HDC - Item 2 - Levine Management Agreement/Lease-Up Budget, s ci&:
%►SSOCIATESINE
ECONOMIC DEVELOPMENT
REDEVELOPMENT
REAL ESTATE CONSULTING
AFFORDABLE HOUSING
To' Frank Tripepi, Executive Director
From: Stephen Copenhaver, GRC
Date: April 9, 2002
Subject: Garvey Avenue Community Center and Senior Housing Project:
Levine Management Agreement/Lease -Up Budget
Attached, please find a copy of the proposed Property Management Agreement and a
Lease -up Budget for the senior housing project on Garvey Avenue. It is anticipated
that this housing project will be completed in July of this year, and therefore it is the
appropriate time to initiate discussions on lease -up policies, contract for property
management services and establish a budget for the initial lease -up effort,
Due .to the performance of the Levine Management Group on the Angelus . Senior
Housing Project, a proposal for property management services was secured for the
Garvey project. The proposed contract is substantially similar to the existing
management contract for the Angelus Senior Housing Project. The property
management company is responsible for.supervising on -site management and routine
maintenance, collecting rent, preparing an annual operating budget for the Board's
approval , maintaining books and records and obtaining bids on capital expenditures
authorized by the Board.
The management contract requires a fidelity bond, workers compensation insurance
and li4bility insurance. The contract has a cross indemnification provisison whereby
each party indemnifies the other from acts of negligence.
The term of the Agreement is for one year with automatic annual extensions unless
either party elects not to extend the contract with or without cause on 60 -days written
notice. The City Attorney has reviewed and approved the agreement.
The management fee is $2304.00 each month or $32.00 per unit. The initial lease -up
budget is $125 per unit or $9,000. Both of these fees are well within industry
standards (off- -site management fees in the marketplace are generally 10% higher than
the proposed, contract). The total lease -up period budget, which includes Levine's fees
($125 /unit) plus advertising, office expense, salaries, equipment, supplies, etc., is
$21,339. The proposed budget entitled "Garvey Senior Lease -up Budget" is attached
for the Board's review.
HOUSING AGENDA
APR 60 2002
ITEM No. a —_J
March 13, 2002
Page 2
Recommendations
1. Approve the management contract with Levine Management Group.
2. Appropriate funds for the lease program in the amount of $21,339.00.
PROPERTY MANAGEMENT AGREEMENT
This Agreement is made as of the date set forth herein, between the Owner ( "Owner ")
and Agent ( "Agent ") identified on the signature page hereof. Certain terms of this Agreement
are set forth on the Information Schedule (the "Information Schedule ") attached hereto and
made a part hereof.
WITNESSETH:
In consideration of the terms, conditions, and covenants hereinafter set forth, Owner and
Agent hereby mutually agree as follows:
1. Definitions. As used in this Agreement:
a) "Building" shall have the meaning ascribed to such term it Section B of the
Information Schedule.
b) "Fiscal Year" shall begin on the V day of July each year and end on the 30"' day of
June each year.
c) "Gross Collections" shall mean all amounts actually collected by Agent, as rents or
other payments, but excluding (i) income derived from interest or investments, (ii)
discounts and dividends on insurance, and (iii) security deposits.
d) "Gross Rents" shall mean revenues collected from Tenants plus any federal
assistance paid to owner with respect to the Building.
e) "Lease" shall mean any Lease in which Owner has agreed to let and Tenant has
agreed to accept the dwelling unit of the Building identified in the Lease in
accordance with the terms of the Lease.
"Mortgages" shall mean, collectively, all mortgages from time to time encumbering
the Building and all promissory notes secured thereby.
g) "Operating Account" shall mean an account in Building's name and designated of
record in an account name identifying the Building and approved by owner in writing,
at such financial institution as Owner may specify from time to time in writing.
h) "Rent" shall mean that monthly amount which Tenant is obligated to pay Owner
pursuant to the terms of a Lease.
i) "Tenant" shall mean a person or family occupying. A dwelling unit in the Building
pursuant to a Lease.
2. Appointment and Acceptance Owner appoints Agent as exclusive agent for the
management of the Building, and Agent accepts the appointment, subject to the terms and
conditions set forth in this Agreement. Agent represents that it is experienced in professional
management of property of the character and occupancy of the Building, and Agent agrees to
manage the Building in accordance with the highest professional standards for such property.
Agent shall act in a fiduciary capacity with respect to the proper protection of and accounting
for Owner's assets, in an independent manner with all third parties (including affiliates of
Agent) and in the best interests of the Owner at all times.
3. Management Plan A Management Plan for the Building (the "Plan ") can be prepared upon
request and only will be implemented if the Plan is approved by the owner. The Plan, if
applicable, contains a comprehensive and detailed description of the policies and procedures
to be followed by Agent in the management of the Building, including but not limited to the
collection of delinquent rents and charges; and the provisions of this Agreement are to be
read in conjunction with and not as a limitation upon the specific obligations of Agent as set
forth in the Plan. Agent agrees to comply with all applicable provisions of the Plan,
regardless whether specific reference is made thereto in any particular provision of this
Agreement. Agent shall prepare a Management Plan for the building based upon the existing
management plan for the Angelus Senior Housing project, owned by the Owner and managed
by the Agent.
4. Meeting with Owner. Agent agrees to cause a representative of Agent to confer with owner
and to attend meetings with owner at any reasonable time or times requested by Owner.
5. Basic Information As soon as practicable, but not later than final completion of
rehabilitation or construction of the Building or any phase thereof, owner shall furnish Agent
with a complete set of general plans and specifications for the Building and copies of all
guarantees and warranties pertinent to construction and fixtures and equipment of the
Building. With the aid of this information and inspection by competent personnel, Agent
shall thoroughly familiarize itself with the character, location, construction, layout, plan and
operation of the Building, and especially the electrical, heating, plumbing, and ventilating
system, and all other mechanical equipment in the Building.
6. Development Phase Agent shall facilitate the work of Owner's general contractor in an
effort to minimize disturbance of the Tenants and promote timely completion of
rehabilitation or construction of the Building. Any disputes between the Agent and the
general contractor shall be immediately referred to Owner by Agent. Further, if applicable,
Agent shall do the following during construction:
a) Post notices around the construction area warning Tenants and others that area is
under construction and trespass may be hazardous;
b) Respond to Tenant complaints regarding the construction activity and notify Owner
thereof, and
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c) Notify Owner of any dangerous condition that emanates from construction.
7. Marketing. Agent shall carry out the 'marketing activities prescribed in the Plan or approved
by owner in writing. Advertising expenses incurred by Agent on behalf of Owner shall be
paid out of the Operating Account as expenses of the Building.
8. Resident Selection. Agent shall accept applications for tenancy on a form of tenant
application approved by the Owner. Agent shall review all applications for eligibility and
submit all qualified applications to the Owner for approval, which shall not be unreasonably
withheld. Agent and Owner agree to cooperate in the implementation of the resident
selection and affirmative marketing provisions of the Management Plan. In carrying out
these provisions, Agent shall:
1) Lease units in compliance with the unit mix, if any, set forth in the Regulatory
Agreements.
2) Assure that occupancy shall be open to all, regardless of race, color, ancestry,
religion, national origin, sex, marital status, children, handicap, or other
characteristics designated by applicable law.
3) Assure that all advertising, including brochures and media advertising, shall
include a reference to "Equal Housing Opportunity ". Owner shall review and
approve all advertising and promotional material prior to use of such material.
4) Provide publications, information brochures, and leases in English and, if
requested by Owner, in Spanish, Mandarin and Cantonese.
5) Provide preference to the residents of the city of Rosemead to the extent
permissible under Federal and State fair housing laws.
6) Have each resident execute the Lease Agreement.
9. Leasing Agent shall offer for rent and shall rent the dwelling units in the Building, upon
completion of construction of each such unit and from time to time thereafter, in accordance
with a rent schedule approved in writing by Owner and the leasing guidelines and form of
lease referred to here in below. Incident thereto, the following provisions shall apply:
a) Agent shall show dwelling units for rent in the Building to all prospective Tenants.
b) Agent shall take and process applications for rentals, including prospective Tenant
interviews and credit checks. If an application is rejected, the applicant shall be
advised of the reason for rejection, in writing.
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c) Agent shall comply with the special low- income housing requirements concerning
leasing and related matters as set forth by the governing housing authority.
d) Agent shall be responsible for or shall assist Owner in the certification and
recertification of tenants covered by any Housing Assistance Payments Contract that
may be applicable to the Building with respect to federal Section 8 rent subsidies,
following procedures required by the U.S. Department of Housing and Urban
Development ( "HUD ") . After the first year of certification and recertification of
Tenants, the certification and recertification process shall be the sole responsibility of
Agent.
e) Agent shall, subject to prior written approval by Owner of any deviation from
Owner's approved rent schedule, Lease form, and leasing guidelines, execute all
Leases in Building's name.
f) Agent shall negotiate any commercial leases and concession agreements called for in
the Plan or approved in writing by owner and, subject to prior written approval by
owner of all terms and conditions, shall execute the same in its name, identified
thereon as Agent for Owner.
g) Agent shall collect, deposit, and disburse security deposits, if required, in accordance
with the terms of each Lease. The amount of each security deposit shall be as
specified in the Plan or as approved by Owner in writing. Security deposits shall be
held by Agent in a trust account, separate from all other accounts and funds. Such
account shall be in the name of the Building, and designated of record as "Security
Deposit Account." Interest on security deposits shall be paid according to law.
h) Agent shall maintain a current list of prospective Tenants and undertake all
arrangements necessary and incidental to the acceptance of rental applications and the
execution of Leases. Agent shall exercise its best efforts (including, but not limited
to, placement of advertising, interview of prospective Tenants, assistance in
completion of rental applications and execution of Leases, processing of documents
and credit and employment verifications, and explanation of the program and
operations of Owner), to effect the leasing of dwelling units, renewal of Leases.
i) Agent shall perform such other acts and deeds requested by Owner as are reasonable,
necessary, and proper in the discharge of Agent's rental duties under this Agreement.
j) Agent shall prorate the first month's rent collected from a Tenant should the Lease
term commence on any other day than the first day of the month. If the Lease term
occurs after the twentieth (20th) day of the month, the prorated amount, plus the next
month's rent, shall be collected on or before the first day of the Lease term.
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k) Agent shall participate in the inspection of the dwelling unit identified in the Lease
together with the Tenant prior to move -in and upon move -out, and shall record in
writing any previous damage to the unit and any damage occurring during the
Tenant's occupancy.
1) Agent shall, unless otherwise agreed by Owner and Agent in writing, (i) comply with
the leasing guidelines and by this reference made a part hereof, and (ii) use for each
Lease the form of lease agreement and by this reference made a part hereof, together
with the form of Low- Income Lease Rider.
10. Collection of Rents, Etc. Agent shall collect when due, directly or through an on -site
manager, all rents, charges, and other amounts receivable on Owner's account in connection
with the management and operation of the Building. Such receipts shall be held in the
Operating Account, separate from all other accounts and funds.
11. Enforcement of Leases. Agent shall make reasonable efforts to secure full compliance by
each Tenant with the terms of such Tenant's Lease. Voluntary compliance shall be
emphasized, and Agent shall counsel Tenants and make referrals to community agencies in
cases of financial hardship or other circumstances deemed appropriate by Agent, all to the
end that involuntary termination of tenancies shall be avoided to the maximum extent,
consistent with sound management of the Building. Nevertheless, and subject to any
applicable procedures prescribed in the Plan, Agent may, and shall if requested by owner,
lawfully terminate any tenancy when sufficient cause for such termination occurs under the
terms of the Tenant's Lease, including, but not limited to, nonpayment of rent. For this
purpose, Agent is authorized to consult with legal counsel to be designated by owner and
bring actions for eviction and execute notices to vacate and judicial pleadings incident to
such actions; provided, however, that Agent shall keep Owner informed of such actions and
shall follow such instructions as Owner may prescribe for the conduct of any such action.
Reasonable attorneys' fees and other necessary costs incurred in connection with such
actions, as determined by Owner, shall be paid out of the operating Account. Agent shall
properly assess and collect from each Tenant or the security deposit the cost of repairing any
damages to the dwelling unit arising during the Tenant's occupancy.
12. Maintenance and Repairs. Agent shall cause the Building to be maintained in a decent,
safe, and sanitary condition and in a rentable and tenantable state of repair, all in accordance
with the Plan and local codes, and Agent otherwise shall maintain the Building at all times in
a condition acceptable to Owner, including, but not limited to, performance of cleaning,
painting, decorating, plumbing, carpentry, grounds care, and such other maintenance and
repair work as may be necessary; the cost of such activities will be considered Building
expenses. Agent shall not be responsible for those specific features of Building conditions
for which Owner does not agree to pay for reasonable recommended repairs or maintenance.
Incident thereto, the following provisions shall apply:
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a) Special attention shall be given to preventive maintenance, and to the greatest extent
feasible, the services of regular maintenance personnel shall be used.
b) Subject to Owner's prior written approval, Agent shall contract with qualified
independent contractors for the maintenance and repair of major mechanical systems,
and for the performance of extraordinary repairs beyond the capability of regular
maintenance personnel. Agent shall obtain prior to commencement of any work
appropriate written evidence of such contractor's liability and worker's compensation
insurance.
c) Agent shall systematically and promptly receive and investigate all service requests
from Tenants, take such action thereon as may be justified, and keep records of the
same. Agent shall make all reasonable efforts to ensure that emergency requests are
received and serviced on a 24 hour basis. Complaints of a serious nature shall be
reported to Owner after investigation. Owner shall have the right to receive copies of
all service requests and the reports of action taken thereon.
d) Agent shall use best efforts to take such action as may be necessary to comply with
any and all orders or requirements of federal, state, county, or municipal authorities
having jurisdiction over the Building and orders of any board of fire underwriters,
insurance companies, and other similar bodies.
e) Subject to the provisions of paragraph 19 hereof, Agent is authorized to purchase all
materials, equipment, tools, appliances, supplies, and services necessary for proper
maintenance or repair of the Building.
f) Notwithstanding any of the foregoing provisions, the prior approval of Owner shall be
required for any expenditure exceeding $1,500.00 in any one instance for labor,
materials, or otherwise, in connection with the maintenance and repair of the
Building, except for emergency repairs involving manifest danger to persons or
property, or required to avoid suspension of any necessary service to the Building. In
the event of emergency repairs, Agent shall notify Owner of the fact promptly, and in
no event later than 72 hours from the occurrence of the event.
13. Utilities and Services. In accordance with any applicable provisions of the Plan, Agent shall
make arrangements for water, electricity, gas, sewage, and trash disposal, vermin
extermination, decorating, laundry facilities, and telephone service in connection with the
Building.
14. Personnel. The Building shall be staffed at a minimum with a full time, onsite manager. All
on -site personnel shall be contracted service providers or employees of Agent and shall be
paid from the Operating Account as an expense of the Building. Agent shall have sufficient
personnel physically present at or available to the building for the full and efficient
performance of its duties under this Agreement, including physical presence of responsible
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persons at such times as reasonably may be requested by Owner. In addition, the Agent shall
have staff available who are fluent in Spanish, Mandarin and Cantonese to handle tenant
concerns and questions.
15. Operating Account Disbursements from the Operating Account shall be governed by the
following:
a) From the funds collected and held by Agent in the Operating Account pursuant to
paragraph 10 hereof, and subject to Owner's approved operating budget, Agent shall
make the following disbursements promptly when payable, in the following order of
priority:
1) salaries and any other compensation due and payable to the employees referred to
in paragraph 14 hereof including Agent's compensation, together with related
payroll taxes;
2) real estate taxes and assessments and fire and other hazard insurance premiums
(including any required monthly escrow payments therefore) , utilities, interest on
the Mortgages, amortization of the principal of the Mortgages, fees, and '
establishment and maintenance of all reserve funds;
3) other payments due and payable by Owner as operating expenses incurred
pursuant to Owner's approved operating budget and in accordance with this
Agreement, and
4) distributions to or at the direction of Owner, including distributions to Owner's
partners in accordance with Owner's partnership agreement.
b) In the event that the balance in the Operating Account is at any time insufficient to
pay disbursements due and payable under subparagraph 15 (a) hereof, Agent shall
promptly inform Owner of the fact and Owner shall make best efforts to remit funds
to cover the deficiency. In no event shall Agent be required to use its own funds to
pay such disbursements.
c) The Agent shall maintain an operating account for rent collection and payment of the
project's operating expenses. The Agent shall maintain a separate resident security
deposit account. In addition, the Owner shall also maintain two separate accounts for
the operating reserves and replacement reserves.
(i) The following separate accounts shall be established:
1. General Operating Account - The Agent shall maintain an operating
account for rent collection and payment of the project's operating
expenses.
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2. Operating Reserve Account - To be funded initially by the Sponsor.
Subsequent monthly deposits to this account shall total per a
determined percentage of effective gross income. Funds from this
account may be transferred only to cover actual operating expenses in
excess of the approved budget amount, or to compensate for vacancy
and bad debt losses in the approved budget amount.
3. Replacement Reserve Account - To be funded through regular
contributions from the operating budget.
4. Security Deposit Account - To be funded by the residents'security
deposits.
16. Operating Budget Agent shall prepare a recommended annual operating budget for the
Building for each fiscal year during the term of this Agreement, and shall submit the same to
Owner at least sixty (60) days before the beginning of such fiscal year. The annual operating
budget shall include a schedule of recommended rents to be charged for each dwelling unit,
including recommended rent increases with respect to Lease renewals and new Leases. In
preparing each proposed annual operating budget, Agent shall use its best efforts to take
account of anticipated increases in real estate taxes, utility charges, and other operating costs.
To the extent feasible, Agent shall support anticipated increases in real estate taxes and utility
charges with written evidence or documentation. Proposed annual operating budgets for the
Building shall be subject to approval by Owner. Owner shall promptly inform Agent of any
changes incorporated in the approved operating budget, and Agent shall make reasonable
efforts to ensure that no expenditures in excess of the amounts set forth in such approved
operating budget, for each line item of operation expense itemized, without the prior written
approval of Owner, except as permitted pursuant to subparagraph 12(f) hereof for emergency
repairs involving manifest danger to persons or property, or required to avoid suspension of
any services to the Building.
17. Records and Reports In addition to any requirements specified in the Plan or other
provisions of this Management Agreement, Agent shall have the following responsibilities
with respect to records and reports:
a) Within thirty (30) days after occupancy of the Building, Agent shall ascertain the
general condition of the Building, including, but not limited to, the taking of an
inventory of all furniture, equipment, tools, and supplies, and shall prepare a report on
the physical and financial status of the Building. within thirty (30) days after the
execution of this Agreement, Agent shall provide Owner with a copy of the reports
and inventories so prepared.
b) Agent shall establish and maintain a comprehensive system of records, books, and
accounts, including computerized systems, in accordance with the Plan and in a
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manner satisfactory to Owner. All records, books, and accounts shall be subject to
examination at reasonable hours by any authorized representative of Owner, or of
owner's limited partner as identified in paragraph 27 hereof ( "Owner's Limited
Partner ")
c) Agent shall prepare a monthly report, in accordance with any applicable provisions of
the Plan and in form satisfactory to Owner, containing and including at least the
following: (i) a statement of income and expenses and accounts receivable and
payable for the preceding month, including an itemized list of all delinquent rents as
of the tenth (10th) day of the current month, as well as a report on action taken
thereon by Agent; (ii) a rent roll /cash receipts form for the previous month; (iii) a
disbursements summary for the previous month; (iv) current bank statements with
reconciliation of the operating and Security Deposit Accounts; (v) copies of paid bills
and invoices for the previous month; and (vi) a narrative of any unusual actions taken
or emergencies responded to, and a full report of any accidents, claims, and potential
claims, for the previous month. Agent shall submit each such report to Owner on or
before the fifteenth (15th) day of each month, and shall concurrently mail a copy 6f
the entire report to Owner's Limited Partner.
d) Agent shall promptly furnish such additional information (including monthly
occupancy reports) as may be requested from time to time by owner or Owner's
Limited Partner with respect to the renting and financial, physical, or operational
condition of the Building.
e) Agent shall prepare, execute, and file all forms, reports, and returns required by law in
connection with the employment of personnel, unemployment insurance, workers'
compensation insurance, disability benefits, Social Security, and other similar
insurance, and all other benefits or taxes now in effect or hereafter imposed.
t) Agent shall establish tenant files containing copies of leases, certification forms,
notices, and other documentation required by the governing housing authority, if and
to the extent applicable.
g) Except as may otherwise be expressly provided in this Agreement, all bookkeeping,
data processing services, and management overhead expenses shall be bome by Agent
out of its funds and shall not be treated as Building expenses.
18. Fidelity Bond. Agent shall furnish and maintain, at the expense of the Building, for the
duration of this Agreement and any extensions thereof, plus thirty (30) days after the
expiration or termination thereof, a commercial blanket bond in favor of owner, in an amount
not less than the sum of (a) two (2) months' potential maximum Gross Rents for the Building
plus (b) aggregate Tenant security deposits held from time to time, both in amounts as
determined by owner, and in a form and with a company acceptable to owner, which
commercial blanket bond shall cover Agent and all employees hired by Agent in connection
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with this Agreement. Such fidelity bond shall cover losses discovered by Owner within two
(2) years after the occurrence of such losses. Such fidelity bond shall be attached to this
Agreement, and such fidelity bond shall contain a written provision that Owner shall be given
at least ten (10) days, prior written notice of cancellation.
19. Bids, Discounts, and Rebates. Agent shall obtain contracts, materials, supplies, utilities, and
services on the most advantageous reasonably terms to the Building, and shall solicit
competitive bids on all contracts or purchases exceeding $2,500.00 for those -items which
can be obtained from more than one source. Agent shall secure and credit to Owner all
discounts, rebates, or commissions obtainable with respect to purchase, service contracts, and
all other transactions on Owner's behalf.
20. Liability of Agent Except as expressly provided to the contrary herein, the obligations and
duties of Agent under this Agreement shall be performed as agent of Owner, but Agent,
personally, shall be liable for its breaches of this Agreement; provided, however, that the
Agent shall not be responsible for incurring any expenditures in excess of existing or
reasonably projected available funds from the Building or funds supplied by Owner. All
expenses incurred by Agent in accordance with its obligations and duties under this
Agreement and consistent with Owner's approved operating budget, except those due to its
breaches of this Agreement and those expressly specified as Agent's expenses herein, shall be
for the account of Owner and shall be paid by the Owner.
21. Indemnification Agent shall indemnify and save harmless Owner, its officers, employees
and agents, from and against any and all damages, liabilities and expenses, including without
limitation, reasonable attorneys fees, to property or injuries to or death of any person or
persons, including property and employees or agents of Owner, and shall defend, indemnify
and save harmless Owner, its officers, and employees, from and against any and all claims,
demands, suits, actions, or proceedings of any kind or nature, including, but not by way of
limitation, worker's compensation claims, resulting from or arising out of the negligent acts,
intentional acts, errors or omissions of Agent, its employees, agents or officers.
Owner shall indemnify and save harmless Agent, its officers, employees and agents, from
and against any and all damages, liabilities and expenses, including without limitation,
reasonable attorneys fees, to property or injuries to or death of any person or persons,
including property and employees or agents of Agent, and shall defend, indemnify and save
harmless Agent, its officers, and employees, from and against any and all claims, demands,
suits, actions, or proceedings of any kind or nature, including, but not by way of limitation,
worker's compensation claims, resulting from or arising out of the negligent acts, intentional
acts, errors or omissions of Owner, its employees, agents or officers.
22. Insurance In addition to any requirements specified in the Plan or other provisions of this
Management Agreement, the following are responsibilities with respect to insurance:
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a) Agent shall procure and maintain workers' compensation insurance in accordance
with the laws of the State of California and employer's liability insurance applicable
to and covering all employees of the Agent at the Building and all persons engaged in
the performance of any work required under this agreement required by law. The cost
of such insurance will be a Building expense for on -site employees and will be at the
Agent's expense for off -site employees.
b) Agent shall procure and maintain automobile liability insurance to cover all vehicles
used to perform work under this Agreement, at its expense, with primary coverage of
at least $1,000,000.
c) Agent shall have no responsibility to procure fire, building loss or liability insurance
for the building. Owner shall obtain property insurance and provide evidence of the
coverage to Agent. Owner shall add the premises to its schedule of owned properties
on its self insurance liability coverage through the California Joint Powers Insurance
Authority. Owner shall provide evidence of coverage to Agent.
d) If any work under this Agreement is subcontracted, Agent shall include in each
subcontract a provision that the subcontractor shall carry workers' compensation
insurance, and automobile insurance, in accordance with the laws of the State of
California, and general liability insurance in the amount of at least $1,000,000. Agent
shall also request evidence of such workers' compensation insurance, automobile and
general liability insurance.
e) Owner shall be named as an additional insured on all insurance policies Agent
procures at the Agents expense pursuant to this Agreement. The cost, if any, of
adding Owner as an additional insured to such policies shall be a Building expense.
f) Agent shall promptly investigate and shall report in detail to Owner all accidents,
claims for damage relating to the ownership, operation, or maintenance of the
Building, and any damage or destruction to the Building and the estimated costs of
repair, and shall prepare for approval by Owner all reports required by an insurance
company in connection with any such accident, claim, damage, or destruction. These
reports shall be given to the Owner promptly and in any case within ten (10) days
after the occurrence of any such accident, claim, damage, or destruction. The Agent
shall cooperate with the Owner and insurers in the investigations and settlement of all
claims.
23. Escrow Payments. From the funds collected and deposited by Agent in the Operating
Account, Agent shall make any monthly escrow payments required under the Mortgages, for
the purpose of funding insurance, tax, and such other reserve or escrow accounts for the
Building as owner may require pursuant to the Mortgages. Agent promptly shall present tax
bills and insurance premium notices to the escrow agent for payment and shall furnish Owner
with evidence of timely payment of such taxes and insurance premiums.
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24. Agent's Compensation. As compensation for all of Agent Is ongoing property leasing,
management, and related services under this Agreement, beginning in the month following
the month in which a certificate of occupancy for the Building was issued, Agent shall
receive a monthly fee in an amount equal to the percentage set forth in Section B of the
Information Schedule of the Gross Rents received in that month (the "Management Fee ") ,
to be paid out of the operating Account and treated as a Building expense. Such fee shall be
payable on the tenth (10th) day of the month following the month in which the services were
rendered.
25. Compliance with Laws. In the performance of its obligations under this Agreement, Agent
shall comply with applicable local, state, and federal laws and regulations.
26. Term of Agreement This Agreement shall be in effect for the period commencing as of the
date hereof and ending on the first (1st) anniversary of the date hereof, and shall be
automatically extended for one (1) year periods thereafter until the date set forth in Sections
A & D of the Information Schedule, subject to the following conditions:
a) Either Owner or Agent may elect not to extend this Agreement by notifying the other
party at least sixty (60) calendar days in advance of the last day of the initial period
hereunder or any annual extension period thereafter.
b) The Owner or Agent may terminate with or without cause this Agreement with 60
days written notice.
c) In the event Agent fails to perform any of its duties hereunder or to comply with any
of the provisions hereof, Owner shall notify Agent in writing and Agent shall have ten
(10) days thereafter within which to cure such default to the reasonable satisfaction of
owner, and if such default cannot be cured within such ten (10) day period, Agent
shall have such additional time as may be necessary to cure the same provided that
Agent demonstrates to the continuing satisfaction of Owner that it is diligently
pursuing all necessary actions to cure such default and that the same will be cured
within a reasonable time without damage or expense to Owner.
d) In the event a petition in bankruptcy is filed by or against Owner or Agent, or in the
event Owner or Agent makes an assignment for the benefit of creditors or takes
advantage of any insolvency act, Owner or Agent may terminate this Agreement
without notice to the other.
e) Within five (5) business days after the termination of this Agreement, Agent shall
close all accounts and pay the balances or assign all certificates of deposit regarding
the Building to Owner. Within ten (10) days after the termination of this Agreement,
Agent shall deliver to Owner all plans and surveys of the Building in its possession
and all books and records concerning the Building. Within thirty (30) days after the
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termination of this Agreement, Agent shall submit to owner all reports required under
paragraph 17 hereof to the date of such termination, and Agent and Owner shall
account to each other with respect to all matters outstanding as of the date of
termination. Upon termination of this Agreement, Agent shall forthwith surrender
and deliver to the Owner any space in the Building occupied by the Agent, other than
the resident manager's unit. Upon direction of the Owner, the Agent shall also give
notice to vacate to the resident manager and diligently pursue any necessary actions to
cause the resident manager to vacate that unit.
f) In the event of fraud, willful misconduct, gross negligence or bad faith on the part of
either the Agent or Owner, then the other party may immediately terminate this
Agreement upon written notice to the defaulting party.
27. Notices. All notices or other communications required or desired to be given under this
Agreement shall be in writing and shall be delivered either personally or by U.S. certified
mail, return receipt requested, which shall be deemed delivered upon personal delivery or
three (3) business days after mailing, to the parties at the addresses set forth in Section E of
the Information Schedule. In the event of a change in the mailing addresses stated above, any
addressee whose address changes hereby agrees to give notice of a new or forwarding address
within seven (7) days of the effective date of said change to the other addressee, whereupon
subsequent notices shall be addressed to such new or forwarding address.
28. Amendment. This Agreement constitutes the entire agreement between Owner and Agent,
and no amendment or modification thereof shall be valid or enforceable except by
supplemental agreement in writing, executed by the parties hereto or the parry to be bound
thereby. In addition, no such amendment or modification shall be valid or enforceable
without the prior written consent of Owner's Limited Partner.
29. Enforceability The invalidity of any clause, part, or provision of this Agreement shall not
affect the validity of the remaining portions thereof. Owner's remedies under this Agreement
are cumulative, and the exercise of one remedy shall not be deemed an election of remedies
nor foreclose the exercise of owner's other remedies. No waiver by owner of any breach of
this Agreement shall be deemed to be a waiver of any other or subsequent breach. Owner or
Agent may apply to any court, state or federal, for specific performance of this Agreement,
for an injunction against any violation of this Agreement, or for such other relief as may be
appropriate, since the injury arising from a default under any of the terms of this Agreement
would be irreparable and the amount of damage would be difficult to ascertain.
30. Governing Law. The law of the state in which the Building is located shall govern the
interpretation and enforcement of this Agreement.
31. Captions The captions used in this Agreement are inserted only as a matter of convenience
and for reference and in no way define, limit, or describe the scope or the intent of this
Agreement.
13
32. Execution of Counterparts For the convenience of the parties, this Agreement may be
executed in multiple counterparts, each of which shall constitute a complete original of this
Agreement, which may be introduced in evidence or used for any other purpose without the
production of any other counterparts.
33. Successors and Assigns This Agreement shall inure to the benefit of and constitute a
binding obligation upon Owner and Agent and their respective successors and assigns;
provided, however, that Agent shall not assign this Agreement, or any of its duties hereunder,
without the prior written consent of Owner. In the event Owner's current general partner or
any successor general partner of Owner is removed as general partner in accordance with
Owner's partnership agreement, any successor general partner selected in accordance with
such partnership agreement shall have authority to act hereunder on behalf of Owner, and
until such successor is selected Owner's Limited Partner shall have temporary authority to act
hereunder on behalf of Owner.
34. Nondiscrimination. In the performance of its obligations under the Agreement, Agent shall
comply with the provisions of all federal, state or local laws prohibiting discrimination in
housing on the basis of race, color, creed, ancestry, religion, orientation, AIDS, ARC, or
physical handicap, including Title VI of the Civil Rights Act of 1964 (Public Law 88 -352)
and the regulations issued pursuant thereto (24 CFR Part I); Executive Order 11063 and the
regulations issued pursuant thereto (25 CFR 570.601); Fair Housing Amendments Act of
1988 and the regulations issued pursuant thereto (24 CFR Part 14 et al) and Title VIII of the
1968 Civil Right Act (Public Law 90 -384).
35. Inspection of Units. Agent shall inspect all units in the Building at least annually and shall
invite the Owner to join in the inspection. Advance notice shall be given to the Tenants as
provided in the Lease Agreement and subject to law.
36. Contracts with Third Parties. Agent shall not enter into any contract for products or
service that is for longer than a period of one year unless such contract is terminable without
any penalty or premium with 30 days notice.
37. Hazardous Material Agent shall comply with all applicable laws or regulations related to
hazardous materials under the Agent's control in managing the Building and take all
necessary steps including enforcement of tenant leases, to ensure that the Building is in
compliance with such laws or regulations.
38. Spending Limitations The Agent shall have no right, without prior written consent of the
Owner, to contract or otherwise deal with related parties for services or goods except
Owner's prior written consent is not necessary if (i) compensation paid or promised for the
goods and services is reasonable (i.e., at fair market value), is paid only for goods and
services actually furnished to the Building, and does not exceed a total of Ten Thousand
Dollars ($10,000) for all such contracts in any one calendar year, (ii) the goods or services to
14
be furnished are reasonable for and necessary to the management of the Building, and (iii) the
fees, terms and conditions of the transactions are at least as favorable to the Building as
would be obtainable in an arm's length transaction.
39. Interpretative Provisions.
a) This Agreement is personal to the Agent, and the Agent shall have no right, power, or
authority to assign all or any portion of this Agreement or any monies due or to
become due hereunder, or to delegate any duties or obligations arising hereunder,
either voluntarily or involuntarily or by operation of law, without the prior written
consent of the Owner. Notwithstanding any such assignment, however, Agent shall
not be released from liability under this Agreement. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the Owner and Agent and
their respective legal representatives, successors, and assigns. Notwithstanding
anything to the contrary contained in this Agreement, Agent shall be subject to the
terms of the Regulatory Agreements. Owner may assign this Agreement to a limited
partnership of which the Owner or an entity controlled by the Owner is a general
partner, and upon such assignment the limited partnership shall become the Owner for
purposes of this Agreement.
b) At its own expense, Agent shall qualify to do business and obtain and maintain such
licenses as may be required for the performance by the Agent of its services under this
Agreement.
c) This Agreement constitutes the entire agreement between the Owner and the Agent
with respect to the management and operations of the Building and no change will be
valid unless made by supplemental written agreement executed by both parties.
d) This Agreement may be signed by the parties hereto in counterparts with the same
effect as if the signatories to each counterpart signed a single instrument. All
counterparts (when taken together) shall constitute an original of this Agreement.
Agent acknowledges that certain contracts with affiliates may require the approval of
the Owner's limited partner and Agent shall not enter into any such contracts without
determining whether any such approval is required as set forth in the Owner's
Limited Partnership Agreement (and obtained if required).
e) Notices required by this Agreement shall be delivered by messenger to the addresses
noted in the Information Schedule, part d or sent by U.S. Postal Service certified mail,
return receipt requested, postage prepaid. These addresses may be changed by notice
given in the same manner. Notices shall be effective (i) on receipt if delivered by
messenger, or (ii) three (3) days after deposit in the United States mail, if sent by
mail.
15
INFORMATION SCHEDULE
The following provisions are incorporated into and made a part of the foregoing Property
Management Agreement between Owner and Agent to which this Information Schedule is
attached:
A. Paragraph 1. The term "Building" means, collectively, the real property commonly
known as Garvey Senior Housing, located at 9118 Garvey Ave., Rosemead, California
91770 and all improvements, appurtenances, and equipment located thereon, including
Seventy -two (72) dwelling units.
B. Paragraph 23. The Management Fee shall be in an amount equal to $32.00 per unit
($ 2,304.00) in each month following the month in which a certificate of occupancy
was issued for the Building. Three shall be an initial "lease -up" fee of $125 per unit.
C. Paragraph 25. The date on which the Agreement will terminate, subject to the
conditions contained in Paragraph 25 (a) through (e) thereof, shall be with sixty (60)
days written notice.
D. Paragraph 27. The addresses to which all notices required or desired to be given
under the Agreement shall be delivered are as follows:
Agent:
Levine Management Group, Inc.
Owner:
ty of Rosemead
c/o Don Wagner
822 S. Robertson Blvd. Suite 200
Los Angeles, CA 90035
8838 E. Vallev Blvd.
Rosemead, CA 91770
16
In Witness Whereof, the parties have executed this Agreement as of the day of ,
no]
Owner:
Garvey Senior Housing
By: City of Rosemead
By:_
Title:
Attest:
Title:
Agent:
Levine Management Group, Inc.
By:_
Title:
Attest:
Title:
17
GARVEY SEMOR
Lease -up budget
3 Months
G/L #
Monthly
Annual
PROJECT EXPENSES
RENTING EXPENSES 6200000
ADVERTISING 6210000
300.00
900.00
SIGNS 6215000
-
LEASE & CREDIT CHECKS 6220000
408.00
1,224.00
OTHER RENTING EXPENSES 6250000
-
-
TOTAL RENTING EXPENSES 6298000
708.00
2,124.00
ADMINISTRATIVE EXPENSES 6300000
OFFICE SALARIES 6310000
1,300.00
3,900.00
OFFICE EXPENSE 6311000
200.00
600.00
OFFICE EQUIPMENT 6311050
1,457.00
4;3
LEASE UP FEE (72 UNITS) 6320000
3,000.00
9,000.00
MANAGER SALARY 6330000
-
-
TELEPHONE AND ANS. SERVICE 6360000
112.00
336.00
POSTAGE 6365000
102.00
306.00
MISC. ADMINISTRATIVE 6390000
-
-
FREIGHT / DELIVERY 6391600
TOTAL ADMIN. EXPENSES 6398000
6,171.00
18,513.00
TOTAL RENTING /ADMINISTRATIVE EXPENSES
6,879.00
20,637.00
TAXES AND INSURANCE 6700000
PAYROLL TAXES 6711000
156.00
468.00
WORKER'S COMPENSATION 6722000
78.00
234.00
TOTAL TAXES & INS. EXPENSE 6798000
234.00
702.00
TOTAL PROJECT EXPENSES 6998000
7,113.00
21,339.00
NET INCOME / (DEFICIT) 6999000
(7,113.00)
(21,339.00)
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