AMENDED AND RESTATED
DEVELOPMENT AGREEMENT
AGREEMENT made as of March 11, 1998 by and between
NEIGHBORHOOD RESTORATIONS LIMITED PARTNERSHIP, VII, a
Pennsylvania limited partnership (the "Partnership") and WPB II,
L.P., a Pennsylvania limited partnership (the "Developer") in
its capacity as the Developer of the Apartment Complex and not
as a General Partner of the Partnership.
Recitals
1. The Partnership was formed to acquire,
construct, develop, improve, maintain, own, operate, lease,
dispose of and otherwise deal with an apartment project located
in Philadelphia, Pennsylvania, known as the Neighborhood
Restorations VII Apartments (the "Apartment Complex").
2. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the First Amended
and
Restated Agreement of Limited Partnership of the Partnership of
even date herewith (the "Partnership Agreement").
3. The Apartment Complex, following the completion
of construction, is expected to constitute a "qualified lowincome
housing project" (as defined in Section 42(g)(1) of the Code).
4. The Developer has already provided and will
continue to provide certain services with respect to the
Apartment Complex
during the acquisition, development, construction and initial
operating phases thereof.
5. In consideration for such services, past and
future, the Partnership has agreed to pay to the Developer
certain fees computed and paid in the manner stated herein.
NOW, THEREFORE, in consideration of the mutual covenants
and conditions set forth herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
Section 1. Defined Terms.
"Development Advances" has the meaning set forth in Section
2.
"Development Costs" means any and all costs and expenses
necessary to (i) cause the construction of the Apartment Complex to
be completed, in a good and workmanlike manner, free and clear of
all mechanics', materialmen's or similar liens, in accordance with
the Plans and Specifications, (ii) equip the Apartment Complex with
all necessary and appropriate fixtures, equipment and articles of
personal property (including, without limitation, refrigerators and
ranges), (iii) obtain all required certificates of occupancy for the
apartment units and other space in the Apartment Complex, (iv) pay
the Development Fee, (v) finance the construction of the Apartment
Complex and achieve Rental Achievement in accordance with the
provisions of the Project Documents, (vi) discharge all Partnership
liabilities and obligations arising out of any casualty generating
insurance proceeds for the Partnership, (vii) fund any Partnership
reserves required hereunder or under any of the Project Documents,
(viii) repay and discharge the Construction Loan, and (ix) pay any
other costs or expenses necessary to achieve the Completion Date and
Rental Achievement.
"Specified Proceeds" means (i) the proceeds of all Mortgage
Loans, (ii) the net rental income, if any, generated by the
Apartment Complex prior to Rental Achievement which is permitted by
the Lenders to be applied to the payment of Development Costs, (iii)
the Capital Contributions of the Investment Limited Partner, the
Class A Limited Partner and the Special Limited Partner, (iv) the
Capital Contributions of the General Partner in the amounts set
forth in Schedule A of the Partnership Agreement as of the Admission
Date and (v) any insurance proceeds arising out of casualties
occurring prior to Rental Achievement.
Section 2. Obligation to Complete Construction and to
Pay Development Costs.
The Developer shall complete the construction of the
Apartment Complex or cause the same to be completed in a good
and workmanlike manner, free and clear of all mechanics',
materialmen's or similar liens and shall equip the Apartment
Complex or cause the same to be equipped with all necessary and
appropriate fixtures, equipment and articles of personal
property, including without limitation, refrigerators and
ranges, provided for in the Project Documents and the Plans and
Specifications. The Developer also shall cause the achievement
of Rental Achievement in accordance with the terms of the
Partnership Agreement. If the Specified Proceeds as available
from time to time are insufficient to pay all Development Costs
and achieve Rental Achievement, the Developer shall advance or
cause to be advanced to the Partnership from time to time as
needed all such funds as are required to pay such deficiencies.
Any such advances ("Development Advances") shall, to the extent
permitted under the Project Documents and any applicable
Regulations or requirements of any Lender or Agency (or
otherwise with any Requisite Approvals), be reimbursed at or
prior to Rental Achievement only out of Specified Proceeds
available from time to time after payment of all Development
Costs. Any balance of the amount of each Development Advance
not reimbursed through Rental Achievement shall not be
reimbursable, shall not be credited to the Capital Account of
any Partner, or otherwise change the interest of any Person in
the Partnership, but shall be borne by the Developer under the
terms of this Agreement.
Section 3. Development Services.
(a) The Developer has heretofore performed certain
services
relating to the development of the Apartment Complex and shall
continue to oversee the construction and development of the
Apartment Complex, and shall perform the services and carry out the
responsibilities with respect to the Apartment Complex as are set
forth herein, and such additional duties and responsibilities as
are reasonably within the general scope of such services and
responsibilities and are designated from time to time by the
General Partner.
(b) The Developer's services shall be performed in the
name
and on behalf of the Partnership and shall consist of the duties
set forth in subparagraphs (i)-(xv) below of this Section 3(b)
and as provided elsewhere in this Agreement; provided, however,
that if the performance of any duty of the Developer set forth
in this Agreement is beyond the reasonable control of the
Developer, the Developer shall nonetheless be obligated to (i)
use its best efforts to perform such duty and (ii) promptly
notify the General Partner that the performance of such duty is
beyond its reasonable control. The Developer has performed or
shall perform the following:
(i) Negotiate and cause to be executed in
the name and on behalf of the Partnership any agreements
for architectural, engineering, testing or
consulting services for the Apartment Complex, and
any agreements for the construction of any
improvements or tenant improvements to be
constructed or installed by the Partnership or the
furnishing of any supplies, materials, machinery
or equipment therefor, or any amendments thereof,
provided that no agreement shall be executed nor
binding commitment made until the terms and
conditions thereof and the party with whom the
agreement is to be made have been approved by the
General Partner unless the terms, conditions, and
parties comply with guidelines issued by the
General Partner concerning such agreements;
(ii) Advise the Partnership as to the
steps necessary to qualify the Apartment Complex during the
compliance period defined in Section 42(i)(1) of the
Code as a "qualified low-income housing project" under
Section 42(g)(1) of the Code;
(iii) Assist the Partnership in preparing
and
processing an application for a low-income housing tax
credit allocation for the Apartment Complex under
Section 42 of the Code;
(iv) Advise the Partnership as to federal,
state
and local subsidy programs available for the Apartment
Complex;
(v) Establish and implement appropriate
administrative and financial controls for the design
and construction of the Apartment Complex, including
but not limited to:
(A) coordination and administration of
the Apartment Complex architect, the general contractor,
and other contractors, professionals and consultants employed in
connection with the design or construction of the Apartment
Complex;
(B) administration of any construction
contracts on behalf of the Partnership;
(C) participation in conferences and the
rendering of such advice and assistance as will aid in
developing economical, efficient and desirable design
and construction procedures;
(D) the rendering of advice and
recommendations as to the selection of subcontractors and suppliers;
(E) the review and submission to the General
Partner for approval of all requests for payments under
any architectural agreement, general contractor's agreement, or any
loan agreements with any lending institutions providing funds for the
benefit of the Partnership for the design or construction of any
improvements;
(F) the submission of any suggestions or
requests for changes which could in any reasonable manner
improve the design, efficiency or cost of the Apartment
Complex;
(G) applying for and maintaining in full
force and effect any and all governmental permits and
approvals required for the lawful construction of the
Apartment Complex;
(H) compliance with all terms and conditions
applicable to the Partnership or the Apartment Complex
contained in any governmental permit or approval required or
obtained for the lawful construction of the Apartment Complex, or in
any insurance policy affecting or covering the Apartment Complex, or
in any surety bond obtained in connection with the Apartment Complex;
(I) furnishing such consultation and
advice relating to the Apartment Complex as may be reasonably
requested from time to time by the General Partner;
(J) keeping the General Partner fully informed
on a regular basis of the progress of the design and
construction of the Apartment Complex, including the preparation
of such reports as are provided for herein or as may reasonably be
requested by the General Partner and which are of a nature
generally requested or expected of construction managers or similar
owner's representatives on similar projects;
(K) giving or making the
Partnership's instructions, requirements, approvals and payments
provided for in the agreements with the Apartment Complex
architect, general contractor, and other contractors, professionals
and consultants retained for the Apartment Complex; and
(L) at the Partnership's expense, filing
on behalf of and as the attorney-in-fact for the
Partnership any notices of completion required or permitted to
be filed upon the completion of any improvement(s) and taking such
actions as may be required to obtain any certificates of occupancy
or equivalent documents required to permit the occupancy of the
Apartment Complex.
(vi) Inspect the progress of the course of
the
construction of the Apartment Complex, including verification
of the materials and labor being furnished
to and on such construction so as to be fully competent to approve
or disapprove requests for payment made by the Apartment Complex
architect and the general contractor, or by any other parties
with respect to the design or construction of the Apartment
Complex, and in addition to verify that the construction is being
carried out substantially in accordance with the Plans and
Specifications approved by the General Partner or, in the event
that the construction is not being so carried out, to promptly
notify the General Partner;
(vii) If requested to do so by the General
Partner, perform on behalf of the Partnership all obligations of
the Partnership with respect to the design or
construction of the Apartment Complex contained in any loan
agreement or security agreement entered into in connection
with any construction or long-term financing for the
Apartment Complex, or in any lease or rental agreement
relating to space in the Apartment Complex, or in any
agreement entered into with any governmental body or agency
relating to the terms and conditions of such construction,
provided that copies of such agreements have been provided by
the Partnership to the Developer or the Partnership has
otherwise notified the Developer in writing of such
obligations;
(viii) To the extent requested to do so by
the General Partner, prepare and distribute to the General
Partner a critical path schedule, and periodic updates
thereto as necessary to reflect any material changes,
but in any event not less frequently than quarterly,
other design or construction cost estimates as
required by the General Partner, and financial accounting
reports, including monthly progress reports on the
quality, progress and cost of the construction and
recommendations as to the drawing of funds from any
loans arranged by the Partnership to cover the cost
of design and construction of the Apartment Complex,
or as to the providing of additional capital
contributions should such loan funds for any reason
be unavailable or inadequate;
(ix) At the Partnership's expense,
obtain and maintain insurance coverage for the
Apartment Complex,
the Partnership, and the Developer and its employees,
at all times until final completion of the
construction of the Apartment Complex, in accordance
with an insurance schedule approved by the General
Partner, which insurance shall include general public
liability insurance covering claims for personal
injury, including but not limited to bodily injury,
or property damage, occurring in or upon the Property
or the streets, passageways, curbs and vaults
adjoining the Property. Such insurance shall be in a
liability amount approved by the General Partner;
(x) Comply with all applicable
present and future laws, ordinances, orders, rules,
regulations and requirements (hereinafter in this subparagraph (x)
called "laws") of all federal, state and municipal
governments, courts, departments, commissions, boards
and offices, any national or local Board of Fire
Underwriters or Insurance Services Offices having
jurisdiction in the county in which the Apartment
Complex is located or any other body exercising
functions similar to those of any of the foregoing,
or any insurance carriers providing any insurance
coverage for the Partnership or the Apartment
Complex, which may be applicable to the Apartment
Complex or any part thereof. Any such compliance undertaken by
the Developer on behalf of and in the name of the
Partnership, in accordance with the provisions of
this Agreement, shall be at the Partnership's
expense. The Developer shall likewise ensure that
all agreements between the Partnership and
independent contractors performing work in connection
with the Apartment Complex shall include the
agreement of said independent contractors to comply
with all such applicable laws;
(xi) Assemble and retain all contracts,
agreements and other records and data as may be necessary to
carry out the Developer's functions hereunder. Without
limiting the foregoing, the Developer will prepare, accumulate
and furnish to the General Partner and the appropriate
governmental authorities, as necessary, data and information
sufficient to identify the market value of improvements in
place as of each real property tax lien date, and will make
application for appropriate exclusions from the capital costs
of the Apartment Complex for purposes of real property ad
valorem taxes;
(xii) Coordinate and administer the design
and construction of all interior tenant improvements to the
extent required under any leases or other occupancy agreements
to be constructed or furnished by the Partnership with respect
to the initial leasing of space in the Apartment Complex,
whether involving
building standard or non-building standard work;
(xiii) Use its best efforts to accomplish the
timely completion of the Apartment Complex in
accordance with the approved Plans and Specifications and the
time schedules for such completion approved by the General
Partner;
(xiv) At the direction of the General
Partner, implement any decisions of the General Partner made
in connection with the design, construction and
development of the Apartment Complex or any policies
and procedures relating thereto, exclusive of leasing
activities; and
(xv) Perform and administer any and
all other services and responsibilities of the Developer
which are set forth in any other provisions of this
Agreement, or which are requested to be performed by
the General Partner and are within the general scope
of the services described herein.
Section 4. Limitations and Restrictions.
Notwithstanding any provisions of this Agreement, the
Developer shall not take any action, expend any sum, make any
decision, give any consent, approval or authorization, or
incur any obligation with respect to any of the following
matters unless and until the same has been approved by the
General Partner:
(a) Approval of all construction and architectural
contracts and all architectural plans, specifications and
drawings prior to the construction and/or alteration of any
improvements contemplated thereby, except for such matters as may
be expressly delegated in writing to the Developer by the General
Partner;
(b) Any proposed change in the work of the
construction of the Apartment Complex, or in the Plans and Specifications
therefor as previously approved by the General Partner, or in the cost
thereof, or any other change which would affect the design, cost,
value or quality of the Apartment Complex, except for such matters
as may be expressly delegated in writing to the Developer by the
General Partner;
(c) Making any expenditure or incurring any obligation
by or on behalf of the Partnership or the Apartment Complex involving a
sum in excess of $25,000 or involving a sum of more than $5,000
where the same relates to a component part of any work, the combined
cost of which exceeds $25,000, except for expenditures made and
obligations incurred pursuant to and specifically set forth in a
construction budget approved by the General Partner
(the "Construction Budget") or for such matters as may be
otherwise expressly delegated to the Developer by the General
Partner;
(d) Making any expenditure or incurring any
obligation which, when added to any other expenditure, exceeds the
Construction Budget or any line item specified in the
Construction Budget, except for such matters as may be
otherwise expressly delegated in writing to the Developer by
the General Partner; or
(e) Expending more than what the Developer in good
faith believes to be the fair and reasonable market value at the time and
place of contracting for any goods purchased or leased or services
engaged on behalf of the Partnership or otherwise in connection with
the Apartment Complex.
Section 5. Accounts and Records.
(a) The Developer on behalf of the Partnership, shall
keep such books of account and other records as may be required and
approved by the General Partner, including, but not limited to,
records relating to the costs of construction and construction
advances. The Developer shall keep vouchers, statements,
receipted bills and invoices and all other records, in the form
approved by the General Partner, covering all collections, if any,
disbursements and other data in connection with the Apartment
Complex prior to the Completion Date. All accounts and records
relating to the Apartment Complex, including all correspondence,
shall be surrendered to the Partnership, upon demand without charge
therefor.
(b) The Developer shall cooperate with the Management
Agent to facilitate the timely preparation by the Management Agent
of such reports and financial statements as the Management Agent is
required to furnish pursuant to the Management Agreement.
(c) All books and records prepared or maintained by
the Developer shall be kept and maintained at all times at the
place or places approved by the General Partner, and shall be
available for and subject to audit, inspection and copying by the
Management Agent, the General Partner or any representative or
auditor thereof or supervisory or regulatory authority, at the
times and in the manner set forth in the Partnership Agreement.
Section 6. Development Fees.
For its services in connection with the development of the
Apartment Complex and the supervision of the construction of the
Apartment Complex, and as reimbursement for Development Advances,
the Developer shall receive a fee (the "Development Fee") in the
amount of $575,000. $143,750 of such fee was earned by the
Developer as of December 31, 1996 and was accrued as of
December 31, 1996. The remainder of the Development Fee shall be
deemed to have been earned as and when the Developer's services
are rendered and such Development Fee shall be paid out of
Specified Proceeds. If Specified Proceeds are insufficient to pay
the Development Fee, such unpaid amounts shall be paid out of Cash
Flow as set forth in Section 10.2(a) of the Partnership Agreement.
In any event, the General Partner shall cause the Partnership to
pay such Development Fee only after the payment of all Development
Costs (other than the Development Fee). If the Development Fee
has not been fully paid by the tenth anniversary of the Completion
Date, the General Partner shall make a Capital Contribution to the
Partnership in an amount sufficient to enable the Partnership to
pay any unpaid portion of the Development Fee.
Section 7. Applicable Law.
This Agreement, and the application or interpretation
hereof, shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
Section 8. Binding Agreement.
This Agreement shall be binding on the parties hereto,
their heirs, executors, personal representatives, successors and
assigns. As long as the Developer is not in default under this
Agreement, the obligation of the Partnership to pay the Development
Fee shall not be affected by any change in the identity of the
General Partner of the Partnership.
Section 9. Headings.
All section headings in this Agreement are for convenience
of reference only and are not intended to qualify the meaning of
any section.
Section 10. Terminology.
All personal pronouns used in this Agreement, whether used
in the masculine, feminine or neuter gender, shall include all
other genders, the singular shall include the plural, and vice
versa as the context may require.
Section 11. Benefit of Agreement.
The obligations and undertakings of the Developer set forth
in this Agreement are made for the benefit of the Partnership and
its Partners and shall not inure to the benefit of any creditor of
the Partnership other than a Partner, notwithstanding any pledge or
assignment by the Partnership of this Agreement or any rights
hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
PARTNERSHIP:
NEIGHBORHOOD RESTORATIONS LIMITED
PARTNERSHIP, VII, a Pennsylvania
limited partnership, by its general
partner, WPB II, L.P., a Pennsylvania
limited partnership, by its general
partner, WPB II, Inc., a Pennsylvania
corporation
By:/s/
DEVELOPER:
WPB II, L.P., a Pennsylvania limited
partnership
By:/s/
