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Current residents who do not wish to purchase their lot and are not considered lower income households will have their rents determined by the rent stabilization agreement that is then in effect or, if there is no agreement, by any applicable rent stabilization ordinance. Other provisions are discussed in the next section. The Settlement Agreement Assuming Council upholds the appeal and conditionally approves the application, staff recommends that the Council also approve the attached settlement agreement, the salient terms of which are as follows: 1. The conversion date of the Park, meaning the date that the lots could be sold, would be no earlier than January 1, 2020. 2. The existing rent stabilization agreement would be extended to December 31, 2017 (currently it is slated to expire on December 31, 2012) and if the Consumer Price Index remains below 7% between now and August 2017, then the existing rent stabilization agreement would be extended to December 31, 2022. [On the other hand, if the CPI were to be 7% or above between now and August 2017, a new rent stabilization agreement would need to be negotiated.] 3. Once lots are sold (which could be no earlier than January 2020), for all existing residents who still live in the Park and are, at that time, considered lower income households, the provisions of the state law that set forth how rents are to be calculated for such households will apply (basically, by a factor of the increase in the Consumer Price Index). 4. Once lots are sold, for all existing residents who still live in the Park and, at that time, are not considered lower income households, their rents will be calculated under the then existing rent stabilization agreement or, if such agreement does not exist, then under any applicable rent stabilization ordinance. 5. For all existing residents who choose to purchase their lots, the Park Owner will provide a 15% discount. (Those who do not wish to purchase their lots will continue to pay rent as provided in paragraphs 3 and 4 above.) 6. The Park will remain a "senior park" in perpetuity, unless the residents themselves vote otherwise or unless prohibited by law. 7. The City may, at its own expense, obtain an appraisal of the lots as if the lots were to be sold in 2010, which information will be shared with the Park residents. 8. The City will pay to the Park Owner $750,000 and the Park Owner will use these funds solely for capital improvements in the Park. The Park Owner will provide to the City annually an accounting as to how these funds have been spent. 9. The Park Owner will dismiss with prejudice the two pending lawsuits if there are no lawsuits filed challenging the City's decision to approve the application 10. If the City were to prevent or substantially interfere with the Park Owner's ability to convert the Park or sell the lots, the Park Owner would have the right to terminate the settlement agreement and seek damages against the City. Page 3 of 4