HomeMy WebLinkAboutColette's Children Home, Inc. - 2010-04-19Council/Agency Meeting Held:_ lw AD
Deferred/Continued to:
j App ved ❑ Conditionally Approved ❑ Denied
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Council Meeting Date: April 19, 2010
Department ID Number: ED 10-15
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Administrator
PREPARED BY: Stanley Smalewitz, Director of Economic Development
SUBJECT: Approve Subrecipient and Acquisition Loan Agreement for Purchase
of 7911 Slater Avenue with Colette's Children Home, Inc.
Statement of Issue: The City Council is asked to approve an Affordable Housing
Agreement with Colette's Children Home, Inc. for the purchase of 7911 Slater Avenue in the
amount of $675,002.
Funding Source: Federal Neighborhood Stabilization Funds (NSP) of $390,568 and
HOME Funds of $284,434.
Recommended Action: Motion to:
1) Approve Affordable Housing Agreement for purchase of 7911 Slater Avenue with
Colette's Children Home and authorize the Mayor and City Clerk to execute Agreement.
2) Authorize .the City Administrator to execute any additional documents needed to
complete this transaction.
Alternative Action(s):
Do not approve Agreement and provide direction to staff.
Item 9. - Page 1
REQUEST FOR COUNCIL ACTION
MEETING DATE: 4/19/2010 DEPARTMENT ID NUMBER: ED 10-15
Analysis: The City Council approved a Joint Powers Agreement with the City. of Buena
Park on June 1, 2009, for the purposes of accessing the City's allocation of Federal NSP
funds. The total amount of the City's allocation is $440,574, of which $50,006 will be
reserved for future administration, reporting, and monitoring of the program as Lead Agency.
The City is proposing to partner with Colette's Children Home, using $390,568 in NSP funds
and $284,432 in HOME funds, for the purposes of acquiring a vacant lot located at 7911
Slater Avenue in the City of Huntington Beach. Colette's will construct a six -unit affordable
housing development on the site. This lot is adjacent to 17432-17442 Keelson Lane which
the City assisted Colette's with the funding of the acquisition and rehabilitation of a ten -unit
affordable housing complex. Managing these two sites will enable Colette's to realize
management and cost efficiencies.
Colette's is partnering with Chelsea Investments, a well -regarded developer of affordable
housing, to submit an infill tax credit application for the July 2010 tax credit consideration.
Chelsea Investments will also help Colette's develop management expertise and capacity in
construction of new housing.
The six units will be comprised of five, three -bedroom units and one, two -bedroom unit. The
rents will be restricted to Redevelopment rent levels which will enable the Agency to receive
Redevelopment Inclusionary Unit credit as well as Regional Housing Needs Assessment
(RHNA) credit. The two -bedroom unit will be restricted to 30% Area Median Income (AMI)
while one, three -bedroom unit will also be at 30% AMI. Two, three -bedroom units will be at
40%, and the remaining two units will be at 50% AMI.
The City needs to obligate the NSP and HOME funds by the end of May 2010 in order to
meet State and Federal drawdown requirements governing the two programs. The City will
also provide an additional $240,566 in HOME funds to cover an expected gap due to the
current tax credit market. If that market improves, and tax credits are sold for a higher than
expected rate, the City's HOME contribution may not be needed. The Agency will bring the
completed construction and permanent financing back for City Council approval.
Environmental Status: Categorically excluded under the National Environment Protection
Act (NEPA). Categorically exempt under the California Environmental Quality Act (CEQA),
Section 15061 (b) (3).
Strategic Plan Goal: Maintain, Improve and Obtain Funding for Public Improvements
Attachment(s):
Item 9. - Page 2
ATTACHMENT #1
1:
SUBRECIPIENT AND ACQUISITION LOAN AGREEMENT
By and Between
THE CITY OF HUNTINGTON BEACH,
a municipal corporation of the State of California
and
COLETTE'S CHILDREN HOME, INC.,
a California non-profit public benefit corporation
(7911 Slater Avenue)
TABLE OF CONTENTS
PAGE
SECTION 1.
DEFINITIONS.........................................................................................................2
SECTION 2.
SUBJECT OF THIS AGREEMENT.......................................................................6
2.1
Purpose of the Agreement........................................................................................6
2.2.
The Redevelopment Plan.........................................................................................6
2.3
Developer.................................................................................................................7
2.4
Term of Agreement..................................................................................................7
2.5
Prohibition Against Transfers; Right of First Refusal.............................................7
SECTON 3.
ACQUISITION OF THE PROPERTY....................................................................9
3.1
Ownership of the Property.......................................................................................9
3.2
City Financial Assistance.........................................................................................9
3.3.
Deposits and Disbursement of NSP Loan and HOME Acquisition Loan.............11
3.4
Acceleration of City Financial Assistance, Enforcement of Note and
Security..................................................................................................................12
3.5
Escrow....................................................................................................................12
3.6.
City's Conditions to Closing..................................................................................14
3.7
Developer's Conditions To Closing.......................................................................15
3.8
Broker's Fees.........................................................................................................16
SECTION 4.
INSURANCE AND INDEMNIFICATION; COMPLIANCE WITH LAWS ......
16
4.1
Insurance................................................................................................................16
4.2
Indemnification......................................................................................................17
4.3
Hazardous Materials..............................................................................................18
4.4
Legal Requirements...............................................................................................18
4.5
Disclaimer of Responsibility by the City...............................................................19
4.6
Rights of Access................................................................:...................................20
4.7
Taxes, Assessments, Encumbrances and Liens.....................................................20
4.8
Rights to Plans.......................................................................................................20
SECTION 5.
USE OF THE PROPERTY....................................................................................20
5.1
No Inconsistent Uses..............................................................................................20
5.2
Regulatory Agreement...........................................................................................21
5.3
Scope of Development...........................................................................................21
5.4
Construction Drawings and Related Documents...................................................21
5.6
Cost of Development.............................................................................................22
5.7
Schedule of Performance.......................................................................................23
5.8
Maintenance of the Property..................................................................................23
5.9
Nondiscrimination..................................................................................................23
5.11
Effect and Duration of Covenants..........................................................................24
SECTION 6.
DEFAULTS AND REMEDIES.............................................................................24
6.1
Developer Defaults................................................................................................24
6.2
City Defaults..........................................................................................................25
6.3
Notice of Default....................................................................................................25
6.4
City's Remedies.....................................................................................................25
6.5
Developer's Remedies...........................................................................................26
i
6.6
Rights and Remedies are Cumulative....................................................................26
SECTION 7.
NSP PROVISIONS..............................................................................:.................26
7.1
National Objectives................................................................................................26
7.2
General Compliance...............................................................................................26
7.3
No Employer/Employee Relationship....................................................................27
7.4
Insurance & Bonding.............................................................................................27
7.5
City Recognition....................................................................................................27
7.6
Amendments..........................................................................................................27
7.7
Suspension or Termination....................................................................................27
SECTION 8.
ADMINISTRATIVE REQUIREMENTS..............................................................28
8.1
Financial Management...........................................................................................28
8.2.
Documentation and Record Keeping.....................................................................28
8.3.
Reporting and Payment Procedures.......................................................................30
8.4.
Procurement...........................................................................................................31
8.5.
Use and Reversion of Assets..................................................................................31
SECTION 9.0. RELOCATION, REAL PROPERTY ACQUISITION AND ONE -
FOR -ONE HOUSING REPLACEMENT.......................................................32
SECTION 10.0.
PERSONNEL & PARTICIPANT CONDITIONS..........................................32
10.1.
Civil Rights............................................................................................................32
10.2.
Affirmative Action.................................................................................................33
10.3
Employment Restrictions.......................................................................................34
10.4.
Conduct..................................................................................................................36
SECTION 11.0
ENVIRONMENTAL CONDITIONS..............................................................39
11.1.
Air and Water.........................................................................................................39
11.2.
Flood Disaster Protection.......................................................................................39
11.3.
Lead -Based Paint...................................................................................................39
11.4.
Historic Preservation..............................................................................................39
SECTION 12.
GENERAL PROVISIONS.....................................................................................40
12.1
Developer's Warranties..........................................................................................40
12.2
Governing Law......................................................................................................40
12.3
Attorneys' Fees......................................................................................................40
12.4
Notices, Demands, and Communications Between the Parties .............................40
12.5
Acceptance of Service of Process..........................................................................41
12.6
Conflicts of Interest................................................................................................41
12.7
Titles and Captions................................................................................................41
12.8
Gender....................................................................................................................41
12.9
Modifications.........................................................................................................41
12.10
Merger of Prior Agreements and Understandings.................................................42
12.11
No Third Parties Benefited....................................................................................42
12.12
Assurances to Act in Good Faith...........................................................................42
12.13
Warranty Against Payment of Consideration for Agreement................................42
12.14
Nonliability of Agency Officials and Employees..................................................42
12.15
Interpretation..........................................................................................................42
12.16.
Counterparts...........................................................................................................42
12.17
Severability............................................................................................................42
12.18.
Extension of Times of Performance......................................................................43
11
12.19 Inspection of Books and Records ...................................................
12.20 Waivers..........................................................................................
SECTION 13. EXECUTION OF AGREEMENT; TIME FOR ACCEPTANCE
....................43
....................43
....................43
iii
LIST OF EXHIBITS
EXHIBIT A -
LEGAL DESCRIPTION
EXHIBIT B -
SITE MAP
EXHIBIT C -
SCOPE OF DEVELOPMENT
EXHIBIT D -
PROJECT BUDGET
EXHIBIT E -
SCHEDULE OF PERFORMANCE
EXHIBIT F -
NSP PROMISSORY NOTE
EXHIBIT G -
HOME PROMISSORY NOTE
EXHIBIT H -
NSP DEED OF TRUST
EXHIBIT I -
HOME DEED OF TRUST
EXHIBIT J -
REGULATORY AGREEMENT
EXHIBIT K -
ENVIRONMENTAL INDEMNITY
EXHIBIT L -
ASSIGNMENT OF AGREEMENT
i
SUBRECIPIENT AND ACQUISITION LOAN AGREEMENT
BETWEEN THE CITY OF HUNTINGTON BEACH
AND
COLETTE'S CHILDREN HOME
FOR
PACIFIC SUN APARTMENT HOMES
(CDBG - NEIGHBORHOOD STABILIZATION PROGRAM)
(HOME PROGRAM)
THIS SUBRECIPIENT AND ACQUISITION LOAN AGREEMENT ("Agreement"),
dated as of April 5, 2010, is entered into by and between THE CITY OF HUNTINGTON
BEACH, a municipal corporation of the state of California (herein called the "City") and
COLETTE'S CHILDREN HOME, a California non-profit public benefit corporation (herein
called the "Developer").
RECITALS
A. The City has applied for and received from the State of California, Department of
Housing and Community Development ("the Department"), funds from the Neighborhood
Stabilization Program allocation of the Department's State Community Development Block
Grant Program (the "NSP Funds"), originating from the United states Government under the
Housing and Economic Recovery Act of 2008 and Title I of the Housing and Community
Development Act of 1974, as amended (HCD Act), Public Law 93-383.
B. Developer has entered into a Purchase and Sale Agreement to acquire the
"Property" (as such term is defined herein) from Kiet Truong (the "Seller") and intends to
implement the "Project" (as such term is defined herein) on the Property in accordance with the
terms of this Agreement.
C. City desires to make a loan of NSP Funds in the amount of THREE HUNDRED
NINETY THOUSAND FIVE HUNDRED SIXTY-EIGHT DOLLARS ($390,568.00) (the "NSP
Loan") to assist Developer in funding the acquisition of the Property, which will be developed
with six affordable rental units for very low income persons and families, more specifically, the
"Project" as hereinafter defined.
D. City desires to improve and preserve affordable housing in the community by
assisting Developer in acquisition of the Property. City's assistance shall be in the form of a loan
of HOME Investment Partnership Program funds ("HOME Funds") in the amount of TWO
HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED THIRTY-TWO DOLLARS
($284,432.00) (the "HOME Acquisition Loan") to assist Developer in acquiring the Property for
implementation of the Project.
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Subrecipient Acquisition Loan Agreement 04.01.10.doc
NOW, THEREFORE, in consideration of the promises and covenants contained herein,
the above recitals, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings given unless
expressly provided to the contrary:
The term "Acquisition Costs" shall mean the total cost of acquiring the Property in
conformance with the terms and conditions of this Agreement, in an amount approved by the
City Administrator or his designee, including closing and escrow costs and the cost of the City's
and the Developer's title insurance policies.
The term "Affordable Rent" shall mean rental rates not to exceed the lesser of (1)
"affordable rent" for very low income households as defined by California Health & Safety Code
Section 50053(b)(2) and (2) the rent limits set forth by the HOME Program in 24 C.F.R.
92.252(b)(1) and 24 C.F.R. 92.252(b)(2). Affordable Rent shall include a reasonable utility
allowance for tenant -paid utilities based on the Orange County Housing Authority's published
utility schedules.
The term "Affordable Unit" shall mean one of the six (6) rental dwelling units in the
Project restricted to occupancy by Very Low Income Households at Affordable Rent. The term
"Affordable Unit" and "Affordable Units" shall be used as the context mandates and shall be
reasonably interpreted in light of the context in which the term appears.
The term "Agreement" or any reference to this "Agreement" shall mean this
Subrecipient and Acquisition Loan Agreement executed by and between City and Developer,
including all exhibits attached hereto, which exhibits are incorporated herein by this reference
and all other documents incorporated herein by reference.
The term "Approved Title Conditions" shall mean title that is subject to current
property taxes and assessments, easements and other encumbrances specifically approved by the
City Administrator.
The term "Assignment of Agreements" shall mean a document substantially in the form
attached to this Agreement as Exhibit "L", which is incorporated herein by this reference.
The term "City" shall mean the City of Huntington Beach, a municipal corporation of the
State of California, having its offices at 2000 Main Street, Huntington Beach, CA 92648, and any
assignee of, or successor to, the rights, powers, and responsibilities of City.
The term "City Administrator" shall mean the individual duly appointed to the position
of City Administrator of the City, or authorized designee. Whenever an administrative action is
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required by City to implement the terms of this Housing Agreement, the City Administrator, or
an authorized designee, shall have authority to act on behalf of City, except with respect to
matters reserved under California law or the City's Charter wholly for City Council
determination.
The term "Construction Financing Event" shall mean the point in time when (i) all
conditions precedent to the recording of the City's HOME development loan documents for the
Project have been satisfied and (ii) the construction loan documents for the Project are recorded.
The term "Conventional Lender" shall mean an institutional lender approved by the City
and providing funds for Developer's implementation of the Project.
The term "Conventional Loan" shall mean a loan provided to Developer by the
Conventional Lender for payment of a portion of the development costs of the Project, including
without limitation, predevelopment costs.
The term "Days" shall mean calendar days and the statement of any time period herein
shall be calendar days and not working days, unless otherwise specified.
The term "Developer" shall mean COLETTE' S CHILDREN HOME, INC., a California
nonprofit public benefit corporation, whose address is 17301 Beach Blvd., #23, Huntington
Beach, CA 92647.
The term "Effective Date" shall mean the date the City Council approves this Agreement
and authorizes its execution; which date shall be inserted into the preamble of this Agreement.
The term "Eligible Tenant" shall mean any person entitled to rent an Affordable Unit as
set forth in the Regulatory Agreement.
The term "Environmental Indemnity" shall mean an instrument substantially in the
form attached to this Agreement as Exhibit "K".
The term "Escrow" shall mean that certain escrow with Beach Pacific Escrow, Inc.,
which has been established to convey the Property from the Seller to Developer, and into which
City shall deposit the NSP Loan and HOME Loan funds described in Section 3.2 in accordance
with the terms of this Agreement.
The term "Escrow Agent" shall mean Beach Pacific Escrow, Inc. or another escrow
agent mutually acceptable to City and Developer.
The term "Force Majeure" shall mean any war; insurrection; strike; lock -out; labor
dispute; riot; flood; earthquake; fire; casualty; Act of God; act of the public enemy; epidemic;
quarantine; restriction; freight embargo; unavoidable lack of transportation; governmental
restriction; unusually severe weather; inability to secure necessary labor, materials, or tools;
delay of any contractor, subcontractor or supplier; economic or market conditions; lack of tenant
commitments or tenant changes; inability to secure satisfactory financing; act of the other party
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including act or failure to act of any public or governmental agency or entity (except that any act
or failure to act of City shall not excuse performance by City unless otherwise provided herein);
or any other cause beyond the control or without the fault of the party claiming an extension of
time to perform.
The term "Grant Deed" shall mean that certain Grant Deed that conveys the Property
from the current owner, the Seller, to Developer.
The term "Hazardous Materials" means any hazardous or toxic substances, materials,
wastes, pollutants, or contaminants, which are defined, regulated, or listed as "hazardous
substances," "hazardous wastes," "hazardous materials," "pollutants," "contaminants," or "toxic
substances," under federal or state environmental and health and safety laws and regulations,
including without limitation petroleum and petroleum byproducts, flammable explosives, area
formaldehyde insulation, radioactive materials, asbestos, and lead. Hazardous Materials do not
include substances that are used or consumed in the normal course of developing, operating, or
occupying a housing project, to the extent and degree that such substances are stored, used, and
disposed of in the manner and in amounts that are consistent with normal practice and legal
standards.
The term "HOME Acquisition Loan" shall mean the City's loan to Developer in an
amount not to exceed TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED
THIRTY-TWO DOLLARS ($284,432.00) of HOME Funds, pursuant to this Agreement.
The term "HOME Deed of Trust" shall mean the Deed of Trust securing the HOME
Acquisition Loan.
The term "HOME Funds" means the City's allocation of funds from the HOME
Investment Partnership Program created by the National Affordable Housing Act of 1990.
The term "HOME Regulations" shall mean 24 CFR Part 92, as amended from time to
time.
The term "Median Income" shall mean the area median income of the Orange County
metropolitan statistical area (PMSA), with adjustments for household size, as estimated annually
by the United States Department of Housing and Urban Development pursuant to Section 8 of
the United States Housing Act of 1937 as amended and published by California's Housing and
Community Development Department pursuant to Health and Safety Code section 50093.
The term "NSP Deed of Trust" shall mean the Deed of Trust attached as Exhibit "H"
hereto, securing the NSP Loan.
The term "NSP Funds" shall mean funds received by the City from the Neighborhood
Stabilization Program allocation of the California Department of Housing and Community
Development's State Community Development Block Grant Program
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The term "NSP Loan" shall mean the City's loan to Developer in an amount not to
exceed THREE HUNDRED NINETY THOUSAND FIVE HUNDRED SIXTY-EIGHT
DOLLARS ($390,568.00) of NSP Funds, as evidenced by the NSP Note and secured by the NSP
Deed of Trust.
The term "NSP Note" shall mean that certain Promissory Note attached here to as Exhibit
"F"
The term "Person" means an individual, partnership, limited partnership, trust, estate,
association, corporation, limited liability company or other entity, domestic or foreign.
The term "Project" shall mean generally the acquisition of the Property and the
development of six Affordable Units, and the subsequent rental of the Affordable Units to
Eligible Tenants, all at Affordable Rent for a period of not less than 60 years, as more
particularly described in the Scope of Development and the Regulatory Agreement.
The term "Project Budget" shall mean the anticipated sources and uses of funds for
acquisition of the Property and the development of the Units as set forth in Exhibit "D" The
Project Budget and Developer's proposed method of financing shall be subject to change from
time -to -time, subject to the prior written approval of Developer and the City Administrator and
subject to and conditioned on such further review and approval by the City Council as is needed
to satisfy applicable law, policies and procedures, upon which approval the Project Budget shall
be replaced by the approved revised Project Budget.
The term "Project Costs" shall mean those costs and expenses incurred or to be incurred
in connection with the acquisition, development and operation of the Project, as set forth in the
Project Budget, which is hereby approved by the City.
The term "Property" shall mean that certain real property located in the City of
Huntington Beach, County of Orange, State of California, commonly known as 7911 Slater
Avenue, Huntington Beach, California, and legally described in Exhibit "A" and depicted on the
Site Map attached hereto as Exhibit "B".
The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and
Declaration of Covenants and Restrictions attached hereto as Exhibit "J"
The term "Restricted Period" shall mean sixty (60) years from the recordation of the
Release of Construction Covenants for the Project.
The term "Sale Price" shall mean the sale price for the Property set forth in the Purchase
and Sale Agreement between Seller and Developer, being the amount of SIX HUNDRED FIFTY
THOUSAND DOLLARS ($650,000.00).
The term "Schedule of Performance" shall mean that certain schedule attached hereto as
Exhibit "E" setting forth the times upon which performance by the parties under this Agreement
is due.
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The term "Scope of Development" shall mean that certain exhibit attached hereto as
Fxl,ihit " C',
The term "Seller" shall mean Kiet Truong, a a Married Man, as his sole and separate
property.
The term "Title Company" shall mean Lawyers Title Insurance Corporation, or another
title insurance company mutually acceptable to City and Developer.
The term "Units" shall mean the five (5) three -bedroom dwelling units and the one (1)
two -bedroom dwelling unit comprising the Project.
The term "Very Low Income Household" shall have the meaning given in California
Health and Safety Code section 50105(a).
SECTION 2. SUBJECT OF THIS AGREEMENT
2.1 Purpose of the Agreement
(a) The purpose of this Agreement is to promote affordable housing by
providing the NSP Loan in the amount of THREE HUNDRED NINETY THOUSAND FIVE
HUNDRED SIXTY-EIGHT DOLLARS ($390,568.00) and the HOME Acquisition Loan in the
amount of TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED THIRTY-TWO
DOLLARS ($284,432.00) to assist Developer in the acquisition of the Property for the purpose
of developing and operating affordable housing in the City of Huntington Beach.
(b) This Agreement is intended to facilitate Developer's acquisition of the
Property for the development of six (6) rental units for rental to Very Low Income Households at
Affordable Rents for a period of not less than 60 years following recordation of the Release of
Construction Covenants for the Project. The Project pursuant to this Agreement and the
fulfillment generally of this Agreement are in the best interests of the City and the welfare of its
residents, and are in accordance with the public purposes and provisions of applicable federal,
state, and local laws and requirements under which the Project is being undertaken and is being
assisted.
(c) The Project will be used and operated for not less than sixty (60) years as
rental housing, with all six of the Units restricted to occupancy by Very Low Income Households
in accordance with the Regulatory Agreement.
2.2. The Redevelopment Plan.
This Agreement conforms to the Redevelopment Plan for the Huntington Beach
Redevelopment Project (the "Merged Redevelopment Project") which was approved by adoption
of Ordinance No. 3343 on December 16, 1996, and which merged together four different,
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previously approved project areas. The Property is located inside of the Merged Redevelopment
Project.
2.3 Developer.
The Developer is COLETTE'S CHILDREN HOME, INC., a California nonprofit public
benefit corporation, whose address is 17301 Beach Blvd., #23, Huntington Beach, CA 92647.
Prior to the Construction Financing Event, the Developer shall assign all of its rights and
obligations under this Agreement to a partnership formed for the purpose of obtaining a Low
Income Housing Tax Credit equity investment in the Project; provided however, that the
Developer must be the managing general partner of the partnership and such assignment shall be
subject to the City's approval of the partnership documents, not to be unreasonably withheld,
conditioned or delayed ("Permitted Assignment").
2.4 Term of Agreement.
This Agreement shall remain in effect until the occurrence of the Construction Financing
Event for the Project (at which time this Agreement will be replaced with the Affordable
Housing Agreement provided for herein), unless this Agreement is earlier terminated in
accordance with its terms. Unless replaced with the Affordable Housing Agreement, the term of
this Agreement and the provisions herein shall be extended to cover any additional time period
during which the Developer remains in control of NSP funds or other NSP assets, including
program income.
2.5 Prohibition Against Transfers; Right of First Refusal.
(a) The qualifications and identity of the Developer are of particular concern
to the City. It is because of those qualifications and identity that the City has entered into this
Agreement with the Developer. No voluntary or involuntary successor in interest of the
Developer shall acquire any rights or powers under this Agreement except as expressly set forth
herein.
(b) Developer agrees that Developer shall not sell the Property during the term
of this Agreement, unless and until Developer has given to City notice in writing of its intent to
sell, specifying the identity of the prospective buyer and the price and terms of the contemplated
sale. Within ninety (90) days after Developer gives City written notice of Developer's intent to
sell, City shall have the right to purchase the Property at the same price and on the same terms
and conditions set forth in Developer's written notice of intent to sell. To exercise this right,
City must, within the same ninety (90) day period, deposit in escrow with any escrow company in
Orange County, California, all moneys and instruments required by the terms of the Developer's
notice of intent to sell to be paid or delivered to Developer on close of escrow and shall also give
Developer written notice of the deposit. If City does not exercise the right in accordance with
the provisions of this Section, Developer may sell the Property to the prospective buyer for the
price and on the terms contained in the notice; provided, however, that Developer has made
every reasonable effort to sell the Property to another nonprofit housing corporation with
Developer's similar experience and reputation in the field of low-income housing (including the
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management of properties with income and affordability restrictions), and provided further that
City has reasonably approved such prospective buyer in advance in writing.
If at any time during the term of this Agreement Developer receives from any
third party a bona fide offer to purchase the Property on terms acceptable to Developer,
Developer shall give written notice of the offer to City. Within ninety (90) days after Developer
gives City written notice of the third -party offer, City shall have the right to purchase the
Property at the same price and on the same terms and conditions set forth in the third -party offer.
To exercise its right, City must, within the same ninety (90) day period, deposit in escrow with
any escrow company in Orange County, California, all moneys and instruments required by the
terms of the offer to be paid or delivered to Developer on close of escrow and shall also give
Developer written notice of the deposit. In the event City does not exercise its right to purchase
in accordance with the provisions of this Section, Developer may sell the Property to the third
party making the offer on the same terms and conditions set forth in that offer; provided,
however, that Developer has made every reasonable effort to sell the Property to another
nonprofit housing corporation with Developer's similar experience and reputation in the field of
low-income housing (including the management of properties with income and affordability
restrictions), and provided further that City has reasonably approved such prospective buyer in
advance in writing. If for any reason the Property is not sold to the party making the offer,
Developer shall give City the same right to purchase the Property on receiving any subsequent
offer from any third party that is acceptable to Developer.
(c) For the reasons cited above, the Developer represents and agrees for itself
and any successor in interest that without the prior written approval of the City (not to be
unreasonably withheld, conditioned or delayed), there shall be no significant change in the
ownership of the Developer or in the relative proportions thereof, or with respect to the identity
of the parties in control of the Developer or the degree thereof, by any method or means.
(d) The Developer shall promptly notify the City of any and all changes
whatsoever in the identity of the parties in ownership and/or in control of the Developer or the
degree thereof, of which it or any of its officers have been notified or otherwise have knowledge
or information. This Agreement may be terminated by the City and the City may exercise any
and all available remedies if there is any significant change (voluntary or involuntary) in
membership, ownership, management or control, of the Developer (other than such changes
occasioned by the death or incapacity of any individual) without the prior written consent of the
City.
(e) Except with respect to a Permitted Assignment, Developer shall not assign
or attempt to assign this Agreement or any right herein, nor make any total or partial sale,
transfer, conveyance or assignment of the whole or any part of the Property (referred to
hereinafter as a "Transfer"), without prior written approval of the City Administrator, except as
expressly permitted by this Agreement. Any proposed transferee shall have the qualifications and
financial responsibility necessary and adequate as may be reasonably determined by the City to
fulfill the obligations undertaken in this Agreement by the Developer. Any such proposed
transferee, by instrument in writing satisfactory to the City and in form recordable among the
land records, for itself and its successors and assigns, and for the benefit of the City shall
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expressly assume all of the obligations of the Developer under this Agreement and agree to be
subject to all conditions and restrictions applicable to the Developer in this Agreement. There
shall be submitted to the City for review all instruments and other legal documents proposed to
affect any such Transfer, and if approved by the City Administrator, its approval shall be
indicated to the Developer in writing.
(f) In the absence of specific written agreement by the City, no unauthorized
Transfer, or approval thereof by the City, shall be deemed to relieve the Developer or any other
party from any obligations under this Agreement.
(g) Consent to any Transfer shall not be deemed to be a waiver of the right to
require consent to future or successive Transfers.
(h) The provisions of this Section 2.5 shall be of no force or effect as of the
expiration of the Regulatory Agreement.
SECTION 3. ACQUISITION OF THE PROPERTY.
3.1 Ownership of the Property.
As of the Effective Date of this Agreement, Developer is in escrow to acquire the
Property from the Seller.
3.2 City Financial Assistance.
(a) The City, subject to and conditioned upon the terms of this Agreement,
shall provide to Developer the NSP Loan and the HOME Acquisition Loan. The repayment
terms of the NSP Loan are set forth in the NSP Note attached to this Agreement as Exhibit "F"
and the repayment terms of the HOME Acquisition Loan are set forth in the HOME Note
attached to this Agreement as Exhibit "G". The NSP Loan and the HOME Acquisition Loan shall
be used exclusively to pay approved Acquisition Costs. Developer anticipates receiving a loan of
funds from Century Housing in the amount of $125,000 (the "Predevelopment Loan") upon
Developer's acquisition of the Property. The terms of the Predevelopment Loan must require
repayment of the loan in full not later than the Construction Financing Event. The City agrees
that it will subordinate the NSP Loan and the HOME Acquisition Loan (but not the Regulatory
Agreement) to the Predevelopment Loan but only if Century Housing provides written
commitments in the subordination agreement reasonably designed to protect the City's
investment in the event of a default. Such written commitments shall provide for, but not
necessarily be limited to: (i) a right of the City to cure a default on the Predevelopment Loan; (ii)
A right of the City to negotiate with lender after notice of default from lender; (iii) An agreement
that if prior to foreclosure of lender's loan, the City takes title to the Property and cures the
default on the loan, the lender will not exercise any right it may have to accelerate the loan by
reason of the transfer of title to the City; and (iv) a right of the City to purchase the Property from
the Developer at any time after a default on the loan. The Regulatory Agreement shall
unconditionally be and remain at all times prior and superior to the lien created by any mortgages
or other financing encumbrances on the Property.
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(b) If Developer has not received an award of Low Income Housing Tax
Credits for the Project by June 30, 2011 or if the Construction Financing Event has not occurred
by November 30, 2011, the NSP Loan and the HOME Acquisition Loan shall immediately
become all due and payable, provided that, the City Administrator may extend such deadlines in
his sole discretion.
(c) It is anticipated that, prior to the scheduled date of the Construction
Financing Event, Developer (or its approved assignee) and the City will enter into an Affordable
Housing Agreement, which will, among other things, provide for a loan from the City to
Developer of additional HOME Program funds in the amount of $500,000 for payment of a
portion of the Project's approved development costs. Upon the Construction Financing Event for
the Project, the amount of the HOME Acquisition Loan shall be added to the additional HOME
Program funds that City anticipates will be loaned to Developer. The combined principal amount
of the HOME Acquisition Loan (exclusive of any accrued interest) and the additional HOME
Program funds shall not exceed $784,432.
(d) At the Construction Financing Event, the NSP Note and the HOME Note
shall be cancelled, the NSP Deed of Trust and the HOME Deed of Trust shall be reconveyed, and
Developer shall execute new promissory notes to the City. The principal amount of the new NSP
promissory note shall be for the total cumulative principal amount of the NSP Loan plus any
accrued and unpaid interest thereon plus any other sums secured by the NSP Deed of Trust. The
principal amount of the new HOME promissory note shall be for the total cumulative principal
amount of the HOME Acquisition Loan plus any accrued and unpaid interest thereon plus any
other sums secured by the HOME Deed of Trust plus the $500,000 amount of the additional
HOME Program funds loaned by the City to the Developer. The new promissory notes shall set
forth the terms of their repayment from one hundred percent (100%) of available net operating
income through the pro rata application of such share of available net operating income,
reflecting the relative amounts of the NSP Loan and the HOME Loan. Subject to Section 3.2(f),
the new promissory notes shall be secured by deeds of trust on the Property that are subordinate
only to those prior liens and encumbrances that are reasonably approved by the City
Administrator. The Regulatory Agreement shall unconditionally be and remain at all times prior
and superior to the lien created by any mortgages or other financing encumbrances on the
Property.
(e) Each obligation of the Developer under this Agreement is a nonrecourse
obligation of the Developer and its approved assignee. Except as provided otherwise in this
Agreement, neither the Developer nor any of the general or limited partners of Developer's
approved assignee, nor any other party, shall have any personal liability for payment of
obligations to the City. The sole recourse of the City shall be the exercise of its rights against the
Property and the Project and any related security for the NSP Loan and the HOME Acquisition
Loan.
Notwithstanding the foregoing, the City may obtain a judgment or order (including, without
limitation, an injunction) requiring Developer or any other party to perform (or refrain from)
specified acts other than repayment of the NSP Loan and the HOME Acquisition Loan; may
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proceed against any person or entity whatsoever with respect to the enforcement of any
performance or completion guarantees or similar rights to performance; and may recover directly
from Developer or any other party:
(i) any damages, costs and expenses incurred by the City as a result of
fraud or any criminal act or acts of Developer or Developer's assignee or any partner,
shareholder, officer, director or employee (acting within the scope of his or her employment) of
Developer or Developer's assignee or of any general partners of Developer's assignee;
(ii) any damages, costs and expenses incurred by the City as a result of any
misappropriation of funds provided for the acquisition and development of the Property, as
described in this Agreement, rents and revenues from the operation of the Project, or proceeds of
insurance policies or condemnation proceeds;
(iii) any and all amounts owing by Developer pursuant to Developer's
indemnification regarding Hazardous Substances; and
(iv) all court costs and attorneys' fees reasonably incurred in enforcing or
collecting upon any of the foregoing exceptions.
(f) If the City's Director of Economic Development finds and determines that
it is necessary to subordinate the NSP Loan and/or the HOME Acquisition Loan to a
Conventional Loan because no economically feasible alternative method of financing the Project
on substantially comparable terms and conditions, but without subordination, is reasonably
available, the City shall subordinate the NSP Loan and/or the HOME Acquisition Loan (but not
the Regulatory Agreement) but only if the Conventional Lender provides written commitments in
the subordination agreement reasonably designed to protect the City's investment in the event of
a default. Such written commitments shall provide for, but not necessarily be limited to: (i) A
right of the City to cure a default on the Conventional Deed of Trust; (ii) A right of the City to
negotiate with the Conventional Lender after notice of default from the Conventional Lender; an
(iii) An agreement that if prior to foreclosure of the Conventional Loan, the City takes title to the
Property and cures the default on the Conventional Loan, the lender will not exercise any right it
may have to accelerate the Conventional Loan by reason of the transfer of title to the City.
3.3. Deposits and Disbursement of NSP Loan and HOME Acquisition Loan.
(a) Upon satisfaction of all conditions precedent (or waiver by City) to City's
obligation to deposit the NSP Loan and the HOME Acquisition Loan into Escrow under this
Agreement, City shall deposit the amount of THREE HUNDRED NINETY THOUSAND FIVE
HUNDRED SIXTY-EIGHT DOLLARS ($390,568.00) of the NSP Loan funds and the amount of
TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED THIRTY-TWO
DOLLARS ($284,432.00) of the HOME Acquisition Loan funds into Escrow to be applied
toward payment of (i) that portion of the Sale Price remaining after crediting Developer for the
deposit previously paid to Seller, (ii) closing and title costs, (iii) Developer's pro -rated taxes and
assessments on the Property, and (iv) reimbursement to Developer of the deposit previously paid
by Developer to Seller and the cost of obtaining an updated appraisal for the Property. Such
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payments shall be in amounts set forth in an estimated settlement statement prepared by the
Escrow Agent and approved by the City Administrator.
(b) Upon Close of Escrow, the Escrow Agent shall disburse the Sale Price
(less Developer's deposit paid to the Seller) from the NSP Loan funds and the HOME
Acquisition Loan funds deposited into Escrow. The Escrow Agent shall pay from the HOME
Acquisition Loan funds the amounts set forth in clauses (ii), (iii) and (iv) of paragraph (a)
immediately preceding. The remaining balance, if any, of the NSP Loan funds and the HOME
Acquisition Loan funds deposited with the Escrow Agent shall be refunded to the City.
3.4 Acceleration of City Financial Assistance; Enforcement of Notes and Security.
In the event Developer does not obtain an award of Low Income Housing Tax Credits for
the Project by June 30, 2011 or the Construction Financing Event has not occurred by November
30, 2011 or Developer otherwise is in Material Default of any of its obligations hereunder or
under the Regulatory Agreement, the entire principal balance of the NSP Loan and the HOME
Acquisition Loan plus any interest due thereon shall immediately become due and payable, and
City shall have the right, at its sole option, to: (a) demand full payment of the principal balance
of the NSP Loan and the HOME Acquisition Loan plus all accrued and unpaid interest; (b) take
over ownership of the Property; (c) foreclose on the Property under the NSP Deed of Trust and/or
the HOME Deed of Trust; and/or (d) exercise such other rights and remedies it may have under
law or in equity.
3.5 Escrow.
This Agreement, once deposited in Escrow, shall constitute joint escrow instructions of
City and Developer. The Escrow agent is hereby empowered to act under the Agreement and
upon indicating its acceptance in writing to City and Developer within five (5) days after receipt
of this Agreement; provided, however, that any undertaking by the Escrow agent of any of the
acts or services set forth in this Agreement shall constitute acceptance of the obligation to
perform as Escrow agent under this Agreement. Any amendment to the Escrow instructions
contained herein shall be in writing and signed by City and Developer.
(a) Closing Date. On or before the date established in the Schedule of
Performance, the parties shall satisfy the conditions described in Sections 3.5(b), 3.6 and 3.7 and
complete the Close of Escrow. If, for any reason, the Close of Escrow has not occurred by the
date provided therefor in the Schedule of Performance, either party may terminate this
Agreement, by providing written notice of termination to the other party.
(b) Delively of Documents and Funds by Developer. On or before twelve
noon on the last business day prior to the scheduled Closing Date, Developer shall deposit or
cause to be deposited with the Escrow agent the following:
(i) the Grant Deed executed in recordable form by the Seller;
(ii) the NSP Note, executed by Developer;
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(iii) the NSP Deed of Trust, executed in recordable form by Developer;
(iv) the HOME Note, executed by Developer;
(v) the HOME Deed of Trust, executed in recordable form by
Developer;
(vi) the Regulatory Agreement, executed in recordable form by
Developer;
(vii) the Environmental Indemnity, executed by Developer;
(viii) the Assignment of Agreements, executed by Developer;
(ix) all funds, documents, and deposits Developer is required to
deposit with Escrow agent in order to close the Escrow conveying
the Property to Developer.
(c) Delivery of Documents and Funds by City. On or before twelve noon on
the last business day prior to the scheduled Closing Date, City shall deposit or cause to be
deposited with the Escrow agent the following:
(i) the NSP Deed of Trust, executed in recordable form by City;
(ii) the HOME Deed of Trust, executed in recordable form by City;
(iii) the Regulatory Agreement, executed in recordable form by City;
and
(iv) the NSP Loan funds and the HOME Acquisition Loan funds
described in Section 3.2.
(d) Recordation. Escrow agent is directed, on the Closing Date, to record
against the Property the following documents in the following order of priority: (i) the Grant
Deed; (ii) the Regulatory Agreement; (iii) the HOME Deed of Trust; and (iii) the NSP Deed of
Trust.
(e) Escrow Agent Duties. The Escrow agent shall (i) record the documents as
provided in subparagraph (d); (ii) at Closing, deliver the original NSP Note and the original
HOME Note to City and a copy of same to Developer; and (iii) upon recordation deliver to City
and Developer conformed copies of the Grant Deed, NSP Deed of Trust, HOME Deed of Trust
and the Regulatory Agreement.
(f) Interest Bearing Accounts. Escrow agent shall hold all funds received in
an interest bearing account with the interest accrued paid at Closing to the party depositing such
funds.
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(g) Title Insurance. At Closing, the Title Company shall (i) deliver to
City an ALTA standard form lender's policy of title insurance in the amount of SIX HUNDRED
SEVENTY-FIVE THOUSAND DOLLARS ($675,000.00), insuring in favor of City the priority
of the NSP Deed of Trust, the HOME Deed of Trust and Regulatory Agreement in accordance
with the priority established by this Agreement, with such endorsements as are requested by the
City ("Lender's Title Policy"); and (ii) deliver to Developer an ALTA standard form owner's
policy of title insurance in the amount of SIX HUNDRED FIFTY THOUSAND DOLLARS
($650,000.00), insuring Developer's fee title in the Property, with such endorsements as are
requested by the Developer and approved by the City ("Developer's Title Policy").
3.6. City's Conditions to Closing_
City's obligations to deposit the NSP Loan funds and the HOME Acquisition Loan funds
described in Section 3.2 in Escrow for disbursement at Closing shall be conditioned and
contingent upon satisfaction or City's waiver of each of the following conditions precedent
(collectively, the "City's Conditions to Closing"):
(a) City shall have in its account THREE HUNDRED NINETY THOUSAND
FIVE HUNDRED SIXTY-EIGHT DOLLARS ($390,568.00) of readily available NSP Funds.
(b) City shall have in its account TWO HUNDRED EIGHTY-FOUR
THOUSAND FOUR HUNDRED THIRTY-TWO DOLLARS ($284,432.00) of readily available
HOME Funds.
(c) Developer shall have completed its testing and inspection of the Property
and shall have delivered the reports to the City;
(d) Developer shall have deposited in Escrow all of the funds and instruments
required of it by this Agreement in order to close the Escrow;
(e) Developer shall have delivered to City and City shall have approved a
Purchase and Sale Agreement between Developer and Seller and any amendments thereto, which
provides for the sale of the Property to Developer for a purchase price equal to the lesser of (i)
the appraised value of the Property as established by an appraisal prepared by a state -certified
appraiser and approved by the City, or (ii) the amount of $650,000.00;
(f) Developer shall have delivered to City and City shall have approved a
Phase 1 Environmental Property Assessment for the Property.
(g) Developer shall have delivered evidence acceptable to the City that
Developer has obtained the insurance policies and endorsements required by this Agreement.
(h) Developer shall have delivered to the City a current certificate of good
standing issued by the California Secretary of State's office and shall have delivered to the City a
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certified resolution of its Board of Directors authorizing Developer's execution and
implementation of this Agreement;
(i) The City shall have determined in its reasonable discretion that Developer
is in full compliance with the terms and conditions of this Agreement and all documents and
instruments referred to herein or executed by Developer in furtherance of this Agreement; and
0) All conditions to Closing set forth in the Purchase and Sale Agreement
and any amendments thereto between Developer and the Seller for conveyance of the Property
have been satisfied (or waived by the appropriate party).
In the event any of the City's Conditions to Closing are not satisfied (or waived by City), City
may cancel the Escrow and terminate this Agreement by delivering ten (10) days prior written
notice to Developer and the Escrow agent. Developer may nullify City's notice to terminate if,
within such ten (10) day period Developer (at no cost to City) cures any unsatisfied City
Conditions to Closing and notifies the Escrow Agent of such cure. In the event of termination
pursuant to this Section, (i) the Escrow shall be cancelled and any funds deposited by City shall
be returned to it with any interest earned on such funds; (ii) Developer shall be responsible for
any escrow cancellation fees imposed by the Escrow Agent (except with respect to a termination
based on the failure of the conditions set forth in 3.6(a) or 3.6(b)); and (iii) this Agreement shall
be terminated and the parties hereto shall have no further rights or obligations hereunder.
3.7 Developer's Conditions To Closing.
Developer's obligations to close Escrow shall be conditioned and contingent upon
satisfaction or Developer's waiver of each of the following conditions precedent (collectively,
the "Developer's Conditions to Closing"): ,
(a) The Seller shall have executed the Grant Deed in recordable form and
shall have deposited same in Escrow;
(b) City shall have deposited in Escrow all of the funds and. instruments
required of it by this Agreement in order to close the Escrow, including but not limited to the
NSP Loan funds and the HOME Acquisition Loan funds described in Section 3.2, the NSP Deed
of Trust, the HOME Deed of Trust and the Regulatory Agreement;
(c) All conditions to Closing set forth in the Purchase and Sale Agreement
and any amendments thereto between Developer and the Seller for conveyance of the Property
have been satisfied (or waived by the appropriate party).
In the event any of the Developer's Conditions to Closing are not satisfied (or waived by
Developer), and provided Developer has fully performed its obligations hereunder, Developer
may cancel the Escrow and terminate this Agreement by delivering ten (10) days prior written
notice to City and the Escrow Agent. City may nullify Developer's notice to terminate if, within
such ten (10) day period City (at no cost to Developer) cures any unsatisfied Developer's
Conditions to Closing and notifies the Escrow agent of such cure. In the event of termination
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pursuant to this Section, (i) the Escrow shall be .cancelled and any funds deposited by Developer
shall be returned to it with any interest earned on such funds; (ii) City shall be responsible for any
escrow cancellation fees imposed by the Escrow Agent; and (iii) this Agreement shall be
terminated and the parties hereto shall have no further rights or obligations hereunder.
3.8 Broker's Fees.
Developer and City shall each indemnify, defend, and hold harmless the other from any
claims or damages for payment of any real estate commissions or broker's fees or finder's fees
arising out of the acts or representations of the other with respect to any of the transactions
contemplated by this Agreement.
SECTION 4. INSURANCE AND INDEMNIFICATION; COMPLIANCE WITH LAWS.
4.1 Insurance.
Developer shall procure and maintain, during the term of this Agreement, at its sole cost
and expense, until the date that City waives any such insurance requirement or requirements in
writing, the following policies of insurance on a Project specific basis:
(a) Workers' Compensation Insurance. Pursuant to California Labor Code
Section 1861, Developer acknowledges awareness of Section 3700 et seq. of said code, which
requires every employer to be insured against liability for workers' compensation. Developer
covenants that it will comply with such laws and provisions prior to commencing, and during the
performance of, any work of construction on the Property. Developer shall maintain such
Workers' Compensation Insurance in an amount not less than the statutory requirements in
California for bodily injury and disease and must maintain employer's liability coverage in an
amount not less than ONE MILLION DOLLARS ($1,000,000.00). Developer shall require all
contractors to provide such Workers' Compensation Insurance for all of the subcontractor's
employees. Developer shall furnish City with a certificate of waiver of subrogation under the
terms of the Workers' Compensation Insurance and Developer shall similarly require all
subcontractors to waive subrogation.
(b) General Liability and Auto Insurance. Developer shall carry general
commercial liability insurance, including coverage for bodily injury, property damage,
products/completed operations and blanket contractual liability in an amount not less than TWO
MILLION DOLLARS ($2,000,000.00) per occurrence and FOUR MILLION DOLLARS
($4,000,000.00) annual aggregate, combined single limit for bodily injury and property damage.
All such insurance shall be provided by insurance companies admitted in California, or if not
admitted in California, then reasonably acceptable to City. Such insurance shall name the City
and its officers, contractors, agents, and employees acting in their official capacity, as additional
insureds. Developer shall carry automobile insurance, including liability coverage for bodily
injury and property damage in an amount not less than ONE MILLION DOLLARS
($1,000,000.00) per occurrence. Developer shall require its insurer to waive its subrogation rights
against City and shall provide certificates of insurance evidencing same.
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(c) Property Insurance. Developer shall obtain and maintain in force, all -
perils (to include fire and vandalism protection) property insurance with extended coverage
endorsements thereon, on the Property, in an amount equal to the full replacement costs and/or
value thereof; this policy shall contain a replacement cost endorsement naming the City as an
insured and shall not contain a coinsurance penalty provision. The policy shall contain a lender's
loss payable endorsement that such proceeds shall be used to repair or rebuild any Units or other
improvements situated on the Property so damaged or destroyed; and, if not so used, such
proceeds shall be paid to City. The proceeds of any such insurance payable to City shall be used
for rebuilding or repair as necessary to restore the Property at the sole discretion of City. The
policy shall name the City and its officers, contractors, agents and employees acting in their
official capacity as additional insureds.
(d) Certificate of Insurance; Additional Insured Endorsements. Prior to the
close of escrow, Developer shall furnish to City certificates of insurance and additional insured
endorsements evidencing the foregoing insurance coverages as required by this Agreement. Such
certificates and endorsements shall be subject to the reasonable approval of the City Attorney and
shall provide the name and policy number of each carrier and policy and shall state that the
policy is currently in force and shall promise to provide that such policies will not be cancelled
without thirty (30) days prior written notice to City.
4.2 Indemnification.
Developer agrees to and shall protect, defend, indemnify and hold the City harmless from
and against all liability, loss, damage, cost or expenses (including reasonable attorneys' fees and
court costs) arising from or as a result of (i) Developer's failure to perform any obligations as and
when required by this Agreement or any document referred to herein, and (ii) the death of any
person or any accident, injury loss, or damage whatsoever caused during the term of this
Agreement to any person or to the property of any person which shall occur on the Property and
which shall be directly or indirectly caused by the acts of, or any errors or omissions of, the
Developer or its officers, shareholders, directors, members, agents, servants, employees,
contractors, or invitees. Developer shall not be responsible for, and the City shall protect, defend,
hold harmless and indemnify Developer against any liability, loss, damage, cost, or expense
(including reasonable attorney's fees and court costs) arising from or as a result of the gross
negligence or willful misconduct of the City or its members, officers, officials, employees,
agents, representatives, servants, or contractors during the term of this Agreement. Developer's
indemnification obligations set forth in this Section 4.2 shall commence upon the Close of
Escrow, except that Developer shall protect, defend, indemnify and hold the City harmless from
and against all liability, loss, damage, cost or expenses (including reasonable attorneys' fees and
court costs) arising from or as a result of a claim by Seller under the Purchase and Sale
Agreement between Developer and Seller or any amendments thereto, even if such claim is made
prior to the Close of Escrow. Developer's indemnification obligations under this Section 4.2
shall survive any termination or expiration of this Agreement.
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4.3 Hazardous Materials.
Developer, from and after the Close of Escrow, and until a transfer, sale, or assignment of
the Property upon which the following covenant shall then be the obligation of the transferee,
purchaser, or assignee, shall indemnify, defend, and hold harmless the City and its officers,
employees, agents and representatives (collectively, the "Indemnified Parties") from and against
any and all liabilities (including penalties, fines and monetary sanctions) arising from a violation
of state or federal law pertaining to (i) the storage of Hazardous Materials on the Property or (ii)
contamination of the Property by a release of Hazardous Materials. Developer, prior to the
Closing Date, shall provide to City a copy of any notices, orders, or reports concerning the
presence of any Hazardous Materials on or affecting the Property that is in Developer's
possession. As a condition precedent to the funding of the NSP Loan, Developer shall execute
and deliver to the City an Environmental Indemnity, substantially in the form of Exhibit "K" to
this Agreement.
4.4 Legal Requirements.
Developer hereby agrees to carry out acquisition of the Property and all activities on the
Property, including, without limitation, any and all public works (as defined by applicable law),
in conformity with all applicable local, state and federal laws, including, without limitation, all
applicable federal and state labor laws (including, without limitation, any requirement to pay
state prevailing wages). It is the intent of the parties that, notwithstanding any other provisions
of this Agreement, Developer's obligation applies only to the extent that a particular statute or
regulation referenced herein or in the Regulatory Agreement applies to the Project. Developer
hereby expressly acknowledges and agrees that the City has never affirmatively represented to
the Developer or its contractor(s) for the Project in writing or otherwise, in a call for bids or
otherwise, that the work to be covered by the bid or contract is not a "public work," as defined in
Section 1720 of the Labor Code. Developer hereby agrees that it shall have the obligation to
provide any and all disclosures, representations, statements, re -bidding, and/or identifications to
the extent the Project triggers a requirement under Labor Code Sections 1726 and 1781, as the
same may be enacted, adopted or amended from time to time, or any other provision of law.
Developer hereby agrees that it shall have the obligation to provide and maintain any and all
bonds to secure the payment of contractors (including the payment of wages to workers
performing any public work) to the extent the Project triggers a requirement under the Civil
Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to
time, or any other provision of law. Developer hereby agrees that it shall have the obligation, at
its sole cost, risk and expense, to obligate any party to the extent the Project triggers a
requirement under Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or
amended from time to time, or any other provision of law. Developer shall indemnify, protect,
defend and hold harmless the City and its officers, employees, contractors and agents, with
counsel reasonably acceptable to City, from and against any and all loss, liability, damage, claim,
cost, expense, and/or "increased costs" (including labor costs, penalties, reasonable attorneys
fees, court and litigation costs, and fees of expert witnesses) which, in direct connection with the
acquisition, construction (as defined by applicable law) and/or operation of the Project,
including, without limitation, any and all public works (as defined by applicable law), results or
arises in any way from any of the following: (1) the noncompliance by Developer of any
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applicable local, state and/or federal law, including, without limitation, any applicable federal
and/or state labor laws (including, without limitation, if applicable, the requirement to pay state
prevailing wages); (2) the implementation of Sections 1726 and 1781 of the Labor Code, as the
same may be enacted, adopted or amended from time to time, or any other similar law; (3) failure
by Developer to provide any required disclosure, representation, statement, re -bidding and/or
identification which may be required by Labor Code Sections 1726 and 1781, as the same may be
enacted, adopted or amended from time to time, or any other provision of law; (4) failure by
Developer to provide and maintain any and all bonds to secure the payment of contractors
(including the payment of wages to workers performing any public work) which may be required
by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended
from time to time, or any other provision of law; and/or (5) failure by Developer to obligate any
party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted,
adopted or amended from time to time, or any other provision of law. It is agreed by the parties
that, in connection with the acquisition, construction (as defined by applicable law) and operation
of the Project, including, without limitation, any public work (as defined by applicable law),
Developer shall bear all risks of payment or non-payment of state prevailing wages and/or the
implementation Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or
amended from time to time, and/or any other provision of law. "Increased costs" as used in this
Section shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be
enacted, adopted or amended from time to time. The foregoing indemnity shall survive
termination of this Agreement.
4.5 Disclaimer of Responsibilityby the City
Except as expressly provided in this Agreement, the City neither undertakes nor assumes
nor will have any responsibility, right or duty to Developer or to any third party to review,
inspect, supervise, pass judgment upon or inform Developer or any third party of any matter in
connection with the Property, whether with respect to the condition of the Property or its quality,
adequacy or suitability to the Project, or with respect to any person furnishing services with
regard to the Property, or otherwise. Developer and all third parties shall rely upon its or their
own judgment regarding such matters, and any review, inspection, supervision, exercise of
judgment or information supplied to Developer or to any third party by the City in connection
with such matter is for the public purpose of providing affordable housing, and neither Developer
(except for the purposes set forth in this Agreement) nor any third party is entitled to rely
thereon.
4.6 Rights of Access.
Commencing upon the Close of Escrow, representatives of the City shall have the
reasonable right of access to the Property, upon two (2) business days' written notice to
Developer (except in the case of an emergency, in which case the City shall provide such notice
as may be practical under the circumstances), without charges or fees, at normal hours for the
purposes of this Agreement, including, but not limited to, the inspection of any work being
performed on the Property. Such representatives of the City shall be those who are so identified
in writing by the City Administrator.
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4.7 Taxes, Assessments, Encumbrances and Liens.
Developer shall pay when due all real estate taxes and assessments assessed and levied on
or against the Property. Developer shall not place, or allow to be placed, on title to the Property
or any portion thereof, any mortgage, trust deed, encumbrance or lien not reasonably approved by
the City Administrator in accordance with the provisions herein, including without limitation,
Section 3.2(f). In addition, Developer shall remove, or shall have removed, any levy or
attachment made on title to the Property (or any portion thereof), or shall assure the satisfaction
thereof within a reasonable time but in any event prior to a sale thereunder. Nothing herein
contained shall be deemed to prohibit the Developer from contesting the validity or amount of
any tax assessment, encumbrance or lien, nor to limit the remedies available to the Developer in
respect thereto.
4.8 Rights to Plans
(a) All work product prepared with regard to the Property or the Project, including
(but not limited to), all plans, construction documents, soils tests and similar reports, permits and
other entitlements are hereby assigned to the City as security for Developer's obligations
hereunder. In the event that this Agreement is terminated by the City, Developer shall, within ten
(10) business days of such termination, transmit all such work product to the City.
(b) To effectuate the assignment described in paragraph a., Developer shall execute
and deliver to the Authority an Assignment of Agreements (the "Assignment"), substantially in
the form attached to this Agreement as Exhibit "L" in a form that is acceptable to the City
Administrator, granting to the City all of Developer's rights to: (1) the plans prepared for the
Project; (2) the contract between Developer and its architect; (3) all permits relating to the
Project; and similar rights and property interests.
SECTION 5. USE OF THE PROPERTY.
5.1 No Inconsistent Uses.
Developer covenants and agrees, for itself, its successors, its assigns, and every successor
in interest to the Property, or any part thereof, that for the period beginning on the Close of
Escrow and ending on the expiration date of the Regulatory Agreement, Developer and such
successors shall not devote the Property to uses inconsistent with the applicable zoning
restrictions, this Agreement, and the Regulatory Agreement; provided that, in the event of any
inconsistency, the provisions of the Regulatory Agreement shall prevail over this Agreement.
5.2 RegulatoryAgreement.
At the Close of Escrow the Regulatory Agreement shall be recorded against the Property
in the Priority set forth in Section 3.5(d).
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5.3 Scope of Development.
The Property is being acquired in anticipation of its development in accordance with and
within the limitations established in the Scope of Development and plans approved by the City
pursuant to this Agreement and permits issued by the City. It is anticipated that Developer will
contract for performance of specific activities. Such contracts shall not in any way diminish or
waive Developer's obligations under this Agreement.
5.4 Construction Drawings and Related Documents
(a) Developer shall prepare and submit construction drawings and related
documents for the development of the Property to the City for review in its capacity as a lender
(including, but not limited to, architectural review) and written approval at the times established
in the Schedule of Performance. The construction drawings and related documents shall be
submitted in two stages, preliminary and final drawings, plans and specifications.. Final
drawings, plans, and specifications are hereby defined as those in sufficient detail to obtain a
building permit. Any items so submitted and approved in writing by the City shall not be subject
to subsequent disapproval. City approval shall not be unreasonably withheld, conditioned or
delayed.
(b) Progressively detailed plans shall be approved by the City if exterior
spaces and areas open to public view do not vary and the plans otherwise do not materially vary
from previously approved plans, and if they are a logical evolution of previously approved plans
and conform to the provisions of the Scope of Development. In the event of the disapproval by
the City of any plans submitted by Developer, City shall promptly communicate in writing to
Developer all reasons for such disapproval and all requirements for subsequent approval of
revised plans.
(c) During the preparation of all drawings and plans, the City staff and
Developer shall hold regular progress meetings to coordinate the preparation of, submission to,
and review of construction plans and related documents by the City. The City staff and
Developer shall communicate and consult informally as frequently as is necessary to insure that
the formal submittal of any documents to the City can receive prompt and speedy consideration.
(d) If any revisions or corrections of plans approved by the City shall be
required by a governmental official, agency, department or bureau having jurisdiction over the
development of the Property, Developer and the City shall cooperate in efforts to obtain waiver
of such requirements or to develop a mutually acceptable alternative. Neither the City nor
Developer shall unreasonably withhold approval of a mutually acceptable alternative.
5.5 City Approval of Plans, Drawings and Related Documents
(a) As provided in Section 5.4, the City, in its capacity as lender, shall have
the right of reasonable review (including, but not limited to, architectural review) of all plans,
drawings and related documents for the rehabilitation of the Property, including any proposed
changes therein. The City Administrator or designee shall approve or disapprove such plans,
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drawings, and related documents referred to in this Agreement (and any proposed changes
therein), in writing, within the times established in the Schedule of Performance. Any
disapproval shall state, in writing, the reasons for disapproval. Developer, upon receipt of a
disapproval shall revise such portions of the plans, drawings or related documents in a manner
that satisfactorily addresses the reasons for disapproval and resubmit such revised portions to the
City as soon as possible after receipt of the notice of disapproval. The City shall approve or
disapprove such revised portions in the same manner and within the same times as provided in
this Section 5.5 for approval or disapproval of plans, drawings, and related documents initially
submitted to the City. No matter once approved shall be subsequently disapproved.
(b) Prior to the Construction Financing Event, the Developer shall submit to
the City Administrator for approval a final construction cost breakdown, detailed cost estimate,
schedule of values and the Developer's contract with a general contractor licensed in the state of
California, which contractor shall be subject to the City Administrator's reasonable approval. All
change order requests during construction shall be submitted to the City Administrator for
review.
5.6 Cost of Development
(a) Except as otherwise expressly set forth in this Agreement, the cost of
developing the Property shall be the responsibility of the Developer. The Project Costs are set
forth in the Project Budget, which shall be subject to change from time -to -time.
(b) The Developer has proposed, and the City has approved, the Project
Budget appended to this Agreement. Developer acknowledges that the City is relying on
Developer's experience and expertise in establishing the costs for the Project and Developer
represents that the Project Budget is based on the best, good faith estimate of the Developer of
the costs that are likely to be incurred for the Project.
(c) Any indirect costs charged must be consistent with the conditions of
Section 8.3(b) of this Agreement. In addition, the City may require a more detailed budget
breakdown than the one contained herein, and the Developer shall provide such supplementary
budget information in a timely fashion in the form and content prescribed by the City. Any
amendments to the budget must be approved in writing by both the City Administrator and the
Developer.
(d) Prior to the Construction Financing Event, Developer shall submit to the
City Administrator for approval commitment letters, loan documents, tax credit partnership
agreement and other documentation reasonably required by the City, demonstrating to the City
Administrator's reasonable satisfaction that Developer has obtained all financing necessary for
the development and operation of the Project as set forth in this Agreement.
5.7 Schedule of Performance
Developer and City shall perform all acts respectively required of such party in this
Agreement within the times provided in the Schedule of Performance. The Schedule of
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Performance is subject to revision from time to time as mutually agreed upon in writing by
Developer and the City Administrator.
5.8 Maintenance of the Property.
Developer shall be responsible, without cost or expense to the City, for the management,
maintenance, security and care of the Property in accordance with applicable state and local laws
and codes and Developer shall provide and maintain such fencing and security as may be
reasonably required by the City Administrator. Developer shall not commence any construction,
grading or other site preparation activities on the Property prior to the Construction Financing
Event, except with the express written approval of the City Administrator. The City shall have
the right at all reasonable times to enter and inspect the Property in order to ensure compliance
with the foregoing requirements. Except if the City reasonably determines that immediate entry
to the Property is necessary to protect public health and safety or to preserve the security of its
loans to the Project, the City shall first provide Developer with two (2) business days prior
written notice; provided that, and notwithstanding the foregoing, prior to the City's entry to an
occupied unit, the City shall first provide the notice required by the tenant's lease. In the event
Developer fails to maintain the Property as required by this Section, Developer shall, within
thirty (30) days after City's notification or Developer's own discovery of any deficiency, take all
necessary steps to correct such deficiency, provided that, if such deficiency is not reasonably
capable of being cured within thirty (30) days, Developer shall commence to cure said deficiency
within thirty (30) days and diligently and in good faith continue to take all necessary steps to
correct such deficiency.
5.9 Nondiscrimination.
There shall be no discrimination against or segregation of any person, or group of
persons, on account of race, color, creed, age, class, income, religion, sex, sexual orientation,
marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the Property, or any part thereof, or in the awarding of contracts for the
Project, nor shall Developer, or any person claiming under or through it, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the
Property, or any part thereof, or in the awarding of contracts for the Project. Developer shall
comply with all applicable federal, state and local nondiscrimination, fair housing, and equal
opportunity requirements. In addition, Developer shall conduct affirmative marketing and
minority outreach activities as required by Federal regulations.
5.11 Effect and Duration of Covenants. The Developer has executed, or will execute
prior to Close of Escrow, in recordable form the Regulatory Agreement. Every covenant and
condition and restriction contained in the Regulatory Agreement shall remain in effect until the
date that is sixty (60) years following the recordation of a Release of Construction Covenants for
the Project (regardless of whether the NSP Loan and the HOME Acquisition Loan have been
repaid prior to the end of such Restricted Period), except that the covenants against
discrimination set forth in Section 5.10 shall remain in effect in perpetuity. The City is deemed
the beneficiary of the terms and provisions of this Agreement and the covenants herein, both for
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and in its own right and for the purposes of protecting the interests of the community and other
parties, public or private, for whose benefit this Agreement and the covenants running with the
land have been provided. The City shall have the right if the covenants contained in this Housing
Agreement are breached, to exercise all rights and remedies, and to maintain any actions or suits
at law or in equity or other proper proceedings to enforce the curing of such breaches to which it
or any other beneficiaries of this Agreement and covenants are entitled.
SECTION 6. DEFAULTS AND REMEDIES.
6.1 Developer Defaults. The occurrence of any one or more of the following events
shall constitute a "Material Default" by Developer hereunder if, after receiving written notice
from the City as provided in Section 6.3 below identifying such event, Developer fails to cure
said event within thirty (30) days; provided that if such default is not reasonably capable of being
cured within thirty (30) days, Developer commences to cure said event within thirty (30) days
and diligently and in good faith continues to cure the event of default:
(a) Developer has failed to Close Escrow to acquire fee title to the Property
within the time set forth in the Schedule of Performance, as such time may be extended pursuant
to this Agreement;
(b) Developer has failed to obtain an award of Low Income Housing Tax
Credits for the Project by June 30, 2011.
(c) The Construction Financing Event has not occurred within the time set
forth in the Schedule of Performance, as such time may be extended pursuant to this Agreement;
(d) Developer fails to complete construction of the Units within the time set
forth in the Schedule of Performance, as such time may be extended pursuant to this Agreement;
(e) Developer fails to observe or perform any material term of this Agreement
or any agreement incorporated hereunder by reference including, but not limited to, the
Regulatory Agreement, the NSP Note, the NSP Deed of Trust, the HOME Note and the HOME
Deed of Trust within the time set forth in this Agreement or any of the documents referred to
herein; or
(f) Developer knowingly and intentionally makes or delivers to City any
statement, report, or certificate that is not true or correct in any material respect.
In no event shall City be precluded from exercising remedies if the default is not cured within
one hundred twenty (120) days, or City's rights under this Agreement become or are about to
become materially jeopardized by any failure to cure a default.
6.2 City Defaults. The occurrence of any one or more of the following events shall
constitute a "Material Default" by City hereunder if, after receiving written notice from
Developer as provided in Section 6.3 below identifying such event, City fails to cure said event
within thirty (30) days; provided that if such default is not reasonably capable of being cured
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within thirty (30) days, City commences to cure said event within thirty (30) days and diligently
and in good faith continues to cure the event of default:
(a) City fails to observe or perform any material term of this Agreement
within the time set forth in this Agreement, including but not limited to timely deposit into
Escrow of the required NSP Loan funds and HOME Acquisition Loan funds; or
(b) City knowingly and intentionally makes or delivers to Developer any
statement, report, or certificate that is not true or correct in any material respect.
In no event shall Developer be precluded from exercising remedies, if the default is not cured
within one hundred twenty (120) days, or Developer's rights under this Agreement become or are
about to become materially jeopardized by any failure to cure a default.
6.3 Notice of Default. The non -defaulting party shall give written notice of any
default under this Section to the defaulting party, clearly specifying the default. Copies of any
notice of default given to the defaulting party shall also be given to any permitted lender
requesting such notice. Any failure or delay in giving such notice or in asserting any of any
party's rights and remedies as to any default shall not constitute a waiver of any default, nor shall
it change the time of default, nor shall it deprive any party of its rights to institute and maintain
any actions or proceedings which it may deem necessary to protect, assert or enforce any such
rights or remedies.
6.4 City's Remedies.
(a) Prior to the Close of Escrow, in the event of any Material Default that the
Developer fails to cure within the time set forth in Section 6.1 (subject to the right of notice and
expiration of applicable cure periods), the City may terminate this Agreement as its sole and
exclusive remedy.
(b) Following the Close of Escrow, in the event of any Material Default that
the Developer fails to cure within the time set forth in Section 6.1 (subject to the right of notice
and expiration of applicable cure periods), the entire principal balance of the NSP Loan and the
HOME Acquisition Loan including all interest shall immediately become due and payable, and
City shall have the option to: (a) demand full payment of the principal balance of the NSP Loan
and the HOME Acquisition Loan including all interest; (b) apply for the appointment of a
receiver to take over possession and management of the Property; (c) foreclose on the Property
under the NSP Deed of Trust and/or the HOME Deed of trust and/or (d) exercise its other rights
under law or in equity.
6.5 Developer's Remedies. Subject to any applicable cure periods and the
general right to notice provided for in this Agreement, upon a default or breach of this
Agreement by City, Developer may bring an action for specific performance of this Agreement or
any term or provision hereof, or, if prior to the Close of Escrow, may terminate this Agreement.
Developer may not sue for monetary damages.
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6.6 Rights and Remedies are Cumulative. Except as otherwise expressly stated
in this Agreement, the rights and remedies of the parties hereto are cumulative, and the exercise
by any party of one or more of its rights or remedies shall not preclude the exercise by it, at the
same or different times, of any other rights or remedies for the same default or any other default
by another party.
SECTION 7. NSP PROVISIONS
7.1 National Obiectives
All activities funded with CDGB funds must meet one of the CDBG program's National
Objectives: benefit low- and moderate -income persons; aid in the prevention or elimination of
slums or blight; or meet community development needs having a particular urgency, as defined in
24 CFR 570.208. The Developer certifies that the activities carried out under this Agreement will
benefit low-income persons by providing affordable housing.
7.2 General Compliance
The Developer agrees to comply with the requirements of Title 24 of the Code of Federal
Regulations, Part 570 (the U.S. Housing and Urban Development regulations concerning
Community Development Block Grants (CDBG)) including subpart K of these regulations,
except that (1) the Developer does not assume the City's environmental responsibilities described
in 24 CFR 570.604 and (2) the Developer does not assume the City's responsibility for initiating
the review process under the provisions of 24 CFR Part 52. The Developer also agrees to comply
with all other applicable Federal, state and local laws, regulations, and policies governing the
NSP funds provided under this contract. The Developer further agrees to utilize funds available
under this Agreement to supplement rather than supplant funds otherwise available.
7.3 No Employer/Employee Relationship
Nothing contained in this Agreement is intended to, or shall be construed in any manner,
as creating or establishing the relationship of employer/employee between the parties. The City
shall be exempt from payment of all Unemployment Compensation, FICA, retirement, life and/or
medical insurance and Workers' Compensation Insurance.
7.4 Insurance & Bonding
The Developer shall comply with the applicable bonding and insurance requirements of
24 CFR 84.31 and 84.48, Bonding and Insurance.
7.5 City Recognition
The Developer shall insure recognition of the role of the City in providing the housing to
be developed through this Agreement. All activities, facilities and items utilized pursuant to this
Agreement shall be prominently labeled as to funding source. In addition, the Developer will
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include a reference to the support provided herein in all publications made possible with funds
made available under this Agreement.
7.6 Amendments
The City or Developer may amend this Agreement � at any time provided that such
amendments make specific reference to this Agreement, and are executed in writing, signed by a
duly authorized representative of each organization, and approved by the City's governing body.
Such amendments shall not invalidate this Agreement, nor relieve or release the City or
Developer from its obligations under this Agreement.
The City may, in its reasonable discretion, amend this Agreement to conform with
Federal, state or local governmental guidelines, policies and available funding amounts. If such
amendments result in a material change to the Agreement, including a change in the funding, the
scope of services, or schedule of the activities to be undertaken as part of this Agreement, such
modifications will be incorporated only by written amendment signed by both City and
Developer.
7.7 Suspension or Termination
In accordance with 24 CFR 85.43 and subject to the right of notice and expiration of
applicable cure periods set forth herein, the City may suspend or terminate this Agreement if the
Developer materially fails to comply with any terms of this Agreement, which include (but are
not limited to) the following:
(a) Failure to comply with any of the rules, regulations or provisions referred
to herein, or such statutes, regulations, executive orders, and HUD guidelines, policies or
directives as may become applicable at any time;
(b) Failure, for any reason, of the Developer to fulfill in a timely and proper
manner its obligations under this Agreement;
(c) Ineffective or improper use of funds provided under this Agreement; or
(d) Submission by the Developer to the City reports that are incorrect or
incomplete in any material respect.
SECTION 8. ADMINISTRATIVE REQUIREMENT'S
8.1 Financial Management
(a) Accounting Standards
The Developer agrees to comply with 24 CFR 84.21-28 and agrees to adhere to
the accounting principles and procedures required therein, utilize adequate internal controls, and
maintain necessary source documentation for all costs incurred.
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(b) Cost Principles
The Developer shall administer its program in conformance with OMB Circulars
A-122, "Cost Principles for Non -Profit Organizations," or A-21, "Cost Principles for Educational
Institutions," as applicable. These principles shall be applied for all costs incurred whether
charged on a direct or indirect basis.
8.2. Documentation and Record Keeping
(a) Records to be Maintained
The Developer shall maintain all records required by the Federal regulations
specified in 24 CFR 570.506, that are pertinent to the activities to be funded under this
Agreement. Such records shall include but not be limited to:
1) Records providing a full description of each activity undertaken;
2) Records demonstrating that each activity undertaken meets one of
the National Objectives of the CDBG program;
3) Records required to determine the eligibility of activities;
4) Records required to document the acquisition, improvement, use or
disposition of real property acquired or improved with CDBG
assistance;
5) Records documenting compliance with the fair housing and equal
opportunity components of the CDBG program;
6) Financial records as required by 24 CFR 570.502, and 24 CFR
84.2128; and
7) Other records necessary to document compliance with Subpart K
of 24 CFR Part 570.
(b) Retention
The Developer shall retain all financial records, supporting documents, statistical
records, and all other records pertinent to the Agreement for a period of four (4) years. The
retention period begins on the date of the submission of the City's annual performance and
evaluation report to HUD in which the activities assisted under the Agreement are reported on for
the final time. Notwithstanding the above, if there is litigation, claims, audits, negotiations or
other actions that involve any of the records cited and that have started before the expiration of
the four-year period, then such records must be retained until completion of the actions and
resolution of all issues, or the expiration of the four-year period, whichever occurs later.
(c) Client Data
The Developer shall maintain client data demonstrating client eligibility for
services provided. Such data shall include, but not be limited to, client name, address, income
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level or other basis for determining eligibility, and description of service provided. Such
information shall be made available to City monitors or their designees for review upon request.
(d) Disclosure
The Developer understands that client information collected under this contract is
private and the use or disclosure of such information, when not directly connected with the
administration of the City's or Developer's responsibilities with respect to services provided
under this contract, is prohibited unless written consent is obtained from such person receiving
service and, in the case of a minor, that of a responsible parent/guardian.
(e) Closeouts
The Developer's obligation to the City shall not end until all close-out
requirements are completed. Activities during this close-out period may include, but are not
limited to: making final payments, disposing of program assets (including the return of all
unused materials, equipment, unspent cash advances, program income balances, and accounts
receivable to the City), and determining the custodianship of records. Notwithstanding the
foregoing, the terms of this Agreement shall remain in effect during any period that the
Developer has control over NSP funds, including program income.
(f) Audits & Inspections
All Developer records with respect to any matters covered by this Agreement shall
be made available to the City, the California Department of Housing and Community
Development, and the Comptroller General of the United States or any of their authorized
representatives, at any time during normal business hours, as often as deemed necessary, to audit,
examine, and make excerpts or transcripts of all relevant data. Any deficiencies noted in audit
reports must be fully cleared by the Developer within 30 days after receipt by the Developer.
Failure of the Developer to comply with the above audit requirements will constitute a violation
of this contract and may result in the withholding of future payments. The Developer hereby
agrees to have an annual agency audit conducted in accordance with current City policy
concerning subrecipient audits and OMB Circular A-133.
8.3. Reporting and Payment Procedures
(a) Program Income
The Developer shall report annually all program income (as defined at 24 CFR
570.500(a)) generated by activities carried out with CDBG funds made available under this
contract. The use of program income by the Developer shall comply with the requirements set
forth at 24 CFR 570.504. By way of further limitations, the Developer may use such income
during the contract period for activities permitted under this contract and shall reduce requests
for additional funds by the amount of any such program income balances on hand. All
unexpended program income shall be returned to the City at the end of the contract period. Any
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interest earned on cash advances from the U.S. Treasury and from funds held in a revolving fund
account is not program income and shall be remitted promptly to the City.
(b) Indirect Costs
If indirect costs are charged, the Developer will develop an indirect cost allocation
plan for determining the appropriate Developer's share of administrative costs and shall submit
such plan to the City for approval, in a form specified by the City.
(c) Payment Procedures
The City will pay to the Developer funds available under this Agreement based
upon information submitted by the Developer and consistent with any approved budget and City
policy concerning payments. With the exception of certain advances, payments will be made for
eligible expenses actually incurred by the Developer, and not to exceed actual cash requirements.
Payments will be adjusted by the City in accordance with advance fund and program income
balances available in Developer accounts. In addition, the City reserves the right to liquidate
funds available under this contract for costs incurred by the City on behalf of the Developer.
(d) , Progress ports
The Developer shall submit regular Progress Reports to the City in the form,
content, and frequency as required by the City.
8.4. Procurement
(a) Compliance
The Developer shall comply with current City policy concerning the purchase of
equipment and shall maintain inventory records of all non -expendable personal property as
defined by such policy as may be procured with funds provided herein. All program assets
(unexpended program income, property, equipment, etc.) shall revert to the City upon
termination of this Agreement.
(b)
OMB Standards
Unless specified otherwise within this agreement, the Developer shall procure all
materials, property, or services in accordance with the requirements of 24 CFR 84.4648.
(c) Travel
The Developer shall obtain written approval from the City for any travel outside
the metropolitan area with funds provided under this Agreement.
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8.5. Use and Reversion of Assets
The use and disposition of real property and equipment under this Agreement
shall be in compliance with the requirements of 24 CFR Part 84 and 24 CFR 570.502, 570.503,
and 570.504, as applicable, which include but are not limited to the following:
(a) The Developer shall transfer to the City any CDBG funds on hand and any
accounts receivable attributable to the use of funds under this Agreement at the time of
expiration, cancellation, or termination of this Agreement, except if this Agreement is replaced
with the Affordable Housing Agreement.
(b) Real property under the Developer's control that was acquired or
improved, in whole or in part, with funds under this Agreement in excess of $25,000 shall be
used to meet one of the CDBG National Objectives pursuant to 24 CFR 570.208 until sixty (60)
years after the recordation of the Release of Construction Covenants for the Project. If the
Developer fails to use CDBG-assisted real property in a manner that meets a CDBG National
Objective for the prescribed period of time, the Developer shall pay the City an amount equal to
the current fair market value of the property less any portion of the value attributable to
expenditures of non-CDBG funds for acquisition of, or improvement to, the property. Such
payment shall constitute program income to the City. The Developer may retain real property
acquired or improved under this Agreement after the expiration of the sixty -year period.
(c) In all cases in which equipment acquired, in whole or in part, with funds
under this Agreement is sold, the proceeds shall be program income (prorated to reflect the
extent to that funds received under this Agreement were used to acquire the equipment).
Equipment not needed by the Developer for activities under this Agreement shall be (a)
transferred to the City for the CDBG program or (b) retained after compensating the City an
amount equal to the current fair market value of the equipment less the percentage of non-CDBG
funds used to acquire the equipment.
SECTION 9.0. RELOCATION, REAL PROPERTY ACQUISITION AND ONE -
FOR -ONE HOUSING REPLACEMENT
The Developer agrees to comply with (a) the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970, as amended (URA), and implementing regulations at
49 CFR Part 24 and 24 CFR 570.606(b); (b) the requirements of 24 CFR 570.606(c) governing
the Residential Anti -displacement and Relocation Assistance Plan under section 104(d) of the
HCD Act; and (c) the requirements in 24 CFR 570.606(d) governing optional relocation policies.
The Developer shall provide relocation assistance to displaced persons as defined by 24 CFR
570.606(b)(2) that are displaced as a direct result of acquisition, rehabilitation, demolition or
conversion for a CDBG-assisted project. The Developer also agrees to comply with applicable
City ordinances, resolutions and policies concerning the displacement of persons from their
residences.
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SECTION 10.0. PERSONNEL & PARTICIPANT CONDITIONS
10.1. Civil Rights
(a) Compliance
The Developer agrees to comply with Title VI of the Civil Rights Act of 1964 as
amended, Title VIII of the Civil Rights Act of 1968 as amended, Section 104(b) and Section 109
of Title I of the Housing and Community Development Act of 1974 as amended, Section 504 of
the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Age
Discrimination Act of 1975, Executive Order 11063, and Executive Order 11246 as amended by
Executive Orders 11375, 11478, 12107 and 12086.
(b) Nondiscrimination
The Developer agrees to comply with the non-discrimination in employment and
contracting opportunities laws, regulations, and executive orders referenced in 24 CFR 570.607,
as revised by Executive Order 13279.
(c) Land Covenants
This contract is subject to the requirements of Title VI of the Civil Rights Act of
1964 (P. L. 88-352) and 24 CFR 570.601 and 570.602. In regard to the sale, lease, or other
transfer of land acquired, cleared or improved with assistance provided under this contract, the
Developer shall cause or require a covenant running with the land to be inserted in the deed or
lease for such transfer, prohibiting discrimination as herein defined, in the sale, lease or rental, or
in the use or occupancy of such land, or in any improvements erected or to be erected thereon,
providing that the City and the United States are beneficiaries of and entitled to enforce such
covenants. The Developer, in undertaking its obligation to carry out the program assisted
hereunder, agrees to take such measures as are necessary to enforce such covenant, and will not
itself so discriminate.
(d) Section 504
The Developer agrees to comply with all Federal regulations issued pursuant to
compliance with Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), which prohibits
discrimination against the individuals with disabilities or handicaps in any Federally assisted
program. The City shall provide the Developer with any guidelines necessary for compliance
with that portion of the regulations in force during the term of this Agreement.
10.2. Affirmative Action
(a) Approved Plan
The Developer agrees that it shall be committed to carry out pursuant to the City's
specifications an Affirmative Action Program in keeping with the principles as provided in
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Subrecipient Acquisition Loan Agreement 04.01.10.doc
President's Executive Order 11246 of September 24, 1966. The City shall provide Affirmative
Action guidelines to the Developer to assist in the formulation of such program. The Developer
shall submit a plan for an Affirmative Action Program for approval prior to the award of funds.
(b) Women- and Minority -Owned Businesses (W/MBE)
The Developer will use its best efforts to afford small businesses, minority
business enterprises, and women's business enterprises the maximum practicable opportunity to
participate in the performance of this contract. As used in this contract, the terms "small
business" means a business that meets the criteria set forth in section 3(a) of the Small Business
Act, as amended (15 U.S.C. 632), and "minority and women's business enterprise" means a
business at least fifty-one (51) percent owned and controlled by minority group members or
women. For the purpose of this definition, "minority group members" are Afro-Americans,
Spanish-speaking, Spanish surnamed or Spanish -heritage Americans, Asian -Americans, and
American Indians. The Developer may rely on written representations by businesses regarding
their status as minority and female business enterprises in lieu of an independent investigation.
(c) Access to Records
The Developer shall furnish and cause each of its own contractors or
subcontractors to furnish all information and reports required hereunder and will permit access to
its books, records and accounts by the City, HUD or its agent, or other authorized Federal
officials for purposes of investigation to ascertain compliance with the rules, regulations and
provisions stated herein.
(d) Notifications
The Developer will send to each labor union or representative of workers with
which it has a collective bargaining agreement or other contract or understanding, a notice, to be
provided by the agency contracting officer, advising the labor union or worker's representative of
the Developer's commitments hereunder, and shall post copies of the notice in conspicuous
places available to employees and applicants for employment.
(e) Equal Employment Opportunity and Affirmative Action (EEO/AA)
Statement
The Developer will, in all solicitations or advertisements for employees placed by
or on behalf of the Developer, state that it is an Equal Opportunity or Affirmative Action
employer. Developer shall comply with all State of California requirements regarding equal
opportunity.
(f) Subcontract Provisions
The Developer will include the provisions of Sections 10.1, Civil Rights, and
10.2, Affirmative Action, in every subcontract or purchase order, specifically or by reference, so
that such provisions will be binding upon each of its contractors or subcontractors.
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10.3. Employment Restrictions
(a) Prohibited Activity
The Developer is prohibited from using funds provided herein or personnel
employed in the administration of the program for: political activities; inherently religious
activities; lobbying; political patronage; and nepotism activities.
(b) Labor Standards
The Developer agrees to comply with the requirements of the Secretary of Labor
in accordance with the Davis -Bacon Act as amended, the provisions of Contract Work Hours and
Safety Standards Act (40 U.S.C. 327 et seq.) and all other applicable Federal, state and local laws
and regulations pertaining to labor standards insofar as those acts apply to the performance of
this Agreement. The Developer agrees to comply with the Copeland Anti -Kick Back Act (18
U.S.C. 874 et seq.) and its implementing regulations of the U.S. Department of Labor at 29 CFR
Part 5. The Developer shall maintain documentation that demonstrates compliance with hour and
wage requirements of this part. Such documentation shall be made available to the City for
review upon request.
The Developer agrees that, except with respect to the rehabilitation or
construction of residential property containing less than eight (8) units, all contractors engaged
under contracts in excess of $2,000.00 for construction, renovation or repair work financed in
whole or in part with assistance provided under this contract, shall comply with Federal
requirements adopted by the City pertaining to such contracts and with the applicable
requirements of the regulations of the Department of Labor, under 29 CFR Parts 1, 3, 5 and 7
governing the payment of wages and ratio of apprentices and trainees to journey workers;
provided that, if wage rates higher than those required under the regulations are imposed by state
or local law, nothing hereunder is intended to relieve the Developer of its obligation, if any, to
require payment of the higher wage. The Developer shall cause or require to be inserted in full, in
all such contracts subject to such regulations, provisions meeting the requirements of this
paragraph.
(c) "Section 3" Clause
(1) Compliance: Compliance with the provisions of Section 3 of the
HUD Act of 1968, as amended, and as implemented by the regulations set forth in 24 CFR 135,
and all applicable rules and orders issued hereunder prior to the execution of this contract, shall
be a condition of the Federal financial assistance provided under this contract and binding upon
the City, the Developer and any of the Developer's contractors and subcontractors. Failure to
fulfill these requirements shall subject the City, the Developer and any of the Developer's
contractors and subcontractors, their successors and assigns, to those sanctions specified by the
Agreement through which Federal assistance is provided. The Developer certifies and agrees that
no contractual or other disability exists that would prevent compliance with these requirements.
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The Developer further agrees to comply with these "Section 3"
requirements and to include the following language in all subcontracts executed under this
Agreement:
"The work to be performed under this Agreement is a project
assisted under a program providing direct Federal financial
assistance from HUD and is subject to the requirements of Section
3 of the Housing and Urban Development Act of 1968, as amended
(12 U.S.C. 1701). Section 3 requires that to the greatest extent
feasible opportunities for training and employment be given to
low- and very low-income residents of the project area, and that
contracts for work in connection with the project be awarded to
business concerns that provide economic opportunities for low -
and very low-income persons residing in the metropolitan area in
which the project is located."
The Developer further agrees to ensure that opportunities for training and
employment arising in connection with a housing rehabilitation (including reduction and
abatement of lead -based paint hazards), housing construction, or other public construction
project are given to low- and very low-income persons residing within the metropolitan area in
which the CDBG-funded project is located; where feasible, priority should be given to low- and
very low-income persons within the service area of the project or the neighborhood in which the
project is located, and to low- and very low-income participants in other HUD programs; and
award contracts for work undertaken in connection with a housing rehabilitation (including
reduction and abatement of lead -based paint hazards), housing construction, or other public
construction project to business concerns that provide economic opportunities for low- and very
low-income persons residing within the metropolitan area in which the CDBG-funded project is
located; where feasible, priority should be given to business concerns that provide economic
opportunities to low- and very low-income residents within the service area or the neighborhood
in which the project is located, and to low- and very low-income participants in other HUD
programs.
The Developer certifies and agrees that no contractual or other legal incapacity
exists that would prevent compliance with these requirements.
(d) Notifications: The Developer agrees to send to each labor organization or
representative of workers with which it has a collective bargaining agreement or other contract or
understanding, if any, a notice advising said labor organization or worker's representative of its
commitments under this Section 3 clause and shall post copies of the notice in conspicuous
places available to employees and applicants for employment or training.
(e) Contracts: The Developer will include this Section 3 clause in every
contract and will take appropriate action pursuant to the contract upon a finding that the
contractor is in violation of regulations issued by the grantor agency. The Developer will not
contract with any entity where it has notice or knowledge that the latter has been found in
violation of regulations under 24 CFR Part 135 and will not let any contract unless the entity has
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first provided it with a preliminary statement of ability to comply with the requirements of these
regulations.
10.4. Conduct
(a) Assignability
The Developer shall not assign or transfer any interest in this Agreement without
the prior written consent of the City in accordance with the procedures set forth in Section 2.5 of
this Agreement.
(b) Contracts
(1) Approvals: The Developer shall not enter into any contracts with
any agency or individual in the performance of this Agreement without the written consent of the
City prior to the execution of such agreement.
(2) Monitoring: The Developer will monitor all contracted services on
a regular basis to assure contract compliance. Results of monitoring efforts shall be summarized
in written reports and supported with documented evidence of follow-up actions taken to correct
areas of noncompliance.
(3) Content: The Developer shall cause all of the provisions of this
contract in its entirety to be included in and made a part of any contract executed in the
performance of this Agreement.
(4) Selection Process: The Developer shall undertake to insure that all
contracts in the performance of this Agreement shall be awarded on a fair and open competition
basis in accordance with applicable procurement requirements. Executed copies of all contracts
shall be forwarded to the City along with documentation concerning the selection process.
(c) Hatch Act
The Developer agrees that no funds provided, nor personnel employed under this
Agreement, shall be in any way or to any extent engaged in the conduct of political activities in
violation of Chapter 15 of Title V of the U.S.C.
(d) Conflict of Interest
The Developer agrees to abide by the provisions of 24 CFR 84.42 and 570.611,
which include (but are not limited to) the following:
(1) The Developer shall maintain a written code or standards of
conduct that shall govern the performance of its officers, employees or agents engaged in the
award and administration of contracts supported by Federal funds.
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(2) No employee, officer or agent of the Developer shall participate in
the selection, or in the award, or administration of, a contract supported by Federal funds if a
conflict of interest, real or apparent, would be involved.
(3) No covered persons who exercise or have exercised any functions
or responsibilities with respect to CDBG-assisted activities, or who are in a position to
participate in a decision -making process or gain inside information with regard to such activities,
may obtain a financial interest in any contract, or have a financial interest in any contract,
subcontract, or agreement with respect to the CDBG-assisted activity, or with respect to the
proceeds from the CDBG-assisted activity, either for themselves or those with whom they have
business or immediate family ties, during their tenure or for a period of one (1) year thereafter.
For purposes of this paragraph, a "covered person" includes any person who is an employee,
agent, consultant, officer, or elected or appointed official of the City, the Developer, or any
designated public agency.
(e) Lobbying
The Developer hereby certifies that:
(1) No Federal appropriated funds have been paid or will be paid, by
or on behalf of it, to any person for influencing or attempting to influence an officer or employee
of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal contract, the making of any
Federal grant, the making of any Federal loan, the entering into of any cooperative agreement,
and the extension, continuation, renewal, amendment, or modification of any Federal contract,
grant, loan, or cooperative agreement;
(2) If any funds other than Federal appropriated funds have been paid
or will be paid to any person for influencing or attempting to influence an officer or employee of
any agency, a Member of Congress, an officer or employee of Congress, or an employee of a
Member of Congress in connection with this Federal contract, grant, loan, or cooperative
agreement, it will complete and submit Standard Form-LLL, "Disclosure Form to Report
Lobbying," in accordance with its instructions; and
(3) It will require that the language of paragraph (d) of this
certification be included in the award documents for all subawards at all tiers (including
subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that
all Developers shall certify and disclose accordingly:
(4) Lobbying_ Certification
This certification is a material representation of fact upon which reliance
was placed when this transaction was made or entered into. Submission of this certification is a
prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S.C.
Any person who fails to file the required certification shall be subject to a civil penalty of not less
than $10,000 and not more than $100,000 for each such failure.
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(f) Copyright
If this contract results in any copyrightable material or inventions, the City and/or
grantor agency reserves the right to royalty -free, non-exclusive and irrevocable license to
reproduce, publish or otherwise use and to authorize others to use, the work or materials for
governmental purposes.
(g) Religious Activities
The Developer agrees that funds provided under this Agreement will not be
utilized for inherently religious activities prohibited by 24 CFR 570.2000), such as worship,
religious instruction, or proselytization.
SECTION 11.0 ENVIRONMENTAL CONDITIONS
11.1. Air and Water
The Developer agrees to comply with the following requirements insofar as they
apply to the performance of this Agreement:
• Clean Air Act, 42 U.S.C. , 7401, et seq.;
• Federal Water Pollution Control Act, as amended, 33 U.S.C., 1251, et
seq., as amended, 1318 relating to inspection, monitoring, entry, reports, and information, as well
as other requirements specified in said Section 114 and Section 308, and all regulations and
guidelines issued thereunder;
• Environmental Protection Agency (EPA) regulations pursuant to 40 CFR
Part 50, as amended.
11.2. Flood Disaster Protection
In accordance with the requirements of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4001), the Developer shall assure that for activities located in an area identified by the
Federal Emergency Management Agency (FEMA) as having special flood hazards, flood
insurance under the National Flood Insurance Program is obtained and maintained as a condition
of financial assistance for acquisition or construction purposes (including rehabilitation).
11.3. Lead -Based Paint
The Developer agrees that any construction or rehabilitation of residential
structures with assistance provided under this Agreement shall be subject to HUD Lead -Based
Paint Regulations at 24 CFR 570.608, and 24 CFR Part 35, Subpart B. Such regulations pertain
to all CDBG-assisted housing and require that all owners, prospective owners, and tenants of
properties constructed prior to 1978 be properly notified that such properties may include lead -
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based paint. Such notification shall point out the hazards of lead -based paint and explain the
symptoms, treatment and precautions that should be taken when dealing with lead -based paint
poisoning and the advisability and availability of blood lead level screening for children under
seven. The notice should also point out that if lead -based paint is found on the property,
abatement measures may be undertaken. The regulations further require that, depending on the
amount of Federal funds applied to a property, paint testing, risk assessment, treatment and/or
abatement may be conducted.
11.4. Historic Preservation
The Developer agrees to comply with the Historic Preservation requirements set
forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. 470) and the
procedures set forth in 36 CFR Part 800, Advisory Council on Historic Preservation Procedures
for Protection of Historic Properties, insofar as they apply to the performance of this agreement.
In general, this requires concurrence from the State Historic Preservation Officer
for all rehabilitation and demolition of historic properties that are fifty years old or older or that
are included on a Federal, state, or local historic property list.
SECTION 12.0. GENERAL PROVISIONS
12.1 Developer's Warranties. Developer represents and warrants (1) that it
has access to professional advice and support to the extent necessary to enable Developer to fully
comply with the terms of this Agreement; (2) that it is duly organized, validly existing and in
good standing under the laws of the State of California; (3) that it has the full power and
authority to undertake the Project and to execute this Agreement; (4) that the persons executing
and delivering this Agreement are authorized to execute and deliver such documents on behalf of
Developer; (5) except as disclosed to the City in writing, there are no actions or proceedings
pending or, to the best of the Developer's knowledge, threatened against the Developer before
any court or administrative agency in any way connected with the Property or the Project which
could adversely affect the Developer's ability to perform the activities contemplated hereunder;
(6) neither this Agreement nor anything provided to be done hereunder violates or shall violate
any contract, agreement or instrument to which the Developer is a party or which affects the
Project or any part thereof, (7) the Developer is not in default in respect of any of its obligations
or liabilities pertaining to this Agreement, nor is there any state of facts or circumstances or
conditions or events which, after notice, lapse of time, or both, would constitute or result in any
such default under this Agreement; and (8) the Developer has not entered into any agreements
which will adversely affect the title to the Project or the Developer's right to develop and use the
Project as provided in this Agreement, and the Developer will not enter into any such agreements
after the date hereof.
12.2 Governing Law. The internal laws of the State of California shall govern the
interpretation and enforcement of this Agreement.
12.3 Attorneys' Fees. In the event that any action, suit or other proceeding is
brought to enforce the obligations of under this Agreement, each party shall bear its own costs
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and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each
and every such action, suit or other proceeding, including any and all appeals or petitions
therefrom.
12.4 Notices, Demands, and Communications Between the Parties. Formal notices,
demands, and communications between City and Developer shall be sufficiently given if: (i)
personally delivered; (ii) delivered by same day or overnight courier (acknowledged by receipt
showing date and time of delivery); or (iii) dispatched by registered or certified mail, postage
prepaid, return receipt requested, to the addresses set forth below:
If to Developer: Colette's Children Home, Inc.
17301 Beach Blvd., #23
Huntington Beach, CA 92647
Attn: Pamela Hope, President
If to City: The City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Attn: City Administrator
With a copy to: City Attorney's Office
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Notices personally delivered or delivered by courier shall be effective upon receipt
or refusal to accept delivery. Mailed notices shall be effective on the earlier of (i) receipt of
refusal to accept delivery, or (ii) noon on the second business day following deposit in the United
States mail.
12.5 Acceptance of Service of Process. In the event that any legal action is
commenced by Developer against City, service of process on City shall be made by personal
service upon the Executive Director or the City Secretary, or in such other manner as may be
provided by law. In the event that any legal action is commenced by City against Developer,
service of process on Developer shall be made by in any manner provided by law, and shall be
valid whether made within or without the State of California.
12.6 Conflicts of Interest. No member, official, or employee of City shall have any
personal interest in this Agreement, nor participate in any decision relating to this Agreement,
that is in violation of any applicable law, regulation or ordinance.
12.7 Titles and Captions. Titles and captions are for convenience only and shall not
be construed to limit or extend the meaning of this Agreement.
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12.8 Gender. As used in this Agreement, masculine, feminine or neuter gender
and the singular or plural number shall each be deemed to include the others wherever and
whenever the context so dictates.
12.9 Modifications. Any amendment, alteration, change, or modification of or to this
Agreement, in order to become effective, shall be made by written instrument or endorsement
thereon and in each such instance executed on behalf of each party hereto.
12.10 Merger of Prior Agreements and Understandings. This Agreement and all
documents incorporated herein contain the entire understanding among the parties hereto relating
to the transactions contemplated herein and all prior or contemporaneous agreements,
understandings, representations, and statements, oral or written.
12.11 No Third Parties Benefited. This Agreement shall create no third -party
beneficiary rights or any other rights in favor of any persons, firms or corporations, except as
may be expressly stated in this Agreement. This Agreement is for the sole use and benefit of the
parties hereto and is not for the use or benefit of any other person or entity.
12.12 Assurances to Act in Good Faith. Developer and City agree to execute all
documents and instruments and to take all action, including timely depositing funds as required
hereby, and shall use their respective best efforts to accomplish the acquisition and rehabilitation
of the Property in accordance with the provisions hereof.
12.13 Warranty gainst Payment of Consideration for Agreement. Except as provided
in this Agreement, Developer warrants that it has not paid or given, and will not pay or give, any
person any money or other consideration for obtaining this Agreement that is in violation of any
law.
12.14 Nonliabilit off City Officials and Employ. No member, official, or
employee of the City shall be personally liable to the Developer or any successor in interest, in
the event of any default or breach by the City or for any amount which may become due to the
Developer or to its successor, or on any obligations under the terms of this Agreement.
12.15 Interpretation. The terms of this Agreement shall be construed in accordance
with the meaning of the language used and shall not be construed for or against any party by
reason of the authorship of this Agreement or any other rule of construction which might
otherwise apply.
12.16. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall constitute one and the
same instrument.
12.17 Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law. If, however, any
provision of this Agreement shall be prohibited by or invalid under applicable law, such
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provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
12.18. Extension of Times of Performance. Notwithstanding the foregoing, in addition
to the specific provisions of this Agreement, performance by any party hereunder shall not be
deemed to be in default during an event of Force Majeure. An extension of time for an event of
Force Majeure shall be limited to the period of such event, and shall commence to run from the
time of the commencement of the cause, provided notice by the party claiming such extension is
sent to the other party within sixty (60) days of the commencement of the cause. In the event of
such delay, the party delayed shall continue to exercise reasonable diligence to minimize the
period of delay.
Times of performance under this Agreement may also be extended by mutual
written agreement by City and Developer. In addition, the City Administrator shall have the
authority on behalf of City to approve extensions of time not to exceed a cumulative total of one
(1) year.
12.19 Inspection of Books and Records. The City or its designee shall have the right
at all reasonable times to inspect the books, records and/or other documents of the Developer
pertaining to the Property and/or the Project as pertinent to the purposes of this Agreement.
12.20 Waivers. The waiver by City or Developer of any term, covenant, or
condition herein contained shall not be a waiver of such term, covenant, or condition on any
subsequent breach.
SECTION 13. EXECUTION OF AGREEMENT; TIME FOR ACCEPTANCE
This Agreement consists of forty-three (43) pages and twelve (12) attachments which
constitute the entire understanding and agreement of the parties.
This Agreement does not take effect until executed by the Developer and City. This
Agreement, when executed by the Developer and delivered to the City, must be authorized,
executed and delivered by the City within thirty (30) days after the date of signature by the
Developer, or this Agreement may be terminated by the Developer on written notice to the City.
The City Administrator is hereby authorized and directed to take such other and further
actions, and sign such other and further agreements and documents on behalf of the City as may
be necessary or proper to effect the terms of this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
"DEVELOPER"
COLETTE' S CHILDREN' S HOME, INC.,
a California nonprofit public benefit
corporation
By: l�
Pa a Hope
Its: Pr sident
"CITY"
THE CITY OF HUNTINGTON BEACH, a
municipal corporation of the state of California
By:
A:7
Tffiyor��
By: _ '" l t1, Zcoe
ity Attorney
By:
ANE, BALLMER & BERKMAN
Special Counsel
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Subrecipient Acquisition Loan Agreement 04.01.10.doc
EXHIBIT A
LEGAL DESCRIPTION
Legal Description of Property Commonly Known As
7911 Slater Avenue
Huntington Beach, California
All that certain real property situated in the County of Orange, State of California, described as
follows:
PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143,
PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF
ORANGE COUNTY, CALIFORNIA.
APN: 165-234-17
Legal Description
EXHIBIT B
SITE MAP
7911 Slater Avenue
Huntington Beach, California
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EXHIBIT C
SCOPE OF DEVELOPMENT
Project Development Concept:
6 new construction residential rental units, which will meet all building code requirements,
configured as follows:
UNITS
Three Bedroom/2 Bath Units 5
Two Bedroom / 2 Bath Units 1
Total Residential Units 6
Project Amenities:
AMENITIES:
Community Room
Laundry Room
Office
Outstanding project amenities will be provided on site and include:
691 sq. ft.
156 sq. ft.
284 sq. ft.
Open Space and recreational common area: The project includes well -designed common
passive open space courtyard facilitating safe and secure play area for children and adult use.
Laundry Facilities: The project will include the availability common laundry facilities including
clothes washer and dryers.
Community Room: The developer will provide a physical space of approximately 691 sq ft. for
resident services. The community room will provide computer access for all tenant adults and
children. The developer will coordinate with outside service providers to deliver additional
educational classes such as computer training, career development and job search skills, financial
counseling and health and wellness programs. The final spectrum of services offered to the
tenants will depend on the availability of outside non-profit organizations to deliver these in a
cost effective ongoing manner.
Design / Energy Efficiency: The project will exceed Title 24 standards and will include passive
solar and green alternatives.
Scope of Development
Page 1 of 1
SOURCES
NSP Loan
HOME Acquisition Loan
HOME Development Loan
9% Tax Credit Equity
Conventional Permanent Loan
Deferred Developer Fee
Total Sources
USES
Acquisition & Closing Costs
Construction Costs
Soft Costs
Developer Fee
Total Uses
EXHIBIT D
PROJECT BUDGET
$ 390,568.00
$ 284,432.00
$500,000.00
$ 1,296,000.00
$ 267,000.00
$ 28,000.00
S 2,766,000.00
$ 675,000.00
$ 1,171,116.00
$ 675,044.00
$ 244,840.00
S 2,766,000.00
Project Budget
EXHIBIT "E"
SCHEDULE OF PERFORMANCE
ITEM OF PERFORMANCE
TIME OF PERFORMANCE
REFERENCE
1. Developer and Agency execute all
Not later than twelve noon on
§ 3.5(b) &
documents and deposit all documents
the business day immediately
3.5(c)
and funds into Escrow as required by
prior to the scheduled Closing
this Agreement.
Date.
2. Closing Date for Developer's
Not later than April 15, 2010.
§ 3.5(a)
acquisition of the Property.
3. The Developer shall submit all
Not later than the second tax
§ 3.2(b)
necessary documentation to the
credit round, 2010. If
California Tax Credit Allocation
Developer's application for tax
Committee required for the Project's
credits is unsuccessful in the
allocation of Nine Percent Tax
second round of 2010,
Credits.
Developer shall reapply in the
first round of 2011.
4. The Developer shall be awarded the
Not later than the allocation date
§ 3.2(b)
allocation of Nine Percent Tax Credits
for the second round of 2010.
for the Project.
However, if Developer's initial
application has been postponed
to the first round of 2011
pursuant to Item 3 above, then
Developer's deadline for
receiving its allocation of Nine
Percent Tax Credits will be not
later than the allocation date for
the first round of 2011.
5. The Developer shall submit to the
Not later than May 15, 2010.
§ 5.4
City for approval the Basic
Concept/Schematic Drawings and
related documents (site plan,
landscaping plan, elevations and
preliminary floor plans).
6. The City shall approve or
Not later than thirty (30) days
§ 5.5
disapprove the Basic
after submittal of the Basic
Concept/Schematic Drawings and
Concept/Schematic Drawings
related documents.
and related documents.
Schedule of Performance
7. The Construction Financing Event
Not later than November 30,
§ 3.2(b)
shall have occurred for the Project.
2011.
8. Developer shall have completed
Not later than June 30, 2013.
§ 2.5 of
construction of the Project.
Regulatory
Agreement
It is understood that this Schedule of Performance is subject to all of the terms and conditions of
the text of the Agreement. The summary of the items performance in this Schedule of
Performance is not intended to supersede or modify the more complete description in the text; in
the event of any conflict or inconsistency between this Schedule of Performance and the text of
the Agreement, the text shall govern.
The time periods set forth in this Schedule of Performance may be altered or amended only by
written agreement signed by the Developer and the City. The City Administrator shall have the
authority to approve extensions of time without action of the City Council, not to exceed a
cumulative total extension of one (1) year.
Schedule of Performance
EXHIBIT F
NSP PROMISSORY NOTE
[behind this page]
NSP Promissory Note
PROMISSORY NOTE SECURED BY DEED OF TRUST
TO THE CITY OF HUNTINGTON BEACH
[NEIGHBORHOOD STABILIZATION PROGRAM]
DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing
same, must be surrendered to Trustee for cancellation before reconveyance will be made.
3% Interest Huntington Beach, California
$390,568 f�{� vj / j� , 2010
FOR VALUE RECEIVED, COLETTE'S CHILDREN HOME, INC., a California non-
profit public benefit corporation ("Borrower"), hereby promises to pay to the CITY OF
HUNTINGTON BEACH, a municipal corporation of the state of California ("City"), or order, a
principal amount of THREE HUNDRED NINETY THOUSAND FIVE HUNDRED SIXTY-
EIGHT DOLLARS ($390,568) (the "NSP Loan"). This Note is given pursuant to that certain
Subrecipient and Acquisition Loan Agreement dated as of April 5, 2010, between Borrower
("Developer" therein) and City (the "Loan Agreement") and evidences the NSP Loan to
Borrower, which provides part of the financing for the acquisition of that certain real property in
the City of Huntington Beach legally described in the Deed of Trust securing this Note (the
"Property") for the development of affordable housing for low income households. The
Borrower shall not make any sale, assignment or conveyance, or transfer in any other form, of
the Property, or any part thereof, or interest therein without the express written consent of the
City as set forth in Section 2.5 of the Loan Agreement. The obligation of Borrower to City
hereunder is subject to the terms of the Loan Agreement, this Note and the following
instruments, each dated on or about the date hereof, and, where applicable, executed and
delivered by Borrower for the purpose of securing this Note: a Regulatory Agreement
("Regulatory Agreement"); a Deed of Trust, Security Agreement and Fixture Filing (With
Assignment of Rents) ("NSP Deed of Trust"); and an Assignment of Agreements ("Assignment
of Agreements"). Said documents are public records on file in the offices of City, and the
provisions of said documents are incorporated herein by this reference. The Borrower shall pay
interest at the rate, in the amount and at the time hereinafter provided.
1. Definitions. Any capitalized term not otherwise defined herein shall have the
meaning ascribed to such term in the Loan Agreement. In addition, the following terms shall
have the following meanings:
The term "Acquisition Costs" shall mean the total cost of acquiring the Property in
conformance with the terms and conditions of this Agreement, in an amount approved by the
City Administrator or his designee, including closing and escrow costs and the cost of the City's
and the Borrower's title insurance policies.
NSP Note [04.01.10].doc NSP Note
Page 1 of 9
The term "Approved 'Title Conditions" shall mean title that is subject to current
property taxes and assessments, easements and other encumbrances specifically approved by the
City Administrator.
The term "Assignment of Agreements" shall mean a document substantially in the form
attached to the Loan Agreement as Exhibit "L", which is incorporated herein by this reference.
The term "City" shall mean the City of Huntington Beach, a municipal corporation of the
State of California, having its offices at 2000 Main Street, Huntington Beach, CA 92648, and
any assignee of, or successor to, the rights, powers, and responsibilities of City.
The term "City Administrator" shall mean the individual duly appointed to the position
of City Administrator of the City, or authorized designee. Whenever an administrative action is
required by City to implement the terms of this Housing Agreement, the City Administrator, or
an authorized designee, shall have authority to act on behalf of City, except with respect to
matters reserved under California law or the City's Charter wholly for City Council
determination.
The term "Construction Financing Event" shall mean the point in time when (i) all
conditions precedent to the recording of the City's HOME development loan documents for the
Project have been satisfied and (ii) the construction loan documents for the Project are recorded.
The term "Environmental Indemnity" shall mean an instrument substantially in the
form attached to the Loan Agreement as Exhibit "K".
The term "hazardous Materials" means any hazardous or toxic substances, materials,
wastes, pollutants, or contaminants, which are defined, regulated, or listed as "hazardous
substances," "hazardous wastes," "hazardous materials," "pollutants," "contaminants," or "toxic
substances," under federal or state environmental and health and safety laws and regulations,
including without limitation petroleum and petroleum byproducts, flammable explosives, area
formaldehyde insulation, radioactive materials, asbestos, and lead. Hazardous Materials do not
include substances that are used or consumed in the normal course of developing, operating, or
occupying a housing project, to the extent and degree that such substances are stored, used, and
disposed of in the manner and in amounts that are consistent with normal practice and legal
standards.
The term "Maturity Date" means the earliest to occur of:
(a) Borrower's failure to obtain an award of Low Income Housing Tax Credits for the
Project by June 30, 2011;
NSP Note [04.01.10].doc NSP Note
Page 2 of 9
(b) The date of the Construction Financing Event for the Project;
(c) November 30, 2011, or such later date as may be determined by the City
Administrator in his sole discretion;
(d) The date that the Property or any portion thereof or interest therein is sold,
transferred, assigned or refinanced, without the prior written approval of the City, except as
otherwise permitted in this Note; or
(e) The date of a default by the Borrower under the terms of this Note, the NSP Deed
of Trust, the Loan Agreement, the Regulatory Agreement or other obligations secured by a deed
of trust on the Property, which is not cured within the respective time period provided herein and
therein.
The term "NSP Deed of 'Trust" shall mean the Deed of Trust recorded on or about the
date of this Note, securing the NSP Loan.
The term "NSP Funds" shall mean funds received by the City from the Neighborhood
Stabilization Program allocation of the California Department of Housing and Community
Development's State Community Development Block Grant Program
The term "NSP Loan" shall mean the City's loan to Borrower in an amount not to exceed
THREE HUNDRED NINETY THOUSAND FOUR HUNDRED SEVENTY-FOUR DOLLARS
($390,568.00) of NSP Funds, as evidenced by this Note and secured by the NSP Deed of Trust.
The term "Person" means an individual, partnership, limited partnership, trust, estate,
association, corporation, limited liability company or other entity, domestic or foreign.
The term "Property" shall mean that certain real property located in the City of
Huntington Beach, County of Orange, State of California, commonly known as 7911 Slater
Avenue, Huntington Beach, California, and legally described in Exhibit "A" to the NSP Deed of
Trust.
The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and
Declaration of Covenants and Restrictions recorded against the Property on or about the date of
this Note.
2. This Note evidences the obligation of the Borrower to the City for the repayment
of the NSP Loan. None of the funds provided pursuant to the NSP Loan were funded directly or
indirectly with any obligation the interest on which is exempt from tax under Section 103 of the
NSP Note [04.01.10].doe NSP Note
Page 3 of 9
Internal Revenue Code of 1986, as amended, or pursuant to any United States government
federal source.
3. This Note is payable at the principal office of the City, 2000 Main Street,
Huntington Beach, CA 92648, or at such other place as the holder hereof may inform the
Borrower in writing, in lawful money of the United States.
4. This Note shall be secured by the NSP Deed of Trust.
5. This Note shall bear interest at the annual rate of three percent, which shall
commence to accrue upon disbursement.
6. Until the Maturity Date, no payments shall be due and payable under this Note
except to the extent of any refinancing.
7. The entire unpaid principal balance of this Note and any accrued but unpaid
interest shall be due and payable upon the Maturity Date.
8. All payments to the City shall be applied first to interest, then to reduce the
principal amount owed.
9. The NSP Loan evidenced by this Note was given in the expectation that the
Construction Financing Event for the Project will occur no later than November 30, 2011, or
such later date as may be determined by the City Administrator in his sole discretion. At the
Construction Financing Event, the NSP Note shall be deposited into escrow to be cancelled, the
NSP Deed of Trust shall be reconveyed to Borrower, and Borrower shall execute a new
promissory note to the City for the total amount of the NSP Loan, including any accrued interest
theretofore unpaid plus any other sums secured by the NSP Deed of Trust. The new promissory
note shall be secured by a deed of trust on the Property that is subordinate only to those prior
liens and encumbrances that are reasonably approved by the City Administrator in accordance
with the Loan Agreement.
10. (a) Prior to the repayment in full of the NSP Loan, the Borrower shall not
assign or attempt to assign the Loan Agreement or any right therein, nor make any total or partial
sale, transfer, conveyance or assignment of the whole or any part of the Property, the
improvements thereon, or any portion thereof or interest therein (referred to hereinafter as a
"Transfer") other than expressly allowed under the Loan Agreement, without prior written
approval of the City. Consent to one such transaction shall not be deemed to be a waiver of the
right to require consent to future or successive transactions. The City shall not unreasonably
withhold or delay its consent. If consent should be given, any such transfer shall be subject to
NSP Note [04.01.10].doe NSP Note
Page 4 of 9
this Section 10, and any such transferee shall assume all obligations hereunder and agree to be
bound by all provisions contained herein.
(b) Any such proposed transferee shall have the qualifications and financial
responsibility necessary and adequate as may be reasonably determined by the City, to fulfill the
obligations undertaken by Borrower in the Loan Agreement, the Regulatory Agreement and this
Note. Any such proposed transferee, by instrument in writing satisfactory to the City and in
form recordable among the land records of Orange County, for itself and its successors and
assigns, and for the benefit of the City shall expressly assume all of the obligations of the
Borrower under the Loan Agreement and the Regulatory Agreement, and agree to be subject to
all conditions and restrictions applicable to the Borrower in this Note. There shall be submitted
to the City for review all instruments and other legal documents proposed to effect any such
transfer; and if approved by the City its approval shall be indicated to the Borrower in writing.
(c) In the absence of specific written agreement by the City, no unauthorized
Transfer, or approval thereof by the City, shall be deemed to relieve the Borrower or any other
party from any obligations under the Loan Agreement or the Regulatory Agreement.
(d) In the event of a Transfer without the prior written consent of the City,
prior to the earlier of (i) the time the NSP Loan is paid in full and (ii) the Construction Financing
Event, the remaining principal balance of the NSP Loan and all accrued but unpaid interest shall
be immediately due and payable.
(e) (i) As used herein, "Transfer" includes the sale, transfer or
conveyance of the Property or any portion thereof or interest therein, whether voluntary,
involuntary, by operation of law or otherwise, or any agreement to do so; the execution of any
installment land sale contract or similar instrument affecting all or a portion of the Property; or
the lease of all or substantially all of the Property.
(ii) "Transfer" shall also include the transfer, assignment,
hypothecation or conveyance of legal or beneficial ownership of any interest in Borrower, or any
conversion of Borrower to an entity form other than that of Borrower at the time of execution of
this Note, except for the following: (A) a cumulative change in the ownership interests of any
individual limited liability company member of forty-nine percent (49%) or less shall not be
deemed a "Transfer" for purposes of this Note; and (B) a transfer of a portion or a majority of
stock of any corporation to a trust formed in connection with a qualified employee ownership
plan shall not, by itself, be deemed to constitute a change in ownership for purposes of this Note.
NSP Note [04.01.10].doc NSP Note
Page 5 of 9
(f) The City shall not unreasonably withhold, condition or delay its approval
of any matter for which its approval is required hereunder. Any disapproval shall be in writing
and contain the City's reasons for disapproval.
11. The NSP Loan is funded from the City's award of NSP Funds. Accordingly,
Borrower agrees for itself, its successors and assigns that the use of the Property shall be subject
to the restrictions on rent and occupancy set forth in the Regulatory Agreement.
12. Each obligation of the Borrower under this Note is a nonrecourse obligation of the
Borrower and its approved assignee. Except as provided otherwise in this Note, neither the
Borrower nor any of the general or limited partners of Borrower's approved assignee, nor any
other party, shall have any personal liability for payment of obligations to the City. The sole
recourse of the City shall be the exercise of its rights against the Property and the Project and any
related security for the NSP Loan.
Notwithstanding the foregoing, the City may obtain a judgment or order (including, without
limitation, an injunction) requiring Borrower or any other party to perform (or refrain from)
specified acts other than repayment of the NSP Loan; may proceed against any person or entity
whatsoever with respect to the enforcement of any performance or completion guarantees or
similar rights to performance; and may recover directly from Borrower or any other party:
(a) any damages, costs and expenses incurred by the City as a result of fraud or
any criminal act or acts of Borrower or Borrower's assignee or any partner, shareholder, officer,
director or employee (acting within the scope of his or her employment) of Borrower or
Borrower's assignee or of any general partners of Borrower's assignee;
(b) any damages, costs and expenses incurred by the City as a result of any
misappropriation of funds provided for the acquisition and development of the Property, as
described in the Loan Agreement, rents and revenues from the operation of the Project, or
proceeds of insurance policies or condemnation proceeds;
(c) any and all amounts owing by Borrower pursuant to Borrower's
indemnification regarding Hazardous Substances; and
(d) all court costs and attorneys' fees reasonably incurred in enforcing or
collecting upon any of the foregoing exceptions.
13. Borrower waives presentment for payment, demand, protest, and notices of
dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on
the ground of any extension or extensions of the time of payment or of any due date under this
NSP Nate [04.01.10].aoc NSP Note
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Note, in whole or in part, whether before or after maturity and with or without notice. Borrower
hereby agrees to pay all costs and expenses, including reasonable attorney's fees, which may be
incurred by the holder hereof, in the enforcement of this Note, the NSP Deed of Trust or any
term or provision of either thereof.
14. Upon the failure of Borrower to perform or observe any other term or provision of
this Note, or upon the occurrence of any event of default under the terms of the NSP Deed of
Trust, the Loan Agreement or the Regulatory Agreement, or other obligations secured by a deed
of trust on the Property, the holder may exercise its rights or remedies hereunder or thereunder.
15. (a) Subject to the extensions of time set forth in this Section 15, and subject to
the further provisions of this Section 15, failure or delay by Borrower to perform any material
term or provision of this Note, the NSP Deed of Trust, the Loan Agreement, Regulatory
Agreement, or other obligations secured by a deed of trust on the Property, constitutes a default
under this Note.
(b) City shall give written notice of default to Borrower, specifying the default
complained of by the City. Delay in giving such notice shall not constitute a waiver of any
default nor shall it change the time of default.
(c) Any failures or delays by City in asserting any of its rights and remedies
as to any default shall not operate as a waiver of any default or of any such rights or remedies.
Delays by City in asserting any of its rights and remedies shall not deprive City of its right to
institute and maintain any actions or proceedings which it may deem necessary to protect, assert,
or enforce any such rights or remedies.
(d) If an event of default occurs under the terms of this Note or the NSP Deed
of Trust, or other obligations secured by a deed of trust on the Property, prior to exercising any
remedies hereunder or thereunder City shall give Borrower written notice of such default.
Borrower shall have thirty (30) days within which to cure the default prior to exercise of
remedies by City under this Note and/or the NSP Deed of Trust; provided that if such default is
not reasonably capable of being cured within thirty (30) days, Borrower must commence to cure
said event within thirty (30) days and diligently and in good faith continue to cure the event of
default. In no event shall City be precluded from exercising remedies if its security becomes or is
about to become materially impaired by any failure to cure a default or the default is not cured
within one hundred twenty (120) days after the notice of default is received or deemed received.
(e) Any notice of default that is transmitted by electronic facsimile
transmission followed by delivery of a "hard" copy,, shall be deemed delivered upon its
transmission; any notice of default that is personally delivered (including by means of
NSP Note [04.01.101.doe NSP Note
Page 7 of 9
professional messenger service, courier service such as United Parcel Service or Federal Express,
or by U.S. Postal Service), shall be deemed received on the documented date of receipt by
Borrower; and any notice of default that is sent by registered or certified mail, postage prepaid,
return receipt required shall be deemed received on the date of receipt thereof.
16. Notwithstanding specific provisions of this Note, Borrower shall not be deemed to be
in default for failure to perform any non -monetary performance hereunder where delays or
defaults are due to war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires,
casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight
embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually
severe weather, inability to secure necessary labor, material or tools, delays of any contractor,
sub -contractor or supplier, acts of the City or any other public or governmental authority or
entity, or any causes beyond the control or without the fault of the Borrower. An extension of
time for any such cause (a "Force Majeure Delay") shall be for the period of the enforced delay
and shall commence to run from the time of the commencement of the cause, if notice by
Borrower is sent to the City within thirty (30) days of knowledge of the commencement of the
cause. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force
Majeure Delay unless and until the Borrower delivers to the City written notice describing the
event, its cause, when and how Borrower obtained knowledge, the date and the event
commenced, and the estimated delay resulting therefrom. Borrower shall deliver such written
notice within thirty (30) days after it obtains actual knowledge of the event. Times of
performance under this Agreement may also be extended in writing by the City and Borrower.
17. If the rights created by this Note shall be held by a court of competent jurisdiction
to be invalid or unenforceable as to any part of the obligations described herein, the remaining
obligations shall be completely performed and paid.
18. If any event occurs giving the City the right to accelerate this Note, the entire unpaid
principal owing hereunder shall, as of the date of such default, commence to accrue interest at a rate
equal to two percentage points above the reference rate published by Bank of America N.A., or the
maximum non -usurious interest rate permitted by law, whichever is less. Further, in the event
Borrower fails to reimburse the City for any amount advanced by or for the account of the City
which is due hereunder or under the NSP Deed of Trust within ten (10) days after written notice
of such advance is made by the City to Borrower, then such unreimbursed amount shall
thereafter bear interest at the Default Rate until paid.
19. Borrower shall have the right to prepay the obligation evidenced by this Note, or
any part thereof, without penalty. However, even if Borrower prepays the entire balance of this
Note including all accrued interest, the covenants, conditions and restrictions imposed on the
Property by the Regulatory Agreement shall remain in full force and effect for the full 60-year term
NSP Note (04.01. 1 0].doe NSP Note
Page 8 of 9
as specified therein and Borrower shall not be entitled to a reconveyance of the NSP Deed of Trust
so long as the Regulatory Agreement remains in effect.
20. If any attorney is engaged by the City because of any event of an uncured default
under this Note or the NSP Deed of Trust or to enforce any provision of either instrument, whether
or not suit is filed hereon, the City shall bear its own attorney's fees and costs.
21. Neither this Note nor any term hereof may be waived, amended, discharged,
modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective
except by an instrument in writing signed by City and Borrower.
22. Notwithstanding any provision in this Note, the City Deed of Trust or other
document securing same, the total liability for payment in the nature of interest shall not exceed the
limit now imposed by applicable laws of the State of California.
23. Time is of the essence in the performance of each provision hereof.
IN WITNESS WHEREOF Borrower has executed this Note as of the day and year set
forth above.
COLETTE' S CHILDREN HOME, INC.,
a California nonprofit public benefit
NSP Note [04.01.10].doe NSP Note
Page 9 of 9
EXHIBIT G
HOME PROMISSORY NOTE
[behind this page]
HOME Promissory Note
PROMISSORY NOTE SECURED BY DEED OF TRUST
TO THE CITY OF HUNTINGTON BEACH
[HOME PROGRAM]
DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing
same, must be surrendered to Trustee for cancellation before reconveyance will be made.
3% Interest Huntington Beach, California
$284,432.00 ,�, / , 2010
FOR VALUE RECEIVED, COLETTE'S CHILDREN HOME, INC., a California non-
profit public benefit corporation (`Borrower"), hereby promises to pay to the CITY OF
HUNTINGTON BEACH, a municipal corporation of the state of California ("City"), or order, a
principal amount of TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED
THIRTY-TWO DOLLARS ($284,432.00) (the "HOME Acquisition Loan"). This Note is given
pursuant to that certain Subrecipient and Acquisition Loan Agreement dated as of April 5, 2010,
between Borrower ("Developer" therein) and City (the "Loan Agreement") and evidences the
HOME Acquisition Loan to Borrower, which provides part of the financing for the acquisition of
that certain real property in the City of Huntington Beach legally described in the Deed of Trust
securing this Note (the "Property") for the development of affordable housing for low income
households. The Borrower shall not make any sale, assignment or conveyance, or transfer in any
other form, of the Property, or any part thereof, or interest therein without the express written
consent of the City as set forth in Section 2.5 of the Loan Agreement. The obligation of
Borrower to City hereunder is subject to the terms of the Loan Agreement, this Note and the
following instruments, each dated on or about the date hereof, and, where applicable, executed
and delivered by Borrower for the purpose of securing this Note: a Regulatory Agreement
("Regulatory Agreement"); a Deed of Trust, Security Agreement and Fixture Filing (With
Assignment of Rents) ("HOME Deed of Trust"); and an Assignment of Agreements
("Assignment of Agreements"). Said documents are public records on file in the offices of City,
and the provisions of said documents are incorporated herein by this reference. The Borrower
shall pay interest at the rate, in the amount and at the time hereinafter provided.
1. Definitions. Any capitalized term not otherwise defined herein shall have the
meaning ascribed to such term in the Loan Agreement. In addition, the following terms shall
have the following meanings:
The term "Acquisition Costs" shall mean the total cost of acquiring the Property in
conformance with the terms and conditions of this Agreement, in an amount approved by the
City Administrator or his designee, including closing and escrow costs and the cost of the City's
and the Borrower's title insurance policies.
HOME Note [04.01.10].doc HOME Note
Page 1 of 9
The term "Approved 'Title Conditions" shall mean title that is subject to current
property taxes and assessments, easements and other encumbrances specifically approved by the
City Administrator.
The term "Assignment of Agreements" shall mean a document substantially in the form
attached to the Loan Agreement as Exhibit "L", which is incorporated herein by this reference.
The term "City" shall mean the City of Huntington Beach, a municipal corporation of the
State of California, having its offices at 2000 Main Street, Huntington Beach, CA 92648, and
any assignee of, or successor to, the rights, powers, and responsibilities of City.
The term "City Administrator" shall mean the individual duly appointed to the position
of City Administrator of the City, or authorized designee. Whenever an administrative action is
required by City to implement the terms of this Housing Agreement, the City Administrator, or
an authorized designee, shall have authority to act on behalf of City, except with respect to
matters reserved under California law or the City's Charter wholly for City Council
determination.
The term "Construction Financing Event" shall mean the point in time when (i) all
conditions precedent to the recording of the City's HOME development loan documents for the
Project have been satisfied and (ii) the construction loan documents for the Project are recorded.
The term "Environmental Indemnity" shall mean an instrument substantially in the
form attached to the Loan Agreement as Exhibit "K".
The term "Hazardous Materials" means any hazardous or toxic substances, materials,
wastes, pollutants, or contaminants, which are defined, regulated, or listed as "hazardous
substances," "hazardous wastes," "hazardous materials," "pollutants," "contaminants," or "toxic
substances," under federal or state environmental and health and safety laws and regulations,
including without limitation petroleum and petroleum byproducts, flammable explosives, area
formaldehyde insulation, radioactive materials, asbestos, and lead. Hazardous Materials do not
include substances that are used or consumed in the normal course of developing, operating, or
occupying a housing project, to the extent and degree that such substances are stored, used, and
disposed of in the manner and in amounts that are consistent with normal practice and legal
standards.
The term "HOME Acquisition Doan" shall mean the City's loan to Developer in an
amount not to exceed TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED
THIRTY-TWO DOLLARS ($284,432.00) of HOME Funds, pursuant to this Agreement.
HOME Note [04.01.10].doc HOME Note
Page 2 of 9
The term "HOME Deed of 'Trust" shall mean the Deed of Trust securing the HOME
Acquisition Loan.
The term "HOME Funds" means the City's allocation of funds from the HOME
Investment Partnership Program created by the National Affordable Housing Act of 1990.
The term "Maturity Date" means the earliest to occur of:
(a) Borrower's failure to obtain an award of Low Income Housing Tax Credits for the
Project by June 30, 2011;
(b) The date of the Construction Financing Event for the Project;
(c) November 30, 2011, or such later date as may be determined by the City
Administrator in his sole discretion;
(d) The date that the Property or any portion thereof or interest therein is sold,
transferred, assigned or refinanced, without the prior written approval of the City, except as
otherwise permitted in this Note; or
(e) The date of a default by the Borrower under the terms of this Note, the HOME
Deed of Trust, the Loan Agreement, the Regulatory Agreement or other obligations secured by a
deed of trust on the Property, which is not cured within the respective time period provided
herein and therein.
The term "Person" means an individual, partnership, limited partnership, trust, estate,
association, corporation, limited liability company or other entity, domestic or foreign.
The term "Property" shall mean that certain real property located in the City of
Huntington Beach, County of Orange, State of California, commonly known as 7911 Slater
Avenue, Huntington Beach, California, and legally described in Exhibit "A" to the HOME Deed
of Trust.
The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and
Declaration of Covenants and Restrictions recorded against the Property on or about the date of
this Note.
2. This Note evidences the obligation of the Borrower to the City for the repayment
of the HOME Acquisition Loan. None of the funds provided pursuant to the HOME Acquisition
Loan were funded directly or indirectly with any obligation the interest on which is exempt from
HOME Note [04.01.10].aoc HOME Note
Page 3 of 9
tax under Section 103 of the Internal Revenue Code of 1986, as amended, or pursuant to any
United States government federal source.
3. This Note is payable at the principal office of the City, 2000 Main Street,
Huntington Beach, CA 92648, or at such other place as the holder hereof may inform the
Borrower in writing, in lawful money of the United States.
4. This Note shall be secured by the HOME Deed of Trust.
5. This Note shall bear interest at the annual rate of three percent, which shall
commence to accrue upon disbursement.
6. Until the Maturity Date, no payments shall be due and payable under this Note
except to the extent of any refinancing.
7. The entire unpaid principal balance of this Note and any accrued but unpaid
interest shall be due and payable upon the Maturity Date.
8. All payments to the City shall be applied first to interest, then to reduce the
principal amount owed.
9. The HOME Acquisition Loan evidenced by this Note was given in the
expectation that the Construction Financing Event for the Project will occur no later than
November 30, 2011, or such later date as may be determined by the City Administrator in his
sole discretion. Upon the occurrence of the Construction Financing Event, the outstanding
principal amount of the HOME Acquisition Loan shall be added to the amount of the additional
HOME funds that City anticipates will be loaned to Borrower for payment of a portion of the
Project's approved construction costs. At the Construction Financing Event, the HOME Note
shall be deposited into escrow to be cancelled, the HOME Deed of Trust shall be reconveyed to
Borrower, and Borrower shall execute a new promissory note to the City for the total amount of
the HOME acquisition and construction loans plus any accrued interest on the HOME
Acquisition Loan theretofore unpaid plus any other sums secured by the HOME Deed of Trust.
The new promissory note shall be secured by a deed of trust on the Property that is subordinate
only to those prior liens and encumbrances that are reasonably approved by the City
Administrator in accordance with the Loan Agreement.
10. (a) Prior to the repayment in full of the HOME Acquisition Loan, the
Borrower shall not assign or attempt to assign the Loan Agreement or any right therein, nor
make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the
Property, the improvements I thereon, or any portion thereof or interest therein (referred to
HOME Note [04.01.10].doc HOME Note
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hereinafter as a "Transfer") other than expressly allowed under the Loan Agreement, without
prior written approval of the City. Consent to one such transaction shall not be deemed to be a
waiver of the right to require consent to future or successive transactions. The City shall not
unreasonably withhold or delay its consent. If consent should be given, any such transfer shall be
subject to this Section 10, and any such transferee shall assume all obligations hereunder and
agree to be bound by all provisions contained herein.
(b) Any such proposed transferee shall have the qualifications and financial
responsibility necessary and adequate as may be reasonably determined by the City, to fulfill the
obligations undertaken by Borrower in the Loan Agreement, the Regulatory Agreement and this
Note. Any such proposed transferee, by instrument in writing satisfactory to the City and in
form recordable among the land records of Orange County, for itself and its successors and
assigns, and for the benefit of the City shall expressly assume all of the obligations of the
Borrower under the Loan Agreement and the Regulatory Agreement, and agree to be subject to
all conditions and restrictions applicable to the Borrower in this Note. There shall be submitted
to the City for review all instruments and other legal documents proposed to effect any such
transfer; and if approved by the City its approval shall be indicated to the Borrower in writing.
(c) In the absence of specific written agreement by the City, no unauthorized
Transfer, or approval thereof by the City, shall be deemed to relieve the Borrower or any other
party from any obligations under the Loan Agreement or the Regulatory Agreement.
(d) In the event of a Transfer without the prior written consent of the City,
prior to the earlier of (i) the time the HOME Acquisition Loan is paid in full and (ii) the
Construction Financing Event, the remaining principal balance of the HOME Acquisition Loan
and all accrued but unpaid interest shall be immediately due and payable.
(e) (i) As used herein, "Transfer" includes the sale, transfer or
conveyance of the Property or any portion thereof or interest therein, whether voluntary,
involuntary, by operation of law or otherwise, or any agreement to do so; the execution of any
installment land sale contract or similar instrument affecting all or a portion of the Property; or
the lease of all or substantially all of the Property.
(ii) "Transfer" shall also include the transfer, assignment,
hypothecation or conveyance of legal or beneficial ownership of any interest in Borrower, or any
conversion of Borrower to an entity form other than that of Borrower at the time of execution of
this Note, except for the following: (A) a cumulative change in the ownership interests of any
individual limited liability company member of forty-nine percent (49%) or less shall not be
deemed a "Transfer" for purposes of this Note; and (B) a transfer of a portion or a majority of
HOME Note [04.0 1. 1 0].doc HOME Note
Page 5 of 9
stock of any corporation to a trust formed in connection with a qualified employee ownership
plan shall not, by itself, be deemed to constitute a change in ownership for purposes of this Note.
(f) The City shall not unreasonably withhold, condition or delay its approval
of any matter for which its approval is required hereunder. Any disapproval shall be in writing
and contain the City's reasons for disapproval.
11. The HOME Acquisition Loan is funded from the City's allocation of HOME
Funds. Accordingly, Borrower agrees for itself, its successors and assigns that the use of the
Property shall be subject to the restrictions on rent and occupancy set forth in the Regulatory
Agreement.
12. Each obligation of the Borrower under this Note is a nonrecourse obligation of the
Borrower and its approved assignee. Except as provided otherwise in this Note, neither the
Borrower nor any of the general or limited partners of Borrower's approved assignee, nor any
other party, shall have any personal liability for payment of obligations to the City. The sole
recourse of the City shall be the exercise of its rights against the Property and the Project and any
related security for the HOME Acquisition Loan.
Notwithstanding the foregoing, the City may obtain a judgment or order (including, without
limitation, an injunction) requiring Borrower or any other party to perform (or refrain from)
specified acts other than repayment of the HOME Acquisition Loan; may proceed against any
person or entity whatsoever with respect to the enforcement of any performance or completion
guarantees or similar rights to performance; and may recover directly from Borrower or any
other party:
(a) any damages, costs and expenses incurred by the City as a result of fraud or
any criminal act or acts of Borrower or Borrower's assignee or any partner, shareholder, officer,
director or employee (acting within the scope of his or her employment) of Borrower or
Borrower's assignee or of any general partners of Borrower's assignee;
(b) any damages, costs and expenses incurred by the City as a result of any
misappropriation of funds provided for the acquisition and development of the Property, as
described in the Loan Agreement, rents and revenues from the operation of the Project, or
proceeds of insurance policies or condemnation proceeds;
(c) any and all amounts owing by Borrower pursuant to Borrower's
indemnification regarding Hazardous Substances; and
HOME Note [04.01.10].doc HOME Note
Page 6 of 9
(d) all court costs and attorneys' fees reasonably incurred in enforcing or
collecting upon any of the foregoing exceptions.
13. Borrower waives presentment for payment, demand, protest, and notices of
dishonor and of protest; the benefits of all waivable exemptions; and all defenses and pleas on
the ground of any extension or extensions of the time of payment or of any due date under this
Note, in whole or in part, whether before or after maturity and with or without notice. Borrower
hereby agrees to pay all costs and expenses, including reasonable attorney's fees, which may be
incurred by the holder hereof, in the enforcement of this Note, the HOME Deed of Trust or any
term or provision of either thereof.
14. Upon the failure of Borrower to perform or observe any other term or provision of
this Note, or upon the occurrence of any event of default under the terms of the HOME Deed of
Trust, the Loan Agreement or the Regulatory Agreement, or other obligations secured by a deed
of trust on the Property, the holder may exercise its rights or remedies hereunder or thereunder.
15. (a) Subject to the extensions of time set forth in this Section 15, and subject to
the further provisions of this Section 15, failure or delay by Borrower to perform any material
term or provision of this Note, the HOME Deed of Trust, the Loan Agreement, Regulatory
Agreement, or other obligations secured by a deed of trust on the Property, constitutes a default
under this Note.
(b) City shall give written notice of default to Borrower, specifying the default
complained of by the City. Delay in giving such notice shall not constitute a waiver of any
default nor shall it change the time of default.
(c) Any failures or delays by City in asserting any of its rights and remedies
as to any default shall not operate as a waiver of any default or of any such rights or remedies.
Delays by City in asserting any of its rights and remedies shall not deprive City of its right to
institute and maintain any actions or proceedings which it may deem necessary to protect, assert,
or enforce any such rights or remedies.
(d) If an event of default occurs under the terms of this Note or the HOME
Deed of Trust, or other obligations secured by a deed of trust on the Property, prior to exercising
any remedies hereunder or thereunder City shall give Borrower written notice of such default.
Borrower shall have thirty (30) days within which to cure the default prior to exercise of
remedies by City under this Note and/or the HOME Deed of Trust; provided that if such default
is not reasonably capable of being cured within thirty (30) days, Borrower must commence to
cure said event within thirty (30) days and diligently and in good faith continue to cure the event
of default. In no event shall City be precluded from exercising remedies if its security becomes
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Page 7 of 9
or is about to become materially impaired by any failure to cure a default or the default is not
cured within one hundred twenty (120) days after the notice of default is received or deemed
received.
(e) Any notice of default that is transmitted by electronic facsimile
transmission followed by delivery of a "hard" copy, shall be deemed delivered upon its
transmission; any notice of default that is personally delivered (including by means of
professional messenger service, courier service such as United Parcel Service or Federal Express,
or by U.S. Postal Service), shall be deemed received on the documented date of receipt by
Borrower; and any notice of default that is sent by registered or certified mail, postage prepaid,
return receipt required shall be deemed received on the date of receipt thereof.
16. Notwithstanding specific provisions of this Note, Borrower shall not be deemed to be
in default for failure to perform any non -monetary performance hereunder where delays or
defaults are due to war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires,
casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight
embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually
severe weather, inability to secure necessary labor, material or tools, delays of any contractor,
sub -contractor or supplier, acts of the City or any other public or governmental authority or
entity, or any causes beyond the control or without the fault of the Borrower. An extension of
time for any such cause (a "Force Majeure Delay") shall be for the period of the enforced delay
and shall commence to run from the time of the commencement of the cause, if notice by
Borrower is sent to the City within thirty (30) ,days of knowledge of the commencement of the
cause. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force
Majeure Delay unless and until the Borrower delivers to the City written notice describing the
event, its cause, when and how Borrower obtained knowledge, the date and the event
commenced, and the estimated delay resulting therefrom. Borrower shall deliver such written
notice within thirty (30) days after it obtains actual knowledge of the event. Times of
performance under this Agreement may also be extended in writing by the City and Borrower.
17. If the rights created by this Note shall be held by a court of competent jurisdiction
to be invalid or unenforceable as to any part of the obligations described herein, the remaining
obligations shall be completely performed and paid.
18. If any event occurs giving the City the right to accelerate this Note, the entire unpaid
principal owing hereunder shall, as of the date of such default, commence to accrue interest at a rate
equal to two percentage points above the reference rate published by Bank of America N.A., or the
maximum non -usurious interest rate permitted by law, whichever is less. Further, in the event
Borrower fails to reimburse the City for any amount advanced by or for the account of the City
which is due hereunder or under the HOME Deed of Trust within ten (10) days after written
HOME Note [04.01 101.doc HOME Note
Page 8 of 9
notice of such advance is made by the City to Borrower, then such unreimbursed amount shall
thereafter bear interest at the Default Rate until paid.
19. Borrower shall have the right to prepay the obligation evidenced by this Note, or
any part thereof, without penalty. However, even if Borrower prepays the entire balance of this
Note including all accrued interest, the covenants, conditions and restrictions imposed on the
Property by the Regulatory Agreement shall remain in full force and effect for the full 60-year term
as specified therein and Borrower shall not be entitled to a reconveyance of the HOME Deed of
Trust so long as the Regulatory Agreement remains in effect.
20. If any attorney is engaged by the City because of any event of an uncured default
under this Note or the HOME Deed of Trust or to enforce any provision of either instrument,
whether or not suit is filed hereon, the City shall bear its own attor ey's fees and costs.
21. Neither this Note nor any term hereof may be waived, amended, discharged,
modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective
except by an instrument in writing signed by City and Borrower.
22. Notwithstanding any, provision in this Note, the City Deed of Trust or other
document securing same, the total liability for payment in the nature of interest shall not exceed the
limit now imposed by applicable laws of the State of California.
23. Time is of the essence in the performance of each provision hereof.
IN WITNESS WHEREOF Borrower has executed this Note as of the day and year set
forth above.
COLETTE'S CHILDREN HOME, INC.,
a California nonprofit public benefit
corpora on
)141,1
By V
Pamela Hoge, e, President
HOME Note [04.01.10].doe HOME Note
Page 9 of 9
EXHIBIT H
NSP DEED OF TRUST
[behind this page]
NSP Deed of Trust
This Document was electronically recorded by
Lawyers Title Company B
RECOR N REQ00 9Y
LAWYERM
FREE RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Recorded in Official Records, Orange County
Tom Daly, Clerk -Recorder
11111111111111111 II 1111111111111111111111111111111111111111111 NO FEE
2010000231151 01:05pm 05/17/10
65 404 D11 A36 U08 19
0.00 0.00 0.00 0.00 54.00 0.00 0.00 0.00
THE CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, CA 92648
Attn: City . Clerk
5- 58 7 O 13 —c> �
(Space Above This Line for Recorder's Office Use Only)
(Exempt from Recording Fee per Gov. Code § 27383)
APN: 165-234-17
DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING
(WITH ASSIGNMENT OF RENTS)
BY COLLETE'S CHILDREN HOME, INC. FOR THE BENEFIT OF
THE CITY OF HUNTINGTON BEACH
[NEIGHBORHOOD STABILIZATION PROGRAM]
This Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) is
made this A day of April, 2010 by COLETTE' S CHILDREN HOME, INC., a California non-profit
public benefit corporation (hereinafter referred to as "Trustor") (whose address is 17301 Beach
Blvd., #23, Huntington Beach, California 92647, to LAWYERS TITLE, (hereinafter called
"Trustee"), for the benefit of THE CITY OF HUNTINGTON BEACH, a municipal corporation of
the State of California (hereinafter called "Beneficiary"), whose address is 2000 Main Street,
Huntington Beach, California 92648.
Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to Trustee,
its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH RIGHT OF
ENTRY AND POSSESSION all present and future right, title and interest of Trustor in and to the
following property (the "Trust Estate"):
(1) All of Trustor's rights, title and interest in and to that certain real property in the City
of Huntington Beach, County of Orange, State of California more particularly described in Exhibit
"A" attached hereto and by this reference made a part hereof (hereafter referred to as the "Subject
Property");
(2) All buildings, structures and other improvements now or in the future located or to be
constructed on the Subject Property (the "Improvements");
NSP DEED OF TRUST
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NSP Deed of Trust [04.01.10].doc
(3) all tenements, hereditaments, appurtenances, privileges, franchises and other rights
and interests now or in the future benefiting or otherwise relating to the Subject Property or the
Improvements, including easements, rights -of -way and development rights (the "Appurtenances").
(The Appurtenances, together with the Subject Property and the Improvements, are hereafter referred
to as the "Real Property");
(4) subject to the assignment to Beneficiary set forth in Paragraph 4 below, all rents,
issues, income, revenues, royalties and profits now or in the future payable with respect to or
otherwise derived from the Trust Estate or the ownership, use, management, operation, leasing or
occupancy of the Trust Estate, including those past due and unpaid (the "Rents");
(5) all inventory, equipment, fixtures and other goods (as those terms are defined in
Division 9 of the California Uniform Commercial Code (the "UCC"), and whether existing now or in
the future) now or in the future located at, upon or about, or affixed or attached to or installed in, the
Real Property, or used or to be used in connection with or otherwise relating to the Real Property or
the ownership, use, development, construction, maintenance, management, operation, marketing,
leasing or occupancy of the Real Property, including furniture, furnishings, machinery, appliances,
building materials and supplies, generators, boilers, furnaces, water tanks, heating ventilating and air
conditioning equipment and all other types of tangible personal property of any kind or nature, and
all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and
substitutions of or to any of such property, but not including personal property that is donated to
Trustor (the "Goods," and together with the Real Property, the "Property"); and
(6) all accounts, general intangibles, chattel paper, deposit accounts, money, instruments
and documents (as those terms are defined in the UCC) and all other agreements, obligations, rights
and written material (in each case whether existing now or in the future) now or in the future relating
to or otherwise arising in connection with or derived from the Property or any other part of the Trust
Estate or the ownership, use, development, construction, maintenance, management, operation,
marketing, leasing, occupancy, sale or financing of the property or any other part of the Trust Estate,
including (to the extent applicable to the Property or any other portion of the Trust Estate) (i)
permits, approvals and other governmental authorizations, (ii) improvement plans and specifications
and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project
managers, supervisors, designers, architects, engineers, sales agents, leasing agents, consultants and
property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties,
guaranties, indemnities and insurance policies, together with insurance payments and unearned
insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or
resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage
to, trespass on or taking, condemnation (or conveyance in lieu of condemnation) or public use of any
of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale
agreements and purchase options, together with advance payments, security deposits and other
NSP DEED OF TRUST
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NSP Deed of Trust [04.01.10].doc
amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits,
bonds, deferred payments, refunds, rebates; discounts, cost savings, escrow proceeds, sale proceeds
and other rights to the payment of money, trade names, trademarks, goodwill and all other types on
intangible personal property of any kind or nature, and (ix) all supplements, modifications,
amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such
property (the "Intangibles").
Trustor further grants to Trustee and Beneficiary, pursuant to the UCC, a security interest in
all present and future right, title and interest of Trustor in and to all Goods and Intangibles and all of
the Trust Estate described above in which a security interest may be created under the UCC
(collectively, the "Personal Property"). This Deed of Trust constitutes a security agreement under
the UCC, conveying a security interest in the Personal Property to Trustee and Beneficiary. Trustee
and Beneficiary shall have, in addition to all rights and remedies provided herein, all the rights and
remedies of a "secured party" under the UCC and other applicable California law. Trustor covenants
and agrees that this Deed of Trust constitutes a fixture filing under Sections 9502(c) and 9604 of the
UCC.
FOR THE PURPOSE OF SECURING, in such order of priority as Beneficiary may elect,
all of the following:
(1) Due, prompt and complete observance, performance and discharge of each and every
condition, obligation, covenant and agreement contained herein or contained in the following:
(a) a promissory note in the original principal amount of $390,568, executed by
Trustor ("Borrower" therein) of even date herewith (the "NSP Note");
(b) the Subrecipient and Acquisition Loan Agreement dated as of April 5, 2010,
by and between Trustor ("Developer" therein) and Beneficiary ("City" therein) (the
"Loan Agreement"); and
(c) the Regulatory Agreement and Declaration of Covenants and Restrictions
(including rental restrictions) dated on or about the date hereof, by and between
Trustor ("Developer" therein) and Beneficiary ("City" therein), recorded concurrently
herewith ("Regulatory Agreement").
(2) Payment of indebtedness of the Trustor to the Beneficiary in the principal sum of
$390,568 or so much thereof as shall be advanced, evidenced by the NSP Note, with interest,
according to the terms of the NSP Note.
(3) Payment and performance of all future advances and other obligations that the then
record owner of all or part of the Property may agree to pay and/or perform (whether as principal,
NSP DEED OF TRUST
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NSP Deed of Trust [04.01.10].doc
surety or guarantor) for the benefit of Beneficiary, when such future advance or obligation is
evidenced by a writing which recites that it is secured by this Deed of Trust.
The Loan Agreement, including all Attachments thereto, and the documents and instruments
executed by Trustor in connection with the Project, including the Regulatory Agreement, the NSP
Note and the Assignment of Agreements, all as described in the Loan Agreement (collectively
referred to as the "Secured Obligations") and all of their terms are incorporated herein by reference
and this conveyance shall secure any and all extensions, amendments, modifications or renewals
thereof however evidenced. Any capitalized term that is not otherwise defined in this Deed of Trust
shall have the meaning ascribed to such term in the Loan Agreement.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
1. That Trustor shall pay the NSP Note at the time and in the manner provided therein,
and perform the obligations of the Trustor as set forth in the Secured Obligations at the time and in
the manner respectively provided therein;
2. That Trustor shall not permit or suffer the use of any of the Property for any purpose
other than the uses permitted by the Secured Obligations;
3. That the Secured Obligations are incorporated in and made a part of this Deed of
Trust. Upon default of a Secured Obligation, and after the giving of notice and the expiration of any
applicable cure period, the Beneficiary, at its option, may declare the whole of the indebtedness
secured hereby to be due and payable.
4. That, subject to the prior rights, if any, of a lender whose lien is senior to this Deed of
Trust ("Senior Lender"), all rents, profits and income from the Trust Estate are assigned to the
Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to
Trustor so long as no default exists hereunder after the giving of notice and the expiration of any
applicable cure period, to collect such rents, profits and income for use in accordance with the
provisions of the Secured Obligations.
5. That upon default hereunder or under the aforementioned agreements, and after the
giving of notice and the expiration of any applicable cure period, Beneficiary shall be entitled to the
appointment of a receiver by any court having jurisdiction, without notice, to take possession and
protect the Trust Estate and operate same and collect the rents, profits and income therefrom;
6. That Trustor will keep the Improvements insured against loss by fire and such other
hazards, casualties, and contingencies as may reasonably be required in writing from time to time by
the Beneficiary, and all such insurance shall be evidenced by standard fire and extended coverage
NSP DEED OF TRUST
PAGE
NSP Deed of Trust [04.01.10].doc
insurance policy or policies. In no event shall the amounts of coverage be less than 100 percent of
the insurable value of the Property. Such policies shall be endorsed with standard mortgage clause
with loss payable to the Beneficiary and certificates thereof together with copies of original policies
shall be deposited with the Beneficiary;
7. To pay, at least 10 days before delinquency, any taxes and assessments affecting the
Property; to pay, when due, all encumbrances, charges and liens, with interest, on the Property or any
part thereof which appear to be prior or superior hereto; and to pay all costs, fees, and expenses of
this Trust. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall
not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is
contesting the legality thereof in good faith and by appropriate proceedings, and Trustor has adequate
funds to pay any liabilities contested pursuant to this Section 7.
8. To keep the Property in good condition and repair, subject to ordinary wear and tear,
casualty and condemnation, not to remove or demolish any buildings thereon without the prior
written consent of Beneficiary, not to be unreasonably withheld, conditioned or delayed; to complete
or restore promptly and in good and workmanlike manner any building which may be constructed,
damaged, or destroyed thereon and to pay when due all claims for labor performed and materials
furnished therefor; to comply with all laws affecting the Property or requiring any alterations or
improvements to be made thereon (subject to Trustor's right to contest the validity or applicability of
laws or regulations); not to commit or permit waste thereof, not to commit, suffer or permit any act
upon the Property in violation of law and/or covenants, conditions and/or restrictions affecting the
Property; not to permit or suffer any material alteration of or addition to the Improvements without
the consent of the Beneficiary;
9. To appear in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including
cost of evidence of title and reasonable attorney's fees in a reasonable sum, in any such action or
proceeding in which Beneficiary or Trustee may appear;
10. Should Trustor fail to make any payment or do any act as herein provided, then
Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor
and without releasing Trustor from any obligation hereof, may make or do the same in such manner
and to such extent as either may deem necessary to protect the security hereof. Following default,
after the giving of notice and the expiration of any applicable cure period, Beneficiary or Trustee
being authorized to enter upon said property for such purposes, may commence, appear in and/or
defend any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; may pay, purchase, contest, or compromise any encumbrance, charge, or lien
which in the judgment of either appears to be prior or superior hereto; and, in exercising any such
powers, may pay necessary expenses, employ counsel, and pay reasonable attorney fees.
Notwithstanding the foregoing, in the event of default under this Deed of Trust, the Beneficiary may
NSP DEED OF TRUST
PAGE-5
NSP Deed of Trust [04.01.10].doc
also require Trustor to maintain and submit additional records. Beneficiary shall specify in writing
the particular records that must be maintained and the information or reports that must be submitted;
11. Beneficiary shall have the right to pay fire and other property insurance premiums
when due should Trustor fail to make any required premium payments. All such payments made by
the Beneficiary shall be added to the principal sum secured hereby;
12. To pay immediately and without demand all sums so expended by Beneficiary or
Trustee, under permission given under this Deed of Trust, with interest from date of expenditure at
the rate specified in the NSP Note;
13. That the funds to be advanced hereunder are to be used in accordance with the
Secured Obligations and upon the failure of Trustor to keep and perform all the covenants,
conditions, and agreements of said agreements, the principal sum and all arrears of interest, and other
charges provided for in the NSP Note shall at the option of the Beneficiary of this Deed of Trust
become due and payable, anything contained herein to the contrary notwithstanding;
14. Trustor further covenants that it will not voluntarily create, suffer, or permit to be
created against the property subject to this Deed of Trust any lien or liens except as permitted by the
Secured Obligations or otherwise approved by Beneficiary, and further that it will keep and maintain
the Property free from the claims of all persons supplying labor or materials which will enter into the
construction of any and all buildings now being erected or to be erected on said premises.
Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be
obligated to pay any claims for labor, materials or services which Trustor in good faith disputes and
is diligently contesting, provided that Trustor shall, at Beneficiary's written request, within thirty
(30) days after the filing of any claim or lien (but in any event, and without any requirement that
Beneficiary must first provide a written request, prior to foreclosure) record in the Office of the
Recorder of Orange County, a surety bond in an amount one -and -one-half (11/2) times the amount of
such claim item to protect against a claim of lien, or provide such other security reasonably
satisfactory to Beneficiary;
15. That any and all improvements made or about to be made upon the premises covered
by the Deed of Trust, and all plans and specifications, comply with all applicable municipal
ordinances and regulations and all other applicable regulations made or promulgated, now or
hereafter, by lawful authority, and that the same will upon completion comply with all such
municipal ordinances and regulations and with the rules of the applicable fire rating or inspection
organization, bureau, association or office;
16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing
representative of the Beneficiary a reasonable charge for providing a statement regarding the
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NSP Deed of Trust [04.01.10].doc
obligation secured by this Deed of Trust as provided by Section 2954, Article 2, Chapter 2 Title 14,
Division 3, of the California Civil Code.
IT IS MUTUALLY AGREED THAT:
17. Should the Property or any part thereof be taken or damaged by reason of any public
improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other
manner, subject to the rights of any senior lender that has been approved by Beneficiary, Beneficiary
shall be entitled to all compensation, awards, and other payments or relief therefor which are not
used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or
damaged, and shall be entitled at its option to commence, appear in and prosecute in its own name,
any action or proceedings, or to make any compromise or settlement, in connection with such taking
or damage. Subject to the rights of any senior lender that has been approved by Beneficiary, all such
compensation, awards, damages, rights of action and proceeds which are not used to reconstruct,
restore or otherwise improve the Property or part thereof that was taken or damaged, including the
proceeds of any policies of fire and other insurance affecting the Property, are hereby assigned to
Beneficiary. After deducting therefrom all its expenses, including attorney's fees, the balance of the
proceeds which are not used to reconstruct, restore or otherwise improve the Property or part thereof
that was taken or damaged, shall be applied to the amount due under the NSP Note secured hereby.
No amount applied to the reduction of the principal shall relieve the Trustor from making payments
as required by the NSP Note. If the NSP Note has been repaid in full, the remainder of the balance
shall revert to the Trustor;
18. Upon default by Trustor in making any payments provided for in the NSP Note
secured hereby or in this Deed of Trust, or in performing any obligation set forth in any of the
Secured Obligations, and if such default is not cured within the respective time provided therefor in
Section 34 of this Deed of Trust, below, Beneficiary may declare all sums secured hereby
immediately due and payable by delivery to Trustee of written declaration of default and demand for
sale, and of written notice of default and of election to cause the property to be sold, which notice
Trustee shall cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust.
Beneficiary shall also deposit with Trustee this Deed of Trust, the NSP Note and all documents
evidencing expenditures secured hereby;
19. a. Prior to the repayment in full of the NSP Loan, the Trustor shall not assign or
attempt to assign the Loan Agreement or any right therein, nor make any total or partial sale, transfer,
conveyance or assignment of the whole or any part of the Property, the Improvements, or any portion
thereof or interest therein (referred to hereinafter as a "Transfer"), without prior written approval of
the Beneficiary, except as otherwise permitted in the Secured Obligations. Consent to one such
transaction shall not be deemed to be a waiver of the right to require consent to future or successive
transactions. Beneficiary shall not unreasonably withhold or delay its consent. If consent should be
NSP DEED OF TRUST
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NSP Deed of Trust [04.01.10].doc
given, any such transfer shall be subject to this Section 19, and any such transferee shall assume all
obligations hereunder and agree to be bound by all provisions contained herein.
b. Any such proposed transferee shall have the qualifications and financial
responsibility necessary and adequate as may be reasonably determined by the Beneficiary, to fulfill
the obligations undertaken by Trustor in the Secured Obligations. Any such proposed transferee, by
instrument in writing satisfactory to the Beneficiary and in form recordable among the land records
of Orange County, for itself and its successors and assigns, and for the benefit of the Beneficiary
shall expressly assume all of the obligations of the Trustor under the Secured Obligations, and agree
to be subject to all conditions and restrictions applicable to the Trustor in this Deed of Trust. There
shall be submitted to the Beneficiary for review all instruments and other legal documents proposed
to effect any such transfer; and if approved by the Beneficiary its approval shall be indicated to the
Trustor in writing.
C. In the absence of specific written agreement by the Beneficiary, no Transfer,
or approval thereof by the Beneficiary, shall be deemed to relieve the Trustor or any other parry from
any obligations under the Secured Obligations.
d. In the event of a Transfer prior to the time the NSP Loan is paid in full and
without the prior written consent of the Beneficiary, the net proceeds of such Transfer, shall be paid
to the Beneficiary to the extent necessary to pay in full the accrued interest, if any, current interest
and remaining principal balance of the NSP Loan.
e. (1) As used herein, "Transfer" includes the sale, agreement to sell, transfer
or conveyance of the Property, the Project, or any portion thereof or interest therein, whether
voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale
contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all
or substantially all of the Property or Project.
(2) "Transfer" shall also include the transfer, assignment, hypothecation or
conveyance of legal or beneficial ownership of any interest in Trustor, or any conversion of Trustor
to an entity form other than that of Trustor at the time of execution of the Loan Agreement, except
for the assignment to a limited partnership provided for in the Secured Obligations and except that a
cumulative change in ownership interest of forty-nine percent (49%) or less shall not be deemed a
"Transfer" for purposes of this Deed of Trust.
f. Beneficiary shall not unreasonably withhold, condition or delay its approval of
any matter for which its approval is required hereunder. Any disapproval shall be in writing and
contain Beneficiary's reasons for disapproval.
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20. After the lapse of such time as may then be required by law following the recordation
of a notice of default, and notice of sale having been given as then required by law, Trustee, without
demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either
as a whole or in separate parcels, and in such order as it may determine at public auction to the
highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may
postpone sale of all or any portion of the Property by public announcement at the time and place of
sale, and from time to time thereafter may postpone the sale by public announcement at the time and
place of sale, and from time to time thereafter may postpone the sale by public announcement at the
time fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying
the property so sold, but without any covenant or warranty, express or implied. The recitals in the
deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person,
including Trustor, Trustee or Beneficiary, may purchase at the sale. The Trustee shall apply the
proceeds of sale to payment of (1) the expenses of such sale, together with the reasonable expenses
of this trust including therein reasonable Trustee's fees or attorney's fees for conducting the sale, and
the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any
search and/or other evidence of title procured in connection with such sale and revenue stamps on
Trustee's deed; (3) all sums expended under the terms hereof, not then repaid, with accrued interest
at the rate specified in the NSP Note; (4) all other sums then secured hereby; and (5) the remainder,
if any, to the person or persons legally entitled thereto;
21. Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties
conferred upon any Trustee herein named or acting hereunder. Each such appointment and
substitution shall be made by written instrument executed by Beneficiary, containing reference to this
Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or
counties in which the property is situated, shall be conclusive proof of proper appointment of the
successor trustee;
22. The pleading of any statute of limitations as a defense to any and all obligations
secured by this Deed of Trust is hereby waived to the full extent permissible by law;
23. Upon written request of Beneficiary stating that all sums secured hereby have been
paid and all obligations secured hereby have been satisfied, including but not limited to the
obligations set forth in the Regulatory Agreement, and upon surrender of this Deed of Trust and any
note, instrument or instruments setting forth all obligations secured hereby to Trustee for cancellation
and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the Property
then held hereunder. The recitals in such reconveyance of any matters or fact shall be conclusive
proof of the truthfulness thereof. To the extent permitted by law, the grantee in such reconveyance
may be described as "the person or persons legally entitled thereto." Neither Beneficiary nor Trustee
shall have any duty to determine the rights of persons claiming to be rightful grantees of any
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reconveyance. When the Property has been fully reconveyed, the last such reconveyance shall
operate as a reassignment of all future rents, issues and profits of the Property to the person or
persons legally entitled thereto;
24. The trust created hereby is irrevocable by Trustor;
25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto,
their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term
"Beneficiary" shall include not only the original Beneficiary hereunder but also any future owner and
holder including pledgees, of the NSP Note secured hereby. In this Deed of Trust, whenever the
context so requires, the masculine gender includes the feminine and/or neuter, and the singular
number includes the plural. All obligations of Trustor hereunder are joint and several;
26. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged,
is made public record as provided by law. Except as otherwise provided by law the Trustee is not
obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or
proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
Beneficiary, at its option, may from time to time remove Trustee and appoint a successor trustee to
any Trustee appointed hereunder. Without conveyance of the Property, the successor trustee shall
succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law;
27. The undersigned Trustor requests that a copy of any notice of default and of any
notice of sale hereunder be mailed to Trustor at the address set forth on the first page of this Deed of
Trust.
28. Trustor agrees at any time and from time to time upon receipt of a written request
from Beneficiary, to furnish to Beneficiary detailed statements in writing of income, rents, profits,
and operating expenses of the premises, and the names of the occupants and tenants in possession,
together with the expiration dates of their leases and full information regarding all rental and
occupancy agreements, and the rents provided for by such leases and rental and occupancy
agreements, and such other information regarding the premises and their use as may be requested by
Beneficiary.
29. Trustor agrees that the loan secured by this Deed of Trust is made expressly for the
purpose of financing the acquisition of the Property for the purpose of developing six dwelling units
of affordable low income housing as set forth in the Secured Obligations.
30. Trustor agrees that, except as otherwise provided in the NSP Note, upon sale or
refinancing of the Property, the entire principal balance of the debt secured by this Deed of Trust,
plus any accrued but unpaid interest thereon, shall at the option of Beneficiary be immediately due
and payable.
NSP DEED OF TRUST
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NSP Deed of Trust [04.01.101.doc
31. Each obligation of the Trustor under this Deed of Trust is a nonrecourse
obligation of the Trustor and its approved assignee. Except as provided otherwise in this Deed of
Trust, neither the Trustor nor any of the general or limited partners of Trustor's approved assignee,
nor any other party, shall have any personal liability for payment of obligations to the City. The sole
recourse of the City shall be the exercise of its rights against the Property and any related security for
the NSP Loan. Notwithstanding the foregoing, Beneficiary may obtain a judgment or order
(including, without limitation, an injunction) requiring Trustor or any other party to perform (or
refrain from) specified acts other than repayment of the NSP Loan; may proceed against any person
or entity whatsoever with respect to the enforcement of any performance or completion guarantees or
similar rights to performance; and may recover directly from Trustor or any other party:
(i) any damages, costs and expenses incurred by Beneficiary as a result of
fraud or any criminal act or acts of Trustor or Trustor's assignee or any partner, shareholder, officer,
director or employee (acting within the scope of his or her employment) of Trustor or Trustor's
assignee or of any general partners of Trustor's assignee;
(ii) any damages, costs and expenses incurred by Beneficiary as a result of any
misappropriation of funds provided for the acquisition and development of the Property, as described
in the Secured Obligations, rents and revenues from the operation of the Project, or proceeds of
insurance policies or condemnation proceeds;
(iii) any and all amounts owing by Trustor pursuant to Trustor's
indemnification regarding Hazardous Substances; and
(iv) all court costs and attorneys' fees reasonably incurred in enforcing or
collecting upon any of the foregoing exceptions.
32. Notwithstanding specific provisions of this Deed of Trust, non -monetary performance
hereunder shall not be deemed to be in default where delays or defaults are proximately caused by
any of the following Force Majeure events, provided such event actually delays and interferes with
the timely performance of the matter, and, despite the exercise of diligence and good business
practices, such event is beyond the reasonable control of Trustor: War; insurrection; strikes; lock-
outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics;
quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or
priority; litigation including litigation challenging the validity of this transaction or any element
thereof, unusually severe weather; inability to secure necessary labor, materials or tools; delays of
any contractor, subcontractor, or suppliers; acts of the other party; acts or failure to act of any
Governmental Authority (except acts or failure to act of the Beneficiary shall not excuse performance
by the Beneficiary); the imposition of any applicable moratorium by a Governmental Authority; or
any other causes which despite the exercise of diligence and good business practices are or would be
NSP DEED OF TRUST
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NSP Deed of Trust [04.01.10].doc
beyond the reasonable control of the party claiming such delay and interference. Notwithstanding
the foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and until
Trustor delivers to Beneficiary written notice describing the event, its cause, when and how Trustor
obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom.
Trustor shall deliver such written notice within ten (10) business days after it obtains actual
knowledge of the event.
33. If the rights and liens created by this Deed of Trust shall be held by a court of
competent jurisdiction to be invalid or unenforceable as to any part of the Secured Obligations, the
unsecured portion of such obligations shall be completely performed and paid prior to the
performance and payment of the remaining and secured portion of the obligations, and all
performance and payments made by Trustor shall be considered to have been performed and paid on
and applied first to the complete payment of the unsecured portion of the obligations.
34. (a) Subject to the extensions of time set forth in Section 32, and subject to the further
provisions of this Section 34, failure or delay by Trustor to perform any term or provision
respectively required to be performed under the Secured Obligations or this Deed of Trust constitutes
a default under this Deed of Trust.
(b) Beneficiary shall give written notice of default to Trustor, specifying the
default complained of by the Beneficiary. Failure or delay in giving such notice shall not constitute a
waiver of any default nor shall it change the time of default.
(c) Any failures or delays by Beneficiary in asserting any of its rights and
remedies as to any default shall not operate as a waiver of any default or of any such rights or
remedies. Delays by Beneficiary in asserting any of its rights and remedies shall not deprive
Beneficiary of its right to institute and maintain any actions or proceedings which it may deem
necessary to protect, assert, or enforce any such rights or remedies.
(d) If the default is reasonably capable of being cured within thirty (30) days,
Trustor shall have such period to effect a cure prior to exercise of remedies by Beneficiary. If the
default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (i)
initiates corrective action within said period, and (ii) diligently, continually, and in good faith works
to effect a cure as soon as possible, then Trustor shall have such additional time as is reasonably
necessary to cure the default prior to exercise of any remedies by Beneficiary. In no event shall
Beneficiary be precluded from exercising remedies if its security becomes or is about to become
materially jeopardized by any failure to cure a default or the default is not cured within one hundred
twenty (120) days after the first notice of default is given.
(e) Except as otherwise required to comply with the provisions of California Civil
Code Section 2924 et seq. that are applicable thereto, any notice of default that is transmitted by
NSP DEED OF TRUST
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NSP Deed of Trust [04.01.101.doc
electronic facsimile transmission followed by delivery of a "hard" copy, shall be deemed delivered
upon its transmission; any notice of default that is personally delivered (including by means of
professional messenger service, courier service such as United Parcel Service or Federal Express, or
by U.S. Postal Service), shall be deemed received on the documented date of receipt by Trustor; and
any notice of default that is sent by registered or certified mail, postage prepaid, return receipt
required shall be deemed received on the date of receipt thereof.
35. In the event of a default or breach by Trustor of any security instrument securing a
senior loan, Beneficiary shall have the right to cure the default prior to completion of any
foreclosure. In such event, Beneficiary shall be entitled to reimbursement by Trustor of all costs and
expenses incurred by Beneficiary in curing the default. The amount of any such disbursements shall
be a lien against the Property and added to the obligation secured by this Deed of Trust until repaid,
with interest at the highest rate permitted by law.
IN WITNESS WHEREOF Trustor has executed this Deed of Trust as of the day and year set
forth above.
COLETTE' S CHILDREN HOME, INC.,
a Californian nprofit ublic benefit corporation
By L
Pamela Hope, P ' nt
NSP DEED OF TRUST
PAGE 13
NSP Deed of Trust [04.01.10].doc
APPROVED BY:
THE CITY OF HUNTINGTON BEACH, a
municipal corporation of the State of California
ATTEST:
City Clem
By: ( Zile
City Attorney
By:
KALE BALLMER & BERKMAN
Special Counsel
NSP DEED OF TRUST
PAGE 14
NSP Deed of Trust [04.01.10].doc
State of California
County of Orange )
On before me, r w
a Notary Public, personally appeared 6 , who proved to me on
the basis of satisfactory evidence to be the person(s) whose name(�re subscribed to the
within instrument and acknowledged to me that he�they executed the same in hi _ er heir
authorized capacity(ies), and that by his_ er heir signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true andjc rrect.
WITNES
Signature
State of California
County of Orange
PATRICIA J. GARCIA
COMM- 1749037 p�
cG� < WY California CO
ORMW COUNTY
(Seal) Comm. ExP. Jw* 19, 2011
%
On / / �C 1 �� . 7 /C1 before me, C� r( A Q; -ckj�
a Notary Public, personally'appeared _ Ean't-ua- LKim_ , who proved to me on
the basis of satisfactory evidence to be the person(s) whose name(s is re subscribed to the
within instrument and acknowledged to me that he g�hey executed the same in hi(_ er heir
authorized capacity(ies), and that by hi er heir signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and eoi
WITNESS my hand.atid official. se
Signature
NSP DEED OF TRUST
NSP Deed of Trust [04.01.10].doe
_ PATRICIA J. GARCIA
s COMM. €�1749037 M
.
(Seal) 7)
,PubtiaCc4somia
ORAtM COUNTY
COM. E . J += is
1920 Main Street
e ers Title Suite 500
'a
Irvine, California 92614
PENALTY OF PERJURY AFFIDAVIT
(GOVERNMENT CODE 27361.7)
I certify under the penalty of perjury that the notary seal on the document to which this
statement is attached reads as follows:
Name of the Notary: Patricia J. Garcia
Date Commission expires: 6-19-11
County Where Bond is Filed: Orange
Commission No.: 1749037 ManufacturerNendor No.: ES11
Place of Execution: Irvine, Ca. Date: May 17, 2010
Signature:
WYek'-S TITLE COMPANY
further certify under the penalty of perjury that the illegible portion of the document to
which this statement is attached reads as follows (if applicable):
Date: May 17, 2010
Signature:
LAWYERS TITLE COMPANY
ACKNOWLEDGMENT
STATE OF CALIFORNIA
ss
COUNTY OF ORANGE
On April 21, 2010 before me, P. L. Esparza, Notary Public, personally appeared
Joan L. Flynn and Cathy Green who proved to me on the basis of satisfactory
evidence to be the persons whose names are subscribed to the within instrument
and acknowledged to me that they executed the same in their authorized capacities,
and that by their signatures on the instrument the persons, or the entity upon behalf
of which the persons acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Notary S ignatur4/
P. L. ESPARZA
Commission # 1857021
Notary Public - California z
z Orange County a
My Comm. Expires Aug4, 2013
(Seal)
1920 Main Street
Suite 500
Irvine, California 92614
PENALTY OF PERJURY AFFIDAVIT
(GOVERNMENT CODE 27361.7)
I certify under the penalty of perjury that the notary seal on the document to which this
statement is attached reads as follows:
Name of the Notary: P.L. Esparza
Date Commission expires: 8-4-13
County Where Bond is Filed: Orange
Commission No.: 1857021 Manufacturer/Vendor No.: NNA1
Place of Execution: Irvine, Ca. Date May 17, 2010
Signature:
LAWYER,S'T_T<E COMPANY
I further certify under the penalty of perjury that the illegible portion of the document to
which this statement is attached reads as follows (if applicable):
Date: May 17, 2010
Signature:
LAWYERS TITLE COMPANY
Exhibit A
LEGAL DESCRIPTION
The land referred to herein is situated in the State of California, County of Orange, and described as
follows:
PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143,
PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE
COUNTY, CALIFORNIA.
APN: 165-234-17
NSP DEED OF TRUST
LEGAL DESCRIPTION
NSP Deed of Trust [04.01.10].doc
EXHIBIT I
HOME DEED OF TRUST
[behind this page]
HOME Deed of Trust
RECORDING REQUESTED BY
LAWYERS ME
FREE RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
THE CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, CA 92648
Attn: City Cl erk
(Space Above This Line for Recorder's Office Use Only)
(Exempt from Recording Fee per Gov. Code § 27383)
APN: 165-234-17
This Document was electronically recorded by
Lawyers Title Company B
Recorded in Official Records, Orange County
Tom Daly, Clerk -Recorder
11 Illllil11111III(III6�IIIIIG111 IIIIII I�IIII111 NO FEE
2010000231150 01:05pm 05/17/10
65 404 D11 A36 U08 19
0.00 0.00 0.00 0.00 54.00 0.00 0.00 0.00
DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING
(WITH ASSIGNMENT OF RENTS)
BY COLLETE'S CHILDREN HOME, INC. FOR THE BENEFIT OF
THE CITY OF HUNTINGTON BEACH
[HOME PROGRAM]
This Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) is
made this /1? day of April, 2010 by COLETTE' S CHILDREN HOME, INC., a California non-profit
public benefit corporation (hereinafter referred to as "Trustor") (whose address is 17301 Beach
Blvd., #23, Huntington Beach, California 92647, to LAWYERS TITLE, (hereinafter called
"Trustee"), for the benefit of THE CITY OF HUNTINGTON BEACH, a municipal corporation of
the State of California (hereinafter called "Beneficiary"), whose address is 2000 Main Street,
Huntington Beach, California 92648.
Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to Trustee,
its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH RIGHT OF
ENTRY AND POSSESSION all present and future right, title and interest of Trustor in and to the
following property (the "Trust Estate"):
(1) All of Trustor's rights, title and interest in and to that certain real property in the City
of Huntington Beach, County of Orange, State of California more particularly described in Exhibit
"A" attached hereto and by this reference made a part hereof (hereafter referred to as the "Subject
Property");
(2) All buildings, structures and other improvements now or in the future located or to be
constructed on the Subject Property (the "Improvements");
HOME DEED OF TRUST
PAGE 1
HOME Deed of Trust [04.01.10].doc
(3) all tenements, hereditaments, appurtenances, privileges, franchises and other rights
and interests now or in the future benefiting or otherwise relating to the Subject Property or the
Improvements, including easements, rights -of -way and development rights (the "Appurtenances").
(The Appurtenances, together with the Subject Property and the Improvements, are hereafter referred
to as the "Real Property");
(4) subject to the assignment to Beneficiary set forth in Paragraph 4 below, all rents,
issues, income, revenues, royalties and profits now or in the future payable with respect to or
otherwise derived from the Trust Estate or the ownership, use, management, operation, leasing or
occupancy of the Trust Estate, including those past due and unpaid (the "Rents");
(5) all inventory, equipment, fixtures and other goods (as those terms are defined in
Division 9 of the California Uniform Commercial Code (the "UCC"), and whether existing now or in
the future) now or in the future located at, upon or about, or affixed or attached to or installed in, the
Real Property, or used or to be used in connection with or otherwise relating to the Real Property or
the ownership, use, development, construction, maintenance, management, operation, marketing,
leasing or occupancy of the Real Property, including furniture, furnishings, machinery, appliances,
building materials and supplies, generators, boilers, furnaces, water tanks, heating ventilating and air
conditioning equipment and all other types of tangible personal property of any kind or nature, and
all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and
substitutions of or to any of such property, but not including personal property that is donated to
Trustor (the "Goods," and together with the Real Property, the "Property"); and
(6) all accounts, general intangibles, chattel paper, deposit accounts, money, instruments
and documents (as those terms are defined in the UCC) and all other agreements, obligations, rights
and written material (in each case whether existing now or in the future) now or in the future relating
to or otherwise arising in connection with or derived from the Property or any other part of the Trust
Estate or the ownership, use, development, construction, maintenance, management, operation,
marketing, leasing, occupancy, sale or financing of the property or any other part of the Trust Estate,
including (to the extent applicable to the Property or any other portion of the Trust Estate) (i)
permits, approvals and other governmental authorizations, (ii) improvement plans and specifications
and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project
managers, supervisors, designers, architects, engineers, sales agents, leasing agents, consultants and
property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties,
guaranties, indemnities and insurance policies, together with insurance payments and unearned,
insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or
resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage
to, trespass on or taking, condemnation (or conveyance in lieu of condemnation) or public use of any
of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale
agreements and purchase options, together with advance payments, security deposits and other
HOME DEED OF TRUST
PAGE 2
HOME Deed of Trust [04.01.10].doc
amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits,
bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow proceeds, sale proceeds
and other rights to the payment of money, trade names, trademarks, goodwill and all other types on
intangible personal property of any kind or nature, and (ix) all supplements, modifications,
amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such
property (the "Intangibles").
Trustor further grants to Trustee and Beneficiary, pursuant to the UCC, a security interest in
all present and future right, title and interest of Trustor in and to all Goods and Intangibles and all of
the Trust Estate described above in which a security interest may be created under the UCC
(collectively, the "Personal Property"). This Deed of Trust constitutes a security agreement under
the UCC, conveying a security interest in the Personal Property to Trustee and Beneficiary. Trustee
and Beneficiary shall have, in addition to all rights and remedies provided herein, all the rights and
remedies of a "secured party" under the UCC and other applicable California law. Trustor covenants
and agrees that this Deed of Trust constitutes a fixture filing under Sections 9502(c) and 9604 of the
UCC.
FOR THE PURPOSE OF SECURING, in such order ofpriority as Beneficiary may elect,
all of the following:
(1) Due, prompt and complete observance, performance and discharge of each and every
condition, obligation, covenant and agreement contained herein or contained in the following:
(a) a promissory note in the original principal amount of $284,432, executed by
Trustor ("Borrower" therein) of even date herewith (the "HOME Note");
(b) the Subrecipient and Acquisition Loan Agreement dated as of April 5, 2010,
by and between Trustor ("Developer" therein) and Beneficiary ("City" therein) (the
"Loan Agreement"); and
(c) the Regulatory Agreement and Declaration of Covenants and Restrictions
(including rental restrictions) dated on or about the date hereof, by and between
Trustor ("Developer" therein) and Beneficiary ("City" therein), recorded concurrently
herewith ("Regulatory Agreement").
(2) Payment of indebtedness of the Trustor to the Beneficiary in the principal sum of
$284,432 or so much thereof as shall be advanced, evidenced by the HOME Note, with interest,
according to the terms of the HOME Note.
(3) Payment and performance of all future advances and other obligations that the then
record owner of all or part of the Property may agree to pay and/or perform (whether as principal,
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surety or guarantor) for the benefit of Beneficiary, when such future advance or obligation is
evidenced by a writing which recites that it is secured by this Deed of Trust.
The Loan Agreement, including all Attachments thereto, and the documents and instruments
executed by Trustor in connection with the Project, including the Regulatory Agreement, the HOME
Note and the Assignment of Agreements, all as described in the Loan Agreement (collectively
referred to as the "Secured Obligations") and all of their terms are incorporated herein by reference
and this conveyance shall secure any and all extensions, amendments, modifications or renewals
thereof however evidenced. Any capitalized term that is not otherwise defined in this Deed of Trust
shall have the meaning ascribed to such term in the Loan Agreement.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
1. That Trustor shall pay the HOME Note at the time and in the manner provided
therein, and perform the obligations of the Trustor as set forth in the Secured Obligations at the time
and in the manner respectively provided therein;
2. That Trustor shall not permit or suffer the use of any of the Property for any purpose
other than the uses permitted by the Secured Obligations;
3. That the Secured Obligations are incorporated in and made a part of this Deed of
Trust. Upon default of a Secured Obligation, and after the giving of notice and the expiration of any
applicable cure period, the Beneficiary, at its option, may declare the whole of the indebtedness
secured hereby to be due and payable.
4. That, subject to the prior rights, if any, of a lender whose lien is senior to this Deed of
Trust ("Senior Lender"), all rents, profits and income from the Trust Estate are assigned to the
Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to
Trustor so long as no default exists hereunder after the giving of notice and the expiration of any
applicable cure period, to collect such rents, profits and income for use in accordance with the
provisions of the Secured Obligations.
5. That upon default hereunder or under the aforementioned agreements, and after the
giving of notice and the expiration of any applicable cure period, Beneficiary shall be entitled to the
appointment of a receiver by any court having jurisdiction, without notice, to take possession and
protect the Trust Estate and operate same and collect the rents, profits and income therefrom;
6. That Trustor will keep the Improvements insured against loss by fire and such other
hazards, casualties, and contingencies as may reasonably be required in writing from time to time by
the Beneficiary, and all such insurance shall be evidenced by standard fire and extended coverage
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insurance policy or policies. In no event shall the amounts of coverage be less than 100 percent of
the insurable value of the Property. Such policies shall be endorsed with standard mortgage clause
with loss payable to the Beneficiary and certificates thereof together with copies of original policies
shall be deposited with the Beneficiary;
7. To pay, at least 10 days before delinquency, any taxes and assessments affecting the
Property; to pay, when due, all encumbrances, charges and liens, with interest, on the Property or any
part thereof which appear to be prior or superior hereto; and to pay all costs, fees, and expenses of
this Trust. Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall
not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is
contesting the legality thereof in good faith and by appropriate proceedings, and Trustor has adequate
funds to pay any liabilities contested pursuant to this Section 7.
8. To keep the Property in good condition and repair, subject to ordinary wear and tear,
casualty and condemnation, not to remove or demolish any buildings thereon without the prior
written consent of Beneficiary, not to be unreasonably withheld, conditioned or delayed; to complete
or restore promptly and in good and workmanlike manner any building which may be constructed,
damaged, or destroyed thereon and to pay when due all claims for labor performed and materials
furnished therefor; to comply with all laws affecting the Property or requiring any alterations or
improvements to be made thereon (subject to Trustor's right to contest the validity or applicability of
laws or regulations); not to commit or permit waste thereof, not to commit, suffer or permit any act
upon the Property in violation of law and/or covenants, conditions and/or restrictions affecting the
Property; not to permit or suffer any material alteration of or addition to the Improvements without
the consent of the Beneficiary;
9. To appear in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including
cost of evidence of title and reasonable attorney's fees in a reasonable sum, in any such action or
proceeding in which Beneficiary or Trustee may appear;
10. Should Trustor fail to make any payment or do any act as herein provided, then
Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor
and without releasing Trustor from any obligation hereof, may make or do the same in such manner
and to such extent as either may deem necessary to protect the security hereof. Following default,
after the giving of notice and the expiration of any applicable cure period, Beneficiary or Trustee
being authorized to enter upon said property for such purposes, may commence, appear in and/or
defend any action or proceeding purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; may pay, purchase, contest, or compromise any encumbrance, charge, or lien
which in the judgment of either appears to be prior or superior hereto; and, in exercising any such
powers, may pay necessary expenses, employ counsel, and pay reasonable attorney fees.
Notwithstanding the foregoing, in the event of default under this Deed of Trust, the Beneficiary may
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also require Trustor to maintain and submit additional records. Beneficiary shall specify in writing
the particular records that must be maintained and the information or reports that must be submitted;
11. Beneficiary shall have the right to pay fire and other property insurance premiums
when due should Trustor fail to make any required premium payments. All such payments made by
the Beneficiary shall be added to the principal sum secured hereby;
12. To pay immediately and without demand all sums so expended by Beneficiary or
Trustee, under permission given under this Deed of Trust, with interest from date of expenditure at
the rate specified in the HOME Note;
13. That the funds to be advanced hereunder are to be used in accordance with the
Secured Obligations and upon the failure of Trustor to keep and perform all the covenants,
conditions, and agreements of said agreements, the principal sum and all arrears of interest, and other
charges provided for in the HOME Note shall at the option of the Beneficiary of this Deed of Trust
become due and payable, anything contained herein to the contrary notwithstanding;
14. Trustor further covenants that it will not voluntarily create, suffer, or permit to be
created against the property subject to this Deed of Trust any lien or liens except as permitted by the
Secured Obligations or otherwise approved by Beneficiary, and further that it will keep and maintain
the Property free from the claims of all persons supplying labor or materials which will enter into the
construction of any and all buildings now being erected or to be erected on said premises.
Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall not be
obligated to pay any claims for labor, materials or services which Trustor in good faith disputes and
is diligently contesting, provided that Trustor shall, at Beneficiary's written request, within thirty
(30) days after the filing of any claim or lien (but in any event, and without any requirement that
Beneficiary must first provide a written request, prior to foreclosure) record in the Office of the
Recorder of Orange County, a surety bond in an amount one -and -one-half (11/2) times the amount of
such claim item to protect against a claim of lien, or provide such other security reasonably
satisfactory to Beneficiary;
15. That any and all improvements made or about to be made upon the premises covered
by the Deed of Trust, and all plans and specifications, comply with all applicable municipal
ordinances and regulations and all other applicable regulations made or promulgated, now or
hereafter, by lawful authority, and that the same will upon completion comply with all such
municipal ordinances and regulations and with the rules of the applicable fire rating or inspection
organization, bureau, association or office;
16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing
representative of the Beneficiary a reasonable charge for providing a statement regarding the
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obligation secured by this Deed of Trust as provided by Section 2954, Article 2, Chapter 2 Title 14,
Division 3, of the California Civil Code.
IT IS MUTUALLY AGREED THAT:
17. Should the Property or any part thereof be taken or damaged by reason of any public
improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other
manner, subject to the rights of any senior lender that has been approved by Beneficiary, Beneficiary
shall be entitled to all compensation, awards, and other payments or relief therefor which are not
used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or
damaged, and shall be entitled at its option to commence, appear in and prosecute in its own name,
any action or proceedings, or to make any compromise or settlement, in connection with such taking
or damage. Subject to the rights of any senior lender that has been approved by Beneficiary, all such
compensation, awards, damages, rights of action and proceeds which are not used to reconstruct,
restore or otherwise improve the Property or part thereof that was taken or damaged, including the
proceeds of any policies of fire and other insurance affecting the Property, are hereby assigned to
Beneficiary. After deducting therefrom all its expenses, including attorney's fees, the balance of the
proceeds which are not used to reconstruct, restore or otherwise improve the Property or part thereof
that was taken or damaged, shall be applied to the amount due under the HOME Note secured
hereby. No amount applied to the reduction of the principal shall relieve the Trustor from making
payments as required by the HOME Note. If the HOME Note has been repaid in full, the remainder
of the balance shall revert to the Trustor;
18. Upon default by Trustor in making any payments provided for in the HOME Note
secured hereby or in this Deed of Trust, or in performing any obligation set forth in any of the
Secured Obligations, and if such default is not cured within the respective time provided therefor in
Section 34 of this Deed of Trust, below, Beneficiary may declare all sums secured hereby
immediately due and payable by delivery to Trustee of written declaration of default and demand for
sale, and of written notice of default and of election to cause the property to be sold, which notice
Trustee shall cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust.
Beneficiary shall also deposit with Trustee this Deed of Trust, the HOME Note and all documents
evidencing expenditures secured hereby;
19. a. Prior to the repayment in full of the HOME Acquisition Loan, the Trustor
shall not assign or attempt to assign the Loan Agreement or any right therein, nor make any total or
partial sale, transfer, conveyance or assignment of the whole or any part of the Property, the
Improvements, or any portion thereof or interest therein (referred to hereinafter as a "Transfer"),
without prior written approval of the Beneficiary, except as otherwise permitted in the Secured
Obligations. Consent to one such transaction shall not be deemed to be a waiver of the right to
require consent to future or successive transactions. Beneficiary shall not unreasonably withhold or
delay its consent. If consent should be given, any such transfer shall be subject to this Section 19,
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and any such transferee shall assume all obligations hereunder and agree to be bound by all
provisions contained herein.
b. Any such proposed transferee shall have the qualifications and financial
responsibility necessary and adequate as may be reasonably determined by the Beneficiary, to fulfill
the obligations undertaken by Trustor in the Secured Obligations. Any such proposed transferee, by
instrument in writing satisfactory to the Beneficiary and in form recordable among the land records
of Orange County, for itself and its successors and assigns, and for the benefit of the Beneficiary
shall expressly assume all of the obligations of the Trustor under the Secured Obligations, and agree
to be subject to all conditions and restrictions applicable to the Trustor in this Deed of Trust. There
shall be submitted to the Beneficiary for review all instruments and other legal documents proposed
to effect any such transfer; and if approved by the Beneficiary its approval shall be indicated to the
Trustor in writing.
C. In the absence of specific written agreement by the Beneficiary, no Transfer,
or approval thereof by the Beneficiary, shall be deemed to relieve the Trustor or any other party from
any obligations under the Secured Obligations.
d. In the event of a Transfer prior to the time the HOME Acquisition Loan is
paid in full and without the prior written consent of the Beneficiary, the net proceeds of such
Transfer, shall be paid to the Beneficiary to the extent necessary to pay in full the accrued interest, if
any, current interest and remaining principal balance of the HOME Acquisition Loan.
e. (1) As used herein, "Transfer" includes the sale, agreement to sell, transfer
or conveyance of the Property, the Project, or any portion thereof or interest therein, whether
voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale
contract or similar instrument affecting all or a portion of the Property or Project, or the lease of all
or substantially all of the Property or Project.
(2) "Transfer" shall also include the transfer, assignment, hypothecation or
conveyance of legal or beneficial ownership of any interest in Trustor, or any conversion of Trustor
to an entity form other than that of Trustor at the time of execution of the Loan Agreement, except
for the assignment to a limited partnership provided for in the Secured Obligations and except that a
cumulative change in ownership interest of forty-nine percent (49%) or less shall not be deemed a
"Transfer" for purposes of this Deed of Trust.
f. Beneficiary shall not unreasonably withhold, condition or delay its approval of
any matter for which its approval is required hereunder. Any disapproval shall be in writing and
contain Beneficiary's reasons for disapproval.
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20. After the lapse of such time as may then be required by law following the recordation
of a notice of default, and notice of sale having been given as then required by law, Trustee, without
demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either
as a whole or in separate parcels, and in such order as it may determine at public auction to the
highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may
postpone sale of all or any portion of the Property by public announcement at the time and place of
sale, and from time to time thereafter may postpone the sale by public announcement at the time and
place of sale, and from time to time thereafter may postpone the sale by public announcement at the
time fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying
the property so sold, but without any covenant or warranty, express or implied. The recitals in the
deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person,
including Trustor, Trustee or Beneficiary, may purchase at the sale. The Trustee shall apply the
proceeds of sale to payment of (1) the expenses of such sale, together with the reasonable expenses
of this trust including therein reasonable Trustee's fees or attorney's fees for conducting the sale, and
the actual cost of publishing, recording, mailing and posting notice of the sale; (2) the cost of any
search and/or other evidence of title procured in connection with such sale and revenue stamps on
Trustee's deed; (3) all sums expended under the terms hereof, not then repaid, with accrued interest
at the rate specified in the HOME Note; (4) all other sums then secured hereby; and (5) the
remainder, if any, to the person or persons legally entitled thereto;
21. Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties
conferred upon any Trustee herein named or acting hereunder. Each such appointment and
substitution shall be made by written instrument executed by Beneficiary, containing reference to this
Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or
counties in which the property is situated, shall be conclusive proof of proper appointment of the
successor trustee;
22. The pleading of any statute of limitations as a defense to any and all obligations
secured by this Deed of Trust is hereby waived to the full extent permissible by law;
23. Upon written request of Beneficiary stating that all sums secured hereby have been
paid and all obligations secured hereby have been satisfied, including but not limited to the
obligations set forth in the Regulatory Agreement, and upon surrender of this Deed of Trust and any
note, instrument or instruments setting forth all obligations secured hereby to Trustee for cancellation
and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the Property
then held hereunder. The recitals in such reconveyance of any matters or fact shall be conclusive
proof of the truthfulness thereof. To the extent permitted by law, the grantee in such reconveyance
may be described as "the person or persons legally entitled thereto." Neither Beneficiary nor Trustee
shall have any duty to determine the rights of persons claiming to be rightful grantees of any
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reconveyance. When the Property has been fully reconveyed, the last such reconveyance shall
operate as a reassignment of all future rents, issues and profits of the Property to the person or
persons legally entitled thereto;
24. The trust created hereby is irrevocable by Trustor,
25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto,
their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term
"Beneficiary" shall include not only the original Beneficiary hereunder but also any future owner and
holder including pledgees, of the HOME Note secured hereby. In this Deed of Trust, whenever the
context so requires, the masculine gender includes the feminine and/or neuter, and the singular
number includes the plural. All obligations of Trustor hereunder are joint and several;
26. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged,
is made public record as provided by law. Except as otherwise provided by law the Trustee is not
obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or
proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
Beneficiary, at its option, may from time to time remove Trustee and appoint a successor trustee to
any Trustee appointed hereunder. Without conveyance of the Property, the successor trustee shall
succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law;
27. The undersigned Trustor requests that a copy of any notice of default and of any
notice of sale hereunder be mailed to Trustor at the address set forth on the first page of this Deed of
Trust.
28. Trustor agrees at any time and from time to time upon receipt of a written request
from Beneficiary, to furnish to Beneficiary detailed statements in writing of income, rents, profits,
and operating expenses of the premises, and the names of the occupants and tenants in possession,
together with the expiration dates of their leases and full information regarding all rental and
occupancy agreements, and the rents provided for by such leases and rental and occupancy
agreements, and such other information regarding the premises and their use as may be requested by
Beneficiary.
29. Trustor agrees that the loan secured by this Deed of Trust is made expressly for the
purpose of financing the acquisition of the Property for the purpose of developing six dwelling units
of affordable low income housing as set forth in the Secured Obligations.
30. Trustor agrees that, except as otherwise provided in the HOME Note, upon sale or
refinancing of the Property, the entire principal balance of the debt secured by this Deed of Trust,
plus any accrued but unpaid interest thereon, shall at the option of Beneficiary be immediately due
and payable.
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31. Each obligation of the Trustor under this Deed of Trust is a nonrecourse
obligation of the Trustor and its approved assignee. Except as provided otherwise in this Deed of
Trust, neither the Trustor nor any of the general or limited partners of Trustor's approved assignee,
nor any other party, shall have any personal liability for payment of obligations to the City. The sole
recourse of the City shall be the exercise of its rights against the Property and any related security for
the HOME Acquisition Loan. Notwithstanding the foregoing, Beneficiary may obtain a judgment or
order (including, without limitation, an injunction) requiring Trustor or any other party to perform
(or refrain from) specified acts other than repayment of the HOME Acquisition Loan; may proceed
against any person or entity whatsoever with respect to the enforcement of any performance or
completion guarantees or similar rights to performance; and may recover directly from Trustor or any
other party:
(i) any damages, costs and expenses incurred by Beneficiary as a result of
fraud or any criminal act or acts of Trustor or Trustor's assignee or any partner, shareholder, officer,
director or employee (acting within the scope of his or her employment) of Trustor or Trustor's
assignee or of any general partners of Trustor's assignee;
(ii) any damages, costs and expenses incurred by Beneficiary as a result of any
misappropriation of funds provided for the acquisition and development of the Property, as described
in the Secured Obligations, rents and revenues from the operation of the Project, or proceeds of
insurance policies or condemnation proceeds;
(iii) any and all amounts owing by Trustor pursuant to Trustor's
indemnification regarding Hazardous Substances; and
(iv) all court costs and attorneys' fees reasonably incurred in enforcing or
collecting upon any of the foregoing exceptions.
32. Notwithstanding specific provisions of this Deed of Trust, non -monetary performance
hereunder shall not be deemed to be in default where delays or defaults are proximately caused by
any of the following Force Majeure events, provided such event actually delays and interferes with
the timely performance of the matter, and, despite the exercise of diligence and good business
practices, such event is beyond the reasonable control of Trustor: War; insurrection; strikes; lock-
outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics;
quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or
priority; litigation including litigation challenging the validity of this transaction or any element
thereof; unusually severe weather; inability to secure necessary labor, materials or tools; delays of
any contractor, subcontractor, or suppliers; acts of the other party; acts or failure to act of any
Governmental Authority (except acts or failure to act of the Beneficiary shall not excuse performance
by the Beneficiary); the imposition of any applicable moratorium by a Governmental Authority; or
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any other causes which despite the exercise of diligence and good business practices are or would be
beyond the reasonable control of the party claiming such delay and interference. Notwithstanding
the foregoing, none of the foregoing events shall constitute a Force Majeure Event unless and until
Trustor delivers to Beneficiary written notice describing the event, its cause, when and how Trustor
obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom.
Trustor shall deliver such written notice within ten (10) business days after it obtains actual
knowledge of the event.
33. If the rights and liens created by this Deed of Trust shall be held by a court of
competent jurisdiction to be invalid or unenforceable as to any part of the Secured Obligations, the
unsecured portion of such obligations shall be completely performed and paid prior to the
performance and payment of the remaining and secured portion of the obligations, and all
performance and payments made by Trustor shall be considered to have been performed and paid on
and applied first to the complete payment of the unsecured portion of the obligations.
34. (a) Subject to the extensions of time set forth in Section 32, and subject to the further
provisions of this Section 34, failure or delay by Trustor to perform any term or provision
respectively required to be performed under the Secured Obligations or this Deed of Trust constitutes
a default under this Deed of Trust.
(b) Beneficiary shall give written notice of default to Trustor, specifying the
default complained of by the Beneficiary. Failure or delay in giving such notice shall not constitute a
waiver of any default nor shall it change the time of default.
(c) Any failures or delays by Beneficiary in asserting any of its rights and
remedies as to any default shall not operate as a waiver of any default or of any such rights or
remedies. Delays by Beneficiary in asserting any of its rights and remedies shall not deprive
Beneficiary of its right to institute and maintain any actions or proceedings which it may deem
necessary to protect, assert, or enforce any such rights or remedies.
(d) If the default is reasonably capable of being cured within thirty (30) days,
Trustor shall have such period to effect a cure prior to exercise of remedies by Beneficiary. If the
default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (i)
initiates corrective action within said period, and (ii) diligently, continually, and in good faith works
to effect a cure as soon as possible, then Trustor shall have such additional time as is reasonably
necessary to cure the default prior to exercise of any remedies by Beneficiary. In no event shall
Beneficiary be precluded from exercising remedies if its security becomes or is about to become
materially jeopardized by any failure to cure a default or the default is not cured within one hundred
twenty (120) days after the first notice of default is given.
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(e) Except as otherwise required to comply with the provisions of California Civil
Code Section 2924 et seq. that are applicable thereto, any notice of default that is transmitted by
electronic facsimile transmission followed by delivery of a "hard" copy, shall be deemed delivered
upon its transmission; any notice of default that is personally delivered (including by means of
professional messenger service, courier service such as United Parcel Service or Federal Express, or
by U.S. Postal Service), shall be deemed received on the documented date of receipt by Trustor; and
any notice of default that is sent by registered or certified mail, postage prepaid, return receipt
required shall be deemed received on the date of receipt thereof.
35. In the event of a default or breach by Trustor of any security instrument securing a
senior loan, Beneficiary shall have the right to cure the default prior to completion of any
foreclosure. In such event, Beneficiary shall be entitled to reimbursement by Trustor of all costs and
expenses incurred by Beneficiary in curing the default. The amount of any such disbursements shall
be a lien against the Property and added to the obligation secured by this Deed of Trust until repaid,
with interest at the highest rate permitted by law.
IN WITNESS WHEREOF Trustor has executed this Deed of Trust as of the day and year set
forth above.
COLETTE' S CHILDREN HOME, INC.,
a California nonprofit public benefit corporation
11
Pamela Vie, President
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APPROVED BY:
THE CITY OF HUNTINGTON BEACH, a
municipal corporation of the State of California
By:
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ity Clerk
Cityttorney
By: ilI)lVa4
KANE BALLMER & BERKMAN
Special Counsel
HOME DEED OF TRUST
PAGE 14
HOME Deed of Trust [04.01.10].doe
ACKNOWLEDGMENT
STATE OF CALIFORNIA
ss
COUNTY OF ORANGE
On April 21, 2010 before me, P. L. Esparza, Notary Public, personally appeared
Joan L. Flynn and Cathy Green who proved to me on the basis of satisfactory
evidence to be the persons whose names are subscribed to the within instrument
and acknowledged to me that they executed the same in their authorized capacities,
and that by their signatures on the instrument the persons, or the entity upon behalf
of which the persons acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Notary Signaturg
P. L. ESPARZA y
Commission # 1857021
Notary Public - California z
a Orange County D
My Comm. Expires Aug 4. 2013
(Seal)
State of California
County of Orange )
,
On OV V t � ( before me,a4le",T
a Notary Public, personally appeared ,who proved to me on
the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF,J
l—
foregoing paragraph is true and
WITNESS my hand and
Signature
State of California
Y under the laws of the State of California that the
PATRICIA J. GARCIA
r
(Seal) "
COMM. #1749037 m
a� <
'r
Notary Public-Califomia n
ORANGE COUNTY
Comm. Exp. June 19, 2011
County of Orange )
ti ; �• 4
On % /X zo f before me,
a Notary Public, personAy appeared , who proved to me on
the basis of satisfactory evidence to be the person(s) whose name(s)i are subscribed to the
within instrument and acknowledged to me tha#'ie%hey executed the same in hi he their
authorized capacity(ies), and that by his er eir signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNES'`S my hand�,afid official
Signature
HOME DEED OF TRUST
HOME Deed of Trust [04.01.10].doc
PATRICIA J. GARCIA
(Seal) COMM. 01749037
r
Comm. . Jua 98 2091
"...awyers Tolte
PENALTY OF PERJURY AFFIDAVIT
(GOVERNMENT CODE 27361.7)
1920 Main Street
Suite 500
Irvine, California 92614
I certify under the penalty of perjury that the notary seal on the document to which this
statement is attached reads as follows:
Name of the Notary: Patricia J. Garcia
Date Commission expires: 6-19-11
County Where Bond is Filed: Orange
Commission No.: 1749037 Manufacturer/Vendor No.: ES11
Place of Execution: Irvine, Ca. Date: May 17, 2010
Signature:
RS TITLE COMPANY
further certify under the penalty of perjury that the illegible portion of the document to
which this statement is attached reads as follows (if applicable):
Date: May 17, 2010
Signature:
LAWYERS TITLE COMPANY
Exhibit A
LEGAL DESCRIPTION
The land referred to herein is situated in the State of California, County of Orange, and described as
follows:
PARCEL I OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143,
PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE
COUNTY, CALIFORNIA.
APN: 165-234-17
HOME DEED OF TRUST
LEGAL DESCRIPTION
HOME Deed of Trust [04.01.10].doc
1920 Main Street
i.awyers
Suite 500
Irvine, California 92614
PENALTY OF PERJURY AFFIDAVIT
(GOVERNMENT CODE 27361.7)
I certify under the penalty of perjury that the notary seal on the document to which this
statement is attached reads as follows:
Name of the Notary: P.L. Esparza
Date Commission expires: 8-4-13
County Where Bond is Filed: Orange
Commission No.: 1857021 Manufacturer/Vendor No.: NNA1
Place of Execution: Irvine, Ca. Date: May 17, 2010
Signature:
RS TITLE COMPANY
I further certify under the penalty of perjury that the illegible portion of the document to
which this statement is attached reads as follows (if applicable):
Date: May 17, 2010
Signature:
LAWYERS TITLE COMPANY
EXHIBIT J
REGULATORY AGREEMENT
[behind this page]
Regulatory Agreement
This Document was electronically recorded by
Lawyers Title Company B
RECORDING REQUEVED BY
UVERS TRE Recorded in Official Records, Orange County
FREE RECORDING REQUESTED BY Tom Daly, Clerk -Recorder
AND WHEN RECORDED MAIL TO: 11 11II 1111111111 11�11 1111111111 11I
NO FEE
2010000231149 01:05pm 05/17/10
THE CITY OF HUNTINGTON BEACH 65 404 Al2 D01 24
2000 Main Street 0.00 0.00 0.00 0.00 69.00 0.00 0.00 0.00
Huntington Beach, CA 92648
Attn: City Clerk
� 0 ( 13
(Space Above This Line for Recorder's Office Use Only)
(Exempt from Recording Fee per Gov. Code § 27383)
APN: 165-234-17
REGULATORY AGREEMENT AND
DECLARATION OF COVENANTS AND RESTRICTIONS
THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND
RESTRICTIONS ("Agreement"), dated as of April 5, 2010, is made and entered into by and
between THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of
California ("City") and COLETTE'S CHILDREN HOME, a California non-profit public benefit
corporation ("Owner").
RECITALS:
A. The City has applied for and received from the State of California, Department of
Housing and Community Development, funds from the Neighborhood Stabilization Program
allocation of the Department's State Community Development Block Grant Program ("NSP
Funds"), originating from the United states Government under the Housing and Economic
Recovery Act of 2008 and Title I of the Housing and Community Development Act of 1974, as
amended (HCD Act), Public Law 93-383.
B. City is responsible for the use of certain funds ("HOME Funds") made available
to the City of Huntington Beach by the United States Department of Housing and Urban
Development ("HUD") under the HOME Investment Partnerships Program (the "HOME
Program").
C. City and Owner ("Developer" therein) have entered into that certain Subrecipient
and Acquisition Loan Agreement, dated as of April 5, 2010 (the "Loan Agreement"), concerning
Owner's acquisition of that certain real property, to be owned in fee by Owner, more particularly
described in Exhibit No. 1 attached hereto and incorporated by reference herein (the "Property").
The Loan Agreement describes the "Project" which generally consists of Owner's acquisition of
the Property and Owner's subsequent development and operation thereon of a six unit affordable
rental housing complex to be restricted to Very Low Income Households. The Loan Agreement
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is hereby incorporated herein by this reference as though fully set forth herein. Any capitalized
terms not defined herein shall have the meanings ascribed to such terms in the Loan Agreement.
D. Owner has executed that certain promissory note (the "NSP Note") dated on or
about the date hereof, pursuant to which the City has provided Owner with a loan of NSP Funds
in the principal amount of THREE HUNDRED NINETY THOUSAND FIVE HUNDRED
SIXTY-EIGHT DOLLARS ($390,568.00) ("NSP Loan"). The NSP Note is secured by a Deed
of Trust With Assignment of Rents dated on or about the date of the Note, naming the City as
beneficiary ("NSP Deed of Trust").
E. Owner has executed that certain promissory note (the "HOME Note") dated on or
about the date hereof, pursuant to which City has provided Owner with a loan of HOME Funds
in the principal amount of TWO HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED
THIRTY-TWO DOLLARS ($284,432.00) ("HOME Loan"). The HOME Note is secured by a
Deed of Trust With Assignment of Rents dated on or about the date of the Note, naming City as
beneficiary ("HOME Deed of Trust"). In consideration of the HOME Loan and in satisfaction of
HOME Program requirements, 100% of the Units are designated as HOME Units.
F. City and Owner now desire to place restrictions upon the use and operation of the
Project, in order to ensure that the Project shall be operated continuously as an affordable
housing project available for rental to Very Low Income Households in accordance with the
terms set forth below for the term of this Agreement.
AGREEMENT:
NOW, THEREFORE, the Owner and City declare, covenant and agree, by and for
themselves, their heirs, executors, administrators and assigns, and all persons claiming under or
through them, that the Property, for the term of this agreement, shall be held transferred,
encumbered, used, sold, conveyed, leased and occupied, subject to the covenants and restrictions
hereinafter set forth:
1. DEFINITIONS.
1.1 Affordable Rent. As used in this Agreement, the term "Affordable Rent"
shall mean rental rates not to exceed the lesser of (1) "affordable rent" for very low income
households as defined by California Health & Safety Code Section 50053(b)(2) and (2) the rent
limits set forth by the HOME Program in 24 C.F.R. 92.252(b)(1) and 24 C.F.R. 92.252(b)(2).
Affordable Rent shall include a reasonable utility allowance for tenant -paid utilities based on the
Orange County Housing Authority's published utility schedules.
1.2 Affordable Unit. As used in this Agreement, the term "Affordable Unit"
shall mean one of the one (1) two -bedroom and five (5) three -bedroom rental dwelling units in
the Project restricted to occupancy by Very Low Income Households at Affordable Rent. The
term "Affordable Unit" and "Affordable Units" shall be used as the context mandates and shall
be reasonably interpreted in light of the context in which the term appears.
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1.3 Eligible Tenant. As used in this Agreement, the term "Eligible Tenant"
shall mean any person entitled to rent an Affordable Unit as set forth in this Agreement.
1.4 Median Income or Orange County Median Income. For purposes of this
Agreement, the terms "Median Income" and "Orange County Median Income" shall mean the
median income for the Orange County Primary Metropolitan Statistical Area, with adjustment
for household size, as estimated annually by the United States Department of Housing and Urban
Development pursuant to Section 8 of the United States Housing Act of 1937 as amended and
published by California's Housing and Community Development Department pursuant to
California Health and Safety Code section 50093.
1.5 Very Low Income Household. As used in this Agreement, the term "Very
Low Income Household" shall have the meaning given in California Health and Safety Code
section 50105(a).
2. TERM OF AGREEMENT; PRIORITY OF AGREEMENT; USE OF
PROPERTY. Pursuant to California Health and Safety Code Section 33334.3 and in satisfaction
of 24 CFR 92.252(e), this Agreement shall commence upon its execution and shall remain in
effect for the longest feasible period but not less than the period terminating sixty (60) years
following the date on which a Release of Construction Covenants is recorded for the Project.
This Agreement shall remain in effect throughout its 60-year term, notwithstanding the payment
in full of the NSP Loan or the HOME Loan. This Agreement is secured by the NSP Deed of
Trust and the HOME Deed of Trust and Owner shall not be entitled to a reconveyance of either
the NSP Deed of Trust or the HOME Deed of Trust prior to the expiration of the 60-year term of
this Agreement. This Agreement shall unconditionally be and remain at all times prior and
superior to the lien created by any deed of trust securing construction and/or permanent financing
for the Project and all of the terms and conditions contained in the loan documents relating to
such financing and to the lien of any new mortgage debt which is for the purpose of refinancing all
or any part of such financing. Owner hereby agrees that the Project is to be owned, managed, and
operated as affordable rental housing for Eligible Tenants for the term of this Agreement. To
that end, and for the term of this Agreement, the Owner hereby represents, covenants, warrants
and agrees as follows:
2.1 Compliance With HOME Regulations. Owner, its successor and assigns,
covenant and agree that the Project shall at all times during the term of this Agreement comply
with applicable requirements set forth in Subpart F of Part 92 of Title 24 of the Code of Federal
Regulations.
2.2 Purpose; Disbursement and Use of HOME Funds. The Property is being
acquired and the Project developed for the purposes of providing Eligible Tenants affordable
rental housing. The HOME Loan of HOME Funds shall be used exclusively for the payment of
costs incurred in connection with the acquisition and development of the Property in accordance
with the Loan Agreement. The amount of the HOME Loan of HOME Funds shall not exceed the
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per unit dollar limits established by HUD pursuant to section 22 1 (d)(3)(ii) of the National
Housing Act, as implemented in regulations issued by HUD, 24 CFR 221.514(b)(1) and (c).
Owner shall not request disbursement of HOME funds until the funds are needed to pay eligible
costs. The amount of each disbursement request shall be limited to the amount needed. The City
shall have the right to disapprove any request if the City determines the request is for an
ineligible item or is otherwise not in compliance with or inconsistent with the Loan Agreement
and this Agreement.
2.3 Schedule. The Project activities shall be accomplished within the time
provided in the Schedule of Performance, which is attached to the Loan Agreement.
2.4 Tasks and Budget. The Project Costs are indicated in the Project Budget
attached to the Loan Agreement. The HOME Funds shall be used exclusively for acquisition of
the Property.
2.5 Construction Covenant. Owner hereby covenants and agrees on behalf of
itself and its successors and assigns in the Property or any portion thereof or any improvements
thereon or any interest therein that Owner and such successors and assigns shall develop the
Units in accordance with the Loan Agreement (including but not limited to the Scope of
Development), the Redevelopment Plan for the Huntington Beach Redevelopment Project, this
Agreement, and plans approved by the City of Huntington Beach. The Project must receive its
Certificate of Occupancy no later than June 30, 2013.
2.6 Facilities. All of the Units in the Project shall contain facilities adequate
for living, sleeping, eating, cooking and sanitation in accordance with all applicable federal, state
and local laws and codes. The rehabilitation and maintenance of the Units shall comply with the
City's building code and all other applicable local codes, rehabilitation standards, ordinances and
zoning ordinances in effect, and the Units shall be decent, safe and sanitary and shall conform to
the building, electrical, plumbing, mechanical and energy codes that have been adopted by the
City of Huntington Beach. To the extent applicable, the Project shall comply with the
accessibility requirements at 24 CFR Part 8, which implements Section 504 of the Rehabilitation
Act of 1973 (29 U.S.C. 794) and, if applicable, the design and construction requirements at 24
CFR 100.205 for covered multifamily dwellings, as defined at 24 CFR 100.201, which
implements the Fair Housing Act (42 U.S.C. 3601-3619).
2.7 Residential Use. None of the Units in the Project will at any time be
utilized on a transient basis or will ever be used as a hotel, motel, dormitory, fraternity house,
sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park, or any
other use that is inconsistent or incompatible with this Regulatory Agreement.
2.8 Faith -Based Activities. Owner covenants that it will comply with all
terms and provisions contained in 24 CFR 92.257. Owner further certifies that HOME funds
will not be used for the acquisition, construction or rehabilitation of structures to the extent that
those structures are used for inherently religious activities.
REGULATORY AGREEMENT
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2.9 Conversion of Units. No part of the Project will at any time be owned by
a cooperative housing corporation nor shall the Owner take any steps in connection with the
conversion to such ownership or uses to condominiums, or to any other form of ownership
without prior written approval by the City. Any such conversion shall comply with the
requirements of 24 C.F.R. Section 92.255.
2.10 Tenant Preference. All of the Affordable Units will be made available
to Eligible Tenants for rental in accordance with the terms of this Agreement, and the Owner
shall not give preference to any particular class or group in renting the Affordable Units, except
to the extent that the Affordable Units are required to be leased or rented to Eligible Tenants and
except as provided in Section 3.6 below.
2.11 Tenant Protections. Owner shall comply with the tenant protections
provisions of 24 C.F.R. Section 92.253, including but not limited to:
a. The lease of an Affordable Unit must be for not less than one year,
unless by mutual agreement between tenant and Owner.
b. The lease may not contain any of the following provisions:
(1) Agreement by the tenant to be sued, to admit guilt or to a
judgment in favor of Owner in a lawsuit brought in connection with the lease;
(2) Agreement by the tenant that the Owner may take, hold, or sell
personal property of household members without notice to the tenant and a court decision on the
rights of the parties. This prohibition, however, does not apply to an agreement by the tenant
concerning disposition of personal property remaining in the Unit after the tenant has moved out
of the Unit. The Owner may dispose of this personal property in accordance with state law.
(3) Agreement by the tenant not to hold the Owner or the Owner's
agents legally responsible for any action or failure to act, whether intentional or negligent;
(4) Agreement by the tenant that the Owner may institute a lawsuit
without notice to the tenant;
(5) Agreement by the tenant that the Owner may evict the tenant
or household members without instituting a civil court proceeding in which the tenant has the
opportunity to present a defense, or before a court decision on the rights of the parties;
(6) Agreement by the tenant to waive any right to a trial by jury;
(7) Agreement by the tenant to waive the tenant's right to appeal,
or to otherwise challenge in court, a court decision in connection with the lease; and
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(8) Agreement by the tenant to pay attorney's fees or other legal
costs if the tenant wins in a court proceeding by the Owner against the tenant. The tenant,
however, may be obligated to pay costs if the tenant loses.
As required by 24 C.F.R. 92.303, Owner shall adhere to a fair lease and grievance procedure
approved by the City and provide a plan for and follow a program of tenant participation in
management decisions.
2.12 Termination of Tenancy. Owner, its successors or assigns, may not
terminate the tenancy or refuse to renew the lease of a tenant, except (i) for serious or repeated
violation of the terms and conditions of the lease; (ii) for violation of applicable federal, state, or
local law; or (iii) for other good cause. Pursuant to 24 C.F.R. 92.253(c), any termination or
refusal to renew must be preceded by not less than 30 days by the Owner's service upon the
tenant of a written notice specifying the grounds for the action.
3. OCCUPANCY OF PROJECT BY ELIGIBLE TENANTS. Owner hereby
represents, warrants, and covenants as follows:
3.1 Income Restrictions. Except as expressly provided herein, throughout the
term of this Agreement, the Affordable Units shall be rented only to, and occupied only by,
Eligible Tenants.
3.2 Rental Rates. Owner shall rent the Affordable Units to Eligible Tenants
at no more than the allowable Affordable Rents for a household size appropriate to the unit,
which is the number of bedrooms plus one. Therefore, a a two -bedroom Affordable Unit shall be
rented at no more than the applicable Affordable Rent for a three -person household and a three -
bedroom Affordable Unit shall be rented at no more than the applicable Affordable Rent for a
four -person household. The rental rates for the Affordable Units shall be adjusted annually based
upon annual updates of the applicable income and rent standards, including but not limited to
updates published by the California Housing and Community Development Department and the
United States Department of Housing and Urban Development. In no event shall any of the
Affordable Units be rented at a rate greater than the applicable Affordable Rent. Failure to
comply with the affordability requirements of this Agreement is an event of default under the
terms of both the NSP Loan and the HOME Loan. Subject to the right to cure, the NSP Loan
and the HOME Loan will each be due and payable immediately if the Affordable Units do not
meet the requirements of this Agreement.
3.3 Occupancy By Eligible Tenant. An Affordable Unit initially occupied by
an Eligible Tenant shall be deemed occupied by an Eligible Tenant until such Affordable Unit is
vacated, even if the tenant's household income subsequently increases to an amount that exceeds
the maximum allowable income for a Very Low Income Household, so long as satisfactory
actions are taken to ensure that all vacancies are filled in accordance with this Agreement until
the noncompliance is corrected. To the extent provided by HOME Regulations, Owner shall not
terminate or refuse to renew the lease of a tenant who initially qualified as an Eligible Tenant but
whose income subsequently increases to an amount that exceeds the maximum allowable income
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for a Very Low Income Household. However, if the tenant's income increases to 140% or more
of the income limit for a Very Low Income Household, Owner shall raise the tenant's rent
(including a reasonable utility allowance) to an amount equal to thirty percent (30%) of the
tenant's gross household income.
3.4 Maximum Occupancy. The maximum number of persons residing in a
three -bedroom unit may not exceed seven persons. Owner shall be responsible for enforcing this
maximum occupancy limit. Upon discovery of a violation of this Section 3.4, Owner shall
immediately notify the Eligible Tenant of record in writing ("Occupancy Violation Notice"). In
the Occupancy Violation Notice, Owner shall inform the Eligible Tenant of the occupancy
violation and provide the Eligible Tenant with an opportunity to cure the violation within thirty
(30) days from the date of the Notice.
3.5 Income Computation. Immediately prior to a prospective tenant's
occupancy of an Affordable Unit, Owner shall obtain and maintain on file an income
computation and certification form from such prospective tenant dated immediately prior to the
date of initial occupancy of an Affordable Unit by such prospective tenant. Owner shall verify
that the income information provided by an applicant is accurate by following all applicable City
policies and procedures and by taking one or more of the following steps as a part of the
verification process: (i) obtain two (2) pay stubs from the most recent pay periods; (ii) obtain a
written verification of income and employment from applicant's current employer; (iii) obtain an
income verification form from the Social Security Administration and/or California Department
of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is
unemployed or did not file a tax return for the previous calendar year, obtain other verification of
such applicant's income as is reasonably satisfactory; or (v) obtain such other information as
may be reasonably required. Owner shall update the foregoing records annually and shall
provide copies of updated tenant eligibility records and monthly rental records to City for
review. Upon review of such records, City may at its option perform an independent audit of the
tenant eligibility records in order to verify compliance with the income and affordability
requirements set forth herein. Costs for such an audit performed by the City shall be deemed a
Project Operating Expense, deductible from the Project's Revenue (as such term is defined in the
HOME Note). Owner shall retain the records described in this Section, including the
documentation submitted pursuant to 24 C.F.R. 92.203(a)(1), for a period of five (5) years after
the date the respective records were created.
3.6 Rental Priority. Subject to Owner's policies and procedures for screening
potential tenants, which must be approved by the City, the Affordable Units shall be rented
according to the following priorities:
a. When an Affordable Unit becomes available as a result of a tenant
vacation, Owner shall give first priority in renting the Affordable Unit to an Eligible Tenant who
has been displaced by activities of the City or the City's Redevelopment Agency.
Except as otherwise set forth above, Affordable Units shall be rented to Eligible Tenants on a
first -come, first -served basis; provided, however, that Owner shall maintain an "interest list" or
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"eligibility list" of potential tenants. The rental priority provision set forth in this Section 3.6
shall apply only to the extent such provisions are not in conflict with any applicable federal or
state law or any regulatory agreement affecting the Project that is approved by the City and
recorded in superior priority to this Agreement.
3.7 Maintenance of Records. Owner shall maintain complete and accurate
records pertaining to the Affordable Units, and shall permit any duly authorized representative of
the City to inspect the books and records of Owner pertaining to the Project including, but not
limited to, those records pertaining to tenant eligibility and occupancy of the Affordable Units.
Records pertaining to the Project and Affordable Units shall be retained for a period of five (5)
years after the termination of this Agreement; records pertaining to tenant eligibility shall be
retained for the period set forth in Section 3.5.
To assist the City in meeting its HOME Program recordkeeping and reporting
requirements and to assist the City's Redevelopment Agency in meeting its reporting
requirements under California's Community Redevelopment Law, Owner shall prepare, maintain
and submit to the City, as appropriate, the following records and reports:
a. Records which demonstrate that the Property meets the property standard
specified in 24 CFR 92.251 and the lead -based paint requirements of 24 CFR 92,355;
b. Records which demonstrate that each family occupying a HOME Unit is income
eligible in accordance with 24 CFR 92.203;
C. Records which demonstrate that the Property meets the affordability and income
targeting requirements of California Health and Safety Code Section 50053 and 24 CFR 92.252
for the duration of this Agreement. Records shall be kept for each family occupying an
Affordable Unit;
d. Records which demonstrate that each lease complies with the tenant and
participant protections, as specified in 24 CFR 92.253. Records shall be kept for each family
occupying an Affordable Unit;
e. Equal opportunity and fair housing records, including, as applicable:
(1) data on the extent to which each racial and ethnic group and single -headed
household (by gender of household head) have applied for, participated in, or benefited from,
any program or activity funded in whole or in part with HOME funds;
(2) documentation of actions undertaken to meet the requirements of 24 CFR Part
135 which implements section 3 of the Housing Development Act of 1968, as amended (12
U.S.C. 1701u);
(3) documentation of the actions taken to affirmatively further fair housing;
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f. Affirmative Marketing and MBE/WBE records, including, as applicable:
(1) if applicable, records documenting compliance with the affirmative
marketing procedures and requirements of 24 CFR 92.351;
(2) if applicable, documentation and data on the steps taken by Owner to
implement the City's outreach programs as set forth in applicable City policies and procedures
including data indicating the racial/ethnic or gender character of each business entity receiving a
contract or subcontract of $25,000 or more paid, or to be paid, with HOME funds; the amount of
the contract or subcontract, and documentation of the Owner's affirmative steps to assure that
minority business and women's business enterprises have an equal opportunity to obtain or
compete for contracts and subcontracts as sources of supplies, equipment, construction and
services;
g. if applicable, records which demonstrate compliance with the requirements of 24
CFR 92.353 relating to displacement, relocation and real property acquisition, including project
occupancy lists identifying the name and address of all persons occupying or moving into the
Property on and after the date on which Owner obtained site control;
h. if applicable, records demonstrating compliance with the labor requirements of 24
CFR 92.354, including contract provisions and payroll records;
i. records demonstrating compliance with the lead -based paint requirements of 24
CFR 92.355;
j. if applicable, records which support any exceptions to the conflict of interest
prohibition pursuant to 24 CFR 92.356;
k. debarment and suspension certifications required by 24 CFR Parts 24 and 91; and
1. Equal opportunity and fair housing records, including, as applicable:
(1) data on the extent to which each racial and ethnic group and single -headed
household (by gender of household head) have applied for, participated in, or benefited from,
any program or activity funded in whole or in part with HOME funds;
(2) documentation of actions undertaken to meet the requirements of 24 CFR
Part 135 which implements section 3 of the Housing Development Act of 1968, as amended (12
U.S.C. 1701u);
(3) documentation of the actions the Owner has taken to affirmatively further
fair housing.
Owner shall retain all books and records relevant to the Loan Agreement for a minimum of five
years after the project completion date, except that records of individual tenant income
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verifications, project rents and project inspections shall be retained for the most recent five year
period until five years after the affordability period terminates, or until the conclusion or
resolution of any and all audits or litigation relevant to the Loan Agreement, whichever is later.
The City, HUD and the Comptroller General of the United States, and any of their
representatives, shall have the right of access to any pertinent books, documents, papers or other
records of the Owner, in order to make audits, examinations, excerpts and transcripts.
3.8 Reliance on Tenant Representations: Each tenant lease shall contain a
provision to the effect that Owner has relied on the income certification and supporting
information supplied by the tenant in determining qualification for occupancy of an Affordable
Unit, and that any material misstatement in such certification (whether or not intentional) will be
cause for immediate termination of such lease.
4. MAINTENANCE
4.1 Maintenance Covenant.
(a) Owner agrees to maintain all interior and exterior improvements,
including landscaping, on the Property in good condition and repair (and, as to landscaping, in a
healthy condition), reasonable wear and tear excepted, and in accordance with all applicable
laws, rules, ordinances, orders, and regulations of all federal, state, county, municipal, and other
governmental agencies and bodies having or claiming jurisdiction (including, but not limited to,
Federal Housing Quality Standards as set forth in 24 C.F.R. 982.401). In addition, Owner shall
keep the Property free from all graffiti and any accumulation of debris or waste material. Owner
shall make all repairs and replacements necessary to keep the improvements in good condition
and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and
landscaping with comparable materials. The maintenance covenant contained in this Section
shall remain in effect for the term of this Agreement.
(b) The Project shall comply with the lead -based paint standards in 24
C.F.R. §92.355. Housing assisted with HOME Program funds constitutes HUD -associated
housing for the purpose of Lead -Based Paint Poisoning Prevention Act (42 U.S.C. Section 4821,
et seq.) and is, therefore, subject to 24 Code of Federal Regulations Part 35.
4.2 City Rights. The City shall have the right to enter upon the Property to
inspect the Property and both the interiors and exteriors of the Units, upon seventy-two (72)
hours notice to Owner. City may, but is not obligated to, perform or cause to be performed the
maintenance necessary to cure any default of these maintenance covenants and Owner shall be
liable for payment of reasonable costs to perform such required maintenance; provided, however,
that Owner first be given written notice of the actions required to cure any default, and Owner,
after receipt of such notice, shall have thirty (30) days to cure such defaults, but Owner shall not
be deemed in default of the foregoing maintenance covenant if such default cannot reasonably be
cured within the thirty, (30) day period referenced above so long as Owner has commenced to
cure such default within the same thirty (30) day period and is diligently proceeding with the
work to cure such default. Notwithstanding the foregoing, if any property conditions are
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reasonably identified by City after a property inspection attended by a representative of Owner
that pose an immediate danger to life or limb, Owner shall have three (3) days to effect
corrections of such condition(s) to City's reasonable satisfaction.
4.3 Annual & Quarterly Reports. Owner covenants and agrees to submit to
the City an annual report (the "Annual Report"), which shall include the information required by
Section 3.5 of this Agreement and by California Health & Safety Code Section 33418. The
Annual Report shall include for each Affordable Unit the rental rate and the income and family
size of the occupants, and shall also include the records described in Section 3.5 herein and any
financial statements required by the Loan Agreement. The income information shall be supplied
by the tenant in a certified statement on a form provided by the City. The Owner shall submit
the Annual Report on or before April 30 of the year following the year covered by the Annual
Report. The Owner shall provide for the submission of household information and certification
in its leases with tenants.
Beginning on the date of first occupancy, and for each fiscal year thereafter during the term of
this Agreement, Owner shall also submit on a quarterly basis a quarterly report for the
management of the Property (the "Quarterly Report"). The Quarterly Report shall include a
profit and loss statement, budget to date figures, and occupancy report and shall clearly show
project revenues, operating expenses, deposits to and withdrawals from the Project's Capital
Reserve Account, and cash flow available for residual receipts payments. The Quarterly Report
shall be in a form that is reasonably acceptable to the City Administrator. The City
Administrator, in his/her sole discretion may waive the requirement of the Quarterly Report for
one or more quarterly reporting periods. However, such waiver shall not operate to waive any
subsequent requirement of the Quarterly Report for the Restricted Period.
4.4 Management Plan. Within the time set forth in the Schedule of
Performance attached to the Loan Agreement, Owner shall prepare and submit to the City for
approval a management plan in accordance with the following ("Management Plan"):
(a) The Management Plan, including such amendments as may be
approved in writing by the City, shall remain in effect for the term of this Agreement. Owner
shall not amend the Management Plan or any of its components without the prior written consent
of the City. The components of the Management Plan shall include:
(1) Management Agent. The name and qualifications of any
proposed management agent. The City shall approve or disapprove the proposed management
agent in writing based on the experience and qualifications of the management agent. The
management agent shall have demonstrated experience in operating affordable housing
comparable to the Project.
(2) Management Program. A description of the proposed
management, maintenance, tenant selection and occupancy policies and procedures for the
Affordable Units.
REGULATORY AGREEMENT
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Regulatory Agreement [04.01.101.doc
(3) Management Agreement. A copy of the proposed
management agreement specifying the amount of the management fee and the relationship and
division of responsibilities between Owner and management agent.
(4) Tenant Lease or Rental Agreement. A copy of the proposed
tenant lease or rental agreement to be used in renting the Affordable Units.
(5) Annual Operating Budget. Within the time set forth in
the Schedule of Performance attached to the Loan Agreement and annually thereafter not later
than fifteen (15) days prior to the beginning of the next fiscal or calendar year of the Project,
Owner shall submit a projected operating budget to the City for review and approval. After
Owner's initial projected operating budget submittal, Owner shall annually reconcile each
previous year's projected budget with actual operating results for the Project ("Budget
Reconciliation"). In each Budget Reconciliation, Owner shall set forth an explanation for any
major discrepancies between projected and actual budgets. For purposes of this Agreement, a
"major discrepancy" shall mean a line item difference between projected and actual budgets of
20% or more.
The City shall not unreasonably withhold, condition or delay its approval of any matter for which
its approval is required hereunder, but such matter shall be deemed disapproved unless the City
provides to Owner its written approval within thirty (30) days after receipt of a request for
approval. Any express disapproval shall be in writing and contain the City's reasons for
disapproval.
(b) Owner hereby covenants and agrees the City shall have the right, at
any time and from time to time, to give notice to Owner if the City determines that the Project is
not being managed or maintained in accordance with the Management Plan. The City may
require the Owner to change management practices or to terminate the management agent and
retain a different management agent, approved by the City. The City agrees that prior to
requiring the Owner to change its management agent or the management practices the City shall
informally consult with Owner, in an attempt to resolve the dispute. If the City determines that
such an attempt at informal resolution has been unsuccessful, it shall give the Owner thirty (30)
days written notice to change the management agent or practice, as the case may be. If Owner
fails to do as requested by the City in the written notice, the City may then require the immediate
change of the management practice or agent, as the case may be. The management agreement
shall provide that it is subject to termination by the Owner without penalty, upon thirty (30) days
prior written notice. Within ten (10) business days following a direction of the City to replace
the management agent, the Owner shall select another management agent or make other
arrangements satisfactory to the City for continuing management of the Project. The Owner
shall notify the City upon learning that there is a voluntary change in the management or control
of the management agent, and, if the change is unsatisfactory to the City, the City shall be
entitled to require the Owner to change the management agent in accordance with the terms of
this paragraph.
REGULATORY AGREEMENT
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Regulatory Agreement [04.01.10].doc
4.5 Other HOME Program Requirements.
Owner shall comply with all applicable federal requirements set forth in Subpart
H of the HOME regulations, including the following:
a. Other Federal Requirements and Nondiscrimination. 24 CFR 92.350. Owner
acknowledges that 24 CFR 92.350 provides that the Federal requirements set forth in 24 CFR
Part 5, subpart A, are applicable to participants in the HOME program, and that these Federal
requirements include the following:
(i) Nondiscrimination and Equal Opportunity,
(1) Civil Rights, Fair Housing, and Age and Disability Discrimination
Acts Assurances:
During the performance of the Loan Agreement, Owner assures that no
otherwise qualified person shall be excluded from participation or employment, denied program
benefits, or be subjected to discrimination based on race, color, national origin, sex, age,
handicap, religion, or religious preference, under any program or activity funded by this
Agreement, as required by the Fair Housing Act (42 U.S.C. 3601-19) and implementing
regulations at 24 CFR part 100 et seq.; Executive Order 11063, as amended by Executive Order
12259 (3 CFR, 1959-1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in
Housing Programs) and implementing regulations at 24 CFR part 107; title VI of the Civil Rights
Act of 1964 (42 U.S.C. 2000d- 2000d-4) (Nondiscrimination in Federally Assisted Programs)
and implementing regulations at 24 CFR part 1; the Age Discrimination Act of 1975 (42 U.S.C.
6101-6107) and implementing regulations at 24 CFR part 146; section 504 of the Rehabilitation
Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8;Title VI of the Civil
Rights Act of 1964, the Fair Housing Act (42 U.S.C. 3601-20) and all implementing regulations,
and the Age Discrimination Act of 1975, and all implementing regulations.
(2) Training, Employment, and Contracting Opportunities Assurance
of Compliance:
The Project Activities to be performed under the Loan Agreement are on a
project assisted under a program providing direct federal financial assistance from HUD which is
subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as
amended, 12 U.S.C. 170lu ("Section 3"), and the regulations issued by HUD to implement
Section 3 (24 CFR Part 135) (the "Section 3 Regulations"). Pursuant to 24 CFR §135.3, the
requirements of the Section 3 Regulations apply to the recipient of such financial assistance only
where the amount of federal assistance exceeds $200,000, and apply to a contractor or
subcontractor of such recipient only where the amount of assistance exceeds $200,000 and the
amount of the contract or subcontract exceeds $100,000. Owner shall provide, to the greatest
extent feasible, training, employment and contracting opportunities generated by the financial
assistance to low- and very -low income persons and business concerns owned by low- or very -
low income persons, or which employ low- or very -low income persons.
REGULATORY AGREEMENT
PAGE 13
Regulatory Agreement [04.01.10].doc
(3) MBE/WBE Affirmative Action Outreach Program:
Owner hereby agrees to comply with the City's minority and women
business outreach program to the extent required by Executive Order 11625, as amended by
Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 CFR, 1977 Comp., p. 139)
(Minority Business Enterprises); Executive Order 12432 (3 CFR, 1983 Comp., p. 198) (Minority
Business Enterprise Development); and Executive Order 12138, as amended by Executive Order
12608 (3 CFR, 1977 Comp., p. 393 and 3 CFR, 1987 Comp., p. 245) (Women's Business
Enterprise).
(ii) Disclosure Requirements. The disclosure requirements and prohibitions of 31
U.S.C. 1352 and implementing regulations at 24 CFR Part 87; and the requirements for funding
competitions established by the Housing and Urban Development Reform Act of 1989 (42
U.S.C. 3531 et seq.).
(iii) Debarred, Suspended or Ineligible Contractors. The prohibitions at 24 CFR
Part 24 on the use of debarred, suspended or ineligible contractors.
(iv) Drug -free Workplace. The Drug -Free Workplace Act of 1988 (41 U.S.C.
701 et seq.) and HUD's implementing regulations at 24 CFR Part 24.
b. Affirmative Marketing. 24 CFR 92.351. Owner shall comply with the City's
Affirmative Marketing requirements.
C. Displacement, Relocation and Acquisition. 24 CFR 92.353. Owner shall prepare
a project -specific relocation plan and shall certify that, to the extent applicable, it will comply or
has complied with the federal relocation, displacement and acquisition rules governing the
HOME Program, which are contained in the Uniform Relocation Act, 49 CFR Part 24, and
applicable program regulations. 24 CFR Section 92.353 requires that tenants who are displaced
from housing units demolished or converted as a result of HOME -funded activities be provided
with relocation assistance.
d. Labor. 24 CFR 92.354. Does not apply to this Project.
e. Lead -based Paint. 24 CFR 92.355. The Project shall comply with the lead -based
paint standards in §92.355.
f. Conflict of Interest. 24 CFR 92.356.
(1) Interest of Employees, Officers and Officials. No employee, agent,
consultant, officer or elected official or appointed official of the City, or employee, agent,
consultant or officer of Owner, and no other public official of the City who exercises any
functions or responsibilities with respect to the activities assisted with HOME funds or who are
in a position to participate in a decision making process or gain inside information with regard to
REGULATORY AGREEMENT
PAGE 14
Regulatory Agreement [04.01.10].doc
these activities, during their tenure and for one year thereafter, may obtain a financial interest or
benefit from a HOME assisted activity or have an interest in any contract or subcontract, or
agreement with respect thereto, or the proceeds thereunder, either for themselves or those with
whom they have family or business ties. Owner shall incorporate, or cause to be incorporated, in
all such contractors or subcontracts a provision prohibiting such interest pursuant to the purposes
of this Section. Fulfillment of "sweat equity" obligations as defined in Section 8201 of the
HOME regulations shall not be considered a violation of this prohibition.
(2) Prohibition Against Occupying HOME -Assisted Units. No officer,
employee, agent, official or consultant of Owner may occupy the Property.
g. Consultant Activities. 24 CFR 92.358. No person providing consultant services
in an employer -employee type relationship shall receive more than a reasonable rate of
compensation for personal services paid for with HOME funds. In no event, however, shall such
compensation exceed the limits in effect under the provisions of any applicable statute (e.g.,
annual HUD appropriations acts which have set the limit at the equivalent of the daily rate paid
for Level IV of the Executive Schedule). Such services shall be evidenced by written
agreements between the parties which detail the responsibilities, standards and compensation.
Consultant services provided under an independent contractor relationship are not subject to the
compensation limitation of Level IV of the Executive Schedule.
5. ENFORCEMENT. In the event Owner defaults in the performance or
observance of any covenant, agreement or obligation of Owner pursuant to this Agreement, and
if such default remains uncured for a period of thirty (30) days after written notice thereof (or
such longer period as may apply to the specific alleged default) shall have been given by City,
or, in the event said default cannot be cured within said time period, Owner has failed to
commence to cure such default within said thirty (30) days and diligently prosecute said cure to
completion, then City shall declare an "Event of Default" to have occurred hereunder, and, at its
option, may take one or more of the following steps:
(a) By mandamus or other suit, action or proceeding at law or in equity,
require Owner to perform its obligations and covenants hereunder or enjoin any acts or things
which may be unlawful or in violation of this Agreement; or
(b) Take such other action at law or in equity as may appear necessary or
desirable to enforce the obligations, covenants and agreements of participant hereunder,
including foreclosure of the Deed of Trust (provided, however, that foreclosure under the Deed
of Trust shall be in the priority position of the Deed of Trust and not this Regulatory Agreement).
Except as otherwise expressly stated in this Agreement, the rights and remedies of
the parties are cumulative, and the exercise by any party of one or more of its rights or remedies
shall not preclude the exercise by it, at the same or different times, of any other rights or
remedies for the same default or any other default by another party.
REGULATORY AGREEMENT
PAGE 15
Regulatory Agreement [04.01.10].doc
6. NONDISCRIMINATION. There shall be no discrimination against or
segregation of any person, or group of persons, on account of race, color, creed, age, class,
income, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any part
thereof, or in the awarding of contracts for the Project, nor shall participant, or any person
claiming under or through it, establish or permit any such practice or practices of discrimination
or segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees or vendees of the Property, or any part thereof, or in the awarding
of contracts for the Project (except as permitted by this Agreement).
Owner shall comply with all applicable federal, state and local nondiscrimination,
fair housing, and equal opportunity requirements. In addition, Owner shall conduct affirmative
marketing and minority outreach activities as required by federal regulations.
6.1 Form of Nondiscrimination and Nonsegregation Clauses. The Owner
shall refrain from restricting the rental, sale or lease of the property on the basis of race, color,
creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or
ancestry of any person. All such deeds, leases or contracts shall contain or be subject to
substantially the following nondiscrimination or nonsegregation clauses:
(a) In deeds: "The grantee herein covenants by and for himself or
herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or
through them, that there shall be no discrimination against or segregation of, any person or group
of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein
conveyed, nor shall the grantee or any person claiming under or through him or her, establish or
permit any practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the
premises herein conveyed. The foregoing covenants shall run with the land."
(b) In leases: "The lessee herein covenants by and for himself or
herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or
through him or her, and this lease is made and accepted upon and subject to the following
conditions:
That there shall be no discrimination against or segregation of any person or group of persons, on
account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as
those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing,
subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor
shall the lessee himself or herself, or any person claiming under or through him or her, establish
or permit any such practice or practices of discrimination or segregation with reference to the
REGULATORY AGREEMENT
PAGE 16
Regulatory Agreement [04.01.10].doe
selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or
vendees in the premises herein leased."
(c). In contracts: There shall be no discrimination against or
segregation of any person or group of persons, on account of any basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926,
12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section
12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or
enjoyment of the land, nor shall the transferee itself or any person claiming under or through him
or her, establish or permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees,
subtenants, or vendees of the land."
7. COVENANTS TO RUN WITH THE LAND. Owner hereby subjects the
Property to the covenants, reservations, and restrictions set forth in this Agreement. City and
Owner hereby declare their express intent that all such covenants, reservations, and restrictions
shall be deemed covenants running with the land and shall pass to and be binding upon the
Owner's successors in title to the Property; provided, however, that on the termination of this
Agreement said covenants, reservations and restrictions shall expire, except the
nondiscrimination covenants contained in Section 6 and Section 6.1 shall remain in perpetuity.
All covenants without regard to technical classification or designation shall be binding for the
benefit of the City, and such covenants shall run in favor of the City for the entire term of this
Agreement, without regard to whether the City is or remains an owner of any land or interest
therein to which such covenants relate.
8. ATTORNEYS' FEES. In the event that any action, suit or other proceeding
is brought to enforce the obligations of under this Agreement, each party shall bear its own costs
and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each
and every such action, suit or other proceeding, including any and all appeals or petitions
therefrom.
9. AMENDMENTS. This Agreement shall be amended only by a written
instrument executed by the parties hereto or their successors in title, and duly recorded in the real
property records of the County of Orange.
10. NOTICE. Any notice required to be given hereunder shall be made in writing
and shall be given by (i) personal delivery, (ii) courier service that provides a receipt showing
date and time of delivery, or (iii) certified or registered mail, postage prepaid, return receipt
requested, at the addresses specified below, or at such other addresses as may be specified in
writing by the parties hereto:
City: City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Attn: Director of Economic Development
REGULATORY AGREEMENT
PAGE 17
Regulatory Agreement [04.01.10].doc
With a copy to: City Attorney's Office
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Owner: Colette's Children Home, Inc.
17301 Beach Blvd., #23
Huntington Beach, CA 92647
Notices personally delivered or delivered by courier shall be effective upon receipt. Mailed
notices shall be effective on the earlier of receipt or Noon on the second business day following
deposit in the United States mail.
11. SEVERABILITY/WAIVER/INTEGRATION.
11.1 Severability. If any provision of this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall
not in any way be affected or impaired thereby.
11.2 Waiver. A waiver by either party of the performance of any
covenant or condition herein shall not invalidate this Agreement nor shall it be considered a
waiver of any other covenants or conditions, nor shall the delay or forbearance by either party in
exercising any remedy or right be considered a waiver of, or an estoppel against, the later
exercise of such remedy or right.
11.3 Integration. This Agreement contains the entire Agreement between the
parties and neither party relies on any warranty or representation not contained in this
Agreement.
12. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the State of California.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute one original and all of which shall be one and the
same instrument. This Agreement may be executed by each party on a separate signature page,
and when the executed signature pages are combined, shall constitute one single instrument.
IN WITNESS WHEREOF, the City and Owner have executed this Regulatory Agreement and
Declaration of Covenants and Restrictions by duly authorized representatives on the date first
written hereinabove.
[SIGNATURES APPEAR ON NEXT PAGE]
REGULATORY AGREEMENT
PAGE 18
Regulatory Agreement [04.01.101.doc
"OWNER"
COLETTE' S CHILDREN HOME, INC.,
a California non-profit public benefit
corporation
Pame pe
esident
"CITY"
THE CITY OF HUNTINGTON
BEACH, a municipal corporation of
the State of California
�,,tl
���e"qr.'s
M r
tlt
ATTEST:
AS TO FORM:
r— City Attorney
11211aX411,01
KX E, ALLMER & BERKMAN
Special Counsel
REGULATORY AGREEMENT
PAGE 19
Regulatory Agreement [04.01.101.doc
State of California
County of Orange
On OLD KI I >� Zo10
s
before me, 1 0&,tyl G-4L
a Notary Public, personally appeared VWTWjA, Hz0,2Q_ , who proved to me
on the basis of satisfactory evidence to be the person(s) hose name(sG)are subscribed to the
within instrument and acknowledged to piethat h s e hey executed the same in hi er heir
authorized capacity(ies), and that by hi . er heir signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PE�RJ'ijI�Y under the laws of the State of California that the
foregoing paragraph is trug,arid correct.
r
WITNESS'"my handWoficseal.
Signature
PATRICIA J. GARCIA
,T .. 60t`,flR9. p9i4E���
a COU�UTY
Cornet. 99, �99
State of California 1
County of Orange )
On Z&O/ Z Q1Q before me, �C Y1$C`%C �C -�` c yrC'A 0,—
a Notary Public, persol4ally appeared who proved to me
on the basis of satisfactory evidence to be the person(s) whose names is/ re subscribed to the
within instrument and acknowledged to me that h she they executed the same in li'Ls] heir
authorized capacity(ies), and that by h's/he heir signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph, is, true and co rect.
WI SS my�hand and > seal:
PATRICIA J. GARCIA
t� •µ COMAA. i3994�037 � .
_ � ? hDt NOj�I PIti�C-CS$90t1118
Signatur (Seal)
j Cortan. June 99,2019
REGULATORY AGREEMENT
Regulatory Agreement [04.01.10].doc
-vvyers Yftle
PENALTY OF PERJURY AFFIDAVIT
(GOVERNMENT CODE 27361.7)
1920 Main Street
Suite 500
Irvine, California 92614
I certify under the penalty of perjury that the notary seal on the document to which this
statement is attached reads as follows:
Name of the Notary: Patricia J. Garcia
Date Commission expires: 6-19-11
County Where Bond is Filed: Orange
Commission No.: 1749037 Manufacturer/Vendor No.: ES11
Place of Execution: Irvine, Ca. Dam-Mlay 17, 2010
Signature:
WYERS TITLE COMPANY
I further certify under the penalty of perjury that the illegible portion of the document to
which this statement is attached reads as follows (if applicable):
Date: May 17, 2010
Signature:
LAWYERS TITLE COMPANY
ACKNOWLEDGMENT
STATE OF CALIFORNIA
ss
COUNTY OF ORANGE
On April 21, 2010 before me, P. L. Esparza, Notary Public, personally appeared
Joan L. Flynn and Cathy Green who proved to me on the basis of satisfactory
evidence to be the persons whose names are subscribed to the within instrument
and acknowledged to me that they executed the same in their authorized capacities,
and that by their signatures on the instrument the persons, or the entity upon behalf
of which the persons acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Notary Signatur
P. L. ESPARZA
Commission # 1857021
Notary Public - California z
Orange County
M Comm. Expires Aug4, 2013
(Seal)
EXHIBIT NO. 1
LEGAL DESCRIPTION OF SITE
The land referred to herein is situated in the State of California, County of Orange, and described
as follows:
PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143,
PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF
ORANGE COUNTY, CALIFORNIA.
APN: 165-234-17
REGULATORY AGREEMENT
LEGAL DESCRIPTION
Regulatory Agreement [04.01.10].doc
"O't I e
'irp
PENALTY OF PERJURY AFFIDAVIT
(GOVERNMENT CODE 27361.7)
1920 Main Street
Suite 500
Irvine, California 92614
I certify under the penalty of perjury that the notary seal on the document to which this
statement is attached reads as follows:
Name of the Notary: P.L. Esparza
Date Commission expires: 8-4-13
County Where Bond is Filed: Orange
Commission No.: 1857021 Manufacturer/Vendor No.: NNA1
Place of Execution: Irvine, Ca. Date: May 17, 2010
Signature:
LAWYERS TITLE COMPANY
I further certify under the penalty of perjury that the illegible portion of the document to
which this statement is attached reads as follows (if applicable):
Date: May 17, 2010
Signature:
LAWYERS TITLE COMPANY
EXHIBIT K
ENVIRONMENTAL INDEMNITY
[Behind This Page]
Environmental Indemnity
ENVIRONMENTAL INDEMNITY BY COLETTE'S CHILDREN HOME IN FAVOR OF
THE CITY OF HUNTINGTON BEACH
THIS ENVIRONMENTAL INDEMNITY (this "Indemnity"), dated as of April 5, 2010,
and made by COLETTE' S CHILDREN HOME, INC., a California non-profit public benefit
corporation (referred to as `Borrower"), whose address for purposes of giving notices is 17301
Beach Blvd., #23, Huntington Beach, CA 92647, in favor of THE CITY OF HUNTINGTON
BEACH (the "City"), whose address for purposes of giving notice is 2000 Main Street,
Huntington Beach, California 92648.
WITNESSETH
WHEREAS, Borrower is the owner of the real property in the City of Huntington Beach
described on Exhibit "A" attached hereto and made a part hereof, and the improvements thereon
(collectively referred to as the "Property");
WHEREAS, Borrower and the City entered into that certain Subrecipient and Acquisition
Loan Agreement, dated as of April 5, 2010 (the "Loan Agreement"), pursuant to which the City
agreed to make loans to Borrower for the purpose of acquiring the Property for the development
of affordable rental housing thereon (the "Loans") (the Loan Agreement and the documents and
instruments referred to therein which are being executed by Borrower concurrently herewith are
referred to collectively as the "Loan Documents");
WHEREAS, Borrower has agreed to execute and deliver to the City this Indemnity to
induce the City to make the Loans.
NOW, THEREFORE, in consideration of the foregoing and in consideration of the
mutual agreements hereinafter set forth, Borrower hereby agrees with the City as follows:
DEFINITIONS
For the purpose of this Indemnity, "Hazardous Materials" or "Hazardous Substances"
shall include, but not be limited to, oil, flammable explosives, asbestos, urea formaldehyde
insulation, radioactive materials, hazardous wastes, toxic or contaminated substances or similar
materials, including, without limitation, any substances defined as "extremely hazardous
substances," "hazardous substances," "hazardous materials," "hazardous waste" or "toxic
substances" in the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, including the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Sections 9601 et seq. ("CERCLA"); the Hazardous Materials Transportation Act, 49
U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. Sections 6901, et seq.; the Toxic Substances Control Act, as amended, 15
ENVIRONMENTAL INDEMNITY
PAGE I
Environmental Indemnity [04.01.101. doc
U.S.C. Section 2601 et seq.; the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the
Federal Water Pollution Control Act, as emended, 33 U.S.C. Section 1251 et seq.; the
Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651; the Emergency
Planning and Community Right -to -Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the
Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe
Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; and those substances defined as
"hazardous waste" in Section 25117 of the California Health and Safety Code, as "infectious
waste" in Section 25117.5 of the California Health and Safety Code, or as "hazardous
substances" in Section 25316 of the California Health and Safety Code or "hazardous materials"
as defined in Section 353 of the California Vehicle Code; and in the regulations adopted and
orders and publications promulgated pursuant to said laws. Other capitalized terms used in this
Indemnity shall have the meanings ascribed to them in the Loan Agreement with the same force
and effect as if set forth in full below.
2. COVENANTS AND INDEMNITY
The following covenants, and indemnities are hereby given and made by Borrower:
2.1 Covenants.
(a) Borrower covenants that it will strictly comply with any and all laws,
regulations, and/or orders which may be promulgated from time to time relating to Hazardous
Materials ("Hazardous Materials Laws"), to immediately take, at Borrower's sole expense, all
remedial action required by any Hazardous Materials Law or any judgment, consent decree,
settlement or compromise in respect to any Hazardous Materials Claim (as defined herein
below), and to keep the Property free of any lien imposed pursuant to any Hazardous Materials
Law or in relation to any Hazardous Materials Claim.
(b) Borrower covenants that the Property will not, while Borrower is the
owner of any portion thereof, be used for any activities involving, directly or indirectly, the use,
generation, treatment, storage, release, transportation, presence, discharge or disposal of any
Hazardous Materials, except for de minimis quantities used at the Property in strict compliance
with all Hazardous Materials Laws and required in connection with the routine rehabilitation,
operation and maintenance of the Property.
(c) The City shall have the right, at any time, to conduct an environmental audit
of the Property at the City's expense, unless Hazardous Materials are found, then at Borrower's
sole cost and expense, and Borrower shall cooperate in the conduct of any such environmental
audit. Other than in an emergency, such audit shall be conducted only after prior notice has been
given to Borrower and only in the presence of a representative of Borrower. Borrower shall give
the City and its agents and employees access to the Property to remove, or otherwise to mitigate
the effects of, Hazardous Materials and Borrower shall not unreasonably delay or condition such
access.
ENVIRONMENTAL INDEMNITY
PAGE 2
Environmental Indemnity [04.01.10]. doc
(e) Borrower shall not install, or permit to be installed, on the Property friable
asbestos or any substance containing asbestos and deemed hazardous by any Hazardous
Materials Laws, and, with respect to any such material currently present in the Property,
Borrower shall promptly either (i) remove or cause to be removed any material that such
Hazardous Materials Laws deem hazardous and require to be removed, or (ii) otherwise comply
with such Hazardous Materials Laws, all at Borrower's sole cost and expense. If Borrower shall
fail to so do within the cure period permitted under applicable law, regulation, or order, the City
may do whatever is necessary to eliminate said substances from the premises or to otherwise
comply with all Hazardous Materials Laws, and the costs thereof shall be added to the
Obligations (as hereinafter defined) of Borrower under this Section 2.
(f) Borrower shall immediately advise the City in writing of any of the
following: (i) any pending or threatened claim against Borrower or the Property by any
governmental entity or agency or by any other person or entity relating to Hazardous Materials
or pursuant to the Hazardous Materials Laws ("Hazardous Materials Claims"), (ii) any
condition or occurrence on the Property that (A) results in noncompliance by Borrower with any
Hazardous Materials Laws, (B) could reasonably be anticipated to cause the Property to be
subject to any restrictions on the ownership, occupancy, use or transferability of the Property
under any Hazardous Materials Law, or (C) could reasonably be anticipated to form the basis of
a Hazardous Materials Claim against the Property or Borrower.
2.2 Indemnity. Borrower hereby agrees to defend, indemnify, protect, and hold
harmless the City and its members, officers, officials, employees, agents, representatives,
servants, contractors, successors and assigns from and against any and all damages, losses,
liabilities, obligations, penalties, claims (including, without limitation, any third party tort
claims), litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or
expenses (including, without limitation, attorneys' and experts' fees and disbursements) of any
kind or of any nature whatsoever, whether foreseeable or unforeseeable, (collectively, the
"Obligations") which may at any time be imposed upon, incurred by or asserted or awarded
against the City as a direct or indirect consequence of:
(a) The presence of any Hazardous Materials on, in, under, or affecting all or
any portion of the Property or any surrounding areas;
(b) The breach of any covenant made by Borrower in Section 2.1 hereof; or
(c) The enforcement by the City of any of the provisions of this Section 2.2 or
the assertion by Borrower of any defense to its obligations hereunder.
3. BORROWER'S UNCONDITIONAL OBLIGATIONS
3.1 Unconditional Obligations. Borrower hereby agrees that the Obligations will be
paid and performed strictly in accordance with the terms of this Indemnity, regardless of any
law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Loan
ENVIRONMENTAL INDEMNITY
PAGE 3
Environmental Indemn ity[04.01.10]. doe
Documents or affecting any of the rights of the City with respect thereto. The obligations of
Borrower hereunder shall be absolute and unconditional irrespective of, and Borrower waives
any defense based upon,
(a) The validity, regularity, or enforceability of the Loan Documents or any
other instrument or document executed or delivered in connection therewith;
(b) Any alteration, amendment, modification, release, termination, or
cancellation of any of the Loan Documents, or any change in the time, manner, or place of
payment of, or in any other term in respect of, all or any of the obligations of Borrower contained
in any of the Loan Documents;
(c) Any extension of the maturity of the Loans or any waiver of, or consent to
any departure from, any provision contained in any of the Loan Documents;
(d) Any exculpatory provision in any of the Loan Documents limiting the
City's recourse to property encumbered by the Deeds of Trust securing the Loans, or to any other
security, or limiting the City's rights to a deficiency judgment against Borrower;
(e) Any exchange, addition, subordination, or release of, or nonperfection of
any lien on or security interest in, any collateral for the Loans, or any release, amendment,
waiver of, or consent to any departure from any provision of, any other surety or guarantee given
in respect of the Loans;
(f) The insolvency or bankruptcy of Borrower or Borrower's approved
assignee's General Partners or of any indemnitor or guarantor under any other indemnity or
guarantee given in respect of the Loans; or
(g) Any other circumstance that might otherwise constitute a defense
available to, or a discharge of, Borrower, Borrower's approved assignee's General Partners, or
any other indemnitor or guarantor with respect to the Loans or any or all of the Obligations.
3.2 Continuation. The term of this Indemnity will continue until such time as no legal
action can be successfully brought against the City due to applicable statutes of limitation. This
Indemnity (a) is a continuing indemnity and shall remain in full force and effect until the
satisfaction in full of all of the Obligations (notwithstanding the payment in full of the Loans or
the release or other extinguishment of the Deeds of Trust, or any other security for the Loans);
and (b) shall continue to be effective or shall be reinstated, as the case may be, if at any time any
payment of any of the Obligations is rescinded or must otherwise be returned by the City upon
the insolvency, bankruptcy, or reorganization of Borrower, Borrower's approved assignee's
General Partners or otherwise, all as though such payment had not been made.
3.3 Survival. Borrower's duty to indemnify shall survive any judicial or non judicial
foreclosure under the NSP Deed of Trust and/or the HOME Deed of Trust or transfer of the
ENVIRONMENTAL INDEMNITY
PAGE 4
Environmental l ndemnity[04.01.10]. doc
Property in lieu thereof, the release and reconveyance or cancellation of the NSP Deed of Trust
and/or the HOME Deed of Trust, and the satisfaction of all of Borrower's obligations under the
Loan Documents.
4. WAIVER
Borrower acknowledges that possible defenses to the enforceability of the Obligations
may presently exist and/or may arise hereafter and as part of the City's consideration for entering
into the Loan Agreement, they have specifically bargained for the waiver and relinquishment by
Borrower of all such defenses. Borrower agrees that it has had the opportunity to seek and
receive legal advice from skilled legal counsel of its choosing and represents and confirms that
Borrower is fully informed regarding, and thoroughly understands, the nature of such possible
defenses, the circumstances under which they may arise, the benefits that they might confer upon
Borrower and the legal consequences to Borrower of waiving such defenses. Borrower makes
this Indemnity with the intent that this Indemnity and all of the waivers herein shall each and all
be fully enforceable by the City and that the City are induced to enter into the Loan Agreement
in material reliance upon such presumed full enforceability. Without limitation to the foregoing,
Borrower hereby waives the following:
(a) Promptness and diligence;
(b) Notice of acceptance and notice of the incurrence of any Obligation by Borrower;
(c) Notice of any action taken by the City, Borrower, or any other interested party
under any Loan Document or under any other agreement or instrument relating thereto;
(d) All other notices, demands, and protests, and all other formalities of every kind, in
connection with the enforcement of the Obligations, the omission of or delay in which, but for
the provisions of this Section 4, might constitute grounds for relieving Borrower of its
Obligations hereunder;
(e) The right to a trial by jury with respect to any dispute arising under, or relating to,
this Indemnity;
(f) Any requirement that the City protect, secure, perfect, or insure any security
interest or lien in or on any property subject thereto;
(g) Any requirement that the City exhaust any right or take any action against
Borrower or any other person or collateral; and
(h) Any defense that may arise by reason of-
(1) The incapacity, lack of authority, death or disability of, or revocation
hereof by, any person or persons;
ENVIRONMENTAL INDEMNITY
PAGE
Environmental Indemnity[04.01.10]. doe
(2) The failure of the City to file or enforce any claim against the estate (in
probate, bankruptcy, or any other proceedings) of any person or persons; or
(3) Any defense based upon an election of remedies by the City, including,
without limitation, an election to proceed by nonjudicial foreclosure or which
destroys or otherwise impairs the subrogation rights of Borrower or any other
right of Borrower to proceed against a guarantor by the operation of Section 580d
of the California Code of Civil Procedure or otherwise.
5. NOTICES
Any notice, demand, statement, request, or consent made hereunder shall be in writing
and shall be personally served, mailed by first-class registered mail, return receipt requested, to
the address set forth in the first paragraph of this Indemnity, above, or given by electronic
facsimile ("fax") transmission to the fax numbers stated below, with confirmations mailed by
first class registered mail, return receipt requested to the address set forth above, of the party to
whom such notice is to be given (or to such other address as the parties hereto, shall designate in
writing):
In the case of the City:
714-374-1590
In the case of Borrower: 714-848-1866
Any notice that is transmitted by fax transmission followed by delivery of a "hard" copy, shall be
deemed delivered upon its transmission; any notice that is personally delivered (including by
means of professional messenger service, courier service such as United Parcel Service or
Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of
receipt; and any notice that is sent by registered or certified mail, postage prepaid, return receipt
required shall be deemed received on the date of receipt thereof.
6. MISCELLANEOUS
6.1 Borrower shall make any payment required to be made hereunder in lawful
money of the United States of America, and in same day funds, to the City at its address
specified in the first paragraph hereof.
6.2 No amendment of any provision of this Indemnity shall be effective unless it is in
writing and signed by Borrower and the City and no waiver of any provision of this Indemnity,
and no consent to any departure by Borrower from any provision of this Indemnity, shall be
effective unless it is in writing and signed by the City, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.
ENVIRONMENTAL INDEMNITY
PAGE 6
Environmental Indemnity[04.01.10I.doc
6.3 No failure on the part of the City to exercise, and no delay in exercising, any right
hereunder or under any Loan Document shall operate as a waiver hereof or thereof, nor shall any
single or partial exercise of any right preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies of the City provided herein and in the Loan
Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law. The rights of the City hereunder or under any Loan Document against any party
thereto are not conditional or contingent on any attempt by the City to exercise any of its rights
hereunder or under any other Loan Document against such party or against any other person or
collateral.
6.4 If any provision of this Indemnity shall be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable, then that provision shall, as to such
jurisdiction, be deemed ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof and without affecting the validity or enforceability of
such provision in any other jurisdiction.
6.5 This Indemnity shall (a) be binding upon Borrower, and Borrower's successors
and assigns; and (b) inure, together with all rights and remedies of the City hereunder, to the
benefit of the City, its directors, officers, employees, and agents, any successors to the City's
interest in the Property, any other person who acquires any portion of the Property at a
foreclosure sale or otherwise through the exercise of the City's rights and remedies under the
Loan Documents, any successors to any such person, and all directors, officers, employees, and
agents of all of the aforementioned parties. Without limiting the generality of clause (b) of the
immediately preceding sentence, the City may, subject to, and in accordance with, the provisions
of the Loan Documents, assign or otherwise transfer all or any portion of its rights and
obligations under any Loan Document, to any other person, and such other person shall
thereupon become vested with all of the rights and obligations in respect thereof that were
granted to the City herein or otherwise. None of the rights or obligations of Borrower hereunder
may be assigned or otherwise transferred without the prior written consent of the City.
6.6 Borrower hereby (a) irrevocably submits to the jurisdiction of any California or
federal court sitting, in each instance, in Orange County in any action or proceeding arising out
of or relating to this Indemnity, (b) waives any defense based on doctrines of venue or forum non
conveniens or similar rules or doctrines, and (c) irrevocably agrees that all claims in respect of
any such action or proceeding may be heard and determined in such California or federal court.
Borrower irrevocably consents to the service of any and all process which may be required or
permitted in any such action or proceeding to the address specified in the first paragraph of this
Indemnity or in any other manner provided by law. Borrower agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by
suit on the judgment or in any other manner provided by law.
ENVIRONMENTAL INDEMNITY
PAGE 7
Environmental Indemnity[04.01.101. doe
6.7 The title of this document and the captions used herein are inserted only as a
matter of convenience and for reference and shall in no way define, limit, or describe the scope
or the intent of this Indemnity or any of the provisions hereof.
6.8 This Indemnity shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of California applicable to contracts made and to be
performed therein, except to the extent that the laws of the United States preempt the laws of the
State of California.
6.9 This Indemnity may be executed in any number of counterparts, each of which
shall constitute an original and all of which together shall constitute one agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
ENVIRONMENTAL INDEMNITY
PAGE 8
Environmental Indemnity [04.01.10]. doc
IN WITNESS WHEREOF, Borrower has duly executed this Indemnity as of the date set
forth below.
COLETTE'S CHILDREN HOME, INC.,
a California nonprofit public benefit corporation
Date:/�/ , 2010 By
Pamela Hope;r"nt
ENVIRONMENTAL INDEMNITY
PAGE 9
Environmental lndemn ity[04.01.101. doe
EXHIBIT A
LEGAL DESCRIPTION
The land referred to herein is situated in the State of California, County of Orange, and described
as follows:
PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143,
PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF
ORANGE COUNTY, CALIFORNIA.
APN: 165-234-17
ENVIRONMENTAL INDEMNITY
EXHIBIT A - LEGAL DESCRIPTION
Environmental lndemnity[04.01.10].doc
EXHIBIT L
ASSIGNMENT OF AGREEMENTS
[Behind This Page]
Assignment of Agreements
ASSIGNMENT OF AGREEMENTS FROM COLETTE'S CHILDREN HOME TO
THE CITE' OF HUNTINGTON BEACH
1. FOR VALUE RECEIVED, the undersigned, COLETTE'S CHILDREN HOME,
INC., a California non-profit public benefit corporation ("Developer"), assigns to THE
CITY OF HUNTINGTON BEACH, a municipal corporation of the state of California
("Assignee"), all of its right, title and interest in and to:
a. All architectural, design, engineering and development agreements, and
any and all amendments, modifications, supplements, addenda and general
conditions thereto (collectively, "Architectural Agreements"); and
b. All plans and specifications, shop drawings, working drawings,
amendments, modifications, changes, supplements, general conditions and
addenda thereto (collectively "Plans and Specifications")
heretofore or hereafter entered into or prepared by any architect, engineer or other person
or entity (collectively "Architect"), for or on behalf of Developer in connection with the
development of the Improvements on the Property described in Exhibit A attached. This
assignment is subject to the prior rights, if any, of a lender approved by Assignee whose
lien is senior to the Deed of Trust held by Assignee. The Plans and Specifications, as of
the date hereof, are those which Developer has heretofore, or will hereafter deliver to
Assignee. The Architectural Agreements include, but are not limited to, the architectural
contracts for this project between Developer and The Barratt Group.
2. This ASSIGNMENT OF AGREEMENTS ("Assignment") constitutes a present
and absolute assignment to Assignee as of the Effective Date, subordinate to a lender
approved by Assignee whose lien is senior to the Deed of Trust held by Assignee
("Senior Lender"); provided, however, Assignee confers upon Developer the right to
enforce the terms of the Architectural Agreements and Developer's rights to the Plans
and Specifications so long as no Default or event which would constitute a Default after
notice or the passage of time, or both, has occurred under the Subrecipient and
Acquisition Loan Agreement dated as of April 5, 2010 between Assignee and Developer
(the "Loan Agreement"). Upon the occurrence of a Default or event which would
constitute a Default after notice or the passage of time, or both, under the Loan
Agreement, Assignee may, in its sole discretion, give notice to Architect of its intent to
enforce the rights of Developer under the Architect Agreements and of its rights to the
Plans and Specifications and may initiate or participate in any legal proceedings
respecting the enforcement of said rights. Developer acknowledges that by accepting this
Assignment, Assignee does not assume any of Developer's obligations under the
Architectural Agreements or with respect to the Plans and Specifications.
3. Developer represents and warrants to Assignee, as of the Effective Date, that: (a)
all Architectural Agreements entered into by Developer are in full force and effect and
ASSIGNMENT OF AGREEMENTS
PAGE 1
Assignment of Agreements [04.01.10].doe
are enforceable in accordance with their terms and no default, or event which would
constitute a default after notice or the passage of time, or both, exists with respect to said
Architectural Agreements; (b) all copies of the Architectural Agreements and Plans and
Specifications delivered to Assignee are complete and correct; and (c) Developer has not
assigned any of its rights under the Architectural Agreements or with respect to the Plans
and Specifications except as expressly permitted by the Loan Agreement. .
4. Developer agrees: (a) to pay and perform all obligations of Developer under the
Architectural Agreements; (b) to enforce the payment and performance of all obligations
of any other person or entity under the Architectural Agreements; (c) not to modify the
existing Architectural Agreements nor to enter into any future Architectural Agreements
without Assignee's prior written approval except as otherwise expressly permitted in the
Loan Agreement; and (d) not to further assign (other than assignment in connection with
a loan which is senior in priority to Assignee's assignment), for security or any other
purposes, its rights under the Architectural Agreements or with respect to the Plans and
Specifications without Assignee's prior written consent.
5. This Assignment secures performance by Developer of all obligations of
Developer under the Loan Agreement. This Assignment is supplemented by the
provisions of the Loan Agreement and said provisions are incorporated herein by
reference.
6. The term "Loan Agreement" as used herein shall mean the Subrecipient and
Acquisition Loan Agreement dated as April 5, 2010 between Developer and Assignee, as
well as any future amendments and implementation agreements between Developer and
Assignee which refer to this Assignment. Capitalized terms not otherwise defined herein
shall have the meaning set forth in the Loan Agreement.
7. This Assignment shall be governed by the internal laws of the State of California,
except to the extent that Federal laws preempt the laws of the State of California, and
Developer consents to the jurisdiction of any Federal or State Court within the State of
California having proper venue for the filing and maintenance of any action arising
hereunder. If Assignee should bring any action to enforce its rights hereunder at law or at
equity, Developer shall reimburse Assignee for all reasonable attorneys' fees and costs
expended in connection therewith.
8. This Assignment shall be binding upon and inure to the benefit of the heirs, legal
representatives, assigns, and successors -in -interest of Developer and Assignee; provided,
however, this shall not be construed and is not intended to waive any restrictions on
assignment, sale, transfer, mortgage, pledge, hypothecation or encumbrance by
Developer contained in the Loan Agreement.
9. The attached Architect's/Engineer's Consent, Schedule 1 and Exhibit A are
incorporated by reference.
ASSIGNMENT OF AGREEMENTS
PAGE 2
Assignment of Agreements [04.01.10].doc
10. The Effective Date of this Assignment shall be the date it is executed by
Developer.
IN WITNESS WHEREOF, the undersigned has executed this Assignment as of the date
set forth below.
COLETTE'S CHILDREN HOME, INC.,
a California nonprofit public benefit corporation
Date: �� , 2010 By
Pamela Ho , President
ASSIGNMENT OF AGREEMENTS
PAGE 3
Assignment of Agreements [04.01.10].doc
ARCHITECT'S CONSENT
The undersigned architect ("Architect") hereby consents to the foregoing Assignment to
which this Architect's Consent ("Consent") is part, and acknowledges that there presently
exists no unpaid claims due to the Architect except as set forth on Schedule 1 attached
hereto, arising out of the preparation and delivery of the Plans and Specifications to
Developer and/or the performance of the Architect's obligations under the Architectural
Agreements.
Architect agrees that if, at any time, Assignee, pursuant to its rights under the Loan
Agreement or the loan documents, elects to undertake or cause the completion of the
rehabilitation of the Improvements on any portion of the Property, in accordance with the
Plans and Specifications, and gives Architect written notice of such election; THEN, so
long as Architect has received, receives or continues to receive the compensation called
for under the Architectural Agreements, Assignee may, at its option, use and rely on the
Plans and Specifications for the purposes for which they were prepared, and Architect
will continue to perform its obligations under the Architectural Agreements for the
benefit and account of Assignee in the same manner as if performed for the benefit or
account of Developer in the absence of the Assignment.
Architect further agrees that, in the event of a breach by Developer of the Architectural
Agreements, or any agreement entered into with Architect in connection with the Plans
and Specifications, so long as Developer's interest in the Agreements and Plans and
Specifications is assigned to Assignee, Architect will give written notice to Assignee of
such breach at the address shown below. Assignee shall have thirty (30) days from the
receipt of such written notice of default to remedy or cure said default. Nothing herein
shall require Assignee to cure said default or to undertake completion of the rehabilitation
of the Improvements.
Architect warrants and represents that it/he/she has no knowledge of any prior
assignment(s) of any interest in the Plans and Specifications and/or the Architectural
Agreements. Except as otherwise defined herein, the terms used herein shall have the
meanings given them in the Assignment.
Dated as of the date set forth below.
THE BARRATT GROUP
Date: , 2010 By:
Joe Barbano
Its:
ASSIGNMENT OF AGREEMENTS
ARCHITECT'S CONSENT
Assignment of Agreements [04.01.10].doc
Assignee's Address:
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Attn: City Administrator
With a copy to: City Attorney's Office
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Architect's Address:
The Barratt Group
2055 Corte Del Nogal
Carlsbad, CA 92011
Attn: Joe Barbano
ASSIGNMENT OF AGREEMENTS
ARCHITECT'S CONSENT
Assignment of Agreements [04.01.10].doc
SCHEDULE OF UNPAID CLAIMS
Schedule 1 to Assignment of Agreements dated as of April 5, 2010 between COLETTE'S
CHILDREN HOME as Developer and THE CITY OF HUNTINGTON BEACH as
Assignee.
ASSIGNMENT OF AGREEMENTS
ARCHITECT'S CONSENT
Assignment of Agreements [04.0 1. 1 0].doc
PROPERTY DESCRIPTION
Exhibit A to Assignment of Agreements dated as of April 5, 2010, between COLETTE'S
CHILDREN HOME as Developer and THE CITY OF HUNTINGTON BEACH as
Assignee.
The land referred to herein is situated in the State of California, County of Orange, and
described as follows:
PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK
143, PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER
OF ORANGE COUNTY, CALIFORNIA.
APN: 165-234-17
ASSIGNMENT OF AGREEMENTS
Assignment of Agreements [04.01.10I.doc
17301 Beach Boulevard, Suite 2A, Huntington Beach, CA 92647-7427
Phone: (714) 842-4594 Ext. 1#; Fax (714) 842-9934; e-mail - pj@escrow.net
Date: May 19, 2010
Attn: Sidney Stone
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92647
Re: Escrow No: 7681
Borrower: COLETTE'S CHILDREN HOME
Loan No: unknown
Dear Sir/Madame:
0,T°-sr,
f
MAY n
I0
:!s UIENT
In connection with the above referenced transaction that this office has closed as of this date, we
enclose the following per your request:
® Certified copy of escrow closing statement
❑ Certified copy of HUD/RESPA
® Original Policy of Title Insurance will follow from Lawyers Title Company
® Check in the amount of $12,817.40
® Copies of Recorded Deed; Regulatory Agreement; Home TD; NSP
® Original executed documents for your loans, including Notes
❑ Other:
Please forward to the new buyer, payment coupons, indicating amount, due date and address for
remittance of first payment.
Please do not hesitate to contact the undersigned if you have any questions regarding this matter.
Sincerely,
PP 5i�
Escrow Officer
7681 IetCloseLender. doc
Escrow # 7681.ESC
Settlement Date: 5/17/10
Property Address:
7911 Slater Avenue
Huntington Beach, CA 92647
Colette's Children Home, Inc.
17301 Beach Boulevard #23
Huntington Beach, CA 92647
Pir
Consideration or sale price
$650,000.00
Deposits
$5,000.00
Deposit 1 by Colette's Children Home, Inc.
Funds Held
New Loans
$390,568.00
First Trust Deed - NSP LOAN
Second Trust Deed - HOME LOAN
$284,432.00 .
Existing Loans
Adjustments
$12,817.40
Unfunded loan reserve
Other Disbursements
$60.00
Notary fees to P. Garcia
Prior Release of funds to seller per instruction
Weed Abatement to D. Tran
Refund of Good Faith Deposit to buyer
$5,000.00
Mailing Costs paid to Susan W. Case, Inc.
$500.00
lAppraisal fee to Nagasaki & Associates
$1,000.00
Environmental fees to The Planning Center
$2,800.00
Reimburse Buyer for City Permit Fees
$3,630.00
Fencing repair/installation to Starlight Contrction
$950.00
NHD report fee to Disclosure Source
Prorations
$1,032.10
County Taxes
$4,222.24 every 6 months.
From 05/17/10to 07/01/10
Commisions
Paid To Keller Williams Realty
Paid To First Olympic Realty, Inc.
Termite Work
Insurance
Home Protection Plan
HOA
Land Lease
:Payoffs
First Existing Loan to Residential Cn
Principal Balance
Interest
Interest on $336,912.31 at 3.25%.
From 04/01/10 to 05/19/10
Late charges
Reconve ancefee
Escrow Shortage
New Loan Charges
Title Charges
Title Premium - Owners Policy to Lawyers Title
Title Premium - ALTA Loan Policy
$884.00
Sub -Escrow fee to Lawyers Title Company
$37.50
Documentary Transfer Tax
Recording Deed
$9.00
Buyers Copy Page 1 Escrow # 7681.ESC
Escrow # 7681.ESC
Settlement Date: 5/17/10
Property Address:
7911 Slater Avenue
Huntington Beach, CA 92647
Colette's Children Home, Inc.
17301 Beach Boulevard #23
Huntington Beach, CA 92647
...
...:...... : :.........
Cha es :::
Cree€it .... :
Escrow Charges
$1,280.00
Escrow fee to Beach Pacific Escrow
Balance Due To You
Balance Due From You
Totals
$680,000.00
$680,000.00
Buyers Copy Page 2 Escrow # 7681.ESC
R1=CORDIN9 REQUESTED BY
��;tri�rµ 7 �';,;''• r
RECORDING REQUESTED BY
WHEN RECORDED MAIL DOCUMENT AND,
TAX STATEMENTS TO:
Colette's Children Home, Inc.
17301 Beach Boulevard, Suite 23
Hurjngton Beach, CA 926 7
i 3G,'lr)l� --S-
Recorded In Official Records, Orange County
Tom Daly, Clerk -Recorder
p IIIpIIIIIIIIVilllllllllll�ll19111111pllllllllllllllllll 9.00
2010000231148 01:05pm 05/17/10
65 404 G02 2 04
357.50 357.50 0.00 0.00 3.00 0.00 0.00 0.00
SPACE ABOVE THIS LINE FOR RECORDER'S USE
The undersigned grentor(s) declare(s): Documentary transfer taxis $715.00
®computed on the consideration or value of property conveyed, or
❑computed on full valueless value of liens and encumbrances remaining at time of sale.
[]Unincorporated area: ®City of Huntington Beach, and;
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, KIET TRUONG, a married man as his
sole and separate property, hereby GRANT(S) to COLETTE'S CHILDREN HOME, INC., a California Public Benefit
Corporation,
the real property in the City of Huntington Beach, County of Orange, State of California, described as:
Parcel 1 of Parcel Map No. 79-577, as shown on a map filed in Book 143, Page 43 of Parcel Maps in the office of the
County Recorder of Orange County, California.
AKA: 7911 Slater Avenue, Huntington Beach, CA 92647
Dated: January 27, 2010 C�V_ s
Kiet Truong
STATE OF
COUNTY OF
On A P N - 1-7 •2 e5 before me, 1l S V, j7 A Notary Public, personally appeared
Kiet Truong who proved to me on the basis of satisfactory evidence to be the person(v�whose name(*) is/am subscribed
to the within Instrument and acknowledged to me that he/shaitkey executed the same in his/herAheir authorized capacity(ies), and that
by his/haOtheir signature(* on the instrument the person(s), or the entity upon behalf of which the person($} acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal) R. S, GARDA
COMM. #1777301
W ' � ` NOTAP,Y PUBLIC -CALIF 1 n
N ` r Los Angeles Cnafy
Comm. Expires Nor 20, 2011
7681 Dced Grant.doc
KANE, BALLMER & BERKMAN
A LAW CORPORATION
515 SOUTH FIGUEROA STREET,
SUITE 1850
LOS ANGELES, CALIFORNIA 90071
TELEPHONE (213) 617-0480
FAX (213) 625-0931
www.kbblaw.com
May 12, 2010
Via Overnite Express
PJ Garcia, Escrow Officer
Beach Pacific Escrow
17301 Beach Boulevard, Suite 2A
Huntington Beach, CA 92647
Liz Ochoa, Title Officer
Lawyers Title Insurance Corporation
1920 Main St., Suite 500
Irvine, CA 92614
Re: Escrow No. 768 LESC
Title Order No. 05387013-25
Dear Ms. Garcia and Ms. Ochoa,
Bruce D. Ballmer
(Retired)
Robert P. Berkman
(1919 -2 00 1)
Writer.
Deborah L. Rhoads
File No. 150-32
We are special counsel to the City of Huntington Beach in connection with the above -referenced
transaction. These instructions are hereby submitted in connection therewith:
I. PARTIES
THE CITY OF HUNTINGTON BEACH, CALIFORNIA, A MUNICIPAL
CORPORATION ("City")
2000 Main Street
Huntington Beach, CA 92648
Attn: Mr. Sidney Stone
COLETTE' S CHILDREN HOME, INC.,
BENEFIT CORPORATION ("Borrower")
17301 Beach Blvd., #23
Huntington Beach, CA 92647
Attn: Mr. William O'Connell
A CALIFORNIA NONPROFIT PUBLIC
May 12, 2010 Escrow No. 768LESC
Page 2 Title Order No. 05387013-25
II. TRANSACTION SUMMARY
The City and Borrower have entered into a Subrecipient and Acquisition Loan Agreement dated
as of April 5, 2010 (the "Loan Agreement") with respect to that certain property located at 7911
Slater Avenue in the City of Huntington Beach and described in Exhibit A attached hereto (the
"Property"). Pursuant to the Loan Agreement, the City will make a loan of Neighborhood
Stabilization Program funds in the original principal amount of $390,568.00 (the "NSP Loan")
and a loan of HOME Program funds in the amount of $284,432.00 (the "HOME Loan") to assist
in paying the costs of acquiring the Property for the development of affordable rental housing.
The NSP Loan and the HOME Loan are both secured by Deeds of Trust With Assignment of
Rents (the "NSP Deed of Trust" and the "HOME Deed of Trust", respectively).
Pursuant to the Loan Agreement, the NSP Loan and the HOME Loan will fund the Borrower's
cost of purchasing the Property from Kiet Truong (the "Seller") for a purchase price of
$650,000.00 (the "Purchase Price"). The NSP Loan and the HOME Loan will be deposited into
Escrow to be applied toward payment of (i) that portion of the Sale Price remaining after
crediting Borrower for the deposit previously paid to Seller, (ii) closing and title costs, (iii)
Borrower's pro -rated taxes and assessments on the Property, and (iv) reimbursement to Borrower
of the deposit previously paid to Seller and (v) reimbursement to Borrower of the cost of
obtaining an updated appraisal for the Property. Such payments shall be in amounts set forth in
an estimated settlement statement prepared by the Escrow Agent and approved by the City and
any remaining funds shall be returned to the City.
In connection with the NSP Loan and the HOME Loan, the City and Borrower will execute and
record against the Property a Regulatory Agreement and Declaration of Covenants and
Restrictions restricting the use of the Property as affordable rental housing (the "Affordability
Restrictions").
Title to the Property is to be delivered to Borrower free and clear of all monetary liens, so that
the liens of the HOME Deed of Trust and the NSP Deed of Trust will be senior to all other
monetary liens that may be recorded against the Property.
The City and Borrower now wish to effectuate the Loan Agreement, by providing for the
disbursement of the NSP Loan and the HOME Loan and the recordation of certain instruments
described below. These escrow instructions are intended to supplement the Vacant Land
Purchase Agreement and Joint Escrow Instructions dated January 5, 2010 and all addendums and
counteroffers and acceptances thereto (the "Purchase Agreement") and the Supplemental
Escrow Instructions dated January 27, 2010 between Borrower and Seller.
II. DELIVERIES
Previously delivered to you, or to be delivered to you, are the following documents,
executed in connection with the above -described transaction:
May 12, 2010
Page 3.
Escrow No. 768 LESC
Title Order No. 05387013-25
A. The Grant Deed conveying the Property to Borrower, executed in Recordable
form by the Seller (the "Deed")
B. The Affordability Restrictions, executed in recordable form by the City and
Borrower;
C. The NSP Deed of Trust, executed in recordable form by Borrower; and
D. The HOME Deed of Trust, executed in recordable form by Borrower.
III. CLOSING PROCEDURES
You are instructed to close this transaction when and only when the following occur:
A. Grant Deed. The Grant Deed conveying the Properly to Borrower, executed in
recordable form by the Seller (the "Grant Deed") has been deposited into
Escrow.
B. Title Policies. Lawyers Title Insurance Corporation shall be prepared to issue the
following title insurance policies:
To Borrower, an owner's policy of title insurance ("Borrower's owner's
policy"). The liability amount and endorsements shall be as requested by
Borrower and approved by City.
To the City, a 2006 ALTA Extended Coverage Loan Policy of Title Insurance,
with liability in the amount of $675,000.00 (the "City's lender policy") (it being
understood that all assessments, taxes and "supplemental taxes" shall be paid
current), with the following endorsements: CLTA 100 (comprehensive), showing
Borrower as the fee title owner of the Property and insuring:
May 12, 2010 Escrow No. 768LESC
Page 4 Title Order No. 05387013-25
(i) the first priority of the HOME Deed of Trust, subject to the
Affordability Restrictions; and
(ii) the second priority of the NSP Deed of Trust, subordinate only to the
Affordability Restrictions and the HOME Deed of Trust.
C. Payment of Recording Costs. You will be in receipt of sufficient funds to record
the Recording Documents (described below), or have made arrangements with
Borrower satisfactory to you to provide for payment of same.
D. City Authorization. You will have received final and unconditional written or
telephonic authorization to record from the undersigned or Sidney Stone, on
behalf of the City.
E. Title Company Satisfaction. The title company will be satisfied that the foregoing
conditions precedent to the recording have been met.
V. WHEN YOU ARE PREPARED TO RECORD THE DOCUMENTS
A. From the NSP Loan and the HOME Loan, disburse $650,000 to the Seller less
the amount of $5,000.00 previously paid by the Borrower to the Seller pursuant
to the Purchase Agreement, and charge the City for the Purchase Price.
B. Disburse the amount of $5,000.00 to the Borrower as reimbursement for the
deposit paid to Seller and referenced in the Paragraph A above.
C. Disburse the amount of $1,000.00 to the Borrower as reimbursement of
Borrower's cost of obtaining an appraisal of the Property.
D. Charge the City for any fees, charges and costs payable by it pursuant to these
Instructions, up to $ 668,183.80. Before such payments are made, the Escrow
Agent shall notify the City of the fees, charges and costs necessary to close the
escrow. The premiums for the Borrower's Owner's Policy and the City's
Lender's Policy plus any other charges you incur associated with these
instructions are to be paid from the funds deposited by the City into Escrow. The
City will wire funds in the amount of $675,000 into Escrow, although Escrow is
only authorized to charge the City for any fees, charges and costs payable by it
pursuant to these Instructions, up to $ 668,183.80. All unused portions of funds
deposited into Escrow by the Citp shall be promptly returned to the City.
E. Record, in the following order, the following documents (the "Recording
Documents"):
1. Grant Deed;
2. Affordability Restrictions;
3. HOME Deed of Trust; and
May 12, 2010
Page 5
4. NSP Deed of Trust.
Escrow No. 768 LESC
Title Order No. 05387013-25
F. Promptly after recordation, please deliver to the City and Borrower conformed
copies of the Recording Documents described above, showing the title company's
certification that the same have been recorded and setting forth the date of
recording and instrument number and a copy of these instructions signed by you
in the space provided below to indicate your acceptance. Deliver the original
executed counterpart of the Recorded Documents to the City.
G. As soon as reasonably possible, but not later than two weeks after the date of
recording, one original and one copy of the City's lender's policy shall be
delivered to the City.
H. We anticipate being in a position to authorize recording on or before May 15,
2010. If for any reason, this escrow cannot close on that date or such later date as
you may be advised by Sidney Stone of the City or the undersigned, you are to
return all documents to the undersigned. Please notify us upon your receipt and
review of the Recording Documents and these escrow instructions.
I. Any documents signed by the City are entitled to free recording pursuant to
Government Code §27383. Except as otherwise expressly provided, neither the
City nor this firm shall incur any expense in connection with the fulfillment of
these escrow instructions and all costs incurred by you with respect to this escrow
shall be the sole obligation of the Borrower.
If any of the instructions in this letter cannot be followed for any reason, or if you have any
questions, please call Sidney Stone at 714-536-5901 or the undersigned at 213-617-0480. Please
acknowledge your receipt and acceptance of these instructions by signing a copy of this letter
and returning it to the undersigned. In any event, your recordation of any of the Recording
Documents shall be deemed to be your acceptance of these instructions. In addition, you are
hereby instructed to advise the undersigned by telephone or e-mail of your recordation of all or
any of the Recording Documents.
These instructions may be amended in writing, or telephonically, by the undersigned or Sidney
Stone of the City.
Very truly yours,
KANE, BALLMER & BERKMAN
Special Counsel for the City of Huntington Beach
By: /e �crwt
\ „ eborah L. Rhoads
May 12, 2010
Page 6
ACCEPTED BY BEACH PACIFIC ESCROW, INC.
Digitally signed by PJ Garaa
PJ Garcia '.`I-T ..... t
mail=p�pescrow,net, c=us
Date 2010 OS 170925'54-07'00'
Name: PJ Garcia
Title: Escrow Officer
Escrow No. 768 LESC
Title Order No. 05387013-25
ACCEPTED BY LAWYERS TITLE INSURANCE CORPORATION
By:
Name: Liz Ochoa
Title: Title Officer
May 12, 2010 Escrow No. 768 LESC
Exhibit A — Legal Description Title Order No. 05387013-25
EXHIBIT A
Description of Property
Legal Description of Property Commonly Known As
7911 Slater Avenue
Huntington Beach, California
All that certain real property situated in the County of Orange, State of California, described as
follows:
PARCEL 1 OF PARCEL MAP NO. 79-577, AS SHOWN ON A MAP FILED IN BOOK 143,
PAGE 43 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF
ORANGE COUNTY, CALIFORNIA.
APN: 165-234-17
escrow instructions (execution).doc