HomeMy WebLinkAboutJHC-Acquisitions, LLC - Jamboree Housing Corporation - JHC - 2009-07-20Council/Agency Meeting Held: 7 ck
Deferred/Continued to:
-A App oved ❑ Conditionally Approved ❑ Denied
C Cle s Sigrffure
Council Meeting Date: 7/20/2009
Department ID Number: ED 09-41
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: HONORABLE CHAIR AND BOARD MEMB S
SUBMITTED BY: FRED A. WILSON, EXECUTIVE DIREC
PREPARED BY: STANLEY SMALEWITZ, DEPUTY EXECUTIVE DIRECTORofi�
SUBJECT: Approve Commitment Letter and Option to Purchase Agreement for the
sale of Emerald Cove Senior Apartments to Jamboree Housing
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: The City of Huntington Beach entered into discussions with Jamboree
Housing Corporation ("JHC"), a non-profit affordable housing developer, to purchase
Emerald Cove Senior Apartments. JHC is submitting an application to the State for Tax
Credit Bonds to assist in financing the project. In order for JHC to apply for bonds by the July
24 deadline, the City and Redevelopment Agency Board need to approve a commitment
letter and option to purchase agreement.
Funding Source: No Agency funds will be included in the sale of Emerald Cove.
HOME or Redevelopment Agency housing set -aside funds may have to be added in the
future depending on tax credit market conditions. Bonds to be issued by the County of
Orange if allocated to Jamboree for this project.
Recommended Action: Motion to:
1. Approve Commitment Letter and authorize the Executive Director to execute;
2. Approve Option to Purchase Real Property Agreement between the Huntington Beach
Redevelopment Agency and JHC-Acquisitions, LLC for the Emerald Cove Senior
Apartments site; and
3. Authorize the Chairman of the Redevelopment Agency and Executive Director to
approve documents and take action necessary to implement the terms of the
commitment letter and Option to Purchase Agreement.
Alternative Action(s):
Do not approve commitment letter and option to purchase agreement and provide staff
direction.
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: 7/20/2009 DEPARTMENT ID NUMBER: ED 09-41
Analysis: With the goal to maintain affordability of units at Emerald Cove, the Agency
considered two bids that were submitted, one of which was from JHC. The Agency's staff
and Financial Consultant reviewed both proposals and concluded that JHC's was preferred
given the current state of financing for these projects and JHC's history of senior -resident
project management.
The Redevelopment Agency is proposing to sell Emerald Cove Apartments to JHC-
Acquisitions LLC. Previous action taken regarding this transaction includes the May 4, 2009
Council approval of the County of Orange Bond Cooperative Agreement, the Planning
Commission May 12, 2009 approval that this transaction conforms to the City's General Plan
and the City Council approval of the transfer of ownership between the City and the
Redevelopment Agency on May 18, 2009.
Emerald Cove was built in 1984 by the Redevelopment Agency. The construction was
financed through the sale of Certificates of Participation. The Agency took title of Emerald
Cove for the sum of $8,483,931 assuming bond debt of $5,170,931 and the City receiving
the reserve of $3,313,000.
Emerald Cove is a 164 unit affordable senior resident project. Maximum income limit is 50%
Area Median Income ("AMI"). There are no covenants currently on property. After JHC
completes the purchase, a 60 year covenant will be placed.
The Agency maintains the following conditions.-
1 . 60 year affordability covenant;
2. Existing resident's rental structure will remain in place (and include yearly 3% rental
increase cap for 5 years);
3. Rehabilitation of buildings, units and community room with an upgrade in residential
services including food programs, exercise classes, health screenings, home repairs,
and educational courses. JHC will be retaining the services of John Stewart Company,
the City's current property management firm.
JHC has the strength and development experience to meet the Agency's requirements. The
Total Development Costs ("TDC") of the project are $14,922,499.
The Agency will receive Regional Housing Needs Assessment (RHNA) credit for the 164
units. The Agency may have to add an additional small amount to the project to continue
offering rents low enough to receive full RHNA, if tax credit markets downgrade further.
Staff has also been meeting with residents on a monthly basis to ensure the transition is
handled as smoothly as possible.
7/15/2009 11:58 AM
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: 7/20/2009 DEPARTMENT ID NUMBER: ED 09-41
After JHC has secured financing, all sale and loan agreements will be brought back to the
Council and Redevelopment Agency Board for approval.
Strategic Plan Goal: Maintain, improve and obtain funding for public improvements.
Environmental Status: Project is categorically exempt pursuant to section 15302 of the
California Environmental Quality Act because it involves the repair of residential structures
(including internal improvements) of the same size and in the same location on the site.
Attachment(s):
7/15/2009 11:58 AM
ATTACHMENT #1
==MMMMMJ
City of Huntington Beach
2000 MAIN STREET CALIFORNIA 92648
REDEVELOPMENT AGENCY
714.536.5582 www.hbbiz.com Fax 714.375.5087
July 13, 2009
JHC-Acquisitions, LLC
c/o Jamboree Housing Corporation
17701 Cowan Avenue, Suite 200
Irvine, CA 92614
Attn: Laura Archuleta, President
Re: Loan Commitment for $8,000,000
18191 Parktree Circle
Huntington Beach, California
Dear Ms. Archuleta:
On behalf of the Redevelopment Agency of the City of Huntington Beach ("Agency"), I am
pleased to inform you that the Agency has approved a commitment to make a loan in the
amount of $8,000,000.00 to JHC-Acquisitions, LLC (the `Borrower"), for the acquisition and
rehabilitation of 164 units of affordable rental housing (including two manager's units) (the
"Project") on the site generally described as 18191 Parktree Circle, Huntington Beach,
California. As set forth more fully below, this commitment is contingent on the Project
receiving approval for the issuance of mortgage revenue bonds and being awarded an
allocation of tax credits, and is subject to the terms and conditions set forth in this letter.
Unless otherwise agreed in writing by the Agency in its sole discretion, this financing
commitment is subject to and contingent upon the following terms and conditions.
This commitment will expire on February 2, 2010
TERMS AND CONDITIONS
1. The Project will consist of the acquisition and rehabilitation of 164 units of rental
housing to be occupied by and restricted to very low income and low income
households at affordable rents (with the exception of two management units), for at
least 60 years.
2. This $8,000,000 loan commitment is contingent upon Borrower receiving all
necessary approvals for issuance of mortgage revenue bonds and receiving an
allocation of 4% Low Income Housing Tax Credits from the California Tax Credit
Allocation Committee ("TCAC") no later than December 20, 2009, to finance the
City ®f Huntington Beach
2000 MAIN STREET CALIFORNIA 92648
REDEVELOPMENT AGENCY
714.536.5582 www.hbbiz.com Fax 714.375.5087
Project approximately as follows (these are current projections and are subject to
change):
Permanent Sources of Funds: i
Mortgage Revenue Bonds $ 3,086,612
LIHTC Equity 3,578,244
Agency LMIHF Loan 8,000,000
Deferred Developer Fee 257,6413
Total Sources $ 14,922,499
3. The Agency loan will be in the original principal amount of $8,000,000, with interest
at 3% per annum from the date of disbursal. The term of the loan will be 60 years.
Loan payments shall be payable exclusively from the Agency's share of 75% of
annual residual receipts, net sale proceeds and net refinancing proceeds. The terms of
the Residual Receipts obligation, including identification of all of Borrower's
obligations having a priority over the Agency's right to receive Residual Receipts, will
be set forth in the promissory note to be attached to the loan agreement. Residual
Receipts shall mean (a) Revenue minus (b) Operating Expenses, calculated on a 12-
month basis, minus (c) the unpaid balance of the Deferred Developer's Fee, if any.
The terms "Revenue," "Operating Expenses" and "Deferred Developer's -Fee" shall
have the meaning given to them in the promissory note.
4. This letter is not intended to describe all of the requirements, terms, conditions and
documents necessary for the Agency loan and the Agency reserves the right, in the
exercise of its sole discretion, to modify any of the terms, conditions or requirements
set forth in this letter upon written notice to Borrower. A loan agreement, including
the form of promissory note, deed of trust and related documents, will be prepared,
and is subject to execution by the Borrower prior to its consideration by the governing
body of the Agency. The final form of the loan agreement approved by Borrower shall
be subject to the discretionary approval of the Agency and shall include all provisions
and attachments customarily included in Agency loan agreements, including but not
limited to conditions precedent to the disbursement of the Agency loan.
5. The Project shall be rehabilitated in accordance with all applicable state and local
laws, rules and regulations.
6. The Borrower shall comply with State Prevailing Wage and/or Federal Davis -Bacon
requirements, if applicable.
City of Huntington Beach
2000 MAIN STREET CALIFORNIA 92648
REDEVELOPMENT AGENCY
714.536.5582 www.hbbiz.com Fax 714.375.5087
7. Borrower shall prepare and submit a sources and uses Project Budget for approval by
the Agency as an attachment to the loan agreement. Line item estimates of the uses of
funds shall be backed up by such documentation, including appraisals and
rehabilitation cost estimates, as may reasonably be required by the Agency Executive
Director. The final sources and uses of funds for the Project shall be consistent with
the Project Budget except as otherwise approved by the Agency Executive Director.
The Agency loan shall be disbursed to pay or reimburse Borrower for payment of
costs in the Project Budget in accordance with disbursement procedures and
requirements to be included in the loan agreement.
8. The Borrower shall submit an audited cost certification following completion of
rehabilitation and, for each year during the term of the Agency loan after the
completion of rehabilitation, an annual audited income and expense statement, balance
sheet and statement of all changes in financial position, signed by an authorized
officer of Borrower.
9. The Agency loan will be evidenced by a non -recourse promissory note (subject to
customary non -recourse carve -outs), and secured by a deed of trust and other
customary loan documents, which shall be subordinated to senior construction and
permanent loan deeds of trust, provided the senior lender(s) agree to provide the
Agency with reasonable notice and cure rights that protect the Agency's investment in
the event of a default by Borrower.
10. The Agency loan documents will contain provisions prohibiting transfers of
Borrower's interests in the site without the reasonable prior written consent of the
Agency Executive Director. The admittance and exit of a tax credit partner shall not
require the written consent of the Agency Executive Director.
11. The Agency loan documents will describe events of default which will permit the
Agency, after notice and opportunity to cure, to pursue appropriate remedies,
including acceleration of the Agency loan and foreclosure under the deed of trust.
These events may include, but are not limited to, failure to complete the rehabilitation
of the Project as required by the loan agreement, failure to comply with use
restrictions, transfers of interests in the Borrower or in the Project without the
reasonable prior consent of the Agency, failure to comply with terms and conditions of
the loan agreement, note or deed of trust, and similar occurrences.
12. At the closing, the Agency shall receive an ALTA lender's policy of title insurance,
showing the Agency deed of trust junior in priority only to deeds of trust to which the
Agency has agreed to subordinate its interests.
City ®i Huntington Beach
2000 MAIN STREET CALIFORNIA 92648
REDEVELOPMENT AGENCY
714.536.5582 www.hbbiz.com Fax 714.375.5087
13. The Borrower shall obtain all land use entitlements, approvals and permits necessary
for the rehabilitation of the Project and shall pay all city fees in connection therewith.
14. The Borrower's architect and general contractor shall be subject to the reasonable
approval of the Agency's Executive Director.
15. The Project and approval of the loan agreement shall be subject to compliance with all
applicable environmental requirements (e.g., CEQA).
16. The Agency loan promissory note shall include definitions of "residual receipts" and
related terms, consistent with other Agency residual receipts loan documents.
17. The Borrower shall prepare and submit a scope of development for approval by the
Agency as an attachment to the loan agreement. The Agency Executive Director shall
have the right to review and approve all design drawings and plans for the Project. All
plans for the rehabilitation of the Project shall be subject to applicable city design
review approval procedures, and shall be consistent with and a logical evolution of the
scope of development, except as otherwise approved by the Agency Executive
Director.
18. The Borrower shall prepare and submit a schedule of performance providing for the
timely satisfaction of all conditions precedent to the closing and the timely
commencement and completion of rehabilitation, for approval by the Agency as an
attachment to the loan agreement. Except as otherwise approved by the Agency
Executive Director and subject to events of force majeure, failure to comply with the
schedule of performance shall be a default under the terms of the loan agreement.
19. At the respective times provided in the schedule of performance, Borrower shall
submit for approval by the Agency Executive Director evidence of financing
consistent with the loan agreement and sufficient to completely finance the acquisition
and rehabilitation of the Project.
20. At the closing, the Borrower shall execute a Regulatory Agreement and Declaration of
Covenants and Restrictions ("Regulatory Agreement"), restricting for 60 years the
maximum income of tenants and the maximum rents that may be charged to tenants,
which shall be recorded against Borrower's interest in the property. The Regulatory
Agreement shall require Agency approvals of any housing management company and
management plans relating to the management and operations of the Project.
21. Prior to the closing, Borrower shall submit to the Agency a Phase 1 Environmental
Site Assessment and shall conduct such additional environmental testing as may be
City ®f Huntington Beach
2000 MAIN STREET CALIFORNIA 92648
REDEVELOPMENT AGENCY
714.536.5582 www.hbbiz.com Fax 714.375.5087
necessary to determine that hazardous materials are not present on the site, or that any
hazardous materials on the site may be remediated without adversely affecting the
feasibility of the Project. The Borrower shall execute an environmental indemnity in
favor of the Agency similar to the form of environmental indemnity used in other
Agency transactions.
22. Borrower shall submit for Agency approval all corporate and partnership or limited
liability formation documents, agreements with the tax credit investor, and authorizing
resolutions, as applicable.
23. Borrower shall obtain and maintain policies of insurance in the form and in the
amounts required by the Agency, not including earthquake insurance, naming the
Agency as an additional insured and meeting the insurance requirements customarily
included in Agency loan agreements.
24. Prior to closing, the Borrower shall submit evidence of insurance, evidence of
financing commitments, copies of construction loan documents and such other
documentation as required by the loan agreement.
[Remainder of Page Intentionally Left Blank]
Ms. Laura Archuleta
July 13, 2009
Page 6
If you have any questions, please do not hesitate to call Sidney Stone at 714-536-5901. Please
acknowledge your consent to the foregoing terms and conditions by signing and returning a
copy of this letter.
Sincerely,
REDEVEL PMENT AGENCY
OF THE CITY OF HUNTINGTON BEACH
LN
Director
APPROVED AS TO FORM:
By: r V J
Genera Counsel
By: �0'/ yzo"Y'
KA E, BALLMER & BERKMAN
Agency Special Counsel
INITIATED AND APPROVED:
By:1,64,7,1,1
D6puty-rxechFive Director
IT
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
Ms. Laura Archuleta
July 13, 2009
Page 7
JHC-ACQUISITIONS, LLC, hereby acknowledges and consents to all of the terms and
conditions set forth in this letter.
Date: D � � B 1 2al
0 ,,
JHC-ACQUISITIONS, LLC,
a California limited liability company
By: JAMBOREE HOUSING
CORPORATION,
a California nonprofit public benefit
co ration
By:
Name: Laura Archuleta
Title: President
ATTACHMENT #2
OPTION TO PURCHASE REAL PROPERTY
This Option to Purchase Real Property (this "Agreement") is entered into as of the _
day of July, 2009 (the "Effective Date"), by and between THE REDEVELOPMENT AGENCY
OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Optionor"),
and JHC-ACQUISITIONS, LLC, a California limited liability company ("JHC").. Optionor and
JHC are sometimes referred to collectively herein as the "Parties."
RECITALS
A. Optionor currently owns fee title to certain improved real property located at
18191 Parktree Circle in the City of Huntington Beach ("City"), County of Orange ("County"),
State of California, as more particularly described on Exhibit "A" attached hereto (the
"Property").
B. Optionor and JHC desire to enter into this Agreement to provide for Optionor to
grant to JHC and for JHC to obtain from Optionor an option to purchase the Property upon the
terms more particularly set forth in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES
CONTAINED IN THIS AGREEMENT, THE PARTIES AGREE AS FOLLOWS:
AGREEMENT
Grant of Option.
(a) Option. Optionor hereby grants to JHC the option (the "Option") to
purchase the Property on the terms and conditions set forth in this Agreement.
(b) Purchase Agreement Form. Prior to the exercise of the Option, Optionor
and JHC shall agree on the final form, terms and conditions of the purchase and sale agreement
for the Property ("Purchase Agreement"), which Purchase Agreement shall incorporate the
basic terms set forth on Exhibit `B" attached hereto. Upon the mutual agreement of the final
form, terms and conditions of the Purchase Agreement, the Parties shall attach the form of the
Purchase Agreement to this Agreement as a substitute Exhibit `B". If Optionor and JHC do not
agree in writing on the form, terms and conditions of the Purchase Agreement prior to the
expiration of the Term (as hereinafter defined), this Agreement and the Option shall
automatically terminate, without the need of any notice or documentation, and neither party shall
have any further rights or obligations hereunder.
2. Term of Option.
(a) Term. The term of the Option shall be for a period commencing on the
Effective Date and ending 5:00 p.m. (California time) on October 15, 2009 (the "Term").
(b) Exercise of Option. At any time during the Term but only after agreement
on the form, terms and conditions of the Purchase Agreement, JHC may exercise the Option by
KXG\HB\Emerald Cove\Commitment Ltr & Option\DOCS 14780511-vl-Option_to_Purchase_(Form) v2.DOC
giving written notice to Optionor of its exercise of the Option (the "Option Notice"). Promptly
after the exercise of the Option, JHC and Optionor shall execute and deliver the Purchase
Agreement.
(c) Expiration. The Option shall expire at 5:00 p.m. (California time) on the
last day of the Term. If the expiration date of the Term falls on a Saturday, Sunday or other day
on which banks are not generally open in the State of California, then the expiration date shall be
extended to the next following business day.
3. Option Consideration. The Option is granted in consideration of JHC's payment
to Optionor of the sum of Ten Dollars ($10.00). JHC shall pay such amount to Optionor upon
the execution of this Agreement.
4. lIntentionally Omitted.1
5. Optionor's Cooperation in Seeking Permits and Approvals. During the Term,
JHC may meet with all city, county, district and other governmental entities to discuss JHC's
proposed rehabilitation of the improvements on the Property, and other matters relating to the
proposed use of the Property and may obtain all project approvals that JHC may deem necessary
or advisable in connection therewith. Provided Optionor does not incur any liabilities or out-of-
pocket costs except those authorized by Optionor and without binding the Property prior to the
execution and delivery of the Purchase Agreement in any way, Optionor agrees to reasonably
cooperate with JHC in any such matters and, at Optionor's reasonable discretion, execute any
and all documents or join in any applications that may be required to obtain all such project
approvals in connection with the rehabilitation.
6. Notices. All notices or other communications made pursuant to this Agreement
shall be in writing and shall be served to the parties at the following addresses (i) mailed by
certified mail, postage prepaid, return receipt requested; (ii) sent by express delivery service,
charges prepaid with a delivery receipt; (iii) personally delivered with a delivery receipt; or (iv)
delivered via facsimile with a follow-up notice as provided below:
Optionor: Redevelopment Agency of the
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Attn: Executive Director
Fax No. (714) 375-5087
With a copy to: City Attorney's Office
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Fax No. (714) 374-1590
K:\CG\AB\Emerald Cove\Commitment Ur & Option\DOCS 1-
4780511-vl-Option_ to_Purchase_(Form) v2.DOC -2-
JHC: JHC-Acquisitions, LLC
c/o Jamboree Housing Corporation
17701 Cowan Avenue, Suite 200
Irvine, CA 92614
Attention: Laura Archuleta
Fax No. (949) 263-8676
With a copy to: Rutan & Tucker, LLC
611 Anton Blvd., Suite 1400
Costa Mesa, CA 92626
Attention: Patrick D. McCalla
Fax No. (714) 664-5100
All notices (other than facsimiles) shall be deemed received on the date shown on the
delivery receipt as the date of delivery, the date delivery was refused, or the date the notice was
returned as undeliverable. All notices delivered via facsimile shall be deemed received upon
confirmation of electronic transmission, provided that the applicable notice is confirmed by a
follow-up notice using another approved method hereunder within seventy-two (72) hours.
Either parry may change its address for the purposes of this paragraph by giving prior written
notice of the change to the other party in the manner provided in this Section.
7. Assignment of Option. JHC may not assign its rights or obligations under this
Agreement without the prior written consent of Optionor, which shall not be unreasonably
withheld, conditioned or delayed.
8. Binding Effect. This Agreement and its terms and conditions shall be binding
upon and inure to the benefit of the parties to this Agreement and their respective successors and
permitted assigns.
9. Time. Time is of the essence of this Agreement.
10. Further Documents. Upon the reasonable request of the other party, each party
will execute, acknowledge and deliver or cause to be executed, acknowledged and delivered,
such further instruments and documents as may be reasonably necessary in order to carry out the
intent and purpose of this Agreement.
11. Exhibits. All exhibits attached to this Agreement and referred to in this
Agreement are incorporated into this Agreement by this reference as though they were fully set
forth in this Agreement.
12. Commission. Each party to this Agreement represents to the other party that it
has not engaged or used the services of any person, firm or corporation that may claim a broker's
commission or finder's fee upon execution of this Agreement, the exercise of the Option or the
execution of the Purchase Agreement, and each party hereto agrees to hold the other party
harmless from any loss, damage, expense or liability, including attorney's fees, resulting from
any claim by any person, firm or corporation based upon its having acted as broker or finder on
behalf of said indemnifying party.
K:\CG\HB\Emerald Cove\Commitment Ur & Option\DOCS 1-
#780511-vl-Option_to_Purchase_(Form) vIDOC -3-
13. Ca to ions. The captions of the sections/paragraphs of this Agreement are for
convenience and reference only, and the words contained in the captions shall in no way be held
to explain, modify, amplify or aid in the interpretations, constructions or meaning of the
provisions of this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, each of which .
shall be deemed to be an original, but all of which together shall constitute one and the same
Agreement.
15. Attorney's Fees. In any action between JHC and Optionor to enforce or interpret
any of the terms of this Agreement, each party shall bear its own costs and expenses of suit,
including attorneys' fees, expert witness fees and all costs incurred in each and every such
action, suit or other proceeding, including any and all appeals or petitions therefrom.
16. Entire Agreement. This Agreement contains the entire agreement between the
parties respecting the matters set forth herein, and supersedes all prior agreements between the
parties respecting such matters.
[SIGNATURES ON FOLLOWING PAGE]
K:\CG\HB\Emerald Cove\Commitment Ltr & Option\DOCS 1-
4780511-vl-Option_to_Purchase_(Form) v2.DOC -4-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
INITIATED AND APPROVED:
By: ca-i
eputy Ex(�eutive Director
"Optionor"
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH, a public
body corporate and politic
By:
Chairperson
ATTEST:
By:
Agency Secreta"'ily
APPROVED AS TO FORM:
By: �-; X4�"
/eneral ounsel O 410
By.
NE, BALLMER & BERKMAN
Agency Special Counsel
LL HC95
JH17C-ACQUISITIONS, LLC,
a California limited liability company
By: JAMBOREE HOUSING CORPORATION,
a California nonprofit public benefit corporation
By:
Name: Laura Archuleta
Title: President
KACG\HB\Emerald Cove\Commitment Ltr & Option\DOCS 1-
#780511-v 1-Option_ to Purchase_(Form) vIDOC -5 -
Date.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
"Optionor"
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH, a public
body corporate and politic
By:
Chairperson
ATTEST:
By:
Agency Secretary
APPROVED AS TO FORM:
By:
General Counsel
By:
KANE, BALLMER & BERKMAN
COUNTERPARTAgency Special Counsel
"JHC"
JHC-ACQUISITIONS, LLC,
a California limited liability company
By: JAMBOREE HOUSING CORPORATION,
a Cali rma nonpro . public benefit corporation
By:A 4 QiL�
Name: Laura Archuleta
Title: President
K:ACG\HB\Emerald CoveACommitment Ltr & Option\DOCS1-
#780511-vl-Option_to Purchase_(Fonn) v2.DOC -5-
EXHIBIT "A"
DESCRIPTION OF THE PROPERTY
Real property in the City of Huntington Beach, County of Orange, State of California, described
as follows:
LOTS 1, A AND B OF TRACT NO. 12060, IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN
BOOK 707, PAGES 5 TO 8 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY.
LOTS 1 AND A OF TRACT NO. 12063, IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN
BOOK 707, PAGES 9 TO 12 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE
OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT FROM A PORTION OF SAID LAND AN UNDIVIDED 1/6 INTEREST IN ALL
OIL, PETROLEUM, ASPHALTUM, GAS, MINERALS AND OTHER HYDROCARBON
SUBSTANCES IN, ON OR UNDER SAID LAND AS RESERVED IN THE DEED
RECORDED AUGUST 15, 1921 IN BOOK 401, PAGE 356 OF DEEDS.
ALSO EXCEPTING THEREFROM ALL MINERALS, GAS, OIL, PETROLEUM, NAPTHA
AND OTHER HYDROCARBON SUBSTANCES IN AND UNDER SAID LAND,
TOGETHER WITH ALL NECESSARY AND CONVENIENT RIGHTS TO EXPLORE FOR,
DEVELOP, PRODUCE, EXTRACT AND TAKE THE SAME SUBJECT TO THE EXPRESS
LIMITATION THAT ANY AND ALL OPERATIONS FOR THE EXPLORATION,
DEVELOPMENT, PRODUCTION, AT LEVELS BELOW A DEPTH OF 500 FEET FROM
THE SURFACE OF SAID LAND BY MEANS OF MINES, WELLS, DERRICKS AND/OR
OTHER EQUIPMENT FROM SURFACE LOCATIONS ON ADJOINING OR
NEIGHBORING LAND LYING OUTSIDE THE ABOVE DESCRIBED LAND AND
SUBJECT FURTHER TO THE EXPRESS LIMITATION THAT THE FOREGOING
RESERVATION SHALL IN NO WAY BE INTERPRETED TO INCLUDE ANY RIGHT OF
ENTRY IN AND UPON THE SURFACE OF SAID LAND, AS RESERVED IN THE DEEDS
RECORDED JANUARY 31, 1984 AS INSTRUMENT NO. 84-043025 AND JANUARY 10,
1994 AS INSTRUMENT NO. 94-019792 OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM THE SUBSURFACE WATER RIGHTS WITHOUT THE
RIGHT OF ENTRY TO THE SURFACE OR TO THE SUBSURFACE ABOVE THE DEPTH
OF 500 FEET, AS DEDICATED TO THE CITY OF HUNTINGTON BEACH BY RECITAL
ON THE MAP OF TRACT NO. 12063, RECORDED IN BOOK 707, PAGES 9 TO 12 OF
MISCELLANEOUS MAPS.
APN: 159-441-01 and 159-441-02 and 159-441-03 and 159-441-04 and 159-441-05
K:\CG\HB\Emerald Cove\Commitment Ltr &
Option\DOCS 14780511-v 1-
Option_to_Purchase_(Ponn) v2.DOC EXHIBIT "A"
EXHIBIT `B"
TERMS OF PURCHASE AGREEMENT
1. The Purchase Price shall be $8,000,000.00.
2. The Closing Date shall mean and refer to the date which is the later of the
following: (a) five (5) business days following the date JHC has obtained its entitlements for the
rehabilitation of the project, and (b) one hundred ten (110) days after JHC has received written
binding commitments for the JHC financing; provided, however, that in no event shall be the
Closing Date occur after February 2, 2010.
3. Optionor shall convey the Property to JHC free and clear of exceptions and
encumbrances except non -delinquent general and special real property taxes and assessments,
easements, encumbrances, covenants, conditions, restrictions, rights of way and other matters of
record approved by JHC during the due diligence period.
4. JHC shall have a sixty (60) day due diligence period to approve the condition of
the Property and any other matters related to the Property including JHC's intended use and
development thereof, in JHC's sole and absolute discretion.
5. Title to the Property shall be conveyed by Optionor to JHC pursuant to a grant
deed in a form and content to be approved by the parties and attached to the Purchase
Agreement.
6. All items of income and expense related to the Property, including non -delinquent
real property taxes and assessments shall be prorated to the Closing Date.
7. Optionor shall finance JHC's purchase of the property subject to and conditioned
upon the terms and conditions of the Loan Commitment from Optionor to JHC dated on or about
the date of this option.
8. The Purchase Agreement shall contain representations and warranties from
Optionor and JHC to be agreed to by the parties. Otherwise, the Property shall be acquired by
JHC in its AS -IS, WHERE -IS condition.
KAMHMEmerald Cove\Commitment Ur &
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