DEVELOPMENT SERVICES AGREEMENT
This Development Services Agreement (the "Agreement") is entered into as of ___________________, 2014 by and among The Villas at Pine Lake, LLC, a(n) Georgia limited liability company (the "Owner") and MV Residential Development LLC, an Ohio limited liability company (“MV''), (the "Developer''), under the following circumstances: A. The Owner has been organized for the purpose of acquiring and rehabilitating, owning, operating and leasing selling a 96-unit residential rental property (the "Project") to be located in Pine Lake, DeKalb County, GA (the "Project''), as a low-income housing tax credit ("Tax Credit") project pursuant to Section 42 of the Internal Revenue Code of 1986, as amended (the "Code"); and B. In consideration for the Development Fee (as defined below), the Owner and the Developer entered into this Development Services Agreement Agreement Now, Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and the mutual covenants set forth herein, the Owner and the Developer hereby agree as follows: 1. Appointment. The Owner hereby appoints the Developer to render the Development Services for the Owner (as defined in Section 2 below), and the Developer hereby agrees that they have the responsibility to perform the Development Services.
Development Services. Inconformity with the provisions of the operating agreement of the Owner (the "Operating Agreement"), the Developer shall have the authority and the obligation to provide the Development Services which shall consist of the following: 2.
A. Assist the Owner in obtaining approval of the construction of the acquired site and the Project by any and all governmental authorities and assist in dealing with neighborhood groups, local organizations, abutters and other parties interested in the development of the Project in connection with such approval. Assist in the selection of a market analyst to perform one or more marketing studies with respect to the Project in order to determine type, size, and number of rental units to build, and obtain copies of any and all reports produced or prepared by such analyst. C. Assist in the selection of an environmental consultant to perform an environmental site assessment of the sites for the Project, and obtain copies of any and all reports produced or prepared by such environmental consultant. B.
Assist in the selection of an architect, negotiate a contract with the architect, and supervise the architect's design of the Project, including the preparation of preliminary and final plans and specifications. D.
Assist in the selection of, and negotiate with, the engineer and other consultants and cause to be prepared such reports, surveys, and reports as may be required in connection with the construction of the Project E.
F. Assist the Owner in the review and approval of plans and specifications for the Project and obtain for the Owner any and all building permits and other permits which may be required in connection with the construction of the Project G. Assist in the selection of qualified general contractor and negotiate and cause to be executed a construction agreement in the name of the Owner with such general contractor.
Coordinate all activities with other members of the development team with respect to the construction of the Project. H.
I. Assist the Owner in identifying and obtaining sources of construction financing for the Project and negotiate the terms of such financing with lenders, including without limitation the commitment therefor and the closing thereof. J. Establish and implement appropriate administrative and financial controls for the design and construction of the Project, including but not limited to: (i) coordination and administration of the Project architect, the general contractor, and other contractors, professionals and consultants employed in connection with the design or construction of the Project; (ii)
administration of any construction contracts on behalf of the Owner;
(iii) the review and submission to the Owner for approval of all requests for payments under any architectural agreement, general contractor's agreement, or any loan agreements with any lending institutions providing funds for the benefit of the Owner for the design or construction of any improvements; (iv) applying for and maintaining in full force and effect any and all governmental permits and approvals required for the lawful construction of the Project;
furnishing such consultation and advice relating to the Project as may be reasonably requested from time to time by the Owner; and (v)
(vi) keeping the Owner fully informed on a regular basis of the progress of the design and construction of the Project, including the preparation of such reports as are provided for herein or as may reasonably be requested by the Managing Member and Investor Member (as defined in the Operating Agreement).
Verify that the construction of the Project is being carried out in accordance with the plans and specifications approved by the Owner or, in the event that the same is not being so carried out, to promptly notify the Owner, and take such actions as may be required to obtain any certificates of occupancy or equivalent documents required to permit the occupancy of the Project. K.
To the extent requested to do so by the Owner, prepare or cause to be prepared and distributed to the Owner (i) a critical path schedule, and provide updates thereto as necessary to reflect any material changes, but in any event not less :frequently than quarterly, (ii) other design or construction cost estimates as required by the Owner, (iii) financial accounting reports, including monthly progress reports on the quality, progress and cost of construction and (iv) recommendations as to the drawing of funds from any loans arranged by the Owner to cover the cost of design and construction of the Project.
L.
M. Work with the Owner's attorneys and accountants to assist all of the foregoing activities. N. Perform and administer any and all other services and responsibilities of the Developer which are set forth in any other provisions of this Agreement, or which are requested to be performed by the Owner and are within the general scope of the services described herein. Representations. The Developer hereby represents that the Development Fee is reasonable for the services to be rendered and is not in excess of that represented in the tax credit application if such representation was made to obtain points in the state credit agency's scoring process. 3.
4.
Development Fee.
For services to be performed under Sections l and 2 of this Agreement, the Owner agrees to pay the Developer a Development Fee in the aggregate amount of Dollars ($ ). The Developer Fee will be paid [___%] to MV and[____%] to the Sponsor. Notwithstanding the foregoing, any portion of the Development Fee which remains unpaid on that date which is one day prior to the expiration of the Compliance Period, and which is paid with the proceeds of a capital contribution made to the Owner pursuant to Section _______ of the Operating Agreement shall be paid solely to the Sponsor in consideration for its Development Services hereunder. Any other deferred Development Fees will be allocated to Sponsor and MV pro rata based on the percentages set forth above. The Development Fee shall be irrevocably earned upon completion of the following services or at the following times: (a)
(i) Selection of architect and general contractor or construction manager. (ii) Completion of a preliminary budget to construct the Project; negotiation of agreement with an architect and completion of preliminary plans and specifications for construction of the Units; negotiation of the construction contract, to be completed by the date of submission of the 10% certification under Section 42(b)(l)(E) of the Code.
Percentage of Developer’s Fee Earned 15% 35%
(iii) Identification of construction lender and negotiation of construction loan agreement, and issuance of all permits necessary to begin construction of the Project. (iv) Substantial completion of 50% of the Project.
15%
(v) Substantial completion of the Project. (vi) Issuance of final Certificate of Occupancy for all units in the Project.
15% 10% 10%
Subject to the terms and conditions of the Project Loans and the Operating Agreement, the Development Fee shall be paid as follows: (b)
1. Up to $ Contribution.
.00 upon receipt of the Investor Member's First Capital
2. Up to $ Contribution.
.00 upon receipt of the Investor Member's Third Capital
3.
Up to $ Contribution.
.00 upon receipt of the Investor Member's Fifth Capital
4. Up to $ Contribution.
.00 upon receipt of the Investor Member's Sixth Capital
5. It is anticipated that at least $ .00 of the Development Fee will be deferred (the ''Deferred Development Fee") and shall be due and payable either from a re1ease of reserves or from a special capital contribution, Net Cash Flow or net proceeds from a Capital Transaction, as provided in Section _______ of the Operating Agreement plus eight percent (8.0%) interest accruing annually. The payments set forth in this subsection (b) shall at all times be subject to the subordination and limitations to be set out the in the Operating Agreement and the Construction Loan documents. In any event, any unpaid amount of the Development Fee will be considered earned in its entirety as of the date the Project is placed in service for purposes of Section 42 of the Internal Revenue Code. Any portion of the Development Fee not paid. by the end of the first year of the credit period may be memorialized by an unconditional., .non-negotiable promissory note of the Owner (the ''Note"), which Note shall in all events be paid no later than the end of the Compliance Period. (c)
5. Notices. Except for any notice required under applicable law to be given in another manner, any notice provided for hereunder shall be delivered by mailing such notice by certified or registered mail, return receipt requested, or overnight courier addressed as follows: To the Developer:
MV Residential Development LLC 9349 Waterstone Blvd Cincinnati, Ohio 45249 Attn: Brian McGeady
and to:
Attn:
To the Owner:
The Villas at Pine Lake, LLC 9349 Waterstone Blvd Cincinnati, Ohio 45249 Attn: David Liette
With a copy to:
Attn: or at such other address as may designated by notice as provided herein. Any notice provided for hereunder shall be effective upon receipt. Actual notice and receipt of any written notice shall constitute notice in all events. 6. Successors and Assigns; Termination. This Agreement shall be binding on the parties hereto, their heirs; successors, and assigns. However, other than as pledged for collateral for construction financing, this Agreement may not be assigned or terminated by any party hereto without the consent of the Investor Member. 7. Severability of Provisions. Each provision of this Agreement shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this Agreement is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Agreement which are valid.
No Continuing Waiver. The waiver by any party of any breach of this Agreement shall not operate or be construed to be a waiver of any subsequent breach. 8.
Amendment. This Agreement may be amended only in a writing executed by all the parties thereto; provided, however, that no such amendment shall be effective without the prior written consent of the Investor Member 9.
10. Applicable Law. This agreement shall be construed and enforced in accordance with the laws of the State of Ohio. 11. Agreement Liability. Each Developer is, as to the Owner, an independent contractor, and shall use reasonable best efforts to satisfy its obligations hereunder. The Developer is not an insurer of the success of the Project [No further text on this page. Signature page follows]
6
SIGNATURE PAGE TO DEVELOPMENT SERVICES AGREEMENT IN WITNESS WHEREOF, the parties have caused this Development Agreement to be duly executed as of the date first written above. DEVELOPER: MV RESIDENTIAL DEVELOPMENT LLC an Ohio limited liability company By: Name: Its:
Authorized Signer
a(n) By: Name: Title:
OWNER: The Villas at Pine Lake, LLC a Georgia limited liability company By: MV Villas at Pine Lake LLC an Ohio limited liability company Its: Managing Member By: MV Affordable Housing LLC an Ohio limited liability company Its: Managing Member By: Name: Its:
7
Authorized Signer
EXHIBIT B LIST OF SUPPORTIVE SERVICES TO BE PROVIDED
8