page 1
" !% of Median Income Tenants" means persons or families with Adjusted
Income that does not exceed sixty percent (60%) of the Median Income for the Area, adjusted for
household size.
"70% of Median Income Tenants" means persons or families with Adjusted
Income that does not exceed eighty percent (70% of the Median Income for the Area, adjusted
for household size,
"Adjusted Income" means the adjusted income of a person (together with the
adjusted income of all persons of the age of eighteen 1 years or older who intend to reside with
such person in one residential unit) as calculated in the manner prescribed under Section
142(d)(2)(B) of the Code:
"Affordable Rents" means collectively Affordable Rent for 30% of Median
income Tenants, Affordable Rent for 50% of Median income Tenants, Affordable Rent for 60%
of Median income Tenants, and Affordable Rent for 70% of Median income Tenants.
"Affordable Rent_ for 30% of Median Income Tenants" means monthly rent
(including the Utility Allowance, and excluding any supplemental rental assistance from the State
of California, the federal government or any other public agency) not in excess of thirty percent
(30%)of one -twelfth It th of thirty percent (30%) of the Median Income for the Area adjusted
for family size appropriate for the Unit, pursuant to California Health & Safety Code Section
33413, 50052.5 and 50053.
"Affordable Rent for 5% of Median Income Tenants" means monthly rent
(including the Utility Allowance, and excluding any supplemental rental assistance from the State
of California, the federal government or any other public agency) not in excess of thirty percent
(30%) of one -twelfth 1 12 th of fifty percent (50%) of the Median Income for the Area adjusted
for family size appropriate for the Unit, pursuant to California Health & Safety Code Section
33413, 50052.5 and 5 005 3.
"Affordable_ Rent for 60% of Median _Income Tenants" means monthly rent
(including the Utility Allowance, and excluding any supplemental rental assistance from the State
of California, the federal government or any other public agency) not in excess of thirty percent
(30%)of one -twelfth 1 12th of sixty percent (60%) of the Median Income for the Area adjusted
for family size appropriate for the Unit, pursuant to California Health & Safety Code Section
33413, 50052.5 and 50053.
"Affordable Rent for 70% of Median Income Tenants" means monthly rent
(including the Utility Allowance, and excluding any supplemental rental assistance from the State
of California, the federal government or any other public agency) not in excess of thirty percent
(30%) f one -twelfth (1/12th) of eighty percent (70%) of the Median Income for the Area adjusted
for family size appropriate for the Unit, pursuant to California Health & Safety Code Section
33413, 50052.5 and 50053.
Page 14
"Certificate of Continuing Program Compliance" shall mean the Certificate to
be filed annually (or quarterly at the written request of the Executive Director) by Tenant with the
Executive Director which shall be substantially in the form attached to this Lease as Exhibit "C".
"Code" means the Internal Revenue Code of 1986, as amended, including the
Regulations promulgated thereunder or under any predecessor statute.
"Median Income for the Area" means the median income for the areaas
determined and published annually by the Secretary of Housing and Urban Development under
Section 8 of the United States Housing Act of 1937, as amended, or if programs under Section
are terminated, median income for the Area determined under the method used by the Secretary of
Housing and Urban Development prior to such termination.
"Utility Allowance" means a monthly allowance for Utility Services based on a
utility allowance schedule published annually by Landlord.
"Utility Services" means all utility services included on the utility allowance
schedule published annually by Landlord.
8.2 Affordable Housing. As hereinafter more particularly provided, Tenant shall use
the Property and the Improvements as rental housing with certain ancillary purposes. [nine] of
the Units shall be leased to 30% of Median Income Tenants at Affordable Rent for 30% of Median
Income Tenants. [nine] of the Units shall be leased to 50% of Median Income Tenants at
Affordable Rent for 50% of Median Income Tenants. [fifty one] of the Units shall be leased
to 60% of Median Income e Tenants at Affordable Rent for 60% of Median Income Tenants.
[fourteen] (14) of the Units shall be leased to 70% of Median Income Tenants at Affordable Rent
for 70% of Median Income Tenants. Except for such reasonable periods during which a Unit is, or
Units are, being maintained, repaired or rehabilitated, Tenant shall actively market any vacant unit
or units and lease it or them as soon as reasonably possible so as to satisfy the subleasing
requirements immediately above. In the selection of subtenants for occupancy of the Units, Tenant
shall give priority to eligible persons displaced by Landlord or by the National City
Redevelopment Agency. Any such priority shall be subject to the rules and regulations of the Tax
Credit Program and to each such subtenant meeting screening criteria (pursuant to the management
plan delivered by Tenant to Landlord) approved by the Executive Director, which approval shall
not be unreasonably withheld. Landlord acknowledges and agrees that it will execute and deliver
the lease rider, in form and substance required by the California Tax Credit Allocation Committee,
which rider will be recorded in the Official Records of San Diego County following recordation
of the Memorandum of Lease.
8.3 Increase _._ in . Pro 's or il's Income. For purposes of satisfying the
obligation to rent the dwelling units as set forth in Section 8.2 above, a person or family who at
the commencement of his, hers or its occupancy qualified as a 30% of Median Income Tenant,
50% of Median Income Tenant, 60% of Median Income Tenant, or 70% of Median Income Tenant,
as applicable, shall continue to be treatedas such Tenant irrespective of any later increase in his,
her or their income. A Unit occupied by a 30% of Median Income Tenant, 50% of Median Income
Tenant, 60% of Median Income Tenant, or 70% of Median Income Tenant, as applicable, shall be
Page 1
deemed, upon the termination of such person ' s or family's occupancy, to be continuously occupied
by such 30% of Median Income Tenant, 50% of Median Income Tenant, 60% of Median Income
Tenant, or 70% of Median Income Tenant, as applicable, until reoccupied, provided that Owner
actively, diligently and continuously markets such Unit for occupancy by a Tenant of the same
income classification.
.4 Section 8 Certificate Holders. Tenant shall accept as Low -Income Tenants, on the
same basis as all other prospective Low -Income Tenants, persons and families that are recipients
of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the
United States Housing Act of 1937, as amended, or its successor, and shall not apply selection
criteria to Section 8 certificate holders that are more burdensome than the criteria applied to all
other prospective Low -Income Tenants. Tenant agrees to modify the subleases for the Units, as
necessary, to allow the rental of Units to Section 8 certificate holders.
.5 Rent Increases. Tenant may adjust the Affordable Rents in accordance with
periodic revisions to the Median Income for the Area by the U.S. Secretary of Housing and Urban
Development; provided, however, that the Affordable Rent for any Unit may not be increased
more often than one time per 12-month period, and only after at least thirty (30) days prior written
notice to the affected Low -Income Tenant,
8.6 Initial Income Certification. Immediately prior to the initial occupancy of each
new subtenant, and at least annually thereafter, Tenant shall obtain, in substantially the form set
forth on Exhibit "B", current income certification statements for each subtenant. Tenant shall
make a good faith effort to verify each income certification statement provided by an applicant for
subtenancy or a subtenant by taking one or more of the following steps as part of the verification
process: (a) obtain a pay stub for the most recent pay period, (b) obtain an income tax return for
the most recent tax year, (c) conduct a credit check, criminal background check or similar search,
(d) obtain an income verification form from the applicant's or subtenant's current employer, (e)
obtain an income verification form from the Social Security Administration and/or the California
Department of Social Services if the applicant receives assistance from either of such agencies, or
(f) if the applicant is unemployed and has no such tax return, obtain another form of independent
verification. Tenant shall maintain each such income certification statement on file for not less
than three years.
8.7 Annual Recertification. Not less than annually, Tenant shall obtain and maintain
a file, again in substantially the form set forth in Exhibit "B", of current income recertification
statements for each subtenant. Tenant shall make a good faith effort to verify each income
recertification statement in the manner described in Section 8.6. Tenant shall also maintain each
such income recertification statement on file for not less than three 3 years.
8.8 `or.m of Sublease. The form of sublease or subrental agreement used by Tenant
shall clearly notify subtenants that Tenant has relied on the income certification supplied by the
subtenant, and will rely on the annual income recertification to be supplied by the subtenant, in
determining qualification for occupancy at Affordable Rent, and that any material misstatement in
Page 1
such certification or recertification will be cause for immediate termination of such sublease or
subrental agreement.
8.9 Low. -Income Housing Tax Credit Pro ram. Notwithstanding anything contained
in this Lease to the contrary, if and when the Property is subject to the requirements of the Federal
Low -Income Housing Tax Credit Program under the provisions of Section 42 of the Code (the
"Tax Credit Program"), and there is a conflict between the requirements of the Tax Credit
Program and the affordability provisions set forth in Sections 8.1 or 8.3 through 8.8 above,
inclusive, the Tax Credit Program provisions shall prevail.
8.10 Access and .eor'ti. Tenant shall permit the representatives of Landlord at any
time or from time to time, upon one business day's notice, to inspect, audit and copy all of its
properties, books, records and accounts. Tenant shall maintain a system of accounting established
and administered in accordance with sound business practices to permit preparation of financial
statements which shall be in conformity with GAP basis of accounting. Tenant shall furnish or
cause to be furnished to Landlord the following:
(a) Notice of Default. As soon as possible, and in any event not later than five
days after the occurrence of any Event of Default, a statement of an officer of Tenant describing
the details of such Event of Default and any curative action Tenant proposes to take;
(b) Annual Statements. s soon as available, and in any event not later than
one hundred twenty (120) days after the close of each fiscal year of 'Tenant, financial statements
of Tenant, including a profit and loss statement, reconciliation of capital accounts and a
consolidated statement of changes in financial position of Tenant as at the close of and for such
fiscal year, all in reasonable detail, certified as provided in clause (a) above by an officer or partner
of Tenant and, upon request of Landlord, if total operating expenses for such year exceed the total
amount set forth in the Pro Forma Budget by more than five percent (5%), accompanied by a
compilation report prepared by a firm of certified public accountants, and in a format, each
reasonably acceptable to the Executive Director;
(c) Pro Form a Budget. As soon as available and in any event not later than
December 15 of each calendar year beginning with the year in which Construction is completed,
Tenant shall provide Landlord with a detailed projection of operating income and budgets of
estimated operating expenses for the immediately succeeding calendar year (the `Pro Forma
Budget") and a detailed cash flow projection for the next succeeding year. Tenant shall also submit
to Landlord on request additional detail, information and assumptions used in the preparation of
the Pro Forma Budget. Tenant shall use commercially reasonable efforts to operate the Property
during such calendar year within the Pro Forma Budget;
(d) Tax Returns. As soon as available, and in any event not later than at the
time of filing with the Internal Revenue Service, the federal tax returns (and supporting schedules,
if any) of Tenant;
(e) Certificate of Performance. Concurrently with delivery of each of the
financial statements provided for in clause (b) above, a certificate of an officer or partner of Tenant
Page 17
stating that Tenant has, in all material respects, performed and observed each of its covenants
contained in this Lease and that no Event of Default or Potential Default has occurred or, if any
such event has occurred, specifying its nature;
(f) Redevelopment Monitoring. Tenant shall submit to Landlord on an annual
basis the annual report required by Section 33418 of the California Health and Safety Code. The
annual report shall include for each dwelling unit the rental rate and the income and the family size
of the occupants.
(g) Rent Roll. As soon as possible and in any event not later than forty-five
days after the close of each calendar quarter, the rent roll as of the end of such calendar quarter
setting forth such information, and in such format, as is reasonably acceptable to the Executive
Director;
(h) Audit Reports. Promptly upon receipt thereof, copies of all reports
submitted to Tenant by independent certified public accountants in connection with each annual,
interim or special audit of the financial statements of Tenant made by such accountants, including
the comment letter submitted by such accountants to management in connection with their annual
audit;
(i) Notices, Certificates or Communications. Immediately upon giving or
receipt thereof, copies of any notices, certificates or other con mnunications given by or on behalf
of Tenant or received by or on behalf of Tenant from lenders pursuant to or in connection with any
of the loan documents, as well as any notices and other communications delivered to the Property
or to Tenant naming Landlord or the "Construction Lender" as addressee, or which could
reasonably be deemed to affect the Construction or the ability of Tenant to perform its obligations
to Landlord;
MonthiLeasing Report. As soon as available and in no event later than
the twenty fifty (25th) day of every calendar month, a monthly property analysis report for the
y
Property indicating the current leasing status for the Property;
1 Monthly it Operating Statements. As soon as available and in no event later
than the twenty-fifth (25th) day of every calendar month, commencing with the first full calendar
month following commencement of lease -up of the Property, a "Monthly peratin Statement"
showing all operating income, operating expenses, and debt service the prior month, in a form
reasonably satisfactory to the Executive Director;
(1) Certificate of Continuing Program Compliance. Tenant shall submit to
Landlord on an annual basis the Certificate of Continuing Program Compliance.
(rn) Other Information. Such other documents and information relating to the
affairs of Tenant and the Property as Landlord reasonably may request from time to time which
Tenant can provide for a reasonable cost.
Page 1
8.11 Onsite Manager. Tenant, through an onsite professional property manager or
property management company, shall manage the Project r cause it to be managed. A.ar
or management company retained to act as agent for Tenant in meeting the obligation of providing
an onsite manager shall be subject to prior written approval of the Executive Director, which
approval shall not be unreasonably withheld or delayed. ConAm Management Corporation
('Property. Manager") is hereby approved by Landlord as the initial property manager. In
exercising his/her approval rights hereunder, the Executive Director may require proof of ability
and qualifications of the manager and/or management company based upon (i) prior experience,
(ii)assets, and(hi) other factors determined by the Executive Director as necessary. The Executive
Director can approve of property manager and/or management company upon submittal of one or
more candidates proposed by Tenant. Furthermore, upon sixty days prior written demand
from Landlord with cause, Tenant shall remove and replace a property manager and/or property
management company. In any agreement with a property manager or property management
company ("Management Agreement"), Tenant shall expressly reserve the right to terminate such
agreement upon written demand of Landlord with cause. That notwithstanding, Landlord agrees
that Property Manager shall be entitled to a thirty (30)-day notice of default and a reasonable
opportunity to cure before any such termination.
8.12 No Use of Hazardous Materials on the Propprty. Tenant covenants and agrees
that it shall not, and that it shall not permit any subtenant to, treat, use, store, dispose, release,
handle or otherwise manage Hazardous Materials on the Propertyfrom and after the date hereof
except in connection with any construction, rehabilitation, operation, maintenance or repair of the
Improvements or in the ordinary course of its business, and that such conduct shall be done in
compliance with all applicable federal, state and local laws, including all Environmental Laws.
Tenant's violation of the foregoing prohibition shall constitute a breach hereunder and Tenant shall
indemnify, hold harmless and defend the Landlord for such violation as provided below.
8.13 Notice and emediation by Tenant. Tenant shall promptly give the Landlord
written notice of any significant release of any Hazardous Materials, and/or any notices, demands,
claims or orders received by Tenant from any governmental agency pertaining to Hazardous
Materials which may affect the Property.
8.14 nviro m n .l In lemnit:. Tenant agrees to indemnify, protect, hold harmless,
and defend (with counsel reasonably satisfactory to Landlord) the Indemnitees from and against
any and all losses, costs, claims, expenses, damages (including, without limitation, foreseeable or
unforeseeable consequential damages), and liabilities directly or indirectly arising out of or in any
way connected with (a) Tenant's breach or violation of any covenant, prohibition or warranty in
this Lease concerning Hazardous Materials, or b the activities, acts or omissions of Tenant, its
employees, contractors or agents on or affecting the Property from and after the Commencement
Date, including but not limited to the release of any Hazardous Materials or other kinds of
contamination or pollutants of any kind into the air, soil, groundwater or surface water on, in, under
or from the Property. This indemnification supplements and in no way limits the scope of the
indemnification set forth in Article 13.
Page 1
8.15 Terminatioi; Subtenants. The agreements and obligations of Tenant under this
Article 8 with regard to indemnification of Landlord shall survive the scheduled termination or
sooner expiration of the Term for any reason, for five years and all claims relating thereto must
be delivered in writing to Tenant within such period. That notwithstanding, the extension of time
within which to deliver a claim to Tenant shall not extend, beyond the date of expiration or
termination of this Lease, the period in which Claims may arise. No action by any subtenant in
violation ofits sublease shall constitute a cause to terminate this Lease provided that Tenant
diligently pursues its available remedies against such subtenant.
8.16 Nondiscrimination. There shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, religion, seq., marital status, national
origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment
of the Property nor shall the Tenant itself, or any person claiming under or through Tenant,
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants, or
vendees in the Property.
8.17 Form of Nondiscrimination and Nonsegregation Clauses. Tenant covenants and
agrees for itself, its successors, its assigns and every successor in interest to the Property or any
part thereof, that it shall refrain from restricting the lease, sublease, rental, transfer, use, occupancy,
tenure, or enjoyment of the Property (or any part thereof) on the basis of sex, marital status, race,
color, religion, creed, ancestry or national origin of any person. All such leases, or contracts
pertaining thereto shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
8.17.1 In leases: "The lessee herein covenants by and for itself, its successors and
assigns, and all persons claiming under or through them, and this lease is made and accepted upon
and subject to the following conditions: That there shall be no discrimination against or segregation
of any person or group of persons, on account of sex, marital status, race, color, religion, creed,
national origin, or ancestry, in the leasing, subleasing, renting, transferring, use, occupancy, tenure
or enjoyment of the land herein leased, nor shall lessee 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, or occupancy of tenants, lessees, sublessees, tenants,
or vendees in the land herein leased."
.17.2 In contracts: "There shall be no discrimination against or segregation of,
any person or group of persons on account of sex, marital status, race, color, religion, creed,
national origin or ancestry in the sale, lease, sublease, rental, transfer, use, occupancy, tenure or
enjoyment of the land, nor shall the transferee itself or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or
vendees of the land."
8.18 Resident nt Services. From not later than six months after the date of issuance of
a temporary certificate of occupancy for the Project until expiration of the Term, Tenant shall
Page 20
provide, or cause to be provided by a reasonably qualified person or firm, services to the residents
of the Project in accordance with the plan therefor attached hereto as Exhibit "D". LPlan for
Resident Services] is hereby approved by Landlord as the initial provider of such resident
services. In the event Tenant desires to replace the resident services provider for any reason, the
Executive Director shall have the authority to approve such a change in his or her reasonable
discretion upon submittal of one or more candidates proposed by the Tenant.
8.19 Effect and Duration of Covenants. Subject to Section 8.21 below, the covenants
established in this Article shall, without regard to technical classification and designation, be
binding on Tenant and any successor in interest to the Property, or Tenant's leasehold interest
therein, or any part thereof, for the benefit and in favor of the Landlord, its successors and assigns,
and the City until the expiration of the Term, except to the extent said covenant expressly provides
that it shall survive the expiration of the Term.
8.20 Indemnification. Tenant hereby saves, defends, indemnifies and holds the
Ind.ennitees harmless from and against any and all losses, costs, damages or liabilities, including,
without limitation, reasonable attorneys' fees and costs, which result from the breach of any
representations and warranties contained in this Article 8.
8.21 Terminable Upon Foreclosure. Notwithstanding anything contained in this Lease
to the contrary, upon foreclosure of a Mortgage, or acceptance by a Mortgagee of an assignment
or deed in lieu of foreclosure, Section 8 .1 through Section 8.16, inclusive, Section 8.18 and Section
8.20 of this Lease shall be terminable by. the purchaser at the foreclosure sale, or the assignee or
grantee of a deed in lieu of foreclosure, by notice to Landlord. Termination of such Sections
pursuant to this provision shall not affect the validity of the remaining provisions of this Lease and
Tenant's rights hereunder.
ARTICLE 9. INSURANCE
9.1 jIand1ord Not Liable. Except as the result of the sole or willful negligence or
intentional acts or omissions by Landlord or its representatives, employees or agents, or as
otherwise expressly set forth herein, Landlord shall not be liable for injury to Tenant's business or
any loss of income therefrom or for any damage or liability of any kind or for any injury to or
death of persons or damage to property of Tenant, or to Tenant's agents, employees, servants,
contractors, subtenants, licensees, concessionaires, customers or business invitees or any other
person which occurs on the Property during the Term.
9.2 Indemnification} Except as the result of the sole or willful negligence or intentional
acts or omissions by Landlord or its representatives, employees or agents, Tenant shall indemnify,
defend and hold the Indemnitees harmless from and against all liability, loss, damage, cost or
expense (including reasonable attorneys' fees and court costs) arising from or as a result of the
death of any person or any accident, injury, loss or damage whatsoever caused to any person or to
the property of any person caused by Tenant's performance of its obligations under this Lease or
any errors or omissions of Tenant, whether such performance, errors or omissions of Tenant be
made by Tenant, its contractors or subcontractors, or anyone directly or indirectly employed by
Page 21
Tenant, and whether such damage shall accrue or be discovered before or after the termination of
this Lease. This indemnification provision supplements and in no way limits the scope of the
indemnifications in Article 13. The indemnity obligation of Tenant under this Article shall survive
the expiration or termination, for any reason, of this Lease, This Section notwithstanding,
indemnification with respect to Hazardous Materials shall be governed by Section 8.14.
9.3 Insurance. From and after .the Commencement Date until the termination of this
Lease, Tenant shall take out and maintain the following types ofinsurancein the forms and
amounts (as may be increased each calendar year by the corresponding increase in the Index) set
forth below, at Tenant's sole expense. Notwithstanding the amounts of insurance set forth below,
the Executive Director shall have the right, but not the obligation, to reduce the amounts required
from time to time.
9.3.1 Comprehensive General Liability in an amount not less than Two Million
Dollars ($2,000,000.00) combined single limit for each occurrence or Four Million Dollars
($4,0O0,00O00)general aggregate for bodily injury, personal injury and property damage
including contractual liability, which limits may be achieved through the use of an umbrella/excess
liability policy(ies). The limits ofthis insurance shall be increased to an amount not less than Five
Million Dollars , combined single limit (which limits may be achieved through the
use of an umbrella/excess liability p liey ies upon the recordation ofthe Certificate
Completion for any of the Improvements in the Official Records. The Indenuitees shall be covered
as additional insureds with respect to liability arising out of activities by or on behalf of Tenant or
in connection with the use or occupancy of the Property. Coverage shall be in a form acceptable
to the City Risk Manager and shall be primary and non-contributing with any insurance or self-
insurance maintained by City or CDC -CIA.
9, .2 Automobile Liability in an amount not less than One Million Dollars
($1,000,000EOO)combined single limit per accident for bodily injury and property damage
covering owned, nor -owned and hired vehicles.
9,3.3 Workers' Compensation as required by the Labor Code of the State of
California and Employers' Liability insurance in an amount not less than One Million Dollars
($1,000,000.00).
9,3.4 "All Risk" " or "Special Form" property including builder's risk protection
during the course of Construction, covering the full replacement value of the Improvements
constructed on or about the Property by Tenant. Said insurance shall include debris removal, and,
if typically carried upon similar affordable housing projects in San Diego County, California,
coverage for flood if this protection is required by the Senior Lender. Landlord shall be named as
loss payee under a standard loss payable endorsement.
9.4 thr Insurance. Tenant shall also obtain and maintain such other insurance in
forms and amounts reasonably required from time to time by Landlord or the City Risk Manager
for protection against the same or other insurable hazards which are then typically insured against
Page 2
by similar properties in San Diego County, California, provided that such coverage is available at
commercially reasonable rates,
9. Contractors. All contractors employed by Tenant with contracts ofFifty Thousand
Dollars ($50,000.00) or more shall be required to furnish evidence of Comprehensive General
Liability insurance subject to all the requirements stated herein with limits of not less than One
Million Dollars 1,000,00.0 combined single limit each occurrence. The Indemnitees shall
have the right to receive evidence of compliance with the foregoing by contractors at any time
upon written request therefor.
9.6 Acceptable Terms of Coverage. Acceptable insurance coverage shall be placed
with carriers admitted to write insurance in California, or carriers with a rating of or equivalent to
A-:VIlI by A.M. Best & Company. Any deviation from this rule shall require specific approval in
writing from the City's Risk Manager. Any deductibles in excess of Twenty -Five Thousand
Dollars 2 ,000. per occurrence or self -insured retentions must be declared to and approved
by the City Risk Manager. At the option of the City Risk Manager, Tenant may be required to
reduce or eliminate such deductibles or self -insured retentions or to procure a bond guaranteeing
payment of losses and related investigations, claim administration and defense costs. In the event
such insurance provides for deductibles or self -insured retention, Tenant agrees that it will fully
protect the Indenmitees in the same manner as those interests would have been protected had the
policy or policies not contained a deductible or retention. Coverage under each policy shall not be
suspended, avoided or canceled by either party except after thirty 0 days' prior written notice
to Landlord. Tenant shall furnish the Indemnitees with certificates of insurance and with original
endorsements effecting coverage as required under this Article. The certificates and endorsements
for each insurance policy shall be signed by a person authorized by the insurer to bind coverage
on its behalf. The Indemnitees reserve the right to require complete certified copies of all insurance
policies not previously provided at any time.
9.7 Bl n1 et Coverage. Notwithstanding anything to the contrary set forth in this
Article 9, Tenant's obligations to carry the insurance provided for herein may be brought within
the coverage of a so-called blanket policy or policies of insurance carried and maintained by
Tenant; provided, however, (i) that the Indemnitees and other parties in interest to it shall be named
as additional insureds as their interests may appear, and (ii) that the coverage afforded the
Indemnitees will not be reduced or diminished by reason ofthe use ofsuch blanket policy of
insurance, and (iii) that the requirements set forth in this Article 9, are otherwise satisfied.
9.8 Waiver of Subroaation. Each policy of insurance procured pursuant to Article
shall contain, if obtainable upon commercially reasonable terms, either (i) a waiver by the insurer
of the right of subrogation against either party hereto for negligence of such party, or (ii) a
statement that the insurance shall not be invalidated should any insured waive in writing prior to a
loss any or all right of recovery against any party for loss accruing to the property described in the
insurance policy. Each of the parties hereto waives any and all rights ofrcoer against the other,
or against the officers, employees, agents and representatives of such other party, for loss or
damage to such waiving party or its property or the property of others under its control, arising
Page 23
from any cause insured against under the form of insurance policies required to be carried pursuant
to Article 9 of this Lease or under any other policy of insurance carried by such waiving party.
ARTICLE 10. MAINTENANCE; C ; REPAIRS; ALTERATIONS; RECONSTRUCTION
10.1 General Maintenance. Throughout the Term, Tenant shall, at Tenant's sole cost
and expense, maintain the Property and the Improvements in good condition and repair, ordinary
wear and tear excepted, and in accordance with all applicable federal, state and local laws,
ordinances and regulations of a governmental agencies and bodies having or claiming
jurisdiction and all their respective departments, bureaus, and officials, b insurance underwriting
boards or insurance inspection bureaus having or claiming jurisdiction, and (c) all insurance
companies insuring all or any part of the Property or the Improvements, or both,
10.2 Program Maintenance. In addition to the routine maintenance and repair required
pursuant to Section 10.1, Tenant shall perform the following programmed maintenance on the
Improvements:
(a) Tenant shall maintain the Improvements, including all common areas, all
interior and exterior facades, and all exterior project site areas, in a safe and sanitary fashion
suitable for a high quality, rental housing project. The Tenant agrees to provide administrative
services, supplies, contract services, maintenance, maintenance reserves, and management for the
entire project including interior tenant spaces, common area spaces and exterior common areas.
(b) Clean-up maintenance shall include, but not be limited to: maintenance of
all private paths, parking areas, driveways and other paved areas in clean and weed -free condition;
maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or
unsightly; removal of all trash, litter and other debris from improvements and landscaping prior to
mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the
maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris
are properly disposed of by maintenance workers.
(c) Landscape maintenance shall include, but not be limited to:
watering irrigation; fertilization; mowing, edging, and trimming of grass; tree and shrub pruning;
trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road
conditions and visibility, and optimum irrigation coverage; replacement, as needed, of all plant
materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas;
and staking for support of trees.
All maintenance work shall conform to all applicable federal and state Occupational Safety and
Health Act standards and regulations for the performance of maintenance. Upon the request of
Tenant, the Executive Director, at his sole and absolute discretion, may grant a waiver or deferral
of any program maintenance requirement. Tenant shall keep such records of maintenance and
repair as are necessary to prove performance of the program maintenance requirements.
ARTICLE 11. OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS
Page 24
11.1 Ownership During Term.
11.1.1 Improvements. All Improvements on the Property as permitted or required
by this Lease shall, during the Term, be and remain the property of Tenant, and Landlord shall not
have title thereto. Tenant shall not, however, demolish or remove any Improvements from the
Property except as p ermitted herein.
11,1.2 Personal Property. All personal property, furnishings, fixtures and
equipment, including, without limitation, Tenant -owned appliances, which are not so affixed to
the Property or the buildings thereon as to require substantial damage to the buildings upon
removal thereof shall constitute personal property including, but not limited to: (a) functional items
related to the everyday operations of the Property; (b) personal property furnishings, fixtures and
equipment of the nature or type deemed by law as permanently resting upon or attached to the
buildings or land by any means, including, without limitation, cement, plaster, nails, bolts or
screws, or essential to the ordinary and convenient use of the Property and the Improvements. At
any time during the Term and at termination thereof, Tenant shall have the right to remove any
and all such personal property, furnishings, fixtures and equipment; provided, that Tenant repairs
any damage to the Property or the Improvements caused by such removal.
11.1.3 Basic Buildinglystems. For purposes of this Lease, the personal property,
furnishings, fixtures and equipment described in this Section 11.41 shall not include those major
building components or fixtures necessary for operation of the basic building systems such as, but
not limited to, the elevators, plumbing, sanitary fixtures, heating and central air-cooling system.
11.2 Ownership at Expiration or Termination.
11.2.1 Property of Landlord. At the expiration or earlier termination of the Term,
except as provided in Section 11.2.2, all Improvements which constitute or are a part of the
Property shall become (without the payment of compensation to Tenant or others) the property of
Landlord free and clear of all claims and encumbrances on such Improvements by Tenant, and
anyone claiming under or through Tenant, except for such title exceptions permitted or required
during the Term. Tenant shall then quitclaim to Landlord any and all rights, interests and claims
to the Improvements. Tenant agrees to and shall defend, indemnify and hold Landlord harmless
from and against all liability and loss which may arise from the assertion of any such claims and
any encumbrances on such Improvements (except claims arising due to Landlord's actions) and
except for such title exceptions permitted or required during the Term.
11.2,2 RemQyal-_by Teitant„ Tenant shall not be required or permitted to remove
the Improvements, or any of them, at the expiration or sooner termination of the Term; provided,
however, that, within thirty (30) days following the expiration or sooner termination of the Tenn,
Tenant may remove all personal property, furniture, and equipment.
11.2.3 LJnremovedPropfl. Any personal property, furnishings or equipment
not removed by Tenant within thirty (30) days after the expiration or sooner termination of the
Term, shall, without compensation to Tenant, become Landlords' property, free and clear of all
Page 2
claims to or against them by Tenant or any third person, firm or entity arising by, through or under
Tenant.
11.2.4 Maintenance and Repair... of Improvements. Subject to the provisions of
this Lease concerning condemnation, alterations and damage and destruction, Tenant agrees to
assume full responsibility for the operation and maintenance of the Property and the Improvements
and all fixtures and furnishings thereon or therein throughout the Term hereof without expense to
Landlord, and to perform all repairs and replacements necessary to maintain and preserve the
Property, the Improvements, fixtures and furnishings in a decent, safe and sanitary condition
consistent with good practices and in compliance with all applicable laws. Tenant agrees that
Landlord shall not be required to perform any maintenance, repairs or services, or to assume any
expense not specifically assumed herein in connection with the Property and the Improvements
thereon unless specifically required under the terms of this Lease.
Except as otherwise provided in this Section 11.2 and in Section 11.4, the condition of the
Improvements required to be maintained hereunder upon completion of the work of maintenance
or repair shall be equal in value, quality and use to the condition of such Improvements before the
event giving rise to the work.
11.3 waste. Subject to the alteration rights of Tenant and damage and destruction or
condemnation of the Property or any part thereof, Tenant shall not commit or suffer to be
committed any waste of the Property or the Improvements, or any part thereof. Tenant agrees to
keep the Property and the Improvements clean and clear of refuse and obstructions, and to dispose
properly of all garbage, trash and rubbish.
11 A Alteration of Immovements. Except as provided in Section 7.1, Tenant shall not
make or permit to be made any material, exterior alteration of, addition to or change in, the
Improvements which would materially affect the exterior elevations (including materials selection
and color) or the size, bulk and scale of the Property, other than routine maintenance and repairs,
nor demolish all or any part of the Improvements, without the prior written consent of Landlord.
Nothing herein shall prohibit interior alterations or decorations, or the removal andreplacement of
interior improvements consistent with the specified use of the Property. In requesting consent for
such exterior improvements as required by the foregoing, Tenant shall submit to Landlord detailed
plans and specifications of the proposed work and an explanation of the need and reasons thereof.
Tenant may make such other improvements, alterations, additions or changes to the Improvements
which do not materially affect the exterior elevations (including materials selection and color) or
the size, bulk and scale thereof without Landlord's prior written consent. Notwithstanding the
prohibition in this Section 11.4, Tenant may make such changes, repairs, alterations,
improvements, renewals or replacements to the exterior elevations, materials, size, bulk or scale
of the Improvements as are required (a) by reason of any law, ordinance, regulation or order of
competent government authority, (b) for the continued safe and orderly operation of the Property,
or (c) to continue to receive the Low Income Housing Tax Credit.
Page 26
ARTICLE 12. SIGNS
Tenant shall not place or suffer to be placed on the Property or upon the roof or any exterior
door or wall or on the exterior or interior of any window of the Improvements, any sign, awning,
canopy, marquee, advertising matter, decoration, lettering or other thing of any kind (exclusive of
the signs, awnings and canopies, if any, which may be provided for in the Plans) without the written
consent of the Executive Director first had and obtained.
ARTICLE 13. INDEMNIFICATION
Tenant will protect, indemnify and save the Indemnitees harmless from and against all
liabilities, obligations, claims, damages, penalties, causes of action, judgments, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses) imposed upon or incurred
by or asserted against Landlord, or the Property or the Improvements during the Term, unless
caused solely by the willful act or gross negligence of Landlord, by reason of (a) any accident or
injury to or death of persons or loss of or damage to property occurring o, or about the Property
or the Improvements, b any failure on the part of Tenant to perform or comply with any of the
terms of this Lease, or (c) any negligence or tortious act on the part of Tenant or any of its agents,
employees, contractors, subtenants, licensees or invitees. In the event that any action, suit or
proceeding is brought against the Indemnitees by reason of any such occurrence, Tenant, upon
Landlord's request, will, at Tenant's expense, defend such action, suit or proceeding with counsel
approved by Landlord. This Section notwithstanding, indemnification with respect to Hazardous
Materials shall be governed by Section 8.14.
ARTICLE 14. DAMAGE OR ST CTIO OF PROPERTY OR IMPROVEMENTS
14.1 ..'s Repair obligation.
14.1.1 In case of damage to or destruction of the Property or the Improvements, or
any part thereof, by fire or other cause at any time during the Term of this Lease, Tenant, if and to
the extent insurance proceeds are available, shall restore the same as nearly as possible to their
value, condition and character immediately prior to such damage or destruction. Such restoration
shall be commenced with due diligence and in good faith, and prosecuted with due diligence and
in good faith, unavoidable delays excepted.
1.4.12 In case of damage to or destruction of the Improvements by fire or other
cause resulting in a loss exceeding in the aggregate Ten Thousand Dollars ($10,000), Tenant shall
promptly give written notice thereof to Landlord.
14.2 Tenant's Restoration of Premises.
14.2.1 If, during the Term, the Improvements are damaged or destroyed, and the
total amount of loss does not exceed thirty-three percent (33%) of the replacement value of the
Improvements, Tenant shall make the loss adjustment with the insurance company insuring the
loss, with the approval of Landlord, which approval shall not be unreasonably withheld or delayed.
Page 27
The proceeds shall be paid directly to a Mortgagee, if any, and if there is not a Mortgagee, to
Landlord and Tenant for the sole purpose of making the restoration of the Improvements in
accordance with this Article 14.
14.2.2 If, during the Term, the Improvements are damaged or destroyed, and the
total amount of loss exceeds thirty-three percent (33%) the replacement value of the
Improvements, Tenant shall make the loss adjustment with the insurance company insuring the
loss, with the approval of Landlord, which approval shall not be unreasonably withheld or delayed,
and the insurance company shall immediately pay the proceeds to a bank or trust company
designated by Landlord and approved by Tenant ("Insurance Trustee"), which approval shall not
be unreasonably withheld or delayed. Any leasehold mortgagee shall be an acceptable Insurance
Trustee. All sums deposited with the Insurance Trustee shall be held for the following purposes
and the Insurance Trustee shall have the following powers and duties:
(a) The sums shall be paid in installments by the Insurance Trustee to
the contractor retained by Tenant and approved by Landlord as construction progresses, for
payment of the cost of restoration. A ten percent (10%) retention fund shall be established that will
be paid to the contractor on completion of restoration, payment ofall costs, expiration of all
applicable lien periods, and proof that the Property and the Improvements are free of all mechanics
liens and lienabie claims;
(b) Payments shall be made on presentation of certificates or vouchers
from the architect or engineer retained. by Tenant .t and approved by Landlord (which approval shall
not be unreasonably withheld or delayed) showing the amount due. If the Insurance Trustee, in its
reasonable discretion, determines that the certificates or vouchers are being improperly approved
by the architect or engineer retained by Tenant, the Insurance Trustee shall have the right to appoint
an architect or an engineer to supervise construction and to make payments on certificates or
vouchers approved by the architect or engineer retained by the Insurance Trustee. The reasonable
expenses andcharges of the architect or engineer retained by the Inurance Trustee shall be paid
by the Insurance Trustee out of the trust fund;
(c) If, after the work ofrestoration has commenced, the sums held by
the Insurance Trustee are not sufficient to pay the actual cost of restoration, Tenant shall, deposit
the amount of the deficiency with the Insurance Trustee within ten 1. days after receipt of request
for payment of such amount from the Insurance Trustee, which. request shall be made by the
Insurance Trustee promptly after it is determined there will be a deficiency;
(d) If the Insurance Trustee has received notice from Landlord that the
Tenant is in default under this Lease, then, subject to the lien of a Mortgagee's Mortgage and the
Mortgagee's prior written consent, the Insurance Trustee shall pay to Landlord an amount
sufficient to cure such default as specified in Landlord's notice to the Insurance Trustee;
(e) Any amounts remaining after making the payments hereinabove
referred to in clauses (a), (b) and (d), and after paying the reasonable costs and expenses of the
Insurance Trustee, shall be paid to any leasehold. Mortgagee to the extent (a) required by any
Page 28
Mortgage and (b) such leasehold Mortgagee makes written demand therefor to the Insurance
Trustee;
(f) Any undisbursed funds remaining after compliance with all of the
provisions of this Section 14.2 shall, if and to the extent required by any Mortgage, be delivered
to the Mortgagee, and if there is no leasehold Mortgagee, to Tenant; and
(g) All actual costs and charges of the Insurance Trustee shall be paid
by Tenant. If the Insurance Trustee resigns or for any reason is unwilling to act or continue to act,
Landlord shall substitute a new Insurance Trustee in the manner described in this Section.
14.2.3 Both parties shall promptly execute all documents and perform all acts
reasonably required by the Insurance Trustee to perform its obligations under this Section 14.2.
14.3 Procedure for Restoring Improvements.
1 . .1 If and to the extent Tenant is obligated to restore the Improvements pursuant
to this Article 14, Tenant shall restore the Improvements substantially in accordance with the
Plans. Within forty-five days after the date of such damage or destruction (as such time may
be reasonably extended at the written request of Tenant), Tenant, at its cost, shall prepare and
deliver to Landlord final plans and specifications and working drawings complying with applicable
laws that will be necessary for such restoration. Such plans and specifications shall specify
differences from the Plans. The plans and specifications and working drawings are subject to the
approval of Landlord only insofar as they vary from the Plans. Landlord shall have twenty (20)
days after receipt of the plans and specifications and working drawings to either approve or
disapprove the plans and specifications and working drawings and return them to Tenant. If
Landlord disapproves the plans and specifications and working drawings, Landlord shall notify
Tenant of its objections in writing, specifying the objections clearly and stating what modifications
are required for Landlord's approval. Tenant acknowledges that the plans and specifications and
working drawings shall be subject to approval of the appropriate government bodies and that they
will, be prepared in such a manner as to obtain that approval.
1 . .2 The restoration shall be accomplished as follows:
(a) Tenant shall complete the restoration within fifteen (15) months (or
such longer time as is necessary in the Landlord's discretion) after final plans and specifications
and working drawings have been approved by the appropriate government bodies and all required
permits have been obtained.
(b) Tenant shall retain a licensed contractor that is bondable. The
contractor shall be required to carry public liability and property damage insurance, builders risk
insurance, standard fire and extended coverage insurance, with vandalism and malicious mischief
endorsements, during the period of construction in accordance with Article 9. Such insurance shall
contain waiver of subrogation clauses in favor of Landlord and Tenant in accordance with the
provisions of and to the extent required by Section 9.8.
Page 2
(c) Tenant shall notify Landlord of the date of commencement of the
restoration not later than ten (10) days before commencement of the restoration to enable Landlord
to post and. record notices of nonresponsibility. The contractor retained by Tenant shall not
commence construction until a completion bond and a labor and materials bond have been
delivered to Landlord to insure completion of the construction.
(d)Tenant shall accomplish the restoration in a manner that will cause
the least inconvenience, annoyance, and disruption to the Property and the Improvements.
(e) On completion of the restoration Tenant shall immediately record a
notice of completion.
(f) If Section 14.2.2 is applicable, the restoration shall not be
commenced until sums sufficient to cover the cost of restoration are placed with the Insurance
Trustee as provided in said Section 14.2.2.
14,4 Mortgagee Protection. The following provisions are for the protection of a
Mortgagee and shall, notwithstanding anything contained in this Lease to the contrary, control:
14.4.1 Jnsurance. Any insurance proceeds payable from any policy of insurance
(other than liability insurance) required by the Lease shall be paid to the Mortgagee, if any, to the
extent required by the Mortgage. The Mortgagee, if any, shall have the rightto participate in all
adjustments, settlements, negotiations or actions with the insurance company regarding the amount
and allocation of any such insurance proceeds. Any insurance policies permitted or required by
this Lease shall name the Mortgagee, if any, as an additional insured or loss payee, as appropriate,
if required by such Mortgage.
age.
14.4.2 Restoration. Tenant shall have no obligation to restore or repair the
Improvements following the occurrence of any casualty for which insurance is not required under
this Tease. The Mortgagee, if any and if it exercises any of its remedies set forth in this Lease,
shall have no obligation to restore or repair damage to the Improvements that cost in excess of
available insurance proceeds. Tenant shall have no obligation to restore or repair damage to the
Improvements if the casualty occurs during the last five years of the Lease term. In the event
such a loss occurs in the last five 5 years, then, at the election of Tenant, with the prior written
consent of the Mortgagee, if any, insurance proceeds shall be used, first, to clear the Property of
the damaged Improvements and any debris, and second, to reduce or pay in full the Mortgage, with
any excess being payable as provided in this Lease.
ARTICLE 15. EMINENT DOMAIN
15.1 Notice. The party receiving any notice of the kind specifiedin this Section 15.1
shall promptly give the other party notice of the receipt, contents and date of the notice received.
For purposes of this Article 15, the term "Notice" shall include:
(a) Notice of Intended Taking;
Page 39
(b) Service of any legal process relating to condemnation of the Property or the
Improvements;
(c) Notice in connection with any proceedings or negotiations with respect to
such condemnation; or
(d) Notice of intent or willingness to make or negotiate a private purchase, sale
or transfer in lieu of condemnation.
15.2 Re Representationresenta:1in s or Ne otiations. Landlord and Tenant shall each
have the right to represent their respective interests in each proceeding or negotiation with respect
to a Taking or intended Taking and to make full proof of their claims. No agreements or settlement
with or sale or transfer to the condemning authority shall be made without the consent of Landlord,
but, as to its reversionary interest only, Landlord may enter into such agreement, settlement, sale
or transfer without the consent of Tenant. Landlord and Tenant each agree to execute and deliver
to the other any instruments which may be required to effectuate or facilitate the provisions of this
Lease relating to condemnation.
15.3 Total Taking,
15.3.1 In the event of a Total Taking, this Lease shall terminate as of the date of
the Taking.
15.3.2 If this Lease is terminated pursuant to this Section 15.3, and separate
Awards are not made to Landlord and Tenant for their respective fee and leasehold interests, the
Award for such Taking shall be apportioned and distributed as follows:
15.3.2.1. First, to the Mortgagee, if any, to the extent of the Mortgage;
15.3.2.2. Second to Landlord, a sum equal to the fair market value of
the Property (subject to the remaining Term and the Rent reserved) on the date immediately
preceding the Taking as determined by the appraisal method set forth in Article 16 and determined
as if there were no taking nor threat of condemnation. The parties shall commence said appraisal
by the earlier of ten (10) days after Tenant's receipt of a copy of a Notice of Intended Taking or
ten (10) days after the date of the Taking;
15.3.2.3. Third, to Tenant, a sum equal to the fair market value of the
Improvements made by Tenant on the date immediately preceding the Taking as determined by
the appraisal method set forth in Article 16 and determined as if there were no Taking, nor threat
of condemnation; plus the residual value of the Term, subject to the Rent reserved; plus any part
of the Award attributable to the Low Income Housing Tax Credit; and
15.3.2.4. Fourth, to Landlord, the remainder, if any.
Page 31
15A Substantial Taking.
15. .1 In the event of a Taking which, in Tenant's reasonable judgment is
substantial, Tenant may, subject to the rights of the Mortgagee, if any, terminate this Lease. If
Tenant elects to terminate this Lease under this provision, Tenant shall give written notice of its
'election to do so to Landlord within forty-five days after receipt of a copy of a Notice of
Intended Taking. In the event Landlord disputes the right of Tenant to terminate this Lease under
this provision, Landlord shall give Tenant notice of this fact within forty-five (45) days after
receiving the notice of Tenant's election to terminate, and the parties shall either raise this issue in
the eminent domain proceeding, if any, as an issue with respect to the apportionment of the Award
between Landlord and Tenant or, if there is no eminent domain proceeding, submit the issue to
arbitration as provided in Article 23. In the event it is determined that Tenant does not have the
right to terminate this Lease, the apportionment f the Award for such Taking and the obligations
of Tenant to restore shall be governed by the terms of Section 15.6 or Section 15.8, whichever is
applicable.
15.4.2 In the event it is determined that Tenant has the right to terminate this Lease,
or in the event Landlord does not dispute Tenant's right to terminate this Lease, such termination
shall be as of the time when the Taking entity takes possession of the portion of the Property and
the Improvements taken. In such event, the Award for such Substantial Taking (including any
award for severance, consequential or other damages which will accrue to the portion of the
Property a d o.r the Improvements not taken) shall be apportioned and distributed as follows:
(a) First, to the Mortgagee, if any, to the extent of the Mortgage;
(b) Second, to Landlord, a sum equal to the fair market value of the
Property taken (subject to the remaining Term and the Rent reserved) immediately preceding the
date of the Taking as determined by the appraisal process provided for in Article 16, commenced
as provided in Section 15.3.2, and as modified by Section 15.6. ;
(c) Third, to Landlord, an amount equal to the portion of the award for
severance, consequential or other damages which accrued to the portion of the Property and/or
Improvements not taken;
(d) Fourth, to Tenant a sum equal to the fair market value of the
Improvements made by Tenant taken immediately preceding the date of the Taking as determined
by the appraisal process provided for in Article 16, commenced as provided in Section 15.3.2, and
as modified by Section 15. . ; plus the residual value of the Term, subject to the Rent reserved;
plus any part of the Award attributable to the Low Income Housing Tax Credit; and
(e) Fifth, to Landlord, the remainder, if any.
15.5 Tenant's Right to Revoke Notice of Termination. Notwithstanding anything to
the contrary contained in Section 1 .4, if Tenant has elected to terminate this Lease, and the taking
authority abandons or revises the Taking, Tenant shall have forty-five days from receipt of
written notice of such abandonment or revision to revoke its notice of termination of this Lease.
Page 3
15.6 aarial Taking.
1 . .1 In the event of a Partial Taking, this Lease shall continue in full force and
effect and Landlord and Tenant shall agree upon an equitable reduction in the .Annual Rent. If the
parties fail to agree upon such reduction within sixty days from the date Tenant is required to
give up such occupancy, use or access, whichever is earlier, Landlord and Tenant shall each choose
one arbitrator and the two arbitrators so chosen shall choose a third arbitrator. The decision of any
two of the arbitrators concerning the reduction in Annual Rent, if any, shall be binding on the
Landlord and Tenant and any expense of the arbitrators only shall be divided equally between
Landlord and Tenant (each party shall be liable for any and all costs incurred by such party,
including without limitation attorneys' fees and expert fees) .
1 . .2 The Award for such Partial Taking shall be apportioned and distributed first
to the Mortgagee, if any, to the extent of the Mortgage, then to Landlord and Tenant in proportion
to the fair market value of their respective interests in the Property and Improvements, as such
interests existed immediately prior to such Partial Taking. Notwithstanding anything contained
herein to the contrary, any part of the Award attributable to the Low Income Housing Tax Credit
shall belong to Tenant.
15.6.3 The fair market value of the parties' respective interests in the Property and
the improvements shall be determined by the appraisal process provided in Article 16, except that
the assumptions listed in such Article shall not apply. Rather, the appraisal shall be based on the
value of the Property as improved and encumbered by this Lease and on the value of the
Improvements as they stand, but without regard to any Taking or threat of condemnation,
15.6.4 Any Award for severance, consequential or other damages which accrues
by reason of the Partial Taking to the portion of the Property or the Improvements not taken shall
be distributed first to the Mortgagee, if any, to the extent of the Mortgage, then shall be apportioned
between Landlord and Tenant in accordance with the diminution in value of their respective
interests.
15.7 Obligation to Repair on Partial Taking. Promptly after any Partial Taking and
regardless of the amount of the Award for such Taking, Tenant shall, to the extent of the Award
received by Tenant and in the manner specified in the provisions of this Lease, repair, alter, modify
or reconstruct the Improvements and/or other improvements on the Property so as to make them
usable for the designated purpose and capable of producing a fair and reasonable net income.
15.8 Temporary Taking.
1 . .1 In the event of a Temporary Taking of the whole or any part of the Property
and/or Improvements, the Term shall not be reduced or affected in any way and Tenant shall
continue to pay in full any sum or sums of money and charges herein reserved and provided to be
paid by Tenant, and, subject to the other provisions of this Section 1 . , Tenant shall be entitled
Page 33
to any Award or payment for the temporary use of the Property and/or Improvements prior to the
termination of this Lease, and Landlord shall be entitled to any Award or payment for such use
after the trination of this Lease.
15 . , 2 If, following such Temporary Taking, possession of the Property and/or
Improvements shall revert to Tenant prior to the expiration of the Term, Tenant shall, unless at
such time there remains less than five years in the Term, restore the Property and/or
Improvements whether or not the Taking authority has made any Award or payment for such
restoration and regardless of the amount of any award or payment and in all other respects
indemnify and hold Landlord harmless from the effects of such Taking so that the Property and/or
Improvements in every respect shall upon completion of such restoration be in the same condition
as they were prior to the taking thereof.
15..3 If, following such Temporary Taking, possession of the Property shall
revert to Landlord after expiration of the Term, any sums deposited pursuant to this Section 15.8
shall be paid over to Landlord in their entirety and without apportionment and Tenant shall be
excused from its obligation to restore the Property and/or Improvements.
15.8.4 Any Award or payment for damages or cost of restoration made on or after
the termination of this Lease shall be paid first to the Mortgagee, if any, to the extent of the
Mortgage, then to Landlord absolutely, together with the remaining balance of any other funds
paid to Tenant for such damages or cost of restoration and Tenant shall thereupon be excused from
any obligation to restore the Property and/or Improvements upon the termination of such
Temporary Taking except that any obligation that may have accrued for Tenant to restore the
Property and/or Improvements prior to the commencement of said Temporary Taking shall
continue to be the obligation of Tenant,
15.9 Mor-t__Protection. Notwithstanding anything contained in this Lease to the
contrary, any and all condemnation proceeds shall be paid first to the Mortgagee, if any, to be
applied to reduce the Mortgage if required by the mortgage documents.
ARTICLE 16. APPRAISAL
whenever an appraisal of the Property is called for under the terms of this Lease, the parties
shall use the following procedure:
16.1 Appointment of Appraiser. Within ten 1 days after notice from Landlord to
Tenant, Landlord and Tenant shall each appoint an MAI appraiser to participate in the appraisal
process provided for in this Article 16 and shall give written notice thereof to the other party. Upon
the failure of either party so to appoint, the nondefaulting party shall have theright to apply to the
Superior Court of the County of San Diego, California, to appoint an appraiser to represent the
defaulting party, Within ten (10) days of the parties' appointment, the two (2) appraisers shall
jointly appoint a third MAT appraiser and give written notice thereof to Landlord and Tenant, or if
within ten (10) days of the appointment of said appraisers the two 2 appraisers shall fail to appoint
Page 3
a third, then either party hereto shall have the right to make application to said Superior Court to
appoint such third appraiser.
16.2 Determination of Fair Market Value.
16.2.1 Within thirty (30) days after the appointment of the third appraiser, the
appraisers shall determine the fair market value of the Property and the Improvements in
accordance with the provisions hereof, and shall execute and acknowledge their determination of
fair market value in writing and cause a copy thereof to be delivered to each of the parties hereto.
16.2.2 The appraisers shall determine the fair market value of the Property and the
Improvements as of the date of Landlord's notice referred to in Section 16.1 above, based on sales
of comparable property in the area in which the Property is located. If, however, in the judgment
of .a majority of the appraisers, no such comparable sales are available, then the appraisal shall be
based on the following assumptions: (i) that the Property is free and clear of this Lease, the
Improvements and all other improvements, and all easements and encumbrances; and (ii) that the
Property is available for immediate sale and development for the purposes and at the density and
intensity of development permitted under the zoning, subdivision and land use planning ordinances
and regulations applicable to the Property in effect on the Commencement Date of this Lease, and
any changes or amendments thereto or modification or variance from the provisions thereof or
conditional use permits which could reasonably be anticipated to have been granted or approved
as of the date of this Lease. Notwithstanding anything contained herein to the contrary, if the
appraisal, for the particular purposes for which it is being done, should reasonably reflect the rent
restrictions imposed on the Property pursuant to Article 8 of this Lease, and such other covenants,
conditions and restrictions to which the Property is subject pursuant to this Lease or to other
documents recorded against the Property in the Official Records, then such covenants, conditions
and restrictions shall be taken into consideration by the appraisers.
16.2.3 If a majority of the appraisers are unable to agree on fair market value within
thirty 3 days of the appointment of the third appraiser, the three appraisals shall be added
together and their total divided by three (3). The resulting quotient shall be the fair market value
of the Property and the Improvements. If, however, the low appraisal and/or high appraisal is or
are more than ten percent (10%) lower and/or higher than the middle appraisal, the low and/or high
appraisal shall be disregarded. If only one appraisal is disregarded, the remaining two appraisals
shall be added together and their total divided by two (2). The resulting quotient shall be the fair
market value of the Property and the Improvements. If both the low and high appraisals are
disregarded, the middle appraisal shall be the fair market value of the Property.
16.3 Payment- of Fees. Each of the parties hereto shall (a) pay for the services of its
appointee, (b) pay one-half 12 of the fee charged by the appraiser selected by their appointees,
and (c) pay one-half 1 2 of all other proper costs of the appraisal.
Page 3
ARTICLE 17. ASSIGNMENT/TRANSFER
17.1 Prohibition Against Transfer.
17.1.1 Fir to Recordation of the Certificate of Completion. Prior to
recordation of the Certificate of Completion, but subject to Article 19 pursuant to which Tenant is
permitted to sublease the Units for residential occupancy, Tenant shall not assign or attempt to
assign this Lease or any right herein (other than to a general or limited partnership of which Tenant
is the managing general partner) without the prior written consent of Landlord, which consent may
be withheld in Landlord's absolute discretion.
17.1.2 Following Recordation of the Certificate of Completion. Following
recordation of the Certificate of Completion, but subject to Article 19 pursuant to which Tenant is
permitted to sublease the Units for residential occupancy, Tenant shall not assign or attempt to
assign this Lease or any right herein, nor make any total or partial sublease, sale, transfer,
conveyance or assignment of the whole or any part of the Property or the Improvements thereon,
without the prior written consent of Landlord, which consent shall not be unreasonably withheld.
In the absence of specific written agreement by Landlord, no unauthorized sublease, sale, transfer,
conveyance or assignment of the Property, or any portion thereof, or approval thereof by Landlord
shall be deemed to relieve Tenant or any other party from any obligations under this Lease.
Notwithstanding anything to the contrary contained herein, Tenant shall be permitted to assign the
Lease to an affiliate of the managing general partner of Tenant in accordance with the option and
right of first refusal granted under Tenant's partnership documents.
17.1.3 Quali ication of Tenant. In connection with the above prohibition and
limitation on assignments, Tenant acknowledges that the qualifications, expertise and identities of
Tenant are of particular concern to Landlord, and that Landlord continues to rely on such expertise
to ensure the satisfactory completion of the Construction and operation of the Improvements on
the Property. Tenant further recognizes that it is because of such qualifications and identities that
Landlord is entering into this Lease with Tenant. No voluntary or involuntary successor in interest
of Tenant shall acquire any rights or powers under this Lease except as expressly set forth in the
Lease.
17.1.4 Conditions. Tenant's right to make an assignment after the recordation of
the Certificate of Completion shall be subject to compliance with the following further conditions:
(a) No Default. At the time of such assignment, this Lease shall be in full force and
effect and either no Event of Default (as defined in Section 21,1 then exists or no Event of Default
will exist upon consummation of the assignment.
(b) Assumption. The assignee shall have executed an express assumption of the
obligations and liabilities of Tenant under this Lease from and after the date of delivery and
recording of the assignment and there shall have been delivered to Landlord at the time of the
request for such assignment a conformed copy of such assumption.
Page 3
(c) Net Worth of Assignee. The assignee shall have a Net Worth equal to at least One
Million Dollars 1,000,0o,00 ("Net Worth Minimum"), , which Net Worth Minimum shall be
increased on the date that is five years after the first day of the first calendar year following the
Commencement Date, and on the same date every fifth (5th) year thereafter ("Net et Worth
jiustinent Date"), by an amount equal to the percentage change in construction industry costs,
from the first day of the calendar year following the Commencement ent Date until the applicable Net
Worth Adjustment Date, as published by the Engineering News Record, or such similar
co.struction industry index as the parties shall agree in the event such information is not available
in the Engineering News Record or such publication is no longer published. Net Worth is to be
evidenced by a statement of financial condition as of a date not more than three hundred sixty
(360) days prior to the date of assignment which is accompanied either by an opinion of a certified
or a chartered public accountant or by a certificate by the chief financial or accounting officer of
the assignee that it fairly represents the financial condition of the assignee. In the event Tenant
agrees to remain liable under this Lease from and after the effective date of such assignment and
to guaranty the obligations of the assignee under this Lease, the Net Worth Minimum standard set
forth in this Section 17,1 shall not apply to such assignee.
Notwithstanding the foregoing, the Executive Director, at her sole and absolute
discretion, shall be permitted to waive the Net Worth Minimum standard for a proposed assignee
that is (a) a Californiaonprofit, public benefit corporation, and b has demonstrated experience
and ability in owning, operating and managing similar affordable housing projects in the State of
California. Any assignee pursuant to the option or right of first refusal granted under Tenant's
partnership documents shall not be subject to the Net Worth Minimum requirement.
17.1, ssi r nt Agreement. No assignment of any interest in the Lease made
with Landlord's consent or as herein otherwise permitted shall be effective ctive unless and until there
shall have been delivered to Landlord an executed counterpart of such assignment or other transfer
document containing an agreement, in recordable form, executed by the assignor and the proposed
assignee, wherein and whereby such assignee assumes due performance of the obligations on the
assignor's part to be performed under this Lease from the effective date of the assignment to the
end of the Term.
17.1.6 Further Assignments. The consent by Landlord to an assignment shall not
in any way be construed to relieve Tenant from obtaining the express consent in writing of
Landlordto any further assignment if required by the terms of this Lease.
17.2 Terminable Upon Foreclosure. Notwithstanding anything contained in this Lease
to the contrary, upon foreclosure of a Mortgage, or acceptance by a Mortgagee of an assignment
or deed in lieu of foreclosure, Article 17 of this Lease shall be terminable by the purchaser at the
foreclosure sale, or the assignee or grantee of a deed in lieu of foreclosure, by notice to Landlord.
17.3 other Rights of Mortgnees. Landlord agrees that none of the restrictions or
limitations on assignment or transfer by Tenant set forth in this Article 17 shall be construed to
limit or abrogate the rights of a Mortgagee to (a) seek the appointment of a receiver, (b) exercise
its rights and remedies under its Mortgage, including completing a foreclosure or deed in lieu, or
Page 3
I
delegate or assign its rights under this Lease to any third party in connection with the exercise
of said Mortgagee's rights and remedies under its Mortgage.
17.4 Limitation on Transfer by Landlord. Landlord agrees, during the Compliance
Period, not to transfer its interest in the Property or under this Lease without the prior written
approval of the Tax Credit Partner; provided, however, no such approval shall be required for such
a transfer to another public body.
17,5 Transfer _ Tax Credit Partner. Notwithstanding the foregoing limitations on
transfer and assignment, nothing herein shall limit or condition a transfer, sale, assignment or other
conveyance of all or a portion of the limited partner interests of the Tax Credit Partner to any
affiliate of the Tax Credit Partner, and the interests of the Tax Credit Partner shall be freely
transferable to without the consent or approval of but only with prior, written notice to Landlord;.
ARTICLE 18. MORTGAGES
18.1 Leasehold Morlgaps.
1 .1,1 General Provisions, At all times during the Term, Tenant shall have the
right to mortgage, pledge, deed in trust, assign rents, issues and profits and/or collaterally (or
absolutely for purposes of security if required by any lender) assign its interest in this Lease, or
otherwise encumber this Lease, and/or the interest of Tenant hereunder, in whole or in part, and
any interests or rights appurtenant to this Lease, and to assign or pledge the same as security for
any debt (the holder of any such mortgage, pledge or other encumbrance, and the beneficiary of
any such deed of trust being hereafter referred to as "Mortgagee" and the mortgage, pledge, deed
of trust or other instillment hereafter referred to as "Mortgage"), upon and subject to each and all
of the following terms and conditions:
(a) Prior to the issuance of a Certificate of Completion, Mortgages
entered into by Tenant shall be limited in purpose to and shall not exceed the amount necessary
and appropriate to develop the Improvements, and to acquire and install equipment and fixtures
thereon. Said amount shall include all hard and soft costs of acquisition, development,
Construction, lease -up and operation of the Improvements. ents. After the recordation of the Certificate
of Completion, the limitation contained in this subsection shall no longer apply.
(b) Any permitted Mortgages entered into by Tenant are to be originated
only by lenders approved in writing by Landlord, which approval will not be unreasonably
withheld. Landlord shall statethe reasons for any such disapproval. Notwithstanding the forgoing,
Landlord shall be deemed to have automatically approved (i) a commercial or savings bank, a trust
company, an insurance company, a savings and loan association, a building and loan association,
an educational institution, a pension, retirement or welfare fund, or other fund authorized to make
loans in the State of California; (ii) any other entity having a net worth of $50,000,000 or more
whether or not a so-called institution, or any division, subsidiary, parent or affiliate owned or
controlled by, owning or in control of or in common control or ownership with any entities
described in (i) or (ii); or (iii) a lender regularly engaged in business in an office or location in the
State of California, or who has a registered agent for service of process in California. In addition,
Page 3
any lender must be duly licensed or registered with any regulatory agency having jurisdictioover
its operation, if ally; and any lender must not be under any order or judgment of any court or
administrative agency restricting or impairing its operation as a lender where the restriction or
impairment would be directly related to the proposed loan to Tenant. Notwithstanding anything to
the contrary contained herein, Landlord hereby approves the Senior Lender as the lender of the
Construction Loan and Pacific Premier Bank as the lender of the Affordable Housing Project loan.
If the lender is other than as set forth in the immediately preceding sentence or a lender deemed
automatically approved pursuant to subdivisions i, (ii) (iii) this Section, then upon the
reasonable request of Landlord, the beneficial owners of lender must be disclosed to Landlord.
(c) All rights acquired by said Mortgagee shall be subject to each and
all of the covenants, conditions and restrictions set forth in this Lease, and to all rights of Landlord
thereunder, none of which covenants, conditions and restrictions is or shall be waived by Landlord
by reason of the giving of such Mortgage.
If Tenant encumbers its leasehold estate by way of a Mortgage as permitted herein,
and should Landlord be advised in writing of the name and address of the Mortgagee, then this
Lease shall not be terminated or canceled on account of any Event of Default by Tenant in the
performance of the terms, covenants or conditions hereof until Landlord shall have complied with
the provisions of Section 18.2 as to the Mortgagee's rights to cure and to obtain a new lease.
1 .1.2 Consent of Mortgagee Required. No cancellation, surrender, termination,
or modification of this Lease shall be effective without the written consent of the holder of any
Mortgage.
18.2 Rights and Obligations of Leasehold Mortgnees. If Tenant or Tenant's
successors or assigns shall mortgage the leasehold interest herein demised, then, as long as any
such Mortgage shall remain unsatisfied of record, the following provisions shall apply:
1 .2 1 No Cancellation. Landlord will not cancel, accept a surrender of, terminate
or modify this Lease in the absence of a. default by Tenant without the prior consent in writing of
the Mortgagee.
18.2.2 Notice of Defaults. Landlord agrees to give each Mortgagee immediate
notice of all defaults by Tenant under the Lease, and to simultaneously give to each Mortgagee a
written copy of all notices and demands that Landlord gives to Tenant. No notice or demand under
the Lease shall be effective until after notice is received by Mortgagee. Any notices of default
given by Landlord under the Lease shall describe the default(s) with reasonable detail. Each
Mortgagee shall have the right to cure any breach or default within the time periods given below.
1 ..3 Mortgagee's Cure Rights.
(a) Notice and Cure. After receipt by Tenant of a notice of default
under the Lease and the expiration of any applicable period of cure given to Tenant under the
Lease, Landlord shall deliver an additional notice ("Mortgagee's 1 . " to each Mortgagee
Page 39
specifying the default and stating that Tenant's period of cure has expired. Each Mortgagee shall
thereupon have the additional periods of time to cure any uncured default, as set forth below,
without payment ofdefault charges, fees, late charges or interest that. might otherwise be payable
by Tenant. Landlord shall not terminate the Lease or exercise its other remedies under the Lease
if:
i Within ninety days after Mortgagee's receipt of the
Mortgagee's Notice, any Mortgagee (i) cures the default, or (ii) if the default reasonably requires
more than ninety (90) days to cure, commences to cure said default within such ninety -day
period and thereafter diligently prosecutes the same to completion; or
(ii)Where the default cannot be cured by payment or
expenditure of money or without possession of the Property or otherwise, Mortgagee initiates
foreclosure or other appropriate proceedings within ninety days after receipt of the
Mortgagee's Notice, thereafter cures all other defaults reasonably capable of cure by the payment
of money to Landlord, and thereafter continues to pay all rents, real property taxes and
assessments, and insurance premiums to be paid by Tenant under the Lease. Mortgagee shall then
have ninety days following the later to occur of (i) the date of execution and delivery of a new
lease of the Property pursuant to Section 18.2.4 of the Lease (a "New Lease"), or (ii) the date on
which Mortgagee or its nominee is able to occupy the Property following foreclosure under such
Mortgage and the eviction of or vacating by Tenant of the leased premises, to cure such default;
provided, however, that if any such default, by its nature, is such that it cannot practicably be cured
within ninety clays, then Mortgagee shall have such additional time as shall be reasonably
necessary to cure the default provided that Mortgagee commences such cure within such ninety
(90)-day period and thereafter diligently prosecutes the cure to completion.
(b) Cure _by Mortgagee. Landlord agrees to accept performance by
Mortgagee of all cures, conditions and covenants as though performed by Tenant, and agrees to
permit Mortgagee access to the Property to take all such actions as may be necessary or useful to
perform any condition or covenants of the Lease or to cure any default of Tenant. Mortgagee shall
not be required to perform any act or cure any default which is not reasonably susceptible to
performance or cure by Mortgagee.
(c) ) Mortgagee__Acilsition and Cure. If Mortgagee elects any of the
above -mentioned options, then upon Mortgagee's acquisition of the Lease by foreclosure, whether
by power of sale or otherwise or by deed or assignment in lieu of foreclosure, or if a receiver be
appointed., the Lease shall continue in full force and effect, provided that, if Mortgagee elects the
option provided in Section 1 .2. a ii above, then upon Mortgagee's acquisition of the Lease,
Mortgagee shall cure all prior defaults of Tenant under the Lease that are reasonably capable of
being cured by Mortgagee within the time set forth in said Section, and Landlord shall treat
Mortgagee as Tenant under the Lease. If Mortgagee commences an action as set forth in Section
I .2. a ii above, and thereafter Tenant cures such defaults (which cure Landlord shall be
obligated to accept) and Mortgagee then terminates all proceedings under the option in said
Section, then the Lease shall remain in full force and effect between Landlord and Tenant.
Page 40
18.2.4 NewL.eas. In the event the Lease is terminated for any reason prior to the
end of the Lease Term, Landlord shall promptly give Mortgagee written notice of such termination
and shall enter into a new lease ("New Lease) with Mortgagee or Mortgagee's nominee covering
the Property, provided that Mortgagee (a) requests such New Lease by written notice to Landlord
within sixty days after Mortgagee's receipt of written notice by Landlord oftermination f
the Lease, and b cures all prior defaults of Tenant that are reasonably capable of being cured by
Mortgagee. The New Lease shall be for the remainder of the Lease Term, effective at the date of
such termination, and shall only include all the rents and all the covenants, agreements, conditions,
provisions, restrictions and limitations contained in the Lease, except as otherwise provided in the
Lease. In connection with a. New Lease, Landlord shall assign to Mortgagee or its nominee all of
Landlord's interest in all existing subleases of all or any part of the Property and all attormnents
given by the sublessees. Landlord shall not terminate or agree to terminate any sublease or enter
into any new lease or sublease for all or any portion of the Property without Mortgagee's prior
written consent, unless Mortgagee fails to deliver its request for a New Lease under this Section.
In connection with any such New v Lease, Landlord shall, by grant deed, convey to Mortgagee or
its nominee title to the Improvements, if any, which become vested in Landlord as a result of
termination of the Lease. Landlord shall allow to the tenant under the New Lease a credit against
rent equal to the net income derived by Landlord from the Property during the period from the date
of termination of the Lease until the date of execution of the New Lease under this Section.
18.2.5 Security Deposits. Mortgagee or any other purchaser at a foreclosure sale
of the . Mortgage (or Mortgagee or its nominee if one of them enters into a New Lease with
Landlord) shall succeed to all the interest of Tenant in any security or other deposits or other
impound payments paid by Tenant to Landlord.
18.2.6 e mitt _ cla . So long as Mortgagee is prevented by any process or
injunction issued by any court or by any statutory stay, or by reason of any action by any court
having jurisdiction of any bankruptcy or insolvency proceeding involving Tenant or any other
person, from commencing or prosecuting foreclosure or other appropriate proceedings in the
nature thereof, Mortgagee shall not be deemed for that reason to have failed to commence such
proceedings or to have failed to diligently prosecute such proceedings, provided that Mortgagee
uses reasonable efforts to contest and appeal the issuance or continuance of any such process, stay
or injunction.
1 .2.7 Defaults a ec _cured. On transfer of the Lease at any foreclosure sale
under the Mortgage or by deed o.r assignment in lieu of foreclosure, or upon creation of a New
Lease, any or all of the following defaults relating to the prior owner of the Lease shall be deemed
cured:
(a)
(b)
of the prior Tenant;
(c)
possession of the Lease;
Attachment, execution or other judicial levy upon the Lease;
Assignment of the Lease for the direct or indirect benefit of creditors
Judicial appointment of a receiver or similar officer to take
Page 41
(d) Filing any petition by, for or against Tenant under any chapter of the
federal Bankruptcy Act or any federal or state debtor relief statute, as amended;
(e) Any failure by Tenant to make a disclosure of a hazardous substance
release as required by the California Health and Safety Code, the Lease or otherwise; and
(f) Any other defaults personal to Tenant and/or not otherwise
reasonably curable by Mortgagee.
18.2.8 Mortgagee Priority. Anything herein contained to the contrary
notwithstanding, the provisions of this Section shall inure only to the benefit of the holders of
Mortgages. If the holders of more than one such Mortgage shall make written requests upon
Landlord in accordance with this Lease, the new lease (as providedfor in subsection 18.2.4 above)
shall be entered into pursuant to the request of the holder whose Mortgage shall be prior in lien
thereto and thereupon the written requests for a new lease of each holder of a Mortgage junior in
lien shall be and be deemed to be void and of no force or effect.
18.3 Landlord's Forbearance and Right to Cure efaults_on Leasehold Mortgages.
18.3.1 Notice. Landlord will give to Mortgagee, at such address as is specified by
the Mortgagee in accordance with Section 26.1 hereof, a. copy of each notice or other
communication with respect to any claim that a default exists or is about to exist from Landlord to
Tenant hereunder at the time of giving such notice or communication to Tenant, and Landlord will
give to Mortgagee a copy of each notice of any rejection of this Lease by any trustee in bankruptcy
of Tenant. Landlord will not exercise any right, power or remedy with respect to any Event of
Default hereunder, and no notice to Tenant of any such Event of Default and no termination of this
Lease in connection therewith shall be effective, unless Landlord has given to Mortgagee written
notice or a copy of its notice to Tenant of such Event of Default or any such termination, as the
case may be.
1 . .2 Mortgagee's Transferees, Etc. In the event the leasehold estate hereunder
shall be acquired by foreclosure, trustee's sale or deed or assignment in lieu of foreclosure of a
Mortgage, the purchaser at such sale or the transferee by such assignment and its successors as
holders of the leasehold estate hereunder shall not be liable for any Rent, if any, or other obligations
accruing after its or their subsequent sale or transfer of such leasehold estate and such purchaser
or transferee and its successors shall be entitled to transfer such estate or interest without consent
or approval of Landlord; provided that, the purchaser or transferee or successor as holder of the
leasehold estate hereunder shall be liable for the payment of all Rent, if ally, becoming due with
respect to the period during which such purchaser, transferee or other successor is the bolder of
the leasehold estate hereunder. This Section shall also apply to the rights of a Mortgagee in
connection with the entry into a new lease under Section 18.2.4 and to the appointment of a
receiver on behalf of a. Mortgagee.
Page 42
18.3.3 Insurance and Condemnation. In the event of any casualty to, or
condemnation of, all or any part of the leased premises or any improvements now or hereafter
located thereon, the provisions of the Mortgages relating thereto shall prevail over any provisions
of this Lease relating thereto.
18.4 No Liability of Mortgagee for Prior Indemnified Acts. A Mortgagee shall not be
obligated to assume the liability of Tenant for any indemnities arising for a period prior to
Mortgagee's acquiring the right to possession of the Property under this Lease.
18.5 Landlord Coo erat_. Landlord covenants and agrees that it will act and fully
cooperate with Tenant in connection with Tenant's right to grant leasehold mortgages as
hereinabove provided. At the request of Tenant or any proposed or existing Mortgagee, Landlord
shall promptly execute and deliver (i) any documents or instruments reasonably requested to
evidence, acknowledge and/or perfect the rights of Mortgagees as herein provided; and (ii) an
estoppel certificate certifying the status of this Lease and Tenant's interest herein and such matters
as are reasonably requested by Tenant or such Mortgagees. Such estoppel certificate shall include,
but not be limited to, certification by Landlord that (a) this Lease is unmodified and in full force
and effect (or, if modified, state the nature of such modification and certify that this Lease, as so
modified, is in full force and effect), b all rents currently due under the Lease have been paid, (c)
there are not, to Landlord's knowledge, any uncured Events of Default on the part of Tenant under
the Lease or facts, acts or omissions which with the giving of notice or passing of time, or both,
would constitute an Event of Default. Any such estoppel certificate may be conclusively relied
upon by any proposed or existing leasehold Mortgagee or assignee of Tenant's interest in this
Lease.
18.6 Priority. The Lease, and any extensions, renewals or replacements thereof, and any
sublease entered into by Tenant as sublessor, and any Mortgage or other encumbrance recorded
by any Mortgagee shall be superior to any mortgages, deeds of trust or similar encumbrances
placed by Landlordon the Property and to any lien right, if any, of Landlordon the buildings, and
any furniture, fixtures, equipment or other personal property of Tenant upon the Property or any
interest of Landlord in sublease rentals or similar agreements.
18.7 Claims. Landlord and Tenant shall deliver to Mortgagee notice of any litigation or
arbitration proceedings between the parties or involving the Property or the Lease. Mortgagee shall
have the right, at its option, to intervene and become a party to any such proceedings. If Mortgagee
elects not to intervene or become a party, Landlord shall deliver to Mortgagee prompt notice of
and a copy of any award, decision or settlement agreement made in connection with any such
proceeding.
18.8 Further_ Amendments. Landlord and Tenant shall cooperate in including in the
Lease by suitable amendment from time to time any provision which may be reasonably requested
by any proposed Mortgagee for the purpose of implementing the mortgagee protection provisions
contained in this Lease and allowing that Mortgagee reasonable means to protect or preserve the
lien of its Mortgage upon the occurrence of a default under the terms of the Lease. Landlord and
Page 4
Tenant each agree to execute and deliver (and to acknowledge ledge for recording purposes, if necessary)
any agreement required to effect any such amendment.
ARTICLE 19. SUBLEASING
19.1 Subleasing of ]Proety. All subleases "Subleases" made by Tenant shall be
subject to the following provisions and restrictions:
1911 Tenant may, without the consent of Landlord, let individual units of the
Improvements to any person who qualifies.
19.1.2 Each Sublease shall contain a provision, satisfactory to Landlord, requiring
the Subtenant to attorn to Landlord upon (a) an Event of Default by Tenant under this Lease, and
(b) receipt by such Subtenant of written notice of such Event of Default and instructions to make
such Subtenant's rental payments to Landlord.
19.1.3 On any termination of this Lease prior to the expiration of the Term, all of
Tenant's interest as sublessor under any and all existing valid and enforceable Subleases for which
Landlord has issued a non -disturbance agreement shall be deemed automatically assigned,
transferred and conveyed to Landlord and subtenants under such Subleases shall be deemed to
have attorned to Landlord. Landlord shall thereafter be bound on such Subleases to the same extent
Tenant, as sublessor, was bound thereunder and Landlord shall have all the rights under such
Subleases that Tenant, as sublessor, had under such Subleases; provided, however, that any
amendments to any such Sublease made after the issuance of a non -disturbance agreement to a
subtenant shall not be binding on Landlord.
19.1.4 Any subtenant qualifying shall, upon written request, receive a non -
disturbance agreement from Landlord.
19.1.5 Not later than thirty (30) days after each anniversary of the date of
commencement of the term of this Lease, Tenant shall deliver to Landlord a current list of the
name and mailing address of each Subtenant.
19.1.6 Tenant shall not accept, directly or indirectly, more than two months
prepaid rent plus a reasonable security deposit from any subtenant.
19.1.7 Each Sublease shall expressly provide that it is subject to each and all of the
covenants, conditions, restrictions and provisions of this Lease.
19.2 Rights of Mortmees. Notwithstanding anything contained in this Lease to the
contrary, all attornment provisions applicable to the Landlord shall also be applicable to a
Mortgagee and, as between Landlord and Mortgagee, the Mortgagee shall have priority in any
attorrent situation.
Page 44
ARTICLE 20. PERFORMANCE OF TENANT'S COV NA1
TS
20.1 Right of Performance. If Tenant shall at any time fail to pay any Imposition or
other charge in accordance with Article 4 hereof; within the time period therein permitted, or shall
fail to pay for or maintain any of the insurance policies provided for in Article 9 hereof, within the
time therein permitted, or to make any other payment or perform any other act on its part to be
made or performed hereunder, within the time permitted by this Lease, then Landlord, after thirty
(30) days' written notice to Tenant (or, in case of an emergency, on such notice, or without notice,
as may be reasonable under the circumstances) and without waiving or releasing Tenant from any
obligation of Tenant hereunder, may (but shall not be required to):
(a) pay such Imposition or other charge payable by Tenant pursuant to the
provisions of Article 4 hereof, or
b. pay for and maintain such insurance policies provided for in Article
hereof, or
(c) make such other payment or perform such other act on Tenant's part to be
made or performed as in this Lease provided.
20.1 .1 h -of Mortgagees. Notwithstanding anything contained in this Lease
to the contrary, all of the performance rights available to Landlord under Section 20.1 shall also
be available to Mortgagee and, as between Landlord and Mortgagee, the rights of the Mortgagee
shall take precedence over the rights of Landlord.
20.2 Reimbursement and Painag. All sums so paid by Landlord and all costs and
expenses incurred by Landlord in connection with the performance of any such act, together with
interest thereon at the rate provided in Section 4.5 from the respective dates of Landlord's making
of each such payment or incurring of each such cost or expense, shall be paid by Tenant to
Landlord on demand. Landlord shall not be limited in the proof of any damages which Landlord
may claim against Tenant arising out of or by reason of Tenant's failure to provide and keep in
force insurance as aforesaid, to the amount of the insurance premium or premiums not paid or
incurred by Tenant and which would have been payable upon such insurance, but Landlord shall
also be entitled to recover as damages for such breach, the uninsured amount of any loss (to the
extent of any deficiency in the insurance required by the provisions of this Lease), damages, costs
and expenses of suit, including attorneys' fees, suffered or incurred by reason of damage to, or
destruction of, the Improvements, ents, occurring during any period l in which Tenant shall have failed
or neglected to provide insurance as aforesaid.
ARTICLE 21. EVENTS OF DEFAULT; REMEDIES
21.1 Events of Default. Any one or all of the following events shall constitute an Event
of Default hereunder:
Page 45
21.1.1 If Tenant shall default in the payment of any Rent when and as the same
becomes due and payable and such default shall continue for more than ten 1 days after
Landlord shall have given written notice thereof to Tenant; or
21.1.2 The abandonment or vacation of the Property by Tenant for a period of
thirty 0 days; or
21.1.3 The entry of any decree or order for relief by any court with respect to
Tenant, or any assignee or transferee of Tenant (hereinafter "Assignee"), in any involuntary case
under the Federal Bankruptcy Code or any other applicable federal or state law; or the appointment
of or taking possession by any receiver, liquidator, assignee, trustee, sequestrator or other similar
official of Tenant or any Assignee (unless such appointment is in connection with a Mortgagee's
exercise of its remedies under its Mortgage), or of any substantial part of the property of Tenant
or such Assignee, or the ordering or winding up or liquidating of the affairs of Tenant or any
Assignee and the continuance of such decree or order unstayed and in effect for a period of ninety
(90)days or more (whether or not consecutive); or the commencement by Tenant or any such
Assignee of a voluntary proceeding under the Federal Bankruptcy Code or any other applicable
state or federal law or consent by Tenant or any such Assignee to the entry of any order for relief
inn an involuntary case under any such law, or consent by Tenant or any such Assignee to the
appointment of or taking of possession by a receiver, liquidator, assignee, trustee, sequestrator or
other similar official of Tenant or any such Assignee, or of any substantial property of any of the
foregoing, or the making by Tenant or any such Assignee of any general assignment for the benefit
of creditors; or Tenant or any such Assignee takes any other voluntary action related to the business
of Tenant or any such Assignee or the winding up of the affairs of any of the foregoing.
21.1.4 If Tenant shall default in the performance of or compliance with any other
term, covenant or condition of this Lease (other than as set forth in Paragraph 21.1.1 of this Section
21.1) and such default shall continue for more than thirty (30) days after Landlord shall have given
written notice thereof to Tenant, provided, however, if cure of such default reasonably requires
more than thirty days, then, provided that Tenant commences to cure within such thirty(30)
day period and thereafter diligently and continuously prosecutes the cure to completion, Tenant
shall not be in default during the cure period.
21,2 Remedies.
.
21.2.1 If an Event of Default shall occur and continue as aforesaid, then in addition
to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate
option to terminate this Lease and bring suit against Tenant or submit the issue of Tenant's default
to arbitration as provided in Article 23 and recover as an award in such suit or arbitration
proceeding the following:
(a) the worth at the time of award of the unpaid rent and all other sums
due hereunder which had been earned at the time of termination;
Page 46
(b) the worth at the time of award of the amount by which the unpaid
rent and all other sums due hereunder which would have been earned after termination until the
time of award exceeds the amount ofsuch rental loss that Tenant proves could have been
reasonably avoided;
(c) the worth at the time of award of the amount by which the unpaid
rent and all other sums due hereunder for the balance of the Term after the time of award exceeds
the amount of such rental loss that Tenant proves could be reasonably avoided;
(d)any other amount necessary to compensate Landlord for all the
detriment proximately caused by the Tenant's failure to perform its obligations under this Lease
or which in the ordinary course of things could be likely to result therefrom; and
(e) such amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable California law.
21.2.2 The "worth at the time of the award" of the amounts referred to in
Subparagraphs 21.2.1(a) and 21.2.1(b) above shall be computed by allowing interest at the rate
provided in Section 4.5 as of the date o.f the award. The "worth at the time of award" of the amount
referred to in subparagraph 21. .1 c above shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
21.2.3 If an Event of Default occurs, Landlord shall also have the right, with or
without terminating this Lease, but subject to any nondi sturbanc e agreements entered into with
Subtenants, to reenter the Property and remove all persons and property from the Property; such
property may be removed and stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant.
21.2.4 If an Event of Default occurs, Landlord shall also have the right, with or
without terminating this Lease, to relet the Property. if Landlord so elects to exercise its right to
relet the Property but without terminating this Lease, then rentals received by Landlord from such
reletting shall be applied: First, to the payment of any indebtedness other than rent due hereunder
from Tenant to Landlord; Second, to the payment of any cost of such relating; Third, to the
payment of the cost of any alterations and repairs to the Property; Fourth, to the payment of rent
due and unpaid hereunder; and Fifth, the residue, if any, shall be held by Landlord and applied in
payment of future rent as the same may become due and payable hereunder. Should the amount of
rental received from such reletting during any month which is applied to the payment of rent
hereunder be less than that agreed to be paid during that month by Tenant hereunder, then Tenant
shall pay such deficiency to Landlord immediately upon demand therefor by Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as
ascertained, any costs and expenses incurred by Landlord in such reletting or in making alterations
and repairs not covered by the rentals received from such reletting.
Page 47
21.2.5 To reentry or taking possession of the Property by Landlord pursuant to
Paragraphs 21.2.3 or 21.2.4 shall be construed as an election to terminate this Lease unless a
written notice of such intention is given to Tenant or unless the termination thereof is decreed by
a court of competent jurisdiction. Notwithstanding any reletting without termination by Tenant
because of any default by Tenant, Landlord may at any time after such reletting elect to terminate
this Lease for any such default.
21.3 Receipt of Rent, No Waiver of Default. The receipt by Landlord of the rents or
any other charges due to Landlord, with knowledge of any breach of this Lease by Tenant or of
any default on the part of Tenant in the observance or performance of any of the conditions or
covenants of this Lease, shall not be deemed to be a waiver of any provisions of this Lease. No
acceptance by Landlord of a lesser sum than the rents or any other charges then due shall be
deemed to be other than on account of the earliest installment of the rents or other charges due,
nor shall any endorsement or statement on any check or any letter accompanying any check or
payment of rent or charges due be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the balance of such
installment or pursue any other remedy provided in this Lease. The receipt by Landlord of any rent
or any other sum of money or any other consideration paid by Tenant after the termination ofthis
Lease, or after giving by Landlord of any notice hereunder to effect such termination, shall not,
except as otherwise expressly set forth in this Lease, reinstate, continue, or extend the term of this
Lease, or destroy, or in any manner impair the efficacy of ny such notice of termination as may
have been given hereunder by Landlord to Tenant prior to the receipt of any such sum of money
or other consideration, unless so agreed to in writing and signed by Landlord. Neither acceptance
of the keys nor any other act or thing done by Landlord or by its agents or employees during the
Term shall be deemed to be an acceptance of a surrender of the Property or the Improvements,
excepting only an agreement in writing signed by Landlord accepting or agreeing to accept such
surrender.
21.4 Effect on Indemnification. Notwithstanding the foregoing, nothing contained in
this Article 21 shall be construed to limit the Indernnitees' right to indemnification as otherwise
provided in this Lease.
21.5 Limited Waiver of RIlit to Terminate Lease. Landlord hereby waives it right to
terminate this Lease during the Compliance Period for a default by Tenant other than the failure
to pay Annual Rent. That notwithstanding, Landlord, during the Compliance Period, shall retain
all other rights and remedies available hereunder or by law for such a non -monetary default,
including, without limitation, an action to compel performance of the covenant or condition that
is the subject of the alleged default.
ARTICLE 22. PERMITTED CONTESTS
Tenant, at no cost or expense to Landlord, may contest (after prior written notice to
Landlord), by appropriate legal proceedings conducted with due diligence, the amount or validity
or application, in whole or in part, of any Imposition or lien or any Legal Requirement or Insurance
Requirement, provided that (a) in the case of liens of mechanics, materialmen, suppliers or
vendors, or Impositions or liens therefor, such proceedings shall suspend the collection thereof
Page 48
from Landlord, and shall suspend a foreclosure against the Property and/or the Improvements, or
any interest therein, or any Rent, if any, (b) neither the Property or the Improe.ets, nor any part
thereof or interest therein, or the Rent, .t, if any, or any portion thereof, would be in any danger of
being sold, forfeited or lost by reason of such proceedings, in the case of a Legal Requirement,
Landlord would not be in any danger of any criminal liability or, unless Tenant shall have furnished
a bond or other security therefor satisfactory to Landlord, any additional civil liability for failure
to comply therewith and the Property and the Improvements would not be subject to the imposition
of any lien as a result of such failure, and (d) Tenant shall have furnished to Landlord, if requested,
a bond or other security, satisfactory to Landlord. If Tenant shall fail to contest any such matters,
or to give Landlord security as hereinabove provided, Landlord may, but shall not be obligated to,
contest the matter or settle or compromise the same without inquiring into the validity or the
reasonableness thereof. Landlord, at the sole cost and expense of Tenant, will cooperate with
Tenant and executeany documents or pleadings legally required for any such contest.
ARTICLE 23. ARBITRATION OF DISPUTES
23.1 Matters Subject to Arbitration. All disputes arising under this Lease shall be
submitted to arbitration prior to either party bringing suit based on such disputes, except that any
dispute relating to the following rights and obligations shall not be subject to arbitration:
23.13 Tenant's obligation to:
(a) pay Rent, if any, and other charges due under this Lease;
(b) indemnify Landlord as provided herein; and
(c) keep the Property and the Improvements free and clear of any
mechanics' or other liens:
23.1.2 Landlord's right to:
(a) pursue any of the remedies defined in Article 21; and
(b) assign, transfer, sell or encumber its interest in the Property or this
Lease;
23.1.3 Any right or obligation the exercise or performance of which is dependent
on Landlord's approval, if the issue is the reasonableness of Landlord's action,
23.1.4 Any right of the Mortgagee to exercise its remedies under its Mortgage or
in connection with the bankruptcy of the Tenant or Landlord.
23.2 Arbitration Process.
Either party may refer a dispute subject to arbitration for settlement by arbitration
in National City, California, in accordance with the Commercial Arbitration Rules of the American
Page 4
Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be
entered in any Court having jurisdiction.
NOTICE: BY I ITIALING IN THE SPACE BELOW YOU ARE AGREEING TO
HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS
PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MAY
POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN
THE "ARBITRATION OF DISPUTES" PROVISION. . IF YOU REFUSE TO SUBMIT TO
ARBITRATION N AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED
TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE, YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS
VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO
SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION.
Tenant's Initials Landlord's Initials
ARTICLE 4. FORCE MAJEURE
24.1 Subject to Paragraph 24.2 below, any prevention, delay, nonperformance or
stoppage by Tenant due to any of the following causes shall be excused: any regulation, order, act,
restriction or requirement or limitation imposed by any federal, state, municipal or foreign
government or any department or agency thereof, or civil or military authority; acts of God; acts
or omissions of Landlord or its agents or employees; fire; explosion; floods and/or earthquakes;
es;
strikes, walkouts or inability to obtain aterials; war, riots, sabotage or civil insurrection; or any
other causes beyond the reasonable control of Tenant.
24,2 No prevention, delay, or stoppage of performance shall be excused unless:
2 . .1 Tenant notifies Landlord within thirty days of such prevention, delay
or stoppage that it is claiming excuse of its obligations under this Article 24; and
24.2.2 Tenant diligently proceeds within thirty (30) days of the conclusion of such
prevention, delay or stoppage to cure the condition causing the prevention, delay or stoppage; and
24.2.3 Tenant effects such cure within a reasonable time.
Page 50
ARTICLE . GENERAL PROVISIONS
25.1 Notices. All notices or demands shall be in writing and shall be served personally,
by overnight courier, or by express or certified mail. Service shall be deemed conclusively made
at the time of service if personally served; the next business day if sent by overnight courier and
receipt is confirmed by the signature of an agent or employee ofthe party served; the next business
day after deposit in .a.e United States mail, properly addressed and postage prepaid, return receipt
requested, if served by express mail; and three 3 days after deposit thereof in the United States
mail, properly addressed and postage prepaid, return receipt requested, if served by certified mail.
25.1.1 Any notice to Landlord shall be given to:
Community Development Commission
Rousing Authority of the City of National City
1243 National City Blvd,
National City, California 91950
Attn: Executive Director
25.1.2 Any notice to Tenant shall be given to:
D Avenue Housing Associates, LP,
o Community HousingWorks
3111 Camino Del Rio North, Suite 800
San Diego, CA 92108
Attention: President and CEO
With a copy to:
Downs Pham &. Kuei LLP
235 Montgomery Street, 30th Floor
San Francisco, CA 94010
Attention: Irene C. Kuei
and to:
Bank of America, N.A.
MAI -22 -02-02
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Facsimile: 1 - 4 - 2 '
And:
Banc of America CDC Special Holding Company, Inc.
I1 Al-22 - 2-02
Page 51
225 Franklin Street
Boston, MA 02110
Attention: Asset Management
Facsimile; 17- 4 -2257
And:
Buchalter, a Professional Corporation
1000 Wilshire Boulevard, Suite 1500
Los Angeles, CA 90017
Attn: Michael A. Williamson, Esq.
Matter No:B0965-0654
And to Mortgagees:
Bank of America, N.A.
2000 Clayton Road
Mail Code CA4-704-06-06
Concord, CA 94520
Attention: Loan Administration
With copy to:
Buchalter, a Professional Corporation
1000 Wilshire Boulevard, Suite 1500
Los Angeles, CA 9 017
Attn: Michael A. Williamson, Esq.
Matter No: B0965-0654
Any party may, by virtue of written notice in compliance with this Section 25.1, alter or change
the address or the identity of the person to whom any notice, or copy thereof, is to be sent.
25.2 Certificates. Landlord or Tenant, as the case may be, shall execute, acknowledge
and deliver to the other, promptly upon request, a Certificate of Landlord or Tenant, as the case
may be, certifying (a) that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that the Lease is in full force and effect, as modified, and stating the date of
each instrument so modifying the Lease), (b) the date, if any, through which the Rent, if any, has
been paid, (c) whether there are then existing any offsets or defenses against the enforcement of
any term hereof on the part of Tenant to be performed or complied with (and, if so, specifying the
same), and (d) whether any default exists hereunder and, if any such default exists, specifying the
nature and period of existence thereof and what action Landlord or Tenant, as the case may be, is
taking or proposes to take with respect thereto and whether notice thereof has been given to the
party in default. Any Certificate may be relied upon by any prospective purchaser, transferee, Tax
Credit Partner, mortgagee or trustee under a deed of trust of the fee or leasehold estate in the
Property or any part thereof or of Landlord's or Tenant's interest under this Lease. Tenant will
Page 5
also deliver to Landlord, promptly upon request, such information with respect to the Property or
any part thereof as from time to time may reasonably be requested.
25.3 No. Merger_ of Title. There shall be no merger of this Lease or the leasehold estate
created by this Lease with any other estate in the Property or any part thereof by reason ofthe fact
that the same person, firm, corporation or other entity may acquire or own or hold, directly or
indirectly: (a) this Lease or the leasehold estate created by this Lease or any interest in this Lease
or in any such leasehold estate, and any other estate in the Property and the Improvements or
any part thereof or any interest in such estate, and no such merger shall occur unless and until all
persons, corporations, firms and other entities, including any leasehold mortgagee or leasehold
mortgagees, having any interest (including a security interest) in (i) this Lease or the leasehold
estate created by this Lease, and (ii) any other estate in the Property or the Improvements or any
part thereof shall join in a written instrument effecting such merger and shall duly record the same.
25.4 tilit Services. Tenant shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at any time rendered to or
in connection with the Property or the Improvements, or any part thereof, and shall comply with
all contracts existing on the date hereof or subsequently executed by Tenant relating to any such
services, and will do all other things required for th.e maintenance and continuance of all such
services.
25.5 _ iet Enjoyment. Tenant, upon paying the Rent, if any, and other charges herein
provided for and upon performing and complying with all covenants, agreements, terms and
conditions of this Lease to be performed or complied with by it, si ll lawfully and quietly hold,
occupy and enjoy the Property during the term of this Lease without hindrance or molestation by
Landlord, or any person or persons claiming through Landlord.
25.6 No Claims Against Landlord. Nothing contained in this Lease shall constitute any
consent or request by Landlord, express or implied, for the performance of any labor or services
or the furnishing of any materials or other property in respect of the Property or any part thereof,
nor as giving Tenant any right, power or authority to contract for or permit the performance of any
labor or services or the furnishing of any materials or other property in such fashion as would
permit the making of any claim against Landlord or its interest in the Property in respect thereof.
25.7 ctio . Landlord and its authorized representatives may enter the Property or
any part thereof at all reasonable times for the purpose of inspecting, servicing or posting notices,
protecting the Property or the Improvements, or for any other lawful purposes. That
notwithstanding, Landlord may only enter residential units after giving Tenant three 3 days prior
written notice,
25.8 No Waiver by Landlord. To the extent permitted by applicable law, no failure by
Landlord to insist upon the strict performance of any term hereof or to exercise any right, power
or remedy consequent upon a default under this Lease, and no acceptance of rent during the
continuance of any such default, shall constitute a waiver of any such default or of any such term.
Page 53
No waiver of any default shall affect or alter this Lease, which shall continue in full force and
effect, or the rights of Landlord with respect to any other then existing or subsequent default.
25.9 Holding Over. In the event Tenant shall hold over or remain in possession of the
Property or the Improvements with the consent of Landlord after the expiration of the Term, such
holding over or continued possession shall create a tenancy for month to month only, upon the
same terms and conditions as are herein set forth so far as the same are applicable.
25.10 Exculpation_ of Certain Personal Liability. Notwithstanding anything to the
contrary provided in this Lease, including, without limitation, the remedies provisions set forth in
Section 21.2 above, it is specifically understood and agreed that except as to;
(a) the obligation to pay Animal Rent pursuant to Section + 1;
(b) the obligation to pay any and all Impositions;
(c) acts of fraud and/or criminal misconduct;
(d) acts of gross negligence and/or willful misconduct;
(e) any and all legal costs and expenses reasonably incurred by Landlord in the
enforcement of this Lease; and/or
(f) liability for risks required to be covered by insurance under this Lease but
for which Tenant fails to maintain such coverage;
there shall be no personal liability or obligation on the part of any partner in Tenant or any assignee
or successor in interest of any such partner with respect to the provisions of this Lease; provided,
that, in no event shall the Tax Credit Partner have any personal liability with respect to the
provisions of this Lease.
25.11 No Partnership. Anything contained herein to the contrary notwithstanding,
Landlord does not in any way or for any purpose become a partner of Tenant in the conduct of its
business, or otherwise, or a joint venturer or member of a joint enterprise with Tenant hereunder.
25.12 RemOies Cumulative: The various rights, options, elections and remedies of
Landlord and Tenant, respectively, contained in this Lease shall be cumulative and no one of them
shall be construed as exclusive of any other, or of any right, priority or remedy allowed or provided
for by law and not expressly waived in this Lease.
25.13 A me s Fees. In the event of a dispute between the parties arising out of or in
connection with this Lease, whether or not such dispute results in arbitration or litigation, the
prevailing party (whether resulting from settlement before or after arbitration or litigation is
commenced) shall be entitled to have and recover from the losing party reasonable attorneys' fees
and costs of suit incurred by the prevailing party.
Page 54
25.14 Time Is Of The Essence. Time is ofthe essence of this Lease and all oft the terms,
provisions, covenants and conditions hereof.
25.15 Survival of Roesentations, Warranties and Covenants. The respective
representations, warranties and covenants contained herein shall survive the Commencement Date
and continue throughout the Term.
25.16 Construction ofAgreement. This Lease shall be construed in accordance with the
substantive laws of the State of California, without regard to the choice of law rules thereof. The
rule of construction that a document be constmed strictly against its drafter shall have no
application to this Lease.
25.17 S er abilit . If one or more of the provisions of this Lease shall be held to be
illegal or otherwise void or invalid, the remainder of this Lease shall not be affected thereby and
shall remain in full force and effect to the maximum extent permitted under applicable laws and
regulations.
25.18 Entire . rent: Modification. This Lease contains the entire agreement of the
parties with respect to the matters discussed herein. This Lease may be amended only by an
agreement in writing signed by the party against whom enforcement of any waiver, change,
modification, extensions or discharge is sought.
25.19 in in Effect and Benefits. This Lease shall inure to the benefit of and be binding
on the parties hereto and their respective successors and assigns. Except as otherwise set forth
herein, nothing in this Lease, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Lease.
25 Further Assurances. Each party hereto will promptly execute and deliver without
further consideration such additional agreement, assignments, endorsements and other documents
as the other party hereto may reasonably request to carry out the purposes of this Lease.
25.21 Counterparts. This Lease may be executed simultaneously in counterparts, each
ofwhich shall be deemed an original, but all of which together shall constitute one and the same
Lease,
25.22 Number and Gender. Whenever the singular number is used in this Lease and
required by the context, the same shall include the plural, and the masculine gender shall include
the feminine and neuter genders.
25.23 Incorporation by Reference. Every Exhibit attached to this Lease and referred to
herein is hereby incorporated by reference.
Page 55
25.24 Tax Crelit Partner Rights. Notwithstanding anything to the contrary contained
in this Lease, Landlord, prior to any action to enforce this Lease, shall give the Tax Credit Partner
notice and opportunity to cure for a period of not less than (a) fifteen (15) days if a monetary
default, and (b) thirty 0 days if a nonmonetary default; provided., however, if in order to cure
such a default Tax Credit Partner reasonably determines that it must remove the general partner of
Tenant, Tax Credit Partner shall so notify Lender and so long as Tax Credit Partner is diligently
and continuously attempting to so remove such general partner, Tax Credit Partner shall have until
the date thirty 0 days after the effective date of the removal of the general partner or general
partners to cure such default but in no event more than one 1 year.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
Page 56
IN WITNESS WHEREOF, the undersigned have executed this Lease as of the date first
above written.
"Landlord"
COMMUNITY EV LOPM NT COMMISSION -
HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY,
a public body, corporate and politic
By:
4Tony inney, Assistant City anager
APPROVED AS TO FORM:
B.
_fermi
APPROVED FORM:
Christensen & Spath LLP
Landlord Special Counsel
By:
Walter p tl HH r
(SIGNATURES CONTINUED ON FOLLOWING PAGE
Page 57
"Tenant"'
D AVENUE HOUSING ASSOCIATES, L.P,,
a California limited partnership
By. CHW D enue, LLC,
a California limited liability company,
its Managing General Partner
By. Community i-IousingWor s,
a California nonpro public benefit corporation,
its Sole era '' Ma ger
By
aryj: Jozinski
Page 58
EXHIBIT "A"
LEGAL DESCRIPTION RIPTI F THE PROPERTY
The land referred to herein is situated in the State of California, County of San
Diego and described as follows:
SITE
ICI I' BALL WEST (LEASE)
APN: 560-410-06
LOT 6 OF CENTER CITY PROJECT, IN THE CITY OF NATIONAL CITY, COUNTY OF
SAN DIEGO, STATE OF CALIFORNIA, ACCORDING DIN TO MAP THEREOF NO. 8807,
FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,
FEB U RY 2411978.
EXHIBIT "A"
Page I_
EXHIBIT "B"
INCOME COMPUTATION AND CERTIFICATION
NOTE TO APARTMENT OWNER: This form is designed to assist you in computing
Annual Income in accordance with the method .od set forth in the Department of Housing and Urban
Development("HUD") Regulations (24 CFR 1 . You should make e certain that this form is at
all times up to date with the HUD Regulations.
Re: Kimball Highland, National City, California
I W , the undersigned state that I we have read and answered fully, frankly and personally
each of the following questions for all persons who are to occupy the unit being applied for in the
above apartment project. Listed below are the names of all persons who intend to reside in the unit:
1
Names
Members
Household
.
of
of
Relationship
Head
Household
2 •
to
of
3.
Age
Social
Number
4.
Security
Place/Source
Employment
5.
of
Income
(before
deductions)
6.
Monthly Gross
Amount
HEAD
SPOUSE
Income ....-. Computation
6. The total anticipated income, calculated in accordance with the provisions of this
paragraph 6, of all persons over the age of 18 years listed above for the 12-month period beginning
the date that I we plan to move into a unit is
Included in the total anticipated income listed above are:
.
EXHIBIT "B"
Page 1
(a) all wages and salaries, overtime pay, commissions, fees, tips and bonuses and other
compensation for personal services, before payroll deductions;
(b) the net income from the operation of a business or profession or from the rental of
real or personal property (without deducting expenditures for business expansion or amortization
of capital indebtedness or any allowance for depreciation of capital assets),
(c) interest and dividends (including income from assets excluded below);
(d) the full amount of periodic payments received from social security, annuities,
insurance policies, retirement funds, pensions, disability or death benefits and other similar types
of periodic receipts, including any lump sum payment for the delayed start of a periodic payment;
(e) payments in lieu of earnings, such as unemployment and disability compensation,
worker's compensation and severance pay;
f the maximum amount of public assistance available to the above persons other than
the amount of any assistance specifically designated for shelter and utilities;
(g) periodic and determinable allowances, such as alimony and childsupport payments
and regular contributions and gifts received from persons not residing in the dwelling;
(h) all regular pay, special pay and allowances of a member of the Armed. Forces
(whether or not living in the dwelling) who is the head of the household or spouse; and
(i) any earned income tax credit to the extent that it exceeds income tax liability.
Excluded from such anticipated income are:
(a)
casual, sporadic or irregular gifts;
(b) amounts which are specifically for or in. reimbursement of medical expenses;
(c) lump sum additions to family assets, such as inheritances, insurance payments
(including payments under health and accident insurance and workmen's compensation), capital
gains and settlement for personal or property losses;
(d) amounts of educational scholarships paid directly to the student or the educational
institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition,
fees, books and equipment. Any amounts of such scholarships or payments to veterans not used
for the above purposes are to be included in income;
fire;
(e) special pay to a household member who is away from home and exposed to hostile
EXHIBIT "B"
Page 2
relocation payments under Title II of the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970;
(g)
foster child care payments;
(h) the value of coupon allotments for the purchase of foods pursuant to the Food
Stamp Act of 1977;
payments to volunteers under the Domestic Volunteer Service Act of 1973;
payments received under the Alaska Native Claims Settlement Act;
(k) income derived from certain submarginal land of the United States that is held in
trust for certain Indian tribes;
(1) payments or allowances made under the Department of Health and Human
Services' Low -Income Home Energy Assistance Program;
ram;
(m)
p .ym nts received from the Job Training Partnership Act;
(n) income derived from the disposition of funds of the Grand River Band of Ottawa
Indians; and
(o) the first $2,000.00 of per capita shares received from judgment funds awarded by
the Indian Claims Commission or the Court of Claims.
7. Do the persons whose income or contributions are included in item 6 above:
(a) have savings, stocks, bonds, equity in real property or
other form of capital investment (excluding the values of necessary
items of personal property such as furniture and automobiles and Yes No
interests in Indian trust land); or
(b) have they disposed of any assets (other than at a
foreclosure or Credit Bankruptcy sale) during the last two years at
less than fair market value?
(c) If the answer to (a) or (b) above is yes, does the
combined total value of all such assets owned or disposed of by all Yes No
such persons total more than $5,000?
EXHIBIT '"
Page
(d) If the answer to (c) above is yes, state:
(1) the amount of income expected to be derived
from such assets in the 12-month period beginning on the date of initial
occupancy in the unit that you propose to rent:
(2) the amount of such income, if any, that was
included in item 6 above:
8. (a) Are all of the individuals who propose to
reside in the unit full-time students
A full-time student is an individual enrolled as a full-time student during each of 5 calendar
months during the calendar year in which occupancy of the unit begins at an educational
organization which normally maintains a regular faculty and curriculum and normally has a
regularly enrolled body of students in attendance and is not an individual pursuing a full-time
course of institutional or farm training under the supervision of an accredited agent of such an
educational organization or of a state or political subdivision thereof.
S
Yes
No
(b) If the answer to 8(a) is yes, is at least 1 of the Yes No
proposed occupants of the unit a husband and wife entitled to file a
joint federal income tax return?
9. Neither myself nor any other occupant of the unit I we propose to rent is the owner
of the rental housing project in which the unit is located (hereinafter the "Owner"), has any family
relationship to the Owner, or owns directly or indirectly any interest in the Owner. For purposes
of this paragraph, indirect ownership by an individual shall mean ownership by a family member,
ownership by a corporation, partnership, estate or trust in proportion to the ownership or beneficial
interest in such corporation, partnership, estate or trustee held by the individual or a family
member; and ownership, direct or indirect, by a partner of the individual.
10. This certificate is made with the knowledge that it will be relied upon by the Owner
to determine maximum income for eligibility to occupy the unit, and I we declare that all
information set forth herein is true, correct and complete and based upon information Ilwe deem
reliable and that the statement of total anticipated income contained in paragraph 6 is reasonable
and. based upon such investigation as the undersigned deemed necessary.
11. Y we will assist the Owner in obtaining any information or documents required to
verify the statements made herein, including either an income verification from my/our present
employer(s)or copies of federal tax returns for the immediately preceding calendar year.
12. I we acknowledge that liwe have been advised that the making of any
misrepresentation or misstatement in this declaration will constitute a material breach of my/our
agreement with the Owner to lease the unit and will entitle the Owner to prevent or terminate
my/our occupancy of the unit by institution of an action for ejection or other appropriate
proceedings.
EXHIBIT "B"
Page
1 . Housing Commission ission Statistical Information (optional - will be used for reporting
purposes only).
I-Iispanic
Race (Head of Household)
White Black Asian
Native American Other
Physical Disability: Yes No
Ilwe declare under penalty of perjury that the foregoing is true and correct.
Executed this day of in the County of
California.
Applicant
Applicant
[Signatures of all persons over the age of 18 years listed in number 2 above required.]
EXHIBIT "B"
Page
FOR COMPLETION BY APARTMENT OWNER ONLY:
1. Calculation of eligible income:
Enter amount entered for entire household in 6 above:
b. (1) Ii answer to 7(c) above is yes, enter the total
amount entered in 7(d}{1), subtract from that figure the amount entered in
7(d){2} and enter the remaining balance ($ _
(2) Multiply the amount entered in 7(c) times the
current passbook savings rate to determine what the total annual earnings
on the amount in 7(c) would be if invested in passbook savings ($ ),
subtract from that figure the amount entered in 7(02) and enter the
remaining balance ($ )
(3) Enter at right the greater of the amount calculated
under (1) and (2) above:
c. TOTAL ELIGIBLE INCOME (line La plus line 1.1)(3)):
2. The amount entered in I .c:
Qualifies the applicant(s) as a Very Low -Income Tenant(s).
Does not qualify the applicant(s) as a Very Low -Income Tenant(s).
3. Number er f apartment unit assigned: Bedroom
Size: Rent: $
Tenant -Paid Utilities:
Water Gas Electric
Trash Other (list Type)
4. Was this apartment unit last occupied for a period of 31
consecutive days by persons whose aggregate anticipated
annual income as certified in the above manner upon their
initial occupancy of the apartment unit qualified them as
Very Low -Income Tenants?
Yes
EXHIBIT "B"
Page
. Method used to verify applicant(s) income:
Employer income verification.
Social Security Administration verification
Department of Social Services verification
Copies of tax returns
Other:
Manager
EXHIBIT "B"
Page
Article I. INCOME VERIFICATION
(For Employed Persons)
The undersigned ploys has applied for a rental unit located in a project financed under
the_ - - - - Multifamily Housing Program for persons of low income.
Every income statement of a prospective tenant must be stringently verified. Please indicate below
the employee's current annual income from wages, overtime, bonuses, commissions or any other
form of compensation received on a regular basis.
Wages:
Overtime:
Bonuses:
Commissions:
Total Current Income:
I hereby certify that the statements above are tru.e and complete to the best of my
knowledge.
Signature:
Title:
I hereby grant you permission to disclose my income to in
order that they may determine my income eligibility for rental of an apartment located in their
project which has been financed under --- Multifamily Housing
Program.
Signature:
Please send form to:
EXHIBIT "B"
Page
INCOME VERIFICATION
(For Social Security Recipients)
TO: SOCIAL SECURITY ADMINISTRATION
Ladies and Gentlemen:
I have applied for a rental unit located in a project financed under the _
Multifamily Housing Program for persons of low income. Every income statement of a
prospective tenant must be stringently verified. In connection with my application for a
rental unit, I hereby give my consent to release to the specific
information requested below.
Signature:
Social Security No.:
Address (Print):
Name (Print):
Monthly Benefits eganlWill Begin:
Social Security Benefit Amount:
Other Benefits* . Amount: $
Medicare Deduction:
Are benefits expected to change?
If Yes, please state date and amount
of change:
Yes —_ No
Date: -..
Amount:
If recipient is not receiving full benefit amount, please indicate reason and date recipient
will start receiving full benefit amount:
Reason: Date of Resumption: Amount: $_—
Signature:
Telephone:
a
Please send form to:
Name (Print):
Title:
EXHIBIT "B"
Page
INCOME VERIFICATION
(For Department of Social _Sr ices Aid Recjpientsl
TO: CALIFORNIA DEPARTMENT OF SOCIAL SERVICES
Ladies and Gentlemen:
I am receiving assistance through your office. I have applied for a rental unit located
in a project financed under the Multifamily Mousing
Program for persons of very low income. Every income statement of a prospective tenant
must be stringently verified. In connection with my application for a rental unit, I hereby
authorize the Department of Social Services to release to _ the specific information requested below.
Signature:
Caseload Number:
Case Number:
1. Number of persons included in budget:
T o tal monthly budget:
a. Amount of grant:
b. Other income and source:
Name (Print):
Case Worker:
Date aid last began: __.._......__ ..
C. Is other income included in total budget? Yes _ No
2. Please specify type of aid
(AFDC, FR, Food Stamps, ANB, Medical, etc.)
3. If recipient is not receiving full grant, please indicate reason:
Overpayment due to client's failure to report other income
Computation error
Other
EXHIBIT "B"
Page 1
Date when full grant will resume:
Case Worker's Signature
Telephone:
District Office
Your very early response will be appreciated.
Please return form to:
EXHIBIT "B"
Page 11
INCOME VERIFICATION
(For Self - Employed Persons)
I hereby attach copies of my individual federal and state income tax returns for the
immediately preceding calendar year and certify that the information shown in such income tax
returns is true and complete to the best of my knowledge.
Signature:
EXHIBIT "B"
Page 12
EXHIBIT "C"
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
[KimbaII Highland Master Plan Site 2]
With reference to that certain Ground Lease Agreement by and between
("Tenant") and the COMMUNITY VEL PME T
COMMISSION- HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY, dated as of [
- - - - 20221 (the "Lease Agreement"), Tenant hereby certifies, as of
, 2 j, the following percentages of units at theProperty, National City,
California are occupied or being held vacant for low-income tenants:
1.Occupied by 30% of Median Income Tenants:
%; Unit Nos. - - --
2. Occupied by 50% of Median Income Tenants:
%; Unit Nos.
3. Occupied by 0 of Median Income Tenants:
°o; Unit Nos. .
4. Occupied by 70% of Median Income Tenants:
%; Unit Nos. _
The undersigned hereby certifies that the information contained in this Certificate is true
and complete and that Tenant is not in default under the Ground Lease.
[SIGNATURE BLOCK]
EXHIBIT "C"
Page 1
EXHIBIT " 9
P12/1_,FOR RESIDENT SERVICES
VICES
[TO BE IINSERTED]
EXHIBIT "D"
Page 1