DEVELOPMENT SERVICES AGREEMENT
AGREEMENT made as of May 1, 1998 by and between PECAN MANOR
APARTMENTS PARTNERSHIP, a Louisiana Partnership In Commendam (the
Partnership) and X. Xxxxxx Xxxxxxx, Jr. (the Developer).
RECITALS
1. The Partnership was formed to acquire, construct,
develop, improve, maintain, own, operate, lease, dispose of and
otherwise deal with an apartment complex located in Natchitoches,
Louisiana (the Apartment Complex).
2. The Apartment Complex, following the completion of
construction, is expected to constitute a qualified low income
housing project (as defined in Section 42(g)(1) of the Code).
3. The Developer has provided and will continue to provide
certain services with respect to the Apartment Complex during the
development and construction thereof.
4. In consideration for such services, the Partnership has
agreed to pay to the Developer a fee computed 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 are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Defined Terms
Capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings specified below:
Completion Date shall mean the date upon which (i) the
Apartment Complex shall have been completed as evidenced by the
issuance by the inspecting architect and by each governmental
agency having jurisdiction, of certificates of substantial
completion or occupancy (or local equivalents) with respect to
all apartment units in the Apartment Complex, and (ii) each such
apartment unit shall have been placed in service after
rehabilitation thereof.
Permanent Mortgage Commencement shall mean the first date
on which all of the following shall have occurred with respect to
the Apartment Complex: (a) Completion Date; (b) the principal
amount and maturity date of the permanent mortgage loan shall
have been finally determined; (c) amortization of the permanent
mortgage loan shall have commenced, and (d) repayment in full of
the construction financing and discharge of the construction
mortgage and all other liens related thereto.
State means Louisiana.
Section 2. Development Services
(a) The Developer shall oversee the development and
construction 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 partners of the Partnership (the
General Partners) on behalf of the Partnership.
(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 the following subparagraphs of this Section 2(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
Partnership 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 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 shall have on
approved by the Partnership unless the terms, conditions, and
parties comply with guidelines issued by the General Partners
concerning such agreements;
(ii) Assist the Partnership in dealing with neighborhood
groups, local organizations, abutters and other parties
interested in the development of the Apartment Complex;
(iii) Assist the Partnership in identifying sources of
construction financing for the Apartment Complex and negotiate
the terms of such financing with lenders;
(iv) 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 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 procedures for and selection of subcontractors and
suppliers;
(E) the review and submission to the Partnership 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
construction and development of the Apartment Complex as may be
reasonably requested from time to time by the Partnership;
(J) keeping the Partnership 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
Partnership;
(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 fact for, the Partnership, any notices of
completion required or permitted to be filed upon the completion
of any improvements and taking such actions as may be required to
obtain any certificates of occupancy or equivalent documents
required to permit the occupancy of dwelling units and other
space in the Apartment Complex.
(v) Assist the Partnership in obtaining access to utilities
and required zoning approvals;
(vi) Inspect the progress of the course of 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
and construction of the Apartment Complex, and in addition to
verify that the same is being carried out substantially in
accordance with the plans and specifications approved by the
Partnership or, in the event that the same is not being so
carried out, to promptly so notify the Partnership;
(vii) If requested to do so by the Partnership, perform on
behalf of the Partnership all obligations of the Partnership with
respect to the design and construction of the Apartment Complex
contained in any loan agreement or security agreement entered
into in connection with any 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 Partnership,
prepare and distribute to the Partnership 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 Partnership, and financial accounting reports,
including monthly progress reports on the quality, progress and
cost of 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;
(ix) Assist the Partnership in obtaining and maintaining
insurance coverage for the Apartment Complex, the Partnership and
its employees during the development phase of the Apartment
Complex in accordance with an insurance schedule approved by the
Partnership, 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 approvals by the Partnership;
(x) During the construction and development period of the
Apartment Complex, comply with all applicable present and future
laws, ordinances, orders, rules, regulations and requirements
(hereinafter called laws) of all Federal, state and municipal
government 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 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
Partners 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 Partnership;
(xiv) At the direction of the Partnership, implement any
decisions of the Partnership made in connection with the design,
development and construction 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 Partnership and are within the general scope of
the services described herein.
Section 3. 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 refrigerators and ranges, all in accordance with the
drawings and specifications forming a part of the construction
contract. The Developer shall be obligated to pay any costs or
expenses, incurred by the Partnership to fund any Apartment
Complex construction, development or other costs and expenses in
excess of (i) the funds available to the Partnership for the
payment thereof through the later to occur Completion
Date/Permanent Mortgage Commencement or the date of the admission
of an investment limited partner to the Partnership and (ii) the
proceeds of such investment limited partner's capital
contribution to the Partnership (together, the Designated
Proceeds). Any funds provided by the Developer pursuant to this
Section 3 shall not be reimbursed by the Partnership, nor create
any liability on behalf of the Partnership to the Developer,
except that the Developer may be reimbursed for such items from
Designated Proceeds. No such advance of funds by the Developer
shall change the interest of any partner or be credited to any
partner's capital account or capital contribution for any
purpose. Excess development costs shall be borne solely by the
Developer in its capacity as the developer of the Apartment
Complex.
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 respects to any of the following matters
unless and until the same has been approved by the General
Partners:
(a) Approval of all construction and architectural
contracts and all architectural plans, specifications and
drawings prior to the construction of any improvements
contemplated thereby, except for such matters as may be expressly
delegated in writing to the Developer by the General Partners;
(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 Partners, or in
the cost thereof, or any 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 Partners; or
(c) Expending an amount greater than the amount which the
Developer in good faith believes 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
approvals by the General Partners, including, but not limited to,
records relating to the costs for which construction advances
have been requested and/or received. The Developer shall keep
vouchers, statements, receipted bills and invoices and all other
records, in the form approved by the General Partners, covering
all collections, if any, disbursements and other data in
connection with the Apartment Complex prior to final completion
of construction. All accounts and records relating to the
Apartment Complex, including all correspondence, shall be
surrendered to the Partnership upon demand without charge
therefor.
(b) 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 Partners, and shall be
available for and subject to audit, inspection and copying by the
management agent for the Apartment Complex, the General Partners
or any representative or auditor therefor or supervisory or
regulatory authority, at the times and in the manner set forth in
the limited partnership agreement of the Partnership.
Section 6. Compensation
For its services in connection with the development of the
Apartment Complex and the supervision of the construction of the
Apartment Complex, the Developer and Community Support Programs,
Inc. shall be entitled to receive, as and when the same is
available from Designated Proceeds or any other source, but in no
event later than December 31, 2000, a fee (the Development Fee)
equal to $160,000, $72,000 of which has accrued previously for
services rendered through May 1, 1998, prior to the date of this
Agreement. The Development Fee will be or has been earned by
Developer as follows:
(i) Fifteen percent (15%) at such time as the Partnership
shall have obtained satisfactory environmental, title and survey
reports with respect to the Apartment Complex, obtained all
necessary easements for off-site utilities relating to sanitary
sewers and storm water run-off and obtained (or confirmed) all
required zoning approvals to permit development of the Apartment
Complex at the Apartment Complex site;
(ii) Ten percent (10%) upon finalization of architectural
and engineering service contracts and substantial completion of
architectural and engineering drawings for the Apartment Complex
and required off-site improvements;
(iii) Ten percent (10%) upon finalization of construction
management and general contractor agreements for the construction
of the Apartment Complex;
(iv) Ten percent (10%) upon obtaining a construction loan
commitment and other commitments as required for the construction
of the Apartment Complex;
(v) Forty percent upon the Apartment Complex being 50%
complete as evidenced by a certificate of the Apartment Complex
architect to such effect;
(vi) Fifteen percent (15%) upon the issuance of
certificates of occupancy for all units in the Apartment Complex
(or local equivalent, or a certificate of substantial completion
from the Apartment Complex architect if certificates of occupancy
are not issued by the local governmental authorities.
The parties confirm that the Development Fee was earned as
of May 1, 1998 to the extent of $72,000 and upon the Developer
having performed the following services for the Partnership
(among other valuable services heretofore provided by the
Developer to the Partnership):
(i) Negotiation with the former land owner with respect to
the contemplated development plans of the Partnership for the
Apartment Complex. Confirmation and/or negotiation of zoning,
utility availability and off-site easements as required for
development of the Apartment Complex;
(ii) Negotiation of engineering and architectural services
agreements required for the development of the Apartment Complex;
(iii) Overseeing the work of the architect and engineer in
the preparation of design drawings for the development of the
Apartment Complex and coordinating the same with the Partnership
desired budget levels therefor;
(iv) Negotiating, structuring and obtaining a construction
loan commitment in an amount as required to enable the Apartment
Complex to be developed; and
(v) Working with and finalizing agreement with various
professionals in the acquisition, design, financing and
implementation of the Apartment Complex.
The Development Fee shall be paid as nearly as practicable
to the date earned and in no event shall any portion of the
Development Fee be paid later than December 31, 1999.
Section 8. Applicable Law
This Agreement, and the application or interpretation
hereof, shall be governed by and construed in accordance with the
laws of the State.
Section 9. Binding Agreement
This Agreement shall be binding on the parties hereto, their
heirs, executors, personal representatives, successors and
assigns and supersedes any prior agreement for the development of
the Apartment Complex between the parties hereto.
Section 10. 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 11. 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 12. 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 parities have caused this Agreement
to be duly executed as of the date first written above.
PARTNERSHIP: PECAN MANOR APARTMENTS
PARTNERSHIP, A LOUISIANA
PARTNERSHIP IN COMMENDAM
By: X. Xxxxxx Xxxxxxx, Jr.
Its: Managing General Partner
/s/ X. Xxxxxx Xxxxxxx, Jr.
DEVELOPER: X. XXXXXX XXXXXXX, JR.
