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HomeMy WebLinkAbout2014-24 Approving an Amended Ground Lease and Deed Restriction for Timeber Ridge Property RESOLUTION NO. 24 SERIES OF 2014 A RESOLUTION APPROVING A GROUND LEASE AND DEED RESTRICTION FOR THE TIMBER RIDGE PROPERTY WHEREAS, the Town of Vail is planning a redevelopment project for the Timber Ridge property; WHEREAS, the purpose of the redevelopment project is to provide employee housing; WHEREAS, to accommodate the redevelopment project, the Town wishes to enter into a long-term Ground Lease with the developer of the property, Lion's Ridge Apartment Homes, LLC; WHEREAS, the Ground Lease will be subject to a Deed Restriction governing the use of the property; WHEREAS, on February 18, 2014 and August 19, 2014, the Town Council approved prior versions of the Ground Lease and Deed Restriction, but those versions were never executed, and since that time certain provisions of both documents have changed; and WHEREAS, the Town Council wishes to approve the Ground Lease and Deed Restriction in substantially the form attached hereto, and to authorize the Town Manager to execute the Ground Lease and Deed Restriction at closing. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF VAIL, COLORADO, THAT: Section 1. The Town hereby approves the Ground Lease for the Timber Ridge property in substantially the form attached hereto, subject to final approval by the Town Attorney. Section 2. The Town hereby approves the Deed Restriction for Lion's Ridge Apartment Homes on the Timber Ridge property in substantially the form attached hereto, subject to final approval by the Town Attorney. Section 3. After execution of the Development Agreement for the Timber Ridge property by all parties to the Development Agreement, and approval by the Town Attorney of any other documents required by the developer's lender, the Town Council authorizes the Town Manager to execute the Ground Lease and Deed Restriction in the final form approved by the Town Attorney. 1 9/4/2014 Q:IUSERSIVAILIRESITIMBER RIDGE GROUND LEASE-6.DOCX INTRODUCED ":-.1 4 ® D ADOPTED this 2nd day of September, 2014. 1' s SEAL = -� • t Ludwig Kurz, ayor Pro Tern EST: I i % 'i c •........" X10__ • P. _:nnay • • erk 2 9/4/2014 Q:IUSERSIVAILIRESITIMBER RIDGE GROUND LEASE-6.DOCX GROUND LEASE This GROUND LEASE (the "Lease") is entered into as of August , 2014 (the Effective Date") by and between the Vail Local Housing Authority, a Colorado statutory housing authority (the "VLHA"), and Lion's Ridge Apartment Homes, LLC, a Colorado limited liability company ("Tenant") (each individually a "Party" and collectively the "Parties"). WHEREAS, the VLHA is the owner of certain real property more particularly described in Exhibit A attached hereto and incorporated herein by this reference(the "Property"); WHEREAS, the Parties desire to allow for the redevelopment of the Property for employee housing; WHEREAS, to accomplish the redevelopment of the Property for employee housing, the VLHA will retain fee ownership of the Property, but the VLHA will provide Tenant with a long- term ground lease of the Property; and WHEREAS,the Parties wish to establish terms of the long-term ground lease. NOW, THEREFORE, for and in consideration of the mutual promises and covenants contained herein, the sufficiency of which is mutually acknowledged, the Parties agree as follows: 1. Lease. The VLHA, in consideration of the rents, covenants, agreements, and conditions herein set forth which Tenant hereby agrees shall be paid, kept, and performed, does hereby lease unto Tenant, and Tenant does hereby lease from the VLHA, the Property together with all of the VLHA's rights, interests, estates, and appurtenances thereto. 2. Term. This Lease shall commence on the Effective Date and unless earlier terminated as provided herein, shall terminate on August 31, 2064. 3. Rent and Security Deposit. The total rent for the period from the Effective Date through December 31, 2024 is the sum of $10. Tenant has paid such sum to the VLHA on the date hereof, the receipt of which is hereby acknowledged. Commencing on January 1, 2025 and each year thereafter during the term of this Lease, Tenant shall pay to the VLHA annual rent in the amounts set forth below. 1 8/15/2014 Q.I USERSI VAILI TIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX Period Annual Rent January 1, 2025 through December 31, 2029 $125,000 January 1, 2030 through December 31, 2034 $140,625 January 1, 2035 through December 31, 2039 $158,200 January 1, 2040 through December 31, 2044 $177,975 January 1, 2045 through December 31, 2049 $200,220 January 1, 2050 through December 31, 2054 $225, 250 January 1, 2055 through December 31, 2059 $253,400 January 1, 2060 through August 31, 2064 $285,075 The annual rent shall be paid in twelve equal monthly installments on the first day of each month. There shall be no security deposit. 4. Permitted Uses. Subject to the terms and provisions hereof, Tenant shall use and enjoy the Property to construct and operate 112 dwelling units (the "Improvements"), at least 70% of which shall be employee housing units in full compliance with the deed restriction attached hereto as Exhibit B and incorporated herein (the "Deed Restriction"), the Development Agreement between the VLHA, the Town of Vail and Tenant dated August , 2014 and applicable law, including without limitation the Vail Town Code, as amended. Tenant will not do, or permit to be done, anything on the Property which is contrary to any legal or insurable requirement or which constitutes a nuisance. 5. Taxation. a. The Parties acknowledge their intent that the Property is to be exempt from ad valorem property taxes pursuant to C.R.S. § 29-4-227, by virtue of a 0.01%ownership interest in Tenant held by the VLHA. b. Tenant may, at its sole cost and expense, contest the validity or amount of any taxes imposed against the Property. 6. Utilities. Tenant shall pay all charges for gas, electricity, telephone and other communication services, and all other utilities and similar services rendered or supplied to the T" Property, and all water, sewer and other similar charges levied or charged against, or in connection with,the Property. 7. Net Lease. This Lease shall be a net lease, and throughout the Term, all payments and other obligations or liabilities of any kind regarding the Property shall be solely the responsibility of Tenant, and not the responsibility of the VLHA. 2 8/15/2014 Q.I USERSI VAILI TIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX 8. Existing Conditions. As of the Effective Date, Tenant has inspected the physical condition of the Property and receives the Property in "as is" condition, with all faults. The VLHA makes no representations or warranties with respect to the condition of the Property or its fitness or availability for any particular use, and the VLHA shall not be liable to Tenant for any latent or patent defect on the Property. The VLHA owns all the improvements existing on the Property as of the date of the Lease, which existing improvements may be removed by Tenant prior to the construction of the Improvements. 9. Hazardous Materials. a. Though the VLHA has no actual knowledge of the presence of any hazardous materials or other adverse environmental conditions on the Property, the VLHA makes no warranty regarding such materials or conditions. b. Tenant shall keep and maintain the Property in compliance with, and shall not cause or permit the Property to be in violation of, any federal, state, or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions ("Hazardous Materials Laws") on, under, about, or affecting the Property. Tenant shall not use, generate, manufacture, store, or dispose of on, under or about the Property or transport to or from the Property any flammable explosives, radioactive materials, hazardous wastes, asbestos, lead- based paints, toxic substances, or related materials, including without limitation any substances defined as or included in the definition of hazardous substances, hazardous wastes, hazardous materials, or toxic substances under any applicable federal or state laws or regulations (collectively referred to hereinafter as "Hazardous Materials"). c. Notwithstanding the above, the Parties understand and agree that Tenant, in the course of construction of the Improvements, may generate biohazardous waste materials due to procedures performed within the primary structure. Tenant shall be solely responsible for the proper storage and removal of these biohazardous waste materials from the property. Tenant shall be solely responsible for, and shall indemnify and hold harmless the VLHA, its directors, officers, employees, agents, successors, and assigns from and against, any loss, damage, cost, expense, or liability directly or indirectly arising out of or attributable to Tenant's use, generation, storage, release, threatened release, discharge, disposal, or presence of biohazardous Materials on, under or about the Property. 10. Construction of Improvements. The Improvements shall be constructed in accordance with the Development Agreement. 11. Ownership of Improvements. a. During the Term, all Improvements shall be solely the property of Tenant, and Tenant shall be entitled to take tax depreciation thereon,to the extent permitted by law. b. Upon termination of this Lease, except as otherwise provided in Section 27, Tenant shall surrender to the VLHA, free and clear of all debt and other encumbrances, all improvements, inclusions, fixtures, equipment and other appurtenances on the Property in good condition and repair. During the Term, the VLHA shall have a right to inspect the Property on an annual basis to review the condition of the improvements. 3 8/15/2014 Q:I USERSI VAILI TIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX 12. Maintenance and Repairs. a. Tenant agrees to maintain the Property throughout the Term of this Lease, at Tenant's own expense, in good working order, in a clean and safe manner. Such maintenance shall include all work necessary to maintain the Property in a first-class condition consistent with similar projects in the Town, including both interior and exterior repairs. b. Throughout the Term of this Lease, Tenant shall, at its own expense, provide all janitorial, landscaping, trash removal, snow removal and other services required for the proper maintenance of the Property. c. Should Tenant fail to perform the required maintenance or repairs after 30 days written notice from the VLHA, the VLHA may, but has no obligation to, perform such maintenance or repairs and invoice Tenant for the costs of such maintenance, plus 8% interest. Tenant shall pay such invoice within 30 days of receipt thereof, and Tenant's failure to do so shall constitute a Tenant Default. 13. Property Management. Throughout the Term of this Lease, Tenant shall provide for professional management of the ongoing use and operation of the Property (either through an independent third party or an affiliate or agent of Tenant). 14. Insurance. Tenant shall maintain the following insurance, and certificates of such insurance shall be furnished to the VLHA prior to the commencement of this Lease and at each subsequent policy renewal date: a. Commercial general liability insurance, including contractual liability, with limits of not less than $2,000,000 per occurrence for bodily injury, personal injury and property damage, naming the VLHA as an additional insured. b. Fire and extended coverage insurance covering the Property for injury or damage by the elements, or through any other cause, in an amount not less than the full actual replacement cost of the Property, common areas, and appurtenances, and sufficient to prevent the VLHA or Tenant from becoming a co-insurer of any partial loss. c. During the course of any construction or repair of Improvements, Builders' Risk Insurance. 15. Indemnification. Tenant agrees to indemnify, defend, and hold the VLHA and its officers, insurers, volunteers, representative, agents, employees, heirs and assigns harmless from and against any and all claims, liability, damages, losses, expenses and demands, including reasonable attorney fees, on account of injury, loss, or damage, including without limitation claims arising from bodily injury, personal injury, sickness, disease, death, property loss or damage, or any other loss of any kind whatsoever, which arise out of or are in any manner connected with this Lease or Tenant's use of the Property; provided however, that Tenant shall not indemnify, defend or hold the VLHA harmless for the VLHA's own negligence or willful acts or omissions. 4 8//5/10/4 Q:IUSERSIVAILITIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX 16. Restoration. Should any Improvements be wholly or partially destroyed or damaged by fire or other casualty, Tenant shall promptly repair, replace, restore, and reconstruct the same, all in compliance with the provisions of this Lease. 17. Condemnation. a. Full taking. Should the entire Property be taken by eminent domain, condemnation or similar proceedings or conveyed in avoidance or settlement of eminent domain, condemnation, or other similar proceedings, then Tenant's right of possession under this Lease shall terminate as of the date of taking possession by the condemnor, and the award therefor will be distributed as follows: first, to the payment of all reasonable fees and expenses incurred in collecting the award; and next, the balance of the award shall be equitably apportioned between the VLHA and Tenant based on the then respective fair market values of the VLHA's interest in the Property and Tenant's interest in the Property. All rent shall be prorated through the date of termination. b. Partial Taking. Should a portion of the Property be taken by eminent domain, condemnation or similar proceedings, this Lease shall continue in effect as to the remainder of the Property unless, in Tenant's reasonable judgment, the taking makes it economically unsound to use the remainder, whereupon this Lease shall terminate as of the date of taking of possession by the condemnor in the same manner as if the whole of the Property had been taken, and the award therefor shall be distributed as provided in subsection (a) hereof. If this Lease is not terminated, all rent shall be equitably adjusted based on the portion of the Property taken. If this Lease is terminated, all rent shall be prorated through the date of termination. c. Temporary Taking. If any portion of the Property is taken for temporary use or occupancy, the Term shall not be reduced or affected. Except to the extent Tenant is prevented from so doing pursuant to the terms of the order of the condemning authority, Tenant shall continue to perform and observe all of the other covenants, agreements, terms, and provisions of this Lease. If Tenant continues to perform its obligations under this Lease throughout the term of the temporary taking, Tenant shall be entitled to the full award for a temporary taking. 18. Assignment. Tenant may assign its rights under this Lease if the new tenant assumes in writing all covenants and obligations of Tenant under this Lease, including without limitation all obligations of Tenant under the Deed Restriction. Tenant shall thereupon be released and discharged from all obligations under this Lease, but such obligations shall be binding upon the new tenant. Notwithstanding the foregoing, Tenant may not assign its rights hereunder prior to the issuance of final certificates of occupancy for all units in the Improvements, and Tenant may not assign its rights hereunder if Tenant is in default of this Lease. 19. Subleasing. a. Tenant may freely execute subleases in compliance with this Lease, the Deed Restriction and applicable law, provided that the term of each such sublease (including all renewal and extension rights) shall not extend past the expiration date of the Term. b. Each sublease shall specifically provide that the sublessee's rights are subject to the VLHA's rights under this Lease and the Deed Restriction, and shall provide that upon a 5 8/15/2014 Q:I USERSI VAILI TIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX termination of this Lease or of Tenant's right to possession of the Property such sublease, at the VLHA's option, shall continue in effect as a lease directly between the VLHA and the sublessee thereunder, provided that the sublessee attorns to the VLHA, the VLHA shall not be responsible for the return or repayment of any security or other deposits made by such sublessee with Tenant unless Tenant has turned the same over to the VLHA, and the VLHA shall not be liable or responsible for the cure or remedy of any breach, violation, or default on the part of Tenant under subleases occurring prior to termination of this Lease or of Tenant's right to possession of the Property. Tenant shall give a copy of each sublease to the VLHA upon request. 20. Tenant's Right to Encumber. a. Leasehold. Tenant may, at any time, without the VLHA's consent or joinder, encumber its interest in this Lease and the leasehold estate hereby created with one or more deeds of trust, mortgages, or other lien instruments to secure any borrowings or obligations of Tenant. No lien of Tenant upon its interest in this Lease and the leasehold estate hereby created shall encumber or affect in any way the interest of the VLHA in the Property. b. Fee Simple. If any of Tenant's lenders requires the VLHA to subordinate its fee interest in the Property to the lender's mortgage, the VLHA shall approve such encumbrance provided that: at all times the Deed Restriction is first and prior to the mortgage; and the VLHA has a first and prior right to cure any deficiency to protect its fee interest in the Property. The VLHA shall have the right to review and approve all documents associated with such encumbrance prior to execution by Tenant, and any encumbrance made without the VLHA's prior review and approval shall be void. c. No Merger. In no event shall the leasehold interest, estate, or rights of Tenant hereunder, or of the holder of any mortgage upon the Lease, merge with any interest, estate, or rights of the VLHA in or to the Property, it being understood that such leasehold interest, estate, and rights of Tenant hereunder, and of the holder of any mortgage upon this Lease, shall be deemed to be separate and distinct from the VLHA's interest, estate, and rights in or to the Property, notwithstanding that any such interests, estates, or rights shall at any time or times be held by or vested in the same person, corporation, or other entity. 21. Quiet Enjoyment. The VLHA covenants that Tenant, on paying the Rent and performing and observing the obligations of this Lease, shall peaceably and quietly have, hold, occupy, use, and enjoy the Property during the Term, and may exercise all of its rights hereunder, subject only to the provisions of this Lease,the Deed Restriction and applicable law. 22. Access. a. The VLHA shall have access to the Property at all times following reasonable prior notice to Tenant to inspect the Property, provided that the VLHA shall use reasonable efforts not to disturb Tenant's use of the Property or the occupants of the Improvements. b. At no time shall Tenant eliminate access to or the ability to safely occupy or operate the Timber Ridge housing units currently existing on the real property adjacent to the Property, as more particularly described on Exhibit B, attached hereto and incorporated herein 6 8/15/2014 Q.I USERSI VAILI TIMBER RIDGE-NEWIAGRIGRO UND LEASE-VLHA-3.DOCX by this reference (the "Adjacent Property"). The VLHA shall have unrestricted access to the Adjacent Property at all times. 23. Tenant Default and Remedies. a. Each of the following is a Tenant default of this Lease: i. If Tenant fails to perform any of its obligations under this Lease or the Deed Restriction and Tenant fails to commence and take such steps as are necessary to remedy the same within 30 days after Tenant is given a written notice specifying the same; provided, however, that if the violation is a violation of this Lease and not a violation of the Deed Restriction, and the nature of the violation is such that it cannot reasonably be remedied within 30 days, and Tenant provides evidence to the VLHA that the violation cannot reasonably be remedied within 30 days, then the violation shall be remedied as soon as reasonably practicable, but in any case, within 180 days of the original notice of violation. ii. If an involuntary petition is filed against Tenant under a bankruptcy or insolvency law or under the reorganization provisions of any law, or when a receiver of Tenant, or of all or substantially all of the property of Tenant, is appointed without acquiescence, and such petition or appointment is not discharged or stayed within 120 days after the happening of such event. iii. If Tenant makes an assignment of its property for the benefit of creditors or files a voluntary petition under a bankruptcy or insolvency law, or seeks relief under any other law for the benefit of debtors. b. If a Tenant default occurs, the VLHA may, without waiving any other rights hereunder or available to the VLHA at law or in equity (the VLHA's rights being cumulative), terminate this Lease, in which event this Lease and the leasehold estate hereby created and all interest of Tenant and all parties claiming by, through, or under Tenant shall automatically terminate upon the effective date of such notice; and the VLHA, its agents or representatives, may, without further demand or notice, reenter and take possession of the Property and remove all persons and property from the Property with or without process of law, without being deemed guilty of any manner of trespass and without prejudice to any remedies for existing breaches hereof c. In addition to the specific remedies set forth herein,the VLHA shall have all other remedies available at law or equity, and the exercise of one remedy shall not preclude the exercise of any other remedy. 24. VLHA Default and Remedies. a. The following is a VLHA default of this Lease: if the VLHA fails perform any of its covenants or obligations under this Lease and fails to commence and take such steps as are necessary to remedy the same within 30 days after written notice is given specifying the same; provided, however, that if the nature of the violation is such that it cannot reasonably be remedied within 30 days, and the VLHA provides evidence to Tenant that the violation cannot 7 8/15/20/4 Q:IUSERSIVAILITIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX reasonably be remedied within 30 days, then the violation shall be remedied as soon as reasonably practicable, but in any case, within 180 days of the original notice of violation. b. If a VLHA default occurs, Tenant may terminate this Lease. c. In addition to the specific remedy set forth herein, Tenant shall have all other remedies available at law or equity, and the exercise of one remedy shall not preclude the exercise of any other remedy, provided that the remedy of specific performance shall not be available against the VLHA. 25. Notices. Any notice under this Lease shall be in writing and may be given by United States Mail, postage prepaid, addressed as set forth herein; or hand-delivery. Notice shall be effective three days after mailing or immediately upon hand-delivery. The addresses of the Parties shall, unless changed in writing, be as follows: The VLHA: Town Manager Town of Vail 75 South Frontage Road Vail, CO 81657 Tenant: Lion's Ridge Apartment Homes, LLC 200 North Main Street Oregon, WI 53575 Attn: Gary J. Gorman With a copy to: Jen Wright Wright and Company, Inc. P.O. Box 7270 Avon, CO 81620 26. Surrender. On the last day of the term of this Lease or upon any termination of this Lease, except as otherwise provided for in Section 27, Tenant shall surrender the Property, with the Improvements then located thereon, into the possession and use of the VLHA, without fraud or delay and in good order, condition, and repair, free and clear of all occupancies, liens and encumbrances, without any payment or allowance whatever by the VLHA for any buildings or improvements erected or maintained on the Property at the time of the surrender, or for the contents thereof or appurtenances thereto. 27. Option to Purchase. a. The VLHA hereby grants to Tenant an option to purchase the Property in accordance with the terms set forth below (the "Option"). Tenant may exercise this option by providing written notice thereof to the VLHA at any time following the Town of Vail's issuance of final Certificates of Occupancy for all units in the Improvements, and prior to December 31, 2024, as long as Tenant is not in default of this Lease. b. If Tenant exercises the Option, the closing of such purchase shall occur on a date selected by Tenant not more than 90 days after Tenant has delivered the written notice exercising 8 8/15/2014 Q.I USERSI VAILI TIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX the Option. If Tenant has not delivered to the VLHA written notice of it exercise of the option by December 31, 2024,the Option shall terminate and be of no further force or effect. c. The purchase price to be paid by Tenant for the Property shall be the sum of $5 million. The VLHA shall, at closing, upon payment of the purchase price, convey the Property "as is" to Tenant by special warranty deed, subject to the Deed Restriction and any subleases executed by Tenant pursuant to Section 19, but free and clear of all other liens, mortgages or encumbrance of any kind and nature other than recorded easements, matters arising by or as a result of the action of Tenant during the term of the Lease and matters to which Tenant has consented in writing during the term of the Lease. Notwithstanding the foregoing, if Tenant has subordinated the VLHA's fee simple interest in the Property pursuant to Section 20(b), it shall be Tenant's sole responsibility to remove such encumbrance prior to closing of Tenant's purchase of the Property. c. The VLHA shall provide to Tenant, at least 30 days prior to the date of closing, a commitment for an owner's title insurance policy, in the amount of purchase price, from Chicago Title Insurance Company (or another title insurance company reasonably acceptable to Tenant), naming Tenant as the insured. The VLHA shall, at its expense, cause the title insurance company to issue the title insurance policy at closing. d. In the event Tenant exercises the Option, the Lease shall terminate at the closing of Tenant's purchase of the Property and all rent shall be prorated through such date, provided that the indemnification provisions of Section 15 shall survive termination of the Lease. 28. Miscellaneous. a. Modification. This Lease may only be modified by subsequent written agreement of the Parties. b. Integration. This Lease and any attached exhibits constitute the entire agreement between Tenant and the VLHA, superseding all prior oral or written communications. c. Binding Effect. This Lease shall be binding upon and inure to the benefit of the Parties and their respective heirs, successors and assigns. d. Severability. If any provision of this Lease is determined to be void by a court of competent jurisdiction, such determination shall not affect any other provision hereof, and all of the other provisions shall remain in full force and effect. e. Governing Law and Venue. This Lease shall be governed by the laws of the State of Colorado, and any legal action concerning the provisions hereof shall be brought in Eagle County, Colorado. f. Third Parties. There are no intended third-party beneficiaries to this Lease. g. No Joint Venture. Notwithstanding any provision hereof, the VLHA shall never be a joint venture in any private entity or activity which participates in this Lease, and the VLHA shall never be liable or responsible for any debt or obligation of any participant in this Lease. 9 8/15/2014 Q:I USERSI VAILI TIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX h. Governmental Immunity. The VLHA and its officers, attorneys and employees, are relying on, and do not waive or intend to waive by any provision of this Lease, the monetary limitations or any other rights, immunities, and protections provided by the Colorado Governmental Immunity Act, C.R.S. § 24-10-101, et seq., as amended, or otherwise available to the VLHA or its officers, attorneys or employees. Time of the Essence. Time is of the essence for all provisions of this Lease. WHEREFORE,the Parties have executed this Lease on the Effective Date. VAIL LOCAL HOUSING AUTHORITY ATTEST: TENANT LION'S RIDGE APARTMENT HOMES, LLC BY GORMAN EMPLOYEE GROUP LION'S RIDGE, LLC, Manager BY GORMAN &COMPANY, INC., Manager BY Gary J. Gorman, President STATE OF ) ) ss. COUNTY OF ) The foregoing instrument was subscribed, sworn to, and acknowledged before me this day of August_, 2014, by Gary J. Gorman, the President of Gorman& Company, Inc., the Manager of Gorman Employee Group Lion's Ridge, LLC, the Manager of Lion's Ridge Apartment Homes, LLC. My commission expires: (SEAL) Notary Public 10 8/15/2014 Q:I USERSI VAILI TIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX EXHIBIT A LEGAL DESCRIPTION Lot 2, Timber Ridge Subdivision, A Resubdivision of Lion's Ridge Subdivision, Block C, A Resubdivision of Lots 1, 2, 3, 4 & 5, Town of Vail, County of Eagle, State of Colorado , 11 8/15/2014 Q.I USERSI VAILI TIMBER RIDGE-NEWLAGRIGROUND LEASE-VLHA-3.DOCX EXHIBIT B DEED RESTRICTION FOR THE OCCUPANCY OF RESTRICTED UNITS AT LION'S RIDGE APARTMENT HOMES THIS DEED RESTRICTION FOR THE OCCUPANCY OF RESTRICTED UNITS AT LION'S RIDGE APARTMENT HOMES (the "Deed Restriction") is made and entered into this day of August, 2014 (the "Effective Date"), by and between the Town of Vail, a Colorado home rule municipality (the "Town"), the Vail Local Housing Authority (the "VLHA"), a Colorado statutory housing authority, and Lion's Ridge Apartment Homes, LLC, a Colorado limited liability company ("Master Lessee") (individually a "Party" and collectively the "Parties"). WHEREAS, the VLHA is the owner of certain real property generally described as the eastern half of the Timber Ridge property and more particularly described in Exhibit 1 attached hereto and incorporated herein by this reference (the "Property"); WHEREAS, the Parties desire to allow for the redevelopment of the Property for employee housing; and WHEREAS, the VLHA, as landlord, and Master Lessee as tenant, have entered into a Ground Lease for the Property dated August , 2014 (the "Ground Lease"). NOW, THEREFORE, in consideration of the promises and covenants hereinafter set for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: 1. Defined Terms. For purposes of this Deed Restriction, the following terms shall have the following meanings: "Principal place of residence" means the dwelling in which one's habitation is fixed and to which a person, whenever he or she is absent, has a present intention of returning after an absence therefrom. In determining what is a principal place of residence, the Town and Master Lessee may consider, without limitation: location of business pursuits; employment and income sources; residence for tax purposes; residence of parents, spouse and children, if any; location of personal property; motor vehicle registration; and voter registration. "Qualified Household" means one Qualified Resident or a group of persons that contains at least one Qualified Resident (who must sign the Unit lease as a tenant). A Qualified Household may have occupants that are not Qualified Residents (and who may also sign the Unit lease as tenants) as long as at least one occupant who has signed the lease is a Qualified Resident. "Qualified Resident" means a natural person who works an average of 30 hours or more per week at a business in Eagle County, Colorado that holds a valid and current business license, or pays sales taxes, or is otherwise generally recognized as a legitimate 12 8/15/2014 Q:I USERSI VAILITIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX business. For example, if a person worked 60 hours per week for one half of the year at such a business in Eagle County, Colorado, and worked elsewhere for the other half of the year, such person would constitute a Qualified Resident. "Rental Guidelines" means the guidelines attached as Exhibit 2 hereto and incorporated herein by this reference. "Restricted Unit" means a Unit that is rented to a Qualified Household pursuant to the terms of this Deed Restriction. "Unit" means each of the residential dwelling units constructed on the Property. 2. Binding Effect. This Deed Restriction shall constitute a covenant running with the Property as a burden thereon, for the benefit of, and enforceable by the Town, the VLHA and the Master Lessee. This Deed Restriction shall bind the Master Lessee and all occupants of the Restricted Units. Each and every occupant of a Restricted Unit shall be personally obligated hereunder for the full and complete performance and observance of all covenants, conditions and restrictions contained herein that are applicable to such occupant during such occupant's respective period of occupancy of a Restricted Unit. Each and every conveyance of the Property or a portion thereof, or interest therein, for all purposes, shall be deemed to include and incorporate by this reference, the covenants contained in this Deed Restriction, even without reference to this Deed Restriction in any document of conveyance. 3. Occupancy. a. The Master Lessee covenants that at least 70% of the total Units in the Property shall be Restricted Units. The Parties acknowledge that the Restricted Units are not fixed and may float so long as at least 70% of the total Units are Restricted Units. For example, assume that the Property contains 100 Units. If 75 of the Units are rented to Qualified Households, and one of such Units becomes vacant, such Unit may thereafter be rented to occupants who are not a Qualified Household, because at least 70 of the Units remain occupied by Qualified Households. b. The Property may contain two additional common areas that shall not qualify as Units, one area to be used by property management personnel, maintenance personnel or security personnel, and one area to be used as a leasing or marketing office. Because such common areas are not considered Units under this Deed Restriction, they shall not be included in the calculation of Restricted Units; provided however, that if such common areas are ever converted into Units, they shall be included in the calculation of Restricted Units. c. A Qualified Resident must occupy the Restricted Unit as his or her principal place of residence. If other occupants of the Restricted Unit are not Qualified Residents,the Restricted Unit need not be their principal place of residence. d. At any time that the number of Restricted Units falls below 70% of the total Units, Master Lessee shall promptly take commercially reasonable efforts in accordance with applicable law and the Rental Guidelines to lease the next Units coming 13 8/15/2014 Q:I USERSI VAILITIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX available for rent to Qualified Households in accordance with this Deed Restriction and the Rental Guidelines, until at least 70%of the total Units are Restricted Units. 4. Unit Lease. No Unit shall be leased or occupied without a Unit lease. Each Unit shall have only one Unit lease at any one time Each Restricted Unit lease shall include a clear reference to this Deed Restriction and a brief summary of this Deed Restriction, including the remedies upon a violation or breach of the terms of this Deed Restriction, and shall incorporate the terms and conditions of this Deed Restriction. 5. Right To Terminate Lease. Nothing herein shall prevent the Master Lessee from terminating the lease of a Qualified Household, or taking any other legal action against the Qualified Household based upon any tenant's breach of the terms of the lease; provided that if a tenant misrepresents his or her status as a Qualified Resident, Master Lessee shall terminate the Unit lease in addition to any other available remedies. 6. Inspection. In a non-emergency situation, if the Town or Master Lessee has reasonable cause to believe that an occupant of a Restricted Unit is violating any provision of this Deed Restriction, the Town or Master Lessee may inspect the Restricted Unit between the hours of 8:00 am and 5:00 pm, Monday through Friday, after providing the occupant with no less than 24 hours written notice, which notice to tenant may be given by posting on the front door of the applicable Restricted Unit. Nothing herein shall preclude the Town or Master Lessee from accessing a Restricted Unit in an emergency situation where there is an imminent threat to person(s) or property. 7. Annual Verification. No later than February 1st of each year, beginning in the year following the first year of occupancy of the Property, Master Lessee shall submit a written statement to the Town including the following information and stating that such information is true and correct to the best of Master Lessee's knowledge and belief: a. Evidence to establish that 70% of the Units were Restricted Units (i.e., occupied by Qualified Households) during the prior calendar year; b. A list of tenants who occupied the Restricted Units in the prior calendar year and the evidence submitted by such tenants to establish that they were Qualified Residents and/or Qualified Households; c. A copy of the lease form currently used for the Restricted Units;and d. Copies (which may be electronic) of all application information submitted by Qualified Residents actually occupying Restricted Units; provided that such copies will only be provided for one Qualified Resident per Restricted Unit, even if more than one Qualified Resident occupies such Restricted Unit. 8. Violations. a. If Master Lessee discovers a violation of this Deed Restriction by an occupant, or if the Town notifies Master Lessee in writing that there is a violation of this Deed Restriction by an occupant, Master Lessee shall send a notice of violation to the 14 8/15/2014 Q:IUSERSIVAILITIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX occupant detailing the nature of the violation and allowing the occupant 10 days from the date of the notice to cure said violation to the reasonable satisfaction of Master Lessee and the Town. Notice may be given by posting on the front door of the applicable Unit or by other lawful means. If the violation is not cured within such time, the violation shall be considered a violation of this Deed Restriction by the Unit occupant. b. If the Town discovers a violation of this Deed Restriction by Master Lessee, the Town shall send a notice of the violation to Master Lessee, detailing the nature of the violation and allowing Master Lessee 30 days from the date the notice is given to cure said violation to the reasonable satisfaction of the Town. If a forcible entry and detainer is necessary to resolve the violation, the forcible entry and detainer shall be commenced within such 30-day period and diligently prosecuted to completion. If the violation if not cured within such time, the violation shall be considered a violation of this Deed Restriction by Master Lessee. 9. Remedies. a. The Town and Master Lessee shall have any and all remedies provided by law and in equity for a violation of this Deed Restriction, including without limitation: (i) damages, including but not limited to damages resulting from the leasing of a Restricted Unit in violation of this Deed Restriction; (ii) specific performance; and (iii) injunction, including without limitation an injunction requiring eviction of the occupant(s) and an injunction to prohibit the occupancy of a Restricted Unit in violation of this Deed Restriction. All remedies shall be cumulative. b. In addition to any other available remedies, if Master Lessee is found to be in violation this Deed Restriction (after expiration of any cure period), Master Lessee shall be subject to a penalty of$100 per violation as determined by the Town in each instance. Each occurrence is hereby deemed to be a separate violation of this Deed Restriction, and the penalty may be imposed for each and every day during any portion of which a violation is found to have been committed, continued or permitted by Master Lessee. This penalty shall not apply if it is discovered that an occupant provided false information to Master Lessee, Master Lessee reasonably relied on such false information, and the false information caused the violation. c. If addition to any other available remedies, if an occupant of a Restricted Unit is found to be in violation of this Deed Restriction (after expiration of any cure period), the occupant shall be subject to a penalty of$100 per violation as determined by the Town in each instance. Each occurrence is hereby deemed to be a separate violation of this Deed Restriction, and the penalty may be imposed for each and every day during any portion of which a violation is found to have been committed or continued by an occupant. d. The cost to the Town or the VLHA of any activity taken in response to any violation of this Deed Restriction by the Master Lessee, including reasonable attorney fees, shall be paid promptly by Master Lessee; provided that, if the Town, the 15 8/15/2014 Q:IUSERSIVAILITIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX VLHA or a court of competent jurisdiction finds that Master Lessee was not in violation of this Deed Restriction, Master Lessee shall not be liable for such payment. 10. Term. This Deed Restriction shall commence on the Effective Date and shall terminate on August 31, 2064. 11. Modification. This Deed Restriction may only be modified by subsequent written agreement of the Parties. 12. Assignment. Neither this Deed Restriction nor any of the rights or obligations of the Parties hereto shall be assigned by either Party without the written consent of the other. 13. Severability. If any provision of this Deed Restriction is determined to be void by a court of competent jurisdiction, such determination shall not affect any other provision hereof, and all of the other provisions shall remain in full force and effect. 14. Governing Law and Venue. This Deed Restriction shall be governed by the laws of the State of Colorado, and any legal action concerning the provisions hereof shall be brought in Eagle County, Colorado. 15. Third Parties. There are no intended third-party beneficiaries to this Deed Restriction. 16. No Joint Venture. Notwithstanding any provision hereof, neither the Town or the VLHA shall ever be in a joint venture with the Master Lessee, and neither the Town or the VLHA shall ever be liable or responsible for any debt or obligation of the Master Lessee. 17. No Indemnity. Nothing herein shall be construed to require the Town or the VLHA to protect or indemnify Master Lessee against any losses attributable to the rental of a Restricted Unit, nor to require the Town or the VLHA to locate a Qualified Resident for any Restricted Unit. 18. Governmental Immunity. The Town, the VLHA and its officers, attorneys and employees, are relying on, and do not waive or intend to waive by any provision of this Deed Restriction, the monetary limitations or any other rights, immunities, and protections provided by the Colorado Governmental Immunity Act, C.R.S. § 24-10-101, et seq., as amended, or otherwise available to the Town,the VLHA or its officers, attorneys or employees. 16 8/15/2014 Q:I USERSI VAILITIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX IN WITNESS WHEREOF, the Parties have executed this Deed Restriction on the Effective Date. TOWN OF VAIL, COLORADO Stan Zemler, Town Manager ATTEST: Patty McKenney, Town Clerk VAIL LOCAL HOUSING AUTHORITY ATTEST: MASTER LESSEE LION'S RIDGE APARTMENT HOMES, LLC BY GORMAN EMPLOYEE GROUP LION'S RIDGE, LLC, Manager BY GORMAN &COMPANY, INC., Manager BY Gary J. Gorman, President STATE OF ) ss. COUNTY OF ) The foregoing instrument was subscribed, sworn to, and acknowledged before me this day of August, 2014, by Gary J. Gorman, the President of Gorman & Company, Inc., the Manager of Gorman Employee Group Lion's Ridge, LLC, the Manager of Lion's Ridge Apartment Homes, LLC. My commission expires: (SEAL) Notary Public 17 8/15/2014 Q.I USERSI VAILI TIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX EXHIBIT 1 LEGAL DESCRIPTION Lot 2, Timber Ridge Subdivision, A Resubdivision of Lion's Ridge Subdivision, Block C, A Resubdivision of Lots 1, 2, 3, 4 & 5, Town of Vail, County of Eagle, State of Colorado x;. 18 8/15/2014 Q.I USERSI VAILI TIMBER RIDGE-NEWIAGRIGRO UND LEASE-VLHA-3.DOCX EXHIBIT 2 RENTAL GUIDELINES 1. Purpose. The purpose of these Rental Guidelines is to set forth the occupancy eligibility requirements for the employee housing rental units (the "Restricted Units") located in Lion's Ridge Apartment Homes, pursuant to the Deed Restriction dated August , 2014. 2. Definitions. All capitalized terms herein shall have the meanings set forth in the Deed Restriction. 3. Administration. In accordance with the Deed Restriction, Master Lessee shall administer these Rental Guidelines, including but not limited to, making determinations regarding the eligibility of applicants to rent and occupy a Restricted Unit as a Qualified Resident as set forth herein. Prior to leasing or renewing a lease for a Restricted Unit, the occupant must sign an individual acknowledgement of acceptance of the terms of these Rental Guidelines and the Deed Restriction. 4. Qualified Households and Residents. Except as otherwise provided herein or in the Deed Restriction, to be eligible for consideration to rent a Restricted Unit, the occupants must first be certified as a Qualified Household. Notwithstanding anything herein to the contrary, Master Lessee shall not be obligated to rent any Unit to a tenant that does not meet Master Lessee's rental guidelines, which rental guidelines shall be subject to review and approval by the Town, in its reasonable discretion. 5. Application. To become a Qualified Resident, a person must first provide the following information on an application to be provided by Master Lessee, and applications and all accompanying documentation shall become the property of the Master Lessee and will not be returned to the applicant: a. Verification (e.g., wage stubs, employer name, address, telephone number and other appropriate documentation as requested by Master Lessee) of applicant's current employment with a business in Eagle County that holds a valid and current business license, or pays sales taxes, or is otherwise generally recognized as a legitimate business; b. Evidence that the applicant has worked, or will work, an average of 30 hours per week or more per year for one or more of such businesses and that such level of employment is expected to be maintained for as long as the applicant lives in the Restricted Unit; c. A valid form of identification, such as a driver's license, state-issued identification, passport or military identification. d. Any other documentation which the Master Lessee deems necessary to make a determination of eligibility; and e. A signed statement certifying and acknowledging: that all information submitted in such application is true to applicant's best knowledge; that the applicant 19 8/15/2014 Q.IUSERSIVAILITIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX understands that he/she may not sublet the Restricted Unit; that the applicant authorizes Master Lessee to verify any and all past or present employment and residency information and all other information submitted by an applicant; and that applicant understands that, as set forth in the Deed Restriction, the Master Lessee reserves the right to review any applications and take any appropriate action regarding such application. 6. Lease Term. The Restricted Units shall be leased to Qualified Households, and may be renewed to Qualified Households, on a month-to-month basis or for periods no greater than 12 months in duration. 7. Interpretation. In evaluating a potential application to lease a Restricted Unit, the Master Lessee shall be guided by the following: a. An applicant's physical place of employment is controlling, not the mailing address of such place. b. Claims of employment by an applicant that are unable to be verified by Master Lessee will not be utilized in determining an applicant's eligibility. c. Seasonal work and part time work alone may not be adequate to meet the minimum 30 hours per week average annual requirement, but may augment other employment to meet the minimum eligibility requirements. 8. Leasing of Units to Non-Qualified Households. a. If at least 70% of the Units in the Property are Restricted Units, other Units may be freely leased by Master Lessee to occupants who are not Qualified Residents or Qualified Households. b. If there are no eligible Qualified Households available to rent a particular Unit, Master Lessee may rent such Unit to occupants other than a Qualified Household. However, at any time that the number of Restricted Units falls below 70% of the total Units, Master Lessee shall thereafter use commercially reasonable efforts to lease the next available Unit(s)to Qualified Households until the 70%threshold is again met. c. In no event may Master Lessee lease a Restricted Unit to a Qualified Resident who will not occupy the Restricted Unit as his or her principal place of residence, unless first expressly approved in writing by the Town after making findings that extraordinary circumstances and hardship exist to justify such arrangement. Such tenancy shall be on a month-to-month basis only. 9. Misrepresentation. Any misrepresentation by an applicant in any submittal shall disqualify such applicant from being eligible to lease a Restricted Unit, and shall be grounds for eviction if such misrepresentation is revealed after such applicant's occupancy. 10. Inspection of Documents. The Town may inspect any documents submitted with any application for Qualified Resident status pursuant to Section 5 hereof, at any time during normal business hours, upon reasonable notice. In addition, upon inspection, if the Town 20 8/15/2014 Q:I USERSI VAILI TIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX reasonably determines that additional documents are necessary to verify Qualified Resident or Qualified Household status, the Town may request additional documents. Notwithstanding the foregoing, Master Lessee shall not be required to retain any documents submitted by applicants who do not sign leases with Master Lessee; provided, however, that if the number of Restricted Units falls below 70% of the total Units, then Master Lessee shall retain documents submitted by applicants to verify its commercially reasonable efforts to lease the next Unit becoming available for rent to a Qualified Household in accordance with the requirements of the Deed Restriction and the Rental Guidelines, until at least 70%of the total Units are once again Restricted Units. 21 8/15/2014 Q:I USERS!VAILI TIMBER RIDGE-NEMAGRIGROUND LEASE-VLHA-3.DOCX EXHIBIT C LEGAL DESCRIPTION OF ADJACENT PROPERTY Lot 1, Timber Ridge Subdivision, A Resubdivision of Lion's Ridge Subdivision, Block C, A Resubdivision of Lots 1, 2, 3, 4 & 5, Town of Vail, County of Eagle, State of Colorado 22 8/15/2014 Q:I USERSI VAILITIMBER RIDGE-NEWIAGRIGROUND LEASE-VLHA-3.DOCX 3