HomeMy WebLinkAboutLREG Partnership Convention Center Redevelopment Project AreaREPORT TO THE CITY COUNCIL
REPORT TO THE REDEVELOPMENT AGENCY
October 16, 2007
FROM: ANDREW T. SOUZA, CITY MANAGER
City Manager's Office
MARLENE MURPHEY, Executive Director
Redevelopment Agency
SUBJECT: APPROVE A JOINT RESOLUTION OF THE f
CALIFORNIA, AND THE REDEVELOPMEN'
(AGENCY) APPROVING THE MATERIAL T
DEVELOPMENT AGREEMENT (DDA) WIT]
DEVELOP A MIXED USE PROJECT (THE PI
MANAGER, EXECUTIVE DIRECTOR OF A(
TO COMPLETE AN AGREEMENT, AND AU
DELIVERY OF THE AGREEMENT, AND RE
NECESSARY ACTION RELATED TO THE T
RESOLUTION
KEY RESULT AREA
Economic Development
RECOMMENDATION
Staff recommends that the City Council approve the terms of
which includes a Disposition and Development Agreement (C
Agency and Developer for the development of a mixed use pi
Development Commission approved the project on Septembe
EXECUTIVE SUMMARY
The Developer is proposing a mixed use project for the Selland ,
rink, offices, retail, restaurant space, and apartments. The proje
allow for the Developer to move forward with the required enviro
documents and architectural/engineering work needed to develo
BACKGROUND
The Developer is proposing a DDA for the purpose of develol
Selland Arena, currently a parking lot. The proposal include:
of a 40,000 square foot ice rink. The project will also include
ice rink and over 73,000 square feet of retail, restaurant and
high end restaurants, boutique retailers, dry cleaning servicer
tenants. The project will also include solar panels to offset th
AGENDA ITEM NO.: ; O
COUNCIL MEETING: October 16, 2007
APPROVED BY
EXECU IVE,DIRECTOR
CITY MAN /
;'
-�OUNCIL OF THE CITY OF FRESNO,
T AGENCY OF THE CITY OF FRESNO
ERMS OF A DISPOSITION AND
4 LREG PARTNERS, L.P. (DEVELOPER) TO
WJECT), AUTHORIZING THE CITY
iENCY, AND CITY ATTORNEY'S OFFICE
THORIZING THE EXECUTION AND
LATED DOCUMENTS, AND TAKING ALL
RANSACTION, CONSISTENT WITH THIS
Presented to - ; 1
Date
Uis esd+nn
/G
a deal with LREG Partners, L.P. (Developer),
,DA) between the City, Redevelopment
'oject. The Housing and Community
?r 26, 2007.
krena parking lot. The project will include an ice
ct will also include solar panels. This would
nmental impact analysis as well as the
p the actual site.
)ing a $43 million mixed use project east of
s 225,000 square foot development consisting
160 urban designed apartment units, a public
office space. The project developers foresee
>, nightclubs, deli/markets and various other
e utility costs. The property to be developed
REPORT TO COUNCIL
RE: APPROVAL OF DDA FOR MIXED USE HOUSING PROJECT
October 16, 2007
Page 2
is currently under a single APN with the Convention Center. The developer proposes to lease the property as a
separate legal parcel. It is anticipated that the parking structure east of the Saroyan Theatre has the capacity to
provide the parking lost to this project.
The apartments would be rented to the public, baseball club employees, the Grizzlies baseball players and the
Falcons hockey players. The apartment units will also include 22 low income housing units. The project is not
anticipated to create a parking shortage. Parking is available at the parking structure which is located next to the
development.
The Redevelopment Agency will provide the use of housing set aside funds for an amount up to $750,000
following receipt of an equivalent amount from the City. For purposes of affordable housing, the Agency will
participate by making available up to 50% of the net tax increment generated by the Legacy project until the
earlier of 13 years or until the project receives $1.8 million in net present value. The Agency will receive
affordability covenants for 55 years for a minimum number of residential units affordable to low income families.
The Developer will also use New Market Tax Credits. According to the Developer, these incentives do not
trigger prevailing wage. Developer will indemnify the City and Agency in the event prevailing wages will apply.
The DDA is subject to approval as to legal form by the City Attorney. CEQA compliance is a condition precedent
on any obligation of the City to the DDA. The DDA is also conditioned upon Developer agreeing to implement all
CEQA mitigation and tax and/or bond counsel opinion that the final DDA terms are in compliance with existing
bond covenants and documents.
FISCAL IMPACT
As referenced above, the Developer intends to mitigate costs of the project with a combination of new market
tax credits, and RDA participation. An agreement with the Parks and Recreation Department for use of ice rink
for $84,000 per year for 30 years is included as part of the financial plan.
Attachments
Resolution
Disposition and Development Agreement
Financial Analysis (Financial Gap without Federal, RDA and City Assistance)
CITY OF FRESNO
City Clerk's Office (Oli911181)
RECORDED AT THE REQUEST OF
AND WHEN RECORDED RETURN TO:
City of Fresno
2600 Fresno Street
Fresno, CA 93721
Attention: City Manager
11 : oa,,,v"A
ro(rv(p7
(SPACE AaOV E THIS LINE FOR RECORDER'S USE)
This Agreement is recorded at the request and for the benefit of the City of Fresno and is
exempt from the payment of a recording fee pursuant to Government Code Section 6103.
CITY OF FRESNO
By:
Its:
Dated:
DISPOSITION AND DEVELOPMENT AGREEMENT
by and among
THE CITY OF FRESNO,
a municipal corporation
THE REDEVELOPMENT AGENCY
OF THE CITY OF FRESNO,
a public body, corporate and politic
will
LREG PARTNERS, L.P.,
a California limited partnership
CONVENTION CENTER
REDEVELOPMENT PROJECT AREA
—i—
ATTACHMENTS
Exhibit A Site Map
Exhibit A-1 Legal Description
Exhibit B Scope of Development
Exhibit C Development Schedule
Exhibit D Ground Lease
Exhibit E Release of Construction Covenants
Exhibit F Certificate of Completion
Exhibit G Basic Design
Exhibit H Affordability Restrictions Running with Land
Exhibit I Budget
—ii—
DISPOSITION AND DEVELOPMENT AGREEMENT
This Disposition and Development Agreement ("DDA" or "Agreement") is entered into as of
the Effective Date (defined below), between THE CITY OF FRESNO, a municipal corporation (the
"City"), THE REDEVELOPMENT AGENCY OF THE CITY OF FRESNO, a public body,
corporate and politic (the "Agency"), and LREG PARTNERS, L.P., a California limited partnership
(the "Developer").
RECITALS
The parties enter this Agreement based on the following facts, understandings, and
intentions:
A. The City owns certain real property adjacent to Selland Arena at the comer of Ventura
Avenue and O Street, Fresno, California, currently improved as a flat surface parking lot, more
particularly described in Exhibits "A" (Site Map) and "A-1," (legal description) attached (the
"Property").
B. Developer proposes to lease the Property as a separate legal parcel with an option to
purchase, and develop it privately with mixed uses consisting of 160 multi -family residential units
(Twenty -Two (22) of the residential units ("Affordable Units") are to be rented and preserved as
Affordable Rental Housing.), office space, retail space and an approximate 40,000 square foot ice
rink/recreational facility, as more particularly described in the Scope of Development, attached as
Exhibit `B" (the "Project').
C. On October 16, 2007, the Council of the City of Fresno (the "Council') considered
the Project and this Agreement at a noticed public hearing, as required by applicable law.
D. The Housing and Community Development Commission reviewed the Project and
this Agreement on September 26, 2007, and recommended that Council approve it.
E. The Project has not yet been environmentally assessed as required by the California
Environmental Quality Act ("CEQA"). CEQA compliance is a condition precedent to any obligation
of the City, Agency or Developer under this Agreement.
F. This Agreement is in the best interests of, and will materially contribute to,
Redevelopment Plan implementation. Further, the Project does the following: (a) will have a
positive influence in the Project Area, and surrounding environs, (b) is in the vital and best interests
of the City, and the health, safety, and welfare of City and Project Area residents, (c) complies with
applicable federal, state, and local laws and requirements, (d) will help eliminate blight, (e) will
improve and preserve the community's supply of low income housing available at affordable rent, as
defined by Cal. H. & S.C. Sections 50052.5 and 50053, to persons of low or moderate income, as
defined in Cal. H. & S.C. Section 50093, (f) will be able to meet the replacement housing provisions
in Cal. H. & S.C. Section 33413, and (g) all planning and administrative expenses incurred in pursuit
hereof are necessary for the production, improvement, or preservation of low and moderate income
housing.
G. By authority granted under California Redevelopment Law (the "Law"), the Agency
has prepared and is responsible for carrying out the redevelopment plan for the Convention Center
Redevelopment Project Area (the "Plan").
H. To the extent provided in or allowed by the Law including Cal. H. & S.C. Sections
33334.2 and 33449, as provided by joint resolutions of the Fresno City Council and the Agency,
findings and determinations pursuant to Health and Safety Code Section 33334.2.(g), the Plan and
limited to the terms and conditions therein, the Agency may make improvements upon and/or
construct and improve structures in order to provide housing for persons and families of low or
moderate income, including related on-site and off-site improvements.
I. Agency administers the Low and Moderate Income Housing Fund established
pursuant to Cal. H. & S. C. Sections 33334.2 et seq.
J. Developer agrees to undertake improvements in accordance with the combined
Development Schedule described in Exhibit "C" attached hereto and incorporated herein (the
"Development Schedule").
K. To the extent Housing Set Aside Funds will exceed fifty (50) percent of the cost of
producing the Affordable Units, the Agency has determined based on substantial evidence, that the
use of the Funds is necessary because the Agency or Developer of the Affordable Units has made a
good faith attempt but been unable to obtain commercial or private means of financing the units at
the same level of affordability and quantity. The Project is not feasible and cannot be completed and
restricted to the affordable rental housing purposes and uses provided under Law and this Agreement
absent the financial support of the Agency.
L. The Property and associated on site and off site improvements are collectively
referred to in this Agreement as the "Improvements" or the "Project," all of which will directly
benefit the Property and the Plan area, cannot otherwise be reasonably paid for or financed, and are
necessary to eliminate blight.
M. Agency is willing to assist Developer's construction of the Affordable Units by
making available to Developer as a grant certain Housing Set Aside (Tax Increment) Funds in the
amount of $750,000 (the "Grant") upon the terms and conditions specified this Agreement.
N. Agency is also willing to assist Developer's construction of the Affordable Units by
making available to Developer, as additional redevelopment funding, 50% of the net tax increment
generated from the Project and actually received by the Agency after completion of the Project until
the earlier of 13 years from the Effective Date of this Agreement or until the project receives $1.8
million in net present value in net present value discounted at a rate of six percent (61/6) from
increment generated ("Supplemental Funding").
O. The Grant and the Supplemental Funding shall be paid in accordance with the
provisions set forth in Section 5.7. The Grant, Supplemental Funding and performance of the
affordability and other covenants and restrictions set forth in this Agreement shall be evidenced by
this Agreement which shall be recorded against and run with the Property.
AGREEMENT
In consideration of the mutual promises and covenants and upon the terms and conditions set
forth in this Agreement, the parties agree as follows:
1. Definitions. Besides definitions contained elsewhere in this Agreement, the
following definitions will govern the construction, meaning, application and interpretation of the
defined terms, as used in this Agreement.
1.1 ADA. "ADA" means the Americans with Disabilities Act of 1990.
1.2 Affordability Period. "Affordability Period" means a period of fifty-
five (55) years commencing from the date Agency records the Certificate of Completion.
1.3 Affordable Rental Housing. "Affordable Rental Housing" or
"Affordable Units" means the Units available at affordable rent, as defined by Cal. H. & S.C. Section
50052.5(4), to persons and families of low and moderate income, as defined in Cal. H. & S.C.
Section 50093 of Code, consistent with Recital F above which requirements shall be enforceable by
covenants running with the land.
1.4 Agency. "Agency" means the Redevelopment Agency of the City of
Fresno, a public body, corporate and politic, organized and existing under the Law, and any assignee
of or successor to its rights, powers and responsibilities.
1.5 Agreement. "Agreement" means this Disposition and Development
Agreement between the City and Developer.
1.6 Budget. "Budget" means the Budget/Financial Plan for the Project
attached hereto and incorporated herein as Exhibit "P' (the "Budget").
1.7 Certificate of Completion. "Certificate of Completion" means that
Certificate issued in the form attached as Exhibit "F" to Developer by Agency evidencing completion
of the Project for purposes of this Agreement.
1.8 Com. "City" means the .City of Fresno, a municipal corporation,
having its offices at 2600 Fresno Street, Fresno, California 93721-3605, and operating through its
Council and its various departments.
1.9 Closing. Close or Close of Escrow. "Closing," "Close" or "Close of
Escrow" means the closing of the escrow in which the City conveys a leasehold interest in the
Property to Developer, as evidenced by the Ground Lease and the recorded Memorandum of Lease
and Option to Purchase.
3
otherwise stated. 1.10 Day. "Day," whether or not capitalized, means a calendar day, unless
1.11 Default. "Default" means a party's failure to timely perform any
action or covenant required by this Agreement following notice and opportunity to cure.
1.12 Developer. "Developer" means LREG Partners, L.P., a California
Limited Partnership.
1.13 Development Schedule. "Development Schedule" means the schedule
attached as Exhibit "C," setting forth the dates and times by which the parties must accomplish
certain obligations under this Agreement. The parties may revise the Schedule from time to time on
mutual written agreement of Developer and the City, but any delay or extension of the completion
date is subject to the requirements in this Agreement.
1.14 Executive Director. "Executive Director" means the Executive
Director of Agency.
1.15 Effective Date. "Effective Date" means the date that the City signs
this Agreement, after Developer signs it, and the Council approves it by resolution, following a
public hearing.
1.16 Environmental Laws. `Environmental Laws" means any federal, state,
or local law, statute, ordinance or regulation concerning environmental regulation, contamination or
cleanup of any Hazardous Materials or Waste including, without limitation, any state or federal lien
or "superlien" law, any environmental cleanup statute or regulation, or any governmentally required
permit, approval, authorization, license, variance or permission.
1.17 Escrow. "Escrow" means the escrow opened with Escrow Holder for
the City to convey a leasehold interest in the Property to Developer.
1.18 Escrow Holder. "Escrow Holder" means Chicago Title, or another
title company mutually satisfactory to both parties.
1.19 Financing Plan. "Financing Plan" means (a) a binding contractual loan
commitment that Developer has accepted in writing, from a qualified commercial lender for
construction and permanent (take-out) financing providing sufficient funds, when combined with
Developer cash financing, for Developer to complete the Project, (b) a pro forma construction
budget, (c) evidence of any required cash equity, and (d) New Markets Tax Credits approval in an
amount sufficient to complete the Project.
1.20 Funding Source. "Funding Source" means the Grant, Supplemental
Funding and other funding sources secured by Developer to construct the Improvements.
1.21 Grant. "Grant" means the principal sum of $750,000 provided by
Agency to Developer upon the terms and conditions set forth in this Agreement.
4
1.22 Grant Documents. "Grant Documents" are collectively this Agreement
and all exhibits and attachments thereto as they may be amended, modified or restated from time to
time.
1.23 Ground Lease. "Ground Lease" means the ground lease, substantially
in the form of Exhibit "D," by which the City conveys a leasehold interest in the Property to
Developer and grants Developer an option to purchase the Property. The Grant Deed will contain all
conditions, covenants, and restrictions required by applicable laws and regulations and this
Agreement.
1.24 Hazardous Materials. "Hazardous Materials" means any substance,
material, or waste, which is or becomes regulated by any local governmental authority, the State of
California, or the United States Government including, without limitation, any material or substance,
which is: (a) defined as a "hazardous waste," "extremely hazardous waste," or `restricted hazardous
waste" under Sections 25115, 25117, or 25122.7, or listed pursuant to Section 25140 of the
California Health and Safety Code, (b) defined as a "hazardous substance" under Section 25316 of
the California Health and Safety Code, (c) defined as a "hazardous material," "hazardous substance,"
or "hazardous waste" under Section 25501 of the California Health and Safety Code, (d) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety Code, (e) petroleum,
(f) friable asbestos, (g) polychlorinated byphenyls, (h) listed under Article 9 or defined as
"hazardous" or "extremely hazardous" under Article 11 of Title 22, California Administrative Code,
(i) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C.
§ 1317), 0) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation
and Recovery Act (42 U.S.C. §6901 et seq., or (k) defined as "hazardous substances" pursuant to
Section of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
§9601, etseq).
1.25 Household. "Household" means one or more persons occupying an
Affordable Unit.
1.26 Housing Set -Aside Funds. "Housing Set -Aside Funds" means those
California Health and Safety Code Section 33334.2 monies held and administered by Agency, a
portion of which shall be made available as the Grant to Developer for eligible costs and expenses
incurred by Developer in constructing the Improvements in such amounts, and upon such terms and
conditions specified in this Agreement.
1.27 Improvements. "Improvements" means the construction of the
Affordable Units and other units that Developer will complete on the Property, including associated
fencing and landscaping improvements, as well as the ice rink, offices, retail and restaurant space.
1.28 Law. "Law" means the Community Redevelopment Law of the State
(California Health and Safety Code Sections 33000 et seq.).
1.29 Material Change. "Material Change" means a change, modification,
revision or alteration to the basic design, the design development drawings, the Financing Plan, or to
other documents or plans that substantially deviates from those previously approved by the City.
3
1.30 Memorandum of Lease and Option to Purchase. "Memorandum of
Lease and Option to Purchase" means a short form of the Ground Lease in a form suitable for
recordation and describing the parties to the Ground Lease, setting forth a description of the
Property, specifying the term of the Ground Lease, describing Developer's option to purchase the
Property, incorporating the Ground Lease by reference and including any other provisions required
by a lender under a Security Financing Interest.
1.31 Outside Date. "Outside Date" means September 30, 2008, the last date
on which the parties are willing to Close the Escrow.
1.32 Plan. "Plan" means the Redevelopment Plan for the Convention
Center Redevelopment Project Area.
1.33 Project. "Project" means the development that Developer is to
complete on the Property and any off-site improvements, as more particularly described in the Scope
of Development, attached as Exhibit "B." The Project includes, without limitation, mixed uses
consisting of multi -family residential units, office space, retail space and an approximate 40,000
square foot ice rink/recreational facility, and the associated landscaping, parking improvements, on-
site improvements, and any off-site improvements that the City may require as a condition to
approving the Project.
1.34 Proiect Area. "Project Area" means the Property.
1.35 Project Completion Date. "Project Completion Date" means the date
that Agency shall have determined the Project has reached completion in accordance with the plans
and specifications in the Development Schedule, as evidenced by Agency's issuance of a Certificate
of Completion.
1.36 Pro "Property" means the real property described in Exhibits
"A" and "A -I.-
1.37 Release of Construction Covenants. "Release of Construction
Covenants" means a document, substantially in the form of Exhibit "E," attached, which evidences
Developer's satisfactory development of the Project.
1.38 Release of Restrictions. "Release of Restrictions" means a release of
those covenants, conditions and restrictions contained in this Agreement, as set forth in Section 1.39.
1.39 Restrictions. "Restrictions" means the affordability restrictions
contained in this Agreement and Exhibit "H" thereto, containing all conditions, covenants, and
restrictions required by the Law, any other applicable laws and regulations, the Plan, and this
Agreement, running with the Property and the Affordable Units thereon and burdening such for the
Affordability Period.
1.40 Security Financing Interest. "Security Financing Interest" means a
security interest, which Developer grants in its leasehold interest in the Property, before the City
issues and records a Release of Construction Covenants, to secure a debt, the proceeds of which
2
Developer uses to construct the Project. The term may include, without limitation, a mortgage, deed
of trust, or any other reasonable security interest securing a debt that the City approved as part of
Developer's Financing Plan.
1.41 Supplemental Funding. "Supplemental Funding" means additional
redevelopment funding of 50% of the net tax increment generated from the Project and received by
the Agency after completion of the Project until the earlier of 13 years from the Effective Date ofthis
Agreement or until the Project receives $1.8 million in net present value discounted at a rate of six
percent (6%).
1.42 Unit. "Unit" means a residential or commercial unit constituting the
Project.
2. Conditions Precedent to City and Agency Obligations. The following are
conditions precedent to the obligations of the City to convey a leasehold interest in the Property to
Developer and the Agency to provide the Grant and Supplemental Funding. These conditions must
be satisfied by the time stated or, if no time is stated, then within 75 days after the approval of both
the New Markets Tax Credits and CEQA. The City or Agency, in writing, may waive any condition
or agree to extend the time for satisfaction. It may terminate this Agreement as provided herein for
the failure of a condition.
2.1 Loan Commitments and Financing Plan. Within 30 days after the
approval of both the New Markets Tax Credits and CEQA, Developer will submit its Financing Plan
to the City and Agency for review and approval. Within 15 business days after receiving the
Financing Plan, the City, through its City Manager, and the Agency, through its Executive Director,
will review the plan, and acting in a commercially reasonable manner, will approve it or disapprove
it. If the City or Agency disapproves the Plan, it will specify the reason for disapproval and ask
Developer to provide any additional information the City or Agency may need to approve the Plan.
If the City or Agency fails to either approve or disapprove the Financing Plan within the 15 -day
period, the City or Agency shall be deemed to have approved the Financing Plan. If the City,
Agency, and Developer are unable to resolve the City's or Agency's objections to the Financing
Plan within 15 business days after Developer has received notice of the disapproval, any of these
parties thereafter can terminate this Agreement immediately by giving notice to the other parties.
The Financing Plan will include construction and permanent loan
commitments from one or more qualified commercial lenders in sufficient amounts, combined with
any other Developer financing, for Developer to complete the Project. Any conditions to the loan
commitments must be reasonably acceptable to the City and Agency. The lenders and Developer
must have signed the commitments, and the commitments must evidence Developer's payment of
any commitment fees. The construction loan, when combined with any other evidence of
immediately available funds irrevocably committed to the Project, must be sufficient to cover
Developer's construction costs, as shown in the approved Financing Plan. Total liens or Security
Financing Interests against the Property shall not exceed Developer's estimated construction budget,
as presented in the Financing Plan.
VA
The City and Agency will review Developer's Financing Plan to confirm that
Developer has sufficient funds available to complete the Project, and to use and maintain the Project
as this Agreement requires. After the City and Agency approve the Financing Plan, Developer will
not make any Material Change in the Financing Plan without first submitting the change to the City
Manager and the Executive Director for review and approval.
2.2 Existence and Authority of Developer. Before the City and Agency
sign this Agreement, and as a condition of the City's and Agency's signature, Developer shall have
delivered the following to the City and Agency: (i) a copy of the certificate of limited partnership
with a certification or other evidence from the California Secretary of State showing that the
Certificate has been filed and Developer is a limited partnership duly and legally formed under
California law; (ii) a certificate of Developers general partner (A) confirming that the purpose of the
entity is to construct and operate the Project, (B) authorizing Developer to enter into and perform this
Agreement, and (C) authorizing the general partner of Developer to execute this Agreement and any
and all documents necessary to carry out the purposes of this Agreement; and (iii) a tax identification
number for Developer.
2.3 Conditions to Effectiveness. The effectiveness of this Agreement is
expressly conditioned upon completion of necessary planning and CEQA review and approval of an
appropriate CEQA document. The Developer will agree to implement all mitigation measures
required as a result of the CEQA process as a condition to the further effectiveness of this
Agreement. Execution of this Agreement is not intended to be approval of a definite course of action
concerning the Project. Effectiveness is further conditioned upon obtaining, where appropriate,
opinions from tax and/or bond counsel that this Agreement and all related agreements are not in
violation of the law or in conflict with the terms of existing bond documents. The City Attorney
shall have the authority to approve or reject all related documents as to legality and conformance to
the delegation of authority in the Council/Agency Resolution(s).
3. Developer's Predisposition Activities and Due Diligence . Before the City
conveys the leasehold interest in the Property to Developer, and as conditions precedent to the City's
conveyance, Developer will do the following:
3.1 Construction Documents. Within 60 days after the Effective Date,
Developer will submit to the City and the Agency the following documents (the "Construction
Documents"), each in form and substance reasonably satisfactory to the City Manager and Executive
Director:
3.1.1 Contract with General Contractor. A copy of a signed
contract between Developer and a general contractor for constructing the Project, (the "General
Contractor"), with written evidence that the General Contractor is a general contractor, licensed
under California law to perform all its duties under the contract. The contract maybe conditioned on
the City's lease of the Property to Developer.
3.1.2 Performance or Completion Bonds. Copies of the
performance or completion bonds for the General Contractor and each contractor and subcontractor
M
referenced above. Each bond will be in a penal sum of at least 100 percent of the applicable contract
price.
3.1.3 Receipts for Permits. Copies of receipts showing that
Developer has paid for and pulled all necessary construction permits from the City's Development
Department.
3.1.4 Approval Process. Within 15 business days after receiving
the Construction Documents, the City, through its City Manager, and the Agency, through its
Executive Director, will review the documents, and acting in a commercially reasonable manner, will
determine whether or not they are satisfactory to the City and Agency. If the City or Agency
determines the Construction Documents are not satisfactory, it will specify the reasons for that
determination and ask Developer to provide any additional information the City or Agency may need
to determine that the Construction Documents are satisfactory to the City and Agency. If the Cityor
Agency fails to make a determination within the 15 -day period, the City or Agency shall be deemed
to have determined that the Construction Documents are satisfactory to it. If the City, Agency, and
Developer are unable to resolve the City's or Agency's objections to the Construction Documents
within 15 business days after Developer has received notice ofthe City or Agency determination that
the Contract Documents are not satisfactory, any of these parties thereafter can terminate this
Agreement immediately by giving notice to the other parties.
3.2 Due Diligence Inspection. Because the City will conveythe leasehold
interest in the Property to Developer "AS IS," with all faults, except as specificallyprovided herein,
for a period of 60 days after approval of both the New Markets Tax Credits and CEQA (the "Review
Period"), Developer or its designated representatives may conduct tests, investigations and
inspections of the Property in all matters relating to the Property, including, but not limited to, the
physical condition or state of the Property and improvements thereon, environmental conditions,
including Phase I and Phase II environmental assessments, and all other matters relating to the
Property or any improvements thereon or affecting Developer or the feasibility ofthe Property for the
Project ("Due Diligence Investigation"), except for title matters which shall be governed by Section
4.4 below. Developer has the right to enter the Property to conduct the Due Diligence Investigation
on the following conditions: (a) the tests, investigations and inspections are conducted without cost
or expense to the City, (b) the tests, investigations and inspections do not unreasonably interfere with
the City's possession or use of the Property, and (c) Developer will assume responsibility for any
loss or liability and for any damage to the Property to the extent resulting from conducting the tests,
investigations or inspections.
Within ten days from the Effective Date, the City shall deliver to
Developer any and all then -existing plans, engineering reports, surveys, maps, soil or seismic reports,
grading plans, environmental reports and assessments, and other studies, reports, correspondence or
materials concerning the Property or any improvements thereon (the "Materials"). The Materials
may include, without limitation, the following: (i) copies of any environmental reports or
environmental site assessments or any other report relating to toxic or hazardous materials or the
environmental condition of the Property or improvements; (ii) engineering studies, maps and cost
reports (sewer, water, hydrology, storm drain, flood control, FEMA, utilities, traffic and noise); (iii)
soils, geology and seismic reports; (iv) covenants, conditions and restrictions, if any, regarding the
9
Property; (v) archaeological studies and reports; (vi) to the extent not described above, grading,
erosion control, water, sewer, storm drain, street improvement, landscape and utility improvement
plans; (vii) any other documents or materials which the City possesses or which are reasonably
available to the City and which Developer requests in writing or the City determines, in its
reasonable judgment, are significant to the evaluation or use of the Property.
The City makes no representation or warranty concerning, and will
have no liability or responsibility for, the materials or the information contained therein.
3.3 Developer's Responsibility for Property Conditions. Developer shall
be solely responsible, at its expense, to conduct the Due Diligence Investigation and determine the
condition of the Property and its suitability for the Project. Developer's responsibility includes,
without limitation, reviewing or determining to its satisfaction, all zoning regulations, other
governmental requirements, all soil, seismic and other- surface and subsurface conditions of the
Property, and its suitability for the Project. Developer's due diligence includes, without limitation,
determining the presence of Hazardous Materials based on environmental assessments obtained by
the City as provided in Section 4.12 and such other information as Developer may consider. Unless
otherwise expressly provided in this Agreement or a separate amendment or agreement, Developer
shall be solely responsible, at Developer's expense, for putting the Property in a condition suitable
for developing the Project.
3.4 Access to Property. City will grant Developer access to the Property
during reasonable daylight hours. Developer will give the City reasonable advance notice of its
intention to enter the Property.
3.5 Environmental Remediation: Other Conditions. Should inspection
reveal any Hazardous Materials or environmental conditions requiring remediation, or if Developer
disapproves of any other condition of the Property, Developer will promptly notify the City. The
parties will have 30 days after that to discuss any environmental remediation costs, or the manner of
curing any other condition to which Developer objects, as applicable. If the parties cannot agree
upon remediation measures within the 30 days, either party may terminate this Agreement by 30
days' notice to the other, however, City may terminate only if costs to remediate are material. Any
remediation will be pursuant to a remedial action plan, if needed, approved by the governmental
agencies having jurisdiction. Notwithstanding the foregoing, City shall be obligated to complete
environmental remediation if the costs of doing so are not material. The work will be performed
according to applicable Environmental Laws and any governmental requirements. Either parry may
terminate this Agreement as allowed by this Section 3.5, even if Developer has given an Approval
Notice or otherwise accepted the Property under Section 3.7.
3.6 Natural Hazards Disclosure Statement. The City shall deliver to
Developer a "Natural Hazards Disclosure Statement" executed by the City.
3.7 Approval of Investigation. If Developer disapproves of any results of
the Due Diligence Investigation, including review of the Materials, Developer may terminate this
Agreement without any liability whatsoever by providing written notice thereof (a "Disapproval
Notice") to the City and the Escrow Holder before the end of the Review Period. On such
10
termination, the Escrow Holder will return any documents and money deposited into escrow to the
depositor, after deducting any escrow cancellation fees or charges. If, however, on or before the
expiration of the Review Period, Developer determines that the results of the Due Diligence
Investigation, including review of the materials, are acceptable and that it intends to proceed with the
acquisition of the Property, then Developer may give written notice of such determination (an
"Approval Notice") to the City and the Escrow Holder. Developer's failure to deliver a Disapproval
Notice or Developer's delivery of an Approval Notice, as applicable, on or before the end of the
Review Period shall constitute Developer's acceptance of the Property, and all other improvements
thereon and all conditions in, on, under and about the Property, except as otherwise expressly
provided in this Agreement.
3.8 Governmental Actions. The matters specified below, each requiring
governmental action, shall have been completed or approved. These matters are in addition to and
without limitation on any other governmental permits, entitlements or approvals required for
development of the Project. Governmental action may be legislative, quasi-judicial or otherwise
discretionary in nature. Neither the Agency nor the City can take action before environmental
assessment of the Project on the Property under CEQA is completed. Neither the Agency nor the
City can commit in advance to approve any matter. Neither the Agency, the City nor any other
public or governmental entity will be liable to the Developer or any other person if it fails to grant
any discretionary approval.
3.8.1 CEOA Review. The EIR shall have been completed and
certified in accordance with the California Environmental Quality Act.
3.8.2 Environmental Clearances. Environmental clearances shall
have been received from regulating agencies for any area within the Property that is found to be
contaminated with Hazardous Materials.
3.9 Evidence of Insurance. The Developer shall have on file with the City
current certificates of insurance for all insurance which this Agreement requires the Developer to
maintain, evidencing that all required insurance is in effect.
3.10 Default. Developer shall not be in default of this Agreement and all
representations and warranties of Developer contained herein shall be true and correct in all material
respects.
3.10.1 Delivery of Documents. Developer will have signed and
delivered all documents required hereunder.
3.10.2 Land Use and Development Approvals. Developer will
have received all land use and development approvals, variances, permits and the like required by
this Agreement.
3.11 Recordine. This Agreement shall have been recorded with the Fresno
County Recorder's Office.
4. Lease of Property. The City will lease to Developer, and Developer will lease
11
from the City, the Property pursuant to the terms and conditions set forth in the Ground Lease
attached hereto as Exhibit "D", and incorporated herein by this reference. Further, in the Ground
Lease the City will grant to Developer the option to purchase the Property at any time during the
term of the Ground Lease, provided Developer is not in default under this Agreement, the Ground
Lease, or any related Agreement with the City or Agency.
4.1 Escrow. Within fifteen (15) days after the Effective Date, the City and
Developer will open the Escrow with the Escrow Holder, and deposit a signed copy of this
Agreement as their initial joint escrow instructions. The City and Developer will sign any
supplemental escrow instructions, consistent with this Agreement that the Escrow Holder deems
necessary or appropriate. This Agreement will control any inconsistency that may exist between this
Agreement and the supplemental escrow instructions. The parties authorize the Escrow Holder to act
under the escrow instructions and, after the Escrow City accepts the instructions in writing, it will
carry out its duties as Escrow Holder under this Agreement.
4.2 Creation of Separate Legal Parcel. Prior to the date for Close of
Escrow, the City shall (i) complete all steps necessary to establish the Property as a separate legal
parcel, and (ii) prepare a legal description of the Property sufficient for the Escrow Holder to record
the Memorandum of Lease and Option to Purchase and issue the title insurance policy described in
Section 4.14.1. When the City has prepared the legal description of the Property, the legal
description shall be attached to and automatically incorporated into this Agreement as Exhibit A-1.
4.3 Conditions Precedent to Closing Escrow. The following are conditions
precedent to the City's obligations to close the Escrow and convey the leasehold interest in the
Property to Developer. These conditions must be satisfied by the time stated or, if no time is stated,
then by the Outside Date set for the Closing. The City, in writing, may waive any condition or agree
to extend the time for satisfaction. It may terminate the Escrow and this Agreement as provided
herein for the failure of a condition.
4.3.1 Insurance. Developer has delivered to the City, and the
City's Risk Management has approved the form and content of, certificates of insurance for all
insurance and performance bonds that this Agreement requires Developer to obtain and maintain.
4.3.2 Section 2 Conditions. All conditions precedent set forth in
Section 2 have been satisfied.
4.3.3 Acceptance of Property Condition. Developer has either
given written Notice of Approval that it has inspected the Property and accepts the Property in AS IS
condition, except as specifically provided in this Agreement, or has failed to give a written
Disapproval Notice before the end of the Review Period, as provided in Section 3.7.
4.3.4 Construction Loan. If the approved Financing Plan
includes a construction loan, the construction lender will have approved the construction loan and
directed that the loan close concurrently with the Closing of the Escrow. Aggregate liens against the
Property securing construction loans shall not exceed the amount approved in Developer's Financing
Plan. Developer and, as necessary, the lender will have signed the loan documents. The documents
IV]
will include, without limitation and as applicable, the loan agreement, the promissory note, the trust
deed, any other security instruments. The parties understand that the loan proceeds will not fund in
full at the loan closing, but will be paid in increments pursuant to the loan documents as construction
of the Improvements proceeds.
4.3.5 No Default. Developer is not in default of this Agreement
and all representations and warranties of Developer contained herein are true and correct in all
material respects.
4.3.6 Design Approvals Developer will have obtained the City's
approval of the design development drawings. Within 15 business days after receiving the design
development drawings, the City, through its City Manager, and the Agency, through its Executive
Director, will review the drawings, and acting in a commercially reasonable manner, will approve it
or disapprove it. If the City or Agency disapproves the drawings, it will specify the reason for
disapproval and ask Developer to provide any additional information the City or Agency may need to
approve the drawings. If the City or Agency fails to either approve or disapprove the design and
development drawings within the 15-day period, the City or Agency, respectively, shall be deemed to
have approved the design and development drawings. The parties intend this process to occur
concurrently with the approval process by the Planning Department of the City.
4.3.7 Land Use Approvals. Developer will have received all land
use approvals and permits required by this Agreement. Within 15 business days after receiving the
land use approvals and permits, the City, through its City Manager, and the Agency, through its
Executive Director, will review the land use approvals and permits, and acting in a commercially
reasonable manner, will approve them or disapprove them. If the City or Agency disapproves the
land use approvals and permits, it will specify the reason for disapproval and ask Developer to
provide any additional information the City or Agency may need to approve them. If the City or
Agency fails to either approve or disapprove the land use approvals and permits within the 15-day
period, the City or Agency, respectively, shall be deemed to have approved the land use approvals
and permits.
4.3.8 Financing. The City will have approved Developer's
Financing Plan as provided in Section 2.1.
4.3.9 Recording this Agreement. Escrow Holder is prepared to
record this Agreement or, at the City's sole option, to record a memorandum of it at the Closing.
4.4 Condition of Title. The City will convey the leasehold interest in the
Property to Developer free of all monetary liens and encumbrances, and rights of occupancy or
possession, real property taxes and assessments not yet due, and other easements, rights of way, and
matters of record. The City will obtain and give Developer a preliminary title report within ten (10)
days from the Effective Date. Developer will have thirty (30) days following receipt of the title
report to notify the City whether it approves the condition of title. Developer's failure to give the
City notice within the thirty (30) days will be deemed approval of title. Developer may not object,
however, to utility easements.
13
If Developer notifies the City that it disapproves any title exception, the City may, but
is not obligated to, remove that title exception within sixty (60) business days after receiving
Developer's written notice. Instead, the City may give Developer other assurances that the title
exception will be removed on or before the Closing. If the City cannot or does not elect to remove
any disapproved title exception within that period, Developer will have ten (10) business days after
the expiration of the sixty (60) business days to either give the City written notice that Developer
elects to purchase the Property subject to the disapproved title exceptions or to terminate this
Agreement. Despite any contrary provisions in this Agreement, the City shall remove any defects in
title resulting from liens or encumbrances in liquidated amounts that can be removed by paying
them.
4.5 Execution of Documents. Developer and the City shall sign the
Ground Lease and the Memorandum of Lease and Option to Purchase and execute any other
documents required hereunder and deliver such documents into Escrow.
4.6 Payment of Closing Costs. Before the Close of Escrow, the City and
Developer shall each deposited its share of all Escrow, title, and Closing costs into the Escrow.
4.7 Escrow and Title Costs. The City will pay the escrow fees, recording
fees, and documentary stamp taxes, if any, to convey the Property to Developer. The City will pay
the premium for a CLTA owner's policy of title insurance, not exceeding the value of Developer's
leasehold interest in the Property, insuring the title to the Property as described herein. Any other
costs associated with the Escrow shall be paid by the City or Developer according to the custom and
practice in Fresno County.
4.8 Prorations. The Escrow Holder will prorate all ad valorem taxes and
assessments, if any, as of Closing, between the City and Developer. If the then -current taxes and
assessments are not ascertainable, the Escrow Holder will apportion the taxes and assessments based
on the most recent statement of taxes and assessments. Escrow Holder will adjust the proration, if
necessary, within thirty (30) days after the actual taxes and assessments are available. Developer will
be solely responsible for ad valorem taxes or assessments on the Property, or any taxes on this
Agreement or any rights hereunder, which may be levied, assessed or imposed for any period after
the Closing.
4.9 Form of Conveyance. The City will convey the leasehold interest in
the Property to Developer by the Ground Lease, substantially in the form attached as Exhibit D and
the recorded Memorandum of Lease and Option to Purchase. The conveyance and Developer's
leasehold title will be subject to all conditions, covenants, restrictions and requirements set forth in
this Agreement and the Ground Lease.
4.10 Nonmerger. The provisions ofthis Agreement will not merge with the
Ground Lease. The Ground Lease will not affect, impair or limit the provisions, covenants,
conditions or agreements of this Agreement.
4.11 Possession. The City will deliver possession of the Property to
Developer at or immediately following the Closing.
14
4.12 Environmental Assessment Reports. Within thirty (30) days after the
Effective Date the City shall obtain a Phase I environmental assessment on the Property, and will
deliver a copy to Developer promptly following receipt. If the Phase I report recommends that
further environmental assessment is necessary, the City shall immediately proceed to cause a Phase U
environmental assessment to be conducted on the Property, and promptly after receiving the report
shall deliver a copy to Developer. Buyer shall have a period of 30 days after receiving the report for
the last assessment conducted under this Section 4.12 in which to review the report(s). The Review
Period set forth in Section 3.2 will be extended to the date on which such 30 -day period ends, if that
date is later than the date on which the Review Period would otherwise end.
4.13 Close of Escrow. The Escrow will close within ten (10) days after the
parties' satisfy all the conditions precedent to Closing as set forth in this Agreement, but not later
than the "Outside Date," unless the parties mutually agree to extend the time for Closing.
4.14 Authority of Escrow Holder. The parties authorize the Escrow Holder
to, and the Escrow Holder will do the following:
4.14.1 Title Policy Premium. Pay and charge the City for the
premium of a CLTA owner's title policy, giving Developer title coverage to the extent of the
purchase price.
4.14.2 Pay Fees. Pay and charge the City the escrow fees and
closing costs, excluding any costs to correct title exceptions or cure property conditions. The City
and Developer must agree in a separate writing or instructions to the Escrow Holder to the allocation
of costs to cure title exceptions or property conditions.
4.14.3 Record Memorandum of Lease and Option to Purchase and
Disburse Funds. Disburse funds, and record and deliver the Memorandum of Lease and Option to
Purchase when the conditions precedent to Closing are satisfied or waived.
4.14.4 Actions to Fulfill Obligations. Take any other actions
necessary to fulfill its obligations under this Agreement.
4.14.5 FIRPTA. and More. Direct the parties to deliver any
instrument, or to perform any act, necessary to comply with FIRPTA or any similar state act and
regulation promulgated thereunder. The City will sign a Certificate of Non -foreign Status, or a
Certification of Compliance with Real Estate Reporting Requirement of the 1986 Tax Reform Act as
the Escrow Holder may require.
4.14.6 Closing and Other Statements. Prepare, deliver to the City
and Developer, and file with all appropriate governmental or taxing authorities a uniform settlement
statement and closing statement.
4.14.7 Closing Statements. Escrow Holder will forward to both
Developer and the City a separate accounting of all funds received and disbursed for each party, and
copies of all signed and recorded documents deposited into Escrow, with the recording and filing
date and information endorsed thereon.
15
4.15 Termination Without Close. If the Escrow is not in condition to close
by the Outside Date, or any later date to which the parties may have agreed in writing, then any party
that is not in default of this Agreement, may demand the return of money or property and terminate
this Agreement and the Escrow. If either party makes a written demand for return of documents or
properties, this Agreement will not terminate until five (5) days after Escrow Holder has delivered
copies of the demand to the other party at the respective addresses shown in this Agreement. If the
other party objects within the five (5) day period, the parties authorize the Escrow Holder to hold all
papers and documents until instructed by a court of competent jurisdiction or by mutual written
instructions of the parties. Termination of this Agreement will be without prejudice to whatever
legal rights either party may have against the other arising from this Agreement. If no party demands
that the Escrow terminate, the Escrow Holder will proceed to Closing as soon as possible.
4.16 Authority to Sign Instructions. The City Manager is authorized to
execute any supplemental escrow instructions for the City that are consistent with the terms of this
Agreement. The City Manager may make minor modifications to this Agreement, or to the
documents referenced herein, to effect the opening and Closing of the Escrow.
5. Redevelopment Agency Participation.
5.1 Developer Responsibility. Except as set forth in this Agreement,
before Developer begins constructing the Improvements or undertakes any other work of
improvement on the Property, Developer, at its own cost and expense, will secure all land use and
other entitlements, permits, and approvals that Agency or any other governmental agency with
jurisdiction over the Project requires for construction of the Project. Without waiver or limitation,
Developer will secure and pay all costs, charges and fees associated with, the following:
5.1.1 Permits and Fees. All permits and fees that the City,
County of Fresno, and other governmental agencies with jurisdiction over the Project, the
Improvements or the Property may require.
5.1.2 ADA/Barriers to the Disabled. The Project shall comply
with all applicable federal, state and local accessibility requirements. For purposes of this
Agreement the number of accessible dwelling units shall be zero (0) unless a greater number of units
shall be required by law, whereupon such greater number of units shall apply.
5.2 Basic Design. Developer has submitted a general or basic concept
drawing to Agency, which Agency has approved, and a copy of which is attached as Exhibit "G" (the
"Basic Design"). Developer will complete the Improvements on the Property in one phase,
according to the Basic Design, and the plans, drawings, and documents that Developer submits to
Agency. Developer shall carry out construction of the Project including the Improvements in
accordance with all applicable local, state and federal laws, codes, ordinances and regulations,
including without limitation all applicable state and federal labor standards.
5.3 Books and Records. Developer shall make available for examination
at reasonable intervals and during normal business hours, all books, accounts, reports, files and other
papers or property with respect to the Affordable Units, and shall permit Agency to audit, examine
1C
and make excerpts or transcripts from such records. Agency may audit any conditions relating to the
Affordable Units at Agency's expense, unless such audit shows a materially significant discrepancy
in information reported by Developer to Agency in which case Developer shall bear the cost of such
audit. Developer shall also reasonably cooperate with and assist the Agency in Agency's compliance
with any applicable audit requirements of the California Redevelopment Law including California
Health and Safety Code Sections 33080 and 33080.1. This section shall survive for a period of four
(4) years after the expiration or termination of this Agreement.
5.4 Audit. Developer shall be accountable to Agency for all Grant funds
and Supplemental Funding disbursed to Developer pursuant to this Agreement. Developer will
cooperate fully with Agency, the State, or other governmental entity in connection with any interim
or final audit relating to the Project that may be performed. Developer will maintain accurate and
current books and records for the Project using generally accepted accounting principles. Developer
agrees to maintain books and records that accurately and fully show the date, amount, purpose and
payee of all expenditures financed with Grant funds and Supplemental Funding and to keep all
invoices, receipts and other documents related to expenditures financed with Grant funds and
Supplemental Funding for not less than four (4) years after the fiscal year in which such expenditures
are incurred. For purposes of this section, "books, records and documents" include, without
limitation, plans, drawings, specifications, ledgers, journals, statements, contracts/agreements,
funding information, purchase orders, invoices, loan documents, computer printouts,
correspondence, memoranda and electronically stored versions of the foregoing. This section shall
survive for a period of four years after the expiration or termination of this Agreement.
5.5 Project Start. Developer shall cause the issuance of all necessary
discretionary governmental permits, approvals and entitlements, close any implicated funding or
other escrow and begin/complete construction of the Improvements according to the Development
Schedule.
5.5.1 Project Completion. Agency, acting through and in the
discretion of its Executive Director, shall extend the completion date of the Project for that period of
time that Agency, in its reasonable discretion, determines necessary to overcome any delay if and to
the extent such delay is due to a cause which is beyond Developer's reasonable control, and if
Developer could not, with reasonable diligence, have foreseen and avoided such cause for delay.
Such causes include, without limitation, failure of City to meet deadlines required of it under this
Agreement, acts of God, inclement weather, flood, war, terrorism, riot or act of the public enemy,
labor disputes, unavoidable inability to secure labor, materials, supplies, tools or transportation, acts
of public utilities, or acts or omissions of any governmental authority (including inspectors) having
jurisdiction. Agency will not extend the completion date for acts or omissions occurring through the
fault of Developer, or for acts of Agency permitted or contemplated by this Agreement. An
extension of time as provided in this subsection will be Developer's sole remedy for any delays in
the Development Schedule the Project completion date.
As a condition precedent to any extension requested by Developer, Developer will give the
Agency notice within ten (10) days after any cause for delay occurs, stating the cause and the
additional time Developer anticipates needed to complete the Project. Any extension by Agency
17
must be in writing and signed by the Executive Director or the Executive Director's designee, which
approval shall not be unreasonably withheld, delayed or conditioned.
5.6 Advance of Funds by City. City shall advance to the Agency no later
than thirty (30) days prior to the estimated completion date for the Project, a grant of $750,000.
5.7 Disbursement of Agency Funding.
5.7.1 Grant. Agency shall pay to Developer a Grant of $750,000
solely from Agency's Low and Moderate Housing Fund within sixty (60) days after the later of (i)
receipt of $750,000 grant from the City or (ii) receipt of a Certificate of Occupancy for the Project.
5.7.2 Supplemental Funding; After completion of the Project,
Agency shall disburse to Developer, solely from Agency's Low and Moderate Housing Fund, within
sixty (60) days of receipt, 50% of the net tax increment received and generated from the Project until
the earlier of 13 years from the Effective Date of this Agreement or until the Project receives $1.8
million in net present value discounted at a rate of six percent (6%).
5.7.3 Use of Funds. All Grant funds and Supplemental Funding
shall be used solely for costs of the Project and Improvements.
5.8 Certificate of Completion. The Certificate of Completion shall be
issued after Developer provides a Certificate of Occupancy for the Project to Agency.
5.8.1 Conditions Precedent of Certificate of Completion. The
following are conditions precedent to Agency issuing the Certificate of Completion, and each
submission will be in form and substance satisfactory to the Executive Director: Evidence that the
time to file all mechanics' liens or material men's liens has expired and any such liens recorded
against the Property or Improvements have been released or, if not released, sufficiently bonded (i.e.
150%) against as required by law.
5.9 Damage or Destruction. To the extent economically feasible,
consistent with the requirements of any permitted encumbrance, or as otherwise approved by Agency
or provided in the Agreement, if any building or improvement on the Property is damaged or
destroyed by an insurable cause, Developer shall, at its cost and expense, diligently undertake to
repair or restore said buildings and improvements consistent with the Basic Design for the Project.
Such work or repair shall commence within ninety (90) days after the insurance proceeds are made
available to Developer and shall be complete within one (1) year thereafter. All insurance proceeds
collected for such damage or destruction shall be applied to the cost of such repairs or restoration
and, if such insurance proceeds shall be insufficient for such purpose, Developer shall make up the
deficiency.
5.10 lWections. Developer shall permit, facilitate and require its
contractors to permit and facilitate observation and inspection of the Project by Agency during
reasonable business hours and upon reasonable notice for the purpose of determining compliance
with this Agreement.
18
5.1 1 Displacement. If and to the extent that development of the Project
results in the permanent or temporary displacement of residential tenants, homeowners or businesses,
Developer shall comply with all applicable local, state and federal statutes and regulations with
respect to relocation planning, advisory assistance and payment of monetary benefits. Developer
shall be solely responsible for payment of any relocation benefits to any displaced persons and any
other obligations associated with complying with said relocation laws. For purposes of this Section
5.11 the parties acknowledge that as of the Effective Date the Project Property is vacant and
unoccupied.
5.12 Reporting Requirements. Developer shall submit to Agency the
following reports:
5.12.1 Annual Reports. Annually, beginning in the year following
Agency's issuance of the Certificate of Completion, and continuing until the expiration of this
Agreement, on such dates as are agreeable between the -parties and consistent with all federal and
state reporting requirements applicable to the Project, Developer shall submit an annual report to
Agency, in a form approved by Agency. Such annual report shall include for each of the Affordable
Units: the rent, the annual income and the family size of the Household occupying the Affordable
Unit. Such annual report shall also state the date the tenancy commenced for each Affordable Unit,
certification from an officer of Developer that the Affordable Unit is in compliance with the
Affordable Rental Housing requirements, and such other information the Agency maybe required by
Law to obtain. Developer shall provide any additional information reasonably requested by the
Agency provided such information is directly related to Developer's compliance with this
Agreement.
5.12.2 Annual Proof of hisurance. Annually, beginning in the year
following Agency's issuance of the Certificate of Completion, and continuing until the expiration of
the Agreement, Developer shall submit proof of insurance as required by this Agreement.
5.13 Leases. All Leases used to rent the Affordable Units are subject to the
following
5.13.1 Annual Income Certification and Reporting. Developer
shall include in leases for all Affordable Units provisions which authorize Developer to immediately
terminate the tenancy of any household one or more of whose members misrepresented any fact
material to the household's qualification as a household for low income family. Each such lease
shall also provide that the household is subject to annual certification, and that, if the household's
annual income increases above the applicable limits for low income family such household's rent
may be subject to increase to the amount payable by tenant under federal, state or local law.
5.14 Affordable Units ofthe Project. With respect to the Project, Developer
shall comply with the following:
5.14.1 Management Functions. Except to any extent otherwise
provided in this Agreement, Developer is specifically responsible for all management functions with
respect to the Affordable Units including, without limitation, the selection of tenants, certification
19
and re -certification of Household size and income, evictions, collection of rents and deposits,
maintenance, landscaping, routine and extraordinary repairs, replacement of capital items and
security. Agency shall have no responsibility for management of the Affordable Units of the Project.
5.15 Affordability Period. Developer covenants and agrees the Affordable
Units shall constitute Affordable Rental Housing during the entire Affordability Period. If
Developer fails to comply with the requirement to lease the Affordable Units only to qualified
Households during the Affordability period, Agency shall be entitled to enjoin Developer from
leasing the Affordable Units in the Project, as Developer acknowledges that damages are not an
adequate remedy at law for such breach.
6. Project Construction.
6.1 Private Development Project. Developer will complete the Project as
described in the Scope of Development using contractors licensed to do business in California.
Developer shall diligently pursue completion of the Project according to the Development Schedule,
the City -approved final construction plans, all permits and approvals approved or issued by the City,
subject to any approved modifications. Except for any work associated with its Due Diligence
Investigation, Developer shall not begin construction or perform any other work on the Property until
after the Closing.
6.2 Developer Responsible for All Development Related Fees, Charges,
and Permits. Developer will pay all permit and permit processing costs, all fees and charges relating
to the Project, and the costs to construct any Project specific offsite improvements or improvements
that the City may require to approve the Project.
6.3 City Review of Development Related Items. Solely to assure the City
that the Project will further the goals, requirements, and expectations ofthe City and this Agreement,
Developer will submit certain development related items to the City for review and written approval
which approval shall not be unreasonably withheld. These development -related items include,
without limitation, building permits, conditional use permits, site plans, building plans, basic concept
drawings, elevation and other drawings showing architectural style, design and features, landscaping
plans (prepared by a professional landscape architect), and finish grading plans (prepared by a
licensed civil engineer).
City review and approval shall be conducted by the City Manager or the City
Manager's designee. The City's review will be in addition to review by any other governmental
entity of Project -related matters, required by any law, code, regulation, or rule. The City shall not
require Developer to take any action or inaction that conflicts with City requirements. The parties
intend this process to occur concurrently with the approval process by the Planning Department of
the City
6.4 Approval of Material Changes. Any Material Change to matters
approved by the City shall be submitted to the City for written approval which approval shall not be
unreasonably withheld.
6.5 City and Other Governmental Approvals. Developer shall apply for,
and diligently pursue until obtained, any City or other governmental permits or approvals necessary
to complete the Project. The Council approval, and the City's execution, of this Agreement does not
limit the City's discretion in the permit and approval process necessary to complete the Project.
Discretionary approvals include, without limitation, the City's review and approval of final
construction plans and specifications. The City shall use best efforts to help Developer obtain any
necessary City and other discretionary governmental permits or approvals.
6.6 Incorporation and Ownership of Approved Documents,• Material
Chance. After the City approves each development -related document, the Developer will provide a
duplicate copy of each approved document to the City; after that, the document will become a part of
this Agreement as though fully set forth herein. The duplicate document will belong to the City for
use as it may deem advisable including, but not limited to, completion of the Project or any
Developer Improvements upon any Default of the Developer. The Developer may not make any
Material Change to a City -approved development -related document without first submitting the
change to the City for review and approval according to the process provided herein. Until the City
approves a Material Change, the previously approved document will be the controlling document.
6.7 Construction Contracts. The Developer's construction contracts with
contractors, appropriately licensed and qualified for construction of the Developer Improvements on
the Property and approved by the City, are in effect. Each construction contract will provide that the
contractor will complete construction for some fixed or specified maximum amounts pursuant to the
approved final construction plans and the approved Financing Plan.
Within fifteen (15) business days after the City issues a building permit for construction on the
Property, the Developer shall submit copies of the construction contract(s) for the Property to the
City's City Manager or a designee, for the sole and limited purposes of determining: (i) that the costs
of work have been clearly fixed and are consistent with the approved Financing Plan, (ii) that no
contract contains Material Changes, not already approved by the City, to the Financing Plan or any
development -related document, and (iii) that the contract(s) contain the required equal opportunity
covenants.
6.8 Discretionary Governmental Actions. Certain planning, land use,
zoning and other permits and public actions required for the Project are discretionary governmental
actions. These include, without limitation, the approval of this Agreement, conveyance of the
Property, and other transactions contemplated by this Agreement. Nothing in this Agreement
obligates the City or any other governmental entity to grant final approval of any matter described
herein.
Such actions are legislative, quasi-judicial, or otherwise discretionary in
nature. The City cannot and do not commit to approve any matter. The City shall not be liable, in
law or equity, to Developer or any of its executors, administrators, transferees, successors -in -interest
or assigns for any failure of any governmental entity to grant approval on any matter subject to
discretionary approval.
6.9 Time for Completion of the Proiect: Costs. Developer will begin
21
construction by the date provided in the Development Schedule, and will diligently complete the
Project according to the Schedule, or by any other date as the parties may agree in a written extension
signed by the parties.
6.10 Progress Reports. Until the Developer completes the Developer
Improvements on the Property and the City issues a Release of Construction Covenants, the
Developer will provide monthly written reports to the City of its construction progress. The reports
will be in such form and detail as the City may require.
6.11 Rights of Access. The City's representatives will have the right to
enter the Property during construction, without charge or fee, during normal construction hours to
assure compliance with this Agreement. Entry by City representatives will not interfere with the
construction of the Developer Improvements.
6.12 Extension of Time for Completion. Developer shall be excused for
any delay in completion, and the City shall extend the completion date in writing for a period
reasonably necessary to overcome any delay, to the extent the delay is due to a cause that is beyond
Developer's reasonable control and could not, with reasonable diligence, have been foreseen and
avoided by Developer. Such causes include, for example, failure of the City to meet deadlines
required of it under this Agreement; acts of God; inclement weather; flood; war, riot or act of the
public enemy, labor dispute; unavoidable inability to secure labor, materials, supplies, tools or
transportation; acts of public utilities; or acts or omissions of any governmental authority (including
its inspectors) having jurisdiction (other than acts of the City permitted by or contemplated by this
Agreement). Developer's lack of funds or Developer's inability to obtain financing for construction
of the Project shall not be construed as unforeseen or unavoidable. As a condition precedent to any
extension, Developer shall give the City notice of any delay -causing event within ten (10) days after
its onset, stating the cause of the delay and the extension Developer reasonably expects is needed,
and asking the City to extend the completion date. An extension under this Section shall be noted in
writing as modifying this Agreement and the Performance Schedule. Obtaining an extension shall be
Developer's sole means of avoiding potential breach of the Construction Covenants herein when a
delaying event occurs.
6.13 Release of Construction Covenants. After Developer has satisfactorily
completed the Project according to the construction covenants in this Agreement (including the
required beginning and completion dates), Developer may ask the City to record a release from those
covenants. Subject to the satisfaction of the conditions to its issuance (see Section 6.14), the City
will provide an instrument certifying Developer's completion by preparing and recording a Release
of Construction Covenants, substantially in the form attached as Exhibit "E." This release, when
recorded, will evidence the City's conclusive determination that Developer has satisfied the
construction covenants in this Agreement. The release will not be evidence that Developer has
complied with or satisfied any obligation to anyperson holding a deed of trust or Security Financing
Interest. The release shall not terminate Developer's indemnification or other obligations, which by
their nature are intended to survive Project completion.
After the release is recorded in the Official Records of Fresno County, any
party then owning or after that purchasing, leasing, or otherwise acquiring any interest in the
0
Property shall not (because of such ownership, purchase, lease, or acquisition) incur any obligation
or liability under this Agreement regarding the construction requirements or Project development.
6.14 Conditions to Issuing the Release of Construction Covenants. The
following are conditions precedent to the City issuing the Release of Construction Covenants, and
each submission will be in form and substance satisfactory to the City Manager:
6.14.1 Release of Mechanic's Liens. Evidence that all mechanics'
liens or material men's liens recorded against the Property and Project improvements have been
released or, if not released, sufficiently bonded against as required by law.
6.14.2 Liens. Evidence that the aggregate liens against the
Property do not exceed the permitted Security Financing Interests approved in the Financing Plan.
6.15 Liens and Stop Notices. Developer will not permit any lien or stop
notice to be filed against the Property. If a claim of lien or stop notice is recorded against the
Property or any Project improvements, Developer, within thirty (30) days after that, or within ten
(10) days after the City's demand whichever first occurs, will do the following:
6.15.1 Pay and Discharge. Pay and discharge the same; or
6.15.2 Surety Bond. Effect the release of it by recording and
delivering to the City a surety bond in sufficient form and amount, or otherwise; or
6.15.3 Protection Assurance. Give the City other assurance that
the City, in its sole discretion, deems satisfactory to protect the City from the effect of the lien or
bonded stop notice.
6.16 Developer's Construction Costs. Except for obligations and fees
expressly assumed by City in this Agreement, the Developer will be responsible for all costs and fees
associated with developing the Property and Improvements, without limitation, all fees and costs
associated with obtaining governmental permits and approvals
6.17 Compliance With Laws. The Developer shall comply with all
applicable laws, regulations and rules of the governmental agencies having jurisdiction over the
Property, the Project or the Developer, including, but not limited to, applicable federal and state
labor standards and environmental laws and regulations..
The Developer, not the City, is responsible for determining
applicability of, and compliance with, all local, state and federal laws to the Developer's activities on
the Property including, without limitation, the California Labor Code, Public Contract Code, Public
Resources Code, Health & Safety Code, Government Code, the City charter, and the City's
municipal code. The City makes no representations as to the applicability or inapplicability of any
such laws to this Agreement, the Developer, the Developer Improvements, or the parties' respective
rights or obligations hereunder including, but not limited to, payment of prevailing wages,
competitive bidding, subcontractor listing, or other matters. The City will not be liable or
responsible in law or equity for any failure of the Developer to comply with any such laws, even if
23
the City knew or should have known of the need for such compliance or failed to notify the
Developer of the need for such compliance.
6.18 Equal Opportunity: Anti -Discrimination. Neither the Developer nor
any of the Developer's contractors, subcontractors or employees will discriminate based on race,
color, creed, religion, sex, marital status, age, physical or mental disability, ancestry or national
origin in the hiring, firing, promoting or demoting of any person engaged in the construction work or
activities undertaken pursuant to this Agreement. The Developer and each of its construction
contractors will give employment preference, to the extent practicable, to individuals residing within
the Project Area.
6.19 Defects in Plans. The City will not be responsible to Developer or to
third parties for any of the following: (a) defects in the design of the Project improvements, or (b)
any structural or other defects in any work that Developer, or its agents, employees or contractors do
according to the approved plans and specifications, or (c) any delays caused by the City's review and
approval, or by any other governmental review and approval processes. Developer will hold
harmless, indemnify, and defend the City, and its officers, employees, agents and representatives
from any claims, suits for damages to property or injuries to persons arising out of or relating to
defects in the design including, without limitation, the violation of any laws, and for defects in any
work Developer or its representatives, employees, or agents performs according to any City -reviewed
and approved design or drawings or other construction items.
6.20 Utilities. Developer is responsible, at its sole cost and expense, to
determine the location of any utilities on the Property and to negotiate with the utility companies for
and to relocate the utilities, if any, as necessary to complete the Project.
6.21 Access. Until the City issues the Release of Construction Covenants,
and solely to assure compliance with this Agreement, City and City representatives may access the
Property, during normal construction hours, free of any charge or fee, provided that the
representatives comply with all safety rules. Other than during emergencies, the City representatives
shall notify Developer at least twenty four (24) hours before accessing the Property. This provision
shall not be construed as limiting the City's rights, under all applicable law, ordinances, and
regulations, to carry out code enforcement and to administratively inspect the Property.
6.22 Hiring Preferences to Project Area Residents. A fundamental purpose
of redevelopment is to expand the employment opportunities for jobless, underemployed, and low-
income persons. Developer, through its construction contractor, shall give preference for
employment to those qualified individuals, if available, residing within the Project Area governed by
the Redevelopment Plan.
Indemnity: Insurance.
7.1 Indemnity. Developer shall indemnify, hold harmless and defend, with
qualified counsel of Developer's choice, the City and Agency, and the City shall indemnify, hold
harmless and defend, with qualified counsel of the City's choice, the Agency, and each of its officers,
officials, employees and agents from any loss, liability, fines, penalties, forfeitures, costs and
24
damages (whether in contract, tort or strict liability including, without limitation, personal injury,
death at any time and property damage) incurred by the City and/or Agency, Developer or any other
person, and from any claims, demands and actions in law or equity, including reasonable attorneys'
fees and litigation expenses, arising or alleged to have arisen directly or indirectly out of performance
of this Agreement (collectively, "Claims'). The preceding sentence shall not apply to any Claims
caused by the negligent acts or omissions, or by the willful misconduct, of the City or Agency or any
of its officers, officials, employees and agents.
This indemnity shall also cover, without limitation the following: (i) any
act, error or omission of Developer as to both the City and Agency and the City as to the
Agency or any of their officers, employees, contractors, subcontractors, invitees, agents or
representatives in connection with this Agreement, the Project or the Property; (ii) any use of
the Property, the Project by Developer or any of its officers, employees, contractors,
subcontractors, invitees, agents or representatives, successors or assigns; (iii) the design,
construction, operation or maintenance of the Project, or (iv) failure of Developer or any of its
officers, employees, contractors, subcontractors, invitees, agents or representatives to comply
with any Federal, State or local law, code, ordinance or regulation applicable to this
Agreement or the Project, including, but not limited to, claims based upon failure to comply
fully with prevailing wage laws as may be determined by any court or agency of the State of
California or United States Government; with respect to any and all claims related to
prevailing wage, Developer, as provided herein and otherwise in this Agreement, assumes all
responsibility for payment of prevailing wage and complying with prevailing wage laws, if
required, and specifically waives any and all rights against the City and Agency, as well as City
and Agency agents, employees, agencies, and consultants, pursuant to California Labor Code
section 1726(c) and analogous federal law, if any, and agrees to defend and fully indemnify the
City and Agency, as well as City and Agency agents, employees, agencies, and consultants, for
any claims based upon failure to pay prevailing wage, including, without limitation, claims for
damages, fines, penalties, litigation expenses, costs, attorneys' fees, and interest. Developer,
City and/or Agency have the right to contest or challenge any finding that prevailing wage
applies.
If Developer contracts or subcontracts any of the work to be performed under
this Agreement, Developer shall require each contractor or subcontractor to indemnify, hold
harmless and defend the City and Agency and each of its respective officers, officials, employees,
agents and volunteers in accordance with the preceding paragraph.
A party's indemnity obligation under this Section shall be limited to the sum
that exceeds the amount of insurance proceeds, if any, received by the party being indemnified, if this
provision violates the terms of an insurance policy; this provision does not apply to any self insured
program.
This section shall survive termination or expiration of this Agreement and the
potential recordation of the Grant Deed.
7.1.1 Indemnification by Contractors or Subcontractors. The
Developer shall require each contractor and subcontractor to indemnify, hold harmless and defend
25
the Agency, the City, the State and each of their respective officers, officials, employees, agents,
boards, and volunteers according to the terms of paragraph 7.1.
7.1.2 Action Arising Out of Approval of This Agreement. The
Developer shall indemnify, defend and hold the Agency, the City and each of their respective
officers, officials, employees, agents, boards and volunteers harmless from any judicial action filed
against the Agency or the City by any third party arising out of the Agency's or the City's approval of
this Agreement or any permit, entitlement or other action required to implement this Agreement,
including without limitation approvals under the Law, CEQA or the City's Municipal Code. The
City will promptly notify the Developer of the action. Within fifteen (15) days after receipt of the
notice, the Developer shall take all steps necessary and appropriate to assume defense of the action.
The City will cooperate with the Developer in the defense of the action (at no cost to the Agency or
the City). Neither the Developer nor the City will compromise the defense of such action or permit a
default judgment to be taken against Agency or the City without the prior written approval of the
other party(ies).
7.1.3 Survival of Indemnification Provisions. Except as
otherwise specifically stated herein, the indemnification provisions in this subsection and every other
indemnification in this Agreement will survive any termination of this Agreement, will survive any
Closing, will survive the expiration of any covenant herein and will not merge with any Ground
Lease or other document evidencing an interest in real property.
7.2 Insurance. Until the City issues the Release of Construction Covenants
and the Release is recorded in the Official Records of Fresno County, Developer shall pay for and
maintain, or cause to be paid and maintained, in effect all insurance policies required hereunder with
insurance companies either (i) admitted by the California Insurance Commissioner to do business in
the State of California and rated not less than "A -VII" in Best's Insurance Rating Guide; or (ii)
authorized by the City's Risk Manager and Agency's Executive Director. The following policies of
insurance are required, and Developer will deliver proof of these policies before starting
construction:
7.2.1 Commercial General Liability hisurance. Commercial
general liability Insurance that shall include contractual, products and completed operations
coverages, bodily injury and property damage liability insurance with combined single limits of not
less than one million dollars ($1,000,000) per occurrence.
7.2.2 Commercial Automobile Liability Insurance. Commercial
automobile liability insurance, endorsed for "any auto" with combined single limits of liability of not
less than one million dollars ($1,000,000) per occurrence.
7.2.3 Workers' Compensation Insurance. Workers'
compensation insurance, as required under the California Labor Code.
7.2.4 Fire and Extended Coverage Insurance. Fire and extended
coverage insurance for at least the full replacement cost of the Developer Improvements on the
26
Property, excluding foundations, footings and excavations and tenant improvements, fixtures and
personal property.
7.2.5 Builders Risk Insurance. Builders risk insurance sufficient
to cover one hundred (100) percent of the replacement value of all improvements made on the
Property including, without limitation, terms of labor and materials in place or to be used as part of
the permanent construction (including, without limitation, surplus miscellaneous materials and
supplies incidental to the work, and scaffolding, staging, towers, forms and equipment not owned or
rented by Developer, the cost of which is not included in the cost of work).
The above described policies of insurance shall be endorsed to provide
an unrestricted thirty (30) day written notice in favor of the City and Agency, of policy cancellation,
change or reduction of coverage, except the Workers' Compensation policy that shall provide a ten
(10) day written notice of such cancellation, change or reduction of coverage. If any policy is due to
expire during the term of this Agreement, Developer shall provide a new certificate evidencing
policy renewal not less than fifteen (15) days before the expiration date of the policy. When an
insurer, broker, or agent issues a notice of cancellation, change or reduction in coverage, Developer
shall immediately obtain and file a certified copy of new or renewal policy and certificates for such
policy with the City and Agency.
The General Liability and Automobile Liability insurance policies
shall be written on an occurrence form and shall name the City, the Agency, and the officers,
officials, agents and employees of each as an additional insured. Each policy shall be endorsed so
that Developer's insurance is primary and no contribution is required of the City and Agency.
Developer shall furnish the City and Agency with copies of the actual policies upon the request of
the Agency's Executive Director, the Executive Director's designee, or the City's Risk Manager.
If Developer fails to maintain the required insurance in full force and
effect, Developer shall immediately discontinue all work under this Agreement until the City and
Agency receive notice that the required insurance has been restored to full effect and that the
premiums for the insurance have been paid for a period satisfactory to City and Agency. Developer's
failure to maintain any required insurance shall be sufficient cause for the City and Agency to
terminate this Agreement after notice and the right to cure as provided in Section 11.3.
If Developer subcontracts all or any portion of the work under this
Agreement, Developer shall require each subcontractor to provide insurance protection in favor of
Developer and the City and Agency, and their officers, officials, employees, agents and volunteers
according to the terms of each of the preceding paragraphs, except that the subcontractors'
certificates and endorsements shall be on file with Developer, City and Agency before the
subcontractor begins any work.
7.2.6 Insurance for Project Design Work. Developer shall
maintain for its Project design work, or if Developer subcontracts any of the Project design work
Developer shall require each design subcontractor to maintain, professional liability insurance (errors
and omissions) with a limit of not less than one million dollars ($1,000,000) per occurrence.
27
If claims made forms are used for any Professional Liability Coverage,
either (i) the policy shall be endorsed to provide not less than a five (5) year discovery period, or (ii)
the coverage shall be maintained for a minimum of five (5) years after the Release of Construction
Covenants is recorded. The requirements of this section relating to such coverage shall survive
termination or expiration of this Agreement.
7.2.7 Performance and Payment Bonds. Developer will obtain
and deliver labor and material bonds, payment, and performance bonds, issued by an insurance
company meeting the criteria for Developer's other insurance under this Agreement. The bonds will
each contain a penal sum at least equal to one hundred (100) percent of Developer's estimated
construction costs. The bonds will name the City and Agency as co -obligee. The City, at the City
Manager's option, and the Agency, at the Executive Director's option, instead of requiring
performance and payment bonds, may consider and accept other evidence, satisfactory to the City
Manager and/or Executive Director, of Developer's ability to complete the Project.
8. Security Financing Interests and Rights of Holders.
8.1 Encumbrances Only for Development Purposes. Despite any other
provision of this Agreement to the contrary, Developer may not grant a security interest in the
Property before the City issues and records a Release of Construction Covenants and the Agency
issues and records a Certificate of Completion. This prohibition does not apply to a Security
Financing Interest securing the construction and permanent financing shown in the approved
Financing Plan.
8.2 Holder Not Obligated to Construct. The holder of any Security
Financing Interest is not obligated to perform Developer's construction obligations, or to guarantee
construction of the Project, whether under this Agreement, the Ground Lease or any Grant Deed.
However, any holder of a Security Financing may not devote the Property to any use, and may not
construct any improvements on the Property, except as authorized by this Agreement.
8.3 Notice of Default to Holder. and Right to Cure. If a holder or
Developer gives the holder's address to the City and asks the City to notify the holder, the City will
give a duplicate notice to the holder of any notice or demand that it gives to Developer of any
Default. Within thirty (30) days after the receipt of the notice, each such holder of record will have
the right, but not the obligation, to cure Developer's default or breach.
Except as necessary to conserve or protect improvements already
constructed, a holder of a Security Financing Interest may not undertake to complete the Project,
without fust expressly assuming Developer's obligations hereunder in a writing satisfactory to the
City. Under any assumption agreement, the holder must agree to complete the Project as provided in
this Agreement. It must also submit evidence satisfactory to the City that it has the qualifications
and financial responsibility necessary to perform the obligations. Any holder properly completing
the Project will be entitled, upon written request, to a Release of Construction Covenants from the
City.
8.4 Failure of Holder to Complete Proiect. If a holder of a Security
In
Financing Interest assumes Developer's construction obligations but, within six (6) months after
Developer's Default, does not proceed diligently with construction, the City will have the same
rights against the holder as it would otherwise have against Developer. The City's rights against the
holder will be to the extent the events producing the rights occur after the holder assumes control of
the Property, unless otherwise provided in the assumption agreement between the City and the
holder.
8.5 Right of City to Cure. If (a) Developer defaults under a Security
Financing Interest before completing the Project, and (b) the holder does not assume Developer's
construction obligations, then the City may cure the default before foreclosure. If the City cures the
default, Developer will reimburse the City on demand for all costs and expenses it incurs to cure the
default. The City may lien the Property to the extent of such costs and expenses. Any lien will be
subordinate to any Security Financing Interest created to secure a debt, the proceeds of which
Developer uses solely to purchase and develop the Property, as authorized in this Agreement.
8.6 Right of City to Satisfy Other Liens. Until Developer completes the
Project and the City records the Release of Construction Covenants, the City may cure Developer's
default of other liens. The City will not exercise the right until Developer has had a reasonable time
to challenge, cure, or satisfy the liens or encumbrances. This provision does not prevent Developer
from contesting the validity or amount of a tax, assessment, lien or charge. hr doing so, Developer
must act in good faith, and the payment delay must not subject the Property to forfeiture or sale.
Before the tax, assessment, lien or charge is due and payable, Developer must give reasonable
security to the City for the lien or charge, and notify the City that it will appeal any property tax
assessment.
8.7 Holder to be Notified of Provisions. Before Developer grants any
Security Financing Interest in any parcel, Developer will cause the holder of a Security Financing
Interest to insert or incorporate the provisions of this Section 8 into the documents evidencing the
Security Financing Interest, or to acknowledge the provisions in writing.
9. Developer's Continuing Obligations. The following obligations of Developer
will run with the land and survive the Closing, the recording of the Ground Lease and this
Agreement, and shall expire on the recording of the Release of Construction Covenants, unless
otherwise specifically provided in this Section 9:
9.1 Taxes and Assessments. The Developer will pay before delinquency
all ad valorem real estate or possessory use taxes and assessments on the Property conveyed to it,
subject to a right to contest the amounts of taxes in good faith. The Developer will remove any levy
or attachment made on the Property, or assure the satisfaction thereof within a reasonable time.
9.2 Maintenance. The Developer will, at its expense, maintain all
walkways, lighting and other improvements, structures and landscaping on the Property in good
repair and first class condition. All landscaping shall be kept sufficiently irrigated and in a healthy,
weed -free condition.
9.3 Discrimination. In its performance of this Agreement, Developer
29
covenants by and for itself and its successors and assigns, and all persons claiming under or through
them, that there shall be no discrimination against or segregation of any person, including
contractors, subcontractors, bidders and vendors, on account of race, color, religion, ancestry,
national origin, sex, sexual preference, age, pregnancy, childbirth or related medical condition,
medical condition (e.g., cancer related) or physical or mental disability, and in compliance with all
applicable federal, state and local laws, regulations and rules including without limitation Title VII of
the Civil Rights Act of 1964,42 U.S.C. Section 2000, et seq., the Federal Equal Pay Act of 1963, 29
U.S.C. Section 206(d), the Age Discrimination in Employment Act of 1967,29 U.S.C. Section 621,
et seq., the Immigration Reform and Control Act of 1986, 8 U.S.C. Section 1324b, et seq., 42 U.S.C.
Section 1981, the California Fair Employment and Housing Act, California Government Code
Section 12900, et seq., the California Equal Pay Law, California Labor Code Section 1197.5,
California Government Code Section 11135, the Americans with Disabilities Act, 42 U.S.C. Section
12 10 1, et seq., and all other applicable anti -discrimination laws and regulations of the United States
and the State of California as they now exist or may hereafter be amended. Developer will allow
Agency representatives access to its employment records related to this Agreement during regular
business hours and upon reasonable notice to verify compliance with these provisions when so
requested by the Agency.
9.4 Environmental. After Closing, Developer will take all necessary
precautions to prevent the release into the environment of any Hazardous Materials in, on or under
the Property. Developer will comply with all governmental requirements with respect to Hazardous
Materials.
9.5 Disclosures After Closing. After Closing and until the Release of
Construction Covenants is recorded, Developer will notify the City, and give the City a copy or
copies of all environmental permits, disclosures, applications, entitlements or inquiries relating to the
Property including, without limitation, notices of violation, notices to comply, citations, inquiries,
cleanup or abatement orders, cease and desist orders, reports filed pursuant to self -reporting
requirements, and reports filed or applications made pursuant to any Governmental Requirement
relating to Hazardous Materials and underground tanks. Immediately after each incident, Developer
will report any unusual or potentially important incidents respecting the environmental condition of
the Property to the City.
If a release of any Hazardous Materials into the environment occurs,
Developer will, as soon as possible after the release, famish the City with a copy of any reports
relating thereto and copies of all correspondence with governmental agencies relating to the release.
Upon request, Developer will furnish the City with a copy of any other environmental entitlements or
inquiries relating to or affecting the Property including, without limitation, all permit applications,
permits and reports, including reports and other matters, which may be characterized as confidential.
9.6 Developer Indemnity. From and after the date Developer first takes
possession of the Property, Developer will indemnify, defend, and hold the City harmless from any
claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive
damage, or expense (including, without limitation, attorneys' fees), arising out of (i) the presence,
release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or
about the Property, or the transportation of any Hazardous Materials to or from the Property, or (ii)
30
the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment
or license relating to any use, generation, release, discharge, storage, disposal or transportation of
Hazardous Materials on, under, in or about, to or from, the Property, by Developer or Developer's
employees, agents, representatives or contractors. This indemnity will include, without limitation,
any damage, liability, fine, penalty, cost or expense arising from or out of any claim, action, suit or
proceeding for personal injury (including sickness, disease or death), tangible or intangible property
damage, compensation for lost wages, business income, profits or other economic loss, damage to
the natural resource or the environment, nuisance, contamination leak, spill, release or other adverse
effect on the environment. The indemnity covers, without limitation, (a) all foreseeable and
unforeseeable consequential damages, (b) the cost of any required or necessary repair, cleanup, or
detoxification and the preparation of any closure or other required plans, and (c) costs of legal
proceedings and attorneys fees. This indemnification shall survive the termination of this
Agreement.
9.7 Release of City. Developer releases City from all claims Developer
may have against City resulting from or connected with the environmental condition of the Property
occurring after Developer accepts possession of the Property. Such claims include, without
limitation, all claims Developer may have against City under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (CERCLA), or any other federal,
state, or local law, whether statutory or common law, ordinance, or regulation concerning the release
of Hazardous Materials or substances into the environment from or at the Property, and the presence
of such materials in, on, under, or about the Property.
Developer's obligations under this indemnity and release shall survive the
Closing, recording of the Grant Deed, and recording of the Release of Construction Covenants.
9.8 Developer and Assignment.
9.8.1 Representations and Warranties of Developer. The
following representations and warranties shall survive the recording of the Memorandum of Lease
and Option to Purchase and shall continue in full force and effect thereafter. The City shall rely on
these representations and warranties throughout the term of the Agreement, until the City has been
notified of any substantial change affecting the representations and warranties. Developer and each
person executing this Agreement for Developer represents and warrants that:
9.8.1.1 Limited Partnership. Developer is a limited
partnership duly formed and existing under the laws of the State of California, in good standing, and
authorized to do business in the State of California, County of Fresno, and City of Fresno.
9.8.1.2 Power and Authority. Developer has all requisite
power and authority to carry out its business as now and hereafter conducted and to enter and
perform its obligations under this Agreement.
9.8.1.3 Authorityto Execute and Deliver. By proper action
of Developer's general partner, the person or persons signing this Agreement for Developer have
been duly authorized to execute and deliver this Agreement and to legally bind Developer to its
31
terms and conditions.
9.8.1.4 Other Agreements. Developer's execution and
performance of this Agreement does not violate any provision of any other agreement to which
Developer is a party.
9.8.1.5 Approvals or Consents. Except as may be
specifically set forth in this Agreement, no approvals or consents not heretofore obtained by
Developer are necessary to Developer's execution of this Agreement or Developer's performance of
the obligations under this Agreement.
9.8.1.6 Sufficient Funds. Developer has or will have
sufficient funds available to fund the Project and to pay all costs assumed by Developer hereunder.
9.8.1.7 Enforceability. This Agreement is valid, binding, and
enforceable against Developer in accordance with its terms, except as such enforceability may be
limited by principals of public policy and subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and rules of law governing specific performance,
injunctive relief or other equitable remedies.
9.8.2 Prohibition Against Transfer of Property and Assignment of
Agreement. The purpose of this Section is to prevent land speculation. Until the City has recorded
the Release of Construction Covenants, Developer shall not do or attempt to do the following
without first obtaining the City's consent: (a) sell, transfer, convey, assign, or lease, any of the
Property, or the improvements on it, or (b) sell, transfer, convey, or assign any rights and obligations
under this Agreement. City consent shall be conditioned on the proposed transferee's written
agreement to be bound by the continuing indemnity provisions and continuing covenants of this
Agreement.
9.8.3 Permitted Transfers. Notwithstanding the foregoing, the
following events ("Permitted Transfers") shall not be deemed a transfer for the purposes ofrequiring
the City's consent:
9.8.3.1 Creation of Security Financing Interests.;
9.8.3.2 Foreclosure. A sale, conveyance, or transfer of the
Property at foreclosure (or a deed in lieu of foreclosure) resulting from a Security Financing Interest;
9.8.3.3 Conveyance or Grants of Easements. The
conveyance or dedication of parts of the Property to the City or any other governmental City, or the
grant of easements or permits to facilitate the development of the Property;
9.8.3.4 Temporary Easements or Permits. The grant of
temporary easements or permits to facilitate the development of the Property before the Release of
Construction Covenants is recorded; or
9.8.3.5 Additional Partners to Developer. The admission of
32
additional partners to Developer, as long as the current general partner of Developer continues as the
majority general partner of Developer.
9.8.4 Approval or Consent ofCity. When a request for transfer
or assignment is submitted to the City for consideration, approval will be conditioned, without
limitation, on the following:
9.8.4.1 Financial Strength and Business Experience The
proposed transferee will demonstrate to the City's satisfaction that the proposed transferee has
sufficient financial strength and the business experience in planning, financing, development,
ownership, and operation of similar projects to complete the Project competently.
9.8.4.2 Assumption Agreement. Any transferee, by
recordable instrument acceptable to the City, shall expressly assume all the unfulfilled or ongoing
obligations of Developer under this Agreement, and agree to be subject to all the conditions and
restrictions to which Developer is subject with respect to the Property.
9.8.4.3 Transfer Documents. Developer or its successors
shall submit all documents, proposed to effect any the transfer or assignment, to the City for review.
9.8.4.4 Other Information. Developer or its successors shall
deliver all information to the City that the City may reasonably request to enable it to evaluate the
proposed transfer or assignment. City shall approve, conditionally approve, or disapprove a request
for assignment within sixty (60) days after receiving the request and all supporting documentation.
City may require Developer to reimburse City for its actual, reasonable, out-of-pocket expenses
(including attorneys' fees) incurred in investigating a proposed assignee's qualifications as a
permitted assignee hereunder.
9.8.5 Developer's Release. The City's approval of any transfer,
assignment, or sale will not relieve Developer or any successor from any unfulfilled or ongoing
obligations of Developer under this Agreement, unless the City specifically releases Developer or
any successor. The provisions of this Agreement are intended to discourage land speculation,
and these provisions shall be liberally interpreted to accomplish that end.
9.9 Insurance and Indemnity. Developer will comply with the insurance
and indemnity requirements in this Agreement.
9.10 Taxes and Assessments. Developer will pay before delinquency all ad
valorem real estate taxes and assessments on the Property, subject to Developer's right to contest any
taxes or assessments in good faith. Developer will remove any levy or attachment on the Property or
any part of it, or assure the satisfaction of the levy -or attachment within a reasonable time.
Developer will not apply for or receive any exemption from the payment of property taxes or
assessments on any interest in or to the Property including, without limitation, the on-site Project
improvements.
9.11 Compliance with Laws. In performing its obligations hereunder,
Developer shall comply with all applicable laws, regulations, and rules of the governmental agencies
33
having jurisdiction including, without limitation, applicable federal and state labor standards and
environmental laws and regulations. Developer, not the City, is responsible for determining
applicability of and compliance with all local, state, and federal laws including, without limitation,
the California Labor Code, Public Contract Code, Public Resources Code, Health & Safety Code,
Government Code, the City Charter, and Fresno Municipal Code. The City makes no representations
regarding the applicability of any such laws to this Agreement, the Project, or the parties' respective
rights or obligations hereunder including, without limitation, payment of prevailing wages,
competitive bidding, subcontractor listing, or other matters. City shall not be liable or responsible, in
law or equity, to any person for Developer's failure to comply with any such laws, whether the City
knew or should have known of the need for Developer to comply, or whether the City failed to notify
Developer of the need to comply.
Further, with respect to prevailing wage, Developer represents,
warrants, and affirms that neither the City, nor the Agency, nor any of its officials, agents,
employees, agencies, or attorneys has made any representation that the work to be covered by
this Agreement, bid or contract was or was not a "public work," as defined in state or federal
law, and to the best of Developer's knowledge neither the Developer nor the City, nor any of its
officials, agents, employees, agencies, or attorneys has received actual written notice from the
Department of Industrial Relations or other government agency that the work to be covered by
this Agreement, bid or contract is or is not a "public work," as defined in state or federal law.
9.12 Covenants. The covenants set forth in the Grant Deed are, by
incorporation of the Grant Deed into this Agreement, made a part of this Agreement as though fully
set forth in this Agreement. Developer shall keep the covenants in the manner and for the times set
forth in the Grant Deed.
10. Covenants and Restrictions Running With The Land. The following
covenants shall run with the land and shall bind Developer, and Developer's successors in interest to
the Property for the periods stated, and shall be fully binding for the benefit of the Plan community
and Agency without regard to technical classification or designation, legal or otherwise.
10.1 Uses of Affordable Units. Developer covenants for itself, its
successors, assigns, and every successor in interest to the Property or any part of it that, during the
term of the lease, after closing of any applicable escrow, during construction, and after completing
the Improvements, the Developer shall devote the Affordable Units on the Property to the uses
specified in this Agreement for the Affordability Period. All uses of the Affordable Units including,
without limitation, all activities Developer undertakes pursuant to this Agreement, shall conform
with this Agreement and the Law. Without waiver or limitation, each of the Affordable Units to be
constructed pursuant to this Agreement shall be maintained as Affordable Rental Housing pursuant
to this Agreement and the Restrictions.
10.2 Maintenance of Property. During the term of a lease with the City, or
as long as Developer is receiving Supplemental Funding from Agency, Developer and those taking
under Developer will maintain all exterior areas of the Property and Improvements on site in
reasonably good condition and repair (and, as to landscaping, if any, in a healthy condition), all
according to the Basic Design and related plans, as amended from time to time. Developer and those
34
taking under Developer shall: (i) maintain all on-site Improvements according to all other applicable
laws, rules, ordinances, orders, and regulations of all federal, state, county, municipal, and other
governmental agencies and bodies having or claiming jurisdiction and all their respective
departments, bureaus, and officials; (ii) keep the exterior Improvements free from graffiti, (iii) keep
the exterior of the Property free from any accumulation of debris or waste material; (iv) promptly
make repairs and replacements to the on-site Improvements; and (v) promptly replace any dead, or
diseased plants and/or landscaping (if any) with comparable materials.
Agency will give Developer written notice of any breach of this Section 10.2.
Within ten (10) days from receipt of such notice, Agency and Developer will meet and confer, and
agree to corrective actions and a schedule of performance for such corrective actions. Developer
must cure the default within the agreed schedule or within (a) ten (10) days after the Agency's notice
for any default involving landscaping, graffiti, debris, waste material, or general maintenance on the
Property, (b) thirty (30) days after Agency's notice for any default involving the Improvements. If
Developer does not cure the default within the agreed schedule, Agency, without obligation to, may
enter the Property, cure the default, and protect, maintain, and preserve the Improvements and
landscaping.
Agency may lien or assess the Property for the Agency's expenses in
protecting, maintaining, and preserving the on-site Improvements and aesthetics of the Property,
including any lawful administrative charge in the manner used by the Agency in the abatement of
public nuisances. The notice and opportunity to cure provided for herein will substitute for the
noticing, hearing, and nuisance abatement order used by Agency. Developer will promptly pay all
such amounts to Agency upon demand.
10.3 Use During Affordability Period. During the Affordability Period
Developer covenants to use and operate the Affordable Units on the Property as Affordable Rental
Housing pursuant to this Agreement.
10.4 No Discrimination. Developer covenants for itself and any successors
in interest and all persons claiming by, through or under them, in perpetuity, that there shall be no
discrimination against or segregation of any person or group of persons because ofrace, color, creed,
religion, sex, sexual preference, marital status, national origin or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the Affordable Units, nor shall Developer itself or
any person claiming under or through Developer establish or permit any such practice or practices of
discrimination or segregation concerning the selection, location, number, use or occupancy of
tenants, lessees, subtenants, sublessees or vendees of the Affordable Units.
10.5 Affordable Unit Deeds, Leases or Contracts. All deeds, leases, or
contracts concerning the Affordable Units shall contain or be subject to substantially the following
nondiscrimination or nonsegregation clauses:
In deeds: "The grantee herein covenants by and for himself or herself, his or her
heirs, executors, administrators and assigns, and all persons claiming under or
through them, that there shall be no discrimination against or segregation of, any
person or group of persons because of race, color, creed, religion, sex, sexual
35
preference, marital status, national origin or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall
the grantee or any person claiming under or through him or her, establish or permit
any such practice or practices of discrimination or segregation concerning the
selection, location, number, use or occupancy of tenants, lessees, subtenants,
sublessees or vendees in the land herein, conveyed. The foregoing covenants shall
run with the land."
In leases: "The lessee herein covenants by and for himself or herself, his or her heirs,
executors, administrators, and assigns, and all persons claiming under or through him
or her, 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, because of race, color, creed, religion, sex, sexual preference, marital
status, national origin, or ancestry in the leasing, subleasing, transferring, use,
occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee
himself or herself, or any person claiming under or through him or her, establish or
permit any such practice or practices of discrimination or segregation concerning the
selection, location, number, use, or occupancy of tenants, lessees, sublessees,
subtenants, or vendees in the premises herein leased."
In contracts: "There shall be no discrimination against or segregation of, any person,
or group of persons because of race, color, creed, religion, sex, sexual preference,
marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or
herself or any person claiming under or through him or her, establish or permit any
such practice or practices of discrimination or segregation concerning the selection,
location, number, use or occupancy of tenants, lessees, subtenants. sublessees or
vendees of the premises."
10.6 Agency as Beneficiary. Agency is the beneficiary of the covenants
running with the land for itself and for protecting the interests of the community and other parties,
public or private, in whose favor and for whose benefit the covenants are provided, without regard to
whether Agency has been, remains, or is an Developer of any land or interest in the Affordable Units
on the Property. Agency may exercise all rights and remedies, and maintain any actions or suits at
law or in equity or other proceedings to enforce the covenants for itself or any other beneficiaries.
11. Default, Remedies and Termination. Failure or delay by either party to
perform any material term of this Agreement shall be a default under this Agreement. Anyfailure or
delay by a party in asserting any right or remedy will not constitute a waiver, and will not deprive the
party of its right to institute and maintain any action or proceeding necessary to protect or enforce
any right or remedy.
11.1 Legal Actions. A parry may institute a legal action to cure, correct, or
remedy any default, to recover damages for any default, or to obtain any other remedy consistent
36
with the purposes of this Agreement. Such legal action shall be brought in the Fresno County
Courts, or the Fresno Division of the Federal District Court for the Eastern District of California.
Service of process shall be made on the City by personal service on the City Clerk or in any other
manner permitted by law. Service of process shall be made on Developer by personal service on
Developer or its designated agent for service of process, or in any other manner permitted by law,
whether service is made in or out of California.
11.2 Rights and Remedies are Cumulative. Except as may be expressly
stated otherwise in this Agreement, the rights and remedies of the parties are cumulative. The
exercise by either party of one or more of its rights or remedies shall not preclude the exercise by it,
at the same or a different time, of any other rights or remedies for the same default or any other
default. In addition to the specific rights and remedies herein, the parties may resort to any other
rights or remedies available at law or in equity including, without limitation, specific performance.
11.3 Notice and Cure Periods. If either party fails to perform under any
provision of this Agreement, the nondefaulting party shall serve written notice of the default on the
defaulting party, describing the default, and reciting the time for cure. A defaulting party will have
thirty (30) days from the date of the notice to cure the breach or failure. However, if the default
cannot be reasonably cured within the thirty (30) day notice period, the party to whom notice is given
shall not be considered to be in default as a result of such failure, so long as that party is diligently
and expeditiously attempting to cure such default and such default is curable within a reasonable
period of time following the expiration of such thirty (30) day notice period. Failure of the
defaulting to party to cure within these times shall entitle the nondefaulting party to enforce any right
or remedy provided in this Agreement, at law, or in equity. This provision is not intended to modify
or extend any other notice or cure period specifically provided for in this Agreement. Failure or
delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of
default.
11.4 Right to Terminate Agreement.
11.4.1 Developer's Right to Terminate. If the City does not tender
conveyance of the Property to Developer within the time specified, or is otherwise in default of this
Agreement, Developer may terminate the Agreement after notice of default and time to cure, and
subsequent written notice to the City and Escrow Holder. The City shall return to Developer any
consideration that it has paid for the Property. After that neither the City nor Developer shall have
any further rights against or liability to the other party under this Agreement.
11.4.2 Citvs Right to Terminate. If, before the City records the
Release of Construction Covenants, any of the following occurs, the City may terminate this
Agreement:
11.4.2.1 Assignment, Sale. Transfer or Conveyance of
ProuertX. Developer, without complying with this Agreement, assigns any rights or obligations
under this Agreement, or sells, transfers, or conveys any of the Property or the Project; or,
11.4.2.2 Change in Identity of Developer. Any significant
37
change in the identity of Developer, or any assignee, not permitted by this Agreement occurs; or,
11.4.2.3 Failure to Submit Documents. Developer does not
submit drawings, plans or other documents or submittals as required by this Agreement within the
times specified in this Agreement or the Development Schedule, as such times may be extended as
provided in this Agreement; or,
11.4.2.4 Failure to Take Title. Developer does not take title to
the Property when the City tenders conveyance pursuant to this Agreement; and
11.4.2.5 Default. Developer defaults under this Agreement
and does not cure the default following demand notice and opportunity to cure as provided in this
Agreement.
11.5 Right of Re -Entry (Power of Termination). The City may reenter and
take possession of the Property, or part of it, and all improvements on it, terminate the estate
conveyed to Developer by the Ground Lease, and revest the estate in the City if, before recording the
Release of Construction Covenants, any of the following occurs:
11.5.1 Failure to Begin or Complete Construction. Developer
does not begin or complete construction of the Project within the time specified in the Development
Schedule or this Agreement, as such times may be extended as provided in this Agreement; or,
11.5.2 Abandonment or Suspension of Construction. Developer
abandons or substantially suspends construction of the Project for 30 days after the City gives written
notice of the abandonment or suspension; or,
11.5.3 Assignment or Transfer of Obligations. Developer assigns
or transfers, or suffers an involuntary transfer of, any rights or obligations under this Agreement, or
in the Property, in violation of the assignment provision of this Agreement.
11.6 Effect on Security Holders. Such right to reenter, repossess, terminate
and revest shall be subject to, limited by, and shall not defeat, render invalid, or limit: (i) any
Security Financing Interest permitted by this Agreement; or (ii) any provision of this Agreement
protecting the holder's Security Financing Interests.
11.7 Recognition of Cites. The Ground Lease, and any subsequent
deed for an approved Property transfer or conveyance occurring prior to the recording of the Release
of Construction Covenants shall contain appropriate provisions to giving effect to the City's right
under Section 11.5 to reenter and take possession of the Property, or any part of it, and all
improvements thereon, and to terminate the estate conveyed to Developer, and revest it in the City.
11.8 Resale of Property. When title to the Property revests in the City, the
City shall use its best efforts to resell the Property, consistent with the objectives of the City for the
Project, to a qualified and responsible party (as determined by the City). The transferee will assume
the obligation of completing the Project or constructing improvements other than the Project,
satisfactory to the City and according to the uses specified in the Plan. Upon any resale of the
W]
Property, or part of it, the proceeds shall be applied as follows:
11.8. l Reimbursement to Citv. First, to reimburse the City for (a)
all costs and expenses incurred (including, without limitation, salaries of personnel) in connection
with the recapture, management, and resale of the Property, or part of it, less any income the City
derived from the property in connection with the management; (b) all taxes, assessments, and water
and sewer charges respecting the Property (or, any of the Property is exempt from taxation or
assessment or such charges during the City's ownership, then such taxes, assessments or charges as
would have been payable if the Property were not so exempt); (c) any payments necessary to
discharge or prevent any subsequent encumbrances or liens due to obligations, defaults, or acts of
Developer, its successors or transferees from attaching or being made; (d) any expenditures made or
obligations incurred to complete the Project or other improvements on the Property; and any amounts
otherwise owing to the City from Developer or by its successor or transferee; and
11.8.2 Reimbursement to Developer. Second, to reimburse
Developer, its successor or transferee, up to the amount equal to the sum of (a) the purchase price
paid to the City for the Property, and (b) the out-of-pocket costs incurred to develop and improve the
Property, less (c) any gains or income to Developer from the Property, the Project or other
improvements on it. Notwithstanding the foregoing, the amount calculated pursuant to this Section
shall not exceed the price that Developer paid the City for the Property, and the fair market value of
the improvements on it when the default or failure occurred, which led to the City's exercise of the
right of reverter.
11.8.3 Remaining Balance. Any balance remaining after such
reimbursements shall be retained by the City.
11.9 No Speculation in Land. The rights established in this Section 10 shall
be interpreted considering the City's intent to convey the Property to Developer for development of
the Project, and not for speculation in undeveloped land or any other purpose.
12. General Provisions.
12.1 Notice. Demands and Communication. All notices, elections, requests,
acceptances, demands, instructions or other communications ("notice" or "notices") to be given to
any party under this Agreement shall be in writing and shall be deemed to have been duly given (i)
on the date of service if personally served on the party to whom notice is to be given; (ii) within
forty-eight (48) hours after mailing, if mailed to the party to whom notice is to be given, by first class
mail which is either registered or certified, postage prepaid, return receipt requested; (iii) within
twenty-four (24) hours after being deposited with a recognized private courier service (e.g. Federal
Express), if delivered by a private courier service to the party to whom notice is to be given, all
charges prepaid; or (iv) when sent, if given by electronic format that provides verification of
successful transmission. All notices shall be properly addressed to the party receiving notice as
follows:
39
CITY:
City of Fresno
Attention: City Manager
2600 Fresno Street
Fresno, CA 93721
Facsimile No.: (559) 498-1870
AGENCY:
Redevelopment Agency of the City of Fresno
Attention: Executive Director
2344 Tulare Street, Suite 200
Fresno, CA 93721
Facsimile No.: (559) 498-1870
WITH COPIES TO:
City Attorney
2600 Fresno Street
Fresno CA 93721-3602
Facsimile No.: (559) 498-1815
DEVELOPER:
A party may change its address by notice given according to this subsection.
12.2 Conflict of Interests. No member, official, officer or employee of the
City shall have any direct or indirect interest in this Agreement, or shall participate in any decision
relating to this Agreement where such interest or participation is prohibited by law. No officer,
employee, or agent of City who exercises any function or responsibility concerning the planning and
carrying out of the Project, or any other person who exercises any function or responsibility
concerning any aspect of this Agreement or the Project, shall have any personal financial interest,
direct or indirect, in this Agreement or the Project.
12.3 Unavoidable Delay. Neither Party will be in default where delays or
defaults are due to war, insurrection, strikes, lock outs, riots, acts of the public enemy, acts of
domestic or foreign terrorism, floods, earthquakes, fires, freight embargoes, court order, or any other
similar cause beyond the control and without the fault of the Party claiming an extension of time to
perform. A Party claiming an unavoidable delay must give notice to the other Party within 10 days
after the delay begins. After that, the Parties may extend the time for performance by a writing
signed by both Parties. This provision does not apply to delays in the Developer's construction
obligations which this Agreement specifically covers elsewhere.
12.4 Provision Not Merged with Deeds. The provisions of this Agreement
:1f]
will not merge into any Grant Deed upon recording
12.5 Provision of Approvals and Actions. Whenever this Agreement
references an action or approval required or permitted by the City, the City Manager or his or her
designee is authorized to act for the City unless this Agreement, the law, or City bylaws, resolutions
or procedures provide otherwise, or the context otherwise requires.
12.6 Nonliability of Officials Employees and Holders. No member,
official, officer, employee or agent of the City shall be personally liable to Developer, or any
successor in interest, for any default or breach by the City.
12.7 Counterparts. This Agreement may be executed in counterparts, and
together each executed counterpart shall constitute one Agreement.
12.8 Waiver. A party's waiver of the other's breach of any provision of this
Agreement shall not constitute a continuing waiver or a waiver of any subsequent breach of the same
or a different provision of this Agreement. No provision of this Agreement maybe waived except in
a writing signed by all parties. Waiver of any provision shall not be deemed to be a waiver of any
other provision herein.
12.9 Attorneys' Fees. If a party initiates or defends litigation or any legal
proceeding regarding the enforcement of this Agreement, the prevailing parry in such litigation or
proceeding, in addition to any other relief that may be granted, shall be entitled to reasonable
attorneys' fees. Attorneys' fees shall include attorneys' fees on any appeal. A party entitled to
attorneys' fees shall be entitled to all other reasonable costs for investigating the action, retaining
expert witnesses, taking depositions and discovery, and all other necessary costs incurred with
respect to the action. All such fees shall be deemed to have accrued on commencement ofthe action
and shall be enforceable whether or not such action is prosecuted to judgment.
12.10 Governing Law and Venue. The provisions ofthis Agreement shall be
interpreted and enforced, and the rights and duties (both procedural and substantive) of the parties
hereunder shall be determined, according to California law.
Venue and jurisdiction (personal and subject matter) for any lawsuit
commenced by either Party in connection with this Agreement shall be in the Superior Court of
Fresno County or in the United States District Court for the Eastern District located in Fresno
County.
12.11 Further Assurances. Each party will take any further acts and will sign
and deliver any further instruments required to carry out the intent and purposes of this Agreement.
12.12 Entire Understanding of the Parties. The parties will execute three
duplicate originals of this Agreement. The exhibits referenced as attached are by such references
incorporated into this Agreement. This Agreement, including the exhibits, is the entire
understanding and agreement of the parties. All prior discussions, understandings, and written
agreements are superseded by this Agreement. This Agreement shall not be modified except by
written instrument duly approved as required by law and executed by authorized representatives of
41
the parties. Should the terms of any exhibit conflict with the body of this Agreement, the body of
this Agreement shall govern.
12.13 Broker. The Developer and the City each represent and warrant it has
not engaged any broker or finder with respect to this Agreement, the Property or the Project. Each
Party will indemnify, defend, protect and hold the other Party and its officers, officials, employees,
agents and representatives harmless against any claim by any person or entity for any broker's or
finder's (or similar) fee or commission arising out of any act or agreement of the indemnifying Party
concerning this Agreement, the Property or the Project
12.14 City Approvals and Actions. Whenever this Agreement requires
action or approval by the City, the City Manager is authorized to act for the City unless specifically
provided otherwise.
12.15 Consent, Reasonableness. Unless this Agreement specifically
authorizes a party to withhold its approval, consent, or satisfaction in its sole discretion, any consent,
or approval, or satisfaction to be requested or required of a party, shall not be unreasonably withheld,
conditioned, or delayed.
12.16 Partial Invalidity. If any part of this Agreement is held to be invalid,
void, or unenforceable in any legal, equitable or arbitration proceeding, the remainder of the
Agreement shall continue in effect, unless not giving effect to the invalid or unenforceable part
would prevent effecting the redevelopment purposes of the Project and this Agreement.
12.17 Ambiguity. This Agreement is the result of the combined efforts of the
parties. Should any provision of this Agreement be found ambiguous, the ambiguity shall not be
resolved by construing this Agreement in favor of or against any party, but by construing the terms
according to their generally accepted meaning, considering the objective of the Agreement.
12.18 Number and Gender. Masculine, feminine or neuter gender terms and
singular or plural numbers will include others when the context so indicates.
12.19 Headings. All headings are for convenience only, are not a part of this
Agreement, and are not to be used in construing this Agreement.
12.20 Binding Upon Successors. This Agreement shall bind and inure to the
benefit of the successors in interest, personal representatives, and assigns of each party, subject to the
limitation on transfer and assignment contained in this Agreement. Any reference in this Agreement
to a specifically named party shall be deemed to apply to any successor, heir, administrator, executor,
representative, or assign of the party who has acquired an interest in compliance with the terms of
this Agreement, or under law.
12.21 Relationship of the Parties. The relationship between the City and
Developer is solely that of a California municipal corporation and an independent, private developer
of property in a redevelopment project area. Nothing in this Agreement, the Grant Deed, or any
other document executed in connection with this Agreement shall be construed as creating a
partnership, joint venture, agency, employment relationship or similar relationship between the City
42
and Developer or any of Developer's contractors, subcontractors, employees, agents, representatives,
transferees, successors -in -interest or assigns. Nothing in this Agreement establishes a principal and
agent relationship between the parties.
12.22 Nature of the Proiect. The Project is a private undertaking of
Developer. After the City conveys title or possession of the Property to Developer, Developer shall
have exclusive control over the Property, subject to the terms of this Agreement and all applicable
Federal, State and local laws, ordinances, codes, regulations, standards and policies. By entering and
performing this Agreement, the City does not approve or endorse the Project except to implement the
redevelopment purposes, goals, policies, and objectives of the City.
12.23 Time of Essence. Time is of the essence of each term, condition, and
covenant contained in this Agreement.
12.24 Survival of indemnification Provisions. Unless otherwise specifically
stated herein, each indemnification provision set forth in this Agreement shall survive the
termination of this Agreement shall survive the Closing, and shall not merge with the Grant Deed or
other document evidencing any interest in real property.
12.25 Amendments or Modifications. This Agreement maybe amended or
modified only by the written mutual consent of the parties, and the approval of the City.
12.26 Exhibits. Each exhibit referenced herein is by such reference
incorporated into and made a part of this Agreement for all purposes. However, the provisions in the
body of this Agreement will prevail over any inconsistent provisions or references in any exhibit.
12.27 Leal Advice. Each Party, in signing this Agreement, does so with
knowledge of its legal rights. Each has received independent legal advice from its own legal
counsel, or has chosen not to consult legal counsel. Each Party will be solely responsible for its own
attorneys' fees in negotiating, reviewing, drafting, and obtaining the approval of this Agreement and
all related agreements or documents.
12.28 Counterparts. The Parties may sign this Agreement in counterparts.
Each counterpart, when executed and delivered, will be one instrument with the other counterparts.
The Parties will sign at least four duplicate originals of this Agreement.
43
IN WITNESS WHEREOF, City and Developer have executed this Agreement on the
dates set forth below.
CITY OF FRESNO
Dated: ,I �ZC1 �� Dated:
F�� A
REDEVELOPMENT AGENCY OF THE
CITY OF FRESNO
17
Dated: //- a � `,f)"%
The above persons to execute this agreement before a Notary Public and attach the notary
acknowledgments.
44
ATTEST:
REBECCA E. KLISCH
City Clerk
LAA:cs[42354cs/agtl-9/25/07, 2:35pm
Attachments: Exhibit A Site Map
Exhibit A-1 Legal Description
APPROVED AS TO FORM:
JAMES C. SANCHEZ
City Attorney
IC 1►'l..dar /
Exhibit B
Scope of Development
Exhibit C
Development Schedule
Exhibit D
Ground Lease
Exhibit E
Release of Construction Covenants
Exhibit F
Certificate of Completion
Exhibit G Basic Design
Exhibit H Affordability Restrictions Running With Land
Exhibit I Budget
LAA:cs;42354cs/agr 11/28/07; 12:45 pm
45
SITE MAP
EXHIBIT A
LEGAL DESCRIPTION
Property in the City of Fresno, County of Fresno, California, more particularly described as follows:
Lot 12 and the southeasterly 22 feet 10 inches of Lot 11 in
Block 82 of the Town (now City) of Fresno, in the County of
Fresno, State of California according to the map thereof
recorded in Book 4, Page 2 of Plats, in the records of said
County.
EXHIBIT A-1
SCOPE OF DEVELOPMENT
EXHIBIT B
DEVELOPMENTSCHEDULE
DEVELOPMENT EVENT TIMING
Submit Site Plan 60 days after submitting Financing Plan
Submit Building Plans 60 days after submitting Site Plan
Begin construction 90 days after submitting Building Plans
Complete Construction 730 days after Beginning Construction
EXHIBIT C
GROUND LEASE
EXHIBIT D
RELEASE OF CONSTRUCTION
COVENANTS
EXHIBIT E
CERTIFICATE OF COMPLETION
CERTIFICATE OF COMPLETION
RECORDED AT THE REQUEST OF
AND WHEN RECORDED RETURN TO:
Redevelopment Agency of City of Fresno
2344 Tulare St., Suite 200
Fresno, Ca. 93721
Attention: Executive Director
SPACE ABOVE THIS LINE FOR RECORDERS USE)
This Certificate of Completion is recorded at the request and for the benefit of the Redevelopment
Agency of the City of Fresno and is exempt from the payment of a recording fee pursuant to
Government Code Section 6103.
Redevelopment Agency
By:
[Marlene Murphey]
Its: Executive Director of Redevelopment
Dated:
Certificate of Completion
Recitals:
A. By a Disposition and Development Agreement (the "Agreement") dated
2007 between LREG Partners, L.P., a California limited partnership ("Owner") and the
Redevelopment Agency of the City of Fresno, a public body corporate and politic ("Agency"),
Owner agreed to construct certain residential units, commercial units and an ice rink on the premises
legally described in Attachment "A" hereto (the "Property") and preserve the Affordable Units, as
defined in the Agreement as rental housing for Low -Income Families with the assistance of Agency
housing set aside funds while meeting the Affordable Housing, income targeting and other
requirements of the Community Redevelopment Law set forth at California Health and Safety Code
Sections 33000 et seq. for a fifty-five (55) year Affordability Period according to the terms and
conditions of the Agreement.
B. The Agreement was recorded on 2007 in the Official Records of
Fresno County, California as instrument No.
C. Under the terms of the Agreement, after Owner completes the construction on the Property,
Owner may ask Agency to record a Certificate of Completion.
D. Owner has asked Agency to furnish Owner with a recordable Certificate of Completion.
E. Agency's issuance of this Certificate of Completion is conclusive evidence that Owner has
completed the construction on the Property as set forth in the Agreement.
on
NOW THEREFORE:
Agency certifies that Owner commenced the construction work on the Project
2007, and completed the construction work on the Project on
200, and has done so in full compliance with the Agreement.
2. This Certificate of Completion is not evidence of Owner's compliance with, or
satisfaction of, any obligation to any mortgage or security interest holder, or any mortgage or security
interest insurer, securing money lent to finance work on the Property or Project, or any part of the
Property or Project.
3. This Certificate of Completion is not a notice of completion as referred to in
California Civil Code section 3093.
4. Nothing contained herein modifies any provision of the Agreement.
IN WITNESS WHEREOF, the Agency has executed this Certificate of Completion as
of this day of 200.
Redevelopment Agency of the City of Fresno
Un
Marlene Murphey
Executive Director
Owner hereby consents to recording this Certificate of Completion against the Property
described herein.
Dated: 1200
LREG Partners, L.P.,
a California limited partnership
By:
Name:
Title:
THE ABOVE PARTIES ARE TO SIGN THIS INSTRUMENT BEFORE A NOTARY PUBLIC.
ATTEST:
CITY CLERK
By:
Deputy
Dated:
APPROVED AS TO FORM:
CITY ATTORNEY
By:
Deputy
Dated:
EXHIBIT F
BASIC DESIGN
[INSERT/ATTACH]
EXHIBIT G
AFFORDABILITY RESTRICTIONS
RUNNING WITH LAND
In addition to the covenants and conditions contained in the Agreement, the following California
Community Redevelopment Law (California Health & Safety Code Section 33000 et seq.)
affordability requirements shall be imposed upon the 22 Affordable Units on the Property funded
under the Agreement and shall bind the Owner and all purchasers of the Property and their
successors for a fifty-five (55) year period.
The Affordable Units on the Property are held and will be held, transferred, encumbered, used, sold,
conveyed and occupied subject to the covenants, restrictions, and limitations set forth in this
Exhibit, all of which are in furtherance ofthe Proj ect, the Agency's Community Redevelopment Law
and Plan Area obligations including Agency's obligations set forth at California Health & Safety
Code sections 33334.2 et seq and 33413 (a) with respect to Housing Set Aside Funds and
replacement dwelling units at affordable rent within the jurisdiction of the Agency. All of the
restrictions, covenants and limitations will run with the land and will be binding on all parties having
or acquiring any right, title or interest in the Affordable Units upon the Property or any part thereof,
will inure to the benefit of the Agency, and will be enforceable by it. Any purchaser under a contract
of sale or other transferee of an interest covering any right, title or interest in any part of the
Affordable Units upon the Property, by accepting a deed or a contract of sale or agreement of
purchase, accepts the document subject to, and agrees to be bound by, any and all restrictions,
covenants, and limitations set forth in this Exhibit for the period of fifty-five (55) years running
from and after recordation of Agency's Certificate of Completion constituting the Affordability
Period.
1. Restrictions. The following covenants and restrictions ("Restrictions") on the use and
enjoyment of the Affordable Units upon the Property shall be in addition to any other covenants and
restrictions affecting the Property, and all such covenants and restrictions are for the benefit and
protection of the Agency and shall run with the Affordable Units upon the Property and be binding
on any future owners of the Property and inure to the benefit of and be enforceable by the Agency.
These covenants and restrictions are as follows:
a. From the date of recordation of the Agency's Certificate of Completion until the
expiration of the Affordability Period the 22 Affordable Units funded under the Agreement are to be
used as Affordable Rental Housing and affordable replacement dwellings as provided for in the
Agreement. Owner agrees to file a recordable document setting forth the project Completion Date
and the Affordability Period as and when determined by the Agency. Unless otherwise provided in
the Agreement, the term affordable rental housing shall include without limitation compliance with
the following requirements:
Nondiscrimination. There shall be no discrimination against nor segregation of any
person or group of persons on account of race, color, creed, religion, sex, marital
status, national origin, ancestry, or handicap in the sale, transfer, use, occupancy,
tenure, or enjoyment of any of the Property, nor shall Owner or any person claiming
under the Owner, establish or permit any practice of discrimination or segregation
with reference to the selection, location, number, use or occupancy of owners or
vendees of the Property.
Principal Residence. Each of the Affordable Units upon the Property shall be leased
only to natural persons, who shall occupy such as a principal residence.
Income Requirements. Each of the 22 Units constituting Affordable Rental Housing
upon the Property may be leased only to (a) natural person(s) whose annual
household income at the time of initial occupancy qualifies as a low income
household as calculated and published by HUD for the Fresno Metropolitan
Statistical Area applicable to such household's size, and at an affordable price
consistent with the applicable California Redevelopment Law.
Injunctive Relief and Recapture. Should any of the 22 Affordable Units constituting
Affordable Rental Housing upon the Property not continue to be, at the time of initial
occupancy, the principal residence of a Household that qualifies as a low-income or
moderate -income Household, during the period of Affordability, such Unit(s) shall be
made available for subsequent lease only to Households that qualify as a low-income
or very low-income for use as the Household's principal residence.
2. Enforcement of Restrictions. Without waiver or limitation, the Agency shall be entitled to
injunctive or other equitable relief against any violation or attempted violation of the Restrictions,
and shall, in addition, be entitled to damages for any injuries or losses resulting from any violations
thereof.
3. Acceptance and Ratification. All present and future owners of the Property and other persons
claiming by, through, or under them shall be subject to and shall comply with the above Restrictions.
The acceptance of a deed of conveyance to the Property shall constitute an agreement that the
Restrictions, as such maybe amended or supplemented from time to time, is accepted and ratified by
such future owners, tenant or occupant, and such Restrictions shall be a covenant running with the
land and shall bind any person having at any time any interest or estate in the Property, all as though
such Restrictions were recited and stipulated at length in each and every deed, conveyance, mortgage
or lease thereof.
4. Benefit. This Exhibit and the Restrictions therein shall run with and bind the Property for a
term commencing on the date the Agreement to which this Exhibit is attached is recorded in the
Office of the Recorder of the county Fresno, state of California, and expiring upon the expiration of
the Affordability Period. The failure or delay at any time of Agency and/or any other person entitled
to enforce these Restrictions shall in no event be deemed a waiver of the same, or of the right to
enforce the same at any time or from time to time thereafter, or an estoppel against the enforcement
thereof.
5. Costs and Attorney's Fees. In any proceeding arising because of failure of Owner or any
future owner of the Property to comply with the Restrictions required by this Exhibit, as may be
amended from time to time, Agency shall be entitled to recover its respective costs and reasonable
attorney's fees incurred in connection with such default or failure.
6. Waiver. Neither Owner nor any future owner of the Property may exempt itself from liability
for failure to comply with the Restrictions required in this Exhibit.
7. Severability. The invalidity of the Restrictions or any other covenant, restriction, condition,
limitation, or other provision of this Exhibit shall not impair or affect in any manner the validity,
enforceability, or effect of the rest of this Exhibit and each shall be enforceable to the greatest extent
permitted by law.
8. Pronouns. Any reference in this Exhibit and the Restrictions therein to the masculine,
feminine, or neuter gender herein shall, unless the context clearly requires the contrary, be deemed to
refer to and include all genders. Words in the singular shall include and refer to the plural, and vice
versa, as appropriate.
9. Interpretation. The captions and titles of the various articles, sections, subsections,
paragraphs, and subparagraphs of this Exhibit are inserted herein for ease and convenience of
reference only and shall not be used as an aid in interpreting or construing this Exhibit or any
provision hereof.
10. Capitalized Terms. All capitalized terms used in this Exhibit, unless otherwise defined
herein, shall have the meanings assigned to such terms in the Agreement.
EXHIBIT H
EXHIBIT I
[Budget]