Real Estate Services Group
Summary of key terms of housing ground lease
The Ground Lease will include the following terms:
- Term: The term of the ground lease will not exceed 40 years.
- Rent: In general the university will seek a ground lease rent payment based on fair market value of the highest and best use of the property, adjusted for terms and conditions of the ground lease, including use restrictions, limits on rent levels and costs of community facilities in excess of those normally found in similar projects.
- Residential Rent Levels: The initial residential rent levels will be set at rates provided by the university. In subsequent years, "permitted rents" may be increased according to a pre-negotiated formula based on CPI.
- Condition of Site: The site will be leased "as is" and subject to all applicable local, state and federal government regulations.
- Costs of Development and Operations: The lessee shall be responsible, at its own expense, for all design and soft costs, permitting costs, on- and off-site improvements, project improvements, operating costs, minor and major repairs and maintenance, government fees, assessments and taxes, management costs, etc.
- Financing: For purposes of securing project financing, the lessee may pledge the rights and privileges granted in the ground lease. The university, however, will not pledge its underlying fee simple interest in the land as security for the development's financing. The university shall have sole and absolute discretion to approve all financing and refinancing.
- Transfer & Assignment: The university shall have the right to approve any sale, assignment or sublease of lessee's interest in the project.
- Occupancy: the Referral Process outlined in Attachment A shall govern Project occupancy.
- Property Management: Property to be maintained in first class condition and otherwise in good, clean, attractive, sanitary and safe order, condition, habitability and repair. Fee for Project property manager to be capped as a percent of adjusted gross income. Lease to include Property management standards; if standards not met, Property Manager must be replaced with new manager subject to university approval.
- Property or Possessory Interest Taxes: The lessee's interest in the project may be subject to property or possessory interest taxes by _______________ County. Lessee shall diligently pursue any appropriate tax exemptions based on the use of the project. Benefits of any such exemption must flow to the Priority Residents or the university.
- Capital Reserve: The developer shall deposit a portion of revenues into a capital reserve account for major maintenance and repair; amount to be negotiated. Consent of the university will be required before the withdrawal of funds from the account. Upon termination of the lease, remaining balance in the capital reserve shall revert to the university.
- End of Term: At the end of the lease term, the university may assume ownership of all improvements on the site, or alternatively require the developer to demolish the improvements and restore the site to its original condition.
- Liquidated Damages: Upon project approval, a date of substantial completion of the housing portion of the project will be determined. Any delay in occupancy beyond the completion date will obligate the developer to pay liquidated damages, which will be assessed on a per unit basis to cover the cost of comparable temporary housing.
- Financial Covenants: The developer will be subject to financial covenants including a maximum amount of debt allowed on the project and a minimum net worth covenant (which will be indexed by CPI).
- Future Campus Development: In connection with this project, the university will not condition or limit in any way its ability to independently determine the need for, plan for, develop, construct, purchase, renovate, operate or manage student, faculty or staff housing in any number of units, in any location or at any time, for the campus community.
- Indemnification & Hold Harmless: The developer will defend, indemnify, and hold harmless the regents, its officers, employees, and agents from and against any and all liability, claims, liens, judgments, expenses, and costs which result from, or in any way arise out of, or in connection with developer's ownership or operation of the project improvements.
- Equal Opportunity: During the term the developer shall not discriminate against any person employed or seeking employment in the project because of race, color, marital status, religion, sex, sexual orientation, handicap, or national origin.
- Other Terms: The ground lease shall contain such other conditions as are customary in transactions of this type.