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CONTRACT 3364 Other h a PROPERTY MANAGEMENT AGREEMENT BETWEEN THE EL SEGUNDO SENIOR CITIZEN HOUSING CORPORATION AND NEIL R. CADMAN DBA CADMAN GROUP This Agreement is entered into this_-1St- day of October, 2004,by and between the EL SEGUNDO SENIOR CITIZEN HOUSING CORPORATION, a California nonprofit public benefit corporation("OWNER") and NEIL R. CADMAN, an individual dba the Cadman Group ("MANAGER"). Section l: APPOINTMENT 1.1 ACCEPTANCE OWNER contracts with MANAGER to lease and manage the property described in paragraph 1.2 upon the terms and conditions set forth in this Agreement. MANAGER accepts the appointment and agrees to furnish the services of its organization for the leasing, management, repair, maintenance and landscaping of the Premises. 1.2 DESCRIPTION OF PREMISES The property to be managed by MANAGER under this Agreement(the 'Premises") is known as Park Vista, located at 615 E. Holly Ave., El Segundo, CA 90245, consisting of the land, buildings and other improvements described as an elderly housing project for independent living in the State of California. 1.3 ADDITIONAL SCOPE OF SERVICES. Subject to the hierarchy of interpretation set forth in Section 29:,the Proposed Services set forth on pages 3-8 of the attached NL NAGER's Proposal for Services dated July 13, 2004 are specifically incorporated by reference into this Agreement and constitute part of the scope of services contemplated by this Agreement. 1.4 TERM The tern of this Agreement is for three (3)years from the effective date to and including September 30, 2007, subject to the provisions set forth in Section 19 regarding termination. 1.5 PERFORMANCE STANDARDS. While performing this Agreement, MANAGER will use the appropriate generally accepted professional standards of practice existing at the time of performance utilized by persons engaged in providing similar services. OWNER will notify MANAGER of any deficiencies and MANAGER will have fifteen(15) days after such notification to cure any shortcomings to OWNER's satisfaction. Costs associated with curing the deficiencies will be borne by MANAGER. 1.6 MANAGEMENT OFFICE Page 1 of 15 ® ® i 3364 OWNER must provide adequate space on the Premises for a management office. OWNER must pay all expenses related to maintaining, but not staffing, such office, including, without limitation, furnishings, equipment, postage and office supplies, electricity, utilities and telephone for business usage only. 1.7 APARTMENT FOR ON-SITE STAFF OWNER must provide a suitable apartment on the Premises for the use of an on-site manager, rent- free, except that resident staff must pay for heat, utilities and telephone in the same manner as other tenants. The on-site manager's specific apartment may be selected by OWNER. 1.8 ASSIGNABILITY. This Agreement is for MANAGER's professional services. MANAGER's attempts to assign the benefits or burdens of this Agreement without OWNER's written approval are prohibited and will be null and void. Section 2: BANK ACCOUNTS The operating account established under this Agreement may be with a bank selected by MANAGER and must at all times be in the name of, and owned by, OWNER, but under MANAGER'S control. MANAGER'S designees are the only parties authorized to draw upon such account. However, MANAGER'S monthly management fee and all other checks in amounts in excess of$1,999.99 must be countersigned by OWNER's President and/or Chief Financial Officer, No amounts in any accounts established under this Agreement may, in any event,be commingled with any other funds of MANAGER or its other clients. 2.1 OPERATING(AND/OR)RESERVE ACCOUNT(S) MANAGER will assume responsibility for previously established operating account(s)known as the El Segundo Senior Housing Corporation Operating account, at a local bank to be used for the deposit of receipts collected which deposits are insured by the federal government. Any other depository which may be used in the future will be selected by OWNER. MANAGER will not be held liable in the event of the bankruptcy or failure of any institution selected by OWNER. Funds in the Operating(and/or)Reserve Account(s)remain the property of OWNER subject to disbursement of operating expenses by MANAGER as described in this Agreement. MANAGER must remit to OWNER, or directly deposit to a Reserve Account established by OWNER, the monthly Reserve amount from the rental receipts. 2.1.1 INITIAL DEPOSIT AND CONTINGENCY RESERVE Immediately upon commencing this Agreement,MANAGER will be authorized to access the Operating Account at a local bank. MANAGER may conduct its own audit of the Operating Account. A contingency reserve account will be maintained by OWNER. Those funds may be used by the officers and/or directors of OWNER for the management and benefit of the Premises. 2.2 SECURITY DEPOSIT ACCOUNT MANAGER must, if required by law, maintain a separate interest bearing account for tenant security deposits and advance rentals. Such account must be maintained in accordance with applicable state or federal laws. MANAGER must obtain all existing security deposits from OWNER's former management contractor. Page 2of15 2.3 FIDELITY BOND MANAGER must cause all personnel who handle or are responsible for the safekeeping of OWNER's monies to be insured by a fidelity bond in the amount of at least $100,000.00 with a company selected by MANAGER. Such bond will be secured at OWNER's expense and OWNER and its Board of Directors will be named as an additional insured thereon. Section 3: COLLECTION OF RENTS AND OTHER RECEIPTS 3.1 MANAGER'S COLLECTION AND BANKING AUTHORITY MANAGER must collect and receipt for all rents, charges and other amounts receivable on OWNER's account in connection with the management and operation of the Premises. Such receipts (except tenants' security deposits and advance rentals, which must be handled as specified in paragraphs 2.2 and 2.3; and special charges, which must be handled as specified in paragraph 3.2) must be deposited in the Operating(and/or)Reserve Account(s)maintained for the benefit of the Premises. 3.2 SPECIAL CHARGES If permitted by applicable law,MANAGER may collect from tenants any or all of the following: an administrative charge for late payment of rent, a charge for returned or non-negotiable checks, credit reports, physicians and medical reports and all other expenses associated with people desiring to qualify to live on the Premises. Section 4: SECURITY DEPOSITS MANAGER must collect, deposit, and disburse tenants' security deposits in accordance with the terms of each tenant's lease. MANAGER must pay tenants interest upon such security deposits only if required by law to do so. MANAGER must comply with all applicable state or local laws concerning the responsibility for security deposits and interest. Section 4 DISBURSEMENTS FROM OPERATING ACCOUNTS 4.1 OPERATING EXPENSES Subject to the terms set forth in section 2 and as otherwise provided,MANAGER is authorized to pay the daily costs of operating the Premises. 4.2 NET PROCEEDS To the extent that funds are reasonably available, MANAGER must transmit the cash balance of the Operating Account to OWNER to be deposited in an account designated by OWNER. Such periodic cash balances must be remitted to OWNER's President and/or Chief Financial Officer at their then current addresses. Section 5: MANAGER NOT REQUIRED TO ADVANCE FUNDS In the event that the balance in the operating Account(s) is at any time insufficient to pay disbursements, OWNER must, immediately upon notice, remit to MANAGER, sufficient funds to cover the deficiency. In no event is MANAGER required to use its own funds to pay such disbursements nor is MANAGER required to advance any monies to the OWNER's Security Deposit or the Operating Account(s). Page 3 of 15 Section 6: FINANCIAL AND OTHER REPORTS 6.1 MONTHLY FINANCIAL REPORT Seven(7) calendar days before each monthly board meeting MANAGER must furnish the members of OWNER's board of directors with a monthly financial statement of delinquent accounts, cash receipts and disbursements from the operation of the Premises during the previous month. In addition, seven(7) calendar days before each monthly board meeting, MANAGER must, on a mutually acceptable schedule,prepare and submit to OWNER such other reports as may be required by OWNER. 6.2 OWNER'S RIGHT TO AUDIT OWNER has the right to conduct periodic audits of all applicable accounts managed by MANAGER. The cost of such audit will be borne by OWNER unless a discrepancy is found between the actual amount of monies owed to OWNER and the amount reported by MANAGER in its financial reports filed with OWNER. If such discrepancy amounts to more than five percent (5%) in underreported rents, or other monies,MANAGER will pay all costs of such an audit. MANAGER will remit to OWNER the amount of such underreported monies. 6.3 ANNUAL BUDGET OWNER's Annual Operating Budget will be prepared by MANAGER with OWNER's Chief Financial Officer to be submitted to the OWNER Board of Directors before October 15, of each year for approval. OWNER must promptly inform MANAGER of any changes in the draft Budget proposal. MANAGER must keep OWNER informed of any real or anticipated deviations from the receipts or disbursements as set forth in the previous years approved budget. 6.4 PREPARATION COSTS The preparation cost of all reports, bookkeeping, clerical and other management overhead, including without limitation, costs of office supplies (excluding on-site office supplies) equipment, data processing services, postage(excluding postage for checks to creditors),transportation for managerial personnel and telephone services, will be paid by MANAGER from its management fees and is not an OWNER expense. Section 7: ADVERTISING With OWNER's prior approval,MANAGER may be authorized to advertise the Premises or portions for rent, using periodicals, signs, plans,brochures, or displays, or such other means as MANAGER may deem proper and advisable, provided such advertising and such signs comply with applicable laws. The cost of such advertising may be paid out of OWNER's Operating Account. All advertising must clearly state that MANAGER is the manager and not the Owner of the Premises. Newspaper ads cannot share space with other properties managed by MANAGER. Section 8: LEASING AND RENTING 8.1 MANAGER'S AUTHORITY TO LEASE PREMISES MANAGER must use all reasonable efforts to keep the Premises rented by procuring tenants for the Premises according to the rules and regulations established by OWNER. MANAGER is otherwise authorized to prepare and execute all leases on behalf of OWNER, including renewals Page 4 of 15 J b and extensions of leases (and expansions of space in the Premises, if applicable) and to cancel and modify existing leases. For this purpose only, MANAGER may execute all leases as OWNER's agent. OWNER must approve the form of the lease used by MANAGER. 8.2 NO OTHER RENTAL AGENT During the term of this Agreement, OWNER agrees not to authorize any other person, firm or corporation to negotiate or act as leasing agent with respect to the letting of the Premises. 8.3 ENFORCEMENT OF LEASES MANAGER is authorized to institute, in OWNER's name, all legal actions or proceedings for the enforcement of any lease term, for the collection of rent or other income from the Premises, or for the evicting or dispossessing of tenants or other persons from the Premises. MANAGER is authorized to sign and serve such notices as MANAGER deems necessary for lease enforcement, including the collection of rent or other income. MANAGER is authorized, with OWNER's prior approval,to settle, compromise, and release such legal actions or suits and to reinstate tenancies. Any monies for such settlements paid out by MANAGER cannot not exceed$1,000.00 without OWNER's prior approval. Attorneys' fees, filing fees, court costs, and other necessary expenses incurred in connection with such actions and not recovered from tenants may be paid out of the Operating and/or Reserve Account(s). MANAGER may, subject to OWNER board of directors' prior approval, select the attorney of its choice to handle such litigation. Section 9: EMPLOYEES 9.1 MANAGER'S AUTHORITY TO HIRE MANAGER may hire, supervise, discharge, and pay all servants, employees, contractors, or other personnel from its management fee, to perform the normal day to day management, maintenance, landscaping and operation of the Premises. 9.2 MANAGER TO PAY ALL EMPLOYEE EXPENSES Unless indicated in the yearly budget, with the exception of onsite employees (Manager and Secretary), all wages and fringe benefits payable to such servants, employees, contractors and/or other personnel hired per paragraph 9.1 above, and all local, state, and federal taxes and assessments (including without limitation Social Security taxes, unemployment insurance, withholding and workers' compensation insurance) incident to the employment of such personnel, shall be paid by MANAGER out of its management fee. 9.3 MANAGER'S AUTHORITY TO FILE RETURNS MANAGER may do and perform all acts required of an employer with respect to the Premises and execute and file all W-2, 1099, employee quarterly, all tax and other returns required under applicable federal, state and local laws, regulations, and/or ordinances governing employment, in addition to all other statements and reports pertaining to labor employed in connection with the Premises and according to any similar federal or state law now or hereafter in force. In connection with such filings, OWNER may upon request, promptly execute and deliver to MANAGER all necessary powers of attorney, notices of appointment, and the like. MANAGER is responsible for all amounts required to be paid under the foregoing laws and MANAGER must pay the same from the management fees that it receives under the terms of this Agreement. Page 5 of 15 9.4 HOLD HARMLESS, LABOR LAWS MANAGER is responsible for complying with all applicable state and federal labor laws. MANAGER will indemnify, defend, and save OWNER and its Board of Directors and the City of El Segundo harmless from all claims, investigations, and suits, from MANAGER'S actions or failures to act, with respect to any alleged or actual violation of state or federal labor laws. MANAGER'S obligation with respect to such violation(s) includes payment of all settlements, judgments, damages, liquidated damages, penalties, forfeitures,back pay awards, court costs, litigation expenses, and attorneys' fees. 9.5 ACCEPTANCE OF GIFTS AND/OR GRATUITIES MANAGER's employees are prohibited from accepting any gratuity, gift, or compensation directly from any resident of the Premises for any services rendered. Section 10: MAINTENANCE, INSPECTIONS &REPORTS 10.1 MAINTENANCE REQUIREMENTS MANAGER will cause the Premises to be maintained and repaired in accordance with local codes and in a condition that is at all times acceptable to OWNER, including, without limitation, cleaning, painting, decorating, plumbing, carpentry, grounds care and such other matters as from time to time may be required. MANAGER will use its employed maintenance personnel to perform all janitorial tasks and make all reasonably necessary repairs and replacements for the proper, efficient operation of, and to otherwise preserve, the Premises in its present condition. Subject to the prior approval of OWNER,MANAGER will make all alterations necessary to comply with lease and insurance requirements, statutory and governmental regulations. MANAGER will furnish experts, at OWNER's request and expense, to conduct periodic examinations,provide written reports and recommendations to insure OWNER's satisfactory compliance with those requirements set forth above. 10.2 ON-SITE MAINTENANCE SPECIFICS MANAGER must give special attention to preventive maintenance, and to the greatest extent feasible,the services of MANAGER maintenance personnel must be used to perform maintenance, repairs, landscaping, inspections and reports. Subject to OWNER's prior approval,MANAGER may contract with qualified independent contractors for the maintenance and repair of equipment, systems and the like, which are beyond the capability of MANAGER'S maintenance employees. MANAGER will systematically and promptly investigate all service requests from tenants,take such action thereon as may be justified and keep records and report same at the monthly OWNER Board of Directors meeting. Emergency requests must be received and serviced on a 24-hour basis. Complaints of a serious nature will be reported to the OWNER board of Directors after investigation. 10.3 APPROVAL FOR EXCEPTIONAL MAINTENANCE EXPENSE The expense to be incurred for any one item of maintenance, alteration, refurbishing, or repair cannot exceed the sum of$300.00, unless such expense is first specifically authorized by OWNER, or is incurred under such circumstances as MANAGER reasonably deems to be an emergency. MANAGER is authorized to negotiate contracts for nonrecurring items of expense,not to exceed $300.00. MANAGER must solicit written cost estimates (bids) from at least three contractors or Page 6of15 � vx suppliers for any work item, maintenance, repair or appliance which can reasonably be expected to cost$301.00 or more, regardless of rebates, and submitted to OWNER for prior approval. However, for budgeted appliance purchases MANAGER need not solicit written cost estimates for each appliance to be purchased. Rather, for such purchases MANAGER need only solicit written cost estimates twice annually. All employees, contractors or other personnel that perform work or services at the Premises are deemed to be MANAGER's employees, except those independent contractors whose contracts are first approved by OWNER's Board of Directors. In an emergency where repairs are immediately necessary for the preservation and safety of the Premises, or to avoid danger to life or property, or to comply with federal, state, or local law, such emergency repairs may be made by MANAGER at OWNER's expense without prior approval. Section 11: RELATIONSHIP OF MANAGER TO OWNER The relationship of the parties pursuant to this Agreement is that of Principal and Independent Contractor. Except those authorized actions taken by MANAGER on behalf of OWNER pursuant to the terms of this Agreement, MANAGER is not OWNER's Agent. Nothing in this Agreement may be construed as creating a partnership,joint venture, or any other relationship between the parties to this Agreement. MANAGER bears the responsibility, loss and damage arising out of or connected with the hiring and/or supervision of its employees and operation of the Premises. The employees and contractors of MANAGER during the period of this Agreement are not and will not be considered to be the direct employee of OWNER, its board of directors or the City of El Segundo. Neither party has the power to bind or obligate the other, except as expressly set forth in this Agreement, except that both parties are authorized to act with such additional authority and power as may be necessary to carry out the spirit and intent of this Agreement. Section 12: INDEMNIFICATION. 12.1 MANAGER agrees to the following: 12.1.1 Indemnification for .Professional Services. MANAGER will save harmless and indemnify and at OWNER's or CITY's request reimburse defense costs for OWNER or CITY from and against any and all suits, actions, or claims, of any character whatever, brought for, or on account of, any injuries or damages sustained by any person or property resulting or arising from any negligent or wrongful act, error or omission by MANAGER or any of MANAGER's officers, agents, employees, or representatives, in the performance of this Agreement. 12.1.2 Indemnification for other Damages. MANAGER indemnifies and holds OWNER and CITY harmless from and against any claim, action, damages, costs (including, without limitation, attorney's fees), injuries, or liability, arising out of this Agreement, or its performance. Should OWNER or CITY be named in any suit, or should any claim be brought against it by suit or otherwise, whether the same be groundless or not, arising out of this Agreement, or its performance, MANAGER will defend OWNER or CITY (at OWNER's or CITY's request and with counsel satisfactory to OWNER or Page 7of15 X64 CITY, as applicable) and will indemnify OWNER or CITY, as applicable, for any judgment rendered against it or any sums paid out in settlement or otherwise. 12.2 For purposes of this section"OWNER"includes OWNER's officers, officials, employees, agents, representatives, and volunteers. 12.3 For purposes of this section"CITY" is the city of El Segundo, its officers, officials, employees, agents, representatives, and volunteers. 12.4 It is expressly understood and agreed that the foregoing provisions will survive termination of this Agreement. Section 13: LIABILITY INSURANCE 13.1 OWNER'S LIABILITY INSURANCE OWNER will obtain and keep in force and effect, adequate insurance against physical damage (e.g., fire with extended coverage endorsement, boiler and machinery, etc.) and against liability for loss, damage, or injury to property or persons which might arise out of the occupancy, management, operation, or maintenance of the Premises. Any deductible required under such insurance policies are at OWNER's expense. MANAGER will be covered as an additional insured on all liability insurance maintained with respect to the Premises. OWNER agrees to furnish MANAGER with two (2) copies of insurance endorsements, certificates or duplicate copies of such policies evidencing such coverage within sixty(60) days of the effective date of this Agreement. Said policies will provide that notice of default or cancellation must be sent to both parties and require a minimum of thirty(3 0) days' written notice before any cancellation oFor changes to said policies except for cancellation due to nonpayment. 13.2 INSURANCE 13.2.1 MANAGER, as Managing Agent of OWNER, must maintain on behalf of OWNER and at the expense of OWNER,the following insurance policies: 13.2.1.1 Fire with extended coverage with coverage on buildings in an amount not less than$4,859,500 and coverage on contents of not less than $24,100 with a deductible amount not to exceed$1,000. 13.2.1.2 Earthquake coverage in an amount not less than$4,859,500 with a deductible amount of not more than ten percent(10%)of the total coverage. 13.2.1.3 General Liability coverage in an amount not less than$1,000,000 single limit and$2,000,000 annual aggregate. 13.2.1.4 Umbrella Liability coverage in an amount of not less than $1,000,000 single limit and$2,000,000 annual aggregate. PaP-,e9of15 13.2.1.5 Directors & Officers Liability(Professional Liability) in an amount of not less than $1,000,000 aggregate inclusive of defense expenses. 13.2.1.6 Fidelity bond covering all employees of MANAGER who handle funds, including all such employees assigned to Park Vista. 13.2.2 In addition to the above coverages,MANAGER must maintain at its own expense the following insurance coverages: 13.2.2.1 Commercial General Liability coverage in an amount not less than$1,000,000. The amount of insurance will be a combined single limit per occurrence for bodily injury, personal injury, and property damage for the policy coverage. Liability policies must be endorsed as required by this Section and to state that such insurance will be deemed"primary" such that any other insurance that may be carried by OWNER will be excess thereto. Insurance must be on an"occurrence,"not a"claims made,"basis and will not be cancelable or subject to reduction except upon thirty(30) days prior written notice to OWNER. 13.2.2.2 Employers Automobile Non Ownership Liability coverage in an amount of not less than$ 1,000,000 covering all employees assigned to OWNER who use their personal automobiles for OWNER business. Automobile coverage will be written on ISO Business Auto Coverage Form CA 00 0106 92, including symbol 1 (Any Auto). The insured parties in connection with all of the above policies must include the following: The City of El Segundo, its elected and appointed officials; employees; agents; officers; and the El Segundo Senior Citizen Housing Corporation, its Board, its employees, agents, officers, directors, and appointed officials. 13.2.2.3 Workers Compensation coverage in accordance with California law. 13.2.2.4 Should MANAGER, for any reason, fail to obtain and maintain the insurance required by this Agreement, OWNER may obtain such coverage at MANAGER's expense and deduct the cost of such insurance from payments due to MANAGER under this Agreement or terminate the Agreement. 13.2.3 All of the above policies must be kept in force during the term of this Agreement and contain a cancellation clause reading in substance as follows: "It is agreed that this policy cannot be canceled nor the amounts of coverage provided herein reduced until thirty(30) days after the OWNER Board of Directors receives written notice as to such cancellation or reduction." In the event that MANAGER is advised by one or more of the insurers that it will no longer provide such coverages, MANAGER must immediately advise OWNER's President that it can no longer Page 9ofIS 6 provide such coverages and request instructions from the Board as to what action to take with regard to replacement of such coverages. 13.2.4 All of the above policies must be written by an insurance company licensed to do business in California with a "Best's Rating" of not less than A XIII. 13.2.5 Two (2) copies of all of the policies set forth above must be sent to the President of the El Segundo Senior Citizen Housing Board, c/o The City of El Segundo, 350 Main St.,El Segundo, CA 90245. 13.2.6 MANAGER will maintain with the City certificates of insurance evidencing current coverage for MANAGER'S General Liability coverage,MANAGER'S Workers Compensation coverage,MANAGER'S Employers Automobile Non Ownership Liability coverage and MANAGER'S Fidelity Bond. Section 14: MANAGER ASSUMES NO LIABILITY FOR ACTS OF OWNER MANAGER assumes no liability, whatsoever for any acts or omissions of OWNER, its board of directors, any previous owners of the Premises or any previous management or other agent of either. MANAGER assumes no liability for any failure of or default by any tenant in the payment of any rent or other charges due OWNER or for the performance of any obligations owed by any tenant to OWNER pursuant to any lease or otherwise. Nor does MANAGER assume any liability for any violations of environmental or other regulations, which occurred before MANAGER'S entering into this agreement. Any such regulatory violations or hazards discovered by MANAGER must be brought to OWNER's attention in writing, and OWNER must promptly cure them. Section 15: MANAGER'S COMPENSATION AND EXPENSES As compensation for the services provided by MANAGER under this Agreement(and exclusive of reimbursement of expenses to which MANAGER may be entitled hereunder), OWNER will pay MANAGER as follows: 15.1 FEE FOR MANAGEMENT SERVICES For its proper performance of all the services as set forth herein,MANAGER will be paid the fee of eleven thousand two hundred twenty-four dollars ($11,224)per month. Management fees may be increased or otherwise modified in subsequent years by written addenda to this Agreement. 15.2 FOR APARTMENT LEASING None. Included in 15.1. Section 16: REPRESENTATIONS OWNER represents and warrants: That OWNER has full power and authority to enter this Agreement; that there are no written or oral agreements affecting the Premises other than tenant leases, copies of which were furnished to MANAGER; that there are no recorded easements, restrictions, reservations, or rights of way which adversely affect the use of the Premises for the purposes intended under this Agreement; that to the best of OWNER's knowledge,the property is zoned for the intended use;that all leasing and other permits for the operation of the Premises were secured and are current;that the building and its construction and operation do not violate any Page 10 of 15 applicable statutes, laws, ordinances, rules, regulations, orders, or the like (including, without limitation,those pertaining to hazardous or toxic substances); that the building does not contain any asbestos, urea, formaldehyde, radon, or other toxic or hazardous substance; and that no unsafe condition exists. Section 17: STRUCTURAL CHANGES OWNER expressly withholds from MANAGER any power or authority to make any structural changes in any building, or to make any other major alterations or additions in or to any such building, or to any equipment in any such building, or to incur any expense chargeable to OWNER other than expenses related to exercising the express powers vested in MANAGER through this Agreement, without the prior written consent of OWNER's Board of Directors. However, such emergency repairs as may be required because of danger to life or property, or which are immediately necessary for the preservation and safety of the Premises or the safety of the tenants and occupants t, or required to avoid the suspension of any necessary service to the Premises, or to comply with any applicable federal state, or local laws, regulations, or ordinances, shall be authorized pursuant to the appropriate paragraphs of this Agreement, and MANAGER must notify OWNER accordingly. Section 18: BUILDING COMPLIANCE Except as otherwise provided,MANAGER assumes no liability, and is given no responsibility for compliance of the Premises, or any equipment therein, with the requirements of any building code, statute, ordinance, law, or regulation of any governmental body or of any public authority or official t having jurisdiction t, except to notify OWNER promptly or to forward to OWNER promptly any complaints, warnings, notices, or summonses received by MANAGER relating to such matters. OWNER represents that to the best of its knowledge the Premises and all such equipment comply with all such requirements. Section 19: TERMINATION, 19.1 Except as otherwise provided, OWNER may terminate this Agreement at any time with or without cause. 19.2 MANAGER may terminate this Agreement at any time upon thirty(30) days notice. 19.3 Upon receiving a termination notice from OWNER,MANAGER will immediately cease performance under this Agreement unless otherwise provided in the termination notice. Except as otherwise provided in the termination notice, any additional work performed by MANAGER after receiving a termination notice will be performed at MANAGER's own cost; OWNER is not obligated to compensate MANAGER for such work. 19.4 Should termination occur, all finished or unfinished documents, reports and other materials prepared by MANAGER will, at OWNER's option, become OWNER's property, and MANAGER will receive just and equitable compensation for any work satisfactorily completed up to the effective date of notice of termination. N ge 1 1 of 15 19.5 Should the Agreement be terminated pursuant to this Section, OWNER may procure on its own terms services similar to those terminated. 19.6 By executing this document, MANAGER waives any and all claims for damages that might otherwise arise from OWNER's termination under this Section. Section 20: HEADINGS AND ATTACHMENTS All headings and subheadings employed within this Agreement are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement. Section 21: FORCE MAJEURE. Should performance of this Agreement be prevented due to fire, flood, explosion, acts of terrorism, war, embargo, government action, civil or military authority, the natural elements, or other similar causes beyond the Parties' reasonable control,then the Agreement will immediately terminate without obligation of either party to the other. Section 22: ENTIRE AGREEMENT. This Agreement, and its Attachments, sets forth the entire understanding of the parties. There are no other understandings, terms or other agreements expressed or implied, oral or written. There are two (2)Attachments to this Agreement: the Request for Proposals#04-05 and MANAGER's Proposal, both of which are incorporated by reference. This Agreement will bind and inure to the benefit of the parties to this Agreement and any subsequent successors and assigns. Section 23: RIGHTS CUMULATIVE; NO WAIVER No right or remedy herein conferred on or reserved by either of the parties to this Agreement is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given under this Agreement or now or hereafter legally existing upon the occurrence of an event of default under this Agreement. The failure of either party to insist at any time on the strict observance or performance of any of the provisions of the Agreement, or to exercise any right or remedy as provided in the Agreement, does not impair any such right or remedy or be construed as a waiver or relinquishment of such right or remedy with respect to subsequent defaults. Every right and remedy given by this Agreement to the parties to it may be exercised from time to time and as often as may be deemed expedient by those parties. Section 24: NOTICES. All communications to either party by the other party will be deemed made when received by such party at its respective name and address as follows: If to MANAGER: If to OWNER: Cadman Qroup El Se�;�rndo Recreation and Parks De 214 Main Street, #361 339 Sheldon Street El Segundo, CA 90245 El Segundo, CA 90245 Attention: Neil R. Cadman Attention: Park Vista Board of Directors Page 12 of 15 W4.n ry Any such written communications by mail will be conclusively deemed to have been received by the addressee upon deposit thereof in the United States Mail, postage prepaid and properly addressed as noted above. In all other instances, notices will be deemed given at the time of actual delivery. Changes may be made in the names or addresses of persons to whom notices are to be given by giving notice in the manner prescribed in this paragraph. Section 25: RULES OF CONSTRUCTION. Each Party had the opportunity to independently review this Agreement with legal counsel. Accordingly, this Agreement will be construed simply, as a whole, and in accordance with its fair meaning; it will not be interpreted strictly for or against either Party. Section 26: INDEPENDENT CONTRACTOR. OWNER and MANAGER agree that MANAGER will act as an independent contractor and will have control of all work and the manner in which is it performed. MANAGER will be free to contract for similar service to be performed for other employers while under contract with OWNER. MANAGER is not an agent or employee of OWNER and is not entitled to participate in any pension plan, insurance,bonus or similar benefits OWNER provides for its employees. Any provision in this Agreement that may appear to give OWNER the right to direct MANAGER as to the details of doing the work or to exercise a measure of control over the work means that MANAGER will follow the direction of the OWNER as to end results of the work only. Section 27: TAXPAYER IDENTIFICATION NUMBER. MANAGER will provide OWNER with a Taxpayer Identification Number. Section 28: NON-APPROPRIATION OF FUNDS. Payments due and payable to MANAGER for current services are within the current budget and within an available, unexhausted and unencumbered appropriation of the OWNER. In the event the OWNER has not appropriated sufficient funds for payment of MANAGER's services beyond the current fiscal year,this Agreement will cover only those costs incurred up to the conclusion of the current fiscal year. Section 29: CONSISTENCY. In interpreting this Agreement and resolving any ambiguities, the main body of this Agreement takes precedence over the attached Exhibits;this Agreement supersedes any conflicting provisions. Any inconsistency between the Exhibits will be resolved in the order in which the Exhibits appear below: 29.1 Exhibit A: Request for Proposals#04-05; 29.2 Exhibit B: MANAGER's Proposal for Services dated July 13, 2004. Section 30: THIRD PARTY BENEFICIARIES. This Agreement and every provision herein is generally for the exclusive benefit of MANAGER and OWNER and not for the benefit of any other party. However,the Parties agree that the city of El Segundo is an intended third-party beneficiary to this Agreement and may enforce MANAGER's obligations under this Agreement. Other than the city of El Segundo,there will be no incidental or other beneficiaries of any of MANAGER's or OWNER's obligations under this Agreement. Section 31: AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS Pa ge 13 of 15 This Agreement shall be binding upon the parties hereto and their respective personal representatives, heirs, administrators, executors, successors,trustees and assigns. Section 32: AUTHORITY/MODIFICATION. The Parties represent and warrant that all necessary action has been taken by the Parties to authorize the undersigned to execute this Agreement and to engage in the actions described herein. This Agreement may be modified by written amendment. Section 33: ACCEPTANCE OF FACSIMILE SIGNATURES. The Parties agree that this Agreement, agreements ancillary to this Agreement, and related documents to be entered into in connection with this Agreement will be considered signed when the signature of a party is delivered by facsimile transmission. Such facsimile signature will be treated in all respects as having the same effect as an original signature. Section 34: SEVERABILITY. If any portion of this Agreement is declared by a court of competent jurisdiction to be invalid or unenforceable,then such portion will be deemed modified to the extent necessary in the opinion of the court to render such portion enforceable and, as so modified, such portion and the balance of this Agreement will continue in full force and effect. Section 35: COMPLIANCE WITH LAW. MANAGER agrees to comply with all federal, state,and local laws applicable to this Agreement. Section 36: INTERPRETATION. This Agreement was drafted in, and will be construed in accordance with the laws of the State of California, and exclusive venue for any action involving this agreement will be in Los Angeles County. [Signatures on next page] Page 14 of 15 IN WITNESS WHEREOF, the parties hereto have affixed their respective signatures this day of October, 2004. EL SEGUNDO SENIOR CITIZENS NEIL R. CADNIAN dba HOUSING DEVELOPMENT CORPORATION THE 7�ROQ .................. ................. President Neil R. Cadman Taxpayer ID: Chief Financial Officer Approved as to Fo Mark D. Flensl- tt ey City of El Se d By: ar 1. Berge Assistant Ci, - torney page 15 of 15 33 64 RFP #04 - 05 Proposal for Management Services El Segundo Park Vista Senior Housing Complex Cadman Group Table of Contents CoverLetter.................................................................... Page 1 Section 1: Executive Summary........ ............... Page 2 Section 2: Description of Proposed Services............................ Page 3 Section 3: Project Organization &Qualifications of Proposer...... Page 9 Section 4: Risks &Contractual Obligations............................. Page 18 Section 5: Exceptions........ ................................................. Page 19 Section 6: Proposer's Financial Data...............................w....... Page 20 Section 7: Representations and Certifications.................. ......... Page 23 Section 8: Description of Proposed Contract Cost- .................... Page 24 Exhibit 1: Representations and Certifications Form.................... Page 27 Cadman Group 3364 Real Estate Management and Consulting Page 1 July 13, 2004 El Segundo Senior Citizens Housing Corporation City Clerk's Office, City Hall 350 Main Street, Room 5 El Segundo, CA 90245-3813 RE: RFP#04—05 Dear El Segundo Senior Citizens Housing Corporation: Enclosed is the Cadman Group's proposal to manage the Park Vista Senior Housing Facility. On behalf of the staff of the Cadman Group, I am pleased to provide you with this proposal and work with the Corporation during the selection process to highlight the management philosophies and company policies that make the Cadman Group a quality, local professional property management company. The Cadman Group is primarily a multi-family commercial management company, and we have experience operating a non-HUD senior housing facility in Long Beach, California. The owners of the company are homeowners and business owners in El Segundo; I believe these qualifications make the Cadman Group a viable candidate to be chosen to manage the facility. The following proposal has been designed to be brief and succinct. Most property management companies that propose to manage a facility of Park Vista's size are qualified on paper to adequately handle the duties as such, however the true test of a company's abilities are found during the interview process and client references. My hope is that you will find this proposal an adequate representation of our qualifications and will grant us the pleasure of continuing in the selection process. Please feel free to contact me direct at 310-606-5894 ext. 15 if you have any questions or comments regarding the proposal. Thank you for your time. Sincerely Neil R. Cadman Owner, Cadman Group 214 Main Street,#361 • El Segundo,California 90245 a (310)606-5894 • Fax (310)606-5899 Page 2 3 3 6 4 Section 1: Executive Summary This proposal is designed to give the El Segundo Senior Citizens Housing Corporation an overview of the management philosophies and procedures the Cadman Group employs in the course of day-to-day management of client's property holdings. Section 2 of the Proposal is a listing of all duties both at the site level and off-site or administrative level the Cadman Group can perform on behalf of the El Segundo Senior Citizens Housing Corporation (hereinafter referred to as "Corporation'). The property management business is an adaptive industry; the duties performed by a management company are never complete and are always changing. The Cadman Group has been developed to be a full service property management company designed to adapt to individual client's needs. Section 3 is designed to give the Corporation an understanding of Neil R. Cadman, his background, qualifications, philosophy toward commercial real estate management, client and tenant services and how Neil Cadman s philosophy is the driving force behind the Cadman Group's day-to-day management goals and procedures. Section 4 describes risk, or risk avoidance, insurance coverage, and contractual obligations associated with operating a commercial property management organization and managing for a public entity. Section 5 is an acknowledgement that the Cadman Group understands the obligations associated with this proposal and potential management duties. Sections 6 and 7 describe the financial strength of Neil R. Cadman and Cadman Group and certifies the Representations and Certifications form. Section 8 describes the fees associated with the management operation of the facility. Cadman Group RFP#04-05 Page 3 3 3 6 4 Section 2: Description of Proposed Services The Cadman Group proposes the following services in accordance with the published RFP #04 -05 needs, the Cadman Group's policies and procedures and for providing quality management to ownership, residents, and staff of a non- HUD senior housing facility. Site Management Services: 1. Provide on-site management for the facility, twenty-fours hours per day, seven days per week in the form of a resident manager that lives at the facility and is the employee of the Cadman Group. Said employee shall receive a monthly salary plus benefits as described in Section 8 of this proposal. The Cadman Group shall train manager on an on-going basis and the on-site manager shall have immediate, open communication with appropriate administrative staff members. On-site manager shall be supervised on a daily basis by the property supervisor, bookkeeper, and other administrative staff. 2. Provide two alternating individuals (assistant managers) who shall be "on-call" to provide site management services. Said individuals shall be on-site when on duty and shall be current or future residents of the facility. Said compensation for each individual shall be in the form of a rent reduction and shall be contracted with the Cadman Group as independent contractors. Said assistant managers shall be part-time employees and shall not receive benefits nor pay from the Cadman Group. Said assistant managers shall be trained on an on-going basis by the Cadman Group and assistant managers shall have immediate, open communication with appropriate administrative staff members. 3. Provide a full-time maintenance worker at the facility Monday through Friday 8:00 AM to 5:00 PM. Said worker shall be an employee of the Cadman Group and will have a minimum one year experience with trades including, but not limited to, plumbing repair, drywall, painting, electrical, and general construction. Said employee shall be able to communicate effectively with residents and staff. Said employee shall receive a monthly salary plus benefits as described in Section 8 of this proposal. Said maintenance worker shall be trained on an on-going basis by the Cadman Group and shall have immediate, open communication with appropriate administrative staff members. The on-site manager shall supervise the maintenance worker. 4. Provide a full-time janitorial worker at the facility Monday through Friday 8:00 AM to 5:00 PM. Said worker shall be an employee of the Cadman Cadman Group RFP#04-05 Page 4 3 3 6 4 Group. Said employee shall be able to communicate effectively with residents and staff. Said employee shall receive a monthly salary plus benefits as described in Section 8 of this proposal. Said janitorial worker shall be trained on an on-going basis by the Cadman Group and shall have immediate, open communication with appropriate administrative staff members. The on-site manager shall supervise the janitorial worker. 5. Oversee and conduct resident leasing program including advertising as the Corporation approves, processing of applications, tenant screening, tenant placement, and maintain a prospective resident waiting list. The Cadman Group shall perform all leasing practices in compliance with the Corporation's mandate regarding potential resident eligibility (age, income, etc.) since the facility is not a HUD facility. Rents for vacant units shall be determined by the Corporation. Cadman Group shall inform the Corporation of market rents for such units if requested by the Corporation. 6. Maintain a resident file for all residents at the facility. Said file shall hold records including,but not limited to rental/lease agreement and addendums such as House Rules, etc., application(s) to rent, resident/management correspondence, maintenance requests, resident information, emergency contact numbers, etc. Said files shall be held private and only be available to the on-site manager, Cadman Group administrative staff, and the Corporation. 7. Collect all rents as they come due, assess and collect late fees for late rental payments as approved by the Corporation, collect security deposits, assess and collect payments for tenant caused damage, etc. Security Deposit funds collected shall be held in accordance with Corporation wishes and any relevant local, state, or federal laws governing handling of such. 8. Enforce all terms of rental/lease agreements and House Rules and supervise process of legal action against tenants for non-performance as necessary. If the Corporation wishes, the Cadman Group shall inform and obtain consent from the Corporation for any legal action taken against a resident for such non-performance. Payment for such legal fees shall be an operational expense of the facility. 9. Establish site maintenance policies including, but not limited to, resident requests, scheduling of work,judgment as to cause and responsibility of needed repairs, follow-up to ensure work completion and resident satisfaction, and daily facility inspections including the parking lot. Perform basic maintenance as necessary. Immediate evaluation of vacant units and timely preparation for re-rental to minimize lost rental income. 10. Interview, retain, and supervise outside contracted vendors including, but not limited to plumbers, electricians, roofing contractors, Cadman Group RFP#04-05 Page 5 33 64 landscapers/gardeners, painters, etc. on an as-needed basis. At no point shall a vendor be allowed to perform work at the facility without Cadman Group administrative approval and each vendor shall provide written proof of workers compensation and liability insurance prior to any work commencing. Off-site or Administrative Duties: 1. Provide monthly operational reports for the facility to each Corporation Board member at least five days prior to each meeting. Said reports to be tailored by the Cadman Group based on the Corporation needs and any auditors retained by the Corporation to provide oversight of the operation of the facility. A full set of sample reports is available upon request. Reports shall include copies of all relevant bank statements with reconciliation reports. A list of available reports includes: - Monthly Profit and Loss Statement -Year to Date Profit and Loss Statement - Monthly Resident Charges (Rent, Security Deposit, Late Rent Fees, etc.) and Payments Report - Accounts Receivable or Rent Due Report - Balance Sheet -General Ledger - Monthly and Year to Date Profit and Loss versus Budget -Security Deposit Balance Sheet - Detailed Expense by Category Report -Rent Roll - Bank Account Reports 2. Cadman Group shall adhere to all terms contained within the management agreement. 3. All staff to be familiar with and utilize the "site budget" and Park Vista Senior Housing Handbook, Cadman Group shall implement facility standard operating procedures. 4. All maintenance and construction repairs over $2,000.00 shall be inspected and passed by the City. This amount shall change per instructions from the City or Corporation. Any "Capital Repair" items valued over $10,000.00 shall be put out to the City for bid. Cadman Group shall notify the Corporation of the need of such repairs and shall assist the Corporation and City, if requested, in obtaining competitive bids at no additional cost to the Corporation. Cadman Group RFP#04-05 Page 6 3 3 6 4 - 5. Attendance by Neil Cadman and other relevant staff members at all meetings scheduled by the Corporation. Such meetings shall include, but not limited to, Board Meetings of the Corporation, meetings with the City in relation to the operation of the facility, facility inspections, resident meetings, etc. If required, Cadman Group shall prepare agenda items for such meetings. 6. Provide management support and advice to the Corporation. Cadman Group will provide knowledge on California landlord-tenant law issues to the best of its ability, however such advice is in no way to be viewed as legal advice. Corporation shall obtain legal advice from the City. 7. Allow and assist in an annual audit of the books and records for the previous fiscal year. Cadman Group shall retain the firm conducting the audit and will submit to the Corporation for it's approval of said firm no later than 60 days prior to any services performed. 8. Within three months of commencement of managerial duties and at the conclusion of each fiscal year, Cadman Group shall conduct an operational audit of the previous year's financial data. Compensation for such audit shall be included within the scope of the management fee. 9. To provide all financial services on behalf of the property and the Corporation. Said services to include, but not limited to: -Collect all money paid to the Corporation and deposit in a Federally Chartered Financial Institution per the Corporation's discretion. Note: Cadman Group maintains over thirty-five accounts with First Coastal Bank and would welcome the opportunity to use First Coastal Bank for said services. -Pay all invoices, bills, payroll, etc. that are incurred by the operation of the property. -Transmit funds as directed by the Corporation to the City for investment purposes. 10. Provide ongoing review of contracted services, staff, and materials for performance and budgetary considerations. 11. Provide up to date rental comparison analyses of local market rents for units of the same relative size and amenities provided by Park Vista and non-HUD senior facilities within the region. 12. During October of each year of management term, Cadman Group shall provide to the Corporation a budget worksheet for the upcoming fiscal year, which identifies expense items that will be conducted by employees of Cadman Group versus those performed by outside contract: In addition, Cadman Group shall prepare an annual report summarizing the Cadman Group RFP#04-05 Page 7 3 3 6 4 operational and financial activities of the facility in the previous budget year. 13. Cadman Group shall conduct its services in accordance within the scope of the approved policies and procedures as specified by the Corporation. Cadman Group will assist and consult with the Corporation for development of such policies and procedures. 14. Cadman Group shall manage the facility in compliance with all federal, state, and local laws. 15. Develop a written resident and staff emergency procedures manual. Upon approval by the Corporation, said manual shall be distributed to each staff member and resident. Each resident and staff member shall be asked to acknowledge in writing their receipt of said manual and a resident meeting shall be conducted each year to review emergency procedures, policies, exit strategies, etc. The City of El Segundo Fire and Police Department shall be asked to participate in such an event. 16. Conduct a resident survey every two years to ensure that resident's needs are being met within the framework of a fiscally sound property management policy. The results of said survey shall be presented to the Corporation for review. In addition, Cadman Group shall hear and attempt to resolve resident's grievances and report such grievances to the Corporation and the City. 17. Report resident violations of rental/lease agreements and House Rules to the Corporation and advise on the proper course of action. Cadman Group shall then implement the course of action as determined by the Corporation. 18. Cadman Group shall prepare and maintain a five-year capital improvement plan. Said plan shall take into account the age and life expectancy of all building facilities including, but not limited to, roof condition and cost of repair/replacement, major plumbing expenditures, garage gate and motor repair/replacement, landscaping design, exterior and interior painting, etc. Preparation of said plan will assist the Corporation and the City in budgeting profit and loss ratios and replacement reserve analyses. 19. Regarding insurance, Cadman Group shall: -Obtain competitive quotes and maintains the facility has adequate property, liability, fire, earthquake (if available), and umbrella policies. -Process and negotiate claims. -Provide workers compensation coverage for on-site and administrative staff, naming the Corporation and the facility itself as additionally Cadman Group RFP#04-05 Page 8 3 3 6 4 insured. As detailed earlier, no outside vendors shall be allowed to perform any contracted work without proof of workers compensation insurance. -Provide fidelity bonds for personnel that handle money in the amount of $100,000.00. -Report to the Corporation any accidents or injuries that have occurred, or reported to have occurred at the facility. 20. Resident Newsletter: The Cadman Group publishes quarterly newsletters for condominium HOA accounts and for a non-HUD senior housing facility. Each newsletter is specifically written for each property and serves as a friendly way to keep residents involved in the operation of the facility, announce new policies, announce meetings, and give a more human element to the management of multi-family commercial property. Regularly we take resident's suggestions for a "resident of the quarter" and highlight that individual's interests, family, etc. This service is provided at no additional cost. Cadman Group RFP#04-05 Page 9 3 3 6 4 - Section 3: Project Organization and Qualifications of Proposer COMPANY OVERVIEW: The Cadman Group was founded in 1995 by Neil Cadman to manage multi- family, condominium homeowner's associations, and commercial properties. Neil Cadman is a licensed California Real Estate Broker and has fifteen years experience selling, developing, and managing commercial real estate in the Southern California region. The Cadman Group is not a corporation, but a sole proprietorship operating under the name "Neil R. Cadman doing business as Cadman Group." Neil Cadman grew up in Westchester, attending Westchester High School and is a 1988 graduate of the University of California, Los Angeles with Bachelor of Arts degrees in History and Political Science. Neil, and his brother Paul, a corporate attorney, are the sons of British immigrants. Upon graduation from UCLA, Neil was going to follow his brother into law and attend law school, but decided to take a chance and see what commercial real estate had to offer. He worked as a broker's assistant with the Hanes Company in Beverly Hills from 1989 to 1991. It was during that time that the commercial real estate market essentially crashed and Neil left full time brokerage and joined The Tiger Company, a Westside development and brokerage company and transformed the company into a leading West Los Angeles property management firm. In 1995, Neil decided to leave the Tiger Company and form the Cadman Group in El Segundo. It was the same year that he married Rebecca Montoya and they moved to El Segundo. Neil and Rebecca bought their first house at 627 Whiting Street and are currently building a new home on the same site. Neil and Rebecca have a daughter, Delaney, and are expecting a new addition to the family in late September/early October 2004. Rebecca Cadman holds a BA in History from UCLA and a Teachers Credential from Loyola Marymount University. Rebecca taught kindergarten and 2nd grade at Kelso Avenue Elementary School in Inglewood until retiring in 1996 to focus on working with the Cadman Group. Neil and Rebecca consider themselves now "long time" residents of El Segundo and have purchased three income properties in town- 221-223 Main Street (co- owned with Hannes Krashitzer - "Chef Hannes") where Rinaldi s and Lehman's Flowers occupy, 345-349 Richmond Street- the Richmond Lofts commercial Cadman Group RFP#04-05 Page 10 3 3 6 4 building, and just recently closed escrow on the Schuldt Printing Building at 225 Richmond Street from the El Segundo School Foundation. They plan to completely renovate the building and lease it out as a "loft" style office suite. From 1995 to 1999 Neil also performed outside contractual duties as the asset manager for Universal Bank, the 711 largest Federal Savings Bank in California. Neil was honored in January of 2004 with being nominated and voted as a Board of Director of Universal Bank. Neil is also actively involved with the Los Angeles Chapter of the Institute of Real Estate Management (IREM) and is a CPM candidate. In addition, he is the President of the non-profit Housing Corporation for the Delta Chi Chapter of the Alpha Tau Omega Fraternity at UCLA. Currently the Cadman Group manages approximately 750 apartment units and over 20 light industrial/warehouse spaces throughout Los Angeles, San Bernardino, and Orange Counties (approximately half of the portfolio is located in El Segundo). The company has a staff of 15 ranging from site management, maintenance, administrative, and property supervision capacities. BOOKKEEPING: The Cadman Group uses QuickBooks Pro 2004 as its management software. Over the past ten years, we have tested programs written for the property management industry and found that most programs are geared for accountants, not real estate professionals or clients. The reports and accounting QuickBooks produces are not only easy to understand, but very simple for accountants to audit and prepare tax returns. We will work with the Corporation to determine which reports are applicable. STAFF: Joan Allen is our in-house bookkeeper and has the distinction of being a QuickBooks advisor - a trained professional who is recognized by Intuit (the maker of QuickBooks) as a trainer for other QuickBooks users. Joan has been a full charge bookkeeper for over 35 years and has served as Controller for Wolfgang Puck and Urth Cafe. Joan lives in Manhattan Beach and is the mother of four grown sons. Warren Scharff is the Cadman Group's property supervisor in charge of site and vendor supervision for the South Bay. Warren has been with the Cadman Group Cadman Group RFP#04-05 Page 11 3 3 6 4 for six years and has extensive experience in the maintenance field having worked for a large management firm as a maintenance supervisor. His experience gives him the tools for proper vendor supervision regarding job performance and prices of services. Warren and his daughter live in Torrance and she attends Torrance High School. Warren would be the property supervisor assigned to Park Vista. Diane Lortie has recently joined the Cadman Group as the director of HOA management. Diane owned and operated Reliable Property Management, Inc. in El Segundo for over 15 years and recently decided to close Reliable Property Management and merge her clients into the Cadman Group. Tonya Hanna is the Cadman Group's property supervisor and division manager for our Long Beach property portfolio. Tonya is a 1998 graduate of the University of Texas and recently joined the Cadman Group after four years with CB Richard Ellis, working on leasing office and retail space with Bob Healy in the CB Richard Ellis Torrance Office. Bob and Tonya recently completed the leasing of the Cook's Market development in downtown El Segundo. Leticia De La Torre is our office administrator who performs daily duties in support of Neil Cadman, Warren Scharff, and Joan Allen. Leticia uses her experience working for Washington Mutual Bank in El Segundo and works with the staff of First Coastal Bank to ensure proper service from our close banking relationship. Leticia is married and the mother of two sons and one daughter. Cesar Diaz is the Cadman Group's executive assistant. Cesar graduated from the University of California, Los Angeles in 2003 has a Bachelor of Arts Degree in Political Science. Cesar assists Neil Cadman in company development, marketing, and management control issues. BANKING: The Cadman Group will perform the banking services on behalf of the Corporation at the Corporation's discretion. We bank exclusively with First Coastal Bank, NA (located in downtown El Segundo) and maintain over 35 bank accounts which gives us some clout at our local branch with issues regarding services charges, etc. We maintain direct communication with Ed Myska, Mari Peters, and Miguel Mendez at the Bank. We will, however, use any bank the Corporation wishes. Many property management companies use trust funds to operate client accounts. However we believe that since money collected and bills paid are Corporation property,we prefer to use bank accounts in the Property's name Cadman Group RFP#04-05 Page 12 3 3 6 4 .._ with signature power to sign checks if the Corporation finds this acceptable, or prepare bill payment checks and deliver/mail them to a designated Board member for signature. We also give the Corporation guidance on how to maximize the interest power of the reserve accounts and operating accounts. We will be open and flexible to what the Corporation needs in terms of banking relationships. PHONE SYSTEM: The Cadman Group uses an Avant phone system to answer most incoming phone calls. While many people do not like "talking" to a system, as a property management company that handles 24-hour emergency situations, we have found it best to have a system that works 24 hours per day, 365 days per year. Unlike a receptionist, the phone system does not go home at 5:00 PM, take sick days, have weekends off, etc. Each staff member has direct extensions that are provided and key staff members associated with site management and supervision maintain company cell phones for immediate response if a staff member is not at their desk. COMPANY PHILOSOPHY Approximately one-third of the Cadman Group's management portfolios are properties that Neil and Rebecca Cadman own (under the name of various Limited Liability Corporations). Neil Cadman believes that a management company cannot truly understand the costs associated with mismanagement unless they own income property. To feel the loss of revenue caused by vacancies, poor maintenance practices, unsupervised vendor work, poor resident retentions policies, etc. is what can make a property management company effective and fulfill the client's objectives for the property. The Cadman Group's philosophy of management is simple and in order of importance: 1. Get vacant units rented now. Having a vacant unit is like writing a check every single day - money that can never be retrieved. 2. Get tenants to rent pay rent in full, on time. 3. Retain tenants. You will have fewer vacancies, thus less lost income. 4. Everything else a property management company does for the operation of the property is for the purpose of fulfilling item#3. This is what Neil Cadman calls the "philosophy of doing minimum management." While the notion of"minimum management" may sound like a company that strives to do very little, actually the contrary is the case; you Cadman Group RFP#04-05 Page 13 3 3 6 4 perform the minimum to get the job done - you do it right the first time and keep the budget in mind at all times. The following are examples of "minimum management" practices: • You define the market rent for a vacant unit and you prepare the unit so you can get the target rent in the shortest amount of time. Marble countertops in one bedroom apartments that rent for $650 per month for market rents is a waste of capital and budget space; on the other hand, you may have to put marble countertops in rentals on the Wilshire Corridor in a high-rise building where the rent is $4,500.00 per month. You put in the best quality materials and workmanship keeping a budget and your target resident base in mind. • You perform maintenance for tenants not just because it is the right thing to do, but also because you will not have tenants if you don't do it quickly and the right way the first time. If you do not provide quality housing, you will not have quality tenants. On going staff training is aimed at recognizing that each task a property management company performs is directly related to the performance and quality of the facility and the satisfaction of the residents, thus the performance and quality of the management company. Poorly landscaped grounds give residents the impression of a lack of caring about the facility; hence you may find residents in turn showing a lack of caring for the facility in terms of cleanliness, adherence to House Rules, payment of rent, etc. As a licensed Agent and Broker, no complaints have ever been filed against Neil R. Cadman and the Cadman Group with the Department of Real Estate and Neil R. Cadman and the Cadman Group have never been involved in any litigation regarding the operation of the Cadman Group. RELEVANT EXPERIENCE Elm Terrace Senior Apartments, Long Beach, California In October 1998, Neil and Rebecca Cadman purchased (50% partnership with another family) the Elm Terrace Senior Apartments in Long Beach, California at 1100 Elm Avenue. The facility was built in 1990 under a conditional use permit for 15% of the residents to be designated "low income" status. The facility has 80 units, all one bedroom, one bathroom and is not a HUD subsidized facility. Of the 80 tenants, 23 have Section 8 housing vouchers, thus qualifying the property for its "low income" requirement with the City of Long Beach. Cadman Group RFP#04-05 Page 14 3 3 6 4 The property was purchased for two reasons: 1. The previous owner was operating the facility in violation the conditional use permit (a drug half-way house) thus exposing the property to potential condemnation from the City of Long Beach. This allowed the property to have significant upside potential. 2. Neil and Rebecca Cadman's belief that the multi-family industry is taking care of wealthy retirees (Sun City Palm Springs, Leisure World, etc.), but is leaving a void for middle and low income retirees who need the facilities, services, and comfort senior complexes can provide. Within eight months, the property was cleared of all non 62 or older residents, significant upgrades were made to the wheelchair lift, elevator, mail boxes, community room, etc. and the property has been a model of excellence for the entire community. Elm Terrace residents enjoy full time site management by a staff that cares about their well being; with"community" gatherings including Monday night football parties in the community room with potluck dinners, Thanksgiving and Christmas Dinner catered by a local restaurant,weekly bingo and bunco, trips to Laughlin and Las Vegas, etc. In addition, the property is located across the street from St. Mary's Hospital and we regularly conduct meetings and seminars geared to senior's health and financial management issues. All speakers are private individuals who provide insurance documentation prior to each event and hold the ownership/management harmless. We also invite Adult Protective Services to hold meetings with our residents to make sure they know their rights in relationship to such issues as bank and credit fraud, elder abuse, tenant rights, discounts available to seniors, etc. The facility has now "adopted" a local elementary school where students visit the residents after school and read to them, do arts and crafts, etc. Owning and managing the Elm Terrace Apartments has been not only profitable from a monetary point of view, but has been the most satisfying aspect of our ownership/management portfolio. Upon request by the Corporation, Cadman Group would be willing to provide a list of all client managed properties with telephone numbers for reference purposes. Cadman Group RFP#04-05 Page 15 3 3 6 4 - PROPOSED SERVICE PLAN FOR PARK VISTA Due to the Cadman Group's close proximity to the facility -we are located at 203 Standard Street on the corner of Standard and Franklin- the communication and supervision lines of management will be open, ready, and continuous. It is our belief that any business operation depends its success or failure at the point at which staff members have the most interaction with customers, or in the case of property management, the residents. A management company can have many years of experience, the best software, bookkeepers, published management philosophy, etc., however if the resident manager is not effective, no other management personnel, policy, or philosophy will make the management of the site effective. Any management company that has the experience and tools to manage a facility like Park Vista is successful in general; however the true test for the Corporation is the measure of success at this one particular property - Park Vista. Effective property management depends on customer service, or "resident relations" more than most businesses. We, as landlords and management companies, provide a product that is basic to human needs - housing. With Park Vista, we need to strive to be even better at resident relations because our "customers" are valued members of our El Segundo community that demand and deserve friendly, prompt service to daily and special needs. Our residents must be treated with the highest levels of respect and dignity, not just because it is good business, but more simply, because they have earned it. The Cadman Group's goal, or mission, is to recruit, train, and supervise the highest level on-site manager that acts as the "front line" for many of the most important tasks performed by a property management company - leasing, enforcement of rules, and tenant retention. In addition, the on-site manager is the supervisor for the assistant managers and the maintenance/janitorial staff and keeps a close eye on the performance and professionalism of outside vendors such as landscapers, plumbers, etc. If chosen to manage the facility, the Cadman Group will interview and review the performance of the current manager by reviewing resident surveys, at length "scene scenarios" conducted by Warren Scharff and Neil Cadman to determine what level of service the current manager has performed at, and can perform at in the future. A regional search would be conducted for a potential new on-site manager targeting two areas of potential candidates: managers who have been trained and certified by the Apartment Association of Greater Los Angeles' On- Site Management Training Program, and Accredited Resident Managers (ABM's). ARM'S are career on-site managers who have earned, through Cadman Group RFP#04-05 Page 16 3 3 6 4 experience and coursework the distinction of being awarded as an Accredited Resident Manager from the Institute of Real Estate Management. The on-site manager would supervise all other site staff and a management system would be installed so that residents know that all needs, questions, or services go through the resident manager. As an example, if a resident is leaving the facility and tells the maintenance worker that they have a clogged bathroom sink, the maintenance worker is to kindly request that the resident see the resident manager; this way all needs go through one employee who is responsible for receiving the request, assigning it, and verifying the work was completed and the resident is satisfied. Much responsibility is placed on the shoulders of the on-site manager, yet the organization of the management company must allow the on-site manager to perform their duties and have off-site management personnel ready to assist and perform administrative duties. For example, an on-site manager must have basic knowledge of maintenance aspects of multi-family facilities and have a keen understanding of landlord-resident relations, but the on-site manager must not be burdened with bookkeeping,financial reporting to the Corporation, etc. Joan Allen will perform all bookkeeping aspects associated with the Park Vista facility. Rents are collected by the on-site manager and delivered to the Cadman Group's offices in El Segundo for daily processing and depositing. All invoices or bills associated with the operation of the facility shall be mailed to the Cadman Group's offices and tracked and paid by Joan Allen. Joan's mandate is to get bills paid on time, analyze utility bills and notify Warren Scharff, Neil Cadman, and the on-site manager if any common area utility bill grows in excess of 10% on any given month and to only pay a non-recurring outside vendor invoice when the work order has been approved for payment in writing by Warren Scharff who will be consulted by the on-site manager prior to any work being ordered. The on-site manager will report to Warren Scharff that such work has been satisfactorily completed. Coordination, reporting, and meeting with the Corporation and overall supervision of the total operation of the facility will be the job of Neil Cadman. Clients of the Cadman Group do not have their facility "assigned" to a property supervisor; rather their point of contact for all inquiries and needs is the owner of the management company. Our philosophy of management is to have well trained staff who understand their individual job descriptions, but also understand that effective, quality management of a facility is a team job. The Cadman Group designs overlapping Cadman Group RFP#04-05 Page 17 3 3 6 4 duties in critical areas in order to maintain checks and balances that lessen the chance for things to "fall through the cracks." With the Park Vista Senior Housing Facility managed by the Cadman Group: 1. The facility will be managed in an efficient, cost conscience manner with budgetary considerations in mind. 2. Residents will be treated with dignity and respect and will view their home as a community of neighbors with on-site and off-site management serving their individual and collective needs. 3. The El Segundo Senior Citizens Housing Corporation will have a management partner that will operate the property as a non-HUD senior facility; report to the Corporation as required, and work with the Corporation to assist in short and long term decisions to ensure the financial stability of the facility and of the Corporation. The Cadman Group will assist the Corporation to ensure that the property operates in a positive fiscal manner and that reserves are established and maintained for future improvements of the facility to protect its longevity. 4. The City of El Segundo will take pride in its Park Vista Senior Citizen Housing Facility and make it a showcase for other cities to emulate. Cadman Group RFP#04-05 Page 18 Section 4: Risks and Contractual Obligations Neil R. Cadman is a licensed California Real Estate Broker and operates the Cadman Group under the guidelines and rules as set forth by California Real Estate Law and the California Department of Real Estate. Neil Cadman is a member of the Apartment Association of Greater Los Angeles and a Certified Property Manager Candidate (CPM) within the Institute of Real Estate Management (IREM). The Cadman Group is a member of the Better Business Bureau. The Cadman Group maintains workers compensation insurance through Everest National. The Corporation and the facility would be named as additionally insured. The Cadman Group maintains a fidelity bond in the amount of$100,000.00. The Corporation and the facility would be named as additionally insured. Cadman Group RFP#04-05 Page 19 3 3 6 4 Section 5: Exceptions The Cadman Group warrants that it has reviewed the requirements of the project as described in the RFP and understands all duties and obligations contained within. Regarding having reviewed the requirements of the Draft Agreement,no Draft Agreement was provided, thus we have no comment at this time. However, the management agreement currently in effect has been reviewed and is acceptable in its entirety. Cadman Group RFP#04-05 Page 20 33 64 Section 6: Cadman Group Financial Data Neil R. Cadman, doing business as Cadman Group has been in business, licensed in the City of El Segundo since 1995. As stated previously, the company is a sole proprietorship, not a corporation. Although the RFP called for financial data for companies in existence less than one year, we felt it best to give the Corporation as much information about the company as possible. Because of the nature of sole proprietorships, Neil and Rebecca Cadman would be willing to provide the Corporation personal financial statements and a letter of financial strength from Ed Myska, Senior Vice President of First Coastal Bank. Cadman Group Profit and Loss June 2004 Jun 04 Ordinary Income/Expense Income Property Management Fees 48,717.00 Total Income 48,717.00 Expense Advertising 215.00 Continuing Education 155.00 Dues and Subscriptions 455.90 Medical&Dental 3,526.79 Payroll Expenses Auto 106.00 ETT 0.00 Gross Wages 32,149.84 Medical 0.00 Payroll Expenses-Other 0.00 Total Payroll Expenses 32,255.84 Postage and Delivery 749.69 Printing and Reproduction 1,599.63 Professional Fees 220.05 Rent 2,553.00 Supplies Office 105.72 Total Supplies 105.72 Telephone 427.50 Travel&Ent Meals 0.00 Total Travel&Ent 0.00 Utilities Cadman Group RFP#04-05 Page 21 3 3 6 4 Cable 98.91 Gas and Electric 107.71 Total Utilities 206.62 Total Expense 42,470.74 Net Ordinary Income 6,246.26 Net Income 6,246.26 Cadman Group Profit and Loss 2003 Jan-Dec 03 Ordinary Income/Expense Income Consulting Fees 35,717.72 Property Management Fees 480,775.44 Total Income 516,493.16 Expense Advertising 9,989.30 Bank Service Charges 566.00 Charitable Contributions 161.69 Continuing Education 602.26 Dues and Subscriptions 1,691.99 Equipment Rental 200.73 Insurance Liability Insurance 874.00 Workers Comp 36,225.50 Total Insurance 37,099.50 Licenses and Permits 4,901.07 Medical&Dental 47,858.59 Payroll Expenses Auto 1,378.00 ETT 84.90 Gross Wages 306,565.00 Medical 1,223.00 Payroll Expenses-Other Total Payroll Expenses 309,250.90 Payroll Taxes FICA 18,910.18 FUTA 728.00 Medicare 4,422.54 SUICA 2,457.00 Total Payroll Taxes 26,517.72 Cadman Group RFP#04-05 Page 22 3 3 6 4 Postage and Delivery 1,899.68 Printing and Reproduction 263.88 Professional Fees Accounting 346.46 Legal Fees 0.00 Professional Fees-Other Total Professional Fees 346.46 Rent 8,100.00 Repairs Computer Repairs 708.58 Total Repairs 708.58 Supplies Office 1,278.72 Total Supplies 1,278.72 Telephone 12,160.53 Travel&Ent Meals 3,297.85 Travel 2,185.75 Travel&Ent-Other 342.19 Total Travel&Ent 5,825.79 Utilities Cable 1,129.81 Gas and Electric 2,405.95 Water 29.08 Total Utilities 3,564.84 Total Expense 472,988.23 Net Ordinary Income 43,504.93 Other Income/Expense Other Income Maintenance Other Income Total Other Income 0.00 Net Other Income 0.00 Net Income 43,504.93 Cadman Group RFP#04-05 Page 23 3 3 6 4 Section 7: Representations and Certifications Please see Exhibit 1 at the end of the proposal. Cadman Group RFP#04-05 Page 24 33 64 Section 8: Proposed Contract Costs The proposed fee associated with the operation of the facility as described herein has two components: 1. For Professional Property Management Services: Cadman Group shall be paid $2,750 per month. 2. Additional costs are to be reimbursable costs associated with on-site staff compensation. Such costs include: a) Resident Manager Salary: The resident manager of a 93 unit non- HUD senior housing facility needs to have specialized training to handle the unique needs a senior housing facility provides, such as senior appropriate activities, resident health related issues, etc. According to the Institute of Real Estate Management, total compensation for multi-family properties of around 100 units is approximately $25,000 per year plus free rent. In addition, all full time employees of Cadman Group receive 100% premium payment for medical HMO, dental HMO, vision HMO, and life insurance. Therefore, the total monthly monetary net expense for the resident manager shall be: $2,740.00 1. Use of a two-bedroom unit in the facility. 2. Gross salary of$2,000.00 per month 3. Approximate payroll taxes of$185.00 per month 4. Benefits, including Health Net HMO, Health Net Vision HMO, Guardian Dental HMO, and Guardian Life Insurance: Approximately $280.00 per month. 5. Workers compensation premiums of approximately $275.00 per month b) Assistant Manager Compensation: The Assistant Managers shall be on an independent contractor contract with the Cadman Group and shall receive compensation for their duties in the form of a rent reduction. c) Maintenance Worker Salary: A qualified maintenance worker for a 93 unit building should have the necessary skill to handle most day to day maintenance issues that arise, thus lessening the need to contract outside vendors. Such a person receives approximately $15.00 per hour plus company benefits. Cadman Group RFP#04-05 Page 25 3 3 6 4 Therefore, the total monthly monetary net expense for the maintenance worker shall be: $3,295.00 1. Gross salary of$2,400.00 per month 2. Approximate payroll taxes of$185.00 per month 3. Benefits, including Health Net HMO, Health Net Vision HMO, Guardian Dental HMO, and Guardian Life Insurance: Approximately $280.00 per month. 4. Workers compensation premiums of approximately $430.00 per month. d) Janitorial Worker Salary: A janitorial worker for a 93 unit building should have the necessary skills to handle basic janitorial services including mopping, window cleaning, parking lot cleaning, trash removal, etc. In addition, the janitorial worker can assist the maintenance worker on tasks in which a second set of hands is necessary to perform a task. Such a person receives approximately $11.00 per hour plus company benefits. Therefore, the total monthly monetary net expense for the maintenance/janitorial worker shall be: $2,439.00 1. Gross salary of$1,760.00 per month 2. Approximate payroll taxes of$135.00 per month 3. Benefits, including Health Net HMO, Health Net Vision HMO, Guardian Dental HMO, and Guardian Life Insurance: Approximately $280.00 per month. 4. Workers compensation premiums of approximately $264.00 per month. Total monthly fee plus reimbursable costs to Cadman Group: Management Fee: $2,750.00 Staff payroll expense: $8,474.00** Total: $11,224.00 **Please note that while the management fee is a "fixed" expense, the reimbursable expenses associated with on-site staff changes periodically with changes in payroll tax tables,benefits costs, salary review, etc. In addition, the Cadman Group would like to review current staffing salaries to determine a more actual cost figure. Cadman Group RFP#04-05 Page 26 3 3 6 4 The Cadman Group shall provide detailed reports at the Board's discretion showing actual costs associated with site staff expense. Reports shall include DE6 and 941 forms,workers compensation premium bills, and benefit payment statements. In this way, the Corporation is assured that actual reimbursements to the Cadman Group for site staff are continually audited by both the Cadman Group and the Corporation. The Cadman Group does not propose a scheduled property management fee increase. Cadman Group RFP#04-05 Page 27 3 3 6 4 Exhibit 1 "I, Neil R. Cadman, represent and certify, on behalf of Cadman Group that I am familiar with the information presented in the proposal, and that is true and correct to the best of my knowledge and belief and that I am authorized to execute this Representation and Certification. Signed &&;e4 Since the Cadman Group is not a corporation, there exists no resolutions or documents showing that Neil R. Cadman is authorized to execute such an agreement. As stated earlier in the proposal, the Cadman Group's legal name is Neil R. Cadman, doing business as Cadman Group. Therefore my signature shall act in full force. Cadman Group RFP#04-05