HomeMy WebLinkAboutContracts & Agreements_212-2021MEMORANDUM OF UNDERSTANDING AMONG THE CITY OF REDLANDS,
SHANGRI-LA INDUSTRIES, LLC, AND STEP UP ON SECOND STREET, INC
FOR DEVELOPMENT, PROPERTY MANAGEMENT, AND CASE MANAGEMENT
OF THE GOOD NITE INN REDLANDS MOTEL CONVERSION PROJECT
This Memorandum of Understanding ("MOU") for Homekey Program is made by and
among the City of Redlands ("City"), Shangri-La Industries, LLC ("SLI"), and Step Up on Second
Street, Inc ("SUS") SLI and SUS, together, are hereinafter referred to as "Developer," and City,
SLI, and SUS are sometimes individually referred to as a "Party" and collectively, as the "Parties "
RECITALS
WHEREAS, the State of California implemented a statewide initiative known as "Project
Homekey" with the intention to secure thousands of motel/hotel rooms to provide non -congregate
shelter for extremely vulnerable individuals experiencing homelessness to help keep susceptible,
homeless persons safe from the COVID-19 virus, flatten the curve, and preserve hospital capacity;
and
WHEREAS, the State of California Department of Housing and Community Development
is anticipated to issue a Notice of Funding Availability ("NOFA") for the Homekey 2 0 2021
Program (NOFA), and
WHEREAS, City has determined that the development of an affordable, interim to
permanent, motel/hotel housing site for Project Homekey could be accomplished most effectively
and economically if undertaken by an experienced developer under an agreement with City; and
WHEREAS, Developer has identified, and is in escrow to acquire, the Good Nite Inn,
located at 1675 Industrial Park Avenue (the "Motel"), as the most desirable motel within the City
for the interim to permanent housing conversion contemplated by Project Homekey; and
WHEREAS, Developer is an experienced affordable housing real estate developer with the
capability of planning, designing, engineering, financing, marketing, developing and owning
permanent supportive housing in a fashion that could achieve City's objective of providing a
permanent housing project with a focus on Project Homekey-eligible clients impacted by the
COVID-19 pandemic, and
WHEREAS, the Parties have prepared this MOU to comply with the NOFA's requirements
to demonstrate how the development team is connected and how the development team will work
together,
NOW, THEREFORE, m consideration of the mutual covenants contained herein and for
such other good and valuable consideration, the receipt of which is hereby acknowledged, the
Parties agree as follows
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AGREEMENT
Section 1 The Parties to this MOU encourage the highest possible degree of
cooperative relationships between their respective representatives with regard to the Motel project
for the Homekey Program, including but not limited to acting in good faith to ensure the
transparency, mutual success, and liability prevention, to acquire, develop, and maintain the Motel
and provide services to the residents.
Section 2 The Parties to this MOU shall coordinate their resources and efforts to
develop and manage the Motel in a timely manner and provide case management services for
residents of the Motel.
Section 3 Developer is selected for the purpose of undertaking, in collaboration with
City, the following activities, exprwessly contingent on the award of Project Homekey grant funds
A. Identifying, negotiating directly with the property owner, and acquiring the Motel,
B Determining the financial feasibility of the Motel conversion, including
developmental and operational viability;
C Undertaking environmental review as required by the California Environmental
Quality Act and National Environmental Policy Act, as applicable, and seeking all required
discretionary land use entitlements to place the Motel in a condition ready for development;
D Assisting City in obtaining state funding made available for Developer's
acquisition of the Motel and applying for all other necessary project financing;
E Working with City to develop a plan for interim operations for Project Homekey
clients (e g. potentially continuing to operate the Motel as non -congregate shelter or as housing
until rehabilitation is completed),
F Defining a development schedule, including project milestones,
G Preparing and carrying out a scope of renovation work necessary to convert the
Motel to affordable housing and create safe and habitable living spaces, and
i. Scope of work shall be based upon a physical/capital needs assessment
commissioned by Developer as part of the development budget and shall
include all work necessary to create safe and habitable living spaces
ii. Scope of work shall include, if not already available, installation of
lutchen/kitchenettes in each housing unit.
iii. Given the limited sheltering resources in our community, and if applicable,
renovation of rooms/units shall be phased to the extent possible to ensure
minimal displacement of Project Homekey clients
H. Owning, managing and operating the Motel as affordable/permanent housing.
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i. Developer shall incorporate the principals of Housing First.
ii Units reserved for persons experiencing homelessness shall be prioritized for
exiting Project Homekey clients during the public health crisis in accordance
with the COVID-19 risk assessment factor in the a Coordinated Entry System.
iii. Units will be required to receive client referrals exclusively from CARS, so
long as the project be funded by CoC-funds, including but not limited to the
Homeless Housing Assistance Program ("HHAP"), HUD CoC, and State ESG
iv The Motel shall remain affordable for a minimum period of ten (10) years from
the close of escrow In the event a HAP contract or operating subsidy is secured
for any unit, Developer shall extend the term of affordability to match the term
of the HAP contract or operating subsidy
Section 4 Exhibit "A," titled "Schedule of Performance" outlines the
responsibilities of the Parties, and is hereby fully incorporated herein.
Section 5 Expressly contingent on the award of Project Homekey grant funds, City
shall perform the following activities
A. Provide an operating subsidy that matches the Department of Housing and Urban
Development's ("HUD") Fair Market Rent ("FMR") calculation on a per unit basis for each
respective calendar year over a period of at least seven (7) years,
B Act as the lead applicant, as required by the State of California Department of
Housing and Community Development or any government organization, to any NOFA,
application, or possible grant funding opportunity related to Project Homekey;
C Work to secure any available housing rental subsidy in conjunction with
Developer in relation to the operation of the Motel that include, but are not limited to Veteran
Affairs Supportive Housing ("VASH") and Section 8 Housing Choice Vouchers
Section 6 SUS shall act as the services provider, property manager of the Motel, and
as the non-profit partner in the Limited Partnership for Property Tax Welfare Exemptions
Contingent on the award of Project Homekey grant funds, City will work with SUS to develop a
mutually acceptable agreement of responsibilities for case management services for the Motel.
Section 7 Developer shall indemnify, defend (with counsel reasonably approved by
City), and hold harmless City and its elected and appointed officials, officers, employees, agents
and volunteers from any and all claims, actions, losses, damages and/or liability arising out of this
MOU from any cause whatsoever, including the acts, errors or omissions of any person and for
any costs or expenses incurred by City on account of any claim except where such indemnification
is prohibited by law This indemnification provision shall apply regardless of the existence or
degree of fault of indemnitees This indemnification provision shall apply regardless of the
existence or degree of fault of indemnitees Despite, the immediately preceding two (2) sentences,
Developer's indemnification obligation applies to City's "active" as well as "passive" negligence,
but does not apply to City's "sole negligence" or "willful misconduct" within the meaning of Civil
Code Section 2782 The Parties recognize and acknowledge that additional agreements for
development services, property management, and case management will contain additional
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indemnification terms.
A. Additional Insured — All policies, except for the Workers' Compensation, Errors
and Omissions and Professional Liability policies, shall contain endorsements naming City and its
elected and appointed offcials, officers, employees, agents and volunteers as additional insureds
with respect to liabilities arising out of the performance of services hereunder The additional
insured endorsements shall not limit the scope of coverage for City to vicarious liability but shall
allow coverage for City to the full extent provided by the policy Such additional insured coverage
shall be at least as broad as Additional Insured (Form B) endorsement form ISO, CG 2010 11 85
B Waiver of Subrogation Rights — Developer shall require the carriers of required
coverages to waive all rights of subrogation against City, and its elected and appointed officials,
officers, employees, agents, volunteers, contractors and subcontractors All general or auto liability
insurance coverage provided shall not prohibit Developer's employees or agents from waiving the
right of subrogation prior to a loss or claim. Developer hereby waives all rights of subrogation
against City
C Policies Primary and Non -Contributory — All policies required herein are to be
primary and non- contributory with any insurance or self-insurance programs carried or
administered by City
D Severabihty of Interests — SLI and SUS agree to ensure that coverage provided to
meet these requirements is apphcable separately to each insured and there will be no cross -liability
exclusions that preclude coverage for suits between SLI and SUS and City or between City and
any other insured or additional insured under the policy However, nothing herein shall preclude
SLI and SUS and their respective assigns from executing indemnification agreements between and
among themselves
E Developer shall furnish Certificates of Insurance to City evidence the insurance
coverage at the time this MOU is executed, additional endorsements, as required shall be provided
prior to the commencement of performance of services hereunder, which certificates shall provide
that such insurance shall not be terminated or expire without thirty (30) days written notice to City,
and Developer shall maintain such insurance from the time commences performance of services
hereunder until the completion of such services Within fifteen (15) days of the execution of this
MOU, Developer shall furnish a copy of the Declaration page for all applicable policies and will
provide complete certified copies of the policies and endorsements immediately upon request.
F Unless otherwise approved by City, insurance shall be written by insurers
authorized to do business in the State of California and with a minimum "Best" Insurance Guide
rating of "A-VII"
G Deductibles and Self -Insured Retention — Any and all deductibles or self -insured
retentions in excess of $10,000 shall be declared to and approved by City
H. Failure to Procure Coverage — In the event that any policy of insurance required
under this MOU does not comply with the requirements, is not procured, or is canceled and not
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replaced, City has the right but not the obligation or duty to cancel the contract or obtain insurance
if it deems necessary and any premiums paid by City will be promptly reimbursed by Developer
I. Insurance requirements are subject to periodic review by City City may, but is not
required to, reduce, waive or suspend any insurance requirements whenever it determines that any
of the required insurance is not available, is unreasonably priced, or is not needed to protect the
interests of City In addition, if City determines that heretofore unreasonably priced or unavailable
types of insurance coverage or coverage limits become reasonably priced or available, City is
authorized, but not required, to change the above insurance requirements to require additional
types of insurance coverage or higher coverage limits, provided that any such change is reasonable
in light of past claims against City, inflation, or any other item reasonably related to City's risk.
J Any change requiring additional types of insurance coverage or higher coverage
limits must be made by amendment to this MOU Developer agrees to execute any such
amendment within thirty (30) days of receipt.
K. Any failure, actual or alleged, on the part of City to monitor or enforce compliance
with any of the insurance and indemnification requirements will not be deemed as a waiver of any
rights on the part of City
L Developer shall provide insurance set forth in accordance with the requirements
herein. If Developer uses existing coverage to comply with these requirements and that coverage
does not meet the specified requirements, Developer shall amend, supplement, or endorse the
existing coverage to do so Without in anyway affecting the indemnity herein provided and in
addition thereto, Developer shall secure and maintain throughout the term of this MOU the
following types of insurance with limits as shown.
(i)
Workers' Compensation/Employers Liability — A program of Workers' Compensation
insurance or a state -approved, self-insurance program in an amount and form to meet
all applicable requirements of the Labor Code of the State of California, including
Employer's Liability with $250,000 limits covering all persons including volunteers
providing services on behalf of Developer and all risks to such persons under this
MOU If Developer has no employees, it may certify or warrant to City that it does
not currently have any employees or individuals who are defined as "employees"
under the Labor Code and the requirement for Workers' Compensation coverage will
be waived by City
M. Developer shall maintain general liability Insurance covering all operations
performed by or on behalf of SLI and SUS providing coverage for bodily injury and property
damage with a combined single limit of not less than one million dollars ($1,000,000) per
occurrence The policy coverage shall include
(i) Premises operations and mobile equipment.
(ii) Products and completed operations
(iii) Road form property damage (including completed operations)
(iv) Explosion, collapse and underground hazards
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(v) Personal injury
(vi) Contractual liability
(vii) $2,000,000 general aggregate limit.
N Primary insurance coverage shall be written on ISO Business Auto coverage form
for all owned, hired and non -owned automobiles or symbol 1 (any auto) The policy shall have a
combined single limit of not less than one million dollars ($1,000,000) for bodily injury and
property damage, per occurrence If Developer is transporting one or more non -employee
passengers in performance of contract services, the automobile liability pohcy shall have a
combined single limit of two million dollars ($2,000,000) for bodily injury and property damage
per occurrence
0 Developer shall require all of its subcontractors in the performance of this MOU to
provide insurance covering the operations with the same basic requirements specified herein, and
naming City as an additional insured.
Section 8 Time is of the essence in the performance of this MOU If any Party has
knowledge that any actual or potential situation is delaying, or threatens to delay, timely
performance of a Party's obligations under this MOU, that Party shall, within twenty-four (24)
hours, give written notice thereof, including all relevant information with respect thereto, to the
other Parties to this MOU
Section 9 The Parties recognize and acknowledge that the State of California may
require amendments to this MOU as the Homekey Program grant funds are awarded. Accordingly,
any modification or amendment of this MOU shall be valid only when made in writing, and signed
and approved by the authorized representatives of the Parties
Section 10 All obligations of the parties set forth in this MOU are expressly
conditioned and contingent upon the State of California awarding Homekey Program grant funds
for the Motel conversion. In the event the State of California does not award Project Homekey
funds to City for it application for the Homekey Program, this MOU shall be of no force or effect
and shall be deemed terminated.
Section 11 SLI and SUS, as Developer, may assign their separate and respective rights,
obligations, and duties contemplated under this MOU to their respective controlled subsidiaries
(each an "Assignee"), and may form one or more jointly controlled or owned special purpose
entities as may be required for the financing or other purposes related to the execution of the
obligations of Developer under this MOU, so long as such assignment or creation of special
purposes entities do no substantively change the obligations of Developer or the rights of City
Section 12 This MOU may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, and such counterparts shall together constitute one
and the same instrument. The Parties shall be entitled to sign and transmit an electronic signature
of this MOU (whether by facsimile, PDF or other email transmission), which shall be binding on
the Party whose name is contained therein. Each Party providing an electronic signature agrees to
promptly execute and deliver to the other party an original signed MOU upon request.
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l- TNESS V. HEREOF, the Parties halve t.aused this AMU to be e\euuted beho\\
1 (?F
C I T
Signature
Paul T Barich, Mayor
Print Name
AT( EST
nne Donaldson, City Clerk
I Ica\(1pn\ \grccmcIIt Prujccl ilumol.e) A10U 11 1(.21 doc.e.ln
SHANG 2I-LA INDUS1 RIF S, LLC
�GL
Signature
Art#sw Mp trs Abdul - Wohab
Print Name
STEP UP ON SECOND Si REM, INC
Print Name
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EXHIBIT "A"
SCHEDULE OF PERFORMANCE
Schedule of Performance- Roles and Responsibilities
Activity
Lead/Co-Lead
The City of
Redlands
Shangri-La
Industries, LLC
Step Up on Second
Street, Inc.
Authorizing Resolution
X
X
X
MOUs, Partnership/Participant
Agreements
X
X
X
Site Control Timeline
X
Site Selection/Evaluation
Appraisal, Physical Needs
Assessment, Environmental Site
Assessment, Preliminary Title
Report, Environmental Testing
(i e lead, asbestos, mold, etc )
X
Site Selection Acquisition
Purchase and Sale Agreement,
Purchase Docs, Escrow Docs,
Deed Restrictions, etc
X
Site Control
Letter of Intent, Exclusive
Negotiating Agreement,
Ground Lease, etc
X
Entitlements/Permits
Land Use Entitlements,
Conditional Use, Variances, etc
X
Construction/Design
Drawings
Building, Fire, other
Permits/Approvals, as required.
X
Revised Development Budget
Update TDC from finalized
Design Plans, Bid Analysis and
Demo
X
Financing Plan -Construction
and Perm
X
Construction Contractor
Procurement
Contractor Bidding,
Improvement Management
X
Construction Contract
Approval
X
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Demolition and Remediation
(based upon Enviro testing
results)
X
Construction Commencement
and Management
X
Supportive Services Plan
Development and Design of
Case Management.
X
Property Management
Development of overall
Management Plan.
X
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