Atlantic Yards Development Agreement Section 8

8/14/2019 Atlantic Yards Development Agreement Section 8

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have commenceduntil the later of the date(i) the Arena CompletionGuarantyhas beenexecutedand delivered o the LDC; (ii) the tenant under the Arena DevelopmentLeaseshall havepaid theCompletion Amount (as defined in the Arena Development Lease) required to be paid inaccordancewith Section 3.3(c) thereof; (iii) the proceeds of the Bonds are available fordisbursementn connectionwith the performanceof the Arena Work; and(iv) commencement fthe excavationof the foundations or the Arena has occurredon the Arena Parcel.

8.4 Arena Development and Construction. Prior to the Outside ArenaCommencementDate, BALLC shall, or it shall cause Events Center, to have commencedconstruction of the Arena pursuant to and in accordance with the terms of the ArenaDevelopmentLease. The Arena shall be the first or secondbuilding in the Project for whichconstruction hall be commenced.Onceconstructions commenced, ALLC shallcauseEventsCenter to continue the Arena Work with diligence. BALLC shall cause the SubstantialCompletion (for this purposeonly, as defined in the Arena DevelopmentLease),of the Arenatooccur on or prior to the OutsideArena SubstantialCompletionDate. BALLC acknowledges ndunderstands he meaningand effect of the Arena OpeningConditions,and herebyagreeso causeEvents Center to acknowledgethe Arena Opening Conditions in accordancewith the ArenaDevelopment ease.8.5 Platform Construction and Commencement. AYDC shall CommenceConstruction (or cause he Commencementof Construction)of the Platform no later than thefifteenth (15th)anniversaryof the ProjectEffective Date, subject o UnavoidableDelays. For thepurposes of this Section 8.5 only, "Commence Construction" and "CommencementofConstruction"shall mean (i) the delivery of the completion guarantyrequiredby the applicableDevelopmentLease(accompaniedby such opinions of counselas ESDC or the applicablelandlord shall then reasonably equire) and (ii) the executionand delivery by AYDC or InterimDeveloper, of true, correct, complete and unredactedcopies of all agreements,documents,

instruments,easements,memorandumsof understanding,side letters,plans, drawingsor otherdocuments delivered or entered into between AYDC, Interim Developer or any of theirrespectiveAffiliates on the one hand and the MTA, LIRR, TransitAuthority or their respectiveAffiliates on the other hand with respect o the developmentor constniction of the Platform orany portion thereof that is sufficient in size and scope o support he constructionof a buildingthereon n accordance ith a Development ease.8.6 Phase Construction. AYDC and Interim Developershall SubstantiallyComplete(or shall cause o be SubstantiallyCompleted) mprovements consistingprimarily ofcommercial,office, retail, residentialand/orhotel uses)on the Phase Propertyencompassingminimum of One Million Five HundredThousand 1,500,000)grosssquare eet (excluding he

Arena but including the Improvements to be completed on Site 5), the health care clinicdescribed n the MGPP and the Affordable Housing Units satisfying the Phase AffordableHousing Commitment (collectively with the Improvementsdescribed n (a) through (f1 below,the "Phase I Improvements") within twelve (12) yearsfrom the ProjectEffective Date (the"Outside Phase I Substantial Completion Date"), subject o UnavoidableDelay and withrespect o the Phase AffordableHousingCommitment,subjecto Sections8.6(-d) nd8.8 below.Any residential rental buildings constructed on the Arena Block as part of the Phase IImprovementswill contain ow-, moderate-,and/or middle-incomeunits and/ormarketrateunits,and/or any combination thereof; provided, however, that ESDC agrees that the particular

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distribution of income bands and which income bandsare includedmay vary from time to timeor building to building and shall be governedby the requirementsof the applicable affordablehousingprogram.(a) Subway Entrance. BALLC shall construct or cause to beconstructed a new subway entrance the "Subway Entrance") to the Atlantic Terminal on theArena Block in accordancewith the terms of the Arena Development Lease and TransitImprovement Agreement. The Subway Entrance shall comply in all respects with therequirements set forth in the Transit Improvement Agreement, the DOB Agreement andapplicable Requirements, including providing sufficient capacity so as to adequatelyaccommodate ans enteringand leaving an event at the Arena. BALLC acknowledges hat theSubstantialCompletion(as defined n the Arena DevelopmentLease)of the Subway Entrance san Arena OpeningCondition.(b) Carlton Avenue Bridee. AYDC shall construct or cause to beconstructed a replacementCarlton Avenue Bridge in accordancewith the terms of the CarltonAvenue Bridge ConstructionAgreementdatedDecember17,2007between he City and AtlanticRail Yards,LLC, a Delaware imited liability companyand Affrliate of AYDC. The CarltonAvenue Bridge shall comply in all respects with the Carlton Avenue Bridge ConstructionAgreement, the DOB Agreementand applicableRequirements. BALLC acknowledges, ndshall cause Events Center to acknowledge, hat the Substantial Completion (as defined in theArena Development ease)of theCarltonAvenueBridge s an ArenaOpeningCondition.(c) Constructionof the UpgradedYard, AYDC or its Affiliates shallcommence and completeconstructionof a new rail yard (the "Upgraded Yard") in accordancewith the terms of the Yard Relocation and Construction Agreement. If construction of theUpgraded Yard is not commenced or completed in accordancewith the terms of the Yard

Relocation and ConstructionAgreement, hen in addition to the consequences rovided in suchYard Relocation and ConstructionAgreement and Section 3.1(b) above, the landlord under theBlock 1121 nterim Leaseshall have he rights and remediesgranted o it under he Block 1121Interim Leaseon accountof such ailure.(d) Timing of Phase Buildines.

(i) Interim Developer shall be required to CommenceConstruction(or cause he Comrnencement f Construction) of Project Buildings on theArena Block in accordancewith the termsof this Section8.6(dXi).(D Commencementof Construction of the first Project

Building on the ArenaBlock (the "First Required Building") shall occur within three 3)yearsfollowing the Project Effective Date, except n the eventof a City Excuse, n whichevent Commencementof Constructionof the First Required Building shall occur withinfour (a) years ollowing the Project Effective.Date(the date by which the frrst building isrequired to be commenced,either by the 3'o or 4manniversary of the Project EffectiveDate, the "First Commencement Deadline"). The First RequiredBuilding shall berequired (the "First Required Building Affordability Requirement") to containAffordable Housing Units with the percentagesof Affordable Housing Units at the

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income levels specified n one of the six scenariosof Interim Developer'schoosingdescribedon s!l!|!-! unless nterim Developershall have applied for CombinationHousingSubsidiesn accordance ith the Affordable HousingApplication Requirementsand beendenied suchCombinationHousingSubsidies suchdenial he "City Excuse").In the event Commencementof Constructionof the First Required Building has notoccurred by the Fi rst CommencementDeadline (subject o Unavoidable Delays andSections8.6(dXiXW), (V) and (VI) hereof), nterim Developershall pay the LiquidatedDamagesdue to ESDC on account of the failure to CommenceConstruction of the FirstRequiredBuilding (the "3-4 Year Liquidated Damages")by the First CommencementDeadline. Once Commencementof Constructionhas occurred, nterim Developershall,or shall cause he applicableTenant to, diligently prosecuteconstructionof the FirstRequiredBuilding until SubstantialCompletion.(ID In addition to the requirements set forth inSection8.6(d)(i)(0, Interim Developershall be required o CommenceConstruction f asecondProjectBuilding (the "First Flexible Building") on the Arena Block by no later

than the second anniversary of the First Commencement Deadline (the "SecondCommencement Deadline"). In the event he Commencement f Constructionof theFirst FlexibleBuilding hasnot occurredby the SecondCommencement eadline subjectto Unavoidable Delays and Sections 8.6(dXi)0V), fV) and (VD hereof), InterimDeveloper shall pay the Liquidated Damagesdue to ESDC on account of the failure toCommenceConstructionof the First Flexible Building by the SecondCommencementDeadline the "5-6 Year Liquidated Damages"). The partieshereby acknowledgehatin the event Interim Developer haspaid the 3-4 Year Liquidated Damages, he referenceto the "secondProject Building" in this Section8.6(dXiXII) shall actually refer to theconstructionof the first Project Building on the Arena Block which, because t will not bebeing constructedpursuant o Section8.6(dXiXI) hereof, will not be required to complywith the First Required Building Affordability Requirement. Once CommencementofConstructionhas occurred, nterim Developershall, or shall cause he applicable Tenantto, diligently prosecute construction of the First Flexible Building until SubstantialCompletion.

(m) In addition to the requirements set forth inSections .6(dXiXI) and 8.6(dXiX[), Interim Developershall CommenceConstructionon thethird ProjectBuilding (the "SecondFlexible Building") on the ArenaBlock by nolater than (x) the secondanniversaryof the SecondCommencementDeadline, and(y) thetenth (l0th) anniversaryof the Project Effective Date (the "Third CommencementDeadline"). In the eventthe Commencement f Constructionof the SecondFlexibleBuilding has not occurred by the Third Commencement Deadline (subject toUnavoidableDelays and Sections8.6(dXiXIV), (V) and (YI) hereof), nterim Developershall pay the Liquidated Damagesdue to ESDC on account of the failure to CommenceConstruction f the SecondFlexible Building by the Third Commencement eadline the"10 Year Liquidated Damages"). The partiesherebyacknowledge hat (1) in the eventInterim Developerhaspaid the 3-4 Year LiquidatedDamages r the 5-6 Year LiquidatedDamages,he referenceo the "third Project Building" in this Section8.6(dXiXIIDshallactually refer to the construction of the secondProjectBuilding on the Arena Block, and(2) in the event Interim Developerhas paid both the 3-4 Year Liquidated Damagesand18627327.20-New ork Server3A - MSW


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soon asreasonablypracticableafter the SubstantialCompletion of any Open Space,ESDC shalltransfer, on an "AS IS, WHERE IS" basisand without any representation r warranty, fee title tosuch Open Space to a conservancy or other not-for-profit organizations (collectively, the"Conseryancy") established y AYDC, Interim Developeror their respectiveAffiliates, whichshall be responsible for maintenance, operation and security of the Open Space. TheConservancy shall be funded in the first instanceby AYDC, Interim Developer, heir respectiveAffiliates or oneor more Tenantsundera DevelopmentLease n an annual amount,andpursuantto a budget, easonably cceptableo ESDC. As construction s SubstantiallyCompletedon aDevelopment Parceladjacent o a portion of Open Space, he Conservancyshall be funded asprovided n this Section8.7(b)and asprovided n an Open Space estrictivedeclarationn a formreasonablysatisfactory o ESDC and recordedagainst such Development Parcel;ptovided thatunder no circumstances hall ESDC, the City, NYCEDC or any of their respectiveAffiliates berequired or otherwiseobligated o fund or otherwiseprovide credit support for any obligations orliabilities of the Conservancy. Such declarationshall oblige the owners of the DevelopmentParcels o (i) perform maintenanceand operation unctions in the event the Conservancydefaultson its obligation to maintain and operate he Open Space, ii) adequately und their shareof themaintenance and operation costs of the adjacent Open Space, and (iii) provide adequateassurances(reasonably satisfactory to ESDC and the City) that the Open Space will besufficiently maintainedand operated. The Conservancyshall be createdprior to the SubstantialCnmnletinn nf anrr Onen Snace and shall he snverne'l hv a hnard rrrhich .Lril l includel j v i r v i j -gL * is Ji i * i i L ! 5! i v i r i lu u j a u!-+u, i r i : irepresentativesof AYDC (or its designees), ivic group(s) active n park matters, he owners ofsurrounding buildings and,on an ex fficio basis, he local community boards and the New YorkCity Departmentof Parksand Recreation.

(c) Block 1129 Construction. Subject o Section 8.8 below, InterimDeveloper shall Commence Construction (or cause the Commencementof Construction) onBlock lI29 of at least one residential building constituting a portion of the Phase IIImprovementswithin ten (10) yearsof the ProjectEffective Date,subject o UnavoidableDelays.Once commenced, nterim Developershall, or shall cause he applicableTenant o, diligentlyprosecute construction of such building until Substantial Completion. For purposesof thisSection 8.7(c) ottly, the term "Unavoidable Delays" shall include Market FinancingUnavailability.8.8 AffordableHousine.

(a) The Project shall have not less than the required Project SiteAffordable Housing Units for low-, moderate- and middle-income individuals and families andsuch Affordable Housing Units shall be built in accordancewith the following requirements: (i)in satisfactionof the Phase Affordable Housing Commitment, (ii) so long as the CombinationHousing Subsidiesare madeavailable by the Cify in accordancewith this Agreement,assumingInterim Developer'ssatisfaction of the Affordable Housing Application Requirements,he firstbuilding (other than the Arena) constructedon the Phase Property shall have such number ofProject SiteAffordable HousingUnits as s requiredby the CombinationHousingSubsidyusedto finance the development and construction of such building, (iii) subject to Sestion 8.8(d)hereof, not more than fifty percent(50%) of the number of residentialunits to be constructedaspart of Phase I shall be completedwithout the completion of fifty percent (50%) of the ProjectSite Affordable Housing Units, and (iv) if applicable, he requirements f Section8.8(fl below

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(the requirements f sub-clausesi), (ii), (iii) and (iv) are collectivelyhereinafter eferred o asthe "Housing Criteria"). Any Additional Affordable HousingUnits built by or at the directionof AYDC or Interim Developershall be excluded for purposes f determiningcompliancewithSections8.8(a)(i) (other than as expresslyprovided in Section2,3&) hereof), 8.8(aXiii) and8.8(f l .

(b) Prior to commencing any Development Work on eachresidentialbuilding on the ProjectSite,AYDC and nterim Developershall,or shall cause he Tenantunderthe applicableDevelopmentLease o, deliver to ESDC an Officer'sCertificatesetting orth thenumber of Affordable Housing Units, if any, to be containedwithin the applicablebuilding anddemonstratinghat upon SubstantialCompletionof suchbuilding, the HousingCriteria shall besatisfied as of such date, and capable of being satisfied hroughout the Project Site. Theforegoing shall not be deemed to alleviate any additional requirements imposed byGovernmentalAuthorities upon the developmentby any subsidiesprovided to the developerofthe applicablebuildings.(c) In addition to the Project Site Affordable Housing Units, AYDCand Interim Developer shall build or shall cause he constructionof at least six hundred (600)affordable homeownershiphousing units ("Additional Affordable Housing Units") on theProject Site or as close o the ProjectSite as reasonablypracticable, ncluding but not limited tothe following neighborhoods: Prospect Heights, Fort Greene, Bedford Stuyvesant, CrownHeights, Clinton Hill and Park Slope, subject to GovernmentalAuthorities making availabletoAYDC, Interim Deveioperor their respectivesuccessors r assignsaffordable housing subsidiesin accordancewith and subject to the terms of Section 8.8(d) below. AYDC and InterimDeveloper shall seek to build or cause he construction of at least two hundred (200) of theAdditional Affordable Housing Units within the Project Site, subject to the density levelsapproved n the MGPP beingmaintained. Additional Affordable Housing Units constructedat a

location other than on the Project Site shall be constructed n accordancewith all applicableRequirements. AYDC and Interim Developer shall seek o (i) cause he Additional AffordableHousing Units to be affordable to families with income up to 150% of AMI and (ii) makehomeownershipopportunities o be made available to families with incomes below 100% AMI.AYDC and Interim Developer shall document or cause he documentationof the constructionofAdditional Affordable Housing Units by providing a written notice to,ESDC, together withevidencereasonablysatisfactory o ESDC, of the same. Any Additional Affordable HousingUnits built by or at the directionof AYDC or Interim Developer hall be excluded or purposesof determining compliancewith Sections8.8(-aXi) other than as expresslyprovided in Section2.3b\ hereof),8.8(aXiii) nd8.8(0.(d) AYDC, Interim Developer, heir respectiveAffiliates and Tenantsunder the applicable DevelopmentLeasesmay apply for financing then generally available todevelopersof Affordable Housing Units for the construction of Project Site Affordable HousingUnits, provided that the lack of such financing shall not diminish any of AYDC's, InterimDeveloper's or their respective Affiliates' obligation to provide the Project Site AffordableHousingUnits or the Additional Affordable HousingUnits. AYDC's, Interim Developer's,heirrespectiveAffiliates' and Tenants'under the applicable Development Leases ailure to (i) applyor otherwise seekapproval or (A) the CombinationHousingSubsidiesor (B) any financing thengenerallyavailable o developers f Affordable Housing Units or (ii) accept he Combination

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Housing Subsidiesor financing should such amounts be rnade available to any of AYDC,Interim Developer, their respectiveAffiliates and Tenants under the applicable DevelopmentLeases, shall not, in either case, relieve or otherwise diminish (or be deemed to relieve orotherwise diminish) the obligations set forth in Section 8.6(d) above or this Section 8.8. IfAYDC, Interim Developer or their respectiveAffiliates applies for tax abatementsunder theCity's Section42la program,AYDC, Interim Developerand their respectiveAffiliates shall berequired to abideby the definition of affordable housingas may be in effect under suchprogramat such ime. The following proceduresshall be utilized by AYDC, Interim Developer and theirrespective Affrliates for financing generally available to developers of Affordable HousingUnites (the "Affordable Housing Application Requirements )

(i) To obtain financing for Affordable Housing Units underprogramsthen generally available to developersof Affiordable Housing Units, AYDC,Interim Developer, their respective Affiliates and Tenants under the applicableDevelopmentLeasesshall be requiredto (I) makea complete application andsubmissionto the applicable administering agency, (II) provide written notification of suchapplicant's intention to close and to be ready,willing and able to close within 12 monthsof complete application and submission, ild (III) if such complete application andsubmission is approved by the administering agency, comply with and satisfy allapplieablepreconditions or closing requiredby the applicable administeringageneyunder its standards, erms, conditions and criteria for the applicable affordable housingprogram. For purposeshereof,"complete application and submission" shall meananapplication for affordable housing financing of a type that such administering agencygenerallymakesavailable o developers or the developmentof affordable housing(or, ifrequired by this Agreement, an application for a pro$am as described on Exhibit V),including a preliminary term sheet or other plan of credit enhancement,as is consideredacceptableby the applicable administeringagencyunder its standards,erms, conditionsand criteria for the applicable affordable housing program, and other information anddisclosures required by the applicable administering agency from developers as acondition for providing financing for Affordable Housing Units.

(ii) It is the understandingof the parties that the applicableadministeringagencyshall review any suchcomplete applicationand submission n goodfaith for consistency with then applicable program rules, standards and criteria, ffidrespondwithin 45 dayswith either (I) a letter of intent to provide the applicable inancingwith respect to an approved complete application and submission or (II) writtennotification of the inability to provide applicablefinancing within the 12 months of thecompleteapplication submission. The failure of the applicableadministering agency ocomply with the foregoing shall be deemeda denial of the application and an AffordableHousingSubsidyUnavailability.

(e) On eachanniversaryof the date of this Agreement, and also uponthe SubstantialCompletionof eachof Phase andPhase I, AYDC shall deliver (or shall causeto be delivered) to ESDC an Officer's Certificate certifying that all of the requirements or theconstructionof Project Site Affordable Housing Units during the applicablephaseof the Projecthavebeensatisfied.

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(0 Until the date hat eachof the following are satisfted: (i) AYDC orits Affiliates shall havedeliveredto the MTA, LIRR or their respectivedesigneeshe completionguaranty required by the Yard Relocation and ConstructionAgreement, (ii) such completionguaranty is effective and unconditional,and (iii) no Event of Default (as defined in the YardRelocation and Construction Agreement) shall have occurred and be continuing, InterimDeveloper agreesthat (D at least eight hundred (800) Affordable Housing Units shall beSubstantiallyCompletedonBlock 1129prior to the OutsidePhase I SubstantialCompletionDate; provided that such number shall be reduced on a unit for unit basis for each PhaseIAffordable Housing Unit completedon the Arena Block, and (ii) for purposesof determiningcompliancewith Section 8.8(.aXiii)above,not more than fifty percent (50%) of the number ofresidentialunits to be constructedon Block 1129 shall be completedwithout the completion offifty percent (50%) of the Project Site Affordable Housing Units to be constructedon Blockll29-(it being agreed hat for purposesof calculating he number of Project Site AffordableHousing Units to be constructedon Block 1129only, suchamountshall not exceed ive hundred(s00).

G) Notwithstanding AYDC's and Interim Developer'sobligations toSubstantiallyComplete(or cause o be SubstantiallyCompleted)the Phase Improvementsbythe Outside Phase I Substantial Completion Date, so long as the Affordable HousingApplication Requirementshave been satisfied in each case, any Affordable Housing SubsidyUnavailability with respect o a proposed esidentialbuilding shall result n a one-yearextensionof the OutsidePhase SubstantialCompletionDate solelywith respect o the gloss square feetproposed for Affordable Housing Units in such building in the application for financing suchAffordable Housing Units, up to an aggregateof eight (8) one-yearextensionsof such OutsidePhase SubstantialCompletionDate;plovldgd,however he aggregategrosssquare eeteligiblefor suchextension or Affordable SubsidyUnavailability shall in no eventexceed450,000 grosssquaxe feet in any year. By way of example, if the Affordable Housing ApplicationRequirements resatisfiedwith respecto a 300,000grosssquare eetbuilding of which 507o sintended o be Affordable HousingUnits in suchapplicationand there is an Affordable HousingSubsidyUnavailability with respect o suchapplication, hen the obligation to satisff the PhaseAffordable Housing Commitmentby the Outside Phase SubstantialCompletion Date shall beextendedby one year solely with respect o i50,000 grosssquare eet of Affordable HousingUnits.8.9 Temporarv OEn Space. To the maximum extentpracticable he Tenantunderthe applicable nterim Leaseshall cause hat portion of the ProjectSite which suchTenantdoesnot reiionably expectto be utilized for constructionwork, supportof constructionor other

permitted usesunder suchInterim Lease,or to becomepart of a DevelopmentParcelupon whichbevelopmentWork will occur, n the twelve (12) month period following the relevantdate ofdetermination, o be convertedto temporary open spacesusable by the generalpublic. EachTenant under an Interim Lease shall make such determinationon the first anniversaryof theProjectEffective Date and on eachanniversaryhereafter.8.10 Existing Parks nvestment. In addition o its obligationswith respect othe OpenSpace,prior to the SubstantialCompletionof PhaseI, AYDC and/or ts Affiliates shallcolleclivety nveit (or shallcauseo be nvested) total of ThreeMillion Dollars ($3,000,000)nthe aggregateor the improvementof existingparks near and around,but not within, the Project

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Atlantic Yards Development Agreement Section 8

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Transcript of Atlantic Yards Development Agreement Section 8