HomeMy WebLinkAbout2019-05-21; City Council; ; First Amendment to Ground Lease for city property located at 6421 Tobria Terrace and commonly known as Villa Loma ApartmentsCAReview /~
~ CITY COUNCIL
• Staff Report
Meeting Date:
To:
From:
Staff Contact:
Subject:
May 21, 2019
Mayor and City Council
Scott Chadwick, City Manager
Debbie Fountain, Community & Economic Development Director
Debbie.fountain@carlsbadca.gov or 760-434-2810
First Amendment to Ground Lease for city property located at 6421 Tobria
Terrace and commonly known as Villa Loma Apartments
Recommended Action
Adopt a Resolution approving the First Amendment to Ground Lease between the City of
Carlsbad and Tobria Terrace LLC for city property located at 6421 Tobria Terrace and commonly
known as Villa Loma Apartments, and authorizing the City Manager to execute the First
Amendment to the Ground Lease and the Ground Lessor's Estoppel Certificate and other
related documents to extend the lease term for said property.
Executive Summary
On Sept. 13, 2018, the City received a notice from Bridge Housing (Tobria Terrace LLC}, indicating that
the company intended to move forward with refinancing the private loan on Villa Loma Apartments;
which were constructed on city-owned property located at 6421 Tobria Terrace in 1996. The city
originally funded two loans for construction of the apartment development, and those loans have been
fully repaid to the city and redevelopment agency. The development is still subject to a ground lease
with the city that includes an annual lease payment made to the city from 30 percent of the
development's surplus cash from operations. This ground lease provides program income to the CDBG
funding program as CDBG funds were used to acquire the property. The annual payment is deposited to
the CDBG program account and then reallocated to alternate projects or activities determined to be
eligible under the program regulations and as approved by the City Council.
The development has a private, first mortgage on the property of approximately $13.6 million at an
interest rate of 5.17%. Bridge Housing intends to refinance the loan and have a new first mortgage of
approximately $17.5 million at an interest rate of 4.94% and a 10-year term with a 30-year amortization.
The refinancing will allow Bridge Housing to take advantage of current market conditions and lower its
interest rate on the noted loan, and will also provide additional funding to allow for physical
improvements that are needed to the property to address aging infrastructure.
As part of the refinancing of the private, first mortgage, the lender is requesting an extension of the
term of the ground lease. The current ground lease is due to expire in October, 2051. The requested
extension is for 8 years or until October, 2059. The requested 8 year extension of the ground lease must
be approved by the City Council.
May 21, 2019 Item #4 Page 1 of 105
Discussion
On Oct. 26, 1993, the City Council approved development of the Villas at El Camino Real
affordable housing rental complex, now known as Villa Loma Apartments. The project is located
west of El Camino Real, between Camino Vida Roble and Alga Road, in the southwest quadrant
of the city. It consists of 344 low income affordable rental apartments; this was the first
affordable housing development in the city that was constructed as a result of the city's
inclusionary housing ordinance.
In addition to approval of the entitlements for the development, the City Council together with
the Housing and Redevelopment Commission approved financial assistance for the affordable
apartments. This financial assistance included the acquisition of property for the development
(through use offederal Community Development Block Grant funds), guarantee of a grading
deposit (with redevelopment housing set-aside funds), fee, deferrals to Certificate of Occupancy
for all city-controlled fees, and construction and permanent financing loans not to exceed $2.9
million from the redevelopment agency. In exchange for this financing package, the City Council
and redevelopment agency received 184 additional affordable units that were above and
beyond the 160 affordable units required of the Master Developer of the Aviara Master Plan to
meet the city's inclusionary housing requirements.
The city/agency loans were repaid in full several years ago, and there are no other city loans
outstanding for this development. The City of Carlsbad continues to have a ground lease on the
property that was provided to Tobria Terrace LLC in the lease agreement, to allow for the
development of the Villa Loma Apartments. Tobria Terrace LLC owns and operates the physical
apartment development. The city continues to own the property and leases it for the purposes
of providing for affordable housing opportunities for low income households.
The ground lease allows Tobria Terrace LLC, to lease property from the city on a long-term
basis. Originally the lease was for 57 years, expiring in October, 2051. The annual rent amount
was set at $150,000. The development was allowed to pay no more than 30 percent of its
surplus cash in any given year. In the event that 30 percent of surplus cash is less than the
annual required payment of $150,000, the difference between the 30 percent of surplus cash
and the required rent shall accrue with interest at three percent. Any rent outstanding shall be
payable on the earlier of the sale of the improvements, refinancing of the improvements, or
termination of the lease. It is anticipated that the city will receive a payment of approximately
$165,000 for accrued rent and interest as a result of the private loan refinancing.
Staff is recommending approval of the First Amendment to Ground Lease to allow for an eight
year extension of term from 2051 to 2059. This extension will allow for a refinancing that would
provide additional private financing for improvements to aging infrastructure and allow for a
continuation of the affordable housing rental development, Villa Loma Apartments, for a longer
period of time. Because this is an extension of the original ground lease, city staff does not have
authorization to execute the amendment to the ground lease. This amendment requires City
Council approval, and authorization for the City Manager to execute the amendment and
related loan documents, such as estoppel certificates.
May 21, 2019 Item #4 Page 2 of 105
Fiscal Analysis
The ground lease has a required $150,000 annual payment for the entire term of the ground
lease. The city will continue to receive this annual payment under the amended lease
agreement. Based on the remaining 32 years of the current lease agreement, the city will
receive a total of $4.8 million in lease payments; the 8-year extension will result in an additional
$1.2 million, for a total of $6 million in lease payments over the remaining term of the amended
lease agreement. It is important to note that because federal Community Development Block
Grant (CDBG) funds were used to purchase the property, the rental income is considered CDBG
program income, under federal regulations, and the funds must be made available for CDBG
programs and activities that benefit low income households over the next 40 years.
Next Steps
The First Amendment to the Ground Lease will be finalized with the assistance of legal counsel
and executed. The City Manager will execute any related documents for the ground lease
extension and/or refinancing of the subject development following final consultation with legal
counsel.
Environmental Evaluation (CEQA)
Pursuant to Public Resources Code Section 21065, approval of the ground lease extension for an
existing development due to a loan refinancing does not constitute a "project" within the
meaning of CEQA in that it has no potential to cause either a direct physical change in the
environment, or a reasonably foreseeable indirect physical change in the environment, and
therefore does not require environmental review.
Public Notification
This item was noticed in accordance with the Ralph M. Brown Act and was available for public
viewing and review at least 72 hours prior to the scheduled meeting date.
Exhibits
1.City Council Resolution
2.Correspondence from Bridge Housing, dated Sept. 13, 2018, indicating its intent to refinance
its first mortgage and request an extension of the term for the city property ground lease
3.Form of the Ground Lessor's Estoppel Certificate
4.Form of Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing
5.Original Ground Lease, dated October 28, 1994
May 21, 2019 Item #4 Page 3 of 105
RESOLUTION NO. 2019-069
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING THE FIRST AMENDMENT TO GROUND LEASE
BETWEEN THE CITY OF CARLSBAD AND TOBRIA TERRACE LLC FOR CITY
PROPERTY LOCATED AT 6421 TOBRIA TERRACE AND COMMONLY KNOWN
AS VILLA LOMA APARTMENTS, AND AUTHORIZING THE CITY MANAGER TO
EXECUTE THE FIRST AMENDMENT TO THE GROUND LEASE AND THE
GROUND LESSOR'S ESTOPPEL CERTIFICATE AND OTHER RELATED
DOCUMENTS TO EXTEND THE LEASE TERM FOR SAID PROPERTY.
WHEREAS, the City Council of the City of Carlsbad, California has determined that it desires to
extend the ground lease between the City of Carlsbad and Tobria Terrace LLC for an additional eight
(8) years to allow for refinancing of a private loan to lower the interest rate on said loan and to provide
additional loan proceeds for physical improvements to aging infrastructure at the affordable housing
development known as Villa Loma Apartments within the City of Carlsbad; and
WHEREAS, Bridge Housing, also known as Tobria Terrace LLC has indicated its intent to proceed
with refinancing the private loan on the Villa Loma Apartments to lower the interest rate and obtain
additional loan proceeds for physical improvements to aging infrastructure at the affordable housing
development; and
WHEREAS, in order to refinance said loan and receive the additional loan proceeds the lender
is requesting that the ground lease between the City of Carlsbad and Tobria Terrace LLC be extended
for an additional eight (8) years; and
WHEREAS, Bridge Housing on behalf of Tobria Terrace LLC has requested an eight (8) year
extension of the ground lease between the City of Carlsbad and Tobria Terrace LLC, and the city desires
to extend the ground lease as requested in order to allow for the improvement of aging infrastructure
at the Villa Loma Apartments and thereby extending the term of the affordable housing rental
development, known as the Villa Loma Apartments.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1. That the above recitations are true and correct.
2. That the City Council hereby approves the First Amendment to Ground Lease
(Attachment A) between the City of Carlsbad and Tobria Terrace LLC for city-owned
May 21, 2019 Item #4 Page 4 of 105
property located at 6421 Tobria Terrace and commonly known as the Villa Loma
Apartments.
3. That the City Council hereby authorizes the City Manager to execute the First
Amendment to the Ground Lease and the Ground Lessor's Estoppel Certificate and to
take all actions necessary to implement the First Amendment to Ground Lease, that are
consistent with and in full compliance with terms and conditions expressed in the
aforementioned First Amendment, and to the satisfaction of the City Attorney.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 21st day of May 2019, by the following vote, to wit:
AYES:
NAYS:
ABSENT:
Hall, Blackburn, Bhat-Patel, Schumacher.
None.
Hamilton.
(SEAL)
May 21, 2019 Item #4 Page 5 of 105
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Katten Muchin Rosenman LLP
2029 Century Park East, Suite 2600
Los Angeles, California 90067
Attention: Mark L. Sonefeldt, Esq.
FIRST AMENDMENT TO GROUND LEASE
THIS FIRST AMENDMENT TO GROUND LEASE (this "Amendment") is made this
__ day of ___ , 2019 (the "Effective Date"), by and between THE CITY OF CARSLBAD,
a California municipal corporation ("Lessor"), and TO BRIA TERRACE LLC, a California limited
liability company ("Lessee").
RECITALS
A. Lessee's predecessor in interest, La Terraza Associates, a California limited
partnership ("Original Lessee"), and Lessor entered into that certain Ground Lease (the "Ground
Lease"), dated as of October 28, 1994, with respect to that certain real property described on
Exhibit A hereto (the "Property"). All capitalized terms used but not defined herein shall have
the meanings set forth in the Ground Lease.
B. The Ground Lease was memorialized by that certain Memorandum of Lease (the
"Memorandum"), dated as of October 28, 1994, by and between Lessor and Original Lessee, and
recorded in the Official Records of San Diego County, California (the "Official Records") on
November 4, 1994 as Instrument No. 1994-0645097.
C. Original Lessee's interest in the Ground Lease was assigned by Original Lessee to,
and assumed by, Lessee pursuant to that certain Assignment and Assumption of Ground Lease and
Memorandum of Ground Lease (the "Assignment"), dated as of March 17, 2011, by and between
Original Lessee and Lessee and recorded on March 22, 2011 in the Official Records as Instrument
No. 2011-0149636.
D. Pursuant to Section 2.2 of the Ground Lease, the term of the Ground Lease
commenced on October 28, 1994 and will expire on October 28, 2051 (the "Initial Term").
E. Lessor and Lessee each desire to amend the Ground Lease, as more fully set forth
below.
In consideration of the mutual promises and covenants herein contained and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor
and Lessee hereby agree as follows:
136635488v7
Attachment A
May 21, 2019 Item #4 Page 6 of 105
1. GROUND LEASE TERM.
1.1 Extension of Initial Term. The Ground Lease is hereby amended such that
eight (8) years shall be added to the Initial Term, so that the expiration date shall be October 28,
2059, subject to any earlier termination in accordance with the terms of the Ground Lease.
136635488v7
2. PAYMENT OF RENT.
2.1 Accrued Rent.
(A) Section 2.3(b) is hereby replaced in its entirety with the following:
"The first payment of Rent shall be equal to the Rent multiplied by a
fraction, the numerator of which is the number of days from the date of this
Lease through the end of the first Lease Year and the denominator of which
is 3 65. The final payment of Rent under this Lease shall be prorated in a
similar manner. Rent shall be payable only the extent of thirty percent
(30%) of Surplus Cash. "Surplus Cash" shall mean operating income of the
Development ( excluding interest income earned on tenant security deposits
and Development reserve accounts) less reasonable operating expenses.
For this purpose, operating expenses shall include all costs and expenses
related to ownership and operation of the Development including, but not
limited to, deposits into reserves, taxes and other similar charges, the
partnership management fee in an amount not to exceed twenty thousand
dollars ($20,000), debt service due in that year on Approved Loans, the
property management fee and other expenses of a property manager in
amounts reasonable and customary in the industry, but shall not include any
allowance for depreciation. In the event the thirty percent (30%) of Surplus
Cash available to pay the Rent is less than the amount of rent due under this
Lease in any year, the difference between thirty percent (30%) of Surplus
Cash and the Rent shall accrue with interest at three percent (3%)
compounded annually, and shaU be paid when and to the extent Surplus
Cash becomes available. All payments of Rent shall be applied first to
accrued amounts due for prior years, then to accrued interest from that year,
and then to current Rent due, beginning with the first year Rent accrued.
Any Rent outstanding shall be payable on the earlier of the sale of the
Improvements (in full) or expiration or earlier termination of this Lease (in
full). After a sale, Rent shall be due currently on an annual basis on the date
set forth in subsection (a) above. Notwithstanding anything to the contrary,
(i) if the sale is due to a judicial foreclosure, nonjudicial foreclosure or deed-
in-lieu of foreclosure which does not terminate this Lease or (ii) the Lease
terminates in accordance with Section 6.2( c )(9) due to a judicial
foreclosure, then the Lender or other transferee of the Development ( a
"Foreclosure Transferee") and its successors and assigns shall have no
liability for the payment of any Rent which accrued prior to such transfer,
and thereafter Lessor shall have no right to terminate this Lease on account
of nonpayment of such accrued Rent."
2
May 21, 2019 Item #4 Page 7 of 105
the following:
(B) Section 2.3(c) of the Ground Lease is replaced in its entirety with
the following:
"Notwithstanding the provisions of section (b ), irrespective of the existence
of Surplus Cash, accrued Rent for any year, and any interest which accrued
on said unpaid Rent in the year the Rent payment was due, shall be paid in
full not later than the twentieth (20th) anniversary of the date such Rent
accrued or the expiration of this Lease, whichever is earlier."
3. INSURANCE.
3.1 Insurance Proceeds. Section 7.3(a) is hereby replaced in its entirety with
"For so long as any Approved Loan on the Development is outstanding and
provided Lessee complies with the conditions precedent to Lessee's election to
restore the Development as set forth in Section 8( a)(l) of this Lease, all fire and
standard risk or extended coverage ( casualty) insurance proceeds (the "Insurance
Proceeds") shall be paid to either (i) the Approved Lender in senior lien position,
or (ii) in the manner outlined in Section 8(a)(l) of this Lease to be disbursed for the
restoration of the Development and for no other purpose. Upon completion of the
restoration of the Development, the remaining balance of the Insurance Proceeds,
if any, shall be disbursed to Lessee (subject to rights of any Approved Lenders). If
the Development is not restored, all Insurance Proceeds shall be applied in a manner
consistent with the Approved Loans."
4. INDEMNITY.
4.1 Lessee Additional Indemnification Obligation. The following provisions
are hereby added to the end of Section 7.4 of the Lease as follows:
"For the avoidance of doubt, the Lessee hereby agrees and acknowledges that the
indemnification obligation set forth in this Section specifically includes, but is not
limited to, all claims, actions, demands, judgements, settlements, costs, expenses
and attorneys' fees arising out of, attributable to or otherwise occasioned, in whole
or in part, by any deed of trust, mortgage, or equivalent security financing interest
encumbering the Lessor's fee interest in the Land, so long as not arising out of
Lessor's gross negligence or willful misconduct. The obligations set forth in this
Section shall survive the termination or expiration of this Lease."
5. CONDEMNATION, DAMAGE OR DESTRUCTION OF THE
DEVELOPMENT.
5 .1 Condemnation.
(A) The first paragraph of Section 8.1 of the Ground Lease is hereby
replaced in its entirety with the following:
3
136635488v7
May 21, 2019 Item #4 Page 8 of 105
136635488v7
"If the Development or the Land or any part thereof is damaged or
destroyed, shall be taken or condemned, for any public or quasi-public
purpose or use by any competent entity in appropriate proceedings, or by
any right of eminent domain, all Insurance Proceeds, or all compensation
received for such taking by the exercise of the power of eminent domain
(the "Loss Proceeds"), shall be shall be applied as follows:"
(B) Section 8.l(a)(l) of the Ground Lease is hereby replaced in its
entirety with the following:
"(a) Loss Proceeds received on account of partial destruction or a partial
taking of the Development or the Land (the "Partial Loss Proceeds"), other
than a taking for a temporary use not exceeding one (1) year, shall be
allocated and paid as follows:
"(1) If the following conditions are met: (i) Lessee reasonably
believes restoration is economically feasible, (ii) Lessee is not in default
under this Lease and the opportunity to cure has not expired under the
Approved Loan Documents, and (iii) the Approved Lender in senior lien
position consents to the use of the of the Partial Loss Proceeds for the
restoration of the Development, all Partial Loss Proceeds shall be paid to a
FDIC insured financial institution designated by the Approved Lender, but
subject to the reasonable approval of Lessor (the "Depository"), to be held
pursuant to the following terms. Lessor hereby assigns to Lessee and the
Approved Lender in senior lien position the right to receive all Partial Loss
Proceeds. The Approved Lender in senior lien position shall, in its sole
discretion, control the receipt and disbursement of the Partial Loss Proceeds
by the Depository and shall have the right to elect to apply the Partial Loss
Proceeds to the Approved Loan in lieu of consenting to the restoration of
the Development. Lessee's obligation to restore the Development shall be
limited to the amount of the Partial Loss Proceeds. Upon direction from the
Approved Lender in senior lien position, the Depository shall pay Partial
Loss Proceeds over to Lessee from time to time, upon the following terms,
for the restoration of the Development. The Depository shall first reimburse
Lessor and Lessee from such Partial Loss Proceeds for their actual,
necessary, and proper costs and expenses in collecting such Partial Loss
Proceeds. The Depository shall release the Partial Loss Proceeds to Lessee
from time to time as the restoration of the Development progresses in
accordance with the procedures required by the Approved Lender. Until
Lessee has completed and paid for restoration of the Development, Lessee
shall hold all Partial Loss Proceeds in trust to be used first for such
restoration and for no other purpose. If any lien is filed against the
Premises, Lessee shall not be entitled to receive any further installment of
Partial Loss Proceeds until Lessee has satisfied, bonded, or otherwise
discharged such lien when and as this Ground Lease requires. When Lessee
has completed and paid for the restoration of the Development, the
Depository shall release to Lessee, and Lessee may retain (subject to rights
4
May 21, 2019 Item #4 Page 9 of 105
of any Approved Lenders) any remaining Partial Loss Proceeds. If the
Partial Loss Proceeds are insufficient to restore the Development, then
Lessee shall nevertheless restore the Development at its expense. The
Depository shall not release any Partial Loss , Proceeds until and unless
Lessee has expended on such restoration of the Development an amount
equal to any such insufficiency.
(C) The first sentence of Section 8. l(a)(2) of the Ground Lease is hereby
replaced in its entirety with the following:
"(2) If Lessee does not reasonably believe that restoration is economically
feasible, or (ii) Lessee is in default under this Lease and the opportunity to
cure has expired under the Approved Loan Documents, the Partial Loss
Proceeds shall be paid to any Approved Lender (in the order of their
respective lien priority, if there is more than one Approved Lender) in an
amount equal to the total value of the Partial Loss Proceeds less the value
of the land that was subject to the taking."
(D) Section 8.l(a)(3) of the Ground Lease 1s hereby deleted m its
entirety.
(E) The first sentence of Section 8 .1 ( d) of the Ground Lease is hereby
replaced in its entirety with the following:
"( d) Loss Proceeds received on account of a total taking of the Development
(the "Total Loss Proceeds") shall be received, disbursed and controlled by
the Approved Lender in senior lien position and shall be allocated and paid
in the following order of priority:"
6. MISCELLANEOUS.
6.1 References. All references to the "Ground Lease," "ground lease" or
"lease" appearing in this Amendment shall mean the Ground Lease as amended by this
Amendment.
6.2 Severability. If any provision of this Amendment is held to be invalid or
unenforceable, the remainder of this Amendment will not be affected, and each provision of this
Amendment will be valid and be enforced to the fullest extent permitted by applicable laws. Lessor
shall use its best efforts to oppose any action that challenges the validity of the transactions
contemplated under this Amendment.
6.3 Entire Agreement/Modification. This Amendment, together with the
Ground Lease, the Memorandum and the Assignment, contains all of the agreements of the parties
hereto with respect to the matters contained herein, and no prior agreement, arrangement or
understanding pertaining to any such matters shall be effective for any purpose. There have been
no additional oral or written representations or agreements. All amendments or modifications to
the Ground Lease or this Amendment shall be in writing and signed by the parties to this
Amendment.
5
136635488v7
May 21, 2019 Item #4 Page 10 of 105
6.4 Execution; Counterparts. This Amendment may be executed in any number
of counterparts and each counterpart shall be deemed to be an original document. All executed
counterparts together shall constitute one and the same document, and any counterpart signature
pages may be detached and assembled to form a single original document.
6.5 Heirs and Successors. This Amendment shall be binding upon the heirs,
legal representatives, successors and permitted assigns of the parties hereto; provided, however
nothing in this section shall be deemed to waive, limit, or impair Lessor's rights set forth in Section
2.5 of the Lease.
6.6 Authority. Each party represents and warrants that the individual signing
this Amendment on behalf of such party is duly authorized to execute and deliver this Amendment
on behalf of said entity in accordance with the governing documents of such entity, and that upon
full execution and delivery this Amendment is binding upon said entity in accordance with its
terms.
6. 7 Ratification. Except as modified by this Amendment, the Ground Lease
shall continue in full force and effect and Lessor and Lessee do hereby ratify and confirm all of
the terms and provisions of the Ground Lease, subject to the modifications contained herein. In
the case of any inconsistency between the provisions of the Ground Lease and this Amendment,
the provisions of this Amendment shall govern and control.
6.8 In consideration for the execution of this Amendment by the Lessor, the
Lessee shall pay the Lessor the amount not to exceed $10,000 for certain costs and expenses
incurred by the Lessor, but not limited to legal fees.
Signatures appear on following page.
6
136635488v7
May 21, 2019 Item #4 Page 11 of 105
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of
the date first written above.
136635488v7
LESSOR:
THE CITY OF CARLSBAD,
a California municipal corporation
By:-----=-----------
Name:_Q_, ~C-◊-t~+--l!.~h~a_d~w-,_· e,_K. __ _
Title:_~(!,.~i~:h"""'/~M~a.~na.=-#'£&'1.=r:~----
LESSEE:
TOBRIA TERRACE LLC
a California limited liability company
By: BRIDGE Housing Corporation -Southern
California, a California nonprofit public
benefit corporation, its sole member
By:-----------
Name: ---------Title: ----------
APPROVED AS TO FORM:
CELIA A. BREWER, CITY ATTORNEY
By:
~~istant City Att
S-2
May 21, 2019 Item #4 Page 12 of 105
136635488v7
EXHIBIT A
DESCRIPTION OF THE PROPERTY
Exhibit A
May 21, 2019 Item #4 Page 13 of 105
l__J,2019
GROUND LEASE MORTGAGE
GROUND LESSOR'S ESTOPPEL CERTIFICATE
(Revised 7-12-2016)
SAHI TEBS II LLC
East Deerpath, Suite 224
Lake Forest, IL 60045
Federal Home Loan Mortgage Corporation
8200 Jones Branch Drive
McLean, VA 22102
Re: Ground leased property located at 6421 Tobria Terrace, Carlsbad, California and
commonly known as Villa Loma Apartments ("Property"); Freddie Mac Loan
No. 505996510 (Supplemental)
Ladies and Gentlemen:
The undersigned, the City of Carlsbad, a municipal corporation ("Lessor"), as lessor under the
Ground Lease dated October 28, 1994, between Lessor and Tobria Terrace LLC, a California
limited liability company ("Lessee"), as lessee, as amended by that certain First Amendment to
Ground Lease dated on or about the date hereof between Lessor and Lessee (collectively, the
"Lease") covering the Property, warrants, represents and certifies to SAHI TEBS II LLC,
Federal Home Loan Mortgage Corporation and each subsequent owner of the mortgage loan
secured by Lessee's leasehold interest in the Property (collectively or individually, "Lender") as
follows, as of the date of this Ground Lessor's Estoppel Certificate ("Certificate"):
1. The term of the Lease commenced on October 28, 1994, and expires on October 28,
2059.
2. The current fixed rent under the Lease is $150,000 per annum, payable in arrears on the
first day of the second month following the close of each Lease Year and is payable out
of 30% of Surplus Cash (as defined in the Lease). Rent, including accrued Rent in the
amount of $[192,211.60 plus 3% simple interest from 2/1/19 to date of Certificate]
("Accrued Rent") to be paid in connection with the proposed refinance and granting of
the Deed of Trust (as defined below), has been paid in full through the date of this
Certificate. There is no accrued rent outstanding under the Lease and, except for the
Accrued Rent, no accrued rent shall be due and payable in connection with the proposed
refinance and granting of the Deed of Trust (as defined below). No additional rent or
Ground Lessor's Estoppel Certificate
4811-2407-1801.2
Exhibit 3
May 21, 2019 Item #4 Page 15 of 105
charge (including taxes, maintenance, operating expenses or otherwise) that has been
billed to Lessee by Lessor is overdue. There are no provisions for, and Lessor has no
rights with respect to, increasing the rent, except as expressly set forth in the Lease.
3. The Lease is in full force and effect. A list of all the documents constituting the Lease is
attached as Exhibit A. The Lease has not been assigned, modified, supplemented or
amended in any way, except as described on Exhibit A. There are no other agreements
concerning the Property, whether oral or written, between Lessee and Lessor, except as
disclosed in that certain title report issued by Old Republic Title Company, dated as of
August 30, 2018, and referencing Order Number 1117019581-JM (the "Title Report").
If so required by Freddie Mac, attached to this Certificate are true, correct and complete
copies of all documents constituting the Lease.
4. Lessor has not delivered or received any notices of default under the Lease; to the best of
the Lessor's knowledge, there is no default by Lessee or Lessor under the Lease, nor has
any event or omission occurred which, with the giving of notice or the lapse of time, or
both, would constitute a default.
5. Lessor is the record and beneficial owner of the Property. Lessor has not subordinated its
interest in the Lease to any mortgage, lien or other encumbrance on the fee, other than as
disclosed in the Title Report and pursuant to the Deed of Trust (as defined below). Lessor
has not assigned, conveyed, transferred, sold encumbered or mortgaged its interest in the
Lease or the Property, other than as disclosed in the Title Report and pursuant to the
Deed of Trust (as defined below).
6. No third party has any option or preferential right to purchase all or any part of the
Property.
7. Lessor has not received written notice of any pending eminent domain proceedings or
other governmental actions or any judicial actions of any kind against Lessor's interest in
the Property.
8. Lessor has not received written notice that it is in violation of any governmental law or
regulation applicable to its interest in the Property and has no reason to believe that there
are grounds for any claim of any such violation.
9. Neither Lessee nor any affiliate of Lessee has any direct or indirect ownership interest in
Lessor or any affiliate of Lessor.
10. No union of the interests of Lessor and Lessee will result in a merger of the Lease into
any superior leasehold interest or the fee interest in the Property.
11. Lessor acknowledges that Lender's address for notice and other purposes under the Lease
is as follows:
Ground Lessor's Estoppel Certificate
4811-2407-1801.2
Page2
May 21, 2019 Item #4 Page 16 of 105
Berkadia Commercial Mortgage LLC
Attn: Jillian Brittin
323 Norristown Road, Suite 300
Ambler, PA 19002
(215) 328-1526
12. Lessor and the person or persons executing this Certificate on behalf of Lessor have the
power and authority to execute this Certificate.
13. Lessor consents to the execution and delivery by Lessee to Lender of a Deed of Trust,
Assignment of Rents and Security Agreement covering Lessee's leasehold interest in and
to the Property (the "Deed of Trust") and the recording of same in the applicable real
property records. Lessor also consents to the execution and delivery by Lessee, and the
filing and/or recording in the appropriate public records, of such additional documents
and instruments as Lender may deem necessary or desirable to establish, perfect and
maintain a lien upon and against Lessee's leasehold interests in the Property, including,
but not limited to, Uniform Commercial Code financing statements and such other
documents, instruments and agreements as Lender may deem necessary or desirable in
connection with the creation, grant, maintenance, renewal, extension, modification or
enforcement of the lien.
14. Lessor acknowledges that Lender is an Approved Lender under the Lease and is entitled
to the benefit of all protections granted to Approved Lender under the Lease without the
need for providing any separate notice under the Lease.
Ground Lessor's Estoppel Certificate
4811-2407-1801.2
Page3
May 21, 2019 Item #4 Page 17 of 105
Lender and its successors and assigns may rely upon the truth and accuracy of the certifications
contained in this Certificate, and this Certificate will be binding upon Lessor and its successors
and assigns, and inure to the benefit of Lender and its successors and assigns; provided, however,
all certifications are made as of the date of this Certificate and Lessor is under no obligation to
update such certifications after the date of this Certificate. This Certificate may not be deemed to
alter or modify any of the terms and conditions of the Lease.
Ground Lessor's Estoppel Certificate
4811-2407-1801
By:_--+_:--~----------
Name:_~£...>....w....1._,___......,........,""""-'16<..1'-". ""''"""(.'----
Title: _ __.,,...o.4..,___,,.1---L--,.___,_.C<.L..___..,,_,."-'------
APPROVED AS TO FORM:
CELIA A. BREWER, CITY ATTORNEY
May 21, 2019 Item #4 Page 18 of 105
EXHIBIT A
That certain Ground Lease dated October 28, 1994, by and between City of Carlsbad, California,
a municipal corporation, as landlord, and La Terraza Associates, a California limited partnership,
as tenant (the "Original Tenant"), as amended or modified by:
1. That certain Memorandum of Lease dated October 28, 1994 and recorded on
November 4, 1994 as Document No. 1994-0645097 in the Official Records of San Diego
County, California.
2. That certain Assignment and Assumption of Ground Lease dated March 17, 2011
pursuant to which Original Tenant assigned its interest in the Ground Lease to Tobria
Terrace, LLC.
3. That certain First Amendment to Ground Lease dated on or about the date hereof.
Ground Lessor's Estoppel Certificate
4811 -2407-1801.2
Page A-1
May 21, 2019 Item #4 Page 19 of 105
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Elizabeth D. Jensen
Kutak: Rock LLP
1650 Farnam Street
Omaha, Nebraska 68102
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
CALIFORNIA
(Revised 5-1-2015)
ATTENTION COUNTY RECORDER: THIS INSTRUMENT IS INTENDED TO
BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING
PURSUANT TO SECTION 9502 OF THE CALIFORNIA COMMERCIAL CODE.
PORTIONS OF THE GOODS COMPRISING A PART OF THE MORTGAGED
PROPERTY ARE OR ARE TO BECOME FIXTURES RELATED TO THE LAND
DESCRIBED IN EXHIBIT A HERETO. THIS INSTRUMENT IS TO BE FILED
FOR RECORD IN THE RECORDS OF THE COUNTY WHERE DEEDS OF
TRUST ON REAL PROPERTY ARE RECORDED AND SHOULD BE INDEXED
AS BOTH A DEED OF TRUST AND AS A FINANCING STATEMENT
COVERING FIXTURES. THE ADDRESSES OF BORROWER (DEBTOR) AND
LENDER (SECURED PARTY) ARE SPECIFIED IN THE FIRST PARAGRAPH
ON PAGE 1 OF THIS INSTRUMENT.
4851-0152-2562.3
Exhibit 4
May 21, 2019 Item #4 Page 20 of 105
Freddie Mac Loan Number: 505996405
Property Name: Villa Loma Apartments
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
CALIFORNIA
(Revised 5-1-2015)
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY
AGREEMENT AND FIXTURE FILING ("Instrument") is made to be effective this [1 st] day of
[ ], 2019, by TOBRIA TERRACE LLC, a limited liability company organized and
existing under the laws of California, whose address is [600 California Street, Suite 900, San
Francisco, CA 94108], as trustor ("Borrower"), to
as trustee ("Trustee"), for the benefit of the CALIFORNIA MUNICIPAL FINANCE
AUTHORITY, whose address is 2111 Palomar Airport Road, Carlsbad, California 92011 , as
beneficiary ("Lender").
AGREEMENT
Borrower, in consideration of the Indebtedness and the trust created by this Instrument,
irrevocably grants, conveys and assigns to Trustee, in trust, with power of sale, the Mortgaged
Property, including the Land located in San Diego County, State of California and described in
Exhibit A attached to this Instrument.
TO SECURE TO LENDER the repayment of the Indebtedness evidenced by Borrower's
Multifamily Note payable to Lender, dated as of the date of this Instrument, and maturing on
~------~' L_] ("Maturity Date"), in the principal amount of$[. _____ ____._
and all renewals, extensions and modifications of the Indebtedness, the payment of all sums
advanced by or on behalf of Lender to protect the security of this Instrument under Section 7,
and the performance of the covenants and agreements of Borrower contained in the Loan
Agreement or any other Loan Document.
Borrower represents and warrants that Borrower is lawfully seized of the Mortgaged Property
and has the right, power and authority to grant, convey and assign the Mortgaged Property, and
that the Mortgaged Property is unencumbered, except as shown on the schedule of exceptions to
coverage in the title policy issued to and accepted by Lender contemporaneously with the
execution and recordation of this Instrument and insuring Lender's interest in the Mortgaged
Property ("Schedule of Title Exceptions"). Borrower covenants that Borrower will warrant and
defend generally the title to the Mortgaged Property against all claims and demands, subject to
any easements and restrictions listed in the Schedule of Title Exceptions.
4851-0152-2562.3
May 21, 2019 Item #4 Page 21 of 105
UNIFORM COVENANTS
(Direct Purchase of Tax-Exempt Loans)
(Revised 3/24/2016)
Covenants. In consideration of the mutual promises set forth in this Instrument, Borrower and
Lender covenant and agree as follows:
1. Definitions. The following terms, when used in this Instrument (including when used in
the above recitals), will have the following meanings and any capitalized term not
specifically defined in this Instrument will have the meaning ascribed to that term in the
Loan Agreement:
"Attorneys' Fees and Costs" means (a) fees and out of pocket costs of Lender's,
Funding Lender's and Loan Servicer's attorneys, as applicable, including costs of
Lender's, Funding Lender's and Loan Servicer's in-house counsel, support staff costs,
costs of preparing for litigation, computerized research, telephone and facsimile
transmission expenses, mileage, deposition costs, postage, duplicating, process service,
videotaping and similar costs and expenses; (b) costs and fees of expert witnesses,
including appraisers; ( c) investigatory fees; and ( d) the costs for any opinion required by
Lender pursuant to the terms of the Loan Documents.
"Borrower" means all Persons identified as "Borrower" in the first paragraph of this
Instrument, together with their successors and assigns.
"Business Day" means any day other than a Saturday, a Sunday or any other day on
which Lender or the national banking associations are not open for business.
"Continuing Covenant Agreement" means the Continuing Covenant Agreement
executed by Borrower and Initial Funding Lender, and dated as of the date of this
Instrument, as such agreement may be amended, modified and/or restated from time to
time.
"Event of Default" means the occurrence of any event described in Section 8.
"Fiscal Agent" means U.S. Bank National Association, a national banking association,
and its successors as Fiscal Agent under the Funding Loan Agreement.
"Fixtures" means all property owned by Borrower which is attached to the Land or the
Improvements so as to constitute a fixture under applicable law, including: machinery,
equipment, engines, boilers, incinerators and installed building materials; systems and
equipment for the purpose of supplying or distributing heating, cooling, electricity, gas,
water, air or light; antennas, cable, wiring and conduits used in connection with radio,
television, security, fire prevention or fire detection or otherwise used to carry electronic
signals; telephone systems and equipment; elevators and related machinery and
equipment; fire detection, prevention and extinguishing systems and apparatus; security
and access control systems and apparatus; plumbing systems; water heaters, ranges,
stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers
4851-0152-2562.3
May 21, 2019 Item #4 Page 22 of 105
and other appliances; light fixtures, awnings, storm windows and storm doors; pictures,
screens, blinds, shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and
floor and wall coverings; fences, trees and plants; swimming pools; and exercise
equipment.
"Freddie Mac Purchase Date" means the date Freddie Mac purchases the Funding Loan
from the Initial Funding Lender.
"Funding Lender" means any Person who is the holder of the Governmental Note.
"Funding Lender Representative" means Funding Lender or any Person designated by
Funding Lender to act on behalf of Funding Lender as provided in the Funding Loan
Agreement, or an assignee of such Person as provided in the Funding Loan Agreement.
The initial Funding Lender Representative shall be the Initial Funding Lender, and
Freddie Mac shall become Funding Lender Representative upon the occurrence . of the
Freddie Mac Purchase Date.
"Funding Loan" means the loan in the original principal amount of $[AMOUNT] made
to Lender by the Initial Funding Lender pursuant to the Funding Loan Agreement.
"Funding Loan Agreement" means the Funding Loan Agreement dated as of the date of
this Instrument, by and between Funding Lender, Governmental Lender and Fiscal
Agent, as the same may be amended, modified and/or restated from time to time.
"Governmental Authority" means any board, commission, department, agency or body
of any municipal, county, state or federal governmental unit, or any subdivision of any of
them, that has or acquires jurisdiction over the Mortgaged Property, or the use, operation
or improvement of the Mortgaged Property, or over Borrower.
"Governmental Note" means the Multifamily Note dated the Closing Date, executed by
Lender and authenticated by the Fiscal Agent in favor of the Initial Funding Lender, as
the same may be amended, restated, supplemented or otherwise modified from time to
time, or any mortgage note executed in substitution therefor, as such substitute note may
be amended, restated, supplemented or otherwise modified from time to time.
"Ground Lease" means, if applicable, the lease described in the Loan Agreement
pursuant to which Borrower leases the Land, as such lease may from time to time be
amended, modified, supplemented, renewed and extended.
"Improvements" means the buildings, structures, improvements now constructed or at
any time in the future constructed or placed upon the Land, including any future
alterations, replacements and additions.
"Indebtedness" means the principal of, interest at the fixed or variable rate set forth in
the Note on, and all other amounts due at any time under, the Note, this Instrument or any
other Loan Document, including prepayment premiums, late charges, default interest, and
advances as provided in Section 7 to protect the security of this Instrument.
4851-0152-2562.3
May 21, 2019 Item #4 Page 23 of 105
"Initial Funding Lender" means SAHI TEBS II LLC, a Delaware limited liability
company, as initial holder of the Governmental Note.
"Land" means the land described in Exhibit A.
"Leasehold Estate" means, if applicable, Borrower's interest in the Land and any other
real property leased by Borrower pursuant to the Ground Lease, if applicable, including
all of the following:
(a) All rights of Borrower to renew or extend the term of the Ground Lease.
(b) All amounts deposited by Borrower with Ground Lessor under the Ground Lease.
(c) Borrower's right or privilege to terminate, cancel, surrender, modify or amend the
Ground Lease.
( d) All other options, privileges and rights granted and demised to Borrower under
the Ground Lease and all appurtenances with respect to the Ground Lease.
"Leases" means all present and future leases, subleases, licenses, concessions or grants or
other possessory interests now or hereafter in force, whether oral or written, covering or
affecting the Mortgaged Property, or any portion of the Mortgaged Property (including
proprietary leases or occupancy agreements if Borrower is a cooperative housing
corporation), and all modifications, extensions or renewals.
"Lender" means the entity identified as "Lender" m the first paragraph of this
Instrument, or any subsequent holder of the Note.
"Loan Agreement" means, individually or collectively as the context may require, the
Project Loan Agreement and/or the Continuing Covenant Agreement, as such agreements
may be amended from time to time.
"Loan Documents" means the Note, this Instrument, the Project Loan Agreement, the
Continuing Covenant Agreement, the Tax Regulatory Agreement, the Tax Certificate, the
Rehabilitation Escrow Agreement, if any, all guaranties, all indemnity agreements, all
collateral agreements, UCC filings, O&M Programs, the MMP and any other documents
now or in the future executed by Borrower, any guarantor or any other Person in
connection with the loan evidenced by the Note, as such documents may be amended
from time to time.
"Loan Servicer" means the entity that from time to time is designated by Funding
Lender Representative pursuant to Section 3.02 of the Project Loan Agreement to collect
payments and deposits and receive Notices under the Note, this Instrument and any other
Loan Document, and otherwise to service the loan evidenced by the Note for the benefit
of Funding Lender and Lender.
"Mortgaged Property" means all of Borrower's present and future right, title and
interest in and to all of the following:
4851-0152-2562.3
May 21, 2019 Item #4 Page 24 of 105
(a) The Land, or, if Borrower's interest in the Land is pursuant to a Ground Lease,
the Ground Lease and the Leasehold Estate.
(b) The Improvements.
(c) The Fixtures.
(d) The Personalty.
( e) All current and future rights, including air rights, development rights, zoning
rights and other similar rights or interests, easements, tenements, rights of way,
strips and gores of land, streets, alleys, roads, sewer rights, waters, watercourses
and appurtenances related to or benefiting the Land or the Improvements, or both,
and all rights-of-way, streets, alleys and roads which may have been or may in the
future be vacated.
(f) All proceeds paid or to be paid by any insurer of the Land, the Improvements, the
Fixtures, the Personalty or any other part of the Mortgaged Property, whether or
not Borrower obtained the insurance pursuant to Lender's or Funding Lender's
requirement.
(g) All awards, payments and other compensation made or to be made by any
municipal, state or federal authority with respect to the Land, the Improvements,
the Fixtures, the Personalty or any other part of the Mortgaged Property, including
any awards or settlements resulting from condemnation proceedings or the total or
partial taking of the Land, the Improvements, the Fixtures, the Personalty or any
other part of the Mortgaged Property under the power of eminent domain or
otherwise and including any conveyance in lieu thereof.
(h) All contracts, options and other agreements for the sale of the Land, or the
Leasehold Estate, as applicable, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property entered into by Borrower now or in the
future, including cash or securities deposited to secure performance by parties of
their obligations.
(i) All proceeds from the conversion, voluntary or involuntary, of any of the items
described in subsections (a) through (h) inclusive into cash or liquidated claims,
and the right to collect such proceeds.
G) All Rents and Leases.
(k) All earnings, royalties, accounts receivable, issues and profits from the Land, the
Improvements or any other part of the Mortgaged Property, and all undisbursed
proceeds of the loan secured by this Instrument.
(1) All Imposition Reserve Deposits.
4851-0152-2562.3
May 21, 2019 Item #4 Page 25 of 105
(m) All refunds or rebates of Impositions by Governmental Authority or insurance
company ( other than refunds applicable to periods before the real property tax
year in which this Instrument is dated).
(n) All tenant security deposits which have not been forfeited by any tenant under any
Lease and any bond or other security in lieu of such deposits.
( o) All names under or by which any of the above Mortgaged Property may be
operated or known, and all trademarks, trade names, and goodwill relating to any
of the Mortgaged Property.
(p) If required by the terms of Section 4.05 of the Continuing Covenant Agreement,
all rights under the Letter of Credit and the Proceeds, as such Proceeds may
increase or decrease from time to time.
(q) If the Note provides for interest to accrue at a floating or variable rate and there is
a Cap Agreement, the Cap Collateral.
"Note" means the Project Note (including any Amended and Restated Note,
Consolidated, Amended and Restated Note, or Extended and Restated Note) executed by
Borrower in favor of Lender, and endorsed by Lender to Fiscal Agent, and dated as of the
date of this Instrument, including all schedules, riders, allonges and addenda, as such
Project Note may be amended, modified and/or restated from time to time.
"Notice" or "Notices" means all notices, demands and other communication required
under the Loan Documents, provided in accordance with the requirements of Section 8.01
of the Project Loan Agreement.
"Person" means any natural person, sole proprietorship, corporation, general partnership,
limited partnership, limited liability company, limited liability partnership, limited
liability limited partnership, joint venture, association, joint stock company, bank, trust,
estate, unincorporated organization, any federal, state, county or municipal government
( or any agency or political subdivision thereof), endowment fund or any other form of
entity.
"Personalty" means all of the following:
(r) Accounts (including deposit accounts) of Borrower related to the Mortgaged
Property.
(s) Equipment and inventory owned by Borrower, which are used now or in the
future in connection with the ownership, management or operation of the Land or
Improvements or are located on the Land or Improvements, including furniture,
furnishings, machinery, building materials, goods, supplies, tools, books, records
(whether in written or electronic form) and computer equipment (hardware and
software).
4851-0152-2562.3
May 21, 2019 Item #4 Page 26 of 105
(t) Other tangible personal property owned by Borrower which is used now or in the
future in connection with the ownership, management or operation of the Land or
Improvements or is located on the Land or in the Improvements, including ranges,
stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers,
dryers and other appliances (other than Fixtures).
(u) Any operating agreements relating to the Land or the Improvements.
(v) Any surveys, plans and specifications and contracts for architectural, engineering
and construction services relating to the Land or the Improvements.
(w) All other intangible property, general intangibles and rights relating to the
operation of, or used in connection with, the Land or the Improvements, including
all governmental permits relating to any activities on the Land and including
subsidy or similar payments received from any sources, including a Governmental
Authority.
(x) Any rights of Borrower in or under letters of credit.
"Project Loan Agreement" means the Project Loan Agreement dated as of the date of
this Instrument, among Borrower, Lender, and Fiscal Agent, as such agreement may be
amended, modified and/or restated from time to time.
"Property Jurisdiction" means the jurisdiction in which the Land is located.
"Rents" means all rents (whether from residential or non-residential space), revenues and
other income of the Land or the Improvements, parking fees, laundry and vending
machine income and fees and charges for food, health care and other services provided at
the Mortgaged Property, whether now due, past due or to become due, and deposits
forfeited by tenants, and, if Borrower is a cooperative housing corporation or association,
maintenance fees, charges or assessments payable by shareholders or residents under
proprietary leases or occupancy agreements, whether now due, past due, or to become
due.
"Tax Regulatory Agreement" means the Regulatory Agreement and Declaration of
Restrictive Covenants among Lender, Borrower, and the Fiscal Agent, regulating or
restricting the use or manner of operation of the Mortgaged Property and containing
requirements that specified percentages of the dwelling units in the Mortgaged Property
be occupied by tenants whose incomes are below specified levels.
"Taxes" means all taxes, assessments, vault rentals and other charges, if any, whether
general, special or otherwise, including all assessments for schools, public betterments
and general or local improvements, which are levied, assessed or imposed by any public
authority or quasi-public authority, and which, if not paid, will become a Lien on the
Land or the Improvements.
4851-0152-2562.3
May 21, 2019 Item #4 Page 27 of 105
2. Uniform Commercial Code Security Agreement.
(a) This Instrument is also a security agreement under the Uniform Commercial Code
for any of the Mortgaged Property which, under applicable law, may be subjected
to a security interest under the Uniform Commercial Code, for the purpose of
securing Borrower's obligations under this Instrument and to further secure
Borrower's obligations under the Note, this Instrument and other Loan
Documents, whether such Mortgaged Property is owned now or acquired in the
future, and all products and cash and non-cash proceeds thereof ( collectively,
"UCC Collateral"), and by this Instrument, Borrower grants to Lender a security
interest in the UCC Collateral. To the extent necessary under applicable law,
Borrower hereby authorizes Lender to prepare and file financing statements,
continuation statements and financing statement amendments in such form as
Lender may require to perfect or continue the perfection of this security interest.
(b) Unless Borrower gives Notice to Lender within 30 days after the occurrence of
any of the following, and executes and delivers to Lender modifications or
supplements of this Instrument (and any financing statement which may be filed
in connection with this Instrument) as Lender may require, Borrower will not (i)
change its name, identity, structure or jurisdiction of organization; (ii) change the
location of its place of business ( or chief executive office if more than one place
of business); or (iii) add to or change any location at which any of the Mortgaged
Property is stored, held or located.
( c) If an Event of Default has occurred and is continuing, Lender will have the
remedies of a secured party under the Uniform Commercial Code, in addition to
all remedies provided by this Instrument or existing under applicable law. In
exercising any remedies, Lender may exercise its remedies against the UCC
Collateral separately or together, and in any order, without in any way affecting
the availability of Lender's other remedies.
( d) This Instrument also constitutes a financing statement with respect to any part of
the Mortgaged Property that is or may become a Fixture, if permitted by
applicable law.
3. Assignment of Rents; Appointment of Receiver; Lender in Possession.
(a) As part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all Rents.
4851-0152-2562.3
(i) It is the intention of Borrower to establish a present, absolute and
irrevocable transfer and assignment to Lender of all Rents and to authorize
and empower Lender to collect and receive all Rents without the necessity
of further action on the part of Borrower.
(ii) Promptly upon request by Lender, Borrower agrees to execute and deliver
such further assignments as Lender may from time to time require.
Borrower and Lender intend this assignment of Rents to be immediately
May 21, 2019 Item #4 Page 28 of 105
(b)
4851-0152-2562.3
effective and to constitute an absolute present assignment and not an
assignment for additional security only.
(iii) For purposes of giving effect to this absolute assignment of Rents, and for
no other purpose, Rents will not be deemed to be a part of the Mortgaged
Property. However, if this present, absolute and unconditional assignment
of Rents is not enforceable by its terms under the laws of the Property
Jurisdiction, then the Rents will be included as a part of the Mortgaged
Property and it is the intention of Borrower that in this circumstance this
Instrument create and perfect a Lien on Rents in favor of Lender, which
Lien will be effective as of the date of this Instrument.
(i) Until the occurrence of an Event of Default, Lender hereby grants to
Borrower a revocable license to collect and receive all Rents, to hold all
Rents in trust for the benefit of Lender and to apply all Rents to pay the
installments of interest and principal then due and payable under the Note
and the other amounts then due and payable under the other Loan
Documents, including Imposition Reserve Deposits, and to pay the current
costs and expenses of managing, operating and maintaining the Mortgaged
Property, including utilities, Taxes and insurance premiums (to the extent
not included in Imposition Reserve Deposits), tenant improvements and
other capital expenditures.
(ii) So long as no Event of Default has occurred and is continuing, the Rents
remaining after application pursuant to the preceding sentence may be
retained by Borrower free and clear of, and released from, Lender's rights
with respect to Rents under this Instrument.
(iii) After the occurrence of an Event of Default, and during the continuance of
such Event of Default, Borrower authorizes Lender to collect, sue for and
compromise Rents and directs each tenant of the Mortgaged Property to
pay all Rents to, or as directed by, Lender. From and after the occurrence
of an Event of Default, and during the continuance of such Event of
Default, and without the necessity of Lender entering upon and taking and
maintaining control of the Mortgaged Property directly, or by a receiver,
Borrower's license to collect Rents will automatically terminate and
Lender will without Notice be entitled to all Rents as they become due and
payable, including Rents then due and unpaid. Borrower will pay to
Lender upon demand all Rents to which Lender is entitled.
(iv) At any time on or after the date of Lender's demand for Rents, Lender
may give, and Borrower hereby irrevocably authorizes Lender to give,
notice to all tenants of the Mortgaged Property instructing them to pay all
Rents to Lender. No tenant will be obligated to inquire further as to the
occurrence or continuance of an Event of Default. No tenant will be
obligated to pay to Borrower any amounts which are actually paid to
Lender in response to such a notice. Any such notice by Lender will be
May 21, 2019 Item #4 Page 29 of 105
delivered to each tenant personally, by mail or by delivering such demand
to each rental unit. Borrower will not interfere with and will cooperate
with Lender's collection of such Rents.
( c) If an Event of Default has occurred and is continuing, then Lender will have each
of the following rights and may take any of the following actions:
4851 -0152-2562.3
(i) Lender may, regardless of the adequacy of Lender's security or the
solvency of Borrower and even in the absence of waste, enter upon and
take and maintain full control of the Mortgaged Property in order to
perform all acts that Lender in its discretion determines to be necessary or
desirable for the operation and maintenance of the Mortgaged Property,
including the execution, cancellation or modification of Leases, the
collection of all Rents, the making of Repairs to the Mortgaged Property
and the execution or termination of contracts providing for the
management, operation or maintenance of the Mortgaged Property, for the
purposes of enforcing the assignment of Rents pursuant to Section 3(a),
protecting the Mortgaged Property or the security of this Instrument, or for
such other purposes as Lender in its discretion may deem necessary or
desirable.
(ii) Alternatively, if an Event of Default has occurred and is continuing,
regardless of the adequacy of Lender's security, without regard to
Borrower's solvency and without the necessity of giving prior notice (oral
or written) to Borrower, Lender may apply to any court having jurisdiction
for the appointment of a receiver for the Mortgaged Property to take any
or all of the actions set forth in the preceding sentence. If Lender elects to
seek the appointment of a receiver for the Mortgaged Property at any time
after an Event of Default has occurred and is continuing, Borrower, by its
execution of this Instrument, expressly consents to the appointment of
such receiver, including the appointment of a receiver ex parte if permitted
by applicable law.
(iii) If Borrower is a housing cooperative corporation or association, Borrower
hereby agrees that if a receiver is appointed, the order appointing the
receiver may contain a provision requiring the receiver to pay the
installments of interest and principal then due and payable under the Note
and the other amounts then due and payable under the other Loan
Documents, including Imposition Reserve Deposits, it being
acknowledged and agreed that the Indebtedness is an obligation of
Borrower and must be paid out of maintenance charges payable by
Borrower's tenant shareholders under their proprietary leases or
occupancy agreements.
(iv) Lender or the receiver, as the case may be, will be entitled to receive a
reasonable fee for managing the Mortgaged Property.
May 21, 2019 Item #4 Page 30 of 105
(v) Immediately upon appointment of a receiver or immediately upon
Lender's entering upon and taking possession and control of the
Mortgaged Property, Borrower will surrender possession of the Mortgaged
Property to Lender or the receiver, as the case may be, and will deliver to
Lender or the receiver, as the case may be, all documents, records
(including records on electronic or magnetic media), accounts, surveys,
plans, and specifications relating to the Mortgaged Property and all
security deposits and prepaid Rents.
(vi) If Lender takes possession and control of the Mortgaged Property, then
Lender may exclude Borrower and its representatives from the Mortgaged
Property.
Borrower acknowledges and agrees that the exercise by Lender of any of the
rights conferred under this Section 3 will not be construed to make Lender a
mortgagee-in-possession of the Mortgaged Property so long as Lender has not
itself entered into actual possession of the Land and Improvements.
(d) If Lender enters the Mortgaged Property, Lender will be liable to account only to
Borrower and only for those Rents actually received. Except to the extent of
Lender's gross negligence or willful misconduct, Lender will not be liable to
Borrower, anyone claiming under or through Borrower or anyone having an
interest in the Mortgaged Property, by reason of any act or omission of Lender
under Section 3( c ), and Borrower hereby releases and discharges Lender from any
such liability to the fullest extent permitted by law.
( e) If the Rents are not sufficient to meet the costs of taking control of and managing
the Mortgaged Property and collecting the Rents, any funds expended by Lender
for such purposes will become an additional part of the Indebtedness as provided
in Section 7.
(f) Any entering upon and taking of control of the Mortgaged Property by Lender or
the receiver, as the case may be, and any application of Rents as provided in this
Instrument will not cure or waive any Event of Default or invalidate any other
right or remedy of Lender under applicable law or provided for in this Instrument.
4. Assignment of Leases; Leases Affecting the Mortgaged Property.
(a) As part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all of Borrower's right, title and
interest in, to and under the Leases, including Borrower's right, power and
authority to modify the terms of any such Lease, or extend or terminate any such
Lease.
4851-0152-2562.3
(i) It is the intention of Borrower to establish a present, absolute and
irrevocable transfer and assignment to Lender of all of Borrower's right,
title and interest in, to and under the Leases. Borrower and Lender intend
this assignment of the Leases to be immediately effective and to constitute
May 21, 2019 Item #4 Page 31 of 105
an absolute present assignment and not an assignment for additional
security only.
(ii) For purposes of giving effect to this absolute assignment of the Leases,
and for no other purpose, the Leases will not be deemed to be a part of the
Mortgaged Property.
(iii) However, if this present, absolute and unconditional assignment of the
Leases is not enforceable by its terms under the laws of the Property
Jurisdiction, then the Leases will be included as a part of the Mortgaged
Property and it is the intention of Borrower that in this circumstance this
Instrument create and perfect a Lien on the Leases in favor of Lender,
which Lien will be effective as of the date of this Instrument.
(b) Until Lender gives Notice to Borrower of Lender's exercise of its rights under this
Section 4, Borrower will have all rights, power and authority granted to Borrower
under any Lease ( except as otherwise limited by this Section or any other
provision of this Instrument), including the right, power and authority to modify
the terms of any Lease or extend or terminate any Lease. Upon the occurrence of
an Event of Default, and during the continuance of such Event of Default, the
permission given to Borrower pursuant to the preceding sentence to exercise all
rights, power and authority under Leases will automatically terminate. Borrower
will comply with and observe Borrower's obligations under all Leases, including
Borrower's obligations pertaining to the maintenance and disposition of tenant
security deposits.
(c)
4851-0152-2562.3
(i) Borrower acknowledges and agrees that the exercise by Lender, either
directly or by a receiver, of any of the rights conferred under this Section 4
will not be construed to make Lender a mortgagee-in-possession of the
Mortgaged Property so long as Lender has not itself entered into actual
possession of the Land and the Improvements.
(ii) The acceptance by Lender of the assignment of the Leases pursuant to
Section 4(a) will not at any time or in any event obligate Lender to take
any action under this Instrument or to expend any money or to incur any
expenses.
(iii) Except to the extent of Lender's gross negligence or willful misconduct,
Lender will not be liable in any way for any injury or damage to person or
property sustained by any Person or Persons in or about the Mortgaged
Property.
(iv) Prior to Lender's actual entry into and taking possession of the Mortgaged
Property, Lender will not be obligated for any of the following:
(A) Lender will not be obligated to perform any of the terms,
covenants and conditions contained in any Lease ( or otherwise
have any obligation with respect to any Lease).
May 21, 2019 Item #4 Page 32 of 105
(B) Lender will not be obligated to appear in or defend any action or
proceeding relating to the Lease or the Mortgaged Property.
(C) Lender will not be responsible for the operation, control, care,
management or repair of the Mortgaged Property or any portion of
the Mortgaged Property. The execution of this Instrument by
Borrower will constitute conclusive evidence that all responsibility
for the operation, control, care, management and repair of the
Mortgaged Property is and will be that of Borrower, prior to such
actual entry and taking of possession.
(d) Upon delivery of Notice by Lender to Borrower of Lender's exercise of Lender's
rights under this Section 4 at any time after the occurrence of an Event of Default,
and during the continuance of such Event of Default, and without the necessity of
Lender entering upon and taking and maintaining control of the Mortgaged
Property directly, by a receiver, or by any other manner or proceeding permitted
by the laws of the Property Jurisdiction, Lender immediately will have all rights,
powers and authority granted to Borrower under any Lease, including the right,
power and authority to modify the terms of any such Lease, or extend or terminate
any such Lease.
(e) Borrower will, promptly upon Lender's request, deliver to Lender an executed
copy of each residential Lease then in effect.
(f) If Borrower is a cooperative housing corporation or association, notwithstanding
anything to the contrary contained in this Instrument, so long as Borrower
remains a cooperative housing corporation or association and is not in breach of
any covenant of this Instrument, Lender consents to the following:
(i) Borrower may execute leases of apartments for a term in excess of 2 years
to a tenant shareholder of Borrower, so long as such leases, including
proprietary leases, are and will remain subordinate to the Lien of this
Instrument.
(ii) Borrower may surrender or terminate such leases of apartments where the
surrendered or terminated lease is immediately replaced or where
Borrower makes its best efforts to secure such immediate replacement by
a newly-executed lease of the same apartment to a tenant shareholder of
Borrower. However, no consent is given by Lender to any execution,
surrender, termination or assignment of a lease under terms that would
waive or reduce the obligation of the resulting tenant shareholder under
such lease to pay cooperative assessments in full when due or the
obligation of the former tenant shareholder to pay any unpaid portion of
such assessments.
5. Prepayment Premium. Borrower will be required to pay a prepayment premium in
connection with certain prepayments of the Indebtedness, including a payment made after
4851-0152-2562.3
May 21, 2019 Item #4 Page 33 of 105
Lender's exercise of any right of acceleration of the Indebtedness, as provided in the
Note.
6. Application of Payments. If at any time Lender receives, from Borrower or otherwise,
any amount applicable to the Indebtedness which is less than all amounts due and payable
at such time, then Lender may apply that payment to amounts then due and payable in
any manner and in any order determined by Lender, in Lender's discretion. Neither
Lender's acceptance of an amount that is less than all amounts then due and payable nor
Lender's application of such payment in the manner authorized will constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.
Notwithstanding the application of any such amount to the Indebtedness, Borrower's
obligations under this Instrument, the Note and all other Loan Documents will remain
unchanged.
7. Protection of Lender's Security; Instrument Secures Future Advances.
(a) If Borrower fails to perform any of its obligations under this Instrument or any
other Loan Document, or if any action or proceeding is commenced which
purports to affect the Mortgaged Property, Lender's security or Lender's rights
under this Instrument, including eminent domain, insolvency, code enforcement,
civil or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent
conveyance or reorganizations or proceedings involving a bankrupt or decedent,
then Lender at Lender's option may make such appearances, file such documents,
disburse such sums and take such actions as Lender reasonably deems necessary
to perform such obligations of Borrower and to protect Lender's interest,
including all of the following:
(i) Lender may pay Attorneys' Fees and Costs.
(ii) Lender may pay fees and out-of-pocket expenses of accountants,
inspectors and consultants.
(iii) Lender may enter upon the Mortgaged Property to make Repairs or secure
the Mortgaged Property.
(iv) Lender may procure the Insurance required by the Loan Agreement.
(v) Lender may pay any amounts which Borrower has failed to pay under the
Loan Agreement.
(vi) Lender may perform any of Borrower's obligations under the Loan
Agreement.
(vii) Lender may make advances to pay, satisfy or discharge any obligation of
Borrower for the payment of money that is secured by a Prior Lien.
(b) Any amounts disbursed by Lender under this Section 7, or under any other
provision of this Instrument that treats such disbursement as being made under
4851-0152-2562.3
May 21, 2019 Item #4 Page 34 of 105
this Section 7, will be secured by this Instrument, will be added to, and become
part of, the principal component of the Indebtedness, will be immediately due and
payable and will bear interest from the date of disbursement until paid at the
Default Rate.
( c) Nothing in this Section 7 will require Lender to incur any expense or take any
action.
8. Events of Default. An Event of Default under the Loan Agreement will constitute an
Event of Default under this Instrument.
9. Remedies Cumulative. Each right and remedy provided in this Instrument is distinct
from all other rights or remedies under this Instrument, the Loan Agreement or any other
Loan Document or afforded by applicable law or equity, and each will be cumulative and
may be exercised concurrently, independently or successively, in any order. Lender's
exercise of any particular right or remedy will not in any way prevent Lender from
exercising any other right or remedy available to Lender. Lender may exercise any such
remedies from time to time and as often as Lender chooses.
10. Waiver of Statute of Limitations, Offsets, and Counterclaims. Borrower waives the
right to assert any statute of limitations as a bar to the enforcement of the Lien of this
Instrument or to any action brought to enforce any Loan Document. Borrower hereby
waives the right to assert a counterclaim, other than a compulsory counterclaim, in any
action or proceeding brought against it by Lender or otherwise to offset any obligations to
make the payments required by the Loan Documents. No failure by Lender to perform
any of its obligations under this Instrument will be a valid defense to, or result in any
offset against, any payments that Borrower is obligated to make under any of the Loan
Documents.
11. Waiver of Marshalling.
(a) Notwithstanding the existence of any other security interests in the Mortgaged
Property held by Lender or by any other party, Lender will have the right to
determine the order in which any or all of the Mortgaged Property will be
subjected to the remedies provided in this Instrument, the Note, the Loan
Agreement or any other Loan Document or applicable law. Lender will have the
right to determine the order in which any or all portions of the Indebtedness are
satisfied from the proceeds realized upon the exercise of such remedies.
(b) Borrower and any party who now or in the future acquires a security interest in
the Mortgaged Property and who has actual or constructive notice of this
Instrument waives any and all right to require the marshalling of assets or to
require that any of the Mortgaged Property be sold in the inverse order of
alienation or that any of the Mortgaged Property be sold in parcels or as an
entirety in connection with the exercise of any of the remedies permitted by
applicable law or provided in this Instrument.
12. Further Assurances; Lender's Expenses.
4851-0152-2562.3
May 21, 2019 Item #4 Page 35 of 105
(a) Borrower will deliver, at its sole cost and expense, all further acts, deeds,
conveyances, assignments, estoppel certificates, financing statements or
amendments, transfers and assurances as Lender may require from time to time in
order to better assure, grant and convey to Lender the rights intended to be
granted, now or in the future, to Lender under this Instrument and the Loan
Documents or in connection with Lender's consent rights under Article VII of the
Continuing Covenant Agreement.
(b) Borrower acknowledges and agrees that, in connection with each request by
Borrower under this Instrument or any Loan Document, Borrower will pay all
reasonable Attorneys' Fees and Costs and expenses incurred by Lender, Funding
Lender or Loan Servicer, including any fees payable in accordance with any
request for further assurances or an estoppel certificate pursuant to the Continuing
Covenant Agreement, regardless of whether the matter is approved, denied or
withdrawn. Any amounts payable by Borrower under this Instrument or under
any other Loan Document will be deemed a part of the Indebtedness, will be
secured by this Instrument and will bear interest at the Default Rate if not fully
paid within 10 days of written demand for payment.
13. Governing Law; Consent to Jurisdiction and Venue. This Instrument, and any Loan
Document which does not itself expressly identify the law that is to apply to it, will be
governed by the laws of the Property Jurisdiction. Borrower agrees that any controversy
arising under or in relation to the Note, this Instrument or any other Loan Document may
be litigated in the Property Jurisdiction. The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction will have jurisdiction over all controversies that
may arise under or in relation to the Note, any security for the Indebtedness or any other
Loan Document. Borrower irrevocably consents to service, jurisdiction and venue of
such courts for any such litigation and waives any other venue to which it might be
entitled by virtue of domicile, habitual residence or otherwise. However, nothing in this
Section 13 is intended to limit Lender's right to bring any suit, action or proceeding
relating to matters under this Instrument in any court of any other jurisdiction.
14. Notice. All Notices, demands and other communications under or concerning this
Instrument will be governed by the terms set forth in Section 8.01 of the Project Loan
Agreement. Notices to Lender shall be given to Funding Lender Representative and
Loan Servicer.
15. Successors and Assigns Bound. This Instrument will bind the respective successors and
assigns of Borrower and Lender, and the rights granted by this Instrument will inure to
Lender's successors and assigns.
16. Joint and Several Liability. If more than one Person signs this Instrument as Borrower,
the obligations of such Persons will be joint and several.
17. Relationship of Parties; No Third Party Beneficiary.
4851-0152-2562.3
May 21, 2019 Item #4 Page 36 of 105
(a) The relationship between Lender and Borrower will be solely that of creditor and
debtor, respectively, and nothing contained in this Instrument will create any
other relationship between Lender and Borrower. Nothing contained in this
Instrument will constitute Lender as a joint venturer, partner or agent of
Borrower, or render Lender liable for any debts, obligations, acts, om1ss10ns,
representations or contracts of Borrower.
(b) No creditor of any party to this Instrument and no other Person will be a third
party beneficiary of this Instrument or any other Loan Document. Without
limiting the generality of the preceding sentence, (i) any arrangement ("Servicing
Arrangement") between Lender or Funding Lender and any Loan Servicer for
loss sharing or interim advancement of funds will constitute a contractual
obligation of such Loan Servicer that is independent of the obligation of Borrower
for the payment of the Indebtedness, (ii) Borrower will not be a third party
beneficiary of any Servicing Arrangement, and (iii) no payment by Loan Servicer
under any Servicing Arrangement will reduce the amount of the Indebtedness.
( c) Funding Lender shall be entitled to direct all remedies and other actions which
may be exercised by Lender under this Instrument.
18. Severability; Amendments.
(a) The invalidity or unenforceability of any provision of this Instrument will not
affect the validity or enforceability of any other provision, and all other provisions
will remain in full force and effect. This Instrument contains the entire agreement
among the parties as to the rights granted and the obligations assumed in this
Instrument.
(b) This Instrument may not be amended or modified except by a writing signed by
the party against whom enforcement is sought; provided, however, that in the
event of a Transfer prohibited by or requiring Funding Lender's approval under
Article VII of the Continuing Covenant Agreement, some or all of the
modifications to the Loan Documents (if any) may be modified or rendered void
by Lender at Lender's option by Notice to Borrower and the transferee(s).
19. Construction.
(a) The captions and headings of the Sections of this Instrument are for convenience
only and will be disregarded in construing this Instrument. Any reference in this
Instrument to a "Section" will, unless otherwise explicitly provided, be construed
as referring to a Section of this Instrument.
(b) Any reference in this Instrument to a statute or regulation will be construed as
referring to that statute or regulation as amended from time to time.
(c) Use of the singular in this Instrument includes the plural and use of the plural
includes the singular.
4851-0152-2562.3
May 21, 2019 Item #4 Page 37 of 105
( d) As used in this Instrument, the term "including" means "including, but not limited
to" and the term "includes" means "includes without limitation."
(e) The use of one gender includes the other gender, as the context may require.
(f) Unless the context requires otherwise any definition of or reference to any
agreement, instrument or other document in this Instrument will be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth in this Instrument).
(g) Any reference in this Instrument to any person will be construed to include such
person's successors and assigns.
20. Subrogation. If, and to the extent that, the proceeds of the loan evidenced by the Note,
or subsequent advances under Section 7, are used to pay, satisfy or discharge a Prior
Lien, such loan proceeds or advances will be deemed to have been advanced by Lender at
Borrower's request, and Lender will automatically, and without further action on its part,
be subrogated to the rights, including Lien priority, of the owner or holder of the
obligation secured by the Prior Lien, whether or not the Prior Lien is released.
END OF UNIFORM COVENANTS; STATE-SPECIFIC PROVISIONS FOLLOW
21-30. Reserved.
31. Acceleration; Remedies.
(a) If an Event of Default has occurred and is continuing, Lender, at Lender's option,
may declare the Indebtedness to be immediately due and payable without further
demand, and may invoke the power of sale and any other remedies permitted by
California law or provided in this Instrument, the Loan Agreement or in any other
Loan Document. Borrower acknowledges that the power of sale granted in this
Instrument may be exercised by Lender without prior judicial hearing. Lender will
be entitled to collect all costs and expenses incurred in pursuing such remedies,
including Attorneys' Fees and Costs and costs of documentary evidence, abstracts
and title reports.
(b) If the power of sale is invoked, Lender will execute a written notice of the
occurrence of an Event of Default and of Lender's election to cause the
Mortgaged Property to be sold and will cause the notice to be recorded in each
county in which the Mortgaged Property or some part of the Mortgaged Property
is located. Trustee will give notice of default and notice of sale and will sell the
Mortgaged Property according to California law. Trustee may sell the Mortgaged
Property at the time and place and under the terms designated in the notice of sale
in one or more parcels and in such order as Trustee may determine. Trustee may
postpone the sale of all or any part of the Mortgaged Property by public
announcement at the time and place of any previously scheduled sale. Lender or
4851-0152-2562.3
May 21, 2019 Item #4 Page 38 of 105
Lender's designee may purchase the Mortgaged Property at any sale and Lender
or such designee will have the right to credit bid all or any part of the
Indebtedness toward the purchase price at such sale.
( c) Within a reasonable time after the sale, Trustee will deliver to the purchaser at the
sale, a deed conveying the Mortgaged Property so sold without any express or
implied covenant or warranty. The recitals in such deed of any matters or facts
will be conclusive proof of the truthfulness thereof. Trustee will apply the
proceeds of the sale in the following order: (i) to all costs and expenses of the
sale, including Trustee's fees not to exceed the statutory maximum therefor,
Attorneys' Fees and Costs, including the cost of any trustee's sale guarantee
policy and any other evidence of title; (ii) to the Indebtedness in such order as
Lender, in Lender's discretion, directs; and (iii) the excess, if any, to the person or
persons legally entitled to the excess.
32. Reconveyance. Upon payment of the Indebtedness, Lender will request Trustee to
reconvey the Mortgaged Property and will surrender this Instrument and the Note to
Trustee. Trustee will reconvey the Mortgaged Property without warranty to the person or
persons legally entitled to the Mortgaged Property. Such person or persons will pay
Trustee's reasonable costs incurred in so reconveying the Mortgaged Property.
33. Substitute Trustee. Lender, at Lender's option, may from time to time, by a written
instrument, appoint a successor trustee, which instrument, when executed and
acknowledged by Lender and recorded in the office of the Recorder of the county or
counties where the Mortgaged Property is situated, will be conclusive proof of proper
substitution of the successor trustee. The successor trustee will, without conveyance of
the Mortgaged Property, succeed to all the title, power and duties conferred upon the
Trustee in this Instrument and by California law. The instrument of substitution will
contain the name of the original Lender, Trustee and Borrower under this Instrument, the
book and page where this Instrument is recorded, and the name and address of the
successor trustee. The procedure provided for substitution of trustee in this Instrument
will govern to the exclusion of all other provisions for substitution, statutory or
otherwise.
34. Statement Of Obligation. Lender may collect a fee not to exceed the maximum allowed
by applicable law for furnishing the statement of obligation as provided in Section 2943
of the Civil Code of California.
35. Spouse's Separate Property. Each Borrower who is a married person expressly agrees
that recourse may be had against his or her separate property.
36. Fixture Filing. This Instrument is also a fixture filing under the Uniform Commercial
Code of California.
37. Additional Provision Regarding Application of Payments. In addition to the
provisions of Section 6, Borrower further agrees that, if Lender accepts a guaranty of
4851-0152-2562.3
May 21, 2019 Item #4 Page 39 of 105
only a portion of the Indebtedness, Borrower waives its right under California Civil Code
Section 2822(a), to designate the portion of the Indebtedness which will be satisfied by a
guarantor's partial payment.
38. Waiver of Marshalling; Other Waivers. To the extent permitted by law, Borrower
waives all of the following:
(a) The benefit of all present or future laws providing for any appraisement before
sale of any portion of the Mortgaged Property.
(b) All rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of the Indebtedness and marshalling
in the event of foreclosure of the Lien created by this Instrument.
( c) All rights and remedies which Borrower may have or be able to assert by reason
of the laws of the State of California pertaining to the rights and remedies of
sureties.
( d) The right to assert any statute of limitations as a bar to the enforcement of the
Lien of this Instrument or to any action brought to enforce the Note or any other
obligation secured by this Instrument.
( e) Any rights, legal or equitable, to require marshalling of assets or to require upon
foreclosure sales in a particular order, including any rights under California Civil
Code Sections 2899 and 3433.
Lender will have the right to determine the order in which any or all of the Mortgaged
Property will be subjected to the remedies provided by this Instrument. Lender will have
the right to determine the order in which any or all portions of the Indebtedness are
satisfied from the proceeds realized upon the exercise of the remedies provided by this
Instrument.
By signing this Instrument, Borrower does not waive its rights under Section 2924c of the
California Civil Code.
39. Additional Provisions Concerning Environmental Hazards. In addition to the
provisions of Sections 5.05 and 6.12 of the Loan Agreement:
(a) Except for matters covered by an O&M Program or lawful conditions expressly
excluded from the definition of Prohibited Activity or Condition in the Loan
Agreement, Borrower will not cause or permit any Lien (whether or not such Lien
has priority over the Lien created by this Instrument) upon the Mortgaged
Property imposed pursuant to any Hazardous Materials Laws. Any such Lien will
be considered a Prohibited Activity or Condition.
4851-0152-2562.3
May 21, 2019 Item #4 Page 40 of 105
(b) Borrower represents and warrants to Lender that, except as previously disclosed
by Borrower to Lender in writing, each of the following are true:
(i) At the time of acquiring the Mortgaged Property, Borrower undertook all
appropriate inquiry into the previous ownership and uses of the Mortgaged
Property consistent with good commercial or customary practice and no
evidence or indication came to light which would suggest that the
Mortgaged Property has been or is now being used for any Prohibited
Activities or Conditions.
(ii) The Mortgaged Property has not been designated as "hazardous waste
property" or "border zone property" pursuant to Section 25220, et seq., of
the California Health and Safety Code.
The representations and warranties in this Section will be continuing
representations and warranties that will be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the Indebtedness has
been paid in full.
( c) Without limiting any of the remedies provided in this Instrument, Borrower
acknowledges and agrees that each of the provisions in Sections 5.05 and 6.12 of
the Loan Agreement and in this Section is an environmental provision ( as defined
in Section 736(f)(2) of the California Code of Civil Procedure) made by Borrower
relating to the real property security ("Environmental Provisions"), and that
Borrower's failure to comply with any of the Environmental Provisions will be a
breach of contract that will entitle Lender to pursue the remedies provided by
Section 736 of the California Code of Civil Procedure ("Section 736") for the
recovery of damages and for the enforcement of the Environmental Provisions.
Pursuant to Section 736, Lender's action for recovery of damages or enforcement
of the Environmental Provisions will not constitute an action within the meaning
of Section 726( a) of the California Code of Civil Procedure or constitute a money
judgment for a deficiency or a deficiency judgment within the meaning of
Sections 580a, 580b, 580d, or 726(b) of the California Code of Civil Procedure.
(d) Any reference in this Instrument or in any other Loan Document to Section 5.05
and/or Section 6.12 of the Loan Agreement will be construed as referring together
to such Section(s) of the Loan Agreement.
40. WAIVER OF TRIAL BY JURY.
(a) BORROWER AND LENDER EACH COVENANTS AND AGREES NOT
TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE
ARISING OUT OF THIS INSTRUMENT OR THE RELATIONSHIP
BETWEEN THE PARTIES AS BORROWER AND LENDER THAT IS
TRIABLE OF RIGHT BY A JURY.
4851-0152-2562.3
May 21, 2019 Item #4 Page 41 of 105
(b) BORROWER AND LENDER EACH WAIVES ANY RIGHT TO TRIAL
BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT
ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH
PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.
41. Attached Riders. The following Riders are attached to this Instrument:
Rider to Project Loan Security Instrument-Ground Lease Mortgage with Fee Joinder
42. Attached Exhibits. The following Exhibits, if marked with an "X" in the space provided,
are attached to this Instrument:
IXI
IXI
IXI
4851-0152-2562.3
Exhibit A
ExhibitB
Exhibit C
Description of the Land (required)
Modifications to Instrument
Ground Lease Description (if applicable)
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
May 21, 2019 Item #4 Page 42 of 105
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or has caused this
Instrument to be signed and delivered by its duly authorized representative.
TOBRIA TERRACE LLC, a California limited
liability company
By: ________________ _
Authorized Signatory
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO )
On _______ , 2018, before me, ____________ , a Notary
Public, personally appeared ______________ , who proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her authorized capacity, and that
by his/her signature on the instrument the person or the entity upon behalf of which the person
acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(This area for official notarial seal)
4851-0152-2562.3
May 21, 2019 Item #4 Page 43 of 105
IN WITNESS WHEREOF, Ground Lessor has
caused this Instrument to be signed and delivered
and delivered this Instrument or has
uly authorized representative.
APPROVED AS TO FORM:
CELIA A. BREWER, CITY ATTORNEY
By: /}2aj~
Ronald Kemp, A~ty Attorney
A notary public or other officer completing this certificate verifies only the identity of the
individual who signed the document to which this certificate is attached, and not the truthfulness,
accuracy, or validity of that document.
ST ATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO )
On 6\ 13 \ \C\, , 2018, before me, KoY--'3-e.Y\ ~ , a Notary
Public, personally appeared Gc.,.,oi"'r C.J.rv2.d w'i c..k ~ ho proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within instrument
and acknowledged to me that he/~ executed the same in his/lotef authorized capacity, and that
by his/het-signature on the instrument the person or the entity upon behalf of which the person
acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
~-···········~ MORGEN 'rff _ ~ Not•,Y Public · Callfomta I ~ .•• --~ San Diet() County >
' • Cornminlon # 2268605 -i
O
• My Com:; E,:iro, Dec 24, 2022 t
(This area for official notarial seal)
4851-0152-2562.3
May 21, 2019 Item #4 Page 44 of 105
RIDER TO PROJECT LOAN SECURITY INSTRUMENT
(Direct Purchase of Tax-Exempt Loans Program)
GROUND LEASE MORTGAGE WITH FEE JOINDER
(Revised 3-24-2016)
The following changes are made to the Instrument which precedes this Rider:
A. The granting clause on Page 1 is deleted and replaced with the following:
Borrower and Ground Lessor, in consideration of the Indebtedness and the trust created
by this Instrument, irrevocably grant, convey and assign to Trustee, in trust, with power
of sale, the Mortgaged Property, including the Leasehold Estate and the Fee Estate in the
Land located in San Diego County, State of California, and described in Exhibit A.
B. The following definitions are added to Section 1:
"Fee Estate" means the fee estate of Ground Lessor in the Land.
"Ground Lease" means the lease described in Exhibit C pursuant to which Borrower
leases the Land, as such lease may be amended, modified, supplemented, renewed and
extended.
"Ground Lessor" means the lessor under the Ground Lease.
"Leasehold Estate" means Borrower's interest in the Land and any other real property
leased by Borrower pursuant to the Ground Lease, if applicable, including all of the
following:
(i) All rights of Borrower to renew or extend the term of the Ground Lease.
(ii) All amounts deposited by Borrower with Ground Lessor under the Ground Lease.
(iii) Borrower's right or privilege to terminate, cancel, surrender, modify, or amend
the Ground Lease.
(iv) All other options, privileges and rights granted and demised to Borrower under
the Ground Lease and all appurtenances with respect to the Ground Lease.
"Lien" means any mortgage, deed of trust, deed to secure debt, security interest, or other
lien or encumbrance on the Mortgaged Property.
4851-0152-2562.3
May 21, 2019 Item #4 Page 45 of 105
C. The definitions of "Fixtures", "Mortgaged Property" and "Personalty" in Article XII are
deleted and replaced with the following:
"Fixtures" means all property owned by Borrower or Ground Lessor which is attached to
the Land or the Improvements so as to constitute a fixture under applicable law,
including: machinery, equipment, engines, boilers, incinerators and installed building
materials; systems and equipment for the purpose of supplying or distributing heating,
cooling, electricity, gas, water, air or light; antennas, cable, wiring and conduits used in
connection with radio, television, security, fire prevention or fire detection or otherwise
used to carry electronic signals; telephone systems and equipment; elevators and related
machinery and equipment; fire detection, prevention and extinguishing systems and
apparatus; security and access control systems and apparatus; plumbing systems; water
heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers,
washers, dryers and other appliances; light fixtures, awnings, storm windows and storm
doors; pictures, screens, blinds, shades, curtains and curtain rods; mirrors; cabinets,
paneling, rugs and floor and wall coverings; fences, trees and plants; swimming pools;
and exercise equipment.
"Mortgaged Property" means all of Borrower's and Ground Lessor's present and future
right, title and interest in and to all of the following:
(i) The Land, including Borrower's interest in the Land pursuant to the Ground
Lease, the Ground Lease and the Leasehold Estate, and Ground Lessor's interest
in the Land, the Ground Lease, and the Fee Estate.
(ii) The Improvements.
(iii) The Fixtures.
(iv) The Personalty.
(v) All current and future rights, including air rights, development rights, zoning
rights and other similar rights or interests, easements, tenements, rights of way,
strips and gores of land, streets, alleys, roads, sewer rights, waters, watercourses
and appurtenances related to or benefiting the Land or the Improvements, or both,
and all rights-of-way, streets, alleys and roads which may have been or may in the
future be vacated.
(vi) All proceeds paid or to be paid by any insurer of the Land, the Improvements, the
Fixtures, the Personalty or any other part of the Mortgaged Property, whether or
not Borrower or Ground Lessor obtained the Insurance pursuant to Lender's
requirement or the Ground Lease.
(vii) All awards, payments and other compensation made or to be made by any
municipal, state or federal authority with respect to the Land or the Leasehold
Estate, as applicable, the Improvements, the Fixtures, the Personalty or any other
4851-0152-2562.3
May 21, 2019 Item #4 Page 46 of 105
part of the Mortgaged Property, including any awards or settlements resulting
from Condemnation proceedings or the total or partial taking of the Land, the
Improvements, the Fixtures, the Personalty or any other part of the Mortgaged
Property under the power of eminent domain or otherwise and including any
conveyance in lieu thereof.
(viii) All contracts, options and other agreements for the sale of the Land, or the
Leasehold Estate, as applicable, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property entered into by Borrower or Ground
Lessor now or in the future, including cash or securities deposited to secure
performance by parties of their obligations.
(ix) All proceeds from the conversion, voluntary or involuntary, of any of the items
described in items (i) through (viii) of this definition, into cash or liquidated
claims, and the right to collect such proceeds.
(x) All Rents and Leases (including the Ground Lease).
(xi) All earnings, royalties, accounts receivable, issues and profits from the Land, the
Improvements or any other part of the Mortgaged Property, and all undisbursed
proceeds of the Project Loan.
(xii) All Imposition Reserve Deposits.
(xiii) All refunds or rebates of Impositions by any Governmental Authority or insurance
company ( other than refunds applicable to periods before the real property tax
year in which this Continuing Covenant Agreement is dated).
(xiv) All tenant security deposits which have not been forfeited by any tenant under any
Lease (including the Ground Lease) and any bond or other security in lieu of such
deposits.
(xv) All names under or by which any of the Mortgaged Property may be operated or
known, and all trademarks, trade names and goodwill relating to any of the
Mortgaged Property.
(xvi) If required by the terms of Section 4.05, all rights under the Letter of Credit and
the Proceeds, as such Proceeds may increase or decrease from time to time.
(xvii) If the Project Note provides for interest to accrue at an floating or variable rate
and there is a Cap Agreement, the Cap Collateral.
"Personalty" means all of the following:
(i) Accounts (including deposit accounts) related to the Mortgaged Property.
4851-0152-2562.3
May 21, 2019 Item #4 Page 47 of 105
(ii) Equipment and inventory which are used now or in the future in connection with
the ownership, management or operation of the Land or Improvements or are
located on the Land or Improvements, including furniture, furnishings,
machinery, building materials, goods, supplies, tools, books, records (whether in
written or electronic form) and computer equipment (hardware and software).
(iii) Other tangible personal property which is used now or in the future in connection
with the ownership, management or operation of the Land or Improvements or is
located on the Land or in the Improvements, including ranges, stoves, microwave
ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and other
appliances (other than Fixtures).
(iv) Any operating agreements relating to the Land or the Improvements.
(v) Any surveys, plans and specifications and contracts for architectural, engineering
and construction services relating to the Land or the Improvements.
(vi) All other intangible property, general intangibles and rights relating to the
operation of, or used in connection with, the Land or the Improvements, including
all governmental permits relating to any activities on the Land and including
subsidy or similar payments received from any sources, including a Governmental
Authority.
( vii) Any rights of Borrower in or under any Letter of Credit.
D. The following new Sections are added:
43. No Merger of Estates.
4851-0152-2562.3
(a) If Borrower acquires the Fee Estate, there will be no merger between the
Fee Estate and the Leasehold Estate unless all Persons, including Lender,
having an interest in the Ground Lease consent in writing to the merger.
(b) Simultaneously with Borrower's acquisition of the Fee Estate, the Lien of
this Instrument will automatically, without the necessity of any further
conveyance, continue to cover the Fee Estate and will be and remain prior
to the Lien of any mortgage, deed of trust or other Lien placed on the Fee
Estate after the date of this Instrument. Promptly after Borrower's
acquisition of the Fee Estate, Borrower, at its sole cost and expense,
including payment of Lender's Attorneys' Fees and Costs and out-of-
pocket disbursements, will execute and deliver all documents and
instruments necessary to subject or further subject the Fee Estate to the
Lien of this Instrument or to confirm and ratify such Lien, and must
provide to Lender a title insurance policy insuring the Lien of this
Instrument as a first Lien on the Fee Estate and the Leasehold Estate, as
applicable.
May 21, 2019 Item #4 Page 48 of 105
(c) If Lender acquires the Fee Estate and the Leasehold Estate (whether
pursuant to the provisions of the Ground Lease, by foreclosure of this
Instrument or otherwise), the Fee Estate and the Leasehold Estate will not
merge as a result of such acquisition and will remain separate and distinct
for all purposes after such acquisition unless and until Lender elects to
merge the Fee Estate and the Leasehold Estate.
44. Ground Lessor Joinder.
4851-0152-2562.3
(a) By its execution and delivery of this Instrument, Ground Lessor joins in
this Instrument with the same intent and consequence as if Ground Lessor
were originally a party to this Instrument, for the purpose of imposing the
lien of this Instrument on the Fee Estate, and acknowledging the
agreements, covenants and obligations set forth in this Instrument are
applicable to Ground Lessor, including those set forth in Sections 2, 3, 4,
6, 7(a), 10 -13, 15 -17 and 20 of this Instrument. All leasehold
mortgagee protection provisions set forth in the Ground Lease, and all
other provisions inuring to the benefit of leasehold mortgagees or their
successors or assigns contained in the Ground Lease, and any
representations, warranties and certifications set forth in the Multifamily
Ground Lessor's Estoppel Certificate delivered by Ground Lessor in
connection with the Project Loan, are incorporated into this Instrument by
reference and are restated and confirmed by Ground Lessor for the benefit
of Lender.
(b) Ground Lessor represents to Lender that it has the power, authority and
right to execute this Instrument as an accommodation grantor, and to deed,
grant, convey and assign to, as applicable, Lender or Trustee, in trust, a
security interest in Ground Lessor's right, title and interest in the
Mortgaged Property pursuant to the terms of this Instrument and to keep
and observe all of the terms of this Instrument to be performed by Ground
Lessor under this Instrument. Ground Lessor further represents that
Ground Lessor possesses an unencumbered fee simple absolute estate in
the Land and that it owns the Land and, to the extent not owned in fee by
Borrower, the Improvements, free and clear of all liens, encumbrances and
charges except for those otherwise approved by Lender. Ground Lessor
will forever 1,varrant, defend and preserve the title, validity and priority of
the lien of this Instrument and defend the same to Lender against the
claims of all persons. Ground Lessor agrees that Ground Lessor will not,
without the prior written consent of Lender, cause or agree to a transfer of
or all or any part of the Mortgaged Property or any interest in the
Mortgaged Property, or permit a transfer of all or any portion of the
Mortgaged Property.
(c) Ground Lessor acknowledges all of the following:
May 21, 2019 Item #4 Page 49 of 105
4851-0152-2562.3
(i) Lender has not made any representations or warranties to Ground
Lessor with respect to the creditworthiness of Borrower or the
prospects of repayment of the Indebtedness.
(ii) Ground Lessor assumes full responsibility for keeping informed
with respect to Borrower's business operations, if any, and
financial condition to the extent Ground Lessor wishes to do so.
(iii) Lender will have no duty to disclose or report to Ground Lessor
any information now or later known to Lender with respect to
Borrower, including any information relating to any of Borrower's
business operations or financial condition.
( d) At any time after Ground Lessor receives notice of an Event of Default
under any of the Financing Documents from Lender, Ground Lessor has
the right (but will not be obligated) to make any payment, perform any
obligation and take any other action that Borrower would have the right to
pay, perform or take under this Instrument which Ground Lessor deems
necessary or desirable to cure the Event of Default.
( e) Ground Lessor acknowledges and agrees that, upon the occurrence of an
Event of Default, Lender or Trustee (if applicable) may take such action,
without notice or demand, as it deems advisable to protect and enforce its
rights against Borrower, Ground Lessor, and in and to the Mortgaged
Property, including the Land, to the fullest extent under the terms of this
Instrument, the Continuing Covenant Agreement, and the other Financing
Documents.
(f) Any indebtedness of Borrower to Ground Lessor now or later existing
(including claims under the Ground Lease or any rights to subrogation
Ground Lessor may have as a result of this Instrument or any action taken
by Lender under this Instrument), together with any interest thereon, will
be, and such indebtedness is, hereby deferred, postponed and subordinated
to the prior payment in full of the Indebtedness. Nothing in this Section
44(f) shall be construed to require, prior to an Event of Default, the
payment in full of the Indebtedness prior to Borrower's payment of
annual "Rent" as set forth in Section 2.3 of the Ground Lease.
(g) Ground Lessor acknowledges that Lender may provide to third parties
with an existing or prospective interest in the servicing, enforcement,
evaluation, performance, ownership, purchase, participation or
Securitization of the Funding Loan, including any of the Rating Agencies,
any entity maintaining databases on the underwriting and performance of
commercial mortgage loans, as well as governmental regulatory agencies
having regulatory authority over Lender, any and all information which
May 21, 2019 Item #4 Page 50 of 105
Lender now has or may hereafter acquire relating to the Project Loan and
the Mortgaged Property, including the Ground Lessor, as Lender
determines necessary or desirable, and that such information rnay be
included in any Disclosure Document and also may be included in any
filing with the Securities and Exchange Commission pursuant to the
Securities Act or the Securities Exchange Act. To the fullest extent
permitted under applicable law, Ground Lessor irrevocably waives all
rights, if any, to prohibit such disclosure, including any right of privacy.
(h) Ground Lessor has no personal liability for the repayment of the
Indebtedness or for the performance of any of Borrower's or Ground
Lessor's obligations under the Financing Documents, and Ground
Lessor's liability under the Financing Documents is expressly limited to
the Mortgaged Property. However, nothing in this Rider limits the
liability or obligations of Ground Lessor as Landlord under the Ground
Lease. By acceptance of this Instrument, Lender hereby agrees to the
terms and conditions set forth in Section 6.S(a) of the Ground Lease
which are hereby incorporated into this Instrument by this reference
as if fully set forth herein.
E. Exhibit C (Ground Lease Description) is attached to this Instrument and made a part of
this Instrument by this reference.
4851-0152-2562.3
May 21, 2019 Item #4 Page 51 of 105
California
EXHIBIT A
DESCRIPTION OF THE LAND
[To be attached]
Multifamily Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing
4851-0152-2562.3
Page A-1
May 21, 2019 Item #4 Page 52 of 105
EXHIBITB
MODIFICATIONS TO INSTRUMENT
The following modifications are made to the text of the Instrument that precedes this Exhibit:
1. The definition of "Freddie Mac Purchase Date" is hereby deleted in its entirety from
Section 1 of the Instrument.
2. The definition of "Funding Lender Representative" in Section 1 of the Instrument is
hereby modified as follows:
"Funding Lender Representative" means Funding Lender or any Person designated by
Funding Lender to act on behalf of Funding Lender as provided in the Funding Loan Agreement,
or an assignee of such Person as provided in the Funding Loan Agreement. The initial Funding
Lender Representative shall be the Initial Funding Lender, and Freddie Mac shall become
Funding Lender Representative upon the occurrence of the Freddie Mac Purchase Date.
California
Multifamily Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing
4851-0152-2562.3
Page B-1
May 21, 2019 Item #4 Page 53 of 105
EXHIBIT C
GROUND LEASE DESCRIPTION
That certain Ground Lease dated October 28, 1994, by and between City of Carlsbad, California,
a municipal corporation, as landlord, ("Landlord") and La Terraza Associates, as tenant,
("Original Tenant"). Original Tenant assigned its interest in the Ground Lease to Tobria
Terrace, LLC ("Borrower") pursuant to that certain Assignment and Assumption of Ground
Lease dated March 17, 2011 by and between Original Tenant and Borrower. Borrower and
Landlord have entered into that certain First Amendment to Ground Lease dated as of [ ],
2019.
California
Multifamily Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing
4851-0152-2562.3
Page B-1
May 21, 2019 Item #4 Page 54 of 105
1442MO.P50
10/27/94
.........
GROUND LEASE
By and Between
THE CITY OF CARLSBAD
and
LA TERRAZA ASSOCIATES,
a California Limited Partnership
La Terraza Affordable Housing Development
Exhibit 5
May 21, 2019 Item #4 Page 55 of 105
--:-•··,
TABLE OF CONTENTS
(continued)
11.14 Applicable Law ............•..... 37
1442MO.PS0
10/27/94 -iii-
May 21, 2019 Item #4 Page 58 of 105
GROUND LEASE
THIS GROUND LEASE ("Lease"), is entered into as of Qciobev::
~, 1994, by and between the City of Carlsbad, a municipal
corporation ("Lessor") and La Terraza Associates, a California
Limited Partnership ("Lessee").
RECITALS
A. The Lessor owns certain real property situated in the
City of Carlsbad, County of San Diego, which is more particularly
described in Exhibit A attached hereto (the "Property").
B. The Lessor has entered into an Option to Lease
Agreement dated April 13, 1994 (the "Option Agreement") with the
Lessee, pursuant to which this Lease is executed.
C. The Lessee has agreed to develop on the Property a
multifamily housing development consisting of three hundred
forty-four residential units (the "Improvements"), which
Improvements will be owned in fee by the Lessee.
D. The Lessor desires to lease the Property to the Lessee
for a period of fifty-seven (57) years pursuant to the terms of
this Lease.
NOW, THEREFORE, in consideration of the promises and the
respective covenants and agreements contained in this Lease, the
parties hereby agree as follows:
ARTICLE 1: DEFINITIONS
1.1 Definitions
The following terms shall have the following meanings in
this Lease:
(a) "Affordability Requirements" shall mean the Lessor's
requirements pursuant to Article 5 of this Lease.
(b) "Approved Lenders" shall mean each and all of the
lenders providing the Approved Loans to Lessee.
(c) "Approved Loans" shall mean the loans described in
Section 6.2(a) below, any loan refinancing a loan described in
Section 6.2(a) below, additional loans not to exceed one million
1442MO.PS0
10/27/94 -1-
May 21, 2019 Item #4 Page 59 of 105
(,'
dollars ($1,000,000), or such other loans approved in writing by
the Lessor, now or hereafter obtained by Lessee in connection
with the Development, as evidenced by promissory notes and
secured by deeds of trust (and any related security documents,
including security agreements, fixture filings, and financing
statements required of the Lessee) which are given by the Lessee.
(d) "Approved Loan Documents" shall mean all documents
executed by the Lessee evidencing or securing the Approved Loans.
(e) "Authorized Officers" shall mean, in the case of the
Lessor, the City Manager, and in the case of the Lessee, its
Managing General Partner.
(f) "Development" shall mean the Improvements and the
Lessee's leasehold interest in the Land.
(g) "Dwelling Units" shall mean the three hundred and
forty-four (344) units of rental housing, which shall be occupied
by the Tenants and by one or more resident managers.
(h) "Foreclosure Transferee" shall have the definition set
forth in Section 2.3(b) hereof.
(i) "Improvements" shall mean the buildings, structures and
other improvements, including the building fixtures therein, now
or hereafter located on the Land.
(j) "Land" shall mean the land, more fully described'in
Exhibit A attached to this Lease and incorporated into this Lease
by this reference.
(k) "Lease" shall mean this Ground Lease between the Lessor
and the Lessee and shall include any and all amendments made to
this Lease.
(1) "Lease Term" shall mean the fifty-seven (57) year
period set forth in Section 2.2 below, during which this Lease
shall be in effect unless earlier terminated in accordance with
the provisions of this Lease.
(m) "Lease Year" shall mean a period of one calendar year
beginning January 1 and ending December 31. The first lease year
shall commence on the date of this Lease and end on the last day
of the following December. The last lease year shall begin on
January 1 of that year and end on the last day of this Lease.
1442MO,PS0
10/27/94 -2-
May 21, 2019 Item #4 Page 60 of 105
,M,-•:.
(n) "Lessee" shall mean La Terraza Associates, a California
Limited Partnership, and its permitted successors and permitted
assigns.
(o) "Lessor" shall mean the City of Carlsbad, and its
successors and assigns.
(p) "Partnership Agreement" shall mean the Limited
Partnership Agreement of Lessee, as amended from time to time.
(g) "Surplus Cash" shall have the meaning set forth in
Section 2. 3 ( b)
(r) "Tenants" shall mean the residents who are authorized
by Lessee to occupy the Dwelling Units.
ARTICLE 2: LEASE OF THE LAND; PAYMENT OF RENT; OWNERSHIP OF
IMPROVEMENTS
2.1 Lease of the Land
The Lessor, for and in consideration of the covenants and
agreements to be kept and performed by the Lessee, leases the
Land to the Lessee, and in consideration thereof, the Lessee does
take, hire and lease the Land from the Lessor pursuant to the
terms of this Lease. The Lessee or its designee shall operate
the Development in compliance with applicable laws.
2 .2 Term
The term of this Lease shall commence on the date of this
Lease as set forth above and shall continue from such date until
the expiration of fifty-seven (57) years, unless earlier
terminated in accordance with this Lease.
2.3 Payment of Rent
(a) The Lessee shall pay to the Lessor, at city Hall, 1200
Carlsbad Village Drive, Carlsbad, CA 92008, or such other place
as Lessor may designate in writing, "Rent" in an annual amount
equal to One Hundred and Fifty Thousand Dollars ($150,000),
without abatement, deduction or offset (except as otherwise
provided in this Lease), payable in arrears on the first day of
the second month following the close of each Lease Year, subject
to subsections (b) and (c) below.
(b) The first payment of Rent shall be equal to the Rent
multiplied by a fraction, the numerator of which is the number of
1442MO.PS0
10/27/94 -3-
May 21, 2019 Item #4 Page 61 of 105
days from the date of this Lease through the end of the first
Lease Year and the denominator of which is 365. The final
payment of Rent under this Lease shall be prorated in a similar
manner. Subject to subsection (c), Rent shall be payable only to
the extent of thirty percent (30%) of Surplus cash. "Surplus
Cash" shall mean operating income of the Development (excluding
interest income earned on tenant security deposits and
Development reserve accounts) less reasonable operating expenses.
For this purpose, operating expenses shall include all costs and
expenses related to ownership and operation of the Development
including, but not limited to, deposits into reserves, taxes and
other similar charges, the partnership management fee in an
amount not to exceed twenty thousand dollars ($20,000), debt
service due in that year on the Approved Loans (excluding the
loans from the Carlsbad Redevelopment Agency, Carlsbad,
California (hereinafter, the ''Carlsbad Redevelopment Agency")),
the property management fee and other expenses of a property
manager in amounts reasonable and customary in the industry, but
shall not include any allowance for depreciation. In the event
the thirty percent (30%) of surplus Cash available to pay the
Rent is less than the amount of Rent due under this Lease in any
year, the difference between thirty percent (30%) of Surplus cash
and the Rent shall accrue with interest at three percent (3%)
compounded annually, and shall be paid when and to the extent
Surplus Cash becomes available. All payments of Rent shall be
applied first to accrued amounts due for prior years, then to
accrued interest from that year, and then to current Rent due,
beginning with the first year Rent accrued. Any Rent outstanding
shall be payable on the earlier of the sale of the Improvements
(in full), Refinancing (as defined below) of the Improvements (to
the extent of available cash) or termination of this Lease (in
full). "Refinancing" shall mean the repayment of any Approved
Loan by the proceeds of a new loan secured by the Development.
After a sale, Rent shall be due currently on an annual basis on
the date set forth in subsection (a) above. Notwithstanding
anything to the contrary, (i) if the sale is due to a judicial
foreclosure, nonjudicial foreclosure or deed-in-lieu of
foreclosure which does not terminate this Lease or (ii) the Lease
terminates in accordance with Section 6.2(c) (9) due to a judicial
foreclosure, nonjudicial foreclosure, or deed-in-lieu of
foreclosure, then the Lender or other transferee of the
Development (a "Foreclosure Transferee") and its successors and
assigns shall have no liability for the payment of any Rent which
accrued prior to such transfer, and thereafter Lessor shall have
no right to terminate this Lease on account of nonpayment of such
accrued Rent.
(c) Notwithstanding the provisions of section (b),
irrespective of the existence of surplus cash, accrued Rent for
1442MO.PS0
10/27/94 -4-
May 21, 2019 Item #4 Page 62 of 105
any year, and any interest which accrued on said unpaid Rent in
the year the Rent payment was due, shall be paid in full not
later than the tenth anniversary of the date such Rent accrued.
Following payment in full of the One Million Seven Hundred and
Twelve Thousand Dollar ($1,712,000) loan from the Carlsbad
Redevelopment Agency, one hundred (100%) of Surplus Cash shall be
utilized to pay Rent, until all accrued Rent and accrued interest
thereon has been paid. Thereafter, Rent shall again be payable
from thirty percent (30%) of Surplus Cash.
(d) Lessor agrees that Lessee may prepay the Rent at any
time in its discretion.
2.4 Title to Improvements
Lessor hereby grants to Lessee, without warranty express or
implied, any right, title, or interest that Lessor may have in
the Improvements now or hereafter located on the Land.
Improvements on the Land during the Lease Term shall be and
remain the property of Lessee; provided, however, that Lessee
shall have no right to destroy, demolish or remove the
Improvements except as specifically provided for in this Lease or
as approved in writing by Lessor. When the Lease Term expires
or, subject to applicable cure rights and interests of Approved
Lenders and limited partners of Lessee, when the Lease is
otherwise terminated under the terms of this Lease, title to the
Improvements shall revert to and vest in Lessor without cost to
Lessor. It is the intent of the parties hereto that this Lease
shall create a constructive notice of severance of the '
Improvements from the Land without the necessity of a deed from
Lessor to Lessee after the Improvements have been constructed.
The Improvements, when built, shall be and remain real property
and shall be owned in fee by the Lessee for the Lease Term.
Lessee agrees to execute, at the request of Lessor at the end of
the Lease Term, within ten (10) days of Lessor's written request,
a confirmatory quitclaim deed of the Improvements to Lessor to be
recorded at Lessor's option and expense and any other documents
that may be reasonably required by Lessor or Lessor's title
company to provide Lessor title to the Land and the Improvements
free and clear of all monetary liens and monetary encumbrances
not caused or agreed to by Lessor.
2.5 Assignment of Lessee's Leasehold Interest; Transfer of the
Development
The Lessee may at any time and from time to time assign its
interest in this Lease and sell or transfer the Development in
accordance with the provisions of the Partnership Agreement and
any Approved Loan Documents applicable to the Development, but
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only with the written consent of the Lessor, which consent shall
be granted by the Lessor if the Lessor reasonably determines that
the transferee has the ability to pay the Rent due hereunder,
taking into account income available to pay Rent from the
Development, that the transferee has the capacity and experience
necessary to properly operate a three hundred and forty-four
(344) unit affordable housing development, and that the
transferee has a good reputation in the community for proper
operation and maintenance of developments. Notwithstanding the
above, the following transfers shall not require the consent of
the Lessor: (i) any transfer of Lessee's interest in this Lease
and the Development to an Approved Lender; (ii) any transfer of
Lessee's interest in the Lease and the Development to a
Foreclosure Transferee, and one further transfer of Lessee's
interest in this Lease and the Development by a Foreclosure
Transferee, and (iii) any transfer of Lessee's interest in this
Lease and the Development to BRIDGE Housing Corporation or a
nonprofit affiliate of BRIDGE Housing Corporation._
ARTICLE 3: DEVELOPMENT OF IMPROVEMENTS
3.1 Commencement of Construction
Subject to Section 11.4 below, the Lessee shall commence
construction of the Improvements within one hundred twenty (120)
days after the date a memorandum of this Lease is recorded in the
Official Records of San Diego County, unless such date is
extended by the City Manager in the reasonable exercise of 'his or
her discretion.
3.2 Completion of Construction
The Lessee shall prosecute diligently to completion the
construction of the Improvements, and shall complete construction
by December 31, 1996, subject to Section 11.4 below.
3.3 Construction Pursuant to Permits
The Improvements shall be constructed in accordance with the
terms and conditions of the City's land use permits and approvals
and building permits.
3.4 Egual Opportunity
During the construction of the Improvements there shall be
no discrimination on the basis of race, color, creed, religion,
sex, sexual orientation, age, disability, marital status,
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national origin or ancestry in the hiring, firing, promoting or
demoting of any person engaged in the construction work.
3.5 Liens
Subject to subsection 4.4(d), the Lessee covenants and
agrees promptly to pay all sums legally due and payable by the
Lessee on account of any labor performed or materials supplied
for the Development on which any lien is or can be legally
asserted against the Lessee's leasehold interest in the Land. In
the event any mechanics' or materialmen's lien is filed against
the Development, subject to subsection 4.4(d), the Lessee at its
expense shall promptly cause such lien to be removed by bonding
or otherwise, and the Lessee shall hold the Lessor harmless from
any and all such asserted claims or liens.
3.6 Permits, Licenses and Easements
The Lessor agrees that, within ten (10) days after receipt
of written request from the Lessee, it shall (at no expense to
the Lessor) join in any and all applications for permits,
licenses or other authorizations required by any governmental or
other body claiming jurisdiction in connection with any work the
Lessee may do pursuant to this Lease or the operation of the
Development, and shall also join in any grants of easements for
public utilities useful or necessary to the proper construction
of the Improvements or the operation of the Development.
3.7 Assurances by Lessee
Lessee agrees that it shall not cause the building permit or
other governmental permits and entitlements necessary to
construct the Development to be amended to permit Lessee to
construct less than three hundred and thirty (330) housing units
on the Land, and Lessee agrees to construct not less than three
hundred and thirty (330) housing units on the Land. Lessee
acknowledges that the construction of affordable housing units on
the Land in excess of one hundred and sixty (160) units will
generate affordable housing credits available for sale by the
Lessor to developers that seek to satisfy affordable housing
inclusionary requirements within the city of Carlsbad (said
excess being the "Affordable Housing Credits"). Lessee further
acknowledges and agrees that the Lessor alone shall be entitled
to sell the Affordable Housing Credits, and that the Lessee shall
have no claim whatsoever on the Affordable Housing credits, and
Lessee covenants and agrees to make no such claim. The parties
hereto specifically agree and intend that Aviara Land Associates,
a California Limited Partnership shall be a third party
beneficiary of this Section 3.7 (and no other provision) of this
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Lease, with full right to enforce at its election the provisions
of this Section 3.7, including the right of specific enforcement.
ARTICLE 4: USE AND MAINTENANCE OF THE DEVELOPMENT
4.1 Use of Development
The Lessee shall at all times during the Lease Term use or
cause the Development to be used for the purposes set forth in
this Lease, consistent with all applicable zoning and
environmental laws of any governmental authority having
jurisdiction over the Development, and with all requirements of
Approved Lenders. Lessee agrees to comply with all applicable
and lawful statutes, rules, orders, ordinances, requirements and
regulations of the United States, the State of California, and of
any other governmental authority having jurisdiction over the
Development; provided, however, that Lessee may, in good faith
and on reasonable grounds, dispute the applicability of, or the
v ,alidi ty of any charge, complaint or action taken pursuant to or
under color of, any statute, rule, order, ordinance, requirement
or regulation, defend against the same, and in good faith
diligently conduct any necessary proceedings to prevent and avoid
any adverse consequence of the same. Lessee agrees that any such
contest shall be prosecuted to a final conclusion as speedily as
reasonably possible. The Lessee agrees:
(a) not to use the Development for any disorderly or
unlawful purpose, but only to provide proper housing facilities
and ancillary uses to Tenants, and to maintain the character of
the Development as required by the Affordability Requirements,
the Partnership Agreement, and any Approved Loan Documents, for
so long as such agreements remain in effect;
(b) to use best efforts, taking into account what is
commercially reasonable, including but not limited to seeking
legal or equitable relief, where appropriate, to prevent any
Tenant from committing or maintaining any nuisance or unlawful
conduct on or about the Development;
(c) to use best efforts, taking into account what is
commercially reasonable, to prevent any Tenant from violating any
of the covenants and conditions of this Lease with respect to the
Development;
(d) to use best efforts, taking into account what is
commercially reasonable, if necessary, to abate any violation of
this Lease by any Tenant upon notice from the Lessor; and
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(e) subject to any applicable laws of the State of
California and the rights of Tenants, to permit the Lessor and
its agents to inspect the Development or any part thereof at any
reasonable time during the Lease Term.
4.2 Maintenance of the Development
Subject to Sections 7.3, 8.1 and 8.2, during the term of
this Lease, the Lessee shall perform, or cause to be performed,
all maintenance and repairs necessary to maintain the Development
in good repair and tenantable condition. The Lessor shall have
the right, upon reasonable notice to the Lessee, and subject to
the rights of Tenants, to enter the Development to make
inspections to determine Lessee's compliance with this Section.
4.3 Utilities
The Lessee shall be responsible for the cost of all
utilities, including water, heat, gas, electricity, waste
removal, sewers, and other utilities or services supplied to the
Development and, subject to Section 4.4(d), the Lessee shall pay
or cause same to be paid currently and as due.
4.4 Taxes and Assessments
(a) Payment of Taxes and Assessments. The Lessee covenants
and agrees during the entire Lease Term, at its own cost and
expense, to pay the public officers charged with their
collection, as the same become due and payable and before any
fine, penalty, interest, or other charge may be added to them for
nonpayment, all real estate taxes, general and special, ordinary
and extraordinary, unforeseen as well as foreseen, of any kind
and nature, made, assessed, levied or imposed upon, or due and
payable in connection with, or which become a lien upon, the
Land, the Improvements, or any part of the Land or Improvements,
or upon the Lessee's leasehold interest in the Land pursuant to
this Lease, as well as assessments for sidewalks, streets,
sewers, water, or any other public improvements and any other
improvements or benefits which shall, during the Lease Term, be
made, assessed, levied, or imposed upon or become due and payable
in connection with, or a lien upon the Land, the Improvements, or
any part of the Land or Improvements, or upon the Lessee's
leasehold interest in the Land pursuant to this Lease.
(b) Payment of Fees. The Lessee covenants and agrees
during the entire Lease Term, at its own cost and expense, to
pay, as the same become due and payable and before any fine,
penalty, interest or other charge may be added to them for
nonpayment, license and permit fees, charges for public utilities
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... ';)_ __ ,·
of any kind, and any and all governmental charges relating to the
use or occupancy of the Improvements.
( c)
promptly
received
fees for
4.4.
Copies of Notices to Lessee. The Lessor agrees
to send to the Lessee copies of any and all notices
by it in respect to any taxes, assessments, charges or
which the Lessee is liable pursuant to this Section
(d) Lessee's Right to Contest. If the Lessee disputes any
amount or validity of any liens, taxes, assessments, charges,
penalties or claims, including liens or claims of materialmen,
mechanics or laborers, upon the Land or the Improvements, the
Lessee may contest and defend against the same at its cost, and
in good faith diligently conduct any necessary proceedings in
connection therewith to prevent and avoid the same; provided,
however, that such contest shall be prosecuted to a final
conclusion as speedily as possible. During any such contest, the
Lessee shall (by the payment of such disputed taxes, assessments
or charges, if necessary) prevent any advertisement of tax sale,
any foreclosure of, or any divesting thereby of the Lessor's
title, reversion or other interest in or to the Land and
Improvements.
4.5 Hazardous Materials
(a) Definitions. The following special definitions shall
apply for the purposes of this Section 4.5:
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(i) "Hazardous Materials" shall mean:
(A) any "hazardous substance" as defined in
Section 101(14) of CERCLA (42 U.S.C. Section 9601(14))
or Section 25281(d) or 25316 of the California Health
and Safety Code at such time;
(B) any "hazardous waste, 11 11 infectious waste" or
"hazardous material" as defined in Section 25117,
25117.5 or 25501(j) of the California Health and Safety
Code at such time;
(C) any other waste, substance or material
designated or regulated in any way as "toxic" or
"hazardous" in the RCRA (42 u.s.c. Section 6901 et
seq.), CERCLA Federal Water Pollution Control Act (33 u.s.c. Section 1521 et seq.), Safe Drinking Water Act
(42 U.S.C. Section 3000 (f) et seq.), Toxic Substances
Control Act (15 u.s.c. Section 2601 et seq.), Clean Air
Act (42 u.s.c. Section 7401 et seq.), California Health
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May 21, 2019 Item #4 Page 68 of 105
and Safety Code (Section 25100 et seq., Section 3900 et
seq.), or California Water Code (Section 1300 et seq.)
at such time; and
(D) any additional wastes, substances or material
which at such time are classified, considered or
regulated as hazardous or toxic under any other present
or future environmental or other similar laws relating
to the Development.
(ii) "Hazardous Materials Laws" means all federal,
state, and local laws, ordinances, regulations, orders and
directives pertaining to Hazardous Materials in, on or under the
Development or any portion thereof.
(b) Certain Covenants and Agreements. The Lessee hereby
covenants and agrees as follows:
(i) The Lessee shall not knowingly permit the
Development or any portion thereof to be a site for the use,
generation, treatment, manufacture, storage, disposal or
transportation of Hazardous Materials or otherwise knowingly
permit the presence of Hazardous Materials in, on or under
the Project; provided however that, for the purposes of this
subsection (b) (i) only, the term "Hazardous Materials" shall
not include the following (which shall hereinafter be
referred to as the "Excluded Hazardous Materials"):
construction materials in reasonable quantities for lawful
use in the construction of the Improvements; reasonabie
quantities of gardening materials, household products,
office supply products or janitorial supply products of the
type customarily used in the construction, maintenance,
rehabilitation, or associated with buildings and grounds, or
typically used in household activities, in a manner typical
of other residential housing developments which are
comparable to the Improvements; certain substances which may
contain chemicals listed by the State of California pursuant
to Health and Safety Code Sections 25249.8 et seq., which
substances are commonly used in reasonable quantities and in
a lawful manner by a significant portion of the population
living within the region of the Development, including, but
not limited to, alcoholic beverages, aspirin, tobacco
products, nutrasweet and saccharine.
(ii) The Lessee shall keep and maintain the
Development and each portion thereof in compliance with, and
shall not cause or permit the Development or any portion
thereof to be in violation of, any Hazardous Materials Laws;
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.... , .......
(iii) Upon receiving actual knowledge of the following,
the Lessee shall immediately advise the Lessor in writing
of: (A) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or
threatened against the Lessee or the Development pursuant to
any applicable Hazardous Materials Laws; (B) any and all
claims made or threatened by any third party against the
Lessee or the Development relating to damage, contribution,
cost recovery, compensation, loss or injury resulting from
any Hazardous Materials (the matters set forth in the
foregoing clause (A) and this clause (B) are hereinafter
referred to as "Hazardous Materials Claims"); (C) the
presence of any Hazardous Materials in, on or under the
Development other than Excluded Hazardous Materials; or (D)
the Lessee's discovery of any Hazardous Materials, except
the discovery of any Excluded Hazardous Materials, on any
real property adjoining or in the vicinity of the
Development, which Lessee reasonably believes may impact the
Development. The Lessor shall have the right to join and
participate in, as a party if it so elects, any legal
proceedings or actions initiated in connection with any
Hazardous Materials Claims.
(iv) Without the Lessor's prior written consent, which
shall not be unreasonably withheld, the Lessee shall not
take any remedial action in response to the presence of any
Hazardous Materials on, under, or about the Development
(other than in emergency situations or as required by
governmental agencies having jurisdiction), nor enter'into
any settlement agreement, consent decree, or other
compromise in respect to any Hazardous Materials Claims.
4.6 Non-Discrimination
The Lessee or its designee shall not, in the selection or
approval of Tenants or provision of services or in any other
matter, discriminate against any person or group of persons on
the grounds of race, color, creed, religion, sex, sexual
orientation, marital status, national origin, ancestry, age, or
disability.
4.7 Community Development Block Grant Requirements
Lessee shall comply with all applicable laws and regulations
governing the use of funds as set forth in 24 CFR 570 et seq.,
including (but not limited to) the following requirements, to the
extent applicable:
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(a) Environment and Historic Preservation. Section 104(f)
of the Housing and Community Development Act of 1974 and 24 CFR
Part 58 that prescribe procedures for compliance with the
National Environmental Policy Act of 1969 (42 u.s.c. 4321-4361),
and the additional laws and authorities listed at 24 CFR 58.5.
(b) Applicability of 0MB Circulars. The policies,
guidelines, and requirements of 0MB Circulars Nos. A-87, A-102,
Revised, A-110 and A-122, as they relate to the acceptance and
use of Community Development Block Grant funds.
(c) Architectural Barriers. The requirements of the
Architectural Barriers Act of 1968 (42 u.s.c. 4151-4157).
(d) Lead-Based Paint. The requirement of the Lead-Based
Paint Poisoning Prevention Act, as amended (42 u.s.c. 4821 et
seq.) and implementing regulations at 24 CFR Part 35.
(e) Relocation. The requirements of the Uniform
Relocation Assistance and Real Property Acquisition Policies Act
of 1970, and similar state laws.
(f) Handicap Discrimination. The requirements of Section
504 of the Rehabilitation Act of 1973 (29 U.S.C. 706), and
federal regulations issued pursuant thereto, which prohibit
discrimination against the handicapped in any federally assisted
program.
(g) Training Opportunities. The requirements of Section 3
of the Housing and Urban Development Act of 1968, as amended-(12 u.s.c. 1701), requiring that to the greatest extent feasible
opportunities for training and employment be given to lower
income residents of the project area and agreements for work in
connection with the project be awarded to business concerns which
are located in, or owned in substantial part by persons residing
in, the areas of the project. The Lessee shall include the
following language in all contracts executed under this Lease:
"The work to be performed under this agreement is a project
assisted under a program providing direct federal financial
assistance from the United States Department of Housing and Urban
Development ("HUD") and is subject to the requirements of Section
3 of the Housing and Urban Development Act of 1968, as amended,
12 U.S.C. 1701. Section 3 requires that to the greatest extent
feasible opportunities for training and employment be given to
lower income residents of the project area and agreements for
work in connection with the project be awarded to business
concerns which are located in, or owned in substantial part by
persons residing in, the areas of the project."
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(h) HUD Regulations. Any other HUD regulations present or
as may be amended, added, or waived in the future pertaining to
Community Development Block Grant Funds, including but not
limited to HUD regulations as may be promulgated regarding
subrecipients.
ARTICLE 5: AFFORDABILITY REQUIREMENTS
5.1 Affordability Definitions
The following terms shall have the following meanings as
used in this Article 5:
(a) "Area Median Income" means the median income for the
San Diego Primary Metropolitan Statistical Area ("PMSA"), with
adjustments for household size, as determined from time to time
by the United States Department of Housing and Urban Development
("HUD") pursuant to the United States Housing Act of 1937, as
amended. If HUD no longer publishes such income determinations,
the Lessee shall use the median income for San Diego County as
published by the California Department of Housing and Community
Development ("HCD"). If HCD no longer publishes such income
determinations, the Lessee shall calculate median income in a
manner consistent with the methods previously used by HUD.
(b) "Low Income Household" means a household whose annual
gross income does not exceed the qualifying limits, adjust&d for
household size and other factors, for a lower income household
for the San Diego PMSA, as determined from time to time by HUD
pursuant to the United States Housing Act of 1937, as amended.
If HUD no longer publishes such income determinations, the Lessee
shall use the lower income determination for San Diego County as
published by HCD. If HCD no longer publishes such income
determinations, the Lessee shall calculate lower income in a
manner consistent with the methods previously used by HUD.
(c) "Moderate Income Household" means a household whose
annual gross income does not exceed the qualifying limits,
adjusted for household size and other factors, for a moderate
income household (120% of median income) as determined from time
to time by HCD for San Diego County. If HCD no longer publishes
such income determinations, the Lessee shall calculate moderate
income in a manner consistent with the methods previously used by
HCD.
(d) "Rent" shall mean the total of monthly payments by the
tenants of a Unit for the following: use and occupancy of the
Unit and associated facilities, including parking; any separately
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charged fees or service charges assessed by Lessee which are .
required of all tenants, other than security deposits; the cost
of an adequate level of service for utilities paid by the tenant,
including garbage collection, sewer, water, electricity, gas and
other heating, cooking and refrigeration fuel, but not telephone
service; any other interest, taxes, fees or charges for use of
the Dwelling Unit or associated facilities and assessed by a
public or private entity other than owner, and paid by the
tenant.
(e) "Unit" shall mean one of the three hundred and forty-
four dwelling units in the Development.
5.2 Occupancy of Development.
The Lessee shall limit for the full Lease Term the rental of
one hundred sixty (160) Units to households whose incomes at
initial occupancy do not exceed the income limits for Low Income
Households. The Lessee shall limit for the full Lease Term the
rental of the remaining Units to households whose incomes at
initial occupancy do not exceed the income limits for Moderate
Income Households, excluding any Units utilized for resident
managers.
5.3 Maximum Rental Charges
(a) The total charges for Rent to Low Income Households
shall not exceed the lesser of: (i) the applicable low incqme
housing tax credit rent; or (ii) one-twelfth of thirty percent
(30%) of sixty percent (60%) of Area Median Income, adjusted for
assumed household size pursuant to subsection (c) below;
provided, however, for Low Income Households whose gross income,
upon annual income recertification, exceeds sixty percent (60%)
of Area Median Income, the Lessee may charge Rent equal to the
lesser of (i) the applicable low income housing tax credit rent
if any; or (ii) thirty percent (30%) of the gross income of the
household, adjusted for household size pursuant to subsection (c)
below. In the event a Low Income Household's gross income, upon
annual recertification, exceeds the maximum income for a Low
Income Household, the Lessee shall rent the next available Unit
to a Low Income Household and may charge the over-income
household a rent comparable to the rent which may be charged for
a Moderate Income Household Unit.
(b) The total charges for Rent to Moderate Income
Households shall not exceed one-twelfth of thirty percent (30%)
of one hundred ten percent (110%) of Area Median Income, adjusted
for assumed household size pursuant to subsection (c) below. For
Moderate Income Households whose gross income, upon annual
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. . ~ ....
recertification, exceeds one hundred ten percent (110%) of Area
Median Income, the Lessee may charge a Rent equal to the greater
of: (i) thirty percent (30%) of one hundred and ten percent
(110%) of Area Median Income, adjusted for household size
pursuant to subsection (c) below, or (ii) thirty percent (30%) of
the gross income of the household. In the event a Moderate
Income Household's gross income, upon annual recertification,
exceeds the maximum income for a Moderate Income Household, the
Lessee shall not be required to terminate the tenancy of the
over-income household and shall not be restricted in the rent
charged to the over-income household so long as the over-income
household otherwise remains a tenant in good standing in the
Development.
(c) In calculating the allowable Rent for the Units, the
Lessee shall use the occupancy per unit assumptions used by the
California Tax Credit Allocation Committee ("TCAC'') for so long
as the Development is subject to a TCAC regulatory agreement; and
if the Development is no longer subject to a TCAC regulatory
agreement, the Lessee shall use the occupancy per unit assumption
of one more occupant per unit than the number of bedrooms in the
unit. In no case, however, shall the Lessee be required by this
Lease to use occupancy per unit assumptions which would cause the
Lessee to be in violation of any regulatory agreement recorded
against the Property by any federal or state government agency
or any lender.
ARTICLE 6: MORTGAGE APPROVED LOANS
6.1 Loan Obligations
Nothing contained in this Lease shall relieve Lessee of its
obligations and responsibilities under any Approved Loans to
operate the Development as set forth therein.
6.2 Liens and Encumbrances Against Lessee's
Interest in the Leasehold Estate
(a) Lessee shall have the right to encumber, without the
consent of Lessor, the leasehold estate created by this Lease and
the Improvements with the following:
(i) a deed of trust securing a construction loan for
the Development from a private lender in an amount not to exceed
Twenty-Six Million Five Hundred Thousand Dollars ($26,500,000);
(ii) deed(s) of trust securing permanent loans for the
Development from one or more private lenders in a total amount
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not to exceed Nine Million Five Hundred Thousand Dollars
($9,500,000);
(iii) a deed of trust securing a construction and
permanent loan for the Development from the Carlsbad
Redevelopment Agency in an amount not to exceed one Million Seven
Hundred Twelve Thousand Dollars ($1,712,00);
(iv) a deed of trust securing a construction and
permanent loan for the Development from the Carlsbad
Redevelopment Agency in an amount not to exceed Five Hundred
Thousand Dollars ($500,000); and
(v) Regulatory Agreements of Approved Lenders and of
the California Tax Credit Allocation Committee.
(b) Lessee shall not have the right, without Lessor's
consent, to encumber Lessor's interest in the Land or Lessor's
reversionary interest in the Improvements. If Lessor so
consents, Lessor's liability under such loan shall be limited to
Lessor's property which is security for the loan and Lessor shall
not be personally liable for repayment of such loan.
(c) For as long as there is any lien securing any Approved
Loans:
(1) Lessor shall not agree to any mutual termination
or accept any surrender of this Lease, nor shall Lessor
consent to any amendment or modification of this Lease
without prior written consent of Approved Lenders which have
an outstanding Approved Loan.
(2) Notwithstanding any default by Lessee under this
Lease, Lessor shall have no right to terminate this Lease
unless Lessor shall have given Approved Lenders which have
an outstanding Approved Loan written notice of such default
pursuant to the requirement of Sections 6.2(c)(7) and 11.2
and such Approved Lenders shall have failed to remedy such
default or acquire Lessee's leasehold estate created by this
Lease or commence foreclosure or other appropriate
proceedings as set forth in, and within the time specified
by, subsection 6.2(c) (4) below. In the event that Lessor
receives competing or conflicting offers to cure any
default, Lessor shall 9ccept the offers to cure in the
following order: first, the Lessee or the limited partner
therein, then each Approved Lender in the same relative
priority as their respective deeds of trust or mortgages.
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(3) Any Approved Lender which has an outstanding
Approved Loan shall have the right, but not the obligation,
at any time to pay any or all of the rental due pursuant to
the terms of this Lease, and do any other act or thing
required of Lessee by the terms of this Lease, to prevent
termination of this Lease. Each Approved Lender shall have
ninety (90) days after receipt of notice from Lessor
describing such default to cure the default. All payments
so made and all things so done shall be as effective to
prevent a termination of this Lease as the same would have
been if made and performed by Lessee instead of by Approved
Lender(s).
(4) In addition to the cure period provided in
paragraph (3) above, if the default is such that possession
of the Development may be reasonably necessary to remedy the
default, any Approved Lender which has an outstanding
Approved Loan shall have a reasonable time after the
expiration of such ninety (90) day period within which to
remedy such default, provided that (i) such Approved Lender
shall have fully cured any default in the payment of any
monetary obligations of Lessee under this Lease within such
ninety (90) day period and shall continue to pay currently
such monetary obligations when the same are due, (ii) such
Approved Lender shall have acquired Lessee's leasehold
estate hereunder or commenced foreclosure or other
appropriate proceedings prior to or within such period, and
shall be diligently prosecuting the same; and (iii) after
gaining possession of the Development, the Approved Lender
shall have cured all non-monetary defaults capable of cure
by the Approved Lender and performed all obligation of
Lessee capable of performance by the Approved Lender when
the obligations are due.
(5) Any default under this Lease which by its nature
cannot be remedied by any Approved Lender shall be deemed to
be remedied if (i) within ninety (90) days after receiving
written notice from Lessor describing the default, or prior
thereto, any Approved Lender shall have acquired Lessee's
leasehold estate or commenced foreclosure or other
appropriate proceedings, (ii) the Approved Lender shall
diligently prosecute any such proceedings to completion,
(iii) the Approved Lender shall have fully cured any default
in the payment of any monetary obligations of Lessee
hereunder which does not require possession of the
Development, and (iv) after gaining possession of the
Development, the Approved Lender shall perform all other
obligations of Lessee hereunder capable of performance by
the Approved Lender when the obligations are due.
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(6) If Approved Lenders are prohibited, stayed or
enjoined by any bankruptcy, insolvency or other judicial
proceedings involving Lessee from commencing or prosecuting
foreclosure or other appropriate proceedings, the times
specified for commencing or prosecuting such foreclosure or
other proceedings shall be extended for the period of such
prohibition; provided that any Approved Lender shall have
fully cured any default in the payment of any monetary
obligations of Lessee under this Lease and shall continue to
pay currently such monetary obligations when the same fall
due; provided, further, that such Approved Lender shall not
interfere with Lessor's efforts to seek compliance by the
Lessee with any n6n-monetary obligation under this Lease.
(7) Lessor shall mail or deliver to any Approved
Lenders which have any outstanding Approved Loan a duplicate
copy of all notices which Lessor may from time to time give
to Lessee pursuant to this Lease. No notice by Lessor to
Lessee hereunder shall be effective unless and until a copy
of the notice shall have been mailed or delivered to such
Approved Lenders as set forth in this Section 6.2(c)(7).
All notices delivered by Lessor to any Approved Lenders
shall also comply with the notice provisions of Section
11.2.
(8) In the event any Foreclosure Transferee becomes
Lessee under this Lease by means of foreclosure or deed in
lieu of foreclosure or pursuant to any new lease obtained
under subsection (9) below, that Foreclosure Transferee
shall be personally liable under this Lease or such new
lease only for the period of time that Foreclosure
Transferee remains lessee thereunder. Nothing in this
Section shall be construed to obligate any Foreclosure
Transferee to remedy any default of Lessee, and any failure
of any Approved Lender to complete any such cure after
commencing the same shall not give rise to any liability of
any Approved Lender to Lessor or Lessee.
(9) In the event a Foreclosure Transferee becomes the
legal owner of the leasehold estate, and upon written
request by Foreclosure Transferee given within sixty (60)
days after becoming the legal owner of the leasehold estate,
Lessor shall enter into a new lease of the Land with the
Foreclosure Transferee for the remainder of the Lease Term
with the same agreements, covenants, reversionary interests
and conditions (except for any requirements which have been
fulfilled by Lessee prior to termination) as are contained
in this Lease and with priority equal to this Lease;
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provided, however, that the Foreclosure Transferee shall
promptly cure any defaults by Lessee susceptible to cure by
the Foreclosure Transferee.
(10) If the Lease is terminated by a bankruptcy
proceeding, foreclosure or by other operation of law, Lessor
shall upon request by an Approved Lender, execute a new
lease of the Land to Approved Lender or other transferee, as
the case may be, on the same terms and conditions as this
Lease, except that the term will commence on the date of the
new lease and will continue for the remaining unexpired term
of this Lease.
(11) Any limited partners of Lessee shall have the same
rights as any Approved Lender authorized under paragraphs
(2), (3) and (7) of this Section 6. 2 (c) of this Lease and
any reference to a Approved Lender in paragraphs (2), (3)
and (7) of this Section 6.2(c) shall be deemed to include
such limited partners.
(12) Lessor· shall cooperate in including in this Lease
by suitable amendment from time to time any provision which
may reasonably be requested by any proposed leasehold
mortgagee for the purpose of implementing the mortgagee-
protection provisions contained in this Lease and allowing
such leasehold mortgagee reasonable means to protect or
preserve the lien of the leasehold mortgage and the value of
its security. Lessor agrees to execute and deliver (and to
acknowledge, if necessary, for recording purposes) any
agreement necessary to effect any such amendment; provided,
however, that any such amendment shall not in any way affect
the Lease Term or rent under this Lease nor otherwise in any
material respect adversely affect any rights of Lessor under
this Lease.
(13) Notwithstanding anything to the contrary contained
in this Section 6.2(c), to effect a cure of a default by
Lessee, an Approved Lender shall not be required to pay any
accrued Rent or interest thereon.
6.3 Cost of Approved Loans to be Paid by Lessee
The Lessee affirms that it shall bear all of the costs and
expenses in connection with (i) the preparation and securing of
the Approved Loans, (ii) the delivery of any instruments and
documents and their filing and recording, if required, and
(iii) all taxes and charges payable in connection with the
Approved Loans.
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6.4 Proceeds of Approved Loans
It is expressly understood and agreed that all Approved Loan
proceeds shall be paid to and become the property of Lessee, and
that the Lessor shall have no right to receive any such Approved
Loan proceeds.
6.5 Subordination of Lessor's Fee Interest
In addition to Lessee's right to encumber its leasehold
estate in the Land and its fee interest in the Improvements,
Lessor agrees to encumber its fee title in the Land with the
encumbrances and liens described in Section 6.2(a) above. Upon
written request by Lessee, Lessor agrees to provide the
subordination provided in this Section 6.5, subject to the
conditions described in this Lease, including the following:
(a) The liability of Lessor under any documents executed in
connection with any Approved Loan shall be limited by the express
terms of the instrument of subordination. The limitations shall
include: (i) the limitation of Lessor's liability solely to the
interest or interests subordinated, Lessor's right not to execute
any instrument which would obligate Lessor for the payment of the
Approved Loan, and the Approved Lender's express recognition that
Lessor is not so obligated; and (ii) the Approved Lender's
agreement to provide Lessor with notice of any default under the
Approved Loan, and the right, without the obligation, within the
same time provided to Lessee, to cure any default or to purchase
the Approved Lender's rights under the Approved Loan Docum~nts
and other debt and security interests for an amount equal to the
sum of the unpaid principal balance, plus accrued interest and
other amounts evidenced and secured thereby.
(b) Lessee shall not be in Material Default under the terms
of this Lease at the time of a request for subordination of
Lessor's fee interest. "Material Default" shall mean any
material breach by Lessee under this Lease, including, without
limitation, the failure to pay Rent then due and payable, or, the
filing of a bankruptcy petition by or against Lessee. Lessee
shall not be in Material Default if Lessee has commenced to cure
the Material Default at the time in question and diligently
pursues such cure to completion.
(c) Provided the conditions of this Section 6.5 are
satisfied, Lessor shall, within ten (10) days after written
request by Lessee, execute, acknowledge and deliver a deed of
trust or other instrument of subordination, together with other
documents as may be reasonably required by the Approved Lender
from Lessor to effectuate the provisions of this Section 6.5,
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without any charge by Lessor to Lessee therefor, subject to the
terms and conditions contained in this Lease. Lessor will
immediately pay over to Lessee proceeds received by Lessor, if
any, of any Approved Loan and the proceeds of any Approved Loan
received by Lessor shall be considered a trust fund to be paid to
Lessee. The agreement of subordination contained herein shall be
self-operative and no further instrument of subordination shall
be necessary unless it be required by an Approved Lender. If any
proceeds are made payable to both Lessor and Lessee, Lessor shall
immediately sign any papers necessary to transfer the proceeds to
Lessee.
6.6 Notice and Right to Cure Defaults Under Approved Loans
Upon the recording of a Memorandum of Lease or this Lease,
Lessor may record in the office of the Recorder of the county in
which the Land is situated a request for notice of any default
under each Approved Loan. In the event of default by Lessee
under an Approved Loan, Lessor shall have the right, but not the
obligation, to cure the default. Any payments made by Lessor to
cure a default shall be treated as rent due from Lessee which
shall be paid within thirty (30) days of the date on which the
payment was made by the Lessor.
ARTICLE 7: INSURANCE
7.1 Required Insurance Coverage
(a) Fire and Extended Coverage Endorsement. The Lessee
shall during the Lease Term keep the Development insured against
loss or damage by a standard all risk policy in amounts not less
than the replacement value of the Development, or should
insurance in such amount not be reasonably and commercially
available, such lesser amount as may be acceptable to both Lessor
and Approved Lenders. The amount of such insurance shall be
adjusted by reappraisal of the Improvements by the insurer or its
designee at least once every five (5) years during the Lease
Term, if requested by Lessor. If an all risk policy insuring the
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full replacement value of the Development is not reasonably and
commercially available, Lessee shall use best efforts to obtain
and maintain an extended coverage endorsement that ensures the
full replacement value of the Development as soon as such
coverage becomes commercially and reasonably available.
(b) Liability and Property Damage Insurance. During the
Lease Term, the Lessee shall keep in full force and effect a
policy or policies of comprehensive general liability and
property damage insurance against liability for bodily injury to
or death of any person or property damage arising out of an
occurrence on or about the Development. The limits of such
insurance shall be not less than one million dollars ($1,000,000)
combined single limit for bodily injury and property damage. The
limits of the insurance shall be adjusted once every five (5)
years if and as reasonably required by Lessor.
(c) Workers' Compensation Insurance. The Lessee shall
carry or cause to be carried workers' compensation insurance
covering all persons employed by Lessee in connection with the
Development and with respect to whom death, bodily injury, or
sickness insurance claims could be asserted against the Lessor or
Lessee.
(d) Builders' Risk Insurance. During the course of any
alteration, construction or reconstruction, the cost of which
exceeds one hundred thousand dollars ($100,000), the Lessee shall
require any contractor to provide builders' risk insurance for
not less than one million dollars ($1,000,000) combined single
limit for bodily injury or property damage insuring the interests
of Lessor, Lessee and any contractors and subcontractors.
7.2 Insurance Policies and Premiums
(a) All liability policies required by this Lease or any
Approved Loan Document shall name the Lessor as an additional
insured. Duplicate copies of such policies or certificates of
such insurance shall be promptly furnished to the Lessor.
(b) To the extent obtainable, any policy of insurance shall
provide that any change or cancellation of said policy must be
made in writing and sent to Lessee and Lessor at their respective
principal offices at least thirty (30) days before the effective
date of change or cancellation.
7.3 Proceeds of Insurance
(a) For so long as any Approved Loan on the Development is
outstanding: All fire and standard risk or extended coverage
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·•;t.,.o,·
(casualty) insurance proceeds shall be applied to the payment of
the costs of repairing or rebuilding that part of the Development
damaged or destroyed if (i) the Lessee agrees in writing within
ninety (90) days after payment of the proceeds of insurance that
such repair or rebuilding is economically feasible, and (ii) each
Approved Lender with an outstanding Approved Loan permits such
repairing or rebuilding, provided that the extent of Lessee's
obligation to restore the Development shall be limited to the
amount of the insurance proceeds. If the Development is not
repaired or rebuilt, all such proceeds shall be applied in a
manner consistent with the terms of the Approved Loans.
(b) In the event that no Approved Loan is outstanding, all
insurance proceeds received under the policies set forth in this
Article 7 shall be paid to the Lessee, provided that the Lessee
shall apply such proceeds, to the extent possible, to
reconstruction or repair in a manner consistent with the
provisions of Section 8.2.
7.4 Indemnification
(a) Lessee shall indemnify and save harmless Lessor, its
councilmembers, officers, employees, agents, and contractors,
utilizing attorneys approved by the Lessor from all claims,
actions, demands, judgements, settlements, costs, expenses and
attorneys' fees arising out of, attributable to or otherwise
occasioned, in whole or in part, by any act or omission of
Lessee, its partners, agents, contractors, servants, employees or
invitees, arising from or relating to operation of the •
Development.
(b) Lessor shall indemnify and save harmless Lessee, its
partners, officers, employees, agents, contractors, or the
partners, officers, employees, agents, contractors, stockholders
or principals of its partners, utilizing attorneys approved by
the Lessee, from all claims, actions, demands, judgements,
settlements, costs, expenses and attorneys' fees arising out of,
attributable to or otherwise occasioned, in whole or in part, by
any act or omission of Lessor, its agents, contractors, servants,
employees or invitees, arising from or relating to operation of
the Development.
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ARTICLE 8:
t--.,.,
CONDEMNATION, DAMAGE OR DESTRUCTION OF THE
DEVELOPMENT
8.1 Condemnation
If the Development or the Land or any part thereof shall be
taken or condemned, for any public or quasi-public purpose or use
by any competent entity in appropriate proceedings, or by any
right of eminent domain, the Lessor and Lessee shall request that
awards and other payments on account of a taking of the
Development and the Land (less costs, fees and expenses incurred
by Lessor and Lessee in connection with the collection thereof)
shall be divided by the presiding court between loss of value of
the fee interest in the Land and loss of value of the
Development. In any case, subject to the rights of Approved
Lenders under the Approved Loan Documents, such awards and
payments shall be applied as follows:
(a) Net awards and payments received on account of a partial
taking of the Development, other than a taking for a temporary
use not exceeding one (1) year, shall be allocated and paid in . . . \ the following order of priority:
(1) If Lessee reasonably believes restoration is
economically feasible, and unless Lessee is then in default and
the opportunity to cure has expired under the Approved Loan
Documents, first, to pay the cost of restoration of the
Development, provided that the extent of Lessee's obligations to
restore the Development shall be limited to the amount of the net
award and payment received on account of the taking. Lessee
shall furnish to Lessor evidence reasonably satisfactory to
Lessor of the total cost of the restoration of the Development.
In such event, the condemnation proceeds shall be paid into the
Construction Fund described in Section 8.2 below, subject to the
rights of Approved Lenders to collect and disburse such funds.
(2) Second, or first if (i) Lessee does not reasonably
believe that restoration is economically feasible, or (ii) Lessee
is in default and the opportunity to cure has expired under the
Approved Loan Documents, to any Approved Lenders (in the order of
their respective lien priority, if there is more than one
Approved Lender) in an amount equal to the decrease (if any) in
the value of the security for their respective Approved Loans as
a result of the partial taking (calculated as set forth below in
this subsection 8.l(a) (2)), less amounts payable to or recovered
by the Approved Lender pursuant to such taking, but not to exceed
the unpaid balance of their Approved Loans. For purposes of this
subsection 8.l(a) (2), the amount of decrease in the value of the
security for an Approved Loan shall be the amount, if any,
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necessary to reduce the outstanding principal of said Approved
Loan such that the Loan to Value Ratio (as defined below) of said
Approved Loan immediately following the taking is equal to the
Loan to Value Ratio of said Approved Loan immediately preceding
the taking. Loan to Value Ratio shall mean that fraction the
numerator of which is the sum of the principal amount of the
Approved Loan plus the principal amounts of all Approved Loans
higher in lien priority to the Approved Loan either immediately
following the taking (after taking into account any paydown
pursuant to this subsection of any loans of higher priority) or,
immediately preceding the taking, as applicable, and the
denominator of which is the appraised value of the Development
immediately following the taking or immediately preceding the
taking, as applicable. The values of the Development immediately
preceding the taking and immediately following the taking shall
be determined by an MAI or SRI appraiser selected by Lessee and
who is reasonably satisfactory to Lessor.
(3) The balance, if any, shall be divided between
Lessor and Lessee in the manner specified in subparagraph (e)
below; provided, however, if the taking has no effect on the
value of the Lessor's fee interest in the Land or reversionary
interest in the Improvements, the balance shall be paid
exclusively to Lessee.
(b) Net awards and payments received on account of a
partial or total taking of only Lessor's fee interest in the Land
or the reversionary interest in the Improvements (that is, .a
taking of Lessor's fee interest in the Land or Lessor's ·
reversionary interest in the Improvements that has no effect on
the value of Lessee's leasehold interest in the Land or Lessee's
fee interest in the Improvements), including severance damages,
shall be paid to Lessor, subject to the rights of any Approved
Lenders to which the Lessor has subordinated its fee interest in
the Land, which amount shall be free and clear of any claims of
Lessee, or any other persons claiming rights to the Land through
or under Lessee, other than Approved Lenders to which the Lessor
has subordinated its interest in the Land.
(c) Net awards and payments received on account of a taking
for temporary use not exceeding one (1) year and relating to a
period during the Lease Term shall be paid to Lessee; provided,
however, that if such taking for temporary use has resulted in
any damage to or destruction of the Development, such net awards
and payments shall be first applied to pay the cost of
restoration thereof if the Lessee determines that restoration is
economically feasible. Net awards and payments received on
account of a taking for temporary use not exceeding one (1) year
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and relating to a period beyond the Lease Term shall be paid to
Lessor.
(d) Net awards and payments received on account of a total
taking of the Development shall be allocated and paid in the
following order of priority:
(1) First, to any Approved Lenders with then-
outstanding Approved Loans secured by the Development (in the
order of their respective lien priority, if there is more than
one Approved Lender), an amount equal to the unpaid balance
secured by their respective Approved Loans to the extent there
are sufficient funds to make such payments;
(2) The balance, if any, shall be divided between
Lessor and Lessee in the manner specified in subparagraph (e)
below; provided, however, if the taking has no effect on the
value of the Lessor's fee interest in the Land or reversionary
interest in the Improvements, the balance shall be paid
exclusively to Lessee.
(e) For purposes of subsections (a) (3) and (d) (2) above,
first Lessee shall receive reimbursement for any funds it has
reasonably expended for repair and/or reconstruction of the
Development (other than funds received from Approved Lenders).
Second, Lessor shall receive that portion of the remaining sum
equal to such remaining sum, multiplied by a fraction the
numerator of which is the number of years elapsed from the date
of the Lease to the date of the taking, and the denominator of
which is fifty-seven (57). Third, Lessee shall receive all
remaining sums.
(f) Lessee shall receive any award granted for or allocated
to trade fixtures, moving expenses or loss of business.
(g) If the Development is taken or condemned during the
last five (5) years of the Lease Term under circumstances
described in subparagraph (a) above, Lessee may elect to
terminate the Lease and proceeds of any payment or award shall be
distributed in accordance with the provisions of subparagraphs
(d) and (e) above.
8.2 Administration of Construction Fund in the Event of
Condemnation. or Damage or Destruction of Development
In the event that the Approved Loans have been paid in full,
and if the Development or any part of it is to be repaired or
reconstructed, after damage or destruction of the Development or
its condemnation, all proceeds collected under any and all
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policies of insurance referred to in Article 7 above covering
such damage or destruction, or all compensation received for such
taking by the exercise of the power of eminent domain, shall be
paid into a special trust fund to be created and held by the
Lessee and to be designated as the Construction Fund, during such
repairing or reconstructing. Any surplus of such insurance or
condemnation proceeds remaining after the completion of all
payments for such repairing or reconstructing shall be held or
applied by the Lessee in a manner consistent with the applicable
provision of Article 7 or this Article.
8.3 Lessee. Lessor, Approved Lenders to be Made Parties in
Legal Proceedings
(a) In the event proceedings shall be instituted (i) for
the exercise of the power of eminent domain, or (ii) as a result
of any damage to or destruction of the Development, resulting
proceeds shall be paid to the Approved Lenders for application or
disbursement in accordance with the Approved Loan Documents. The
Lessee, Lessor, and, as necessary, any Approved Lender with a
then-outstanding Approved Loan shall be made parties to those
proceedings, and if not made parties by the petitioning party,
shall be brought into the proceedings by appropriate proceedings
of other parties so that adjudication may be made of the damages,
if any, to be paid to the Lessee, Lessor and Approved Lenders as
compensation for loss of their rights in the Improvements or the
Land, or for damage to or destruction of the Development. Should
Lessor or Lessee receive notice of institution of any proceedings
subject to Section 8.1, the party receiving such notice shall
notify the other in accordance with Section 11.2 of this Lease,
not later than thirty (30) days after receiving such notice.
(b) The Lessor and the Lessee shall cooperate and consult
with each other in all matters pertaining to the settlement,
compromise, arbitration, or adjustment of any and all claims and
demands for damages on account of damage to or destruction of the
Development, or for damages on account of the taking or
condemnation of the Improvements or the Land.
8.4 Termination
In the event of a total taking or in the event of damage,
destruction, or a partial taking, other than a temporary taking
of the Development, which Lessee reasonably determines renders
continued operation of the Development infeasible both as a whole
and in substantial part, this Lease shall terminate (except if
Lessee is rebuilding the Development in accordance with the terms
of this Lease), and in such event any proceeds shall be allocated
pursuant to Section 7.3 or Article 8, as appropriate. In the
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event of a partial taking that does not result in termination
pursuant to this Section 8.4, this Lease shall remain in full
force and effect as to the portion of the Development remaining,
except that Rent otherwise payable hereunder shall be equal to an
amount determined by multiplying the Rent by the ratio that the
number of square feet in the Improvements after such taking bears
to the number of square feet in the Improvements prior to the
taking.
ARTICLE 9: ASSURANCES OF LESSOR
9 .1 Lessor to Give Peaceful Possession
The Lessor covenants that it owns in fee simple, and that it
has good and marketable title to the Land and that the Land is
free of all easements, covenants, conditions and restrictions
except for those exceptions set forth in Exhibit B to this Lease.
The Lessor has the full right and authority to make this Lease.
The Lessor covenants and warrants that the Lessee and its Tenants
shall have, hold and enjoy, during the Lease Term, peaceful,
quiet and undisputed possession of the Land without hindrance or
molestation by or from anyone so long as the Lessee is not in
default under this Lease following the expiration of all
applicable notice and cure periods.
9.2 Lessor to Lease Development with Marketable Title
Except as disclosed in Section 9.1, Lessor covenants and
warrants that, there are no outstanding liens or encumbrances on
the Land.
9.3 Lessor to obtain Necessary Governmental Approvals
The Lessor covenants that all necessary approvals have been
obtained from any and all governmental agencies in compliance
with all laws, ordinances, and regulations requisite to leasing
of the Land.
9.4 Release of Lessor
Lessor may sell, assign, transfer or convey (but not
encumber) all or any part of Lessor's interest in the Land,
reversionary interest in the Improvements or this Lease without
obtaining Lessee's consent, provided that the purchaser,
assignee, or transferee: (i) expressly assumes all of the
obligations of the Lessor under this Lease by a written
instrument in a form reasonably satisfactory to Lessee and
recordable in the Official Records of the County of San Diego;
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and (ii) executes necessary documentation to effect continued
subordination of the fee interest in the Land to Approved Lenders
who have required subordination pursuant to Section 6.5 above.
In the event Lessor intends to sell all or any part of the Land,
Lessor shall notify Lessee of such intention not later than ten
(10) days before close of escrow. In the event of a sale,
assignment, transfer or conveyance by Lessor of the Land or its
rights under this Lease, the same shall operate to release Lessor
from any future liability upon any of the covenants or conditions
of this Lease, expressed or implied, in favor of Lessee, and in
such event Lessee shall look solely to the successor in interest
of Lessor in and to the Land or this Lease. This Lease shall not
be affected by any such sale or transfer, and Lessee agrees to
attorn to any such purchaser or assignee.
9.5 Encumbrance by Lessor
Except as provided in Section 6.5 and except as disclosed in
Sections 9.1 and 9.2, Lessor shall not encumber or hypothecate
its interest in the Land or any part thereof with any mortgage,
deed of trust or other form of security interest. Any existing
mortgagee shall agree in writing in form satisfactory to Lessee
not to disturb Lessee's possession of the Land in the event such
mortgagee should foreclose or otherwise exercise its remedies
under its loan documents provided Lessee agrees to attorn to such
mortgagee.
ARTICLE 10: DEFAULTS AND REMEDIES
10.1 Events of Default; Remedy for Default by Lessee
(a) Any one or more of the following events shall
constitute an "Event of Default":
(1) Failure to pay rent, as required pursuant to
Section 2.3 of this Lease, or any other payment required
hereunder, and continuance of such failure for a period of
thirty (30) days after receipt by the Lessee of written
notice specifying the nonpayment;
(2) Failure of the Lessee to observe and perform any
covenant, condition or agreement hereunder on its part to be
performed, and (i) continuance of such failure for a period
of thirty (30) days after receipt by the Lessee of written
notice specifying the nature of such default, or (ii) if by
reason of the nature of such default the same cannot be
remedied within said thirty (30) days, the Lessee fails to
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proceed with reasonable diligence after receipt of said
notice to cure the same; or
(3) Lessee's abandonment of the Land for the period of
time required for such abandonment to be legally recognized
as such under California law; or
(4) A general assignment by Lessee for the benefit of
creditors; or
(5) The filing of a voluntary petition by Lessee, or
the filing of an involuntary petition by any of Lessee's
creditors seeking the rehabilitation, liquidation or
reorganization of Lessee under any law relating to
bankruptcy, insolvency or other relief of debtors, provided
that in the case of an involuntary petition Lessee shall
have ninety (90) days to cause such petition to be withdrawn
or dismissed; or
(6) The appointment of a receiver or other custodian
to take possession of substantially all of Lessee's assets
or of this leasehold, which appointment is not withdrawn or
dismissed within ninety (90) days, excluding any
receivership initiated by an Approved Lender which shall not
constitute an Event of Default hereunder; or
(7) Lessee becomes insolvent or declares in writing it
is unwilling to pay its debts as they become due; or any
court enters a decree or order directing the winding up or
liquidation of Lessee or of substantially all of its assets;
or Lessee takes any action toward the dissolution or winding
up of its affairs or the cessation or suspension of its use
of the Development; or
(8) attachment, execution or other judicial seizure of
substantially all of Lessee's assets or this leasehold,
which is not dismissed, bonded, or stayed within ninety (90)
days.
(b) In the event Lessee fails to cure any default within
the applicable cure period, any limited partner of Lessee shall
have the same rights as provided Approved Lenders with
outstanding loans under Section 6.2(c) (2), (3) and (7), which
provisions shall be for the benefit of such limited partners of
Lessee .
(c) Whenever any default shall have occurred and be
continuing and upon expiration of any applicable cure periods
provided herein, and subject to the cure rights of Approved
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tr _ ••
Lenders and limited partners of Lessee set forth in this Lease,
the Lessor may take whatever action at law or in equity as may
appear reasonably necessary to enforce performance or observance
of any obligations, agreements, or covenants of the Lessee under
this Lease, including without limitation, termination of this
Lease. In the event of such default, Lessor's remedies shall be
cumulative, and no remedy expressly provided for in this Section
shall be deemed to exclude any other remedy allowed by law.
10.2 Remedy for Default by Lessor
If the Lessor defaults under this Lease, the Lessee shall
give the Lessor and the Approved Lenders written notice requiring
that the default be remedied by the Lessor. If the default is
not cured within the time set forth by the Lessee (which shall be
a reasonable time for curing the default and shall in any event
be at least thirty (30) days), the Lessee and Approved Lenders
may take any action as may be necessary to protect their
respective interests. Such action, in the event that the Lessor
shall fail to perform any of its obligations under this Lease and
such failure shall continue after the expiration of the cure
period specified in this section, shall include the right of the
Lessee and Approved Lenders to cure such default and receive
reimbursement for any expenditure with interest thereon (at the
reference rate then in effect at Wells Fargo Bank, N.A) from
Lessor within thirty (30) days after sending to Lessor a
statement therefor.
ARTICLE 11: MISCELLANEOUS
11.1 Instrument Is Entire Agreement
This Lease and the attached Exhibits constitute the entire
agreement between the parties with respect to the matters set
forth herein. This Lease shall completely and fully supersede
all other prior understandings or agreements, both written and
oral, between the Lessor and the Lessee relating to the lease of
the Land by the Lessor to the Lessee.
11. 2 Notices
All notices hereunder shall be in writing signed by
Authorized Officer(s) and shall be sufficient if sent by United
States first class, certified mail, postage prepaid, or express
delivery service with a receipt showing the date of delivery,
addressed:
if to the Lessor:
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with a copy to:
if to the Lessee:
City Hall
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Attention: City Manager
City of Carlsbad
Housing & Redevelopment
Department
2965 Roosevelt Drive, Suite B
Carlsbad, CA 92008
Attention: Housing & Redevelopment
Director
La Terraza Associates, a California
Limited Partnership
One Hawthorne, 4th Floor
San Francisco, CA 94105
Attn: Managing General Partner
following notice to the Lessor that Mission Housing (or its
affiliate) has been admitted as a limited partner of Lessee, with
a copy to:
Mission Housing
18101 Von Karman Ave., Suite 1700
Irvine, CA 92715-1046
Attn: Asset Manager
following notice to the Lessor that Great Western Savings (or its
affiliate) has closed its permanent loan(s) for the Development,
with a copy to:
Great
835 -
Santa
Attn:
Western Bank
4th Street
Rosa, CA 95404
Bill Wright
or any other address as either party may have furnished to the
other in writing pursuant to the requirements of this Section
11.2 as a place for service of notice. Any notice so mailed
shall be deemed to have been given on the delivery date or the
date that delivery is refused by the addressee, as shown on the
return receipt.
11.3 Limited Partner Consent
Lessor and Lessee may not mutually agree to terminate or
surrender this Lease without the consent of the limited partner
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of Lessee and all Approved Lenders who continue to have a
security interest in the Land or the Development.
11.4 Force Majeure.
Performance by either party hereunder shall not be deemed to
be in default where defaults are due to war; insurrection;
strikes; lock-outs; riots; floods; earthquakes; fires;
casualties; acts of God; acts of the public enemy; epidemics;
quarantine restrictions; freight embargoes; governmental
restrictions or priority; litigation (including suits filed by
third parties concerning or arising out of this Lease); weather
or soils conditions which, in the opinion of the Lessee's
contractor, will necessitate delays; inability to secure
necessary labor, materials or tools; delays of any contractor,
sub-contractor or supplier; acts of the other party; acts or
failure to act of any public or governmental agency or entity
(other than the acts or failure to act of the Lessor); or any
other causes (other than Lessee's inability to obtain financing
for the Development) beyond the control or without the fault of
the party claiming an extension of time to perform. Times of
performance under this Lease may also be extended in writing by
the Lessor and the Lessee.
11.5 Recording
A Memorandum of this Lease shall be recorded in the Office
of the Recorder in the county in which the Development is
located.
11.6 Non-Waiver of Breach
Neither the failure of the Lessor or the Lessee to insist
upon strict performance of any of the covenants and agreements of
this Lease nor the failure by the Lessor or Lessee to exercise
any rights or remedies granted to such parties under the terms of
this Lease shall be deemed a waiver or relinquishment (i) of any
covenant herein contained or of any of the rights or remedies of
the Lessee or Lessor hereunder, (ii) of the right in the future
of the Lessor or Lessee to insist upon and to enforce by any
appropriate legal remedy a strict compliance with all of the
covenants and conditions thereof, or (iii) the right of the
Lessor to recover possession of the Land upon occurrence of a
default and the expiration of applicable notice and cure periods
or the expiration of the Lease Term.
11.7 Effective Date; Counterparts
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,.:,.•,
This Lease shall become effective upon the commencement of
the Lease Term set forth in Article 2. This Lease may be
executed in counterparts, each of which shall be an original and
all of which shall constitute the same instrument.
11.8 Lease Binding on Successors
This Lease and all of its provisions and attached Exhibits
shall inure to the benefit of, and shall be binding upon, the
Lessor, the Lessee, and their respective permitted successors and
permitted assigns and, as provided in Sections 6.2(c) (10) and
10.l(b), Approved Lenders and limited partners of Lessee.
11.9 Relationship of Parties
Nothing contained in this Lease shall be deemed or construed
by the parties or by any third party to create the relationship
of principal or agent or of partnership, joint venture or
association or of buyer and seller between Lessor and Lessee, it
being expressly understood and agreed that neither the
computation of any payments and other charges under the terms of
this Lease nor any other provisions contained in this Lease, nor
any act or acts of the parties, shall be deemed to create any
relationship between Lessor and Lessee other than the
relationship of landlord and tenant.
11.10 No Merger
There shall be no merger of this Lease or any interest in
this Lease nor of the leasehold estate created hereby, with the
fee estate in the Land, by reason of the fact that this Lease or
such interest therein, or such leasehold estate may be directly
or indirectly held by or for the account of any person who shall
hold the fee estate in the Land, or any interest in such fee
estate, nor shall there be such a merger by reason of the fact
that all or any part of the leasehold estate created hereby may
be conveyed or mortgaged in a leasehold mortgage to a leasehold
mortgagee who shall hold the fee estate in the Land or any
interest of the Lessor under this lease.
11.11 Gender and Number
Words of any gender used in this Lease shall be held to
include any other gender, and any words in the singular number
shall be held to include the plural (and vice versa), when the
context requires.
11.12
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The titles and article or paragraph headings are inserted
only for convenience, and are in no way to be construed as a part
of this Lease or as a limitation on the scope of the particular
provisions to which they refer.
11.13 Severability
If any provision of this Lease or the application of any
provision to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Lease, or the
application of such provision to persons or circumstances other
than those as to which it is invalid or unenforceable, shall not
be affected, and each provision of this Lease shall be valid and
be enforced to the fullest extent permitted by law.
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EXHIBIT A
Legal Description
PAACEL 1 OF CERTIFICATE OF COM?L!ANCE RECORDED JULY 1, 1994 AS FIU: NO.
1954•0418120, OFFICIAL RECORDS Ah"D DESCRIBED AS FOLLOWS:
AU, TJUT PORTION OF PAACEL 2 OF PAACEL M1Jl 1188, RECORDED: DECEY.BER 20, 1972,
AS FILE NO. 3t0334, BEING A PORTION OF FRACTIONJ.J.. SECTION 23, TOW?~SHIP 12
SOUTH, RANGE 4 WEST, ~ BERNARDINO !-:F.RIDIAN, BEING 'WITHIN THE CITY OF
CAP.l,SaJ.D, com--n· OF SAN DIEGO, STATE OF CALIFORNIJ.., BEING MORE: PAATICtTLAAl..Y
DESCRIBED AS FOLLOWS:
BEGU,"NING AT niE NORT'liii,"EST COJU.."ER OF SAID PAACEL; 'niENCE EASTERLY ;.J.,ONG TH:E
NORTHERLY LINE OF SAID PAACEL, SOUTH 89° 26' 14~ EAST, 1347.93 FEET (RECOP.D:
SO'JI"H 89° 27' 42~ EAST, 1347.93 PM 1188), TO THE NOR~T COJU.."ER OF SAID
PAACEL 2; .THENCE SOtn'HERLY Al.QNG THE EASTERLY LINE OF SUD PAACEL, SOUTH 0 O 3 3'
OB" wtST, 6.99' (RECORD: SOUTH 0° 33' 17" WEST, PM 1188), TO A LINE BEING 45.00
FEET W!STERL Y I.ND PAAJ.l...UL 'WITH THE CEITT'EP.l.INE OF EL 0-IY.INO JU:J..L AS SHOWN ON
ROAD StTRVEY 1800·1; THENCE SOUTHERLY IJ\'"D P~L 'WITH SA!D CEITT'ERLih"E, SOtrrr.
37° 03' 37" WEST, 253.SB FEET (RECORD: SOUTH 37° 03' S6~ WEST, RS. 1800·1), TO
THE BEGINN!NG OF A TANGEh"T 1S4S. 00 FOOT RADIOS CURVE, CONCAVE SOu'l1{'USTEiU.Y,
THENCE SO~"l:STERLY Al.QNG THE ARC OF SJ.ID CURVE, THROUGH A CEITT'PJ.l. ANGLE OF
24° 37' SB", A DISTANCE OF 664 .24 FEET, TO AN lm'ERSECTION 'WITH THE SOUTHER:..Y
LIN'! OF TiiE ABOVE DESCRIBED PAACEL 2; THENCE WESTERLY Al.QNG SAID SOUTHE~Y
Lih~, NORTH 89° 32' 21" WEST, 903.3S FEET (RECORD: NORTH 89° 32' 01" WEST, PM
1188), TO THE SOU'I'HWl"EST CORNER OF S1..ID PARCEL 2; THENCE NORTHERLY J.l..ONG TP.!
ft"ESTEF..:.,Y Lih"l: OF SAID PAACEL 2, NORTH 0° 33' S3" EAST, 84S.89 FEET (RECORD:
NORni 0° 3t' 26'' EAST, PM llBB), TO THE POIITT' OF BEGINN!NG.
May 21, 2019 Item #4 Page 96 of 105
.EXHIBIT B
LIENS AND ENCUMBRANCES
Lessor's interest in the Land is subject to the easements,
covenants, conditions, and restrictions described in the attached
preliminary title report dated October 24, 1994 issued by Chicago
Title Insurance Company, except for exception numbers 12 and 14
listed therein.
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0 OCT 27 '94 08:,,"'''<1M CHICAGO TITLE SD raer NO: ::lb:./UbU . J.!:) ~.,:>
DESCRIPTION
PAACEL 1 OF CE~TIFICATE OF COMPLIANCE RECORDED JULY 1, 1~94 AS F!LE NO.
1994-0418120, OFFICIAL RECORDS AND DESCRl!ED AS FOLLOWS:
P.4/9
ALL 'l'KAT PO~TlON OF PARCEL 2 OF PARCEL MAP 1188, RECORDED: DECEMBE~ 20, 1972,
AS FILE NO. 340334, aEING A PORTION OF FAACTlONAL SEC'l"ION 23, TOWNSHIP 12
SOOI'H, RANGE 4 WEST, SAN SER.NARl)INO MERIDIAN, BEING WITHIN THE CITY OF
CARLS:aAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ~EING MORE PARTICUI.ARLY
DESCRIBED AS FOLLOWS:
EEGINNING AT THE NORTHWiST CORNER OF SAII:> PARCEL; 'TMENCE BASTBRLY ALONG TH£
NORTHERLY LINE OF SAID PARCEL, SOUTH 89° 26' 14" EAST, 13'7.93 FEET (RECORD:
SOOTH 89° 27' 42" .AST, 1347.93 PM 1188), TO THE NORnr&A.ST CORNER OF SA?D
PARCEL :2; THENC!: SOU'I'K£RLY ALONG THE EASTERLY LINE OF SAID PARCEL, SOOTH 0" 33'
08" WEST, 6.99' (RECORD: SOUTH 0" 33' 171' WiST, PM 1188), TO A LINE: :BEING 45.00
PEET WESTEJU.Y AND P~L WITH THE CE?n'ERLINE OF EL CAMINO R.UL AS SHOWN ON
ROAD SURVEY 1800-l; THENCE SOUTHIJU,Y ANP PARALLEL WITH SAID CENTERl..INE, SOtll'H
37• 03' 3"1" 1ri,"£ST, 293.58 FEET (RECORD: SOUTH 37° 03' 56" WEST, RS. 1800-1), TO
THE BEGINNING OF A TANGENT 1545.00 FOOT JUWIOS CORW, CONCAVE SOUTHEASTERLY,
THENCE SOUI'HWESTERL Y ALONG THE AAC OF SAID CORVE, THROUGH A CENTRAL ANGLE OF
24° 37' SB'', A DIST.lNC:E OF 664 .24 PEET, TO AN INTERSECTION wrrn nIE SOtm!ERLY
LINE OF THE: ASOVi: DiSCRISED PARCEL 2; THENCE WESTERLY ALONG SAID SOOTHBRLY
LINE, NORTH 89., 32' 2l'' WEST, 903 .3S FEET (UCO.RD: NORTif 89° 32' 01" WEST, PM
1188), TO THE SOUTHWEST CORNER OF SAII> PARCEL 2: ~NCE NORTHERLY ALONG THE
W!STERLY LINE OF SAID PAACEL 2, NORTH 0° 33' 53~ iAST, S4S-89 FEET (RECORD:
NORTH 0° 34' ~6~ SA.ST, PM 1188), TO Tim POINT OF BEGINNING.
l May 21, 2019 Item #4 Page 100 of 105