HomeMy WebLinkAboutresolution.council.066-26RESOLUTION #066
(Series of 2026)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN
CONCERNING THE LUMBERYARD AFFORDABLE HOUSING
DEVELOPMENT PROJECT AND APPROVING AN OPTION TO GROUND
LEASE.
WHEREAS the provision of affordable housing is important to allow
people who work in the City of Aspen (the "City") and Pitkin County to live near
where they work and to be part of the community; and
V�►THEREAS the City Council of the City of Aspen has highly prioritized
the implementation of the Lumberyard Affordable Housing Development Project
(the "Prof ect"); and
WHEREAS the City of Aspen entered into a Development Agreement with
Gorman and Company LLC (the "Developer") on July 14, 2025, for the
development of the Lumberyard Affordable Housing project; and
WHEREAS Lumberyard Apartments 2, LLC is a development and
operating entity established by Gorman &Company for the purpose of
implementing the Phase B portion of the Proj ect, and
WHEREAS, in order to support the development of the Phase B portion of
the Project, the City is willing to enter into an Option Agreement, granting
Lumberyard Apartments 2, LLC, an exclusive option to enter a ground lease for
the development of Phase B of the Proj ect, which will enable the Developer to
demonstrate site control for purposes of applying with the Colorado Housing and
Finance Authority for Middle Income Tax Credit funding.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF ASPEN, COLORADO,
That the City Council of the City of Aspen hereby approves the Option
Agreement between the City of Aspen and Lumberyard Apartments 21 LLC, a
copy of which is annexed hereto As herein as Exhibit "A", AA
hereby authorize the City Manager to execute said contract on behalf of the City
of Aspen.
INTRODUCED, READ AND ADOPTED by the City Council of the City of
Aspen on the 12th day of May, 2026,
Rachael E.1Richards, May
I, Nicole Henning, duly appointed and acting City Clerk do certify that the
foregoing is a true and accurate copy of that resolution adopted by the City Council
of the City of Aspen, Colorado, at a meeting held May 12, 2026.
Nicole Henning, City Clerk
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OPTION AGREEMENT
This OPTION AGREEMENT ("Agreement") is entered into this 7th day of May, 2026
("Effective Date"), by and between the City of Aspen, Colorado, a Colorado municipal
corporation, whosemailing address is 427 Rio Grande Place, Aspen, CO 81611 ("Grantor"),
and Lumberyard Apartments 2, LLC, a Wisconsin limited liability company, whose mailing
address is 200 N Main Street, Oregon, WI 53575 ("Grantee").
RECITALS
A. Grantor owns certain real property located in the City of Aspen, Colorado, as
described in Exhibit A ("Property").
B. Grantor and Grantee desire to cooperate in the development of the Property
(defined below) as apublic- private project in accordance with .the terms of that certain
Development Agreement dated July 14, 2025 (the "Development Agreement") entered into by
and between Grantor and Gorman & Company LLC, a Wisconsin limited liability company
("Gorman"), an affiliate of Grantee, pursuant to which Grantor agreed to ground lease the
Property to Gorman or its affiliates for the purpose of development of an affordable housing
project.
C. Pursuant to and in furtherance of the Development Agreement, Grantee desires
to obtain an option to enter into a Ground Lease with Grantor for the purpose of developing the
Property for affordable residential housing, qualifying for low income housing tax credits under
Section 42 of the Internal Revenue Tax Code or middle income housing tax credits under C.R.S.
§§39-22-5401, et seq. (collectively, "Tax Credits"), pursuant to terms and conditions of this
Agreement.
D. Grantor desires to provide Grantee with an option to lease the Property.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein and other good and valuable consideration paid, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows.
1. Grant of Option for Ground Lease; Ground Lease Terms.
(a) Grant of Option. Grantee shall have the exclusive option on the conditions
stated herein ("Option") from the Effective Date until December 31, 2026 ("Primary Option
Period") to enter into the Ground Lease in substantially the form attached hereto as Exhibit B
the "Ground Lease"), with Grantor for the development of affordable residential housing on the
Property. During the Primary Option Period and, if applicable, the Extended Option Period (as
defined below), Grantor agrees to negotiate with Grantee in good faith regarding revisions to the
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form of Ground Lease that are reasonably requested by Grantee's investors and lenders. Grantor
acknowledges receipt of the payment of a non-refundable option fee of One Hundred Dollars
($100.00) from Grantee as consideration for the Option.
(b) Ground Lease Execution. Before Grantee and Grantor execute the Ground
Lease, the following conditions shall be satisfied (or waived by the Grantor):
(i) Grantee shall have delivered to the Grantor letters of intent,
commitments, term sheets, or other evidence to demonstrate that Grantee has secured or will
secure sufficient financing for the development of affordable residential housing on the
Property in a manner that complies with the terms of the Development Agreement, the
requirements of any CHFA LURA (defined below) and any restrictive covenants recorded against
the Property for the benefit of the Aspen/Pitkin County Affordable Housing Authority, a Colorado
housing authority ("APCHA") (collectively, the "Restrictive Covenants" and together with the
CHFA LURA and the Development Agreement, the "Project Documents").
(ii) Grantee shall deliver to the Grantor evidence satisfactory to the
Grantor, in its reasonable discretion, demonstrating that APCHA has agreed to subordinate the
terms of its Restrictive Covenants to the CHFA LURA, if applicable, and if required by the CHFA
LURA.
(iii) Grantee shall have obtained all entitlements, permits and other
governmental, quasi -governmental or regulatory approvals required for the commencement of the
development of the affordable residential housing on the Property in a manner that complies
with the terms of the Project Documents.
(c) Ground Lease Terms. Grantor and Grantee acknowledge that the
Ground Lease provides for the following: (i) a forty (40) year initial term, with a renewal
term of twenty (20) years; (ii) a rental amount of $10.00 per year during the initial term.
(d) Restrictive Covenants. Grantor acknowledges that Grantee may be
required to record restrictive covenants including a all use restriction agreement from the
Colorado Housing Financing Authority (the "CHFA LURA") and those required by the other
funding sources that are consistent with maintaining improvements constructed on the
Property by Grantee ("Improvements") as affordable housing against the Property and the
Improvements that will be binding on the Property, the Improvements, and the Grantor and
its successors and assigns. The CHFA LURA and any Restrictive Covenants required by the
Grantee's funding sources to be recorded against the Property or the Improvements are
subject to Grantor's review and approval (which approval shall not be unreasonably withheld
provided the restrictions are not in effect for more than 15 years and are consistent with
maintaining the Improvements as affordable housing). The Grantor acknowledges, without
representation as to whether such term is acceptable, that the CHFA LURA may provide that
residential tenants may not be evicted without cause and their gross rent cannot be raised
during the three year period after termination of the CHFA LURA by foreclosure or deed in
lieu thereof.
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2. Extension. In the event that Grantee does not receive Tax Credits before the
expiration of the Primary Option Period, Grantee may extend the Primary Option Period for
an additional one (1) year, until December 31, 2027 ("Extended Option Period"). Such
extension shall be in writing and delivered to Grantor prior to the expiration of the Primary
Option Period.
3. Exercise of Option. Grantee's exercise of the Option, if Grantee elects to
exercise the Option, shall be completed by delivery of written notice to Grantor via certified
mail, return receipt requested, or via a national recognized overnight courier service to
Grantor's mailing address, provided above (the "Option Notice"). After Grantee exercises
the Option, Grantor and Grantee shall enter into the Ground Lease within six (6) months after
Grantee's delivery of the Option Notice and Grantee shall pay Grantor the rent for the first year
of the initial term of the Ground Lease.
4. Access. Grantee may access the Property during the Primary and Extended
Option Periods by providing Grantor notice at least twenty-four (24) hours prior to Grantee
accessing the Property. Grantee agrees to the following terms in connection with its access to
the Property:
(a) Grantee shall not commence construction or otherwise alter or damage
the Property. Grantee shall leave the Property in the same condition as it was prior to Grantee's
entry.
(b) Grantee shall assume liability for all loss, damages, or injuries to the
Property or Grantee, its agents, employees, subcontractors, assignees, and consultants
(collectively, the "Grantee Parties") or any other third parties resulting from access, acts,
omissions, or use of the Property granted from this Agreement to the Grantee Parties.
(c) Grantee shall not permit mechanic's lien claims or liens of any kind
against the Property.
(d) Prior to accessing the Property, Grantee will provide Grantor with evidence
of liability insurance reasonably satisfactory to the City.
5. Assi.�nment. Grantee may not assign its rights under this Agreement without
prior written approval from Grantor, which approval may be withheld in the Grantor's sole
and absolute discretion; provided that Grantee may assign this Agreement to an entity
controlled by or under common control with Grantee if required by Grantee's investors or
lenders.
6. Additional Terms and Conditions.
(a) Government Immunity. No term or condition of this Agreement shall
be construed or interpreted as a waiver, express or implied, of any of the immunities, rights,
benefits, protections, or other provisions, of the Colorado Governmental Immunity Act, CRS
§ 24- 10-101 et seq., or the Federal Tort Claims Act, 28 U.S.C.§§1346(b) and 2671 et seq.,
as applicable now or hereafter amended.
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(D) Governing Law and Venue. This Agreement will be construed and
enforced in accordance with the laws of the State of Colorado. Venue for legal proceedings
related to this Agreement shall be in the City of Aspen, Colorado.
(c) Compliance With Law. The parties shall strictly comply with all
applicable federal and state laws, rules, and regulations in effect or hereafter established,
including, without limitation, laws applicable to discrimination and unfair employment
practices.
(d) Capacity. Grantor and Grantee represent and warrant to each other that
no joinder, consent, or approval from any third parties is required in order for the parties to
enter into this Agreement and consummate the transaction described herein.
(e) Captions and Headings. The captions and headings contained in this
Agreement are for reference purposes only and will not in any way affect the meaning or
interpretation of the text of this Agreement.
(f) Counte arts. This Agreement may be signed in any number of
counterparts, each of which will be an original, but all of which together will constitute one
and the same instrument.
(g) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof and supersedes
any and all prior or contemporaneous agreements and understandings pertaining thereto
whether oral or written. Amendments to this Agreement must be written and executed by
both parties.
[signatures on following pages]
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IN WITNESS WHEREOF, the parties executed this Agreement as of the Effective Date
above written.
GRANTEE:
Lumberyard Apartments 5 a Wisconsin limited liaty company
By: GEC Lumberyard Apartments 2, LLC, a Wisconsin limited liability company
its Managing Member
By: Gorman &Company, LLC, a Wisconsin limited liability company
its Manager
Title: president &CEO
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GRANTOR:
gwjy:ASPEN, COL JAADO
LptfG fft&W
7753E0500940430...
By. Pete Strecker
Name:
Title: City Manager
(SEAL)
Attest:
DocuSigned by:
I
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Exhibit A
Property Description
Lots 2A5 2B5 3, 45 Final Plat Lumberyard Affordable Housing Subdivision recorded with the
Pitkin County Clerk and Recorder on December 2, 2024 at Reception No. 706473.
Exhibit A-1
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Exhibit B
it of Ground Lease
[see attached]
Exhibit B-1
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GROUND LEASE —LUMBERYARD PHASE B
THE CITY OF ASPEN, COLORADO
Landlord
LUMBERYARD APARTMENTS 2, LLC,
a Wisconsin limited liability company
Tenant
Dated , 20
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GROUND LEASE — LUMBERYARD PHASE B
THIS GROUND LEASE —LUMBERYARD PHASE B ("Lease effective
20 , is made by and between the City of Aspen, Colorado, a Colorado
municipal corporation ("Landlord"), and Lumberyard Apartments 2, LLC, a Wisconsin limited
liability company ("Tenant").
RECITALS
A. Landlord is the owner of that certain parcel of land located in Aspen, Colorado and
more particularly described on the attached Exhibit A ("Land").
B. The Tenant intends to construct a multifamily housing development and related
amenities, as further described herein (the "Housing Project") on the Property that is deed
restricted to maintain affordability.
C. The Landlord and Tenant desire to cooperate in the development of the Premises
(defined below) as a public -private project in accordance with the terms of that certain
Development Agreement dated July 14, 2025 (the "Development Agreement") entered into by
and between Landlord and Gorman & Company LLC, a Wisconsin limited liability company
("Gorman"), an affiliate of Tenant, pursuant to which Landlord agreed to ground lease the
Premises to Gorman or its affiliates for the purpose of development of the Housing Project.
D. The Development Agreement contemplates the development of the Lumberyard
affordable housing project by Tenant in two or more phases, and the development of the Housing
Project on the Premises comprises the second phase of such development, also known as "Phase
I3 ."
NOW, THEREFORE, in consideration of the covenants and agreements of the parties
hereto, as set forth herein, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
LEASE OF PROPERTY
1.1 Land Leased. Landlord, in consideration of the rents, covenants, agreements and
conditions herein set forth, hereby leases to Tenant, and Tenant hereby rents and leases from
Landlord, the Land, together with all of Landlord's rights, interests, estates and appurtenances
thereto, any improvements thereon.
1.2 Premises Defined. The Land and the rights, interests, estates and appurtenances
leased to Tenant pursuant to Section 1.1, together with all Improvements (defined below) now or
hereafter constructed thereon, are hereinafter collectively referred to as the "Premises."
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ARTICLE JUL
0_ UT
2.1 Effective Date Defined. The date upon which the last of the parties hereto executes
this Lease is hereinafter referred to as the "Effective Date."
2.2 Original Term. The period of time commencing on the Effective Date and ending
at midnight, Mountain Time on the date that is forty (40) years following the Rent Commencement
Date is hereinafter referred to as the "Original Term."
2.3 Renewal Term. Tenant shall have the right to renew this Lease for one (1)
additional period of twenty (20) years (the "Renewal Term"), upon the same terms and conditions
as the Original Term. Tenant shall give written notice to Landlord irrevocably exercising the option
not more than five (5) years and not less than six (6) months prior to expiration of the Term. If
Tenant fails to timely deliver written notice of its intent to renew this Lease within the time period
set forth in this Section 2.3, Tenant's right to renew shall terminate, and this Lease shall expire as
A the end of the Original Term.
2.4 Term. The Original Term and any Renewal Term, if applicable, are referred to
herein collectively as the "Term."
ARTICLE III
RENT
3.1 Rent Commencement Date and Lease Year Defined. "Rent Commencement
Date" shall mean the date mutually agreeable to the parties, but in any event no later than one
hundred eighty days after completion by the Landlord of all Landlord Obligations (as defined in
Article IV hereof). "Lease Year" shall mean each consecutive period of twelve (12) full calendar
months, following the Rent Commencement Date. If the Rent Commencement Date is a date other
than the first day of a calendar month, the first Lease Year shall include that fractional portion of
the calendar month in which the Rent Commencement Date occurs and the first full twelve (12)
months thereafter, and the last Lease Year shall end on the expiration or earlier termination of this
Lease. Once the Rent Commencement Date has been established, the parties shall execute a rent
commencement letter in the form attached hereto as Exhibit B, memorializing the first and last
days of the Original Term.
3.2 Base Rent. Tenant shall pay base rent to Landlord on the first day of the Original
Term in an amount equal to $400.00 ($10.00/year) as full payment for all rent due and owing
during the Original Term ("Original Term Base Rent"). The Original Term Base Rent shall be
the entire amount of base rent due and payable to Landlord during the Original Term, and Tenant
shall not be required to make any other payments of base rent to Landlord at any time during the
Original Term. If Tenant elects to extend the Lease for the Renewal Term, Tenant shall pay base
rent to Landlord on the first day of the Renewal Term in an amount equal to $200.00 ($ 10. 00/year)
as full payment for all rent due and owing during the Renewal Term (the "Renewal Term Base
Rent"). The Renewal Term Base Rent shall be the entire amount of base rent due and payable to
Landlord during the Renewal Term, and Tenant shall not be required to make any other payments
of base rent to Landlord at any time during the Renewal Term. The Original Term Base Rent and
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the Renewal Term Base Rent may be collectively referred to herein as "Base Rent." Taking into
account the restrictions on the use of the Premises and the other obligations assumed by the Tenant
in connection with the Housing Project, the Landlord and Tenant agree that Rent payable under
this Lease constitutes fair market rent under the circumstances.
3.3 Additional Rent and Rent Defined. The term "Additional Rent" shall mean all
amounts required to be paid by Tenant under the terms of this Lease other than Original Term Base
Rent or Renewal Term Base Rent. The term "Rent" shall mean Base Rent and Additional Rent,
3.4 Net Lease. It is the intent of the parties that the Rent provided to Landlord shall be
absolutely net to Landlord and that, except as expressly provided in this Lease, Landlord will not
be required to pay any costs or expenses or provide any services in connection with the Premises
and Tenant will bear all costs and expenses relating to the Premises. Accordingly, except for those
costs and expenses which Landlord has expressly agreed to pay pursuant to this Lease, Tenant
covenants and agrees to pay, in addition to Rent, all costs and expenses relating to the Premises
which accrue during or are allocable to the Original Term or the Renewal Term, including, without
limitation: (a) real and personal property taxes; (b) insurance premiums; (c) utility charges;
(d) costs and expenses of maintaining and repairing the Improvements, and (e) costs incurred
pursuant to the terms and provisions of any of the Permitted Encumbrances (as hereinafter
defined).
ARTICLE IV
IMPOSITIONS, UTILITIES, LANDLORD CONc
SITE DE
TRUCTION
COSTS, NET LEASE
S OFF-
4.1 Landlord Obligations. Landlord and Tenant hereby acknowledge and agree that
Landlord shall not be deemed to have delivered the Premises, and Tenant shall not be required to
accept the Premises, until Landlord completes all of Landlord's obligations as set forth in the
Development Agreement that are a condition of Tenant's acceptance of the Premises thereunder,
including without limitation, delivering to Tenant an environmental site assessment showing no
recognized environmental conditions, and delivering to Tenant a "clean" site that is suitable for
residential development as set forth in Section 4.3 of the Development Agreement and the
satisfaction of all of the City's obligations under Section 4.4 of the Development Agreement
(collectively, the "Landlord Obligations").
4.2 Impositions Defined. The term "Impositions" shall mean all taxes, assessments,
use and occupancy taxes, water and sewer charges, rates and rents, charges for public utilities,
excises, levies, license and permit fees and other charges by any public authority, general and
special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever,
which shall or may during the Original Term and any applicable Renewal Term be assessed, levied,
charged, confirmed or imposed by any public authority upon, or accrue, or become a lien on (1)
the Land or any part thereof, (ii) the Improvements now or hereafter constructed on the Land; (iii)
the appurtenances to the Premises or the sidewalks or streets adjacent thereto; (iv) the rent and
income received by or for the account of Tenant from any sublessees or for any use or occupation
A the Premises; (v) such franchises, licenses and permits as may be pertinent to the use of the
Premises; or (vi) any documents to which the Tenant is a party creating or transferring an interest
or estate in the Premises. Impositions shall not include any income tax, capital levy, estate,
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succession, inheritance or transfer taxes or similar tax of Landlord; any franchise tax imposed upon
any owner of the fee of the Premises; or any income, profits or revenue tax, assessment or charge
imposed upon the rent or other benefit received by Landlord under this Lease by any association
having jurisdiction over the Land, any municipality, county, state, the United States of America or
any other governmental body, subdivision, agency or authority having jurisdiction over the Land
or Tenant (hereinafter all of the foregoing bodies are collectively referred to as "Governmental
Authorities"). Furthermore, and notwithstanding any provision in this Lease to the contrary,
Impositions shall not include any taxes, assessments, charges, excises, levies, fees, or any other
charges imposed on Landlord in connection with Landlord's ownership or development of any
real property owned by the Landlord other than the Land, including, without limitation, any impact
fees, special assessments or metropolitan district assessments, utility connection fees or similar
charges (except sewer tap fees paid by Tenant hereunder) required to be paid in connection the
ownership or development of any real property owned by the Landlord other than the Land (the
"Land Development Charges"). Landlord shall be solely responsible for payment of the Land
Development Charges. The parties hereby acknowledge and agree that the Impositions shall solely
and directly relate to the Tenant's development and use of the Land from and after the Rent
Commencement Date through expiration of the Term, and not to the Landlord's development of
any other real property owned by the Landlord. To the extent any charges for other real property
owned by Landlord are included in the tax bill for the Premises, Landlord shall deliver to Tenant
the amount attributable thereto within thirty (30) days of Landlord's receipt of a copy of the tax
bill. Notwithstanding the foregoing, provided the Aspen Pitkin County Housing Authority will be
a special limited partner of the Tenant, the Landlord anticipates that the Premises will be exempt
From payment of real property taxes and sales and use taxes and to the extent that the Premises is
exempt from the payment of real property and sales and use taxes, such taxes shall not be included
within the definition of "Impositions." If Tenant loses all or any portion of such tax exemption,
then Landlord and Tenant shall cooperate in good faith to either (i) reinstate such tax exemption,
with respect to the Premises, or (ii) to deal with all issues that arise for Tenant in connection with
the loss of such tax exemption, including without limitation, budget issues with respect to the
operation of the Housing Project, potential defaults under financing encumbering the Project and
potential defaults with equity investors or otherwise.
4.3 Tenant's Impositions Obligation. Commencing on the Rent Commencement
Date and continuing throughout the remainder of the Term, Tenant will pay directly to the taxing
authority all Impositions as and when they become due. Tenant shall pay to Landlord, within thirty
(30) days following Landlord's written demand therefor, Tenant's pro rata share of all Impositions
payable by Tenant for the tax year in which the Term ends. In the event any Imposition that Tenant
is obligated to pay may be paid pursuant to law in installments, Tenant may pay such Imposition
in installments as and when such installments become due. Tenant shall, within thirty (30) days
after written request by Landlord, deliver to Landlord evidence of due payment of all Impositions
Tenant is obligated to pay hereunder, concurrently with the making of such payment.
4.4 Tax Contest. Subject to the rights of the senior Leasehold Mortgagee (as defined
below) from time to time, Tenant may, at its sole cost and expense, contest the validity or amount
of any real estate taxes attributable to the Premises for which it is responsible. So long as Tenant
diligently pursues the contest, the payment of the real estate taxes being contested may be deferred,
as permitted by law, during the pendency of such contest. Nothing herein contained, however,
shall be construed to allow any real estate taxes to remain unpaid for such length of time as would
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permit any Governmental Authority to assert a lien against the fee interest in the Premises for
nonpayment of taxes, or permit the Premises, or any part thereof, to be sold or seized by any
Governmental Authority for the nonpayment of same. Landlord will, at the request of Tenant,
cooperate in such contest, provided that Landlord is not required to incur any expense in
connection with any such contest.
4.5 Tenant's Utilities Obliroations. Except as set forth in Section 4.1, Tenant shall be
responsible, at its sole cost and expense, for obtaining, connecting and installing (and maintaining
and repairing to the extent the applicable utility provider fails to maintain or repair) all utility lines,
connections and facilities on the Premises and shall pay all charges for gas, electricity, telephone
and other communication services and all other utilities and similar services rendered or supplied
to the Premises, and all water rents, sewer service charges or other similar charges levied or
charged against, or in connection with, the Premises.
4.6 Special Operating Equipment. The City has a design to 75%net-zero energy goal
For the Housing Project, which goal is contained in the PD Documents (the "City EnerLyy Goals").
The City Energy Goals require that the Housing Project contain certain novel energy equipment,
including, without limitation, battery storage facilities (collectively with all such equipment, the
"Special Operating Equipment"). Tenant shall construct and install the Special Operating
Equipment, but notwithstanding anything contained herein to the contrary, in no event shall Tenant
be responsible for the operating expenses, repair, maintenance, upkeep and replacement of the
Special Operating Equipment, nor shall Tenant be obligated to incur any costs, liabilities or
expenses in connection therewith.
ARTICLE V
RD'S WARRANTIES .
5.1 Title to Premises.
VENANTS
(a) Warranties of Title. Landlord warrants and represents to Tenant that it has
good and indefeasible fee simple title to the all subject, however, to the Permitted
Encumbrances (as defined below), and has full right, power and authority to enter into this Lease.
Landlord further warrants that (i) no construction has been performed by or at the request of the
Landlord on the Land during the six (6) month period prior to the execution of this Lease, except
for such construction for which payment in full or provision for payment in full has been made,
and (ii) there are no mortgages or other liens affecting the Land which are superior to this Lease
or which could result in the termination of this Lease.
(b) Title Information. Tenant shall obtain (i) a commitment for title insurance
("Commitment") from a title company acceptable to Tenant ("Title Company") covering
Tenant's leasehold estate in the amount of the value of the Land and the cost of the Improvements
to be constructed on the Land, together with copies of all liens, encumbrances and other matters
affecting Landlord's title to the Land ("Title Documents") in an amount as reasonably determined
by Tenant, and (ii) an ALTA survey of the Premises (the "Survey"). Upon execution of this Lease
by both parties hereto, Tenant may cause the Title Company to issue to Tenant a Leasehold Owner
Policy of Title Insurance at Landlord's sole cost and expense (subject to annual appropriation by
the City Council of the City of Aspen), and a Leasehold Lender Policy of Title Insurance at
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Tenant's sole cost and expense, both in form and substance acceptable to Tenant covering the Land
and the appurtenant easements in the amount of the value of the Land and the cost of the
Improvements to be constructed on the Land. The cost of the Survey shall be paid by Tenant.
(c) Permitted Encumbrances. "Permitted Encumbrances" shall mean those
encumbrances reflected in the Commitment and Title Documents or on the Survey which are
acceptable to Tenant, as set forth on Exhibit C attached hereto. Permitted Encumbrances shall
specifically exclude any and all license agreements, leases or occupancy agreements relating to
the Premises entered into by Landlord and any third parties (collectively, the "Third Party
kgreements"). Landlord shall cause all Third Party Agreements to be terminated prior to the
Effective Date. After the execution of this Lease, Landlord may not add any additional
encumbrances on the Premises without the prior written consent of Tenant, which consent may be
granted or withheld by Tenant in its sole and absolute discretion. Notwithstanding anything to the
contrary contained in this Lease, Tenant covenants and agrees, at its sole cost and expense, to abide
by and comply with the provisions of all of the Permitted Encumbrances.
5.2 Ingress and Egress.
(a) Landlord shall not permit parking of any vehicles, other than those of
Tenant, its customers, employees, contractors, agents and invitees, on the Premises.
(b) In order to develop the Land with the Improvements, it may be necessary or
desirable that street, water, sewer, drainage, gas, power lines, set back lines, the Public Plaza
Improvements (as defined in Section 6.1 hereof) and other easements, dedications and similar
rights be granted or dedicated over or within portions of the Landlord's real property located
immediately adjacent to the Land (which will comprise "Phase B" of the Lumberyard affordable
housing development) by plat, replat, grant, deed or other appropriate instrument. Landlord shall,
on written request of Tenant timely join with Tenant in executing and delivering such documents,
in recordable form, from time to time throughout the Term, as may be required by any
Governmental Authority, public utility or company for the purpose of granting such easements
and dedications. Tenant shall have the right to review and reasonably approve any and all
documents regarding declarations, development and easements affecting the Land, or any portion
thereof.
ARTICLE VI
TENANT CONSTRUCTION
6.1 Construction of New Improvements. Tenant shall construct on the Premises (a)
a multifamily housing project on the Premises that is deed restricted to maintain affordability in
accordance with the terms of the Development Agreement, and (b) a public plaza with a bike share
station in the public plaza, common areas for use by tenants of the Housing Project and the public
at large, and a covered bus stop area all as more particularly shown on Exhibit D attached hereto
(collectively, the "Public Plaza Improvements"). For avoidance of doubt, the Premises shall not
include any of the right of ways shown on Exhibit D, and Landlord shall not permit buses to enter
onto the Premises at any time. Except with respect to the Public Plaza Improvements, Tenant shall
have the right, from time to time and at any time, at its sole cost and risk, subject to the subsequent
provisions of this Section, to demolish and remove any Improvements or portions of Improvements
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situated upon the Land, and to construct replacement Improvements for Improvements so
removed. Any Improvements constructed by Tenant on the Land shall be constructed in
accordance with the Construction Standards (defined in Section 6.3). "Improvements" shall mean
any buildings, structures, signage and any and all other improvements located at any time upon
the Land, including the Public Plaza Improvements.
6.2 Alterations. At any time and from time to time during the Term, Tenant may
perform such alteration, renovation, repair, refurbishment and other work with regard to any
Improvements as Tenant may elect, provided that the same is done in accordance with the
Construction Standards.
6.3 Construction Standards and Liens.
(a) Standards. Any Improvements shall be constructed, and any alteration,
renovation, repair, refurbishment or other work with regard thereto shall be performed, in
accordance with the following standards ("Construction Standards"):
(i) All such construction or work shall be performed in a good and
workmanlike manner in accordance with good industry practice for the type of work in question.
(ii) All such construction or work shall be done in compliance with all
applicable deed restrictions, building codes, ordinances and other laws or regulations of
Governmental Authorities.
(iii) No construction or work shall be commenced until all licenses,
permits and authorizations required of all Governmental Authorities having jurisdiction are
obtained.
(iv) Tenant shall have obtained and shall maintain in force and effect the
insurance coverage required in Article VIII with respect to the type of construction or work in
question.
(v) After commencement, such construction or work shall be
prosecuted with due diligence to its completion.
(b) Mechanic's and Materialmen's Liens. Tenant shall have no right,
authority or power to bind Landlord or any interest of Landlord in the Premises for any claim for
labor or for material or for any other charge or expense incurred in constructing any Improvements
or performing any alteration, renovation, repair, refurbishment or other work with regard thereto,
nor to render Landlord's interest in the Premises liable for any lien or right of lien for any labor,
materials or other charge or expense incurred in connection therewith. Tenant shall not be
considered the agent of Landlord in the construction, erection or operation of any such
Improvements. If any liens or claims for labor or materials supplied or claimed to have been
supplied to the Premises are filed, Tenant shall diligently pursue the release or discharge thereof
and shall cause such liens to be bonded off the Premises in accordance with the Colorado
mechanic's lien laws, within thirty (30) days of Tenant's receipt of actual knowledge thereof.
Notwithstanding the foregoing, Tenant may dispute any such mechanic's liens, and shall not be
required to pay any such mechanic's liens during such period of dispute.
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(c) Responsibility Notice. Tenant shall give Landlord at least ten (10) days'
written notice prior to the commencement of any repair work, demolition, or construction upon
the Premises or the Improvements that Landlord may have an opportunity to post notices of non.
responsibility as provided by the laws of the State of Colorado.
6.4 Proof of Compliance. Tenant shall deliver to Landlord, within thirty (30) days
after Landlord's written request therefor, at Tenant's expense, evidence of compliance with all
applicable requirements for permits and codes, ordinances, and approvals, including but not
limited to, building permits, zoning and planning requirements, and approvals from various
governmental agencies and bodies having jurisdiction over the Premises.
6.5 Ownership of Improvements. During the Term, all Improvements shall be solely
the property of Tenant. Upon expiration or termination of the Term, the Improvements shall be the
property of Landlord. Landlord acknowledges that Tenant, by the terms of this Lease, retains
exclusive possession of the Improvements and equipment therein and that Tenant alone is entitled
to all the benefits, and will bear all the burdens of possession of the Improvements and equipment
therein. Any and all depreciation, amortization, tax credits, and other federal tax benefits or
attributes of possession relating to the Improvements and equipment therein located on the
Premises and any additions thereto, substitutions therefore, fixtures therein and other property
related thereto shall be deducted, credited or otherwise claimed exclusively be Tenant during the
Term of this Lease.
6.6 Reversion. Subject to Landlord's Option to Purchase set forth in Article XVI, at
the expiration or sooner termination of this Lease, whether by default or eviction, the Premises and
Improvements shall, without compensation to Tenant or any other party, become the sole property
of Landlord or Landlord's designee, free and clear of all claims to or against them by Tenant or
security interests, and encumbrances. All Improvements, alterations,
any third person, and all liens,
additions, and utility installations (excluding trade fixtures of Tenant and Tenant's personal
property and equipment (collectively, the "Tenant's Property")) that may be made on the
Premises, shall be the property of Landlord upon termination of this Lease and shall remain upon
and be surrendered with the Premises at the expiration or sooner termination of this Lease. Tenant's
Property shall, at Tenant's election, remain the sole and separate property of Tenant and may be
removed by Tenant from the Premises; provided, however, that Tenant shall repair any damage
from such removal. The Premises, Improvements, alterations, additions and utility installations
shall revert to Landlord in their then existing "as is" condition without any warranties or
representations whatsoever, including, without limitation, any warranties or representations as to
the usefulness for any particular purpose.
6.7 Signs. Tenant shall have the right, at Tenant's sole cost and expense, to install
exterior fascia signage on the Improvements to the maximum extent permitted by applicable codes.
ARTICLE VII
USE, MAINTENANCE AN
7.1 Use. Subject to the terms and provisions hereof, Tenant shall use and enjoy the
Premises only for the construction, operation, maintenance, use, repair, and replacement of the
Housing Project in accordance with and subject to the requirements of a Restrictive Covenant and
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Agreement dated on or about the date hereof and to be recorded in the records of the Clerk and
Recorder of Pitkin County, as amended from time to time throughout the Term of this Lease (the
"Restrictive Covenant"), and any other use covenant then in effect, recorded against the Premises
or the Land, and in favor of the Landlord or the Aspen Pitkin County Housing Authority. The
Restrictive Covenant shall not be subordinate to the lien of the senior Leasehold Mortgagee's deed
of trust or any other deed of trust for so long as such deeds of trust are recorded against the
Premises. Tenant shall not use or occupy, or knowingly permit the Premises to be used or occupied,
in any way that (1) makes void or voidable any insurance then in force with respect thereto, (ii)
makes it impossible to obtain the insurance required to be furnished by Tenant hereunder, (Ili)
constitutes a public or private nuisance or (iv) violates the Restrictive Covenant or any other deed
restrictions affecting the Land.
7.2 Compliance with Laws. Tenant shall in no event use the Premises or any portion
thereof in such a manner as to violate any applicable law, rule, ordinance or regulation of any
governmental body. Without limiting the generality of the preceding sentence, Tenant shall
comply with all applicable federal and state laws and their implementing regulations currently in
existence and as hereafter amended. Tenant shall, at its own cost and expense from and after the
Rent Commencement Date and thereafter during the Term, keep the Premises in compliance with
all applicable codes and regulations of Governmental Authorities, foreseen or unforeseen, ordinary
or extraordinary, including but not limited to the Americans with Disabilities Act, and shall be
responsible for any or all fines or penalties for noncompliance or violation of such codes and
regulations from and after the Rent Commencement Date and thereafter during the Term of this
Lease with respect to the Premises.
7.3 Maintenance and Repairs. Subject to the provisions of Section 4.6, Tenant shall
take good care of the Premises, including the Public Plaza Improvements, make all repairs thereto,
interior and exterior, structural and nonstructural, ordinary and extraordinary, foreseen and
unforeseen and shall maintain and keep the Premises and the sidewalks and curbs located within
the Premises in good order, repair and condition at all times. Tenant will not do, permit or suffer
any waste, damages or injury to or upon the Premises or any part thereof, but this Section shall not
be construed as limiting Tenant's rights under Article VI. Landlord shall have no obligation to
maintain or repair the Premises except as expressly set forth in Section 4.6 and below.
7.4 Failure by Tenant to Make Repairs. If Tenant fails or neglects to keep and
maintain the Premises or any of the Improvements located thereon in good order and repair, or
Fails to maintain the Premises and the Improvements in a clean, sanitary and neat condition, after
written notice from Landlord and an opportunity to cure in accordance with the provisions of
Section 14.1 hereof, Landlord shall have the right, but not the obligation, to enter upon the
Premises or the Improvements and make the necessary repairs, maintenance or alterations to the
exterior of the Premises or the Improvements, but not to any interior portions of the Improvements.
The reasonable costs and expenses incurred by Landlord in connection with conducting such
repairs, maintenance or alterations shall be reimbursed by Tenant to Landlord, and shall be
Additional Rent due and payable to Landlord hereunder, within thirty (30) days after receipt by
Tenant of an invoice therefore together with documentation supporting such invoices as reasonably
requested by Tenant.
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7.5 Landlord's Entry. Upon reasonable prior notice to Tenant, Landlord may enter
onto the Premises (but not into any individual apartment units) for the purposes of inspecting the
same, at Landlord's sole cost and expense and at Landlord's sole risk.
7.6 Reporting. Tenant shall provide a report of certain items related to I
housing located on the Premises (the "Annual Report") to Landlord and the Aspen Pitkin County
Housing Authority ("APCHA"), on an annual basis on or before April 1 each year commencing
after the Housing Project is placed into service. At any time the time during which the Tenant has
an investor member (the "Investor"), the Annual Report shall be the same report (and due on the
same date) provided by Tenant to the Investor; thereafter, the Annual Report shall be in the same
form (and due on the same date) as is required by Tenant's senior lender; and thereafter, to the
extent Tenant has no senior lender or Investor, Tenant shall continue to provide an Annual Report
to the Landlord and APCHA in form and substance reasonably acceptable to Landlord and
APCHA. In the event Tenant fails to provide the Annual Report by April 1 of a given year (or such
different date, if so required by the Investor or senior lender), Landlord may send written notice of
Tenant's failure to do so (the "Landlord Notice"). If Tenant fails to provide the Annual Report
within thirty (30) days of the date of the Landlord Notice, Tenant and Landlord shall have an in -
person meeting at the Housing Project within sixty (60) days of the Landlord Notice or such other
time as is mutually agreeable to the parties.
ARTICLE VIII
INSURANCE AND INDEMNITY
8.1 Landlord's Insurance. Landlord shall maintain during this Lease, commercial
general liability insurance, or its equivalent, with limits of not less than $2,000,000 per occurrence
for bodily injury, personal injury and property damage, which amount shall be increased
throughout the Term to commercially reasonable levels as reasonably determined by Landlord.
Landlord shall also obtain and keep in force all risk property insurance covering loss or damage to
all real and personal property except for that property which Tenant is obligated to insure in Section
8.2 below. Landlord's required insurance coverage may be provided by an insurance provider of
Landlord's choosing and may be provided under blanket insurance policies as long as such blanket
insurance policies comply with the requirements hereof. If the Landlord insures against similar
risks by self-insurance, Landlord may, at its election, provide for the insurance required by this
Section 8.1, partially or in whole, by means of a self-insurance fund. If Landlord elects to self -
insure, Landlord shall annually furnish to the Tenant a certification of the adequacy of the
Landlord's reserves.
8.2 Tenant's Insurance. Tenant shall maintain during this Lease, commercial general
liability insurance, including contractual liability, with limits of not less than $2,000,000 per
occurrence for bodily injury, personal injury and property damage, naming Landlord as an
additional insured, and property damage insurance, including builder's risk insurance, covering
Tenant's personal property and all Improvements located on the Premises on a full replacement
cost basis, which amounts shall be increased during the Term to commercially reasonable levels
as reasonably determined by Tenant. Certificates of insurance evidencing such coverages shall be
furnished to Landlord prior to the commencement of the Lease and at each subsequent insurance
I
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8.3 Landlord/Tenant Liability.
(a) Landlord shall not be liable to Tenant for any loss, damage or injury of any
kind or character to any person or property (a) arising from any use of the Premises and the
Improvements, or any part thereof for any period on or after the Rent Commencement Date, (b)
arising from the condition of the Premises, (c) caused by any defect in the Premises or the
Improvements, (d) caused by or arising from any act or omission of Tenant, or any of its agents,
employees, licensees or invitees (e) arising from or in connection with the conduct of any business,
occupation, transaction, event or other activity first arising or occurring on the Premises or within
the Improvements on and after the Rent Commencement Date, (f) arising from any accident on the
Premises or any fire or casualty thereon or in the Improvements first arising on and after the
Effective Date, (g) occasioned by the failure of Tenant to maintain the Premises or the
Improvements in good condition, or (h) arising from any other cause whatsoever first arising on
or after the Rent Commencement Date (except to the extent resulting from the acts of Landlord,
its employees, agents and contractors but subject to the provisions of Section 17.25 hereof).
(b) Tenant shall not be liable to Landlord for any loss, damage or injury of any
kind of character to any person or property resulting from the use and operation of buses or similar
vehicles on the Premises by the Landlord and access to and use of the Premises by the general
public in connection with the provisions of such bus services, and access to and use of the general
public of all public access areas on the Premises, including but not limited to bike trails and hiking
trails.
(c) Neither Landlord nor Tenant shall be responsible or liable to the other for
any consequential, exemplary, punitive, indirect or special damages resulting from a breach of this
Lease.
8.4 Waiver of Subrogation. Landlord and Tenant agree that all policies of insurance
to be kept and maintained in force by the respective parties hereto, shall, unless prohibited by law
or other regulation having the effect of law, contain provisions in which the rights of subrogation
against the Landlord and Tenant are waived by the insurance company or carriers insuring the
Premises, any Improvements, the Land, or other property in question. Landlord expressly waives
any right of recovery against Tenant for damage to or loss of the building, the Premises and the
Land or the Improvements thereon, which loss or damage may arise by fire or any other peril
covered by any policy of insurance required to be maintained pursuant to this Lease which contains
or is required to contain waiver of subrogation rights against Tenant pursuant to this Section, and
Landlord shall make no claim for recovery against Tenant therefor. Tenant expressly waives any
right of recovery against Landlord for damage to or loss of its Improvements, fixtures, or other
property located in the Premises, which damage or loss may arise by fire or any other peril covered
by any policy of insurance maintained or required to be maintained pursuant to this Lease which
contains or is required to contain a waiver of subrogation right against Landlord as set forth in this
Section, and Tenant shall make no claim for recovery against Landlord therefor.
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CASUALTY LOSS
9.1 Tenant's Rights. Subject to the rights of any Leasehold Mortgagee under a
Leasehold Mortgage (as defined in Section 15.1), should any Improvements be wholly or partially
destroyed or damaged by fire or any other casualty, Tenant shall have the right to restore and
reconstruct the Improvements or terminate this Lease. If Tenant elects to terminate this Lease
under this Section at any time during the last five (5) Lease Years of the Term, Tenant shall, at the
request of Landlord, cause the Improvements to be razed and the Land to be leveled, cleaned and
otherwise put in good order. Thereafter, the parties shall have no further rights, duties or
obligations under this Lease. If Tenant elects not to terminate this Lease under this Section, Tenant
shall repair, replace, restore and reconstruct any Improvements as provided in any Leasehold
Mortgage and in compliance with the Construction Standards.
9.2 Notice of Damage. Tenant shall promptly notify Landlord of any destruction or
damage to the Premises.
ARTICLE X
CONDEMNATION
10.1 Total Taking. Subject to the rights of any Leasehold Mortgagee under a Leasehold
Mortgage, should the entire Premises be taken (which term, as used in this Article, shall include
any conveyance in avoidance or settlement of eminent domain, condemnation or other similar
proceedings) by any Governmental Authority, corporation or other entity under the right of
eminent domain, condemnation or similar right, then Tenant's right of possession under this Lease
shall terminate as of the date of taking possession by the condemning authority, and the award
therefor will be distributed as follows: (i) first, to the payment of all reasonable fees and expenses
incurred in collecting the award, (ii) second, to Tenant in an amount equal to the unamortized cost
of the Improvements (assuming that the Improvements are amortized over the Original Term of
the Lease), plus Tenant's moving expenses and (iii) the balance of the award shall be equitably
apportioned between Landlord and Tenant based on the then respective fair market values of
Landlord's interest in the Premises (appraised by reference to all relevant factors including the
income stream derivable by Landlord under this Lease and the then present value of Landlord's
reversionary interest in the entire Premises after expiration of the Original Term) and Tenant's
interest in the Premises (appraised by reference to all relevant factors, including the income stream
derivable by Tenant from the Premises for the remainder of the Original Term). After the
determination and distribution of the condemnation award as herein provided, the Lease shall
terminate, and the parties shall have no further rights, duties or obligations under the Lease.
10.2 Partial Taking. Should a portion of the Premises be taken by any Governmental
Authority, corporation or other entity under the right of eminent domain, condemnation or similar
right, such that (i) in Tenant's reasonable judgment, so much of the Improvements shall be so taken
as to make it economically unsound to use the remainder for the uses and purposes contemplated
hereby, or (ii) any access is taken that materially and adversely affects the Premises as determined
by Tenant in its reasonable discretion, then this Lease shall terminate as of the date of taking of
possession by the condemning authority in the same manner as if the whole of the Premises had
thus been taken, and the award therefor shall be distributed as provided in Section 10.1. Should
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any other partial taking of the Premises occur, then this Lease nevertheless shall continue in effect
as to the Premises, or the remainder thereof, as the case may be.
10.3 Award on Partial Taking. In the event of a partial taking where this Lease is not
terminated, and as a result thereof Tenant will need to restore, repair or refurbish the remainder of
the Premises in order to put them in a usable condition, then (i) the award shall first be paid to
Tenant for payment of such restoration, repair and refurbishment in accordance with the
Construction Standards and (ii) the remainder shall be apportioned and paid as provided in (i) and
(iii) of Section 10.1, considering the respective interests of Landlord and Tenant in the portion of
the Premises taken. If a portion of the Premises is taken and no repair or restoration work is
required because thereof, the award therefor shall be apportioned and paid as provided in (i) and
(lit) of Section 10.1, considering the respective interests of Landlord and Tenant in the portion of
the Premises taken.
10.4 Temporary Taking. If the whole or any portion of the Premises is taken for
temporary use or occupancy, the Term shall not be reduced or affected, and Tenant shall continue
to pay the Rent in full. Except to the extent Tenant is prevented from so doing pursuant to the
terms of the order of the condemning authority, Tenant shall continue to perform and observe all
of the other covenants, agreements, terms and provisions of this Lease. In the event of any
temporary taking, Tenant shall be entitled to receive the entire amount of any award therefor unless
the period of temporary use or occupancy shall extend beyond the expiration of the Term, in which
case such award, after payment to Landlord therefrom for the estimated cost of restoration of the
Premises to the extent that any such award is intended to compensate for damage to the Premises,
shall be apportioned between Landlord and Tenant as of the day of expiration of the Term in the
same ratio that the part of the entire period for such compensation is made falling before the day
of expiration and that part falling after, bear to such entire period.
10.5 Notice of Taking, Cooperation. Landlord and Tenant shall promptly notify the
other of the commencement of any eminent domain, condemnation or other similar proceedings
with regard to the Premises. Landlord and Tenant covenant and agree to fully cooperate in any
condemnation, eminent domain, or similar proceeding in order to maximize the total award
receivable in respect thereof. Any termination of this Lease pursuant to this Article X shall not
affect the rights of Landlord and Tenant to any such award.
ASSIGl�
ARTICLE XI
ANT AND SUBLETTING
11.1 Tenant's Right to Assign.
(a) Tenant may, with the prior consent of Landlord (which consent is not to be
unreasonably withheld), assign this Lease to any affiliate, subsidiary or other business entity
owned and controlled by Tenant or Gorman & Company, LLC, a Wisconsin limited liability
company ("Affiliated Transferee"). In the event Tenant assigns this Lease in accordance with
this Section to an Affiliated Transferee, Tenant shall be deemed released from its duties and
obligations hereunder. Tenant shall have no duty to share any profits or provide any other
remuneration or consideration to Landlord as a result of its assigning this Lease, or subleasing all
or any portion of the Premises, and it shall be deemed unreasonable for Landlord to require any
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such sharing, remuneration, or consideration in connection with Landlord's consent to any
assignment or sublease.
(b) After completion of construction by Tenant of the Improvements, Tenant
may assign its rights hereunder to any other party, with such party expressly assuming Tenant's
obligations hereunder, with Landlord's prior written approval, which approval shall not be
unreasonably withheld or delayed in any case. Landlord's right to approve any assignee of
Tenant's rights under this Lease shall be limited to approval of (1) the character, reputation and
Financial strength of the proposed assignee and (ii) compliance of the proposed use with any deed
restrictions affecting the Land. No other factors shall be considered. Upon Landlord's written
approval of any proposed assignee of Tenant's rights under this Lease, Tenant shall be relieved of
liability, and such assignee shall become the new Tenant. Landlord shall indicate its written
approval or disapproval of any proposed assignee within thirty (30) days after Tenant gives to
Landlord notice of the proposed assignment, including the identity of the proposed assignee and
reasonably sufficient information as to the proposed assignee and proposed use to enable Landlord
to evaluate such assignee's character, reputation and financial strength and to determine
compliance of the intended use. If Landlord fails to indicate its approval or disapproval within
such thirty (30) day period, Landlord shall be deemed to have approved the requested assignment.
Any assignment of Tenant's rights under this Lease that are not in accordance with this Section
shall be void.
11.2 Tenant's Right to Sublease. Tenant may freely execute subleases with regard to
the Improvements, provided only that (1) the lease term of each such sublease (including all
renewal and extension rights of any kind or type) shall not extend past the stated expiration date
A the Term, unless Landlord consents in writing thereto, which consent shall not be unreasonably
withheld or delayed and (n) the intended use by the sublessee does not violate the Restrictive
Covenant described in Section 7.1, or any deed restrictions affecting the Land of which Tenant has
received written notice from Landlord.
11.3 Assignment by Landlord. In the event of a transfer and assignment by Landlord
oI its interest in this Lease to a person or other entity expressly assuming Landlord's obligations
hereunder, Landlord shall thereby be released from any liability hereunder which thereafter
accrues, and Tenant agrees to look solely to such successor in interest of Landlord for performance
of such subsequently accruing obligations.
11.4 Transfers. Notwithstanding anything to the contrary herein, the Tenant's
membership may change from time to time without Landlord's prior written consent, provided that
Tenant continues to be managed or controlled, directly or indirectly, by Gorman & Company, LLC
or its successors. Any other change in the ownership or control of Tenant shall require Landlord's
prior written consent.
FAA *A V Lai
ENVIRONMENTAL
12.1 Definitions. For purposes of this Lease the following terms shall have the following
meanings:
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(a) "Environmental Laws" means applicable federal, state and local laws,
codes, ordinances, rules and regulations relating to protection of the public health and the
environment, including, without limitation, those laws relating to the storage, handling and use of
chemicals and other hazardous materials, those relating to the generation, processing, treatment,
storage, transport, disposal or other management of waste materials of any kind and those relating
to the protection of environmentally sensitive areas.
(b) "Hazardous Material" means "hazardous substance," "pollutant or
contaminant," and "petroleum" and "natural gas liquids," as those terms are defined or used in
Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") and "asbestos" and in such quantities and qualities that are violative of
Environmental Laws.
(c) "Release" means depositing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing in amounts that violate
Environmental Laws.
(d) "Report" means Phase I Environmental Site Assessment
12.2 Landlord's Representations, Warranties and Covenants. Except as disclosed in
the Report, Landlord hereby represents, warrants and covenants that:
(a) To the best of Landlord's knowledge, there are no Hazardous Materials
located at the Land, nor will any Hazardous Materials be located in the Land upon completion of
Landlord's Obligations and delivery of the Premises from Landlord to Tenant hereunder, and
Landlord has received a No Further Action Letter from the Colorado Department of Public Health
and Environment that permits residential development on the Premises.
(b) To the best of Landlord's knowledge, there has been no Release and there
is no threat of Release of any Hazardous Materials on, onto or from the all that has resulted in
or that could result in a violation of any Environmental Law or in the creation of liability or
obligations, including, without limitation, notification, deed recordation or remediation, under any
Environmental Law. To the best of Landlord's knowledge, the Land has not contained and contains
no underground or aboveground storage tanks, no "PCBs" or "PCB items," as those terms are
defined in 40 C.F.R. §761.3, and no asbestos.
(c) To the extent permitted by law, Landlord agrees to indemnify and hold
Tenant, its directors, officers, stockholders, employees, agents, attorneys, consultants, contractors
and its successors and assigns, harmless from and against any and all claims, losses, damages,
liabilities, fines, penalties, charges, judgments, administrative orders, remediation requirements,
enforcement actions of any kind, and all costs and expenses incurred in connection therewith
(including, but not limited to, reasonable attorneys' fees and expenses), arising out of any material
misrepresentation of Landlord contained in this Section or any breach by Landlord of its
obligations under this Section.
(d) If it is discovered that the Premises contain Hazardous Materials, the
presence of which predates this Lease, Landlord, at its sole expense, shall take all action required,
1
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including environmental cleanup of the Premises, to comply with the covenants herein or
applicable legal requirements and, in any event, shall take all action deemed necessary under all
applicable Environmental Laws.
12.3 Tenant's Representations, Warranties and Covenants. Tenant hereby
represents, warrants and covenants that:
(a) Tenant and Tenant's officers, directors, members, partners, employees, and
representatives (collectively, the "Tenant Parties") shall not use, generate, manufacture, refine,
)roduce, process, store, or dispose of Hazardous Materials, on, under, or about the Premises or
transport Hazardous Materials to or from the Premises in the future for the purpose of generating,
manufacturing, refining, producing, storing, handling, transferring, or processing Hazardous
Materials; provided, however, Tenant and Tenant Representatives may use, generate, manufacture,
refine, produce, process, store, transport, or dispose of Hazardous Materials in such amounts as
are permitted under applicable Environmental Laws.
(b) Tenant agrees not to knowingly permit the Release by its agents,
contractors, subcontractors, successors, assigns, subtenants, concessionaires, and any other
occupants of the Premises (the "Tenant Agents" and together with the Tenant Parties, collectively
the "Tenant Representatives") of any Hazardous Material on, onto or from the Premises that
could result in a violation of any Environmental Law or the creation of liability or obligations,
including, without limitation, notification, deed recordation or remediation, under any
Environmental Law.
(c) If Tenant is in breach of any of its agreements set forth in this Section,
Tenant, at its sole expense, shall take all action required, including environmental cleanup of the
Premises, to comply with the covenants herein or applicable legal requirements and, in any event,
shall take all action deemed necessary under all applicable Environmental Laws.
(d) Tenant agrees to indemnify and hold Landlord, its officers, employees,
agents, attorneys, consultants, contractors and its successors and assigns, harmless from and
against any and all claims, losses, damages, liabilities, fines, penalties, charges, judgments,
administrative orders, remediation requirements, enforcement actions of any kind, and all costs
and expenses incurred in connection therewith (including, but not limited to, reasonable attorneys'
fees and expenses), arising out of any breach by Tenant of its obligations under this Section.
ARTICLE XIII
WAP;]ZANTY OF PEACEFUL P
13.1 Peaceful Possession. Landlord covenants that Tenant, on paying the Rent and
performing and observing the covenants and agreements herein contained and provided to be
performed by Tenant, shall and may peaceably and quietly have, hold, occupy, use and enjoy the
Premises during the Term and may exercise all of its rights hereunder, subject only to the
provisions of this Lease and applicable governmental laws, rules and regulations. Landlord agrees
to warrant and forever defend Tenant's right to such occupancy, use and enjoyment and the title
to the Premises against the claims of any and all persons whomsoever lawfully claiming the same,
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or any part thereof, by, through or under Landlord, but not otherwise, subject only to provisions
of this Lease and all applicable governmental laws, rules and regulations.
ARTICLE XIV
DEFAULT AND REMEDIES
14.1 Tenant's Default. Each of the following shall be deemed an "Event of Default"
by Tenant hereunder and a material breach of this Lease:
(a) If Tenant fails to pay Rent when due and such default continues for sixty
(60) days after Tenant is given a written notice specifying such default.
(b) If Tenant fails to keep, perform or observe any of the covenants,
agreements, terms or provisions contained in this Lease that are to be kept or performed by Tenant,
other than with respect to payment of Rent or other sums of money, and Tenant fails to cure such
default within thirty (30) days after Tenant is given written notice specifying the same; provided
however, if Tenant is unable to cure any such default within thirty (30) days, Tenant shall have
such additional time as is reasonably necessary to cure such default provided that Tenant diligently
pursues a cure.
(c) If an involuntary petition is filed against Tenant under any bankruptcy or
insolvency law or under the reorganization provisions of any law of like import or if a receiver of
Tenant, or of all or substantially all of the property of Tenant, is appointed without acquiescence,
and such petition or appointment is not discharged or stayed within ninety (90) days after the
happening of such event.
(d) If Tenant makes an assignment of its property for the benefit of creditors or
files a voluntary petition under any bankruptcy or insolvency law, or seeks relief under any other
law for the benefit of debtors.
Upon any notice of an Event of Default sent to Tenant, Landlord shall simultaneously send the
same to the senior Leasehold Mortgagee and to the Investor. The senior Leasehold Mortgagee and
the Investor shall each have the right, but not the obligation, to proffer a cure for the Event of
Default in the same manner as if proffered by Tenant directly. If so proffered by one or both parties,
Landlord shall accept such cure to the extent it would have accepted the same from Tenant.
14.2 Landlord's Remedies. If an Event of Default occurs and is continuing, Landlord
may, at any time thereafter prior to the curing thereof and without waiving any other rights
hereunder or available to Landlord at law or in equity (Landlord's rights being cumulative), do
any of the following:
(a) Landlord may terminate this Lease by giving Tenant written notice thereof,
in which event this Lease and the leasehold estate hereby created and all interest of Tenant and all
parties claiming by, through or under Tenant shall automatically terminate upon the effective date
A such notice. Landlord, its agent or representatives, shall have the right, without further demand
or notice, to re-enter and take possession of the Premises and remove all persons and property
therefrom with or without process of law, without being deemed guilty of any manner of trespass
and without prejudice to any remedies for arrears of Rent or existing breaches hereof. In the event
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of such termination, Tenant shall be liable to Landlord for damages in an amount equal to all
expenses incurred by Landlord enforcing its rights hereunder.
(b) Restrain or enjoin any breach or threatened breach of any covenant, duty or
obligation of Tenant herein contained.
(c) Notwithstanding anything contained herein to the contrary, Landlord shall
never be entitled to dispossess Tenant of the Premises pursuant to any "lock out" or other
nonjudicial remedy, Landlord hereby waiving its right to forcibly dispossess Tenant from the
Premises, whether peaceably or otherwise, without judicial process, such that Landlord shall not
be entitled to any "commercial lock -out" or any other provisions of applicable law which permit
landlords to dispossess tenants from commercial properties without the benefit of judicial review.
(d) No termination of this Lease and no repossession of the Premises shall
relieve Tenant of its liabilities and obligations under this Lease that exist as of the date of the
termination, all of which shall survive any such termination or repossession.
(e) In addition to all other remedies of Landlord (including the right to seek
specific performance), Landlord shall be entitled to reimbursement upon demand of all reasonable
attorney's fees and expenses incurred by Landlord in connection with any default. The remedies
of Landlord hereunder shall be deemed cumulative and not exclusive of each other.
Notwithstanding the foregoing, or anything contained herein to the contrary, in no event shall
Landlord have the right to terminate this Lease for any reason whatsoever during the term of any
deed restriction, regulatory agreement or other documentation that contains a compliance period
for purposes of maintaining the affordability of the housing in the Housing Project; provided
however, that upon an ongoing default during any "Compliance Period" under the Restrictive
Covenant and the failure to cure such default, the Base Rent shall be increased to $25,000.00 per
year, payable upon the 90 day anniversary of Landlord's notice to Tenant that but for the
prohibition in this paragraph, Landlord would exercise its right to terminate in Section 14.2(a), and
each one year anniversary thereafter until the Event of Default has been cured; and provided,
further, that upon the expiration of any required compliance period, Landlord may exercise its
remedies in Section 14.2 to the extent an Event of Default is then ongoing.
14.3 Remedies Not Exclusive. Except as otherwise provided herein, no right or remedy
herein conferred on or reserved to Landlord and Tenant is intended to be exclusive of any other
remedy or right, and each and every right or remedy shall be cumulative and in addition to any
right or remedy given hereunder or now or hereafter existing at law, in equity or by statute.
14.4 Landlord's Default. A "Landlord's Default" shall occur hereunder if Landlord
fails to keep, perform or observe any of the covenants, agreements, terms or provisions contained
in this Lease that are to be kept or performed by Landlord and Landlord fails to commence and
take such steps as are necessary to remedy the same within thirty (30) days after Landlord is given
written notice specifying the same, or having so commenced, thereafter fails to proceed diligently
and with continuity to remedy the same.
14.5 Tenant's Remedies. If a Landlord's Default occurs, Tenant may, at any time
thereafter prior to the curing thereof and without waiving any other rights hereunder or available
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to Tenant at law or in equity (Tenant's rights being cumulative), do any one or both of the
following:
(a) Tenant may perform Landlord's obligations hereunder and Landlord shall
(subject to annual appropriation by the City Council) pay to Tenant within thirty (30) days after
demand therefore all reasonable costs and expenses incurred by Tenant in doing so.
(b) If Landlord's Default renders all or any portion of the Premises untenantable
for those uses incidental to or customarily associated with the operation of a multifamily housing
project that is deed restricted to maintain affordability for more than sixty (60) days, Tenant may
terminate this Lease, in which event Tenant shall have no fiirther rights, duties or obligations
hereunder, and Tenant may obtain actual damages from Landlord.
ARTICLE XV
LEASEHOLD FINANCING
15.1 Leasehold Financing. Tenant shall have the right at any time and from time to time
during the Term with prior notice to, but without the consent or approval of Landlord, to grant one
or more mortgage(s) or other security interest(s) ("Leasehold Mortgage") in Tenant's interest in
this Lease (the leasehold estate created hereby), the Improvements constructed on the Land by
Tenant, and all of Tenant's Property to one or more leasehold mortgages (each, a "Leasehold
Mortgagee"),
15.2 Tenant Lender. The foreclosure by any Leasehold Mortgagee under a Leasehold
Mortgage shall not terminate this Lease or affect any of the covenants, conditions, terms and
restrictions set forth in this Lease as obligations of Tenant.
15.3 Lender Protections. Notwithstanding anything in this Lease to the contrary, the
following provisions shall prevail during the term of any Leasehold Mortgage:
(a) Landlord shall not convey, transfer, assign, mortgage or encumber its
interest in the Premises, without the prior written consent of Leasehold Mortgagee;
(b) Tenant and Landlord shall not modify, amend, cancel, or terminate this
Lease, without the prior written consent of Leasehold Mortgagee;
(c) Landlord shall not accept a voluntary surrender of this Lease by Tenant,
without the prior written consent of Leasehold Mortgagee;
(d) Landlord shall serve upon Leasehold Mortgagee a copy of each notice that
it delivers under this Lease and shall allow Leasehold Mortgagee to cure any such default as
provided in the Lease;
(e) This Lease may not be terminated in the event of a casualty or condemnation
without the prior consent of Leasehold Mortgagee;
(f) Any foreclosure or assignment in lieu of foreclosure under any Leasehold
Mortgage, or the exercise by Leasehold Mortgagee of its other rights or remedies under the
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applicable Leasehold Mortgage, shall be subject to the Restrictive Covenant but shall not require
Landlord's consent, violate this Lease, constitute an event of default, limit Landlord's obligations
under this Lease, or entitle Landlord to exercise any rights or remedies under this Lease;
(g) The liability of Leasehold Mortgagee (or its designee) hereunder (including
following the foreclosure of the mortgage) shall be limited to its interest in the Premises, and
Leasehold Mortgagee (or its designee) shall automatically be released from such liability from and
after the date it no longer holds an interest in the Premises (or to the extent required by Colorado
law, shall not have any liability under this Agreement other than for its own direct acts or
omissions);
(h) The senior most Leasehold Mortgagee shall have the right to participate in
the settlement of any casualty claim or condemnation proceeding and all insurance proceeds or
condemnation award to which Tenant is entitled shall be paid to the senior most Leasehold
Mortgagee and disbursed only in accordance with the applicable loan documents,
(i) If Tenant defaults as mortgagor under a Leasehold Mortgage, such default
shall not constitute an event of default hereunder except to the extent that Tenant's acts or
)missions, in and of themselves, constitute an event of default under the express terms of this
Lease
(j) Leasehold Mortgagee shall have the right, but not the obligation, to remedy
any default under this Lease or cause the same to be remedied and Landlord shall accept such
performance by or at the instance of such Leasehold Mortgagee as if the same had been made by
Tenant. There shall be added to any grace period allowed by the terms of this Lease to Tenant for
curing any default, an additional ten (10) days in the case of default in payment of Rent and an
additional sixty (60) days in the case of all other defaults, for such Leasehold Mortgagee to cure
the same beyond the time allowed to Tenant. In no event shall the continuation of this Lease be
conditioned on defaults that are personal to Tenant being cured by Leasehold Mortgagee.
(k) Without the prior written consent VT lal-I I d Mortgagee, no merger of the
fee title with the leasehold interest created herein will result in the termination of this Lease.
(1) If the Leasehold Mortgagee or its designee or nominee shall acquire
ownership of the Tenant's leasehold estate under the Lease, following the foreclosure or
assignment in lieu of foreclosure of Tenant's leasehold estate hereunder, the Leasehold Mortgagee
or its designee or nominee may further assign said interest without the prior consent of Landlord,
and such assignee shall enjoy all rights, powers and privileges granted under the Lease, subject to
the other terms and conditions of the Lease and the Restrictive Covenant.
(m) Tenant shall give Leasehold Mortgagee notice of Tenant's failure to
exercise any Lease renewal, extension or purchase options and Landlord shall permit Leasehold
Mortgagee the right to exercise any such Lease renewal, extension or purchase rights
notwithstanding expiration of such rights following the Tenant's failure to do so for a period of
thirty (30) days following the Tenant's failure to exercise such rights.
(n) Landlord shall cause any future fee mortgagee of Landlord's interest in the
Premises to execute and deliver to Leasehold Mortgagee a commercially reasonable written
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agreement providing further assurance that (i) such fee mortgage does not encumber and is subject
to the Lease and to the rights of Tenant and Leasehold Mortgagee under the Lease and (ii) upon
any foreclosure under the fee mortgage, fee mortgagee will not disturb Tenant's and/or Leasehold
Mortgagee's (as applicable) use and occupancy of the Premises.
(o) Landlord and Tenant acknowledge and agree that, during the term of any
Leasehold Mortgage, Tenant shall be prohibited from subordinating its rights under the Lease to
the lien of any fee mortgage.
(p) Notwithstanding anything contained herein to the contrary, (a) all insurance
proceeds payable in connection with any casualty, damage or destruction to any portion of the
Premises to which the Tenant is entitled and/or any awards or sales proceeds which are attributable
to any Improvements in the event any portion of the Premises is taken in any proceedings by public
authorities (by condemnation or otherwise) or is acquired for public or quasi -public purposes by
sale in lieu thereof, shall be applied as provided for under the provisions contained in the senior
most Leasehold Mortgage and any related documents and Landlord hereby subordinates any right
that it may have to such proceeds, to the rights and liens of the Leasehold Mortgagee in and to
such proceeds; (b) such payment must not be less than the total award minus the value of the
remainder interest in the fee considered as unimproved; and (c) in the event of a partial taking,
Tenant shall be permitted to rebuild and restore the Improvements unless the Leasehold Mortgagee
consents to distribution of such proceeds.
ARTICLE XVI
OPTION TO PURCIIASE
16.1 Option to Purchase. Tenant hereby grants to Landlord the option to purchase all
of Tenant's right, title and interest in and to the Premises upon the following terms and conditions.
(a) Commencing on the later of (i) the date that is fifteen (15) years after the
date of the final certificate of occupancy issued for the Improvements located on the Premises, and
(ii) the date that is sixty (60) days after the payment in full of any permanent financing obtained
by Tenant and secured by the Premises (such event, the "Triggering Event"), Landlord or a
wholly -owned subsidiary thereof (each, a "Landlord Party" and collectively, the "Landlord
Parties") shall have the option to purchase all of Tenant's right, title and interest in and to the
Premises (the "Option to Purchase").
(b) Upon the occurrence of the Triggering Event, the Tenant shall notify
Landlord, and Landlord (or any Landlord Parties) shall have a period of ninety (90) days after such
written notice is delivered (the "Purchase Period") in which to provide written notice to the
Tenant of its decision to purchase the Premises at a price equal to the Option Purchase Price
(defined below) (the "Exercise Notice"). If, within the Purchase Period, Landlord fails to deliver
to Tenant the Exercise Notice, then the right to purchase granted by this Lease shall be null, void
and of no further force and effect whatsoever.
(c) The "Option Purchase Price" will be equal to the greater of (I) Fair Market
Value (defined below) of the Housing Project less (A) the Landlord's (or Landlord's investment
affiliate) (the "Landlord Investor Entity") then -current capital account (i.e., the Landlord
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Investor Entity's capital contribution less any distributions received by the Landlord Investor
Entity as a result of its ownership interest in the Tenant plus any additional contributions made by
the Landlord Investor Entity), plus (a) assumption of all indebtedness or repayment thereof
(provided, however, any outstanding loan from the Landlord or the Landlord Investor Entity at the
time of such exercise by the Landlord Investor Entity shall be disregarded in this calculation), plus
(b) repayment to third party investors for the Housing Project on such terms and conditions as is
set forth in the Tenant's organizational documents or side agreements with any such investors;
plus (c) any amounts owed by the Tenant to the entity developing the Housing Project or to its
affiliates (collectively, the "Developer") as set forth in writing as of the date of the acquisition,
plus (d) 10% of the fair market value as a disposition fee to the Developer; or (II) the sum of: (a)
all outstanding indebtedness and accrued but unpaid interest owed to lender(s) (other than the
Landlord or Landlord Investor Entity), (b) repayment to third party investors for the Housing
Project on such terms and conditions as is set forth in the Tenant's organizational documents or
side agreements with any such investors (but not including any required repayment to the Landlord
Investor Entity, which would be disregarded for this calculation); (c) the amount of all so-called
"exit tax" obligations that will be incurred by the Tenant or its members as a result of the Landlord
exercising the option, (d) any amounts owed by the Tenant to the Developer as set forth in writing
as of the date of the acquisition, and (e) funding of reserves as is required to ensure a healthy
operating Housing Project. The Tenant will use commercially reasonable efforts (with no
guaranty) to prevent the participants in the Tenant's development entity from having negative
capital account balances. For the avoidance of doubt, any portion of reserve accounts funded by
the Landlord Investor Entity and not otherwise accounted for in the formulas above shall be treated
as being added to any outstanding Landlord or Landlord Investor Entity outstanding solely for
purposes of the formula calculations above. "Fair Market Value" shall mean the value of the
Premises encumbered by the Restrictive Covenant as determined by an appraiser mutually
agreeable to the Tenant and Landlord (or the Landlord Investor Entity). If such parties cannot agree
on a single appraisal, then each party shall select an appraiser, and those appraisers shall agree
upon a third appraiser, whose judgment as to the value of the Premises shall be deemed final.
(d) Upon determination of the Option Purchase Price, Landlord or the Landlord
Investor Entity and Tenant shall use their good faith efforts to promptly (within thirty (30) days of
the determination of the value of the Premises) enter into a commercially reasonable purchase and
sale agreement for sale of Tenant's right, title and interest in and to the Premises ("PSA") that
confirms, among other things, the Landlord entity that shall acquire the Premises at the closing of
the sale of Tenant's interest in the Premises (the "Closing the Option Purchase Price of the
Premises to be paid by the applicable Landlord entity acquiring the Premises at Closing, the closing
date, which shall be a date within thirty (30) days after the PSA is mutually executed and the time
and place of Closing. If Landlord (or the Landlord party purchasing the Premises) and Tenant
cannot agree on the terms for the PSA, then such dispute shall be resolved in accordance with
expedited arbitration in accordance with the provisions below, with the understanding that the PSA
is to be executed with commercially reasonable provisions.
(e) Any expedited arbitration in accordance with the foregoing shall be before
a single arbitrator acceptable to the parties in their reasonable judgment in accordance with the
rules of the American Arbitration Association, provided that, if the parties fail to agree on an
arbitrator within five (5) days, then either party may request the American Arbitration Association
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to designate an arbitrator. The determination of the arbitrator shall be conclusive and binding upon
the parties. The costs and expenses of such arbitrator shall be borne equally by the parties.
ARTICLE IVII
MISCELLANEOUS
17.1 Notices. Any notice provided for or permitted to be given hereunder must be in
writing and may be given by (i) depositing same in the United States Mail, postage prepaid,
registered or certified, with return receipt requested, addressed as set forth in this Section,
(ii) depositing with payment with a reputable overnight carrier service; (iii) hand delivering the
same to the party to be notified, or (iv) sending via electronic delivery (e-mail). Notice given in
accordance herewith shall be effective upon receipt at the address of the first addressee listed below
for each party, as evidenced by the executed postal receipt or other receipt for delivery. For
purposes of notice the addresses of the parties hereto shall, until changed, be as follows:
Landlord: City of Aspen, Colorado
427 Rio Grande Place
Aspen, CO 81611
Attention: City Manager
and a copy to: Butler Snow LLP
1801 California Street, Suite 5100
Denver, Colorado 80202
Attention: Dalton Kelley
Tenant: Gorman &Company, LLC
200 North Main Street
Oregon, Wisconsin 53575
Attn: Kimball Crangle
Telephone: (303) 887-2707
Email: kcrangle@gormanusa.com
With a copy to: Reinhart Boerner Van Deuren s.c.
1000 North Water Street, Suite 1700
Milwaukee, Wisconsin 53202
Attn: Joseph Shumow and Amy Ruhl
Telephone: (414) 298-8330
Email: j shumow@reinhartlaw. coma aruhl@reinhartlaw.com
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And with a copy to: Zions Bancorporation, N.A.
dba Vectra Bank Colorado
7222 E. Layton Avenue
Denver, CO 80237
Attention: Anton Bengtson
With a copy to: Holland &Hart LLP
555 17th Street, Suite 3200
Denver, CO 80202
Attention: Andrew A. Folkerth, Esq.
The parties hereto shall have the right from time to time to change their respective addresses for
purposes of notice hereunder to any other location within the United States by giving a notice to
such effect in accordance with the provisions of this Section.
17.2 Modification and Non -Waiver. No variations, modifications or changes herein or
hereof shall be binding upon any party hereto unless set forth in writing executed by both parties
hereto and with the prior written consent of Investor. No waiver by either party of any breach or
default of any term, condition or provision hereof, including without limitation the acceptance by
Landlord of any Rent at any time or in any manner other than as herein provided, shall be deemed
a waiver of any other or subsequent breaches or defaults of any kind, character or description under
any circumstance. No waiver of any breach or default of any term, condition or provision hereof
shall be implied from any action of any party, and any such waiver, to be effective, shall be set out
in a written instrument signed by the waiving party.
17.3 GoverningThis Lease shall be construed and enforced in accordance with
the laws of the State of Colorado without regard to principles of conflicts of laws.
17.4 Number and Gender; Caption; References. Pronouns, wherever used herein, and
of whatever gender, shall include natural persons and corporations and associations of every kind
and character, and the singular shall include the plural wherever and as often as may be appropriate.
Article and section headings in this Lease are for convenience of reference and shall not affect the
construction or interpretation of this Lease. Whenever the terms "hereof," "hereby," "herein" or
words of similar import are used in this Lease they shall be construed as referring to this Lease in
its entirety rather than to a particular section or provision, unless the context specifically indicates
to the contrary. Any reference to a particular "Article" or "Section" shall be construed as referring
to the indicated article or section of this Lease. Whenever placed before one or more items, the
words "include," "includes," and "including" shall mean considered as part of a larger group, and
not limited to the item(s) recited.
17.5 Estoppel Certificate. Landlord and Tenant shall execute and deliver to each other
or the Investor or any lender, within fifteen (15) days following written request therefor, a
certificate addressed as indicated by the requesting party and stating.
(a) whether or not this Lease is in full force and effect;
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(b) whether or not this Lease has been modified or amended in any respect, and
submitting copies of such modifications or amendment;
(c) whether or not there are any existing defaults hereunder known to the party
executing the certificate, and specifying the nature thereof,
(d) whether or not any particular article, section or provision of this Lease has
been complied with; and
(e) such other matters as may be reasonably requested.
17.6 Exhibits. All exhibits and addenda attached hereto are incorporated herein for all
purposes.
17.7 Seyerability. If any provision of this Lease or the application thereof to any person
or circumstance shall, at any time or to any extent, be invalid or unenforceable, and the basis of
the bargain between the parties hereto is not destroyed or rendered ineffective thereby, the
remainder of this Lease, or the application of such provisions to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be affected thereby.
17.8 Attorney Fees. If litigation is ever instituted by either party hereto to enforce, or to
seek damages for the breach of, any provision hereof, the prevailing party therein shall be promptly
reimbursed by the other party for all attorneys' fees reasonably incurred by the prevailing party in
connection with such litigation.
17.9 Surrender of Premises; Holding Over. Tenant shall quit and surrender the
Premises at the expiration or earlier termination of this Lease. The Premises shall be broom clean,
in good condition and repair, except for ordinary wear and tear, damage that is Landlord's
responsibility to repair hereunder, damage by eminent domain, fire and casualty, and all
alterations, additions and improvements. At the expiration or earlier termination of this Lease, any
holdover shall be from month to month at 110% of the Base Rent for the month preceding the
expiration or earlier termination of this Lease, and otherwise on the same terms and conditions as
herein provided.
17.10 Conflict. If there is any conflict or inconsistency between the terms and conditions
of this Lease and the terms and conditions of the Development Agreement, the terms and
conditions of this Lease shall control. If there is any conflict or inconsistency between the terms
and conditions of this Lease and Applicable Laws, Applicable Laws shall control.
17.11 Inspection of Project Books. All books and documents in the possession of the
Tenant relating to the Housing Project will at all times be open to inspection by the Landlord and
its respective accountants or other agents as the Landlord may from time to time reasonably
designate.
17.12 No Multi -Fiscal Year Obligations or Unlawful Delegation. Notwithstanding any
provision to the contrary contained herein, the Landlord's obligation to make any payments
hereunder shall be subj ect to annual appropriation by the City Council, in its sole discretion.
Nothing in this Lease is intended to nor shall be construed to create any multiple -fiscal year direct
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or indirect debt or financial obligation on the part of the Landlord within the meaning of the
Colorado Constitution, the Charter, or the laws of the State, and any such financial obligation of
the Landlord created by this Lease is expressly subject to annual appropriation by the City Council.
No provision of this Lease shall be construed or interpreted as creating an unlawful delegation of
governmental powers nor as a donation by or a lending of credit of the Landlord within the
meaning of Sections 1 or 2 of Article XI of the State Constitution. No provision of this Lease shall
be construed as a donation or grant to, or in aid of any corporation by the Landlord within the
meaning of Section 2 of Article XI of the State Constitution.
17.13 Relation of Parties. It is the intention of Landlord and Tenant to hereby create the
relationship of landlord and tenant, and no other relationship whatsoever is hereby created.
Nothing in this Lease shall be construed to make Landlord and Tenant partners or
Njoint venturers
or to render either party hereto liable for any obligation of the other.
17.14 Force Majeure. As used herein "Force Majeure" shall mean the occurrence of
any event (other than failure to obtain financing for, failure to refinance or cessation of
disbursements under existing financing for, the purchase, construction, demolition, repair or
ownership of the Land or Improvements) which prevents or delays the performance by Landlord
or Tenant of any obligation imposed upon it hereunder (other than payment of Rent) and the
prevention or cessation of which event is beyond the reasonable control of the obligor. If Tenant
shall be delayed, hindered or prevented from performance of any of its obligations (other than to
pay Rent) by reason of Force Majeure (and Tenant shall not otherwise be in default hereunder) the
time for performance of such obligation shall be extended for the period of such delay, provided
that the following requirements are complied with by Tenant: (1) Tenant shall give prompt written
notice of such occurrence to Landlord and (ii) Tenant shall diligently attempt to remove, resolve
or otherwise eliminate such event, keep Landlord advised with respect thereto, and commence
performance of its obligations hereunder immediately upon such removal, resolution or
elimination. Anything contained in or inferable from this Lease to the contrary notwithstanding,
Tenant shall not be relieved by any event of Force Majeure from Tenant's obligations to pay Rent
hereunder, nor shall the Term be extended thereby.
17.15 Entire Agreement. This Lease constitutes the entire agreement of the parties
hereto with respect to its subject matter, except the Second Amended and Restated Operating
Agreement of Lumberyard Apartments 2, LLC, a Wisconsin Limited Liability Company, as
amended from time to time (the "Operating Agreement"), and all prior agreements with respect
thereto are merged herein. Any agreements entered into between Landlord and Tenant of even
date herewith, including the Operating Agreement, are not, however, merged herein.
17.16 Recordation. Landlord and Tenant will execute a Memorandum of Lease
substantially in the form of Exhibit E attached hereto, which shall be filed for record in the Office
of the Clerk and Recorder of Pitkin County, Colorado.
17.17 Successors and Assigns. This Lease shall constitute a real right and covenant
running with the Premises, and, subject to the provisions hereof pertaining to Tenant's rights to
assign, sublet or encumber, this Lease shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Whenever a reference is made herein to either
party, such reference shall include the party's successors and assigns.
Docusign Envelope ID: 7F209DCD-EOA1-860C-8284-OEC8CA6E131E
17.18 Landlord's Joinder. Landlord agrees to join with Tenant in the execution of such
applications for permits and licenses from any Governmental Authority as may be reasonably
necessary or appropriate to effectuate the intents and purposes of this Lease, provided that no such
application shall constitute an encumbrance of or with respect to the Premises, and Landlord shall
not incur or become liable for any obligation as a result thereof.
17.19 No Third Parties Benefited. The terms and provisions of this Lease are for the
sole benefit of Landlord and Tenant, and no third party is intended to benefit herefrom.
17.20 Survival. Any terms and provisions of this Lease pertaining to rights, duties or
liabilities extending beyond the expiration or termination of this Lease shall survive the end of the
Term.
17.21 Time of Essence. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor.
17.22 Holidays. If a date for performance by either party falls on a Saturday, Sunday or
on a legal holiday, such date for performance shall instead be the next following business day.
17.23 Waiver of Jury Trial. LANDLORD AND TENANT HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT
BY EITHER OF THEM AGAINST THE OTHER ON ANY MATTERS WHATSOEVER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY
OF THE PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE. The waiver of
trial by jury in the immediately preceding sentence is voluntarily and intentionally made by
Landlord and Tenant.
17.24 Tenant's Quitclaim. Upon the expiration of the Term, or any sooner termination
of this Lease, within thirty (30) days after written request from Landlord, Tenant agrees to execute,
acknowledge, and deliver to Landlord a proper instrument in writing, releasing, and quitclaiming
to Landlord all right, title, and interest of Tenant in and to the Premises and all Improvements
thereon (excluding Tenant's Property).
17.25 Governmental Immunity. The parties hereto understand and agree that Landlord
is relying on, and does not waive or intend to waive by any provision of this Lease, the monetary
limitations, or any other rights, immunities, and protections provided by the Colorado
Governmental Immunity Act, Section 24.10.101 et sew., C.R.S. as from time to time amended, or
any other limitation, right, immunity or protection otherwise available to Landlord, its officers, or
its employees.
[SIGNATURES ON FOLLOWING PAGES]
27
Docusign Envelope ID: 7F209DCD-EOAl-860C-8284-OEC8CA6E13lE
EXECUTED as of the date first set forth above.
(SEAL)
Attest:
City Clerk
LANDLORD:
CITY OF ASPEN, COLORADO
By:
Name: Peter J. Strecker
Title: City Manager
S-1
Docusign Envelope ID: 7F209DCD-EOA1-860C-8284-OEC8CA6E131E
LUMBERYARD APARTMENTS 2, LLC,
a Wisconsin limited liability company
By: GEC Lumberyard Apartments 2, LLC,
a Wisconsin limited liability company,
its managing member
By: Gorman &Company, LLC, a
Wisconsin limited liability company,
its manager
By:
Brian Swanton, President
S-2
Docusign Envelope ID: 7F209DCD-EOA1-860C-8284-OEC8CA6E131E
Legal Description of Premises
Exhibit A-1
Docusign Envelope ID: 7F209DCD-EOA1-860C-8284-OEC8CA6E131E
EXHIBIT B
Rent Commencement Date Letter
RENT COMMENCEMENT DATE LETTER
Date: , 202
Landlord: the City of Aspen, Colorado, a Colorado municipal corporation
Tenant: Lumberyard Apartments 2, LLC, a Wisconsin limited liability company
Lease: Agreement of Lease between Landlord and Tenant dated
"Lease" ).
This is to certify:
1. The Rent Commencement Date for the Premises is
references in the Lease to the Rent Commencement Date will refer to this date.
2. The Term Expiration Date of the Lease is
and all
3. This letter may be executed in several counterparts, and executed and delivered via .pdf,
or other electronically transmittable means, each of which shall be fully effective as an
original and all of which together shall constitute one and the same instrument.
[signatures to follow on separate page]
Exhibit B -1
Docusign Envelope ID: 7F209DCD-EOA1-860C-8284-OEC8CA6E131E
EXECUTED as of the date first set forth above.
(SEAL)
Attest:
City Clerk
CITY OF ASPEN, COLORADO
Bv:
Name: Peter J. Strecker
Title: City Manager
Exhibit B-2
Docusign Envelope ID: 7F209DCD-EOA1-860C-8284-OEC8CA6E131E
TENANT:
LUMBERYARD APARTMENTS 2, LLC,
a Wisconsin limited liability company
By: GEC Lumberyard Apartments 2, LLC,
a Wisconsin limited liability company,
its managing member
By: Gorman &Company, LLC, a
Wisconsin limited liability company,
its manager
By:
Brian Swanton, President
Exhibit B-3
Docusign Envelope ID: 7F209DCD-EOAl-860C-8284-OEC8CA6E13lE
EXHIBIT C
Permitted Encumbrances
Exhibit C-1
Docusign Envelope ID: 7F209DCD-EOA1-860C-8284-OEC8CA6E131E
EXHIBIT D
Depiction of Public Plaza Improvements
Exhibit D-2
Docusign Envelope ID: 7F2091DCD-EOM1 860C-8284-OEC8CME131 E
After recording return to:
•
Form of Memorandum of Lease
MEMORANDUM OF LEASE
This Memorandum of Lease ("Memorandum"), dated to be effective as of
20 , is entered into by City of Aspen, Colorado, a Colorado municipal
corporation ("Landlord"), and Lumberyard Apartments 2, LLC, a Wisconsin limited liability
company ("Tenant").
l . Grant of Lease; Term.
a. Landlord leases to Tenant, and Tenant leases from Landlord, those certain
premises more particularly described on Exhibit "A" attached hereto and
incorporated herein (the "Premises") for an initial term of forty (40) years
after the Rent Commencement Date, subject to the provisions of that certain
Ground Lease ("Lease") between the parties hereto, dated
b. The Lease grants Tenant one options to renew the Lease for an additional
period of twenty (20) years.
c. The Lease grants Tenant certain other rights on the terms set forth therein.
2. Purpose. This Memorandum is prepared for the purpose of recordation only, and it in
no way modifies the provisions of the Lease. In the event of any inconsistency
between the provisions of this Memorandum and the Lease, the provisions of the
Lease shall prevail.
3. Miscellaneous. The parties have executed this Memorandum of Lease as of the date
first set forth above on the dates and at the places indicated in their acknowledgments
below.
Exhibit C-1
Docusign Envelope ID: 7F209DCD-EOA1-860C-8284-OEC8CA6E131E
CITY OF ASPEN, COLORADO
By: _
Name
Peter J. Strecker
Title: City Manager
(SEAL)
Attest:
City Clerk
STATE OF COLORADO )
COUNTY OF PITKIN )
This instrument was acknowledged before me on
by Peter J. Strecker, City Manager of the City of Aspen, Colorado.
(SEAL)
My Commission Expires:
Notary Public
20 ,
Exhibit D-2
Docusign Envelope ID: 7F209DCD-EOM 860&8284-OEC8CME131 E
TENANT:
LUMBERYARD APARTMENTS 25 LLC,
a Wisconsin limited liability company
By: GEC Lumberyard Apartments 2, LLC,
a Wisconsin limited liability company,
its managing member
STATE OF )
COUNTY OF )
This instrument was acknowledged
20 by
of
(SEAL)
My Commission Expires:
By: Gorman &Company, LLC, a
Wisconsin limited liability company,
its manager
By:
Brian Swanton, President
b
efore me on
Notary Public
0
Exhibit D-3
Docusign Envelope ID: 7F209DCD-EOA1-860C-8284-OEC8CA6E131E
61491183v1
Exhibit A
Legal Description
Exhibit D-4
docusign.
Certificate Of Completion
Envelope Id: 7F209DCD-EOA1-860C-8284-OEC8CA6E131E Status: Completed
Subject: Complete with Docusign: Option_Agreement_and_Ground_Lease= _Lumberyard_EXECUTION.pdf
Source Envelope:
Document Pages: 48 Signatures: 2
Certificate Pages: 5 Initials: 0
AutoNav: Enabled
Envelopeld Stamping: Enabled
Time Zone: (UTC-07:00) Mountain Time (US & Canada)
Record Tracking
Status: Original
5/14/2026 10:04:08 AM
Security Appliance Status: Connected
Signer Events
Nicole Henning
nicole.henning@aspen.gov
City Clerk
City of Aspen
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Accepted: 8/18/2020 8:53:55 AM
ID: a9c98d3f.5934-457e.9080-25e144561512
Pete Strecker
pete.strecker@aspen.gov
City Manager
Pete Strecker
Security Level: Email, Account
Authentication
(None)
Electronic Record and Signature Disclosure:
Accepted: 5/15/2026 1:34:52 PM
ID: 33798479-78614482-851 c-aaO69f5ebbb4
In Person Signer Events
Editor Delivery Events
Agent Delivery Events
Intermediary Delivery Events
Certified Delivery Events
Carbon Copy Events
Witness Events
Notary Events
Holder: Nicole Henning
nicole.henning@aspen.gov
Pool: StateLocal
Signature
DocuSlgned by:
�(h l4
9825ADCD26A746D..1
Signature Adoption: Pre -selected Style
Using IP Address: 64.39.229.1
Signed by:
7753E0500940430...
Signature Adoption: Pre -selected Style
Using IP Address: 64.39.229.1
Signature
Status
Status
Status
Status
Status
Signature
Signature
Envelope Originator:
Nicole Henning
427 Rio Grande Place
Aspen, CO 81611
nicole.henning@aspen.gov
IP Address: 64.39.229.1
Location: DocuSign
Timestamp
Sent: 5/14/2026 10:05:53 AM
Viewed: 5/14/2026 10:06:04 AM
Signed: 5/14/2026 10:06:55 AM
Sent: 5/14/2026 10:05:53 AM
Viewed: 5/15/2026 1:34:52 PM
Signed: 5/15/2026 1:35:12 PM
Timestamp
Timestamp
Timestamp
Timestamp
Timestamp
Timestamp
Timestamp
Timestamp
Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 5/14/2026 10:05:53 AM
Envelope Summary Events Status Timestamps
Certified Delivered
Signing Complete
Completed
Security Checked
Security Checked
Security Checked
5/15/2026
1:34:52
PM
5/15/2026
1:35:12
PM
5/15/2026
1:35:12
PM
Payment Events Status Timestamps
Electronic Record and Signature Disclosure
Electronic Record and Signature Disclosure created on: 5/27/2020 1:57:50 PM
Parties agreed to: Nicole Henning, Pete Strecker
ELECTRONIC RECORD AND SIGNATURE DISCLOSURE
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Unless you tell us otherwise in accordance with the procedures described herein, we will provide
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