amended and restated agreement for development between...

AMENDED AND RESTATED

AGREEMENT FOR DEVELOPMENT

BETWEEN

THE CITY OF PORTLAND AND

HOYT STREET PROPERTIES, L.L.C.

D A T E D ~ ~ ~ ~ I I /4 1999

TABLE OF CONTENTS

I1 . GENERAL TERMS AM) DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A . DESCRIPTIONS OF THEPROJECTS . . . . . . . . . . . . . . . . . . 3 B . DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 C . EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 D . PLANNING AND FEASIBILITY STUDY FOR PARK PROJECTS 9 E . STREET IMPROVEMENTS BY CITY . . . . . . . . . . . . . . . . . 10

1 . Half Streets . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2 . Entire Streets . . . . . . . . . . . . . . . . . . . . . . . . . 10

F . DOCUMENTATION OF CHANGES IN DEVELOPMENT REQUIREMENTS; SATISFACTION OF CONDITIONS . . . . . 11

III . CONTINGENT OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 A . INITIAL DEVELOPMENT AGREEMENT OBLIGATIONS . . 11 B . LOVEJOY PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1 . City Obligations . . . . . . . . . . . . . . . . . . . . . . . . 11 2 . HSP Obligations . . . . . . . . . . . . . . . . . . . . . . . . 12

C . STREETCARPROJEXT . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1 . Cityobligations . . . . . . . . . . . . . . . . . . . . . . . 13 2 . HSP Obligations . . . . . . . . . . . . . . . . . . . . . . . 13

D . PARK SQUARES PROJECT . . . . . . . . . . . . . . . . . . . . . . . . 15 1 . Park Squares Property Conveyance . . . . . . . . . . . 15 2 . Park Improvements . . . . . . . . . . . . . . . . . . . . . 16

E . NEIGHBORHOOD PARK PROJECT . . . . . . . . . . . . . . . . . . 18 1 . Acquisition of Neighborhood Park Property . . . . 18 2 . Improvement of Neighborhood Park Project . . . . 21

IV . ADDITIONAL CONDITIONS TO PARTIES' PERFORMANCE . . . . . . . . . 21 A . B-N LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 B . URBAN RENEWAL DISTRICT . . . . . . . . . . . . . . . . . . . . . . 21

V . HOUSING AFFORDABILITY OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . 22 A . COOPERATION TO MEET HOUSING AFFORDABILITY GOALS

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1 . Overall Goals for Housing Affordability . . . . . . . 22 2 . River District Housing Implementation Strategy . 22 3 . HSP Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 4 . Condition of Compliance . . . . . . . . . . . . . . . . . 22

B . HSP PROPOSALS FOR AFFORDABLE HOUSING . . . . . . . . 23 1 . Submittal of Proposals . . . . . . . . . . . . . . . . . . . 23 2 . Financing Proposals . . . . . . . . . . . . . . . . . . . . . 23

C . PROCESSING HSP PROPOSALS FOR AFFORDABLE HOUSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

D . MONITORING HOUSING AFFORDABILITY GOALS . . . . . 24 1 . PDCRole . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2 . Calculation of Goal Compliance . . . . . . . . . . . . . 24 3 . Consequences of Noncompliance by HSP . . . . . . . 24 4 . Consequence of HSP Compliance . . . . . . . . . . . . 24

. . . . . . . E SALE OF CITY AFFORDABLE HOUSING PARCELS 25 . . . . . . . . . . . . . . . . . . . 1 . Distribution of Parcels 25

2 . Size of Parcels . . . . . . . . . . . . . . . . . . . . . . . . . 25 . . . . . . . . . . . . . . . . . . . . . . . . . 3 . Terms of Sale 25

F . HSP'S RIGHT TO REPURCHASE PARCELS . . . . . . . . . . . . . 26 . . . . . . . . . . . . . . . G . CONSTRUCTION OF SMALLER UNITS 27

VI . HOUSING DENSITY GOALSLFEASIBILITY . . . . . . . . . . . . . . . . . . . . . . 27 A . HSPOBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 B . COOPERATION OF PARTIES . . . . . . . . . . . . . . . . . . . . . . 27

. . . . . . . . . . 1 . Variation of Development Concepts 27 2 . Public Parking . . . . . . . . . . . . . . . . . . . . . . . . 27

C . MONITORING HOUSING DENSITY PROGRESS . . . . . . . . . 27 . . . . . . . . . . . . . . . . . . . . . . . 1 . PDC's Authority 27

2 . Credits for HSP Performance . . . . . . . . . . . . . . 28 3 . Approval of Density . . . . . . . . . . . . . . . . . . . . . 28

. . . . 4 . Credits for Properties Conveyed or Optioned 28 D . DEVELOPMENT OF COMPLEMENTARY FACILITIES . . . . 28

1 . Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2 . PDC's Authority . . . . . . . . . . . . . . . . . . . . . . . 29

VII . TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 A . TERMINATION DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 B . EARLY TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 C . EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 29

wn . ASSIGNMENT OF HSP'S INTERESTS; RIGHTS OF MORTGAGEES . . . . 29 A . GENERAL STATEMENT OF PURPOSE . . . . . . . . . . . . . . . 29 B . APPROVAL OF TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . 30

1 . Maintenance of HSI Interest . . . . . . . . . . . . . . . 30 2 . Continuation of Management . . . . . . . . . . . . . . . 30 3 . Limitation on Transfer of Uncommitted Property . 30 4 . Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

C . ASSUMPTION OF HSP'S OBLIGATIONS BY TRANSFEREE PRIOR TO IMPROVEMENT . . . . . . . . . . . . . . . . . . . . . . . . 30

D . LIMITATION ON ASSUMPTION BY TRANSFER.EE . . . . . . 31 E . . SUBORDINATION OF ASSIGNMENT PROVISIONS TO

MORTGAGEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 F . ESTOPPEL CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . 31

IX . DEFAULT; CURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 A . DEFAULTBYHSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 B . DEFAULT BY CITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

X . REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 A . DEFAULT BY HSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

. . . . . . . . . . . . . . . . . . . . 1 . Recovery of Damages 33 2 . Specific Performance; Injunctive Relief . . . . . . . . 33

B . DEFAULT BY CITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 . . . . . . . . . . . . . . . . . . . . . . 1 . General Remedies 33

. . . . . . . . . . . . . . . . . . 2 Land Repurchase Rights 34

XI . WAIVERS OF DEFAULT. TEWIINATION OF ENFORCEMENT PROCEEDINGS AMD RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . 34

. . . . . . . . . . . . . . . . . . . . . . . A . NONEXCLUSIVE REMEDIES 34 B . WAIVER OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

. . . . . . . . . . . . . . . . . . . . . . . . . . . C . NO IMPLIED WAIVER 34 XI1 . CONVEYANCE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

A . CASH CONVEYANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 B . ESCROW; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 C . CONDITION OF TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 D . TITLE INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 E . RECORDING COSTS. TAXES AND SPECIAL ASSESSMENTS

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 1 . Recording Costs . . . . . . . . . . . . . . . . . . . . . . . 36 2 . Real Property Taxes . . . . . . . . . . . . . . . . . . . . . 36 3 . Special Assessments . . . . . . . . . . . . . . . . . . . . . 36 4 . Escrow Fees and Transfer Taxes . . . . . . . . . . . . 36

MI1 . CONSTRUCTION STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 A . COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . 37 B . COOPERATION DURING CONCURRENT CONSTRUCTION

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 . . . . . . . . . . . . . . . . . . . . . . . . 1 . Interference .. 37

. . . . . . . . . . . . . . . . . 2 . Mitigation of Interference 37

C . INSPECTION ACCESS TO HSP'S PROPERTY . . . . . . . . . . . 37 1 . Preconveyance Access . . . . . . . . . . . . . . . . . . . . 37 2 . Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

D . SAFETY MATTERS; INDEMNIFICATION . . . . . . . . . . . . . 38 1 . Interference With Operations . . . . . . . . . . . . . . 38 2 . Indemnity from Liens . . . . . . . . . . . . . . . . . . . . 38

XIV . MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 A . DENSITY CALCULATIONS . . . . . . . . . . . . . . . . . . . . . . . . 38 B . ENVIRONMENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

1 . HSP Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 38 2 . No Assumption of Liability . . . . . . . . . . . . . . . . 38

. . . . . . 3 . Consequence of Unsatisfactory Conditions 39 . . . . . . . . . . . . . . . . . . . . . . . . 4 HSP Cooperation 39

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . C . PRIVATE UTILITIES 39 D . OTHER EASEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 E . FLOOR AREA RATIOS (FAR) AND HEIGHT LIMITATIONS

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 F . CONVEYANCE OF RIGHTS-OF-WAY AND PUBLIC

EASEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 G . EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 H . OTHER CITY PERMIT OR LAND USE REQUIREMENTS . . 41 I . FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 J . ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

1 . Express Matters . . . . . . . . . . . . . . . . . . . . . . . . 43 2 . Lovejoy Payment . . . . . . . . . . . . . . . . . . . . . . . 43

. . . . . . . 3 . Street Conveyances for Streetcar Project 43 4 . Maintenance Standard for Parties . . . . . . . . . . . 43 5 . Size of City Affordable Housing Parcel . . . . . . . . 43 6 . Housing Density Credits . . . . . . . . . . . . . . . . . . 43 7 . Obligation to Execute Documents . . . . . . . . . . . . 43 8 . Existence and/or Duration of Force Majeure . . . . 43 9 . The Right of the City to Purchase Property for

Affordable Housing . . . . . . . . . . . . . . . . . . . . . 43 . . . . . . . . . 10 . Rights to Purchase a Replacement Site 44

11 . The Consent to Interim Streetcar Service . . . . . . 44 K . CONFLICT OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . 44

1 . Public Conflicts . . . . . . . . - . . . . . . . . . . . . . . . . 44 2 . Public Official Liability . . . . . . . . . . . . . . . . . . . 44

L . DISCRlMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 M . NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

1 . Actual Receipt . . . . . . . . . . . . . . . . . . . . . . . . . 44 2 . Mailing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

3 . Delivery by Facsimile . . . . . . . . . . . . . . . . . . . . 46 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 TIME OF THE ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 CHOICE OF LAW . . . . ; . . . . . . . . . . . . . . . . . . . . . . . . . . 47 CALCULATION OF TIME . . . . . . . . . . . . . . . . . . . . . . . . . 47 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LEGAL PLWOSE 47 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . 48

. . . . . . . . . . . . . . . . . . . . . . . PLACE OF ENFORCEMENT 49 . . . . . . . . . . . . . . . . . NO THIRD PARTY BENEFICIARIES 49

. . . . . . . . . . . . OBLIGATION TO EXECUTE DOCUMENTS 49

. . . . . . . . . . . . NONWAIVER OF GOVERNMENT RIGHTS 49 CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . . . . . 49

. . . . . . . . . . . . . . . GOOD FAITH AND REASONABLENESS 50 STATUTORY DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . 50 INSPECTION OF RECORDS . . . . . . . . . . . . . . . . . . . . . . . . 50 RECORDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

EXHIBITLIST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

AMENDED AND RESTATED AGREEMENT FOR DEVELOPMENT BETWEEN

THE CITY OF PORTLAND AND HOYT STREET PROPERTIES, L.L.C.

This Amended and Restated Agreement for Development ("Agreement") is entered into as of this day of , 1999 among the City of Portland ("City"), a municipal corporation of the State of Oregon; Hoyt Street Properties, L.L.C. ("HSP"), an Oregon limited liability company, by Hoyt Street Investors, L.L.C., an Oregon limited liability company, its managing member; and Hoyt Street Investors, L.L.C. ("HSI"), an Oregon limited liability company whose obligations are limited solely to those stated in Section VIII. The City and HSP, and their respective successors and assigns shall be referred to herein individually as a "Party" and jointly as "Parties".

I. RECITALS

A. HSP is the owner of approximately thirty-four (34) acres of property in Northwest Portland referred to in this Agreement as the "Property." The Property is depicted on Exhibit A-1 and specifically described on Exhibit A-2, both of which are attached hereto and incorporated herein by this reference.

B. On September 8, 1997, the Parties entered into an Agreement for Development between the City of Portland and Hoyt Street Properties, L.L.C., (" 1997 Agreement"). The intent of the 1997 Agreement was to provide for timely private development and public investments on the Property and in the vicinity so that they occur in a manner generally consistent with the River District Development Plan endorsed by City Council on May 11, 1994 ("Plan"). In adopting the Plan, the City affirmed its vision to extend the downtown northward and to create within the River District a "community of neighborhoods.. .a community which is unique because of its image, its diversity, and most important, its embrace of the Willamette River. "

The City seeks through the Plan and its attendant policies, including, without limitation, the River District Design Guidelines, the River District Housing Implementation Strategy, and the River District Right-of-way standards, to encourage a rich urban environment, with housing that reflects the income diversity of the City as a whole, an active street life, a strong network of pedestrian connections, significant open spaces which capitalize on the proximity of the district to the river, and a diversity of architectural styles and scales appropriate to an urban environment.

AMENDED AND RESTATED DDAlHSPlClTY MARCH 8, 1999

D. The Plan calls for a high density, mixed-use development of the Property which will consist primarily of new residential projects such that, at full build-out, approximately 2,000 to 3,000 new housing units will be built on the Property. The Plan also calls for a series of public and private infrastructure improvements in the area in support of the private development on the Property.

Until it entered into the 1997 Agreement, HSP was under no obligation to develop at the densities and affordability levels envisioned by the Plan and the City was under no obligation to implement the public improvements envisioned. Most of the Property was subject to a minimum housing density o'f fifteen (15) units per acre, but this minimum falls far short of the density called for in the Plan. HSP shall continue to work within the framework of the Plan by performing the HSP activities outlined in this Agreement, to the extent that the public improvements called for in the Plan are implemented in accordance with the Agreement. An estimate of the densities achievable under this Agreement is set forth in Exhibit C.

F. The primary purpose of this Agreement is to describe, in the light of progress realized under the 1997 Agreement, the general framework for development of the Property by HSP, for the construction of infrastructure improvements by the City, and to define when commitments of the respective parties need to be f d i z e d .

G. Pursuant to the terms of the 1997 Agreement, the City Council directed the Bureaus of Environmental Services ("BES") and Parks and Recreation ("Parks "), together with the Portland Development Commission ("PDC ") to fund and proceed with the Parks Planning and Feasibility Study for Parks projects called for in the 1997 Agreement.

H. The Mayor appointed the Tamer Creek Park and Water Feature Steering Cormnittee and charged it with the responsibility of developing design concepts for the Parks projects and making recommendations to City Council.

I. The Steering Committee met and considered the purpose, location, size and major design features and general timing for each proposed park and made its recommendations to City Council.

J. On October 21, 1998, the City Council adopted Resolution No. 35736, approving the Tanner Creek Park and Water Feature Steering Committee's recommendations to create four parks in the River District, including the purpose, location, size and major design features and general timing for each proposed park, and directing Parks to work together with PDC and HSP to

AMENDED AND RESTATED DDAIHSPICITY MARCH 8, 1999

amend the 1997 Agreement to incorporate the Steering Committee's recommendations.

K. HSP's predecessor obtained a Central City Master Plan approval in 1989 (subsequently amended). Among other things, this Master Plan obligates HSP to provide public pedestrian connections located in certain vacated rights-of- ways (ie. at N.W. Irving Street, N.W. Kearney Street and N.W. Marshall Street). In order to achieve the River District vision calling for the creation of the three Tanner Creek Park Blocks containing up to 66,000 square feet, the 1997 Agreement acknowledged that HSP would apply for, and PDC would support, an amendment to the Master Plan to remove HSP's obligations to create the public pedestrian ways. The intent of this provision was to allow HSP to donate up to 66,000 square feet of open space in lieu of the pedestrian ways. HSP is now willing to continue to fulfill its obligations regarding the provision of the pedestrian ways, in addition to donating up to 66,000 square feet of land for open space as called for in City Council Resolution No. 35736. There is accordingly no need for a Master Plan amendment.

L. The City will not commit additional public resources in support of the public projects called for in the Plan without a like commitment by HSP that the Property will be developed by HSP or its transferees in accordance with the Plan and with the Steering Committee recommendations. Likewise, HSP will not agree to specific land use and development requirements unless the public infrastructure commitments are also in place. Therefore this Agreement establishes a series of modified contingent obligations between the Parties which provide for the phased construction of certain public and private improvements consistent with the Plan and with the Parties' actions under the 1997 Agreement to date.

M. The parties acknowledge that it is the intent of the City to delegate many of its rights and responsibilities to manage, administer and enforce this Agreement, to PDC which shall be generally authorized to act on behalf of the City on all matters except as otherwise provided for herein.

GENERAL TERMS AND DEFINITIONS

A. DESCRIPTIONS OF THE PROJECTS

Specific terms and conditions are included in this Agreement relating to the City's commitment to make certain public infrastructure improvements and HSP's commitment to construct the private improvements which it develops in compliance with certain minimum housing densities and other obligations under

AMENDED AND RESTATED DDA/HSP/ClTY MARCH 8. 1999

this Agreement. These terms and conditions are established relative to four (4) proposed public projects (individually, a "Project", and jointly or collectively, "Projects ") known as:

1. the "Lovejoy Project", defined as removal of the N.W. Lovejoy and N.W. 10th Avenue ramps and reconstruction of those streets at grade along with construction of a new ramp to the Broadway Bridge at N.W. 9th Avenue and N. W. Lovejoy, including all street improvements engineered as part of the Lovejoy Project by the City. The location of the Lovejoy Project is generally shown on Exhibit B attached hereto and incorporated herein by this reference.

2. the "Streetcar Project", defined as the construction of a new streetcar system, connecting downtown Portland and, ultimately, Portland State University, with the Good Samaritan Hospital area along an alignment including N.W. 10th and N.W. 11th Avenues, N.W. Lovejoy and N.W. Northrup within the Property. The location of the Streetcar Project is generally shown on Exhibit B;

3. the "Park Squares Project", defined as the acquisition of land by the City and the development of Park improvements on that land (i.e., the design, construction and maintenance of City parks) to be known as "South Park Square", "North Park Square", and jointly, as the "Park Squares". The names of "South Park Square", "North Park Square", and "Park Squares" are used for the purposes of this Agreement only. The City may designate the Park improvements by other names in the future. The Park Squares Project anticipates the possible development of a related project known as the "Daylighting of Tanner Creek" which would bring stormwater from the Tanner Creek stormwater system to the surface and may be incorporated into the Park Squares as a park amenity and educational feature. The Park Squares Project will be two full City blocks, each consisting of approximately 40,000 square feet, located in the area as generally shown on Exhibit B. The design, construction and maintenance of the Park Squares Project and the Daylighting of Tanner Creek are collectively referred to herein as the "Park Squares Improvements " ; and

4. the "Neighborhood Park Project", defined as the acquisition by the City of approximately 90,000 square feet of property owned by HSP bordered approximately by the street extensions of N.W. Overton Street, N. W. 10'" Avenue, N. W. 1 lth Avenue and N. W. Quimby Street, as generally shown on Exhibit B, and the development of Park improvements, (i.e.,

AMENDED AND RESTATED DDAIHSPICITY MARCH 8.1999

the design, construction and maintenance of the Neighborhood Park Project) on the property acquired.

B. DEFINITIONS

The following terms used in this Agreement are defined as follows:

"Affordable Housing" shall mean housing, either for sale or for rent, which meets the then current affordable monthly payments for the Portland area as defined by the U.S. Department of Housing and Urban Development for "low," and "moderate" income households and the "extremely low" income category as defined by the City of Portland's Comprehensive Housing Affordability Strategy all as shown as housing targets on Exhibit D-1, attached hereto and incorporated herein by this reference.

2. "Appraisal" shall mean a method for determining the sale price of any site to be acquired by the City or HSP under this Agreement, excevt public rights-of-way. or other public easements to be dedicated to the City pursuant to this Agreement, properties to be acquired pursuant to Section V.E. herein or properties condemned other than pursuant to Section X1V.G. The method for appraisal is as follows:

a. The City will appoint an appraiser, HSP will appoint an appraiser, and the two appointed appraisers will select an independent third appraiser.

b. The two appointed appraisers will each independently set a market value of the subject site, and then attempt to set the market value by agreement.

c. If the appraisers appointed by the City and HSP cannot agree on market value, the independent third appraiser shall determine the market value based upon the analyses performed by the appraisers for the City and HSP.

d. The independent third appraiser's determination of market value will be binding on HSP and the City.

e. Each Party shall pay all costs of its appointed appraiser and one-half of the costs of an independent third appraiser, if used.

AMENDED AND RESTATED DDAIHSPICITY MARCH 8,1999

3. "City" shall mean the City of Portland, Oregon.

4. "City Certifies," or "City Certification" as used relating to the Park Squares Improvements and the Neighborhood Park Project, shall mean the City Council'sadoption of a resolution expressing the Council's commitment to implement the respective Project, and certifying that funds are available to do so. Upon adoption of such a resolution, the Project shall become a "Project Certified by the City. "

For any Projects Certified by the City, the City will Commence Construction of the Project not later than twelve (12) months following the effective date of the Council resolution certifying the Project. The 12-month period may only be extended by the mutual written agreement of the Parties, or by such amount of time that the City is delayed in reaching a final resolution of lawsuits, land use appeals or other legal proceedings which prohibit it from Commencing Construction. In the event the City fails to Commence Construction within the 12 months following the effective date of the Council resolution (unless the 12-month period has been extended pursuant to this paragraph and, in that case, within the extended period), HSP shall thereafter have no obligation to meet the increased density requirements that are contingent upon the particular City Certification until Commencement of Construction of the subject Project.

5 . "Closing" shall mean the completion of a sale and purchase of real property as described in Section X1I.B. herein.

6 . l'Commence Construction" or "commencement of construction" shall mean the issuance of the Notice to Proceed by a Party to its general contractor, except as provided in Section III.B. 1. herein, as to the Lovejoy Project.

7. l 'C~n~ey ' I or l'Conveyancel' shall mean transfer of property by dedication, donation, voluntary sale or sale under threat of or through the exercise of the power of eminent domain.

8. "Development Permit" shall mean the earlier of a required quasi-judicial land use approval for a proposed project or the building permit for the proposed project.

9. "Effective Date" shall mean September 8, 1997.

AMENDED AND RESTATED DDAMSPICITY MARCH 8. 1999

"Goals" shall mean the minimum Affordable Housing targets established in the River District Housing Implementation Strategy approved by the City Council on December 21, 1994 for "extremely low," "low" and "moderate" incomes shown on Exhibit D-1 as a percentage of total new units at build-out.

"HSP" shall mean Hoyt Street Properties, L.L.C., an Oregon limited liability company.

"HSP Goals" shall mean the Goals for "extremely low, " "low " and "moderate" incomes applicable to the Property shown on Exhibit D-2 as a percentage of total new units at build-out.

"LID" shall mean a local improvement district formed to pay the costs of a public improvement project specially benefitting certain properties.

"Master Plan" shall mean the Master Plan for the Property approved by the City under File #7948/DZ91-89 as amended under File #SLUR 92- 00798 MS LA, LUR 95-00241 SU and LUR 97-00156 DZ.

"Neighborhood Park" shall mean a park approximately 90,000 square feet in size, located between the extensions of N.W. Overton Street, N.W. 10" Avenue, N.W. 11' Avenue and'^.^. Quimby Street, as generally shown on Exhibit B, developed in conformance with the general purpose, location, size and major design features and general timing set out in the Tamer Creek Park and Water Feature Steering Commjttee recommendations approved by City Council on October 21, 1998.

"Neighborhood Park Property" shall mean that land optioned to the City by HSP pursuant to Section 1II.E. 1. herein.

"North Park Square" shall mean one of two Park Squares, and is to be located between the extensions of N.W. Northrup and N.W. Marshall Streets, and N. W. 10' and N. W. 1 1' Avenues as generally shown on Exhibit B, and developed in conformance with the general purpose, location, size and major design features and general timing set out in the Tanner Creek Park and Water Feature Steering Committee recommendations approved by City Council on October 21, 1998.

"Original Density" shall mean fifteen (15) units per acre.

AMENDED AND RESTATED DDAIHSPICITY MARCH 8. 1999

All increases in density related to the Projects required in this Agreement ("Additional Densities") shall replace the Original Density, it being the intention of the Parties that the densities stated herein will be the densities required of HSP on the Property. The Original Density and Additional Densities are summarized on Exhibit C, attached hereto and incorporated herein by this reference.

"Park" shall mean an improved public open space and may include auxiliary public uses so long as the use of the property is primarily open space and non-commercial in character. All Parks shall be designed by or at the direction of the City of Portland, Bureau of Parks.

"Park Squares Improvements" shall mean the design, construction and maintenance of the Park Squares Project, or either the North Park Square or the South Park Square as the context may require, and the possible Daylighting of Tanner Creek.

"Park Squares Property" shall mean that land conveyed to the City by HSP pursuant to Section III.D. 1.

"Party" shall mean the City and HSP individually. "Parties" shall mean the City and HSP jointly.

"PDC" shall mean the Portland Development Commission, the duly designated and acting urban renewal agency of the City of Portland,' Oregon.

"Plan" shall mean the River District Development Plan endorsed by the City Council on May 1 1, 1994.

"Project" shall mean one of the four public projects described in Section 1I.A. herein. "Projects" shall mean more than one Project.

"Property" shall mean the real estate described in Recital I.A. herein.

"Replacement Site" shall mean that parcel of real property which HSP may acquire from the City pursuant to a first right to negotiate as described in Section 1II.E. 1 .b. (1) herein.

"River District Vision" shall mean that document acknowledged by the City under City Resolution No. 34970, adopted on March 11, 1992.


29. "South Park Square" shall mean one of two Park Squares, and is to be located between N.W. Johnson Street and the vacated N.W. Kearney Street, and N. W. 10" and N. W. 1 1" Avenues as generally shown on Exhibit B, and developed in conformance with the general purpose, location, size and major design features and general timing set out in the Tanner Creek Park and Water Feature Steering Committee recornmendations approved by City Council on October 21, 1998.

30. "Uncommitted Property" shall mean the Property except: (1) parcels which either have improvements that are complete, under construction, or have committed financing; (2) parcels for which a complete application for design review approval has been submitted with all fees paid; or (3) parcels which are designated under this Agreement for public use.

C. EFFECTIVE DATE

The Parties' obligations to perform according to the terms and conditions of the 1997 Agreement commenced on September 8, 1997. The Parties' obligations to perform according to the terms and conditions of this Agreement will commence upon final execution of this Agreement, subject to termination on August 2, 1999 under the circumstances described in Section m.B. 1 .a., below.

D. PLANNING AND FEASIBILITY STUDY FOR PARK PROJECTS

The Parties acknowledge that the City has undertaken and completed a Planning and Feasibility Study for Parks Projects that has resulted in the City Council adoption of the recommendations of the Tanner Creek Park and Water Feature Steering Committee, by Resolution No. 35736, dated October 21, 1998. It is the intent of the Parties that the design of those Parks be of the quality of other downtown parks and open spaces. The Parties agree that the Park Squares will be a multi-use space, similar in function to the South Park Blocks, pedestrian oriented, and capable of accommodating short-term public events. A significant portion of the Park Squares will include trees and landscaped areas that support and enhance the uses in the park. The park project design may incorporate a related project, known as the "Daylighting of Tanner Creek" which would bring stormwater from the Tanner Creek stormwater system to the surface as a park amenity and educational feature. The Park Squares will not include features, sport facilities, or other improvements that would generate permanent or long- term impacts on the residents of the neighborhood, such as excessive noise,

AMENDED AND RESTATED DDAlHSPlClTY MARCH 8, 1999 9

lighting, early or late hours of use, large crowds, or significant automobile traffic.

E. STREET IMPROVEMENTS BY CITY

In addition to the construction of the Lovejoy Project, if and when the following street improvements are made, the City shall be responsible for the cost of construction of:

1. Half Streets, One-half of the street improvements on portions of streets which front on publicly-owned property on one side and HSP-owned property on the other side; and

2. Entire Streets,

a. All street improvements on portions of streets which front publicly-owned property on both sides of the street; and

b. All necessary street improvements, in the event the City chooses to Commence Construction of the Streetcar Project prior to construction of the streets necessary to accommodate the fixed rail system. HSP shall reimburse the City for the cost of construction of those streets (or portions of streets) which HSP would otherwise have been required to construct pursuant to this Agreement as part of HSP's development of the Property. HSP shall reimburse the City before a building permit is issued on that portion of the Property adjacent to the street improvements constructed by the City under this Section II.E.2.b.

If street improvements are made within the Property after the Effective Date agd are not financed with an LID, and thereafter a Party acquires property pursuant to this Agreement which fronts the c6mpleted street improvements, then the acquiring Party shall reimburse the other Party for the cost of construction of the street improvements as if the acquiring Party had owned the acquired property at the time the improvements were made. If the City is the acquiring Party, City shall reimburse HSP within thirty-six (36) months of the date of acquisition. If HSP is the acquiring Party, HSP shall reimburse the City before a building permit is issued for construction on the acquired property which abuts the completed street improvement.

If the Parties agree, construction costs may be financed through a Local Improvement District ("LID"), in which case, the City shall bear the share of


the LID assessment attributable to its benefitted property based upon the allocation formula approved in the LID ordinance.

F. DOCUMENTATION OF CHANGES IN DEVELOPMENT REQUIREMENTS; SATISFACTION OF CONDITIONS

All changes in the development requirements for the Property and/or~satisfaction of conditions which are required by the Parties' activities pursuant to this Agreement, such as the contingent increases or decreases in densities, shall be evidenced by a written document, in recordable form mutually acceptable to the Parties, which shall be recorded upon the satisfaction or failure of the condition upon which the change in development requkements (including an increase or decrease in density) is contingent.

111. CONTINGENT OBLIGATIONS

Subject to the Additional Condition to Parties' Performance (Section IV herein) and the specified required performance of the other Party, each Party shall perform its respective obligations as described herein:

A. INITIAL DEVELOPMENT AGREEMENT OBLIGATIONS

HSP hereby agrees that housing shall be constructed on the Uncommitted Property fiom the Effective Date at a minimum density of eighty-seven (87) units per acre. This new minimum density shall replace the Original Density.

B. LOVEJOY PROJECT

1. City Obligations.

a. At no expense to HSP except the contribution stated in Section 111. B. 2.b., the City shall Commence Construction of the Lovejoy Project on or before August 1, 1999. For purposes of this Section, "Commence Construction" or the "Commencement of Construction" shall mean the awarding of a contract for the demolition phase of the Project.

If the City fails to do so, HSP may terminate this Agreement in accordance with Section VII below.


b. The City shall coordinate the work associated with the Lovejoy Project with the work associated with the development of housing on the HSP parcels adjacent to the Lovejoy and the 1 0 ~ Avenue Ramps. The City and HSP will develop a Memorandum of Understanding, for approval by PDOT and HSP, which will delineate the issues to be addressed and a process by which they will be addressed. Those issues include, but are not limited to, the sequencing of demolition, access to developments and how, and under what circumstances, PDOT will reimburse HSP for streetwork which HSP may undertake in advance of the Lovejoy Project. PDOT agrees to reimburse HSP for approved streetwork costs within ninety (90) days of HSP's submission of an invoice with documentation of costs in a form acceptable to PDOT.

2. HSP Obligations.

a. In conjunction with the Lovejoy Project, and after the City notifies HSP of the estimated date of the City's Commencement of Construction, HSP shall, within ten (10) days of the City's request for conveyance, execute documents necessary to convey the following property for public rights-of-way:

(1) N. W. 10th Avenue between N. W. Irving and N.W. Northrup Streets; N.W. Lovejoy Street between N.W. 9th and N.W. 12th Avenues; and

(2) An additional easement of up to 10 feet along the north side of N.W. Lovejoy between N. W. 9th and N.W. 12th as necessary to increase the width of N.W. Lovejoy to the minimum width required for the Lovejoy Project, it being the Parties' goal to minimize the amount of easement required.

b. HSP shall contribute $121,000 to the Lovejoy Project as part of the design and engineering costs. HSP shall make the contribution by payment in full to the Portland Office of Transportation, no later than thirty (30) days after the Commencement of Construction of the Lovejoy Project. In the event that the City fails to begin the demolition work within ninety (90) days after the Commencement of Construction of the Lovejoy Project, the City shall reimburse HSP for the design and engineering costs contribution required by this subsection.

AMENDED AND RESTATED DDA/HSP/CITY MARCH 8, 1999

C. STREETCAR PROJECT

1. City Obligations.

a. The City shall make reasonably diligent efforts to design, finance and construct the Streetcar Project.

b. If the City makes reasonably diligent efforts to obtain the necessary approvals and financing for the Streetcar Project, but after a period of ten (10) years after the Effective Date, the City has not Commenced Construction of the Streetcar Project or instituted interim streetcar service using rubber wheeled vehicles as allowed by subsection c. of this section, then the City may discontinue its efforts and notify HSP that the Streetcar Project will not be constructed under the terms of this Agreement. If the City so notifies HSP, HSP shall be relieved of the HSP obligations stated in Section III.C.2 herein.

c. The Streetcar Project is intended to be a fixed rail system. However, the City may institute the Streetcar Project as regularly scheduled service using rubber wheeled trolleys on an interim basis as part of a long term plan for permanent service.

d. , The City may form a Streetcar Local Improvement District ("Streetcar LID") to partially fmance the capital costs of the Streetcar Project after City has committed to construct the Streetcar Project.

2. HSP Obligations.

a. When the City Commences Construction of the Streetcar Project, or when the City commences operation of the Streetcar Project using rubber wheeled trolleys on such conditions and for such duration as agreed to by the Parties, which agreement shall not be unreasonably withheld, then the minimum housing density on the then Uncommitted Property shall increase by an additional one (1) unit per 2,000 square feet of land (approximately 22 units per acre) above the then required minimum density, provided however, that if the City discontinues operation of the Streetcar for a period of more than six (6) consecutive months (except if

AMENDED AND RESTATED DDAlHSPlCITY MARCH 8 , 1999

the interruption is caused by construction, repair or upgrade in anticipation of continuing service ), the increase in minimum housing density required under this Section III.C.2. shall be canceled on the then Uncommitted Property, and until Streetcar operation is restored, the minimum housing density on the Uncommitted Property shall be calculated without the Streetcar Project increase. At the time the City resumes operation of the Streetcar, the minimum housing density on HSP's then Uncommitted Property shall increase by an additional one (1) unit per 2,000 square feet of land above the then required minimum density.

b. At the time of formation of a Streetcar LID for a fixed rail system, HSP will execute the necessary documents waiving its right to remonstrate against. a lump sum Streetcar LID assessment in an amount not to exceed $700,000 when combined with the amount of assessment, if any, against property within the Property which HSP does not own at the time of the assessment.

If the Streetcar Project is developed on an interim basis using rubber wheeled trolleys, HSP agrees to waive its right to remonstrate against an LID assessment on property it owns to help pay for the capital costs of the Streetcar Project, provided that the assessment is based on the same rate used in compming assessments on other properties receiving a similar benefit from the Streetcar Project.

HSP shall be entitled to any financing options available to other property owners assessed within the Streetcar LID.

c. In conjunction with the Streetcar Project and after the City notifies HSP of the estimated Commencement of Construction, HSP shall, within ten (10) days of the City's request for Conveyance, execute documents necessary to convey any streets necessary for the Streetcar Project as shown on Exhibit B.


D. PARK SQUARES PROJECT

1. Park Squares Property Conveyance.

a. HSP Obligations.

(1) At a time mutually agreed to by the Parties, but no later than thirty-six (36) months after the Effective Date, HSP shall convey to the City, at no cost, the property for development of South Park Square.

(2) At a time mutually agreed to by the Parties, but no later than seventy-two (72) months after the Effective Date, HSP shall convey to the City, at no cost, 26,000 square feet of the property needed for development of North Park Square. At the time of this HSP conveyance, the City shall purchase from HSP 14,000 square feet of the property needed for development of North Park Square, with consideration for the purchase being determined by Appraisal.

(3) At the same time as the conveyance of the North Park Square property described in Section III.D. 1. a. (2) above, HSP shall convey to the City for public rights-of-way N. W. 10th Avenue and N. W. 1 lth Avenue, each between N.W. Lovejoy and N.W. Overton.

(4) For a period of three (3) years after the Effective Date, HSP will not develop permanent improvements on that land identified on Exhibit B as South Park Square. For a period of six (6) years after the Effective Date, HSP will not develop permanent improvements on that land identified on Exhibit B as North Park Square. It is the intent of the Parties that during each of these periods, the design and level of improvements for each of the Park Squares will be determined, and that funds will be secured by the City for the Park Square Improvements.

b. City Obligations. Prior to commencement of Construction, the City shall maintain the Park Squares Property it has acquired through conveyance from HSP in a condition that does not constitute a nuisance to the adjacent properties.


c. Parties' Rights Prior to Construction of Improvements. Prior to Commencement of Construction of the Park Squares Improvements :

(1) HSP may install and maintain temporary park improvements (such as grass and trees) at HSP's expense on either or both of the Park Squares if HSP believes such improvements are needed to enhance adjacent HSP developments, subject to permits issued by the City. HSP shall maintain any temporary park improvements at its sole expense. The City shall have no liability for claims, actions or suits for personal injury or property damage arising from HSP's actions or omissions in installing or maintaining temporary park improvements and HSP shall sign an appropriate document to that effect, which has been approved by the City Attorney, before installing any temporary park improvements. Upon City's Commencement of Construction of Park Squares Improvements, HSP's temporary park improvements on the property which the City is improving may be removed or demolished by the City without compensation to HSP.

The City and HSP will have the non-exclusive right to use the Park Squares Property for any purpose permitted by the City's zoning regulations and subject to any necessary reviews and permits and insurance certificates required by the City. Upon reasonable notice given by either the City or HSP to the other Party, the right of either Party to use the Park Squares Property for other than Park use shall cease.

2. Park Improvements.

a. City Obligations.

(1) The City shall make reasonably diligent efforts to design, finance and construct the Park Squares Improvements with the goal that the South Park Square and the North Park Square will be completed when the private improvements on adjacent properties are ready for occupancy. The City will make every reasonable effort to begin construction of the South Park Square no later than March 8, 2000.

AMENDED AND RESTATED DDAWSPICITY MARCH 8, 1999

(2) After completion of construction of each of the Park Squares Irnprovements, it will be the responsibility of the City to maintain and police the completed Park Square(s) in the same manner as other City parks in the downtown area.

b. HSP Obligations.

(1) When the City Certifies the construction of the South Park Square Improvements, the minimum density of the then Uncommitted Property south of N.W.Lovejoy Street shall be increased by one unit per 2,000 square feet of land above the then required minimum density.

(2) When the City Certifies the construction of the North Park Square Improvements, the minimum density of the then Uncommitted Property north of N. W. Lovejoy Street and south of N.W. Overton Street shall be increased by one unit per 2,000 square feet of land above the then required Ilainimum density.

(3) HSP may desire to accelerate the construction of one or both of the proposed Park Squares Improvements and may propose that HSP undertake construction of said .improvements on behalf of the City, but subject to the City's approval and agreement to reimburse HSP for all of the reasonable costs of the Park Squares Improvements 'undertaken by HSP. Upon written notice of HSP's desire to undertake construction of any Park Squares Improvements, the City will work with HSP in a good faith effort to allow the Park Squares Improvements to be accelerated but is under no obligation to agree to the work proceeding. HSP acknowledges that any Park improvements constructed by HSP will be designed by or at the direction of the Parks Bureau; that all design and engineering work will be approved by the Parks Bureau; and that all construction work will be subject to inspection and sign-off by the Parks Bureau. HSP acknowledges that the design, engineering and construction of any Park improvements relating to the Daylighting of Tanner Creek will be subject to additional approval and sign-off by BES.


E. NEIGHBORHOOD PARK PROJECT

1. Acquisition of Neighborhood Park Property.

a. HSP Obligations.

(1) No later than October 15, 1999, HSP shall grant to the City, by and through PDC, a no-cost option to purchase the Neighborhood Park Property, which shall be an area of land of approximately 90,000 square feet between the extensions of N.W. Overton Street and N.W. Quimby Street, and 10" and 11' Avenues, for the development of a Park, along with associated public uses consistent with the Plan, which may include water quality facilities and demonstration facilities so long as the principal use of the area is park-like and compatible with the residential character .of the area.

(2) The City's option to purchase the Neighborhood Park Property shall be for a period terminating seventy-two (72) months after the Effective Date unless exercised by the City before expiration. The purchase price of the Neighborhood Park Property, pursuant to the option, shall be based on the square footage value at the time of option exercise established by an Appraisal to be undertaken at that time. Closing shall occur no more than thirty (30) days after the completion of Appraisal and unless otherwise agreed by the Parties, shall be a cash sale. Conveyance shall otherwise be made pursuant to the terms and conditions of Section XI1 herein.

(3) As a part of, and a condition to the closing of the acquisition of the Neighborhood Park Property, HSP shall execute documents necessary to convey public rights-of- way to the City for N.W. Overton Street between N.W. 9th and N.W. 12" Avenues, together with any other public rights-of-way required by the Master Plan.

(4) From the Effective Date through the later of: (i) the closing of City's acquisition of the Neighborhood Park Property, or (ii) the expiration of the City's option to purchase without the City exercising the option, HSP will

AMENDED AND RESTATED DDAIHSPICITY MARCH 8 , 1999

not develop permanent improvements on the area identified on Exhibit B as the Neighborhood Park Project.

(5 ) In the event that the City does not Commence Construction of the Neighborhood Park Project within three years after the date of conveyance of the Neighborhood Park Property by HSP to the City, or within four years if City has not Commenced Construction solely because necessary permits have not been granted, HSP shall be entitled to repurchase the Neighborhood Park Property at its then fair market value determined by Appraisal. Any reconveyance of the Neighborhood Park Property shall be made pursuant to the terms and conditions of Section XI1 herein.

b. City Obligations.

(1) To the extent the combined area of the Neighborhood Park Property and the Park Squares exceeds 11 1,000 square feet, and at such time as PDC determines that real property owned by the City or PDC, preferably in the River District, is available for development, PDC shall grant to HSP the f i s t right to negotiate for acquisition or development of all or a portion of such real property (the "Replacement Site") provided that the Replacement Site meets the minimum standards established in this Section 1II.E. 1 .b.(l). The Replacement Site shall be equal in area to the difference between the combined area of the Neighborhood Park Property and the Park Squares and 11 1,000 square feet, or of a size to accommodate two hundred (200) housing units, but at a minimum, either (i) a one-acre site or (ii) a site smaller than one acre but of sufficient size to accommodate eighty-seven (87) housing units and street-level commercial uses whichever may be agreed by the Parties. Sale of the Replacement Site to HSP shall be upon the same terms and conditions as those offered, or to be offered, to the public for acquisition or development of the Replacement Site. Development of the Replacement Site shall be consistent with City goals and objectives and land use and other specific program requirements for the Replacement Site established by PDC

AMENDED AND RESTATED DDAIHSPICITY MARCH 8.1999

and/or the City at the time of granting the first right to negotiate.

(2) Following its acquisition of the Neighborhood Park Property, the City shall maintain the Neighborhood Park Property in such a condition that it does not constitute a nuisance to the adjacent properties.

c. Parties' Rights Prior to Construction of Improvements.

Prior to Commencement of Construction of the Neighborhood Park Project:

(1) HSP may install and maintain temporary park improvements (such as grass and trees) at HSP's expense on the Neighborhood Park Property if HSP believes such improvements are needed to enhance adjacent HSP developments, subject to permits issued by the City. HSP shall maintain any temporary park improvements at its sole expense. The City shall have no liability for claims, actions or suits for personal injury or property damage arising from HSP's actions or omissions in installing or maintaining temporary park improvements and HSP shall sign an appropriate document to that effect, which has been approved by the City Attorney, before installing any temporary park improvements. Upon City's Commencement of Construction of the Neighborhood Park Project, HSP's temporary park improvements may be removed or demolished by the City without compensation to HSP.


The City and HSP will have the non-exclusive right to use the Neighborhood Park Property for any purpose permitted by the City's zoning regulations and subject to any necessary reviews and permits and insurance certificates required by the City. Upon reasonable notice given by either the City or HSP to the other Party, the right of either Party to use the Neighborhood Park Property for other than Park use shall cease.

2. Improvement of Neighborhood Park Project.

a. City Obligations. The City shall make reasonably diligent efforts to design, finance and construct the Neighborhood Park Project with the goal that the Project will be completed when the improvements on adjacent properties are ready for occupancy.

b. HSP Obligations. When the City Certifies the Neighborhood Park Project Improvements, the minimum housing density of the then Uncommitted Property north of N.W. Overton Street will be increased by an additional density of one (1) unit per 2,000 square feet of land above the then required minimum density.

IV. ADDITIONAL CONDITIONS TO PARTIES' PERFORMANCE

A. B-N LEASE

The parties recognize that HSP's ability to perform some obligations outlined in this Agreement may be constrained by the terms and conditions of a Second Amended Lease between HSP, as assignee of Walker Road Partners, and Burlington-Northern Railroad Company dated June 18, 1992 ("B-N Lease ") . HSP will use its best efforts to perform its obligations pursuant to this Agreement notwithstanding the terms of the B-N Lease, but the Parties recognize that HSP obligations under this Agreement will be subject to its obligations under the B-N Lease. HSP is not obligated to seek termination of the B-N Lease.

B. URBAN RENEWAL DISTRICT

The Parties acknowledge that the ability of each to successfully accomplish the public and private improvements called for under this Agreement may be, in large part, dependent on the ability of the City to secure the necessary funds to undertake the public improvements and to meet its housing affordability goals. To this end, the Parties agree to work together to evaluate the feasibility and legality of establishing an urban renewal district, including the Property, as a possible mechanism to provide for said public. financing.


V. HOUSING AFFORDABILITY OBLIGATIONS

A. COOPERATION TO MEET HOUSING AFFORDABILITY GOALS

1. Overall Goals for Housing Affordability. The Parties acknowledge that one of the essential objectives of the River District is to create a diverse neighborhood with a variety of housing types serving a population that reflects the income ranges of the City as a whole. To this end, HSP will make good faith efforts to help accomplish this objective through cooperation with the City in meeting the Goals.

2. River District Housing Implementation Strategy. The River District Housing Implementation Strategy, approved by City Council on December 21, 1994 (the "Strategy"), is to guide development of housing in the River District which reflects the diversity in household income of the City of Portland as a whole. The Strategy calls for the establishment of specific percentage targets for development of housing in the District for "extremely low," "low" and "moderate" income levels (the "Goals"), which are hereby incorporated into this Agreement by reference and are attached hereto as Exhibit D-1.

3. HSP Goals. HSP agrees to cooperate with the City to meet the Goals for its Property (the "HSP Goals"). HSP Goals are hereby incorporated into this Agreement by reference and are attached hereto as Exhibit D-2. The Parties acknowledge that the actual numbers of affordable units built will vary from that shown on Exhibit D-2 depending upon the timing of the public infrastructure improvements undertaken by the City and the extent of required street and open space dedications. Nonetheless, the HSP Goals expressed in minimum percentage of total new units built are binding on HSP, subject to the other terms of this Section V.

4. Condition of Compliance. The Parties acknowledge that HSP's ability to meet, or exceed, the HSP Goals will be subject to the availability of public financial assistance from the City and other sources, and the negotiation and successful agreement between the City and HSP regarding the amount and use of this assistance. I


B. HSP PROPOSALS FOR AFFORDABLE HOUSING

1. Submittal of Proposals. HSP will prepare and submit development proposals from time to time to PDC for development of Affordable Housing giving the City the opportunity to commit tax abatements andlor other City, State or Federal public subsidy funds, needed to include Affordable Housing among various HSP projects on its Uncommitted Property. Those subsidies, if provided, will be provided for projects of a reasonable size and scale, in an amount on a per unit basis, of a type and at a time reasonably equivalent to those offered other Affordable Housing projects in Portland. However, any agreement to provide subsidies shall be subject to the same review and exercise of discretion by PDC as applied to other development proposals for Affordable Housing.

2. Financing Proposals. HSP shall seek private and public financing from other reasonably available sources which may include, but are not limited to: bank financing, special tax abatement, low income housing tax credits, multi-family revenue bond financing, State or Federal housing programs, possible financing from the City based on future anticipated property tax revenues or, alternatively, tax increment financing, if it becomes available in the future.

C. PROCESSING HSP PROPOSALS FOR AFFORDABLE HOUSING

1. If an application is submitted to PDC andlor another housing agency by HSP which meets PDC's andlor the subsidizing agency's lending requirements and guidelines, but is not funded on a reasonably equivalent basis and within a similar time frame as those offered other Affordable Housing projects in Portland either because: (a) the City determines that sufficient public subsidies are not available at the time to do the project; or (b) the City and HSP do not agree on the "reasonableness" of the type, amount or other terms and conditions of the proposed public assistance, then HSP and the City agree to work in good faith together, for a period of twelve (12) months thereafter, to modify the proposal to the Parties' satisfaction or to secure necessary public funds during that period.

2. During this 12 month period, the City may elect to develop the property itself or to attempt to secure another entity to develop the proposed project under those terms and conditions sought by the City but not accepted by HSP. If the City so secures another entity, or elects to

AMENDED AND RESTATED DDAMSPICITY MARCH 8, 1999

develop the property itself, it shall then have the right to purchase the proposed property from HSP, upon the terms set forth in Sections V.E. and F. herein as if the subject property were a "City Affordable Housing Parcel" and cause the development of the proposed project.

3 . In the event the necessary public subsidies are not provided and the City fails to exercise its right to acquire the proposed property, HSP shall be given credit against the HSP Goals for the Affordable Housing project submitted but not subsidized, whether the project is built or not.

D. MONITORING HOUSING AFFORDABILITY GOALS

1. PDC Role. The City Council has directed PDC to monitor the River District's projects in achieving the Goals. The City has directed PDC and the Housing and Community Development Commission to monitor HSP's progress in achieving the HSP Goals. HSP shall be given Affordable Housing credit toward the HSP Goals to the extent the recently sold or optioned Lots 55, 56, 57 and 58 of Pearl Block 4 contain Affordable Housing.

2. Calculation of Goal Compliance. Upon the fifth, tenth and fifteenth anniversaries of the Effective Date, PDC shall make a determination whether or not the HSP Goals have been met in the housing projects completed to that anniversary.

3 . Consequences of Noncompliance by HSP. If, on the fifth, tenth or fifteenth anniversaries of the Effective Date, the HSP Goals have not been met, HSP shall sell to the City, at the City's request, a parcel of land of HSP's choice, subject to the provisions of Section V.E. below, of not more than 100 feet x 200 feet for the limited purpose of development by the City of Affordable Housing ("City Affordable Housing Parcel"). HSP shall reserve a sufficient amount of Uncommitted Property to meet the requirement of this Section V.D. on each of the fifth, tenth and fifteenth anniversaries.

4. Consequence of HSP Compliance. If on the fifth, tenth or fifteenth anniversaries of the Effective Date, HSP has met or exceeded the HSP Goals, then PDC shall take no additional action pursuant to this Section V.D. HSP shall then be relieved of any obligations as to the applicable anniversary.


E. SALE OF CITY AFFORDABLE HOUSING PARCELS

1. Distribution of Parcels.

In designating a City Affordable Housing Parcel, HSP shall designate a parcel that is proximate to existing housing, so as to distribute the Affordable Housing throughout the Property, rather than to concentrate Affordable Housing in one area.

Size of Parcels.

The area of a City Affordable Housing Parcel required to be offered pursuant to V.D.3. shall be proportionately reduced in the proportion that the HSP Goals are met but shall not be less than a 100 foot x 100 foot parcel. In the event a City Affordable Housing Parcel that HSP would otherwise be required to sell is less than 100 feet x 1CO feet, the City shall not purchase said parcel, but the City's right to purchase shall carry forward to the next 5 year period. In the event the HSP Goals applicable at the end of the next five-year period, including any deficiency in the immediately preceding five-year period, are met, the City's right to purchase a City Affordable Housing Parcel shall be canceled.

Terms of Sale.

The City shall pay a purchase price for a City Affordable Housing Parcel determined as follows :

a. The parcel will be appraised at the time of intended acquisition. Within ten (10) days of HSP's designation of a City Affordable Housing Parcel, the City will appoint an appraiser, HSP will appoint an appraiser and the two appraisers will select an independent third appraiser. ,

b. The two appointed appraisers will establish the market value of the parcel by agreement within sixty (60) days of their appointment. If the appraisers appointed by the City and HSP cannot agree on market value, the independent third appraiser shall determine the market value based upon the analyses performed by the appraisers for the City and HSP within


thirty (30) days of the failure by the appointed appraisers to reach agreement.

c. Once the market value is determined pursuant to Section V.E.3. b., the City may utilize its appointed appraiser to develop a modified appraisal, or addendum thereto, which establishes, in the appraiser's opinion, that portion of the market value of the parcel which may be solely attributable to the City's investment in the Lovejoy Project, the Streetcar Project, the Park Squares Project and the Neighborhood Park Project, if any, and acknowledging that HSP is making significant contributions to those Projects as well. This information shall be shared with HSP and the independent third appraiser within thirty (30) days of determination of the market value of the parcel under Section V.E.3.b. HSP may offer evidence and analysis to rebut the modified appraisal to the independent third appraiser within thirty (30) days of the City's submission of the modified appraisal to the independent third appraiser. The independent third appraiser will review the modified appraisal and the evidence, analyses and rebuttal of HSP. If the independent third appraiser concludes that the City has demonstrated that the market value has been increased as a result of the City infrastructure investments as described above, the purchase price will be reduced by the amount of that increase. The independent third appraiser shall make a final determination within thirty (30) days of receipt of all information from the Parties.

d. Closing shall occur not more than 30 days after a final determination of price pursuant to this Section V. C. 3. Closing shall be pursuant to the terms and conditions set forth in Section XII herein.

F. HSP'S RIGHT TO REPURCHASE PARCELS

HSP may repurchase any City Affordable Housing Parcel acquired by the City at a purchase price as determined in the manner described in Section V .E.3. herein, in the event the City, or its successor, fails to Commence Construction of an Affordable Housing project on the City Affordable Housing Parcel at the density required by this Agreement within two (2) years of the City's initial acquisition of that parcel.


G. CONSTRUCTION OF SMALLER UNITS

In order to help achieve a mixture of unit sizes and demographic variety, from the Effective Date:

1. For all rental housing projects built by HSP, HSP will construct at least fifteen percent (15 %) of those units at a size no greater than 700 gross square feet per unit.

2. For all for-sale housing projects built by HSP, HSP will construct at least ten percent (10%) of those units at a size no greater than 700 gross square feet per unit.

VI. HOUSING DENSITY GOALS/FEASIBILITY

A. HSP OBLIGATIONS

HSP shall build the housing that it develops at the minimum housing densities established herein whether or not the housing improvements are subsidized or otherwise financially assisted by the City.

B. COOPERATION OF PARTIES

Variation of Development Concepts. The Parties agree to work in cooperation to the extent that the Parties desire to vary housing densities from those described in this Agreement, to alter the mix between rental and home ownership, to address parking, soils or environmental constraints which may affect the financial feasibility of undertaking projects contemplated in this Agreement or in the event a project cannot be developed on a commercially reasonable basis due to adverse market conditions at the time which are outside of the control of HSP.

2. . Public Parking. The Parties shall work cooperatively to evaluate feasibility in pursuit of establishing a structured public parking facility for public and neighborhood use in the event one is reasonably needed to achieve River District Plan goals.

C. MONITORING HOUSING DENSITY PROGRESS

1. PDC's Authority. The City shall delegate the authority solely to PDC to monitor HSP's progress in achieving the housing densities required in this Agreement. PDC shall tally the total number of housing units


completed by HSP as development occurs and calculate the resulting density for each project completed.

2. Credits for HSP Performance. To the extent projects on the Property exceed the minimum required densities, PDC shall credit that additional density to the account of HSP for application to future projects on the Property.

Approval of Density. At such time as HSP applies to the City for a Development Permit, HSP shall notify PDC of ,the projected density of the project which is the subject of the application. Only PDC, acting on behalf of the City, shall approve or disapprove the density for the project as being in compliance with this Agreement, taking into account any credit for additional densities earned by HSP through the development of past projects. Likewise, PDC may authorize HSP to proceed with proposed projects which are to be built with densities below the then required minimum density upon satisfactory evidence that HSP will develop future projects at increased densities which, when added to the projected density of the initially proposed project, will be sufficient to achieve the required minimum densities of the combined projects. Nothing in this section shall be interpreted to give PDC any authority to approve the proposed project, except for purposes of approving its proposed density under this Agreement.

4. Credits for Properties Conveyed or Optioned. HSP shall be given density credit for recently sold Lots 55, 56, 57 and 58 of Pearl Block 4 to the extent they create housing at densities greater than 80 units per 40,000 feet. Those lots were sold with deed restrictions requiring not less than 160 dwelling units be built during the period of the negotiations on this Development Agreement and were required by HSP in good faith compliance with the density goals contemplated by this Agreement.

D. DEVELOPMENT OF COMPLEMENTARY FACILITIES

1. Intent. The City and HSP acknowledge the need for flexibility in housing densities to allow other complementary uses on the Property in support of the large number of housing units proposed. Certain community facilities and services may be highly desirable and of great benefit to the character and enhancement of the River District but may be precluded if strict adherence to the housing density requirements is required in every case.


PDC's Authority. The City shall delegate the authority to PDC to review and approve any modifications to the anticipated housing development program proposed by HSP if HSP can demonstrate to PDC that the proposed modifications are of significant benefit to the development of the River District as a whole sufficient to warrant a reduction in the number of housing units. PDC will consult with other City bureaus and members of the City Council as it evaluates any such HSP requests.

VII. TERMINATION OF AGREEMENT

A. TERMINATION DATE

This Agreement shall terminate on the fiftieth (50th) anniversary of the Effective Date, if not sooner terminated pursuant to Section V1I.B herein.

B. EARLY TERMINATION

In the event that City or HSP has the right to terminate this Agreement under any provision of this Agreement, termination shall occur upon the date specified by one Party in a written notice of termination given to the other Party. The date specified in the termination notice shall be no less than ninety (90) days after the date of the notice.

C. EFFECT OF TERMINATION

Upon termination pursuant to Section VI1.A or B, all rights and obligations of the Parties shall cease. The Parties shall thereafter be free to use their respective properties without regard for the terms of this Agreement. The Parties agree to execute such documents for recording as may be necessary to remove the lien of this Agreement from the title of any properties of the Parties.

VIII. ASSIGNWENT OF HSP'S INTERESTS; RIGHTS OF MORTGAGEES

A. GENERAL STATEMENT OF PURPOSE

HSP recognizes, in view of the importance of the covenants of this Agreement to the general welfare of the community, that the qualifications and identity of HSP as the developer of the Property is of particular concern to the community. HSP further recognizes that it is because of such qualifications and identity that the City is entering into this Agreement and in so doing is'further accepting and relying on HSP to comply with all applicable terms of this Agreement.


B. APPROVAL OF TRANSFERS

For the foregoing reasons, HSP and HSI each agree, for itself and any successor-in-interest, that, as to its respective obligations, unless the City has given its prior written approval, which approval shall not be unreasonably withheld:

1. Maintenance of HSI Interest. During the first 24 months immediately following the Effective Date, Hoyt Street Investors, L.L.C., an Oregon limited liability company and a member of HSP, shall not take any actions to reduce its interest in HSP below the percentage of interest in HSP it controls at the Effective Date;

2. Continuation of Management. During the first 24 months after the Effective ate, Hoyt Street Investors, L.L.C. shall take no action that would cause itself to be removed, or to remove itself, as managing member of Hoyt Street Properties, L.L.C.;

3. Limitation on Transfer of Uncommitted Property. During the first 24 months after the Effective Date, HSP shall not transfer or otherwise convey more than forty-nine percent (49%) of the total area of the Uncommitted Property to any party other than an affiliate of HSP, or any other entity it controls, the total area to be measured as of the Effective Date; and

4. Notification. Throughout the term of this Agreement, HSP shall notify PDC of a proposed transfer of any interest in the Property that it owns no less than thirty (30) days before the closing of the transfer. HSP's notice shall include the name, address, telephone and facsimile numbers of any proposed transferee, as well as the key officers and local representatives of the transferee, if any, and a summary of the nature and scope of the transferee's business.

A breach by HSI of its respective obligations under this Section VIII shall not constitute a breach by HSP.

C. ASSUMPTION OF HSP'S OBLIGATIONS BY TRANSFEREE PRIOR TO IMPROVEMENT

If HSP proposes to transfer a portion of the Property to another prior to completion of the improvements on such portion, any proposed transferee, by

AMENDED AND RESTATED DDANSPICITY MARCH 8, 1999

instrument in writing, for itself and its successors and assigns, and expressly for the benefit of PDC and the City, shall upon closing of such transfer, expressly assume all of the obligations of HSP under this Agreement as to any portion of the Property which transferee proposes to acquire and agree to be subject to all the conditions and restrictions to which HSP is subject with respect to the portion of the Property conveyed. It is the intent of this provision that no transfer of, or change with respect to ownership in, the Property or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit PDC or the City of any rights or remedies or controls provided in or resulting from this Agreement with respect to the Property and the construction of the improvements thereon that PDC or the City would have had had there been no such transfer or change. Upon closing of such transfer, HSP shall be relieved of liability under this Agreement with respect to the portion of the Property conveyed, provided that the documents effecting the transfer have been executed and delivered to the City. Any Property conveyed shall remain subject to the density restrictions contained in Section 111 of this Agreement, as applicable.

D. LIMITATION ON ASSUMPTION BY TRANSFEREE

No transferee of any completed improvements located on the Property shall be required to assume, or be deemed to have assumed, any obligations under this Agreement. However, the portion of the Property acquired in such transfer shall remain subject to the density requirements applicable to such property pursuant to this Agreement at the time of transfer.

E. SUBORDINATION OF ASSIGNMENT PROVISIONS TO MORTGAGEES

The provisions of this Section VIII are expressly subordinate to the rights of any lender making a loan secured by an interest in the Property, or any portion thereof, to enforce the terms of its mortgage or trust deed, including the right to foreclose or accept a transfer in lieu of foreclosure of an interest in the Property.

F. ESTOPPEL CERTIFICATES

Each Party agrees that at any time, and from time to time at reasonable intervals, within ten (10) days after the request of the other Party, it will execute and deliver to the requesting Party, a certificate stating:

a. That this Agreement is unmodified and in full force and effect (or if modified, that this Agreement is in effect as modified and


identifying the modifications, or if this Agreement is not in full force and effect, the certificate 'should so state);

b. Whether there is an existing default by the requesting Party, and if there is any such default, specifying the nature and extent thereof; and

c. Whether or not there are any setoffs, defenses or counterclaims against enforcement of the obligations of the requesting Party.

IX. DEFAULT; CURE

A. DEFAULT BY HSP. The following shall constitute defaults on the part of HSP:

Any breach of the provisions of this Agreement whether by action or inaction, which continues and is not remedied within sixty (60) days after City'has given notice to HSP specifying the breach; provided that if the City determines that such breach cannot with due diligence be cured within a period of sixty (60) days, the City may, in its sole discretion, allow 'HSP a longer period of time to cure such breach, and in any such event such breach shall not constitute a default hereunder so long as HSP diligently proceeds to effect such cure and such cure is accomplished within such longer period of time granted by the City;

2. Any assignment by HSP for the benefit of creditors, or adjudication as a bankrupt, or appointment of a receiver, trustee or creditor's committee over HSP; or

3. The failure of HSP to pay when due any tax, assessment, lien or other charge having priority over the City's interests described in this Agreement against HSP's interest in the portion of the Uncommitted Property reserved as a potential City Affordable Housing Parcel; provided that HSP shall not be deemed to be in default hereunder for failure to pay such tax, assessment, lien or other charge if HSP in good faith is contesting the same and, if necessary to avoid foreclosure, has furnished an appropriate bond or other undertaking to assure payment in the event HSP's contest is unsuccessful.


B. DEFAULT BY CITY. City shall be in default hereunder if it breaches any of the provisions of this Agreement whether by action or inaction, and such breach continues and is not remedied within sixty (60) days after HSP has given notice specifying the breach; provided that if HSP determines that such breach cannot with due diligence be cured within a period of sixty (60) days, HSP may, in its sole discretion, allow the City a longer period of time to cure such breach, and in any such event such breach shall not constitute a default hereunder so long as the City diligently proceeds to effect such cure and such cure is accomplished within such longer period of time granted by HSP.

A. DEFAULT BY HSP

If HSP shall default under the terms of this Agreement, the City may, in addition to any other remedies at law or in equity:

1. Recovery of Damages. Recover from HSP any monetary damage to the City resulting from the default; and

2 . Specific Performance; Injunctive Relief. Compel HSP's performance under this Agreement or prevent HSP action contrary to the Agreement by injunction or other equitable relief.

B. DEFAULT BY CITY

1. General Remedies. Except as provided in Section X.B.2. herein, if the City shall default under the terms of this Agreement, HSP may, in addition to any other remedies at law or in equity except the right to compel the City's specific performance:

a. Recoverv of Damages. Recover from the City any monetary damage to HSP resulting from the default; and

b. Termination of HSP Contingent Obligation. In the case that the City's default is a failure to perform any obligation under this Agreement, HSP shall be relieved from any HSP obligation under this Agreement which was contingent upon that failed performance.


2. Land Repurchase Rights. Notwithstanding Section X.B. 1. herein, HSP may compel a repurchase of land from the City pursuant to its rights under this Agreement.

WAIVERS OF DEFAULT, TERMXVATION OF ENFORCEMENT PROCEEDINGS AND RELATED MATTERS

A. NONEXCLUSIVE REMEDIES

No remedy by the terms of this Agreement conferred upon or reserved to any Party is intended to be exclusive of any other remedy allowed by law, but, unless expressly provided otherwise herein, each and every such remedy shall be cumulative and shall be in addition to any other remedy given to each Party hereunder. In case any Party shall have proceeded to enforce any right or remedy hereunder and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case the Parties shall be restored to their former positions and rights hereunder and all rights, remedies and powers of each Party shall continue as if no such proceedings had been taken except as modified by such proceedings.

To the extent not precluded by this Agreement, the nondefaulting Party may, in its discretion, waive any default hereunder and its consequences and rescind any consequence of such default and, in case of any such waiver or rescission, the Parties shall be restored to their former positions and rights hereunder respectively, but no such waiver or rescission shall extend to or affect any subsequent or other default, or impair any right consequent thereon. No such waiver or rescission shall be in effect unless the same is in writing and signed by the nondefaulting Party

C. NO IMPLIED WAIVER

No delay or omission to exercise any right or power shall be construed to be a waiver of any such default or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient.

XII. CONVEYANCE PROVISIONS

Subject to any specific terms for conveyance to the contrary stated elsewhere in this Agreement, in any case where either Party conveys real property to the other Party

AMENDED AND RESTATED DDAlHSPlCln MARCH 8, 1999

pursuant to this Agreement (except conveyances of rights-of-way or public easements or transfers by exercise of the City's power of eminent domain) the conveyance of real property shall take place upon the following conditions:

A. CASH CONVEYANCE

The conveyance shall be for cash consideration unless otherwise agreed by the Parties.

B. ESCROW; CLOSING

The conveyance shall be closed in escrow at the office of an escrow agent designated by the selling Party (the "Closing"). The selling Party shall designate an escrow agent no less than forty-five (45) days prior to the scheduled date of a Closing. Each Party shall pay one-half (%) of any escrow fees charged by the escrow agent.

C. CONDITION OF TITLE

The selling Party shall convey fee title to any real property by statutory special form of warranty deed, subject only to those conditions to title approved by the purchasing Party prior to Closing. No less than thirty (30) days prior to the scheduled date of a Closing, the selling Party shall provide to the purchasing Party a preliminary title report disclosing all matters of record encumbering the real property to be sold. Purchasing Party shall notify selling Party of any objection to the condition of title within ten (10) days of receipt of the preliminary title report. If the purchasing Party does not notify selling Party of objection to the encumbrances listed on the preliminary title report, purchasing Party shall be deemed to have approved the disclosed conditions to title. If purchasing Party notifies selling Party of an objection, selling Party shall make reasonable efforts to satisfy purchasing Party's notice of objection. If the objection cannot be reasonably satisfied until Closing, the Parties agree to delay satisfaction until Closing.

Should the title to the real property to be conveyed remain unacceptable on the scheduled Closing date, the purchasing Party may (1) waive its objection and proceed to Closing; (2) grant an extension to the Closing date to allow the selling Party to satisfy an objection if selling Party has elected to do so; (3) proceed to remove an unacceptable monetary encumbrance to title at its own expense, which expense shall be reimbursed to purchasing Party by the selling Party; or (4) decline the conveyance. Purchasing Party may clai