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SR-07-13-2010-8C~® City Council Report and c~Y °f Redevelopment Agency Report Snntn Monica City Council Meeting: July 13, 2010 Agenda Item: ~_-.~ To: Mayor and City Council Chair and Redevelopment Agency Members From: Andy Agle, Director of Housing and Economic Development Eileen Fogarty, Director of Planning and Community Development Subject: Civic Center Village Recommended Action Staff recommends that the Redevelopment Agency: 1. Approve amendments to the Civic Center Village Disposition and Development Agreement (DDA), provided as Attachment A, involving extending the period for the developer to obtain financing, close escrow and commence construction and, 2. authorize the Executive Director to execute the DDA. Staff recommends that the City Council: 1. Approve a resolution of intent to amend the Civic Center Specific Plan (CCSP) to remove the. Main Street Circle and 2. Review the design changes proposed for approval by the Planning Director as a minor modification to the Civic Center Village Development Agreement (DA) and provide direction to staff, if necessary. Executive Summary The Civic Center Village (Village) development has been unable to obtain financing necessary to close escrow and commence construction since it was approved by the City Council and Redevelopment Agency in 2008. The developer (Related) has requested an extension of the Schedule of Performance period not to exceed 24 months, with commencement of construction to occur no later than August 2012. Additionally, minor modifications to the approved design have arisen during the course of preparing the detailed plans for ARB review. The Director of Planning and Community Development has the authority to approve the design changes as minor modifications to the DA, and staff is using this opportunity to inform Council of the design changes. Finally, initiating the process of removing the Main Street Circle from the CCSP will facilitate lahd dedication and easement issues related to RAND and the Village. 1 Background The Civic Center Village property comprises approximately 3.7 acres and will enhance the Civic Center area with up to 324 residences (including 160 that will be affordable to low-income households, including families and artists), public open space, an extension of Olympic Drive, public art and sustainable design. The City Council approved the Development Agreement for the Civic Center Village on May 13, 2008 and the Redevelopment Agency approved the Disposition and Development Agreement (DDA) on June 10, 2008. Discussion DDA Extension The terms of the DDA between the Agency and developer, Related/Santa Monica Village, LLC (Related), establish a Schedule of Performance reflecting milestones to be achieved by Related for the Village development. One milestone involves obtaining financing for the Village by July 2010. Related has requested an extension not to exceed 24 months for the"financing milestone due to the continued inability to obtain construction financing in the current economic environment. As consideration for granting the requested extension, Related has agreed to revise the DDA's existing profit-sharing participation formula. The existing participation formula is proposed to be modified in two ways. First, the existing formula provides that the Agency will receive 30 percent of gross condominium sales (Parcel A and C) that exceed defined thresholds measured by per square foot of building area. Related. proposes to lower the threshold at which the Agency would begin sharing this 30/70 split ih the condominium sale proceeds. Additionally, a second participation threshold would be created above which the Agency would receive 50 percent of condominium sale proceeds. The existing and proposed thresholds are as follows: 2 DDA Participation Formula for Agency Existing Proposed Parcel A 30% share of sales revenue $1,351 + $1,229 to $1,390 50% share of sales revenue N/A $1,391 + Parcel C 30% share of sales revenue $1,437 + $1,241 to $1,403 50% share of sales revenue NA/ $1,404 + Staff and the City's real estate economics consultant, Keyser Marsten Associates, believe Related's extension request is warranted given the continued challenges in construction financing, as well as the weak character of real estate markets. Staff and the City's advisors also recommend the proposed participation formula as a fair and reasonable developer concession in conjunction with an extension of the Schedule of Performance. Additional Changes to the DDA and DA The construction of the extension of Olympic Drive by Related from Main Street to Ocean Avenue is a public benefit negotiated as part of the DA. The First Amendment to the DDA acknowledges that as a result of the 2-year extension, assumptions regarding the development of the Olympic Drive extension are no longer valid in that the extension. may not be constructed in time to reduce significant construction impacts of projects planned for the Civic Center Village and adjacent Downtown areas, including the Expo Line and Esplanade Projects (the "Adjacent Infrastructure Projects"). Accordingly, the DDA has been revised to include provisions (i) for Related and Agency to cooperate in good faith to mitigate the impacts of the Adjacent Infrastructure Projects by coordinating the development of the Village with the Adjacent Infrastructure Projects and executing 3 any necessary amendments to the DDA, DA and/or the Lease Agreement to effect such mitigation and coordination; and (ii) for Related to release the City and Agency from any claims resulting from any delays to the Schedule of Performance resulting or arising from the Adjacent Infrastructure Projects. DA Minor Modifications for Design As Related has worked through the more detailed technical building requirements associated with development of the Civic Center Village, certain design changes have become necessary. The design changes are illustrated in Exhibit B. Related and its designers have developed minor revised design approaches for all sites associated with glazing, unit organization and landscaping. Site A contains some massing changes related to locations of balconies and bay windows, as well as an increase in ceiling height at the first level. Site C has been reconfigured to allow for additional ground-floor open space, and to correct a structural design issue associated with the "transparent spine" at the rear of the building. Although minor, Site C is the only site that incorporates changes more significant than is typical for the transition from concept to final design. The original design proposed to create thin, horizontal walkways connecting three vertical elements at each level of the proposed housing. Related's detailed building code analysis revealed that the walkways must be fully enclosed. While the change has eliminated the openings between the vertical elements, Related's designers have responded by increasing the distance between each vertical element as they extend toward Ocean Avenue, requiring additional height at the back portion of the northern wing which does not exceed the previously approved maximum height of 96 feet. The additional height accommodates a pool structure and event space at the top level. Design changes also increase the commercial square footage and ceiling height at the ground level to ensure appropriate spaces to support pedestrian-oriented uses. The design changes are within the parameters contained in the Development Agreement and associated CEQA analysis, and therefore may be approved by the Planning and Community Development Director as a minor modification to the 4 Development Agreement. Staff believes that the design changes have improved the overall aesthetics and orientation of the proposed buildings, including reducing the perceived mass of the buildings from Ocean Avenue. As the changes involve some shifts in massing and heights, staff wanted to inform Council and seek any necessary direction prior to completing the minor modification approval process. Following Council action, the minor modification language will be finalized, and the project will proceed to the Architectural Review Board for approval of the final details of building design, colors, materials and landscaping, as described in the approved Development Agreement. CCSP Amendment The CCSP currently includes the creation of the Main Street Circle. On March 24, 2009, the City Council held a study session to consider an integrated approach to planning and implementation of Civic Center and Expo Light Rail improvements. The study session presented recommendations for further study and community dialogue, including elimination of the Main Street Circle as a public improvement that was no longer aligned with the broader priorities for the Civic Center due to its location in relation to the proposed overall circulation improvements in the Civic Center. On May 11, 2009, community members participated in a workshop to consider the integrated planning opportunities related to Civic Center / Expo. At that meeting, there was broad community support for removing the Main Street Circle from the Civic Center Plan. The proposed Main Street Circle has also created challenges with respect to the RAND Corporation. _As part of its Development Agreement, RAND is required to make a land dedication if, and when, the City chooses to move forward with construction of the Main Street Circle. Following the events of September 11, 2001 and subsequent security studies, RAND and its clients, including the federal government, have become concerned about how best to secure the RAND facilities. RAND has requested that in exchange for its land dedications necessary to support the development of the Civic Center Village, the City expeditiously process a discrete amendment to the Civic Center 5 Specific Plan to remove the Main Street Circle. Adoption of the Resolution of Intent attached in Exhibit C marks the first official step in that process. Financial Impacts & Budget Actions There are no direct budgetary impacts associated with Agency approval of an extension to the Civic Center Village DDA or execution of minor modifications to the Village DA. It is difficult to estimate potential additional revenues that may result from the proposed change in the participation formula in light of uncertainties in the real estate market. Amending Civic Center Specific Plan will involve minor consultant costs for environmental review which can be funded within the existing budget. Prepared by: Jim Kemper, Housing Administrator Forwarded to Council: Ro~Gould City Manager Aileen Fogarty, ~ireci' Planning and Comm nity Attachments: A. Village DDA Amendments B. Village Design Modifications C. Resolution of Intent to Amend CCSP 6 riousmg and tconomic uevelopment ~~~~~~~ ~ FIRST AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT This FIRST AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT ("First Amendment") is dated as of July 1, 2010; and is entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA ("Agency") and RELATEDlSANTA MONICA VILLAGE, LLC, a California limited liability company ("Developer"). RECITALS A. Agency is the owner of certain real property (the "Site") located within the Village Special Use District (the "'District") in the City of Santa Monica, California (the "City"). The District is located west of Main Street, east of Ocean Avenue, north of Pico Boulevard and south of the future extension of Olympic Drive from Main Street to Ocean Avenue. The District includes the newly built RAND Corporation headquarters, the Viceroy Hotel, a private office building at 1733 Ocean Avenue and the Site. B. The Agency and Developer entered into that certain Disposition and Development Agreement dated as of June 10, 2008 (the "DDA"), pertaining to the redevelopment of the Site with a mixed retail and residential housing development (the "Improvements"), in accordance with the terms and conditions of the DDA. Developer intends to subdivide the Site into three parcels, which shall be referenced individually herein as Parcel A, Pazcel B and Pazcel C. C. Developer has acknawledged that it may be unable to comply with the timelines in the Schedule of Performance notwithstanding the provisions for extension afforded under Section 604 of the DDA. Consequently, Developer is now seeking, and Agency has agreed, to extend the times for performance in the Schedule of Performance by two yeazs (the "Extension Period") as set forth in the Revised Schedule of Performance attached hereto as "Attachment 1", subject to the terms and conditions set forth herein. D. Agency and Developer acknowledge and agree that economic conditions and the financial assumptions in the DDA have changed since DDA execution. Such assumptions were used to determine the Total Threshold Price for Pazcel A and the Total Threshold Price for Pazcel C in the Participation Agreement. Thus, in cgnsideration for the Agency's grant of the Extension Period, Developer and Agency have agreed to modify the terms of the Participation.Agreement as set forth herein. E. Agency and Developer acknowledge, understand and agree that, as a result of the Extension Period, assumptions regarding the development of the Olympic Drive extension which were made in negotiating the DDA and Development Agreement (the "DA") aze no longer valid in that the Olympic Drive extension may not be constructed in time to reduce significant construction impacts of projects planned for the Civic Center and adjacent Downtown areas including, but not limited to the Palisades Garden Walk and Town Square, Civic Auditorium, Expo Line and Esplanade Projects (hereinafter "Adjacent Infrastructure Projects"). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby mutually acknowledged, the parties agree as follows: 1. Recitals. The Recitals and attachments referenced above are hereby incorporated by reference into this First Amendment and adopted by the parties to this First Amendment as true and correct. 2. Defined Terms. Capitalized terms used in this First Amendment shall have the meaning given them in the DDA unless specifically provided otherwise herein. 3. Schedule Changes. The Developer's obligations regarding the schedule of development and construction for the Project shall be in accordance with the Revised Schedule of Performance, attached hereto as Attachment No. 1. The Revised Schedule of Performance shall supersede in its entirety the Schedule of Performance attached to the DDA as Attachment No. 3 and any conflicting language in the DDA. 4. Modification to Section 604 of the DDA. The second paragraph of Section 604 ofthe DDA shall be deleted in its entirety and replaced with the following text "Notwithstanding any provision to the contrary in this Section or any other section of this Agreement, if the Developer has not obtained financing for Parcel Aand/or Pazcel B on or before July 31; 2012, despite Developer's diligent and reasonable efforts to apply for and obtain such financing, the Agency Executive Director, in his or her sole and absolute discretion; may either (i) allow an extension for a period of not longer than six (6) months or (ii) terminate this Agreement and return the Good Faith Deposit in full to the Developer without any further obligation imposed on either parry. Developer shall not; under any circumstances, be allowed to develop Pazcel C until and unless such financing for the Parcel A and Pazcel B have been obtained, in which event the order of development of Parcel A, Parcel B and Pazcel C shall proceed as set forth in Section 305." 5. Modifications to Participation Agreement. The Participation Agreement attached to the DDA as Attachment No. 19 shall be deleted in its entirety and replaced with the Participation Agreement attached hereto as Attachment No. 2. 6. Cooperation. Agency and Developer shall act cooperatively and in good faith and in a timely manner, to mitigate the impacts of the Adjacent Infrastructure Projects, including without limitation, by using best efforts to coordinate the development of the Improvements with the Adjacent Infrastructure Projects. 2 7. Release. On and after the Effective Date of this First Amendment, Developer hereby waives, releases and discharges Agency, the City and their respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and administrative proceedings, and from all liability for damages, losses,. costs, liabilities, fees and expenses (including, without limitation, attorneys' fees) arising out of or in any way connected to delays in the Revised Schedule of Performance resulting or arising from the Agency's Infrastructure Projects, except for damages, losses, costs, liabilities, fees and expenses (including, without limitation, attorneys' fees) arising out of the gross negligence or willful misconduct of-Agency, the City and their respective members, officers, employees, agents; contractors and consultants.. Developer acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." To the extent of the release set forth in this Section 7, Developer hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code. 8. Binding on Successors and Assigns: This First Amendment and all of the terms and conditions herein shall be binding upon and inure to the benefit of the successors, assignees, personal representatives, heirs and legatees of the parties. 9. DDA in Full Force and Effect. Except as otherwise expressly modified herein, the terms and conditions of the DDA shall remain unmodified and in full force and effect. 10. Further Assurances. The parties agree to execute such other documents and to take such other action as may be reasonably necessary to further the purposes of this First Amendment.. 11. Third Party Beneficiaries. The parties to this First Amendment acknowledge and agree that the provisions of this First Amendment aze for the sole benefit of Agency and Developer, and not for the benefit, directly or indirectly, of any other person or entity. // // // !/ // // // 12. Effectiveness of this First Amendment. This First Amendment shall not be effective unless and until it has been executed by Developer and Agency. The Effective Date of this First Amendment shall be deemed to be the date this First Amendment is executed byAgency. REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA (Agency) By: ATTEST: Agency Secretary REVIEWED AND APPROVED AS TO FORM: Counsel By: J. Rod Gould Executive Duector {signatures continue on following page} 4 APPROVED AS TO FORM: K_ANE, BALLMER & BERKNLAN Agency Special Counsel By: Murray O. Kane DEVELOPER: RELATED/SANTA MONICA VILLAGE, LLC, a California limited liability company, By: The Nicholas Company, Inc., a Delaware corporation, Its Non-Member Manager By: Name: Title: AT'I'ACHA~IEN'1' NL?.1 RE+'VISE+D SCHEDITLE OFPE+RFDRMAIOTCE I. GENERAL PROVISIONS Submission -Architect, Landscape Architect Within thirty (30) days following and Civil Engineer. Developer shall submit to execution of the DDA by the Agency. Agency for approval ofthe names and qualif- cations of its- architect, landscape architect, and civil engineer for each Pazcel. Approval -Architect, Landscape Architect Within fifteen (15) days following receipt and Civil Engineer. Agency shall approve or by the Agency. disapprove the architect, landscape architect, and civil engineer for each Pazcel. II. DEVELOPMENT Submission - Schematic/Desian Development Drawings. Developer shall prepare and submit to Agency the schematicJdesign development drawings for Parcels A andB. 2. .Approval -Schematic Drawings. Agency shall approve or disapprove the schematic/design development drawings for Parcels A and B. Submission - Preliminary Construction Drawings, and Preliminary Landscapine and Grading Plans. Developer shall prepare and submit to Agency preliminary construction drawings and preliminary landscaping and grading plans for Pazcels A and B. 4. Approval - Preliminary Construction DraWlnQS, and Preliminary Landscaping and Gradine Plans. Agency shall approve or disapprove the preliminary construction drawings and preliminary landscaping and grading plans for Parcels A and B. Santa Monica\The Village DDA documents Revised SOP At I Within ninety (90) days after execution of this DDA by the Agency and in any event prior to Close of Escrow. Within fifteen (15) business days after receipt by Agency. On or before June 30, 2011 and in any event prior to Close of Escrow. Within fifteen (15) business days after receipt by Agency. Attachment No. 3 Page 1 of 6 5. Submission -Final Construction Drawinirs and Landscapin>? and Finish Gradin>? Plans. Developer shall prepare and submit the final construction drawings and the final landscaping and finish grading plans for Parcels A and B. 6. Approval -Final Construction Drawings and Landscaping and Finish C-radine Plans. Agency shall approve or disapprove the final construction drawings and the final landscaping and .finish grading plans for Pazcels A and B. 7. Evidence of Financing. Developer shall submit to Agency for approval the Evidence of Financing for Pazcels A and B required by the Method ofFinancing (AttachmentNo.13). 8. Approval of Financing. Agency shall approve or disapprove each submission of Developer's Evidence of Financing for Parcels A and B required by the Method of Financing. 9. Receipt of Entitlements. Developer shall obtain all entitlements necessary for the development of each Parcel: Within ninety (90) days after Agency approval of the preliminary construction drawings and in any e~~2nt prior to Close of Escrow. Within fifteen (15) business days after receipt by Agency. At least thirty (30) days prior to the Close of Escrow. Within fifteen (15) business days after receipt of such submission by Agency. At least thirty (30) days prior to Close, of Escrow. 10. Execution of Agency Loan Documents. At or prior to Close of Escrow. Developer shall execute the Agency Loan Documents, the Ground .Leases and Memoranda of Ground Leases for -the Parcels.. 11. Close of Escrow/Construction Financing Event -for A and B. Developer shall have satisfied all conditions precedent to Close of Escrow for Parcels A and B, as required by the DDA and Method of Financing. Santa Monica\The Village DDA documents Revised SOP At 1 On or before July 31, 2012. Attachment No. 3 Page 2 of 6 12. Commencement of Construction Parcel B. Within thirr_y (30) days of Close of Developer shall commence construction ofthe Escrow for Parcels A and B. improvements on Parcel B, as required by the DDA and Scope of Development (Attachment No. 4). 13. Tenant Selection. Developer shall submit a At least (30) days prior to tenant selection plan for the Affordable commencement ofpre-leasing. Apartment Units for Agency review and approval, as required by the Regulatory Agreement (Attachment No. 8). 14. Management Plan. Developer shall submit the Management Plan for Parcel B for Agency review and approval, as required by the Regulatory Agreement. At least thirty (30) days prior to commencement ofpre-leasing. 15. Exterior Maintenance Plan. Developer shall submit an Exterior Maintenance Plan for Parcel B for Agency review and approval, as required by the Regulatory Agreement. 16. Rental Rates. Developer shall submit a rental rate plan for the Affordable Apartment Units for Agency review and approval, as required by the Regulatory Agreement. 17. Commencement of Pre-Leasin . Developer shall commence pre-leasing of the Affordable Units. 18. Comnletion of Construction Parcel B. Developer shall complete construction of the improvements on Parcel B, in accordance with the DDA and Scope of Development. 19. Commencement of Construction Parcel A. Developer shall commence construction of Parcel A. Santa Monica\The Village DDA documents Revised SOP At 1 At least thirty (30) days prior to commencement ofpre-leasing. At .least (30) days prior to commencement ofpre-leasing. . No eazlier than 180 days prior to completion. of construction of the improvements on Pazcel B, as required by the DDA and Scope of Development. On or before thirty (30) months after commencement of construction of Parcel B. Concurrently with commencement of construction of Pazcel B. Attachment No. 3 Page 3 of 6 20. CC&Rs for Parcel A. Developer shall submit At least thirty (30) days prior to t~'~e CC&Rs for Parcel A for Agency re~riew completion of construction of Pazcel B. and approval. 21 Comnletion of Construction Parcel A. Developer shall complete construction of the improvements on Parcel A. Any structures, improvements, facilities and/or amenities necessary for the issuance of a certificate of occupancy for the Affordable Units on Parcel Band/or in accordance with the Reciprocal Easement Agreement (Attachment No. 17} shall be completed concurrently with completion . of the improvements on Parcel B. All other improvements on Parcel A shall be completed no later than 180 days after completion of construction of Parcel B. 22. 23. 24. 25 26. Submission - Schematic/Desi Development Drawings. Developer shall prepare and submit to Agency the schematic/design development drawings for Parcel C. Approval -Schematic Drawinus: Agency shall approve or disapprove the schematicldesign development drawings for Parcel C. Submission - Preliminary Construction Drawings, and Preliminary Landseanin2 and Grading Plans. Developer shall prepare and submit to Agency preliminary construction drawings and preliminary landscaping and grading plans for Parcel C. Apnroval - Preliminary Construction Drawings and Preliminary Landsca in and Crradin Plans. Agency shall approve or disapprove the .preliminary construction drawings and preliminary landscaping and grading plans for Parcel C. Submission - Einal Construction Drawin s santa Monica\The Village DDA documents Revised SOP At 1 Within one hundred and twenty (120) days prior to close of construction financing for Parcel C. Within fifteen (15) business days after receipt by Agency. Within ninety (90) days after Ageney's approval of schematic/design development drawings for Parcel C and in any event prior to Close of Escrow. Within fifteen (15) business days after receipt by Agency. Within ninety (90) days after Agency Attachment No. 3 Page 4 of 6 and Landscanine and Finish Grading Plans. Developer shall prepare and submit the final construction drawings and the final landscaping and finish grading plans far Parcel C. 27 28. 29 30. 31 32. 33. Approval -Final Construction Drawines and Landscapma and Finish Gradine Plans. Agency shall approve or disapprove the final construction drawings and the final landscaping and finish grading plans for Parcel C. Evidence of Financin . Developer shall submit to Agency for approval the Evidence of Financing for Parcel C. _Approval ofFinancing. Agency shall approve or disapprove each submission ofDeveloper's Evidence of Financing for Parcel C required by the Method of Financing. Close of Construction Financing Event for Parcel C. Close of Financing Event for Parcel C shall occur. Commencement of Construction Parcel C. Developer shall commence construction of Parcel C. CC&Rs. Developer shall submit the CC&Rs for Parcel C for Agency review and approval. Approval of CC&Rs. Agency shall approve or disapprove the Developer's submission of CC&Rs. Santa MonicalThe Village DDA documents Revised SOP At 1 approval of the preliminary construction drawings far Parcel C and in any event prior to Close of Escrow. Within fifteen (IS) business days after receipt by Agency. At least sixty (60) days prior to the date established herein for commencement of construction on Pazcel C. Within fifteen (15) business days after receipt of such submission by Agency. At least five (5) days prior to commencement of construction of the improvement on Parcel C, in accordance with the DDA and Scope of Development. No earlier than commencement of construction for Parcels A and B and no later than .eighteen (18) months from commencement of construction of Pazcels AandB. At least thirty (30) days prior to completion of construction of Parcel- C. Within fifteen (15) business days after receipt of such submission by Agency. Attachment No. 3 Page 5 of 6 34. Completion of Construction Parcel C. No later than thirty (30) months after Developer shall complete construction of commencing construction of Parcel C. the improvements on Parcel C. Santa Monica\The Village DDA documents Revised SOP At 1 Attachment No. 3 Page 6 of 6 ATTAt;~NL4.NT N®. 2 PARTICIPATI®t~T PAg'MENT AGREEMENT This PARTICIPATION AGREEMENT ("Agreement") by and between RELATED/SANTA MONICA VILLAGE, LLC, a limited liability company ("Developer"), and the REDEVELOPMENT AGENCY OF 1"HE CITY OF SANTA MOidICA ("Agency"), a public body, corporate and politic, hereby evidences the Developer's obligation to pay the Agency the Participation Payment, in accordance with Section 701 of that certain Disposition and Development Agreement, dated as of ,between Developer and the Agency, as amended by that certain First Amendment to the DDA, dated. concurrently herewith (collectively, the "DDA") . DDA as used herein shall mean, refer to and include the DDA, as well as any riders, exhibits, addenda, implementation agreements, amendments and attachments thereto (which are hereby incorporated herein by this reference) or other documents expressly incorporated by reference in the DDA. 1. Definitions. Any capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the DDA. In addition, the following terms shall have the following meanings:. the "Aeencv Escrow Account" shall mean the escrow account established for the benefit of Agency with First American Title Insurance Company, located at . The Agency Escrow Account shall be an interest bearing account. "Associated Persons" shall mean, to the broadest extent permitted by law, present and former officers, directors, shareholders, partners, employees, agents, representatives, _consultants„ spouses, children, relatives, heirs, assigns and predecessors-in-interest and successors-in-interest of the Developer and each of its Associated Entities ("Status"), which Status shall be determined at the time Developer provides a Notice of Transfer in accordance with the procedure set forth herein. "Associated Entities" shall include parent corporations, sister corporations, subsidiaries, divisions, Affiliates, controlling and controlled entities, partnerships, predecessor partnerships; successor entities and joint ventures involving such Associated Entities. "Bulk Sale" shall mean the sale often (10) or more Market Rate Units to a Buyer. "Business Days" shall mean days other than Saturdays, Sundays, and legal holidays and closures observed by the Agency, and "days" means calendar days. If the time for performance of an obligation under this Agreement. falls on other than a working day. the time for performance shall be extended to the next working day. "Buyer" shall mean the purchaser of one or more Market Rate Units. Santa Monica\The Village Attachment NO. 2. DDA documents Rev 1. Participation Agt. Page 1 Of lZ "Cumulative Gross Revenues for Parcels A and C" shall mean the cumulative total of the Gross Revenues for Parcel A and the Gross Revenues for Parcel C. "Develoner" shall mean Related/Santa Monica Village, LLC, a limited liabilit,~ company, or its assignees and successors in interest as the lessees under the Parcel A Ground Lease and the Parcel C Ground Lease, respectively. "Fair Market Value" shall mean the amount that a willing buyer would pay and a willing seller would accept in the Santa Monica residential market fcr like and similar residential units without regard to any relationship between the buyer and the seller. "Gross Revenues for Parcel A" shall mean, at any time, the cumulative total of the Sales Prices for each Transfer of a Market Rate Unit on Parcel A, after adding the Net Upgrade Revenues and deducting applicable sales commissions and closing costs that are customary in the Santa Monica real estate market for each Transfer. "Gross Revenues for Parcel C" shall mean, at any time, the cumulative total of the Sales Prices for each Transfer of a Market Rate Unit on Parcel A, after adding the Net Upgrade Revenues and deducting applicable sales commissions and closing costs that are customary in the Santa Monica real estate market for each Transfer. "Last Market Rate Unit" shall mean the last Market Rate Unit sold by Developer on Parcel A and Parcel C combined. "Market Rate Units" shall mean the approximately sixty-six (66) Market Rate Units on Parcel A and the approximately ninety-eight (98) Market Rate Units on Parcel C. "Net Upgrade Revenue" shall mean the net revenues from the Transfer of any Upgrades to a Buyer, after deducting Developer's direct costs for the Upgrades, excluding Developer's overhead, fees and profit ("Hard Costs"). "Participation Payments" shall mean the sum of the Tier 1 Participation Payments and the Tier 2 Participation Payments. "Sale Price" shall mean the sale price of a Market Rate Unit upon a Transfer by Developer, excluding Upgrades, closing costs and sales commissions. "Saleable Square Feet" shall mean the floor area exclusively allocated to a Market Rate Unit excluding balconies, patios, exterior storage units and other similar features as well as common areas such as staircases, lift shafts, lobbies and communal toilets. It shall be the area contained within the enclosing walls of the unit measured up to the exterior face of an external wall or the centerline of a separating wall between adjoining units, as the case. may be. Enclosing walls separating a unit from a light well, a lift shaft or any similar vertical shaft, or a Santa Monica\The Village Attachment N0.2 DDA documents Pa e 2 Of IZ Rev 1. Participation Agt. g common area (e,g. corridor), shall be deemed an external wall and its full thickness shall be included. All internal partitions and columns within the units shall be included. "Term" shall mean the period of time commencing on the date of the DDA and continuing for a period of time until such time as the Last Market Rate Unit is sold by Developer and Developer has satisfied all of Developer's obligations hereunder. "Tier 1 Parcel A _Particination Deposit" shall mean each deposit made into the Agency Escrow Account after the Cumulative Gross Revenues for Parcel A have exceeded the Tier 1 Total Threshold Price for Parcel A. "Tier 2 Parcel A Particination Deposit" shall mean each deposit made into-the Agency Escrow Account after the Cumulative Gross Revenues for Parcel A have exceeded the Tier 2 Total Threshold Price for Parcel A. "Tier 1 Parcel C Particination Deposit" shall mean each deposit made into the Agency Escrow Account after the Cumulative Gross Revenues for Parcel C have exceeded the. Tier 1 Total Threshold Price for Parcel C. "Tier 2 Parcel C Participation Deposit" shall mean each deposit made into the Agency Escrow Account after the Cumulative Gross Revenues for Pazcel C have exceeded the Tier 2 Total Threshold Price for Parcel C. "Tier 1 Participation Payment(s)".shall mean the payment(s) obligated to be paid by .Developer to the Agency. once the Cumulative Gross Revenues for Parcels. A and C have exceeded the Tier 1 Total Threshold Price for Parcels A and C. "Tier 2 Participation Payment(s)" shall mean the payment(s) obligated to be paid by Developer to the Agency once the cumulative Gross Revenues for Parcels A and C have exceeded the Tier 2 Total Threshold Price for Parcels A and C. "Tier 2 Parcel A Participation Payment(s)" shall mean the payment(s) obligated to be paid by Developer to the Agency once the Gross Revenues for Parcel A have exceeded the Tier 2 Total Threshold Price for Parcel A. "Tier 2 Parcel C Particination Payment(s)" shall mean the payment(s) obligated to be paid by Developer to the Agency once the Gross Revenues for Parcel C have exceeded the Tier 2 Total Threshold Price for Parcel C: "Tier 1 Total Threshold Price for Parcel A" shall equal $1,069 multiplied by 1.15 multiplied by the total Saleable Square Feet developed on Parcel A. Santa Monica\The Village - Atta,Cllment 110. 2 DDA documents xe~ t. Participation Agt. Page 3 of 12 "Tier 1 Total Threshold Price for Parcel C" shall equal $1,079 multiplied by 1.15 multiplied by the total Saleable Squaze Feet developed on Parcel C. "Tier 2 Total Threshold Price for Parcel A" shall equal $1,069 multiplied by 1.3 multiplied by the total Saleable Square Feet developed on Parcel A "Tier 2 Total Threshold Price for Parcel C" shall equal $1,079 multiplied by 1.3 multiplied by the total Saleable Square Feet developed on Parcel C. "Tier 1 Total Threshold Price for Parcels A and C" shall mean the sum of the Tier 1 Total Threshold Sale Price for Parcel A and the Tier 1 Total Threshold Price for Parcel C, above which the Agency shall be entitled to receive Tier 1 Participation Payments. "Tier 2 Total Threshold Price for Parcels A and C shall mean the sum of the-Tier 2 Total Threshold Price for Parcel A and the Tier 2 Total Threshold Price for Parcel C above which the A2ency shall be entitled to receive Tier Z Participation Payments. "Transfer" means any assignment (other than an assignment of common area to a homeowners association), sale, lease, conveyance or other transfer by Developer to an initial Buyer of a Market Rate Unit or any portion thereof or interest therein, by any means or method. "Transfer" shall exclude any subsequent assignment, sale,-lease conveyance or other transfer by a person or entity who acquired from Developer, its successors or assigns. "Upgrades" shall mean custom features, enhancements, upgrades, options or the equivalent for a Market Rate Unit that are not (i) offered to any Buyer as standard features of a Mazket Rate Unit and/or (ii) included within the advertised sales price of a Market Rate Unit. 2. Developer's Obligation. This Agreement evidences Developer's obligation to pay the Agency the Participation Payment(s), if any. Developer covenants and agrees that during the Term of this Agreement, Developer shall make Participation Payments to the Agency based upon the provisions of this Agreement. 3. Dispute of Fair Market Value. In the event that (i) the Transfer of a Market Rate Unit is to an Associated Person or Associated Entity, and/or the Transfer entails a Bulk Sale and (ii} Agency believes that the Sale Price disclosed in the Notice of Transfer for the Market Rate Unit is less than its Fair Market Value, the Participation Payment for that Market Rate Unit shall be subject to the dispute process under Section 6(j)(the "Dispute Process"). The Agency shall have up to twelve (12) Business Days from receiving the Notice of Transfer, or twelve (12) Business Days from the Agency's receipt of the Closing Statement, if the Sales Price in the Closing Statement is less than the Sales Price described in the Notice of Transfer, to invoke the Dispute Process by delivering to Developer a written notice of dispute (the "Notice of Dispute"). Santa Monica\The Village Attachment No. 2 DDA documents Rev 1. Participa[ionAgt. ~ Page 4 Of 12 4. Payment to Agency. Subject to the requirement to make deposits ihto the Agency Escrow Account as required by this Agreement, the Participation Payment is payable at the principal office of Agency, 1685 Main Street, Reom 212, Santa Monica, California 90401, or at such other place as the Agency may inform the Developer in writing, in Lawful money of the United States. 5. Securi .This Agreement shall be secured by the Participation Deed of Trust (Attachment 19A to the DDAj. 6. Procedure for Payment. Developer shall make payments to the Agency as provided in this Section 6. a. Notice of Transfer. Within five (5) days of opening escrow for the purchase and sale of a Market Rate Unit between Developer (as seller) and Buyer, Developer shall provide a Notice of Transfer to the Agency. The Notice of Transfer shall include the following information: i. the total amount to be paid by the Buyer to Developer as consideration for the Transfer, including (A) the Sales Price for the Mazket Rate Unit being Transferred; (B) the sales price of any Upgrades to be Transferred in connection with such Market Rate Unit; and (C) the Hard Costs of the Upgrades described in subparagraph (B); ii. the number of Market Rate Units being Transferred with an express, readable (no less than standard I2 font) designation of "BULK SALE" if ten (10) or more units are to be Transferred to the Buyer; iii. the name of the Buyer; iv. if the Buyer is an Associated Person or Associated Entity, a description of the Buyer's Status and association with Developer; v. the legal address of each Market Rate Unit being Transferred; vi. if the Buyer is an Associated Person or an .Associated Entity, an itemization of closing costs, and sales commissions associated with each Market Rate Unit being Transferred. b. Closine Statement. Developer shall provide a copy of the escrow closing statement for each Market Rate Unit to the Agency ("Closing Statement") ne later than ten (10) business days after the close of escrow for the purchase and sale of the Market Rate Unit. c. Participation Deposit for Parcel A. Santa Monica\The Village Attaellment NO. 2 DDA documents Rev 1-. Participation Ag[. Page 5 Of 12 Tier 1. To the extent that- the Transfer of a Market Rate Unit on Parcel A causes the Cumulative Gross Revenues. for Parcel A to exceed the Tier t Totai Threshold Price for Parcel A, Developer shaii have the escrow officer designated for the purchase and sale of the Market Rate Unit deposit into the Agency Escrow Account, upon close of escrow for that Market Rate Unit, thirty percent (30%) of the Gross Revenues for Parcel A in excess of the Tier 1 Total Threshold Price for Farcel A after subtracting any Tier 1 Parcel A Participation Deposit, if any, deposited into the Agency Escrow Account from the Transfer of other Market Rate Units for Parcel A. Tier 2. To the extent that the Transfer of a Market Rate Unit on Parcel A causes the Cumulative Gross Revenues for Parcel A to exceed the Tier 2 Total Threshold Price for Parcel A, Developer shall have the escrow. officer designated for the purchase and sale of the iYlarket Rate Unit deposit into the Agency Escrow Account, upon close of escrow for that Market Rate Unit, fifty percent (50%) of the Gross Revenues for Parcel A in excess of the Tier 2 Total Threshold Price for Parcel A after subtracting any Tier 2 Parcel A Participation Deposit, if any, deposited into the Agency Escrow Account from the Transfer of other Market Rate Units for Parcel A. d. Participation Deposit for Parcel C. Tier 1. To the extent that the sale of a Mazket Rate Unit on Parcel C causes the Cumulative Gross Revenues for Parcel C to exceed the Tier 1 Total Threshold Price for Parcel C, Developer shall have the escrow officer designated for the purchase and sale of the Market Rate Unit deposit into the Agency Escrow Account, upon close of escrow for that Market Rate Unit, thirty percent (30%) of the Gross Revenues for Pazcel C in excess of the Tier 1 Total Threshold Price for Parcel C after subtracting any Tier 1 Parcel C Participation Deposit, if any, deposited into the Agency Escrow Account from the sale of other Market Rate Units for Parcel C. Tier 2. To the extent that the sale of a Market Rate Unit on Parcel C causes the Cumulative Gross Revenues for Parcel C to exceed the Tier 2 Total Threshold Price for Parcel C, Developer shall have the escrow officer designated for the purchase and sale of the Market Rate Unit deposit into the Agency Escrow Account, upon close of escrow for that Market Rate Unit, fifty percent (50%) of the. Gross Revenues for Parcel C in excess of the Tier 2 Total Threshold Price for Parcel C after subtracting any Tier 2 Parcel C Participation Deposit, if any, deposited into the Agency Escrow Account from the sale of other Market Rate Units for Pazcel C e. Participation Amount. Tier 1. To the extent that the Cumulative Gross Revenues fer Parcels A and C exceeds the Tier 1 Total Threshold Price for Parcels A and C, the escrow officer shall disburse thirty percent (30 %) of the excess amount to the Agency; first, from any Tier 1 Parcel A Participation Deposits and Tier 1 Parcel C Participation Deposits in the Agency Escrow Account, then, upon depletion of the Agency Escrow Account, from the escrow account of each Market santa Monica\The Village Attachment NO. 2 DDA documenu Rev 1. Participation Agt. Page 6 Of 12 Rate Unit generating the excess amount upcn the close of escrow for such A~Iarket Rate'Unit; until the sale of the Last Market Rate Unit ("Tier 1 Participation Payment(s)"), after subtracting any prior Tier 1 Participation Payment(s) That have been previously disbursed to the Agency, the objective being that the final Tier I Participation Payment is equal to thirty percent (30%) of the excess of the Cumulative Gross Revenues for Parcels A and C (up to the Tier 2 Total Threshold Price for Parcels A and C) over the Tier 1 Total Threshold Price for Parcels A and C. See Table of Examples, attached hereto as Exhibit "B: ' Tier 2. To the extent that the Gross Revenues for Parcels A and C exceed the Tier 2 Total Threshold Price for Parcels A and C, the escrow officer shall disburse fifty percent (50%) of the excess amount to the Agency, first, first from any Tier 2 Parcel A Participation Deposit and Tier 2 Parcel C Participation Deposit: in the Agency Escrow Account, then, upon depletion of the Agency Escrow Account, from the .escrow account of each Market Rate Unit generating the excess amount upon the close of escrow for such Market Rate Unit, until the sale of the Last Market Rate Unit ("Tier 2 Participation Payment(s)"), after subtracting any prior Tier 2 Participation Payment(s) that have been previously disbursed to the Agency, the objective being that the final Tier 2 Participation Payment is equal to fifty percent (50%) of the excess of the Gross Revenues for Parcels A and C over the Tier 2 Total Threshold Price for Parcels A and C. See Table of Examples; attached hereto as Exhibit "B." f. Excess Participation Deposits. Tier 1. ' To the extent that the sum of the Tier 1 Parcel A Participation Deposit plus the Tier I Parcel C Participation Deposit exceeds the sum of the Tier 1 Parcel A Participation Payment plus the Tier 1 Pazce1 C Participation Payment after the sale of the Last Market Rate Unit, the escrow officer. shall disburse this excess amount to the Developer upon the sale of the Last Market Rate Unit. Tier 2. To the extent that the sum of the Tier 2 Parcel. A Participation Deposit plus the Tier 2 Parcel C Participation Deposit exceeds the sum of the Tier 2 Parcel A Participation Payment plus the Tier 2 Parcel C Participation Payment after the sale of the Last Market Rate Unit, the escrow officer shall disburse this excess amount to the Developer'upon the sale of the Last Market Rate Unit. g. No Agency Participation. In the event that the. Cumulative .Gross Revenues for Parcels A and C do not exceed the Tier 1 Total Threshold Price for Parcels A and C after the sale of the Last Market Rate Unit, the escrow officer shall disburse all proceeds, if any, in the Agency Escrow Account to the Developer upon the sale of the Last Mazket Rate Unit, and the Participation Payments shall be zero. In the event that the Cumulative Gross Revenues for Parcels A and C exceed the Tier 1 Total Threshold Price for Parcels A and C after the sale of the Last Market Unit, but do not exceed the Tier 2 Total Threshold Price for Parcels A and C, the Tier 2 Participation Payments shall be zero and the escrow officer shall disburse all proceeds, if Santa Monica\The Village Attachment No. 2 DDA documents Rev 1. PaRicipa[ion Agt. Page 7 Of 12 any, in the Agency Escrow Account to Developer after paying all Tier I Participation Payments to the Agency in accordance herewith. h. Escrow Instructions. This Agreement and any supplemental instructions to implement this Agreement, mutually agreed upon in writing by the Agency and Developer, shall serve as the escrow instructions to the escrow officer for the sale of any Market Rate Unit and to the escrow officer for the Agency Escrow Account. i. Release of Lien. Upon the sale of each Market Rate Urit, the Agency shall record or cause to be recorded in the Office of the County Recorder for the County of Los Angeles a "Release of Lien" in the form attached. hereto as Exhibit "A" with respect to the applicable Market Rate Unit; provided, however, that (i) the Agency has not invoked the Dispute Process and (ii) the Developer has not failed (after an opportunity to cure) to deposit any Participation Deposit and/or disburse any Participation Payment, as and.when required by. this Agreement (referenced hereinafter as a "Material Default"). If the Agency invokes the Dispute Process and the Developer is not in Material Default of this Agreement, the Agency shall record a Release of Lien if (i) the Developer credits the Agency's asserted Fair Market Value for that Market Rate Unit toward the Gross Revenues for Parcel Aand/or the Gross Revenues for Parcel C ("Credit"), as applicable, which Credit shall be subject to adjustment based upon the outcome of the Dispute Process. j. Dispute Process. In accordance with Section 3, herein, the Agency may, in its sole and absolute discretion, invoke. the Dispute Process by providing Developer with a Notice of Dispute. The Notice of Dispute shall identify each Market Rate Unit sold to an Associated Person or ah Associated Entity, or subject to a Bulk Sale, that is the subject of the dispute. Developer shall have ten (10) business days to respond to the Notice of Dispute by either (i) using the Fair Market Value asserted by the Agency for that Market Rate Unit in the calculation of Gross Revenues for Parcel A or Gross Revenues for Parcel C, as applicable or (ii) invoking the appraisal process directly below ("FMV Appraisal Process"), by written notice to the Agency ("Notice of Appraisal Process"). Developer shall give written notice of its election of either (i) or (ii} herein. In the event Developer elects the FMV Appraisal Process, Developer shall provide Agency with documentation evidencing the Developer's basis for asserting that the Market Rate Unit was Transferred at or above Fair Market Value. k. FMV Appraisal Process. In the event that Developer invokes the FMV Appraisal Process, Agency shall submit to Developer a List of Qualified Appraisers within seven (7) business days of the Developer's Notice of Appraisal Process. Developer shall select a "Qualified Appraiser" from the List of Appraisers provided by Agency within three (3) Business Days of the Agency's submittal to Developer of the List of Appraisers. The L,st of Appraisers shall be generated by the Agency in.accordance with Section 6{1): The Qualified Appraiser shall complete and submit a Fair Market Value appraisal of the Market Rate Unit ("Appraisal"), which shall be no higher than the Fair Market Value asserted by the Agency and no lower than the Sales Price of the Market Rate Unit. The Appraisal shall be submitted to the Agency and Santa Monica\The Village Attachment NO.2 DDA documents Pa e 8 Of. 12 Rev 1. Participation Agt. g Developer on or prior to 5:00 p.m. Pacific time on the date that is fifteen (15) Business Days following the Developer's selection of the Qualified Appraiser. The value presented by the Appraisal shalt be used in the calculation of Gross Revenues far Parcel A or Gross Revenues for Parcel C, as applicable. However, if the Appraisal is ten percent or more above the Sale Price, then Develeper shall pay for the Appraisal. If the Appraisal is less than ten percent above the Sale Price, then Agency shall pay for the Appraisal. 1. List of Appraisers. The List of Appraisers shall contain no less than three (3) "Qualified Appraisers" selected by the Agency. The Agency may provide a new List of Appraisers each time that Developer invokes the FMV Appraisal Process: For purposes hereof, a "Qualified Appraiser" shall mean any MAI designated appraiser with a minimum of five (5) years of experience appraising residential condominiums in Santa Monica. m. R~i,ht to Audit. i. Records. The Developer shall make available to Agency or Agency's designated agent, at [insert local address of Developer], full and accurate. books and accounts, records, cash receipts, invoices, and other. pertinent records associated with the Transfer of each Market Rate Unit ("Records"). Such Records shall be kept by the Developer for a three (3) year period from the Transfer of the Last Market Rate Unit. The Agency shall be entitled during such period to inspect, examine and to copy at the Agency's expense, the Developer's Records for the. purpose of this Agreement. The Developer shall cooperate fully with the Agency during any such inspection. ii: Audit. The Agency shall also be entitled, at its expense, to perform an independent audit of the Developer's Records, by a certified public accountant designated by the Agency (the "Agency CPA"). Any such audit shall be conducted during normal business hours. A copy of any such audit shall be provided to Developer, and the Developer shall be provided with an opportunity to address the findings of the audit.. Should the Agency determine that based on the audit there is a deficiency in the Participation. Payments due and payable to the Agency, the deficiency amount shall be immediately due and payable to the Agency, absent manifest error in the Agency's determination. If such deficiency exceeds five percent (5%} of the amount of Participation Payments actually paid to the Agency, the Developer shall, in addition to paying the deficiency amount to the Agency, reimburse the Agency for the cost of the audit plus ten percent (10%) of the deficiency amount as compensation to the Agency for administrative costs. and loss of interest on the deficiency amount. However, in the event the Agency audit discloses that such deficiency is less than five. percent (5%) of the actual Agency Participation Payments paid to the Agency, only the deficiency amount shall be due and payable to the Agency. The Developer shall pay any such deficiency amount and agrees that any administrative or late charges-applicable thereto represent a fair and reasonable estimate of the costs that the. Agency would incur from the Developer's late payment. Acceptance of late charges and any Santa blonicalThe Village Attachment A10.2 DDA documents Rev t. Participation Agt. Page 9 of 12 portion of the Iate payment of the deficiency amount by the Agency shall in no event constitute a waiver of ary other default under this Agreement with respect to any other late payments by the Developer nor prevenf the Agency from exercising any of its other rights and remedies granted in this Agreement or under operation of law. 7. Non-Recourse Obli ae tion. The obligation to make the Participation Payment to the Agency is anon-recourse. obligation of the Developer. Developer shall not have any personal liability, except as provided in this Section. Provided, however, that the foregoing shall not {a) constitute a waiver ofany obligation evidenced by this Agreement, the DDA, or the Participation Deed of Trust; (b) limit the right of the Agency to name Developer as a party defendant in any action or suit for judicial foreclosure and sale under this Agreement, the DDA, or the Participation Deed of Trust or any action or proceeding hereunder so long as no judgment in the. nature of a deficiency judgment shall be asked for or taken against Developer; (c) release or impair this Agreement, the DDA, or the Participation Deed of Trust; (d) prevent or in any way hinder Agency from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, any other remedy against the mortgaged property or as prescribed by law or in equity in case of default; (e) prevent or in any way hinder Agency from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, its remedies in respect of any deposits, insurance proceeds, condemnation awards or other monies or other collateral or letters of credit securing this Agreement, the DDA, or the Participation Deed of Trust; (f) relieve Developer ofany of its obligations under any indemnity delivered by Developer to Agency; or (g) affect in any way the validity ofany guarantee or indemnity from any person of all or any of the obligations evidenced and secured by this Agreement, the DDA, or the Participation Deed of Trust. Notwithstanding the first sentence of this paragraph, Agency may recover directly from Developer or from any other party: (a) any damages, costs and expenses incurred by Agency as a result of fraud or any criminal act or acts of Developer or any partner, shareholder, officer, director or employee of Developer, or of any member or general or limited partner of Developer, or ofany general or limited. partner of such member or general or limited partner; (b) all court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions (provided that Agency shall pay Developer's reasonable court costs and attorneys'-fees if Developer is the prevailing party in any such enforcement or collection action). 8. Developer Waivers. Developer waives presentment for payment, demand, protest, and notices of dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on the ground ofany extension or extensions of the time of payment or ofany due date under this Agreement, in whole or in part, whether before or after maturity and with or without notice. Developer hereby agrees to pay all costs and expenses; including reasonable Santa Monica\The Village AttacllmentN0.2 DDA documents Rev 1. Participation Agt. Page 1 ~ Of 12 attorney's fees, which may be incurred by the holder hereof, in the enforcement of this Agreement or the Participation Deed of Trust, or any term or provision of either thereof. 9. Agency Remedies. Upon the failure of Developer to perform or observe any term or provision of this Agreement, or upon the occurrence of any event of default under the terms of this Agreement or the Participation Deed. of Trust,.. the Agency may exercise its rights or remedies hereunder or thereunder: 1D. Ri¢hts Held Invalid. If the rights created by this Agreement shall be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the remaining obligations shall be completely performed and paid. 11. Gender Neutral. In this Agreement the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, if the context so requires. 12. Discrepancies. In the case of any inconsistency between the provisions of this Agreement and the DDA, the provisions of this Agreement shall prevail. SIGNATURES ON NEXT PAGE IN WITNESS WHEREOF Developer and Agency have executed this Agreement as of the day and year set forth below. REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA (Agency) Date: Chairman ATTEST: Agency Secretary REVIEWED AND APPROVED AS TO FORM: Agency General Counsel Santa Monica\'rhe Village Attachment NO. 2 nDA aocnments pa e 11 of 12 Rev 1. Participation Ag[. g By: APPROVED AS TO FORM: KANE, BALLMER & BERKMAN Agency Specia] Counsel By: RELATED/SANTA MONICA VILLAGE, LLC, a California limited liability company By: The Nicholas Company, Inc., a Delaware corporation its Non-Member Manager Date: By: Name: Title: Santa Monica\The Village Attaell7nerit NO. 2 DDA documents Rev 1. Participation Agt. Page 12 Of 12 EXHIBIT "A" RELEASE OF LIEN [BEHIND THIS PAGE] EXHIBIT "B" TABLE OF EXAMPLES Assumptions for Example 1: Tier 1 Total Threshold Price for Parcel A equals $9.0 million and Tier 1 Total Threshold Price for Parcel C equals $13.0 million. The Tier 1 Total Threshold Price for Parcels A and C equals $22.0 million. Tier 1 Parcel A Participation Deposits will be deposited into the Agency Escrow Account after Gross Revenues for Parcel A exceed $9.0 million. Tier 1 Parcel C Participation Deposits will be deposited into the Agency Escrow Account after Gross Revenues for Parcel C exceed $13.0 million. Tier 1 Participation Amount(s) will be drawn first from the Agency Escrow Account, and then on a unit-by-unit basis once the Tier I Total Threshold Price for Parcels A and C is achieved. Tier 2 Total Threshold Price for Parcel A equals $11.0 million and Tier 2 Total Threshold Price for Parcel C equals $15.0 million. Tier 2 Parcel A Participation Deposits will be deposited into the Agency Escrow Account after Gross Revenues for Parcel A exceed $11.0 million. Tier 2 Parcel C Participation Deposits will be deposited into the Agency Escrow Account after Gross Revenues for Parcel C exceed $15.0 million. Tier 2 Participation Payment(s) will be drawn first from the Agency Escrow Account, and then on a unit-by-unit basis.. [space ]eft intentionally blank] Example 1: Parcel A -Tier I Tota] Threshold Price for Parcel A - $9 Site A: millio n, Tier 2 Total Th reshold Price fo r Pazcel A - $11 .Tazget Average Price Per Squaze Foot = $1 069 million , Tier 1 Mazgin above Target = $1,229 per square foot of saleable area (1.15 multiplied times the Target,Average Price Per Squaze Foot) Tier 2 Margin above Tazget = $1,390 psf (1.3 multiplied times the Target Average Price Per Square Foot) Agency Participation: 30% of every dollar of Average Sales Revenue between$1,229and$1,390per square foot. of saleable area 50% of every dollar of Average Sales Revenue - above $1,390 per square foot of saleableazea Unit Unit Sates Cumulative Participation Participation Deposit @ 50%Above Tier 2 Total Price Sales Deposit @ 30% Threshold Price for Parcel A Revenue Above Tier 1 Total T}reshold Price for Parcel A A-1 $1 000,000 $],ooo,ooo $o $o A-2 $750,000 $1,750,000 $0 $0 A-3 $1,300,000 $3,050,000 $0 gp A-4 $900,000. $3,950,000 $p $0 A-5 $1,100,000 $5,050,000 $0 $0 A-6 $1,200,000 $6,250,000 $0 $0 A-7 $850,000 $7,100,000 $0 gp A-8 $1,100,000 $8,200,000 $0 $0 A-9 $1,000,000 $9,200,000 $60,000 $0 Ado $1,500,000 $10,700,000 $450,000 $p A-11 $600,000 $1],300,000 $90,000 $150,000 Total $600,000 $150,000 750,000 Parcel C -Tier 1 Total Threshold Price for Pazcel C - $13 Target Average Price Per Squaze Foot = $1,079 million , Tier 2 Tota] Threshold Price for Parcel C - $IS Tier 1 Margin above Target = $1,241 per squaze miiiion . foot of saleable area (1.15 multiplied times the Target Average Price Per Square Foot) Tier 2 Margin above Target = $1,403 psf (1.3 multiplied times the Tazget Average Price Per Square Foot) Agency Participation: 30% of every dollar of Average Sales Revenue. between $1;241 and $1,403 per square foot of saleable area - 50% of every dollar of Average Sales Revenue above $1,403 per square foot - of saleable area Unit Unit Sales Cumulative Participation Participation Deposit @ 50% Above Total Price Sales Deposit @ 30% Threshold Price for Parcel C Revenue Above Tota] Threshold Price for Parcel C c-t $tsoo,aao $1soo,aao $a c-z $t,zso,oao $2,7so,aoo $o C-3 $1,700,000 $4,450,000 $0 C-4 $1,500,000 $5,950,000 $0 C-5 $1,700,000 $7,650,000 $0 C-6 $1,700,000 $9,350,000 $0 C-7 $1,400,000 $10,750,000 $0 C-8 $1,600,000 $]2,350,000 $0 C-9 $1,500,000 $13,850,000 $25s,000 C-IO $2,000,000 $15,550,000 $345,000 $425,000 C-Ii $1,200,000 $17,050,000 $0 $600,000 Total $fi00,000 $1,025,000 $1,625,000 Cumulative Gross Revenues for Pazcels A and C totals $28,350,000. The Tier 1 Total Threshold Price for Parcels A and C equals $22 million. Amount available for participation totals $6,3s0,000. Agency Participation. equals $2,375,000.. The Tier 2 Pazcel A Participation Payment is $150,000. The Tier 2 Parce] C Participation Payment is $1,025,000. Example 2: Pazce]A -Tier 1 Total Threshold Price for Parcel A - $10 Site A: million, Tier 2 Total Thueshold price for Pazcel A is $12 Tazget Average Price Per Squaze Foot = $1,069 million. Tier 1 Margin above Target= $1,229 per squaze foot of saleable area (1.15 mutiplied times the Tazget Average Price Per Square Foot) Tier 2 Margin above Target = $1,390 psf (1.3 multiplied times the Target -- Average Price Per Square Foot) Agency Participation: 30% of every dollaz of Peerage Sales Revenue between $1,229 and $1,390 per square foot of saleable area 50% of every dollaz of Average Sales Revenue - above $1,390 per square foot '.. of saleable area Unit Unit Sales Cumulative Participation Participation Deposit @ SO% Above Total Price Sales Deposit @ 30% Threshold Price for Pazcel C '~~ Revenue Above Total ', Threshold Price for Pazcel A A-I $1,000,000 $1,000,000 $0 $0 A-2 $750,000 $1,750,000 $0 $0 A-3 $1,300,000 $3,050,000 $0 $0 ''. A-4 $900,000 $3,950,000 $0 $0 '. A-5 $1,100,000 $5,050,000 $0 $0 A-6 $1,20Q,000 $6,250,000 $0 - $0 '. A-7 $850,000 $7,100,000 $0 $0 - ', A-8 $1,100,000 $8,200,000 $0 $0 '. A-9 $1,000,000 $900,000 $0 $0 ~'~ Ad 0- $1,500,000 $10,700,000 $210,000 $0 ', A-ll $600,000 $11,300,000 $180,000 $0 - Total $390,000 $0 $390,000 - Pazcel C -Tier 1 Total Threshold Frice for Pazcel C - $IS Site A: million; Tier 2 Total Threshold Frice for Pazcel C is $17 Tazget Average Price Per Squaze Foot = $1,069 Tier 1 Margin above Tazget = $1,229 per square million. foot of saleable area (L15 - multiplied times the Tazget leverage Price Per SgnazeFoot) Tier 2 ivlargin above Target = $1,390 psf (1.3 multiplied times the Tazget Average Price Per Square Foot) Agency Participation: 30% of every dollar of Average Sales Revenue between $1,22S and $1,390 per square foot of saleable area 50% of every dollar of Average Sales Revenue - above $1,390 per squaze foot of saleable area Unit Participation Cumulative Participation Part=cipation Deposit @ 50% Above Total Deposit @ Sales Deposit @ 30% Threshold Price for Parcel C 50% Above Revenue Above Total Tier 2 Total Threshold Price for - Threshold Pazcel C Price for Pazcel A C-1 $1,200,000 $1,200,000 $0 $0 C-2 $1,15Q,000 $2,350,000 $0 $0 C-3 $1,000,000 $3,350,000 $0 $0 C-4 $900,000 $4,250,000 $0 $0 C-i $1,100,000 $5,350,000 $0 $0 C-6 $1,000,000 $6,350,000 $0 $0 C-7 $950,000 $7,300,000 $0 $0 C-8 $800,000 $5,100,000 $0 $0 C-9 $1,20Q,000 $9,300,000 $0 $0 C-10 $1,400,000 $10,700,000 $0 $0 C-ll $700,000 $11,400,000 $0 $0 T°tal $0 $0 $0 Cumulative Gross Revenues for Parcels A and C totals $22,700,000. The Tier 1 Total Threshold Price for Pazcels A and C equals$25 million. No revenue is available for Agency Participation as the Cumulative Gross Revenues for Parcels A and C do not exceed the Tier 1 Total Threshold Price For Parcels A anc C. Developer is repaid $390,000 from the Parcel A escrow account. iCrcl%?~d~~ ~~ Changes made to building on Site A 1. The ground floor profle has changed at street level in plan 2. The ground floor elevation has been modified. 3. The area of the retail has been increased From 9,930SF to 10,371SF 4. The loratiori of lobby& gym has changed on the ground floor. 5. The floor to floor heights has been changed to get higher retail of min 15 feet at the pedestrian level. 6. Tha number of units on the ground floor has changed from 8 to 9. Siz units have mezzanine floors and three are street studios that have an average of 14 feet clear ceilings. 7. The balcony area has increased on Olympic Drive. e. The glassy bays on Olympic drive have been dropped from the 3rd floor to the 2nd floor. The glass canopy from the 5the floor terraces has been eliminated. 9. The profile of the balwnies has been changed 10. The dancing cubes of the 5th and 6th floor have been widened by an average of 4 feet. 11. Some of the dancing cubes have been connected by a smaller and lower glassy element to increase the unit plan efficiency layout. 12. New bay windows have been added to these dancing cubes to capture more views from the inside of the units 13. The proportion and location of the windows and their mullions have been altered to accommodate the interior layout of me unit plan 14. The Olympic plaza width has been changed from 58 Feet to 54 Feet. 15. The sky bridge width has been changed from 35 feet to 36 feet. 16. The community room has a clear ceiling height of 1 D feet thus raising a portion of the deck above by 2 feet. 17. There is a new glass canopy on the living street side of the sky bridge. 16. The total number of units is 65. (was 66) 19 Catherine Wagner's art piece is a part of the ceiling of the Olympic Bridge. , 2D. The location of the public elevator from the parking to the living street has been Uangetl. 21. The bay window proportions have been changed 22 The walkways to the units on the living street side are no longer separated by a 3 feet floor opening due to structural constraints. Instead, some of the units have an entrance balcony/alcove for privacy 1. The location of the lobby has moved north and its entrance is located within the public plaza. 2. The location of the public plaza has moved north and the waterfall is being eliminated. 3. The area of the public plaza has increased from 1376 SF to 2400 SF 4, The retail area has increased from 7400 SF to 9600 SF 5. Theaccess from the public parking to Ocean Avenue has been changed to accommodate the new retail parking layout 6. The ground floor plan and profile has changed to accommodate all of the above changes. 7.~ The proportion of the three building masses has been modifetl to increase the space between the buildings from 20 feet to 32 feet each. 8: The pool and spa has moved from the 2nd floor to the roof of the northem most building. (on the 8th floor) 9. The event space/party room is located on the 6th floor of the northern mast building. 10. The number of vertical circulation cores is reducetl from 5 to 3, thus increasing efficiency in floor plan & circulation. The main/middle core on the secontl wing goes up to 96 feet in height. 11. The proportion of the glassy bays has changed to accommodate the unit plan changes. 12. An additional glassy bay/ pop out has been added to the north elevation. ~. 13. The floor to floor heights have been modified to gel a higher retail of 17 feet at the pedestrian level. 14. The balcony location and profile has changed to accommodate changes in unit plans. 15. The walkway/breezeway areas between the three wings of the building have changed to accommodate units/usable space. This area had open walk ways that were stacked on each floor. The circulation ele- menlnow is anenclosed space. ~ . 16. The percentage of openings on the east elevation has been reduced to accommodate building code guidelines. 17. The glass panels on the balconies and east elevation have been removed. 18. The building structure has been made more efficient. 19. The total number of units is 97(not 98) Site C: March 2008: Aerial view along Ocean Avenue Site C: June 2010: Aedal view along Ocean Avenue __ _. ___ ~~ ~~o~~Eew~~~~~~~o~ ~ __ ~.Ee~~ ~ ~ -- -- ~~ - ~ t.~_.. ~ _ i "' ~T I ~ {!'. •wa am9N vm t ++ eScH ~ nr, ? ~ ~c~ _ „ WP + ~ouexwlas ': ~ ~ - t r x+e r z wv.: MYC. Y ~ ,~ rK.r ~R ~ ~ ~"°' n "' ~''` ~. ~ r ~ ~~ +.~r~ S a H 4! -: . I r ~r r"C Itlw ~~ ~ ~9~~ ,~+d,~~ ~ ~,• ~' m .~e a ~ ~ a ~ ~ ~ ~ e Rg'' rti .¢4 i ~ o W «„ g .: ~ ~ ~w. ~ ,a P^sa oa ~ „ ~ ~ _ 3 ..~.., r ..+..c s z~ -.. ~ r ' _.. A , ~ ' s:c#, n.~ 6 ~w. ~~" ~. .e ~~7 ~ r 3 - °° Y Y i :1 " _. _._ _ „r.: _ ._. _. OCWInvErvuE -0EMYY~tIfIE Site C: March 2008: Roof Plan showing Heights Site C: June 2010: Roof Plan showing Heights Reference Resolution No. 10513 (CCS) and Amended Contract No. 8934 (CCS).