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HomeMy WebLinkAboutINSTITUTIONAL PROPERTY INVESTORS INC- IPI - c/to Five Points zoa vaa6t 7,o 6—I1—EW.� 1 . F`` 7 ` n INSTITUTIONAL PROPERTY INVESTORS IPI 2 S. Alto Mira • S. Laguna Beach.CA 92677-3302 • 714/499-1404 Fax 714/419-4711(l March 11, 1992 Mr. Ray Silver Deputy City Manager City of Huntington Beach 2000 ,Main Street , Huntington Beach, California 92648 RE : Modification of request for deferment of`f1es for Five Points Senior villas Dear Ray: . 1 have talked with Staff, Council members and Department Heads over the last six months concerning the City of Huntington Beach fees, which are assessed to senior citizens . The. problems Five Points has had regarding the excess fees for seniors has been well documented. As you know the fees currently being requested are $250, 000 more than Staff indicated' in June 1991, I had no knowledge of these additional fees at the time the , Affordable Housing Agreement was signed. This letter is intended to address the inequity of your current policy towards user fees for seniors and to request that Five Points be granted a deferral of the Traffic Impact fee, the Library fee and the Park and Rec fee until a decision is reached by the Affordable Housing Task force- - The usage fees and assessments specifically listed below are significantly in error for obvious reasons. 1 . Traffic Impact Fee: It is the responsibility of the traffic engineer to assess this fee based upon traffic impact'. However, rather than conduct any study, the fee is based upon unit count. Thus, if this were a family project with two people per apartments, each having a car, a 166 unit project with 332 cars is charged the same impact fee as Five Points, which is restricted to only 65 'cars for all residents. obviously, the family complex will have five times the impact of a senior project, and therefore the fees assessed Five Points are obviously excessive. , 2. Sewer Fee: The above example is repeated in the sewer fee, even though this is aifee collected by the county. The per unit fee at Five ,Points is $2, 350 because , Huntington Beach does not designate senior housing as commercial.; The sewer fee is the same as 'a million dollar home with five bedrooms . This fee is currently repres'cntc 20%,-Of ,the per unit land cost _ • 1 • „F. ) 5- / . , , , ..,,, „. 1 , . _ , . , ,, . , .,. . , ., , , ,•.. . , . . „ , , , , f' r . • iurnur Dona;Qry A60U1SiT1QNS:?.DEVELOPMENTM AND-:MANAGEMENT , . . ;: _ - rod Nd6V zo ,6-r i-so .! 4 ,4 IpI St g' 3 . The Park and Recreation Fee: This fee is another example of an inconsistency inherent in user fees and assessments, since each unit is assessed without any relation to expected usage. I am appealing to your common sense and guidance. My goal is to build a quality project for seniors at affordable rents. As a direct result of the City' s current policy, the Affordable e Housing Agreement provides only enough funds to pay for the City fees . If your goal is to help this project and seniors citizens of Huntington Beach then you will direct Staff to postpone collection of these excessive fees until the conclusion of the task force recommendation. Very truly yours, David Michelson (E ) y-aq 01s REQUEb i' FOR CITY COUNCIL ACTION Date March 2, 1992 Submitted to: APPROVED BY CITY COU Honorable Mayor and City Council Members 3-- 14 - 92 Submitted by: Michael T. Uberuaga, City Administrator " Prepared by: Michael Adams , Director of Community Developm CITY Ct& Subject: FIVE POINTS VILLA SENIOR CITIZEN PROJECT REQUEST FOR WAIVER AND DEFERMENT OF DEVELOPMENT FEES Consistent with Council Policy? NI Yes [ ] New Policy or Exception l Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments: .3 /G 1/LutieSoL � adii to STATEMENT OF ISSUE: Q .,,,,.Li G, /79I Institutional Property Investors (IPI) Inc. , developer of a 164 unit senior citizen apartment project located at Main and Florida Streets, which the City/Redevelopment Agency is participating via a Loan and Grant agreement, have requested a waiver of a portion ($167, 868 . 00) of Park and Recreation Fees and a deferment of remaining ($29 ,428 . 00) portion together with $34 , 540 . 00 Traffic Impact Fee and $4 , 324 . 20 of Library Fees until completion of projects construction. These fees are required to be paid at time of construction permit issuance. RECOMMENDATION: Deny developer ' s request for waiver of Park and Recreation Fees, Traffic Impact Fees and balance of Library Fees and direct staff to withhold issuance of construction permits until fees have been satisfied. ANALYSIS: On November 18, 1991, City Council/Redevelopment Agency approved a Loan Agreement between the Redevelopment Agency and Five Points Senior Villas (IPI Inc. ) designed to assist in the development of a 164 unit senior citizen rental project . Agency Loan and Grant amounts of $250 , 000 and $500 , 000 respectively derived from the City' s affordable housing funds (20% set-a-side) , coupled with City sponsored Multi-family Housing Revenue Bonds assured affordable rents for the longest possible term (30 years) and provided an additional 16 units over and above that which was originally contemplated (32 units) for a total of 48 units . These 48 units of affordable housing consists of 32 units available to very-low income households (those earning 50% or less of the counties median income) while 16 units will be available to low and moderate income households (those earning not more than 120% of median income) . As referenced in IPI ' s General Partners, David Michelson' s letter, to Ray Silver dated February 19, 1992, the proposed project has experienced unexpected cost overruns producing an internal cash flow problem resulting in necessitating a deferment of Park and Recreation, Traffic Impact and Library Fees until such time as grant monies are received from the City. Section 203 of the executed affordable housing agreement states that "upon each of the first through fifth anniversaries of the issuance of .a certificate of occupancy for the developer improvements, and provided the developer is not in default of agreement, the Agency shall grant to the developer the sum of One-hundred Thousand Dollars ($100, 000) for a total of Five-hundred Thousand Dollars ($500, 000) . " These grant monies were to be in consideration for the developers agreement to provide housing to very-low, lower and low-moderate income households at affordable rents . Mr. Michelson has indicated that even though he had originally intended to pay all fees and assessments at time of permit issuance, as conditioned within the Loan Agreement, the above mentioned unexpected expenditures surfaced and will, if allowed to defer fees until payment of grant monies, be able to still provide affordable housing as conditioned within the Loan Agreement. Total Park and Recreation fees due amount to $197,296 . 00 of which $167, 868 . 00 was pledged by the projects previous developer in the form of a Surety Bond which remains questionable if collectable and therefor needs to be an obligation of current developer (IPI Inc. ) . Mr Michelson' s letter of February 19, 1992 requests a waiver of this previous bonded obligation. Staff is not in support of fee waiver nor feels that such a waiver can be justified based on project cost pro-forma, reviewed and analyzed by Agency' s economic consultants (Keyser-Marston) (See Attachment No. 3) who had provided an allowance of $749, 000 towards fees and permits. Current projected permit fees total approximately $450, 000 of which $193, 928 have been paid, well within that allowance (see Attachment No. 4) . Additional permit fees being requested to be deferred are: Traffic Impact Fee of $34, 540 and balance of Library Fee of $4,324 .20 . RCA - 5 Points -2- (2418d) • The present development site was previously approved as a 148 unit senior citizen complex which through a series of financial and physical misfortune (fire damage) became a non-project. The present developer (IPI) after negotiating with both previous developers, lender and the Resolution Trust Corporation (RTC) obtained control of the site and on May 7, 1991 obtained Planning Commission' s approval for the present 164 unit complex. As a matter of policy the previous developer of the 148 complex was able to post a Surety Bond in the amount of $167, 868 guaranteeing payment of Park and Recreation Fees . This bond remains active having premium current until September 1992 . Current developer. (IPI) has alleged that reliance on an outstanding fee letter prepared by the Department of Community Development dated June 17, 1991, (see Attachment No. 5) was the basis used in determining project development cost. It is staff ' s position that letter of June 17, 1991 was not intended to address development fees collected by other City departments but to address development fees associated with the sixteen (16) additional units in IPI ' s proposal and also not intended to address outstanding fees obligated under the 148 unit complex (see Attachment No. 6 & 7) . FUNDING SOURCE: None required based on staff recommendation, funds previously provided for in Loan Agreement. ALTERNATIVE ACTION: 1. Deny the request for waiver of fees and approve the deferment of $197,296 . 00 Park and Recreation Fees, $34,540 . 00 Traffic Impact Fees and $4,324 .20 Library Fees until such time as project is eligible to receive previously approved grant monies which will then be used to satisfy subject fees . Conditioned upon the following: a. The City Attorney be requested to prepare necessary documents providing for deferral of fees and; b. Developer shall post a Surety Bond acceptable to both City Attorney and City Treasurer in an amount guaranteeing payment of subject fees . 2. If City Council/Redevelopment Agency wishes to consider additional financial assistance, instruct the Agency Executive Director to re-open negotiations to amend existing Loan Agreement and agendize the necessary public hearing. ATTACHMENTS: 1. Loan Agreement 2. IPI letter at February 19, 1992 3 . Keysar-Marston Analysis, June 10, 1991 4 . Project Fees and Assessments 5 . Community Development Fee Letter - June 17, 1991 6 . Community Development Letter - December 19, 1991 7. Community Development Letter - January 13, 1992 MA:CPS: jr RCA - 5 Points -3- (2418d) KeyserMarstonAssociatesInc. Richard L.Botti 500 South Grand Avenue,Suite 1480 Calvin E.Hollis,II Los Angeles,California 90071 Kathleen H.Head 213/622-8095 Fax 213/622-5204 SAN DIEGO 619/942-0380 Heinz A.Schilling �� SAN FRANCISCO 415/398-3050 �� Timothy C.Kelly �,� A.Jerry Keyser MEMORANDUM ��► ,1p� Kate Earle Funk .,\ Robert J.Wetmore \`' .� � et\'C Michael Conlon Denise E.Conley ��PS ��`'O c, TO: Mr. Charles P. Spencer, ,Gs3N Director of Housing and Redevelopment City of Huntington Beach FROM: KEYSER MARSTON ASSOCIATES, INC. SUBJECT: Five Points Senior Citizen Apartment Project DATE: June 10, 1991 On June 7 , 1991 Keyser Marston Associates, Inc. (KMA) received a revised pro forma from Institutional Property Investors, Inc. re- lated to the proposed Five Points Senior Citizen Apartment Project. As you know, KMA had a number of questions related to the pro forma previously submitted, which were clarified in this revised pro forma. I have enclosed a copy of the KMA pro forma, which has been revised accordingly. The key findings of this analysis can be sum- marized as follows: 1. Table 1 summarizes the costs that will be incurred by the developer during the construction and lease-up period. KMA estimates these costs at $10 . 94 million. The developer did not submit a revised cost pro forma in the June 7 , 1991 cor- respondence. We have, therefore, assumed that the previously submitted estimate of $10, 587 , 894 remains valid. Based on this assumption, the KMA and developer estimates are essen- tially equivalent, with the KMA estimate being approximately $352 , 000 higher than the developer estimate. 2 . Table 2 presents a stabilized income analysis, of which the pertinent elements can be summarized as follows: KMA Developer Gross Income $1, 385, 100 $1, 376, 790 Vacancy 69, 300 68, 840 Operating Expenses 404, 900 516, 236 Net. Operating Income $ 910,900 $ 791, 714 Real Estate Predevelopment&Evaluation Services A J • Page The key differential between the KMA and developer pro formas is related to ongoing operating expenses. KMA has estimated these expenses at $4 . 00 per square foot, while the developer estimate equates to $5. 10 per square foot. However, in a let- ter dated May 31, 1991, the developer indicated that Wells Fargo Bank, the construction lender for this project, es- timates that operating expenses will total $451, 000 or $4 . 47 per square foot. This represents a $. 63 per square foot dif- ferential from the expense estimate used in the developer pro forma. 3 . A 10-year cash flow analysis is presented in Table 3 . KMA utilized the debt service, interest earnings, capitalized in- terest and earnout amounts submitted by the developer. However, based on the debt service footnote in the developer's pro forma, which states that the loan is fully amortized over 30 years, it was assumed that the outstanding balance in year 10 would be approximately $8 . 4 million rather than the $9 . 5 million shown in the developer pro forma. 4 . Table 3 also presents the return to the developer and the equity investor assuming the equity investor receives 65% of the project cash flow. As can be seen in Table 3 , the inves- tor return is estimated at 15 . 3% . Using the developer's es- timates, including a sale or refinancing in ten years, the in- vestor return is estimated at 10. 2%. If the Wells Fargo ap- praisal expense estimates are used, the investor return is 13 . 2%. The developer estimate of project return at 7 . 11% rep- resents an average annual return excluding the assumed sale or refinancing of the project. The cost and income assumptions, excluding the operating expense estimates, are roughly equivalent between the KMA and developer pro formas. However, the magnitude of the differential between the operating expense estimates makes a material difference in the analysis of the project's financial feasibility. It is our conclu- sion that using either the KMA estimates or the Wells Fargo es- timates the project is financially feasible. Using the developer's expense estimates, the project return is in all likelihood insuffi- cient to support the full projected cost of the development, in- cluding the estimated $2 .25 million in land acquisition costs. KHH: lp 91286.HTB 14066. 0005 KeyserMarstonAssociateslnc. • TABLE 1 ESTIMATED DEVELOPMENT COSTS FIVE POINTS SENIOR CITIZEN APARTMENT COMPLEX HUNTINGTON BEACH, CALIFORNIA 164 UNITS - 20% SET ASIDE FOR VERY LOW AND LOW INCOME LAND 108,029 SF $20.83 /SF $2,250,000 DIRECT COSTS BUILDING SHELL/GARAGE 101,214 SF $54.00 /SF $5,466,000 ON-SITES/LANDSCAPING 108,029 SF $3.25 /SF 351,000 TOTAL DIRECT COSTS $5,817,000 INDIRECT COSTS ARCHITECTURE & ENGINEERING 4.00% DIRECT COSTS $233,000 PERMITS & FEES ALLOWANCE 749,000 TAXES& INSURANCE 1.00% DIRECT COSTS AND LAND 81,000 LEGAL & CLOSING 1.00% DIRECT COSTS AND LAND 81,000 CAPITALIZED INT/DEBT SVC DURING CONST 723,000 FINANCING FEES 6.50 POINTS 618,000 / MARKETING/LEASING ALLOWANCE 100,000 DEVELOPMENT MANAGEMENT 2.00% DIRECT COSTS 116,000 CONTINGENCY 3.00% DIRECT COSTS 175,000 / TOTAL INDIRECT COSTS $2,876,000 / TOTAL DEVELOPMENT COSTS $10,943,000 OR SAY $10,940,000 SOURCE: KEYSER MARSTON & ASSOCIATES, INC. TABLE: FVEPTS: 5/20/91 ' TABLE 2 ESTIMATED OPERATING INCOME FIVE POINTS SENIOR CITIZEN APARTMENT COMPLEX HUNTINGTON BEACH, CALIFORNIA 164 UNITS - 20% SET ASIDE FOR VERY LOW AND LOW INCOME RENTAL INCOME 1 BEDROOM 1 BATH (VERY LOW) 13 UNITS a $473 / MONTH $73,800 1 BEDROOM 1 BATH DELUXE (VERY LOW) 1 UNITS a $473 / MONTH 5,700 2 BEDROOM 1 BATH (VERY LOW) 1 UNITS a $535 / MONTH 6,400 2 BEDROOM 2 BATH (VERY LOW) 0 UNITS a $535 / MONTH 0 1 BEDROOM 1 BATH (LOW) 14 UNITS a $695 / MONTH 116,800 1 BEDROOM 1 BATH DELUXE (LOW) 2 UNITS a $706 / MONTH 16,900 2 BEDROOM 1 BATH (LOW) 1 UNITS a $779 / MONTH 9,300 2 BEDROOM 2 BATH (LOW) 1 UNITS a $779 / MONTH 9,300 1 BEDROOM 1 BATH (MARKET). 102 UNITS a $695 / MONTH 850,700 1 BEDROOM 1 BATH DELUXE (MARKET) 14 UNITS a $775 / MONTH 130,200 2 BEDROOM 1 BATH (MARKET) 9 UNITS a $850 / MONTH 91,800 2 BEDROOM 2 BATH (MARKET) 6 UNITS a $895 / MONTH 64,400 LAUNDRY INCOME 164 UNITS a $5 / MONTH 9,800 GROSS INCOME $1,385,100 (LESS) VACANCY AND BAD DEBT 5.00% GROSS INCOME 69,300 GROSS EFFECTIVE INCOME $1,315,800 EXPENSES 101,214 SF a $4.00 /SF 404,900 NET INCOME BEFORE DEBT SERVICE $910,900 OR SAY $911,000 SOURCE: KEYSER MARSTON & ASSOCIATES, INC. TABLE: FVEPTS: 5/20/91 1 TABLE 3 • 10 YEAR CASH FLOW FIVE POINTS SENIOR CITIZEN APARTMENT COMPLEX HUNTINGTON BEACH, CALIFORNIA 164 UNITS - 20% SET ASIDE FOR VERY LOW AND LOW INCOME CONSTRUCTION YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR 1 2 3 4 5 6 7 8 9 10 RENTAL INCOME. • 1 BEDROOM 1 BATH (VERY LOW) $45,749 $76,002 $78,282 $80,630 $83,049 $85,541 $88,107 $90,750 $93,472 $96,277 1 BEDROOM 1 BATH DELUXE (VERY LOW) 3,519 5,846 6,022 6,202 6,388 6,580 6,777 6,981 7,190 7,406 2 BEDROOM 1 BATH (VERY LOW) 3,980 6,613 6,811 7,015 7,226 7,443 7,666 7,896 8,133 8,377 2 BEDROOM 2 BATH (VERY LOW) 0 0 0 0 0 0 0 0 0 0 1 BEDROOM 1 BATH (LOW) 72,391 120,263 123,871 127,587 131,414 135,357 139,418 143,600 147,908 152,31•;,' :, 1 BEDROOM 1 BATH DELUXE (LOW) 10,505 17,452 17,976 18,515 19,071 19,643 20,232 20,839 21,464 22,1L• 2 BEDROOM 1 BATH (LOW) 5,796 9,628 9,917 10,215 10,521 10,837 11,162 11,497 11,842 12,19 2 BEDROOM 2 BATH (LOW) 5,796 9,628 9,917 10,215 10,521 10,837 11,162 11,497 11,842 12,197 1 BEDROOM 1 BATH (MARKET) 527,422 884,707 920,095 956,899 995,175 1,034,982 1,076,382 1,119,437 1,164,214 1,210,783 1 BEDROOM 1 BATH DELUXE (MARKET) 80,724 135,408 140,824 146,457 152,316 158,408 164,745 171,334 178,188 185,315 2 BEDROOM 1 BATH (MARKET) . 56,916 95,472 99,291 103,263 107,393 111,689 116,156 120,803 125,635 130,660 2 BEDROOM 2 BATH (MARKET) 39,953 67,018 69,698 72,486 75,386 78,401 81,537 84,799 88,191 91,718 LAUNDRY INCOME 9,840 10,234 10,643 11,069 11,511 11,972 12,451 12,949 13,467 14,005 GROSS INCOME $862,590 $1,438,271 $1,493,347 $1,550,553 $1,609,972 $1,671,689 $1,735,794 $1,802,380 $1,871,545 $1,943,388 (LESS) VACANCY AND BAD DEBT 0 71,914 74,667 77,528 80,499 83,584 86,790 90,119 93,577 97,169 EFFECTIVE GROSS INCOME $862,590 $1,366,357 $1,418,680 $1,473,026 $1,529,473 $1,588,104 $1,649,004 $1,712,261 $1,777,968 $1,846,219 EXPENSES 404,856 421,050 437,892 455,408 473,624 492,569 512,272 532,763 554,073 576,236 NET INCOME BEFORE DEBT SERVICE $457,734 $945,307 $980,788 $1,017,618 $1,055,849 $1,095,535 $1,136,732 $1,179,498 $1,223,894 $1,269,983 PLUS: INTEREST EARNINGS • 139,113 77,500 . 63,163 47,275 31,000 14,338 0 0 0 PLUS: CAPITALIZED INTEREST 478,226 0 0 0 0 0 0 0 0 (LESS) DEBT SERVICE 823,650 823,650 823,650 823,650 823,650 823,650 823,650 823,650 823,650 (LESS) DEV SHARE OF CASH FLOW a 35% 87,998 69,705 77,105 84,435 92,120 100,178 109,579 124,547 140,086 PLUS: EARNOUT AMOUNT 0 0 185,000 205,000 210,000 215,000 185,000 0 0 NET INCOME AFTER DEBT SERVICE $163,425 $129,452 $328,196 $361,808 $381,079 $401,045 $388,503 $231,302 $260,159 SALES PROCEEDS 16,933,101 (LESS) CLOSING COSTS a 3% 507,993 (LESS) BOND REPAYMENT 8,419,914 (LESS) DEVELOPER SHARE OF SALES PROCEEDS • 2,801,818 NET SALES PROCEEDS 5,203,376 TABLE 3 (CONT) 10 YEAR CASH FLOW FIVE POINTS SENIOR CITIZEN APARTMENT COMPLEX HUNTINGTON BEACH, CALIFORNIA 164 UNITS - 20% SET ASIDE FOR VERY LOW AND LOW INCOME NET CASH FLOW BEFORE DEBT SERVICE (10,940,000) 457,734 945,307 980,788 1,017,618 1,055,849 1,095,535 1,136,732 1,179,498 17,649,002 NET CASH FLOW AFTER DEBT SERVICE (2,755,000) 163,425 129,452 328,196 361,808 381,079 401,045 388,503 231,302 5,463,535 CASH ON CASH RETURN 5.9% 4.7% 5.6% 6.6% 7.9% 9.6% 11.6% 13.2% DEVELOPER RETURN 87,998 69,705 77,105 84,435 92,120 100,178 •109,579 124,547 2,941,903 RETURN TO INVESTOR/DEVELOPER NPV DEVELOPER RETURN 1,728,941 16% NPV EQUITY RETURN 3,836,591 IRR ON TOTAL INVESTMENT 12.1% IRR ON EQUITY 15.3% BOND AMOUNT 8,185,000 EQUITY AMOUNT 2,755,000 TOTAL DEVELOPMENT COST 10,940,000 SOURCE: KEYSER MARSTON & ASSOCIATES, INC. TABLE: FVEPTS: 5/20/91 FIVE POINTS SENIOR VILLAS PROJECT FEES AND ASSESSMENTS Paid Paid Pevious Current IPI Fees & Assessments 148 Units 16 Additional Developer Developer Due 1 . Park & Rec $167,868.00 #2 $29,428.00 $167,868.00 #2 $29,428.00 2. Traffic Impact N/A $34,540.00 N/A $34,540.00 3. Library $10,320.00 $7,799.70 $10,320.00 $3,475.50 $4,324.20 #1 4. Inspection $14,078.00 $9,548.50 $14,078.50 $2,591 .50 $6,957.00 #1 5. Conservation $389.00 $300.29 $389.00 $143.54 $156.75 #1 6. Processing N/A $30.00 N/A $15.00 $15.00 7. Change of Owner/ Contractor $88.50 $30.00 $88.50 N/A $30.00 8. Plan Check $9,151 .00 $18,210.73 $9,151 .00 $1.8,210.73 #1 9. Electrical $8,088.00 $5,036.25 $8,088.00 $5,036.25 #1 10. Plumbing $3,339.38 $2,087. 11 $3,339.38 $2,087. 11 #1 11 . Mechanical (B) $898.94 $1 ,011 .21 $898.94 1 ,011 .21 #1 12. Mechanical (F) $719.00 #1 $719.00 #1 #1 13. Sewer (City) $19,240.00 $2,400.00 $19,240.00 $2,400.00 14. Sewer (OCSD) $37,000.00 $37,600.00 $37,000.00 $37,600.00 15. Water $8,880.00 $960.00 $8,880.00 $960.00 16. Constr. Water $1 ,776.00 $1 ,152.00 $1 ,776.00 $1 ,152.00 17. Drainage $13,412.50 $13,412.50 $295,248.32 $150,133.79 $295,248.32 $66,548.27 $83,585.52 #1 Note 1 : Amounts based upon 164 units . Until such time as plans are submitted and checked reflecting the proposed 166 units , fees cannot be accurately determined. Note 2: Park and Recreation fee guaranteed by surety bond posted by the projects previous developer which may become obligation of current developer. (2147d) (..., ,.. _::::.....i' .e�<as.a.,..u..�.al .,.y,r.u�.? .. t,.S.}.a3 r.'..ur.JJ..wI._.i4JrJirt.,.4<u.w.wu+....ww.........r- .... ✓ I +'•fit';, ;,4 _ 41,f, ...AAi � { k ty of Huntington Beach ,O� !:.; 2000 MAIN STREET CALI FORNIA 92648 DEPARTMENT OF COMMUNITY DEVELOPMENT RECEVVE � Building Division 536-5241 Planning Division 536-5271 DEC .,j 1991 June 17 , 1991 r. r �;; Mr. David Michelson, President Dep t Institutional Property Investors, Inc. 19800 Mac Arthur Boulevard - #680 Irvine, CA 92715 RE : Five Points Senior Villas Dear Dave : As requested, this letter is to clarify additional building permit fees created by modification to existing building permit No. A-59462, increasing quantity of units from 148 to 164: PARK & RECREATION FEE $28 ,000 . 00 (16 new units) LIBRARY FEE 7 , 799 . 70 (51,998 add' l . sq. ft. ) COMPLETE NEW PLAN CHECK FEE 18 ,210 . 73 (Based on valuation of $9 , 158 , 684 including Parking Structure) INSPECTION FEE - Add' l . sq.ft. 9 , 548 . 50 CONSERVATION FEE - Add' l . sq. ft. 300 . 29 PROCESSING FEE 30 . 00 CHANGE OF OWNER/CONTRACTOR 30 . 00 $63 , 919 . 22 Following plan check, there is the possibility that unforeseen fees may be due. Please give me a call if you have questions regarding the above. Kindly, Michael Adams Director MA/js ✓ ,��J o t, 1r fit City of Huntington Beach y c.. 2000 MAIN STREET CALIFORNIA 92648 DEPARTMENT OF COMMUNITY DEVELOPMENT Building Division 536-5241 Planning Division 536-5271 December 19 , 1991 Institutional Property Investors Inc . 19800 Mac Arthur Blvd. No . 680 Irvine, CA 92715 Attn: Mr . Dave Michelson Subject : FIVE POINTS SENIOR VILLAS BUILDING PERMIT STATUS Dave : In response to your letter of December 13 , 1991, please be advised that this department ' s fee letter of June 17, 1991 addressed, as you had requested, building permit fees only and was not intended to be an " agreement" covering other City department ' s development fees . Sincerely, r encer, Hoff. in Building Director cc : Mike Adams Steve May, Public Works CPS : jr 4 W a> • i • J ` City of Huntington Beach 2000 MAIN STREET CALIFORNIA 92648 DEPARTMENT OF COMMUNITY DEVELOPMENT Building Division 536-5241 Planning Division 536-5271 January 13 , 1992 . • David Michelson 19800 MacArthur Blvd. , #680 Irvine, CA 92715 Subject : Traffic Impact Fees - Five Points Senior • Dear Mr . Michelson: Your recollection regarding my statements concerning traffic impact fees for Five Points Senior Project was incorrect . If you should have any further questions please contact me at 536-5271 . Sinc-rely, ae-6 H• . ��• Zel • P ing Director HZ : jl (1976d) • DRUG USE • IS i AB SUMMARY REPORT PURSUANT TO SECTION 33433 OF THE CALIFORNIA COMMUNITY REDEVELOPMENT LAW ON AN AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND FIVE POINTS SENIORS This summary report has been prepared for the Huntington Beach Redevelopment Agency ("Agency") pursuant to Section 33433 of the California Health and Safety Code. This report sets fourth certain details of •the proposed Affordable Housing Agreement ("Agreement") between the Agency and Five Points Seniors ("Developer") related to the development of a 164 unit senior citizen apartment project. While this transaction does not involve the conveyance of property from the Agency to the Developer, it does entail the provision of Agency financial assistance to effect the development of income restricted units. This report describes and specifies: 1. The costs of the proposed Agreement to the Agency, which includes the cost of providing a grant to this project, and the opportunity costs associated with providing a loan to the developer at a below market interest rate. 2. The value of the assistance being provided to the Developer. 3. The reasons for which the assistance is being provided. A. SALIENT POINTS OF THE AGREEMENT 1. Developer Responsibilities Under the terms of the proposed Agreement, the Developer must accept the following responsibilities: a. The project must consist of 164 senior citizen apartment units, constructed at the quality standard mandated by the Agency. b. For a thirty year period the project must set-aside 32 units for very low income households (0% to 50% of the Orange County median income) , and 16 units for low to moderate income households (50% to 120% of the County median income) . c. The project must be maintained in accordance with the CC&R's incorporated into the Agreement. ., d. A full-time activities director and an on-site manager must be employed and a van shuttle service must be provided for the project residents. e. The Agency note must be fully amortized over an eight year period, on a monthly basis. f. An equity contribution must be maintained from the commencement of construction through the end of the fifth year of project operation. The required contribution is: Through the second year of operation $1, 500,000 Year 3 1,250,000 Year 4 1,000, 000 Year- 5 500, 000 2. Agency Responsibilities The Agency is responsible for, and shall commit the following to the project: a. Upon the issuance of a Certificate of Occupancy, a $250,000 loan must be made to the Developer. The note will bear simple interest at 5% per annum. b. For a five year period after the issuance of a Certificate of Occupancy, an annual grant of $100, 000 must be provided to the • Developer. The total grant equals $500,000. c. The Agency shall use its best reasonable efforts to assist the Developer in securing very low income tenants that are recipients of federal housing subsidies. B. COST OP THE AGREEMENT TO AGENCY The estimated costs of the Agreement to the Agency are as follows: Total Present Value Grant $500,000 $365,800 Interest Gap for Agency Loan(1) 38, 100 25,700 Total Costs to Agency $538, 100 $391,500 (1) Opportunity cost of issuing a 5% loan versus earning 8.3% interest on invested funds. -2- C. ESTIMATED VALUE TO DEVELOPER ASSISTANCE BEING PROVIDED BY AGENCY The Agency is providing the Developer with a grant of $100, 000 per year for five years. The Agency is also providing the Developer with a below market interest rate loan of $250, 000. The value of the assistance package is estimated as follows: Total Present Value Grant $500, 000 $365, 800 Interest Gap for Agency Loan(1) 59,400 41,200 Total Benefit to Developer $559,400 $407,000 (1) Benefit of receiving a 5% loan versus paying 10% interest on a conventionally financed loan. D. REASONS FOR THE PROVISIONS OF AGENCY ASSISTANCE . Keyser Marston Associates, Inc. (KMA) analyzed the development economics of the proposed project to assess the need for Agency financial assistance. In a letter dated June 10,. 1991, KMA concluded that the proposed 164 unit senior citizen apartment complex, with the attendant Agency restrictions, could not support the total estimated development costs. The impositions of income • restrictions and construction/ongoing operational quality standards creates the need for the assistance package being proposed. -3- el REQUEST FOR CITY COUNCIL ACTION 91_54 August 19, 1991 Date Submitted to: Honorable Mayor and City Council Members Submitted by: Michael T. Uberuaga, City Administrate Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic Deve opment Director Subject: Exclusive Negotiation Agreement/Five Points Senior Project at Main & Florida Streets Consistent with Council Policy? pQ Yes ( ] New Policy or Excepti• APPROVED BY CITY COUNCIL 12.21 Statement of Issue, Recommendation,Analysis, Funding Source,Alternative •ctions,Attachments: CITY CLERK ' STATEMENT OF ISSUE: The developer, Institutional Property Investors, Inc. (IPI), proposing the development of a 164-unit senior citizen rental complex located at Main and Florida Streets, has requested financial assistance. The proposed project obtained the necessary development entitlements from Planning Commission on May 17, 1991. Staff has reached tentative agreement with IPA regarding financial assistance for the project, and is requesting City Council action to confirm the agreement. RECOMMENDATION: • Approve an Exclusive Negotiation Agreement between Institutional Property Investors, Inc., and the City of Huntington Beach and direct staff to prepare appropriate loan agreements. ANALYSIS: The proposed project's developer, (IPI), has requested financial assistance from the city to enable this development to go forward. Without such assistance, IPI believes the project will not be economically feasible, and therefore would be abandoned. The proposed 164-unit project is designed to accommodate senior citizens of which 20% or 32 units are conditioned to be affordable, and made available to low-moderate income individuals/families. This project is eligible for financial assistance using the city's 20% housing set aside funds, subject to a finding of benefit. As previously directed by the City Council at its study session on July 15, 1991, staff has been negotiating with the developer to determine an appropriate level of financial assistance. We are now in a position to recommend that assistance which basically requires the developer to provide an additional 16 affordable units at moderate-income level for which the city, utilizing set aside funds, will provide the project with a $250,000 loan at 5% interest to be paid back over a ten-year term and an additional $500,000 grant paid over a five-year term at $100,000 per year to assure financial feasibility of the project. The above assistance is also conditioned upon IPI providing substantial equity ($1.5 million) toward the project, providing high-quality construction materials and other agreed upon amenities. 4 ALTERNATIVE ACTION: 1) Do not approve Exclusive Negotiation Agreement. 2) Direct staff to further negotiate. FUNDING SOURCE: 1) Redevelopment 20% Housing Set Aside funds for the project if later loan documents are approved. No funds are needed for the requested action. ATTACHMENTS: Exclusive Negotiation Agreement. MTUBAK/CPS:ls 9462r EXCLUSIVE NEGOTIATING AGREEMENT (Five Points Senior Villas) THIS EXCLUSIVE NEGOTIATING AGREEMENT (the "Agreement") is made and entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency") and the MICHELSON FAMILY TRUST, dated as of December 12, 1984 (the "Developer") . RECITALS The following recitals are a substantive part of this Agreement. A. In furtherance of the objectives of the Community Redevelopment Law of the State of California, Health and Safety • Code Section 33000 , et seq. , and particularly Section 33334 .2, et seq. , the Agency desires to assist in the development of housing which is to be made available at an affordable housing cost to low- and moderate-income households. B. The Developer proposes to construct and operate a One Hundred Sixty-Four (164) unit senior citizen rental housing project (the "Project" ) on an approximately 1. 84 acre parcel of land at the southwest corner of Main Street and Florida Street in the City of Huntington Beach (the "Proposed Development Site") . The Proposed Development Site is depicted on the Site Map attached hereto as Exhibit "A" and incorporated herein. The City of Huntington Beach (the "City") has approved Negative Declaration No. 91-3 , Conditional Use Permit No. 91-4 and Conditional Exception (Variance) No. 91-7 with respect to the Project and the Proposed Development Site. C. The Developer desires to negotiate an Owner Participation Agreement ("OPA") with the Agency to assist the Developer in operating affordable housing within the Project. D. The parties recognize and acknowledge that the purpose of this Agreement is to establish a period during which the Developer shall have the exclusive right to negotiate with the Agency the terms of the OPA which will include, without limitation, the economics of the development, the site plan and specific uses of the development, and any other terms relevant to the development of the Project and the Proposed Development Site. E. The parties intend that during the Negotiating Period (as the term is hereinafter defined) each will perform certain actions and responsibilities under this Agreement. F. The Developer has formed Five Point Seniors , a California general partnership, to act as the developer of the Project (the "Partnership" ) . The Partnership will consist of two general partners , one of which will be the Developer and one of which will be the Norman D. and Bunnie L. Ward Trust . The Developer and the Agency intend for the Partnership, if acceptable to the Agency, to assume the rights and obligations of the Developer pursuant to the OPA. NOW, THEREFORE, the parties hereto mutually agree as follows: 1. Negotiating Period. The Agency agrees to negotiate with the Developer and the Developer agrees to negotiate with the Agency for a thirty (30) day period from the date this Agreement is approved. by the Agency ("Negotiating Period" ) . Agency and Developer shall negotiate diligently and in good faith to carry out the obligations of this Agreement on or before the times established in this Agreement, to establish development plans and concepts and to determine the economic • feasibility of the development of the Project. The Agency and the Developer agree, for the period set forth above, to negotiate in good faith to prepare an OPA to be entered into between the Agency and the Developer concerning the Proposed Development Site and the Project . The Agency further reserves full discretion with respect to the conduct or disposition of any proceedings which require notice and a public hearing. The obligation to negotiate in good faith requires that Developer and Agency communicate with respect to those issues for which agreement has not been reached, and in such communication follow reasonable negotiation procedures including meetings, telephone conversations and correspondence. If on the last day of the Negotiating Period the Developer has not signed and submitted a draft OPA submitted by the Executive Director for signature by the Developer, then this Agreement shall automatically terminate without further notice by the Agency to the Developer, and both parties knowingly agree that neither party shall have any further rights or obligations to the other arising out of this Agreement. Further, both parties recognize and acknowledge that the purpose of this Agreement is solely to provide a procedure for negotiation, that each party is incurring costs pursuant to the negotiation process provided for in this Agreement, and that there is no intent to provide rights to the Developer in the proposed project aside from the opportunity to negotiate a potential OPA. If an OPA is signed and submitted by the Developer within the Negotiating Period, then this Agreement shall be extended for a period not to exceed thirty (30) days from the date of such submittal to enable the Agency to (i) determine whether it desires to enter into such OPA, and (ii) take the 6816u/2460/000 -2 • - actions necessary to bring such OPA before the Agency for consideration , action and authorization to sign, if such is approved . Developer acknowledges that the determination by the Agency of whether it desires to enter into the OPA is at its sole and absolute discretion. Both parties further recognize and acknowledge that the Project would be subject to -planning review and approval by the City or an other governmental entity with authority to review such a project, if any such further review and approvals are required. 2 . Developer Submission of Information. The Developer is required to make full disclosure to the Agency of all pertinent information concerning the Developer and the Partnership. The Developer represents to the Agency that within fifteen (15) days of the approval of this Agreement by the Agency it shall submit to the Agency Director for his review all basic information relating to the corporation which is reasonably requested by the Agency including, without limitation, information regarding capitalization, insurance, other liability and financial capacity issues, and an original or true copy of the executed partnership agreement which creates the Partnership or other proposed developer entity. In the event that during the term of this Agreement such information changes, Developer shall submit written evidence of such new information immediately to the Agency Executive Director for his review and consideration. The parties acknowledge that this requirement is necessary so that the Agency may verify the qualifications of the persons and entities which comprise the Developer. 3 . Lead Negotiator for Developer. The Developer represents to the Agency that David Michelson, Trustee of the Developer, is the person with whom the Agency staff shall work with on a day-to-day basis concerning the negotiations toward the development of the Proposed Development Site and the Project. If the Developer desires to designate another individual as the lead negotiator on this Project, then it shall notify the Agency Director immediately. • 4 . Deposit . The Developer shall deliver a letter of credit, in a form reasonably acceptable to the Agency, in the amount of Twenty Thousand Dollars ($20, 000) to the Agency upon mutual execution of this Agreement (the "Deposit") . If the Developer terminates this Agreement without cause or if the • Agreement terminates for failure of the Developer to perform a required action, then the Agency shall be entitled to reimbursement for costs in negotiation contemplated herein. Such costs shall include reasonable attorneys ' and advisory fees incurred by the Agency (the "Negotiation Costs" ) . The Agency will provide supporting documentation evidencing the Negotiation Costs. In the event that the Deposit exceeds the Negotiation Costs the remainder shall be returned to Developer . The Deposit shall be the maximum amount that the 6816u/2460/000 -3- Developer may be held responsible towards payment of the Negotiation Costs . In the event Developer executes a draft OPA submitted for signature by the Agency' s Executive Director but the Agency Board: ( i) does not approve the OPA; ( ii) terminates the Agreement without cause, or ( iii ) the Developer terminates the Agreement for failure of the Agency to perform a required action, the full amount of the Deposit shall be returned to Developer. If the Agency Board approves the OPA the Deposit shall be promptly returned to the Developer . 5 . Financing. Developer agrees to provide within fifteen (15) days of the Agency approval of this Agreement a description of the proposed method of construction of the Project and permanent financing and amount and sources of capital therefor, which proposed financing method must include a One Million Five Hundred Thousand Dollar ($1, 500, 000) equity contribution from Developer. The OPA shall provide that the Developer' s equity interest in the Project shall be a minimum of One Million Five Hundred Thousand Dollars ($1,500, 000) at all times until the fourth (4th) anniversary of the commencement of construction of the Project (or such other period mutually agreed upon by the parties hereto) , at which time the Developer ' s equity interest in the Project shall be a minimum of Five Hundred Thousand Dollars ($500, 000) . 6. Development Concept Packaae. Developer further agrees that within thirty (30) days of this Agreement it shall submit documents, reports and information (collectively, the "Development Concept Package" ) concerning the proposed development that will provide the Agency with the following information: a. A preliminary site plan and architectural/design concept for the development showing access roads, amount and location of parking, location and size of all buildings, including height and perimeter dimensions, pedestrian and vehicular circulation system (including access to upper floors) , landscaping, elevations, perspective renderings and the architectural character of the project . b. A schedule for the development of all structures and improvements proposed and an estimate of development costs including construction and non-construction costs. c. An estimate of project income and expenses and a pro forma statement of project return adequate to enable the Agency to evaluate the economic feasibility of the proposed development . The economic pro forma shall be in a form typically submitted to a construction lender and shall include land prices as determined by the appraiser . The pro forma shall specify the form and amount of the equity to be • contributed to the Project by the Developer. This information will be submitted for analysis to an economic consultant selected by the Agency in its sole discretion. 6816u/2460/000 -4- d. Biographical and background description of the Developer and all senior officers of the Developer, including such matters as (i) prior record with respect to the completion of projects , particularly those of a scale comparable to that proposed herein; (ii) record of any pending or past litigation and evidence of timely performance reflecting minimal litigation and/or disputes concerning the payment of joint venturers, contractors, suppliers or taxing authorities and (iii) record of satisfactory operation of residential projects . It is understood that the Agency may take, appropriate steps to verify such matters , and the Developer agrees to cooperate in furnishing such information to the Agency. The Agency acknowledges that the materials submitted in connection with the obtaining of entitlements for the Project will be sufficient to satisfy requirement (a) above, and acknowledges receipt of the estimate of development costs pursuant to requirement (b) and the pro forma pursuant to requirement (c) above. Within twenty (20) days upon receipt of the Development Concept Package, the Agency staff shall review the development concept proposed by the Developer, together with the remainder of the Development Concept Package, and may either accept it, request modifications or reject it. If any such items are rejected, the Agency staff shall provide a list of deficiencies to the Developer and the Developer shall resubmit the Development Concept Package, with corrections, within ten (10) days of such rejection. If the Agency staff accepts the Development Concept Package, the Agency and Developer shall continue to negotiate toward the execution of an OPA with respect to the development of the Project. . 7. Design Objectives. The design and development objectives for the Project shall be specified in the OPA, and the actual development shall be in conformity therewith. The Agency shall cooperate fully with Developer' s professional ' • consultants and associates in providing them with any information and assistance reasonably within the capacity of the Agency to provide in connection with the preparation and execution of the drawings, plans and specifications or other documents or information required to be submitted by the Developer to the Agency or to the City pursuant to this Agreement or as required by state or local laws and regulations . This requirement does not obligate the Agency to incur any monetary costs therefor . All design, architectural and building plans for development shall be subject to the review and approval of the Agency and the City. 8. Affordable Housing. The OPA shall provide that certain units within the Project shall be made available and 6816u/2460/000 -5- rented at an "Affordable Rent" (as defined in California Health and Safety Code Section 50053 ) as follows : (a) Sixteen (16) units for "Very Low Income Households" (as defined in Health and Safety Code Section 50105) ; (b) Sixteen (16) units for "Lower Income Households" (as defined in Health and Safety Code Section 50079 . 5) ; and • (c) Sixteen (16) units for "Persons and Families of Low and Moderate Income" (as defined in Health and Safety Code Section 50093) . The OPA shall require that such units be so restricted for thirty (30) years from the occupancy of the Project, and that such restrictions be recorded as an encumbrance against the Property. The Developer shall also be required under the OPA to perform high quality construction of the Project and to provide an activities director and van service to tenants during such thirty (30) year period. . 9 . Agency Financial Assistance. The Agency shall be required under the OPA, in consideration for the Developer' s performance of the affordable housing requirements set forth in Section 8 above, to •provide the following financial assistance to the Developer: (a) Upon the occupancy of the Project, the Agency shall make a loan of Two Hundred Fifty Thousand Dollars ($250,000) to the Developer . The loan shall accrue simple interest of five percent (5%) per annum. The loan shall be for a term of ten (10) years, with interest payments payable monthly in the third (3rd) through tenth (10th) years of the loan. The loan shall be secured by security mutually acceptable to the Agency and the Developer. (b) The Agency shall grant to the Developer the. sum of One Hundred Thousand Dollars ($100, 000) on each of the first (1st) through fifth (5th) anniversaries of the occupancy of the Project (for a total of Five Hundred Thousand Dollars ($500,000) ) provided that the Developer is in compliance with the OPA. • 10 . Default. With the exception of those specified obligations herein which failure to perform may cause automatic termination, in the event that the Developer or the Agency fails to fulfill the obligations described in this Agreement within the times specified, the nonperforming party shall have ten (10) days following written notice from the other to commence to cure such failure to perform as may be identified in the written notice. If, in the objective judgment of the other party, the nonperforming party has failed to commence to 143 6816u/2460/000 -6- cure within such ten ( 10) day period, the other party may terminate this Agreement and, thereafter , neither party shall have any further rights or obligations to the other except as provided concerning the distribution of the Deposit in paragraph 4 herein. The Developer, by execution hereof knowingly agrees , notwithstanding anything herein to the contrary, that it shall have no right to specific performance of this Agreement. Each party by execution hereof knowingly agrees , notwithstanding anything to the contrary, that it shall have no right to money damages , nor any other legal remedies or equitable remedies under the law with respect to this Agreement . 11. Non-Discrimination. Developer shall not discriminate against nor segregate any person, or group of persons on account of sex, race, color, marital status , religion, handicap, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Proposed Development Site, nor shall the Developer establish or permit any such practice or practices of discrimination or segregation in the selection, location, number, use or occupancy of tenants , lessees, subtenants, sublessees or vendees of the land. 12 . Environmental Requirements. Certain state and local environmental requirements may be applicable to the proposed development . Pursuant to such requirements certain environmental documents may be required to be prepared and certified for the proposed Project. The Developer agrees to supply information to determine the environmental impact of the proposed development and, at its sole cost and expense, to reimburse the Agency and/or the City for the cost of preparation of such environmental impact documents, if any, as may need to be completed for the development of the Project. 13. No Real Estate Commissions . The Agency shall not be liable for any real estate commission or brokerage fees which may arise herefrom. The Agency represents that it has engaged no broker, agent or finder in connection with this transaction, and the Developer agrees to hold the Agency harmless from any claim by any broker, agent or finder retained by the Developer. 14 . Compliance with Laws . The Developer acknowledges that under the OPA it shall be required to carry out the construction of its improvements in conformity with all applicable laws , including all applicable federal and state labor standards ; provided, however, the Developer and its contractors ,: successors , assigns , transferees and lessees will not be waiving their rights to contest any such laws , rules and standards . 6816u/2460/000 -7- 15 . No Assignment . This Agreement shall not be assigned by the Developer without prior written approval of the Agency, which the Agency shall grant or refuse at its sole discretion. 16 . Agency Assistance . The Agency shall cooperate fully in providing Developer with appropriate information and assistance, provided that the Agency shall not be obligated to incur costs therefor. 17 . Press Releases . The Developer and Agency agree to discuss any press releases with a designated Agency representative prior to disclosure in order to assure accuracy and consistency of the information. 18 . Notices . All notices given or required to be given hereunder shall be in writing and addressed to the parties as set out below, or to such other address as may be noticed under and pursuant to this paragraph. Any such notice shall be considered served when actually received by the party intended, whether personally served or sent postage prepaid by registered Or certified mail, return receipt requested, or sent by • telecopy or overnight courier service. To Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attn: Ms. Barbara Kaiser, Deputy City Administrator/Director of Economic Development To Developer: Institutional Property Investors, Inc. 19800 MacArthur Boulevard, Suite 680 Irvine, California 92715 Attn: Mr. David Michelson, President with a copy to: Bret H. Reed, Jr . A Law Corporation 1300 Dove Street, Suite 200 • Newport Beach, California 92660 19 . Integration of All Agreements . This Agreement supersedes any previous agreement entered into between the Developer and the Agency with respect to the Proposed Development Site and/or the Project. 20 . Execution Authority. The signatories to this Agreement represent and warrant that they have the authority to execute this Agreement on behalf of the principals they purport to represent. 21. Time of Essence. Time is of the essence of every portion of this Agreement in which time is a material part . 6816u/2460/000 -8- • 22 . Governing Law. This Agreement shall be construed in accordance with the laws of the State of California . 23 . Attorneys ' Fees . In the event any action is taken pursuant to this Agreement , the prevailing party shall be entitled to recover from the other party its actual attorneys ' fees and costs , whether or not a final court judgment is entered. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year appearing below. REDEVELOPMENT AGENCY OF THE CITY OF H ON BEACH, a public bod , corpo ate and olitic Dated: C217 der, /q9 / By: .•Li-k./\ �i Charman "AGENCY" ATTEST: drosin:e. 40241/4:464.1e Agency Secretary • APPROVED AS TO FORM: • Strad ing' Yea, Carlson & Rauth Speci 1 Couns- for the Agency 4<3L, City Attorney, Agency General Counsel 8 _ _41I • MICHELSON FAMILY TRUST, dated of December 12, 1984 Dated: /3 /r * By: a —//tr-lee-60- David Michelson, Trustee "DEVELOPER" 46 6816u/2460/000 -9- EXHIBIT "A" Site Map of Proposed Development Site (To Be Inserted) 6816u/2460/000 -10- • Rrc. CEIVED Nov i : 19"1 Dept.of Comm.Development AFFORDABLE HOUSING AGREEMENT (Five Points Senior Villas) by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AGENCY, and FIVE POINTS SENIORS, L.P. DEVELOPER • c v At PL Ac(fi7a/T 6 FR c E-- • FILE us/ CIT Fog_ N3uc ??EV/EW �o 1� Of rc.r N • AFFORDABLE HOUSING AGREEMENT (Five Points Senior Villas) by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AGENCY, and FIVE POINTS SENIORS, L.P. DEVELOPER A TABLE OF CONTENTS I . [ §100] SUBJECT OF AGREEMENT A. [ §101 ] Purpose of Agreement B. [ 0.02] The Site C. [ §103 ] Parties to the Agreement 1. [ §104] The Agency 2. [ §105] The Developer D. [ §106] The Guarantors E. [ 0.07 ] Prohibition Against Change in Ownership., Management and Control of Developer II . [ §200] AGENCY ASSISTANCE A. [ §201] Agency. Loan B. [ §202 ] Note and Deed of Trust C. [ §203] Agency Grant D. [ §204] Submission of Evidence of Financing Commitments and Loan Closing III . [ §300) DEVELOPMENT OF THE SITE A. [ §301] Development of the Site by the Developer 1. [ §302 ] Scope of Development 2. [ §303 ] Site Plan ' . 3. [ §304] Construction Drawings and Related Documents 4. [ §305) Approval of Plans, Drawings, and Related Documents 5. [ §306] Cost of Construction 6. [ §307] Construction Schedule 7. [ 008] Bodily Injury and Property Damage ' Insurance (i ) , 8. [ 009 ] City and Other Governmental Agency Permits 9 . [ 010) Rights of Access 10. [ §3.11] Local, State and Federal Laws 11 . [ 012] Antidiscrimination During Construction B. [ §313 ] Taxes, Assessments, Encumbrances and Liens C. [ 014] Prohibition Against Transfer of the Site, the Buildings or Structures Thereon D. [ §315 ] Certificate of Completion • E. [ §316] Mortgage, Deed of Trust, Sale and Lease-Back Financing; Rights of Holders 1 . [ 017] No Encumbrances Except Mortgages, Deeds of Trust, or Sale and Lease-Back for Development 2 . [ 018] Holder Not Obligated to Construct Improvements 3 . [ §319 ] Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure 4. [ §320] Right of the Agency to Cure Mortgage or Deed of Trust Default 5. [ §321] Environmental Matters IV. [ §400] USE OF THE SITE A. [ §401 ] Use in Conformance with Agreement.. .:. B. [ §402 ] Affordable Rental Housing C. [ §403 ] Operating Expenses D. [ §404] Management and Maintenance E. [ §405 ] Rights of Access F. [ §406] Developer' s Equity G. [ §407 ] Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction H. [ §408] Nondiscrimination (ii) V. [ 000] GENERAL PROVISIONS A. [ 001 ] Notices, Demands and Communications Between the Parties B. [ 002 ] Conflicts of Interest C. [ 003 ] Enforced Delay; Extension of Times of Performance D. [ 004] Nonliability of Officials and Employees of the Agency VI . [ 000] DEFAULTS AND REMEDIES A. [ 001 ] Defaults -- General B. [ 002.] Legal Actions 1 . [ 003 ] Institution of Legal Actions 2 . [ 004] Applicable Law 3 . [ 005] Acceptance of Service of Process C. [ 006] Rights and Remedies Are Cumulative D. [ 007] Inaction Not a Waiver of Default E. [ 008] Liquidated Damages F. [ 009] Remedies and Rights of Termination Prior to Conveyance 1. [ 010] Damages 2 . [ 011] Specific Performance 3 . [ 012 ] Termination by the Developer Prior to Completion 4. [ 013 ] Termination by the Agency Prior to Completion G. [ 014] Remedies of the Parties for Default After Completion 1. [ 015 ] Termination and Damages 2 . [ 016] Action for Specific Performance (iii) VII . [ §700] SPECIAL PROVISIONS A. [ §701 ] Real Estate Commissions B. [ §702 ] Successors in Interest C. [ §703 ] Memorandum of Agreement VIII . [ §800] ENTIRE AGREEMENT, WAIVERS IX. [ §900] TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY ATTACHMENTS Attachment No. 1 Site Map and Legal Description Attachment No. 2 Guaranty Attachment No. 3 Promissory Note Secured by Deed of Trust Attachment No. 4 Construction Deed of Trust With Assignment of Rents Attachment No. 5 Schedule of Performance Attachment No. 6 Scope of Development Attachment No. 7 Certificate of Completion for Construction and Development Attachment No. 8 Declaration of Covenants, Conditions and Restrictions Attachment No. 9 Certification of Eligibility Attachment No. 10 Certification of Continuing Program Compliance Attachment No. 11 Operating Budget Attachment No. 12 Memorandum of Affordable Housing. Agreement • (iv) • • • AFFORDABLE HOUSING AGREEMENT • • (Five Points Senior Villas) • THIS AFFORDABLE HOUSING AGREEMENT (the "Agreement" ) is entered into as of November 18. 199.1 by and between the REDEVELOPMENT ' AGENCY OF" THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" ) and FIVE POINTS SENIORS, L.P. , a California limited partnership (the "Developer" ) . The Agency and the .Developer hereby agree as follows: I . [ §100] SUBJECT OF AGREEMENT • A. [ 0.01] Purpose of Agreement A. The Agency is required by California Health-and Safety Code Section 33334.2, et seq. , to expend a certain percentage of property taxes allocated to it for the purpose of increasing, improving and preserving the City of Huntington. Beach' s supply of Low- and Moderate-Income housing available at an Affordable Housing Cost. B. This Agreement provides for the development of a One Hundred Sixty-Four (164) unit -senior citizen rental housing project (the "Project" ) on an approximately 1. 89 acre parcel of land within the City of Huntington Beach. Forty-eight (48) of those units (the "Affordable Units" ) will be available pursuant to this Agreement for Very Low Income Households, Lower Income Households and Persons and Families of Low and Moderate Income at an Affordable Rent (as those terms are defined in • Section 402 hereof) for a period of thirty (30) years. C. In consideration for the Developer' s construction and operation of the Project. and the Affordable Units, this ' Agreement provides that the Agency shall make available . certain financial assistance in the form of a low interest loan 'and a series of five grants. C. [ §102 ] The Site The Site is that real property located in .the City of Huntington Beach ( "City" ) as depicted and more fully described in the "Site Map and Legal Description" which is attached hereto as Attachment No. 1, and incorporated herein by reference. The Site is not located in any redevelopment project area of the City, but the development of the 'Project will be of benefit to the Main-Pier 'Redevelopment Project due to the creation of affordable housing near such project area. The Agency intends that the .Affordable Units' shall replace . certain housing in the Main-Pier Redevelopment Project occupied by persons of Low and Moderate Income which was destroyed to facilitate certain redevelopment activities within such project area. The Developer owns, or will own at the time of the commencement of construction hereunder, fee simple title to the entire Site. C. [ §103J Parties to the Agreement 1 . [ §104] The Agency The Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California, California Health and Safety Code Section 33000, et seq. The principal office of the Agency is located at City Hall, 2000 Main Street, Huntington Beach, California 92648. "Agency" , as used in this Agreement, includes the Redevelopment Agency of the City of Huntington Beach, and-�any assignee of or successor to its rights, powers and responsibilities. 2 . [ §105] The Developer The Developer is Five Points Seniors, L.P. , which is a California limited partnership. The principal office and mailing address of the Developer for the purposes of this Agreement is c/o Institutional Property Investors, Inc. , 19800 MacArthur Boulevard, Suite 680, Irvine, California 92715. The sole general partner of the Developer is David R. Michelson, Trustee of the Michelson Family Trust, under trust dated as of December 12, 1984, as amended March 1, 1985. The Developer represents and warrants to the Agency as follows: (a) The Developer is a duly established limited partnership and in good standing under the laws of the' State of California and has duly authorized, executed and delivered this Agreement and any and all other agreements and documents required to be executed and delivered by the Developer in order to carry out, give effect to, and consummate the transactions contemplated by this Agreement. • (b.) The Developer does not have any material contingent obligations or any material contractual agreements which could materially adversely affect the ability of the Developer to carry out its obligations hereunder. (c) There are no material pending or, so far as is known to the Developer, threatened, legal proceedings to which the Developer is or may be made a party or to which any 12/04/91 7100u/2460/050 -2- of its property is or may become subject, which has not been fully disclosed in the documentation submitted to the Agency which could materially adversely affect the ability of the Developer to carry out its obligations hereunder. (d) There is no action or proceeding pending or, to the Developer' s best knowledge, threatened, relating to the dissolution or liquidation of the Developer, and there is no action or proceeding pending or, to the Developer' s best knowledge, threatened by or against the Developer which could affect the validity and enforceability of the terms of this Agreement, or materially and adversely affect the ability of the Developer to carry out its obligations hereunder. (e) The Developer has performed all of its obligations to be performed at or prior. to this date in accordance with the "Schedule of Performance" , which is . .. attached hereto as Attachment No. 5 and incorporated herein, and is not in default hereunder. Each of the foregoing items (a) to (e) , inclusive, shall be deemed to be an ongoing representation and warranty. • The Developer shall advise the Agency in writing if there is any material change pertaining to any matters set forth or referenced in the foregoing items (a) to (e) , inclusive. D. [ §106] The Guarantors The "Guarantors" are David Michelson, Kathleen M. Michelson, Norman D. Ward and Bunnie L. Ward. As beneficiaries of the trusts which are partners of the Developer, the Guarantors will benefit materially by the execution of this Agreement. Concurrently with the execution of this Agreement the Guarantors shall execute and deliver to the Agency a guaranty of the Developer' s obligations pursuant to this Agreement in the form of the "Guaranty" which is attached hereto as Attachments No. 2-A and 2-B and incorporated herein by reference. The parties agree and acknowledge that the delivery of the Guaranty by the Guarantors is a material inducement for the Agency to approve the Agreement, and that but for the provision of such Guaranty, the Agency would not approve this Agreement. E. [ §107] Prohibition Against Change in Ownership, Management and Control of Developer The qualifications and identities of the Developer and its general partners are of particular interest and concern to the City and the Agency. It is because of these qualifications and identities that the Agency has entered into this Agreement with the Developer. Consequently, except as 12/04/91 7100u/2460/050 -3- expressly set forth in this Section '107 and Section 319 hereof, no person, whether a voluntary or involuntary successor in interest of the Developer, shall acquire any rights or powers under this Agreement nor shall the Developer assign or transfer all or any part of this Agreement or any rights hereunder without the prior written approval of the Agency. The Agency shall approve such a transfer upon receipt by the Developer of (i) reasonable evidence satisfactory to the Agency that the transferee has assumed in writing, and in full, the Developer' s duties and obligations under this Agreement and the attachments hereto, (ii )- an opinion of counsel of the transferee that the transferee has duly assumed the obligations of the Developer under this Agreement and that such obligations and this Agreement are binding on the transferee, and (iii) the Agency receives evidence acceptable to the Agency that either (a) the transferee has experience in the ownership, operation and management of rental housing developments such as the Developer Improvements without any record of material violations of discrimination restrictions or other state or federal laws or regulations applicable to such developments, or (b) the transferee agrees to retain a property management firm with the experience and record described in Section (a) above. Written approval of the Agency shall also be required prior to any and all changes whatsoever in the identity of the person in control of the Developer, including any change in, or addition of, general partners of the Developer. The voluntary or involuntary sale or transfer of any general partnership interest of the Developer shall be deemed to constitute an assignment for the purposes of this Section 107 and the written approval of the Agency shall be required prior to effecting such a transfer. Any purported transfer, voluntary, involuntary, or by operation of law, except with the prior written consent of the Agency in accordance with this Section 107, shall constitute a default of Developer and shall confer no rights whatsoever upon any purported assignee or transferee. Notwithstanding any other provision of this Section 107 to the contrary, Agency approval of an assignment of this Agreement, or any interest therein, or an assignment of a general partnership interest or limited partnership interest in the Developer, shall not be required in connection with any transfer of an interest in the Developer so long as the existing general partner of the Developer retains operational and managerial control over development of the Site, provided that such transfer does not affect more than forty-nine percent (49%) of the existing general partnership interest in the Developer and the Developer shall remain responsible for the obligations of the Developer hereunder. All of the terms, covenants and conditions of this Agreement shall be binding upon and shall inure to the 12/04/91 7100u/2460/050 -4- l ey He nc.7 ►wrep G PJ/-'e5 T/c_ De-•lk: r%'S (�y5 f f.. 'r Cam` i — r,C CN['1� 7 u , /7yCd -7 LG�,h �^ -f 7'61-AA 5 �of r � �r, rsry funs °i tird '3 1-er ) la i'Jc. Ac lV' r/ of to c,-� c t / f c:; ct'd�'cJ C7 f!��r U-th of,ze y f'?; / ,famed-fe,4. Lt;vef)rYec.7d- UON benefit of the Developer and the permitted successors and assigns of the Developer. Whenever the term "Developer" is used herein, such term shall include any other permitted successors and assigns as herein_provided. _..- II . [ §200] AGENCY ASSISTANCE A. [ §201 ] Agency Loan Upon the issuance of a certificate of occupancy or temporary certificate of occupancy for the Developer Improvements, and subject to the applicable terms and conditions of this Agreement, the Agency agrees to loan to the Developer the sum of Two Hundred Fifty Thousand Dollars ($250,000) (the "Agency Loan" ) . B. [ §202 ] Note and Deed of . Trust The Agency Loan shall be evidenced by the Developer' s execution of a "Promissory Note, " in the form of Attachment No. 3 hereto, which is incorporated herein. The Promissory Note shall bear simple interest at the rate of five percent (5%) per annum for term of the loan. The Developer shall make monthly payments of principal and interest during the third (3rd) through tenth (10th) years of the Agency Loan, with payments amortized over the eight (8) year repayment period and with the loan balance due in full upon the tenth (10th) anniversary of the Agency Loan. The full amount of the Promissory Note, with all interest accrued thereon, shall be immediately due and payable upon the Developer' s uncured default of this Agreement and/or the Promissory Note. The Developer' s obligations pursuant to the Promissory Note shall be secured by the Developer' s execution of a "Deed of Trust" in the form of Attachment No. 4 hereto, which is incorporated herein. The Deed of Trust shall be made subordinate to the obligations pursuant to any multifamily housing revenue bond issuance which provides funds for the construction of. the Project. The Agency may, in its reasonable discretion, subordinate the Deed of Trust to any mortgage or deed of trust encumbering the Site which secures other financing obtained by the Developer necessary to undertake the development of the Site in accordance with this Agreement, provided that the Agency determines that such subordination is necessary to enable the Developer to develop the Developer Improvements. The Developer shall execute and deliver a copy of the Promissory Note and the Deed of Trust to the Agency as a condition precedent to the disbursement of the Agency Loan Proceeds. In connection with the Deed of Trust, the Agency may obtain, at the expense of the Developer, an ALTA lender' s policy or policies of title insurance, together with such endorsements as are reasonably requested by the Agency. 12/04/91 7100u/2460/050 -5- 7k e7 hereb, Lr.GPi��'c'S t� oe.ek , ',, c�s-s: f)/.1�T Cc- 7``- pcCle61- a /0,.,-,47 6rA f- > olt4 itl� Th [ f,v,S Zc.1 API .3 herar:c) �j c• �; er, irc/ C c.; cle.c.t c'� I-' �D G�. !hc/ez� '1 f/�,) /. ,,feed—ee^ Cif rL' L / f .J �/u i c'- '' -te— ;x /- ilt/ f'L•,- ra. L'Jeca ;r. ,m lC J V 1 benefit of the Developer and the permitted successors and assigns of the Developer. Whenever the term "Developer" is used herein, such term shall include any other permitted successors and assigns as herein_provided. /1— II . [ §200] AGENCY ASSISTANCE A. [ §201 ] Agency Loan Upon the issuance of a certificate of occupancy or temporary certificate of occupancy for the Developer Improvements, and subject to the applicable terms and conditions of this Agreement, the Agency agrees to loan to the Developer the sum of Two Hundred Fifty Thousand Dollars ($250,000) (the "Agency Loan" ) . B. [ §202 ) Note and Deed of Trust The Agency Loan shall be evidenced by the Developer' s execution of a "Promissory Note, " in the form of Attachment No. 3 hereto, which is incorporated herein. The Promissory Note shall bear simple interest at the rate of five percent (5%) per annum for term of the loan. The Developer shall make monthly payments of principal and interest during the third (3rd) through tenth (10th) years of the Agency Loan, with payments amortized over the eight (8) year repayment period and with the loan balance due in full upon the tenth (10th) anniversary of the Agency Loan. The full amount of the Promissory Note, with all interest accrued thereon, shall be immediately due and payable upon the Developer' s uncured default of this Agreement and/or the Promissory Note. The Developer' s obligations pursuant to the Promissory Note shall be secured by the Developer' s execution of a "Deed of Trust" in the form of Attachment No. 4 hereto, which is incorporated herein. The Deed of Trust shall be made subordinate to the obligations pursuant to any multifamily housing revenue.bond • issuance which provides funds for the construction of. the Project. The Agency may, in its reasonable discretion, subordinate the Deed of Trust to any mortgage or deed of trust encumbering the Site which secures other financing obtained by the Developer necessary to undertake the development of the Site in accordance with this Agreement, provided that the Agency determines that such subordination is necessary to enable the Developer to develop the Developer Improvements. The Developer shall execute and deliver a copy of the Promissory Note and the Deed of Trust to the Agency as a condition precedent to the disbursement of the Agency Loan Proceeds. In connection with the Deed of Trust, the Agency may obtain, at the expense of the Developer, an ALTA lender' s policy or policies of title insurance, together with such endorsements as are reasonably requested by the Agency. 12/04/91 7100u/2460/050 -5- This duplicate Page #5 includes Developers Original initialling C. [ §203 ] Agency Grant Upon each of the first (1st) through fifth (5th) anniversaries of the issuance of a certificate of occupancy for the Developer Improvements, and provided the Developer is not in default of this Agreement, the Agency shall grant to the Developer the sum of One Hundred Thousand Dollars ($100,000) (for a total of Five Hundred Thousand Dollars ($500,000) ) . Such payments shall be in consideration for the Developer' s agreement to provide housing to Very Low, Lower, and Low- and Moderate-Income Households at an Affordable Rent (as those terms are defined in Section 402 hereof) , and to provide a high quality level of construction materials and amenities in the development and operation of the Developer Improvements, as set forth in this Agreement and the attachments hereto. D. [ §204] Submission of Evidence of Financing Commitments and Loan Closing As required in this Agreement and within the time established therefor in the Schedule of Performance (Attachment No. 5) , the Developer shall submit to the Agency evidence that the Developer has obtained sufficient equity capital and firm and binding commitments for financing necessary to undertake the development of the Site in accordance with this Agreement. The Agency shall approve or disapprove such evidence of financing commitments within the time set forth in the Schedule of Performance. Approval shall not be unreasonably withheld or conditioned. If the Agency shall reasonably disapprove any such evidence of financing, the Agency shall do so by written notice to the Developer stating the reasons for such disapproval and the Developer shall diligently pursue and shall within ninety (90) days of such notice submit to the Agency new. evidence of financing. The Agency shall, approve or disapprove such new evidence of financing in the same manner and within the same times established in this Section 204 for the approval or disapproval of the evidence of financing as initially submitted to the Agency. Such evidence of financing shall include the following: 1. A copy of the commitment obtained by the Developer for the mortgage loan or loans for financing to fund the construction of the applicable Developer Improvements. The commitment for financing shall be in such form and content acceptable to the Agency as reasonably evidences a legally binding, firm and enforceable commitment subject to the construction lender' s customary and normal conditions and terms. That commitment letter from Wells Fargo National Bank dated September 23, 1991 which has been submitted to the Agency is hereby approved as meeting the requirements of this - Section 1; and 12/04/91 7100u/2460/050 -6- 2 . A copy of the contract between the Developer and one or more general contractors for the construction of the applicable Developer Improvements, certified by the Developer to be a true and correct copy thereof; and 3 . A financial statement and/or other documentation satisfactory to the Agency as evidence of other sources of capital sufficient to demonstrate that the Developer has adequate funds to cover the equity requirements of construction of the Improvements and the requirements of Section 406 hereof. Such funds shall be in the amount of at least One Million Five Hundred Thousand Dollars ($1, 500, 000) from the commencement of construction through the second (2nd) anniversary of the date a certificate of occupancy for the Developer Improvements is issued by the City. III . [ 000] DEVELOPMENT OF THE SITE A. [ 001 ] Development of the Site by the Developer At its option, the Agency shall have the right to review and approve the plans and specifications for the Developer Improvements as set forth in Sections 302 through 305 hereof. 1 . [ 002 ] Scope of Development The Site shall be developed as provided in the Scope of Development (Attachment No. 6) . The Developer shall d commence and complete construction of such improvements (the "Developer Improvements" ) by the respective times established therefor in the Schedule of Performance (Attachment No. 5) subject to Section 503 of this Agreement. The development shall include any plans and specifications submitted to City and/or Agency for approval, and shall incorporate or show compliance with all applicable mitigation measures. 2 . [ 003 ] Site Plan The Developer has prepared and submitted to the Agency for its approval Design Drawings and a Site Plan and related documents containing the overallplan for development of the Site in sufficient detail to enable the Agency to effectively evaluate the proposal for relationship of structures to landscape, physical and environmental considerations and conformity to the requirements of this Agreement. The Agency has approved such submissions. The Site shall be developed as established in this Agreement and such documents except as changes may be mutually agreed upon between the Developer and the Agency. Any such changes shall be-:.within the limitations of the Scope of Development which is attached to this Agreement as Attachment No. 6 and incorporated herein. 12/04/91 7100u/2460/050 -7- 3 . [ §304] Construction Drawings and Related Documents By the time set forth therefor in the Schedule of Performance (Attachment No. 5) , the Developer shall prepare and submit to the City construction drawings, landscape plans, and related documents for development of the Site for building permit( s) . During the preparation of all drawings and plans, staff of the Agency, City, and the Developer shall hold regular progress meetings to coordinate the preparation of, submission to, and review of drawings, plans and related documents by the Agency. The staff of Agency, City, and the Developer shall communicate and consult informally as frequently as is necessary to insure that the formal submittal of any documents to the Agency can receive prompt and speedy consideration. The Developer shall be obligated to obtain all City approvals._ required for the construction of the Developer Improvements. 4. [ 005] Approval of Plans, Drawings, and Related Documents The Agency and the City shall have the right of planning review, including plan check, of all plans and submissions, including any changes therein. The Agency shall approve or disapprove such plans and submissions within the same time periods established by the City for its review of construction and architectural plans and submissions. During each stage of the processing for Developer Improvements, the Agency and the City shall have the right to require additional information and shall advise the Developer if any submittal of plans or drawings is not complete or not in accordance with City/Agency procedures. If the Agency or the City determines that such a submittal is not complete or not in accordance with procedures, such tender shall not be deemed to constitute a submittal for purposes of satisfying the Schedule of Performance (Attachment No. 5) . If the Developer desires to make any substantial changes in the construction plans after their approval by the Agency and the City, the Developer shall submit the proposed change to the Agency and the City for their approval. If the construction plans, as modified by the proposed change, conform to the requirements of Section 304 of this Agreement and the Scope of Development (Attachment No. 6) the Agency and the City shall approve or reject the proposed change and notify the Developer in writing within such periods as are established by the City for its review of such changes to construction and architectural plans and specifications. Such change in construction plans shall, in no event, be deemed approved by the Agency or the City without such an actual approval. 12/04/91 7100u/2460/050 -8- 5 . [ §306] Cost of Construction All the costs of site preparation, planning, designing and constructing the Developer Improvements and developing the Site and constructing all improvements thereon shall be borne solely by the Developer. As more fully set forth in the Scope of Development (Attachment No. 6) , the Developer Improvements shall be constructed to the same or better standard of quality as the apartment project constructed by the Developer at 12200 Valley View, Garden Grove, California. The Developer shall also bear all costs related to discharging the duties of the Developer set forth in this Agreement. The Developer assumes the responsibility to construct and shall let contracts for or cause to be constructed all off-site improvements developed pursuant to this Agreement. The Developer shall be responsible for all fees associated with development of the Developer Improvements, including, without limitation, school facilities fees and impact fees ( "School Fees" ) . Upon completion of the Developer Improvements, the Developer shall submit to the Agency a detailed and itemized report of its costs of development. The Agency agrees, upon request therefor by the Developer, to consider, but in no way is obligated, to issue or participate in the issuance of multi-family housing bonds ( "Bonds" ) to assist in financing of the Project. For any such financing to proceed, it is understood that: (i), the entire cost of such financing, including without limitation costs of issuance, debt service, and financial advisement of the Agency, shall be borne by the Developer; (ii ) the bonds shall have a rating of "A" or better from Moody' s or Standard and Poor' s; and (iii ) neither the Agency nor the City shall have any liability, contingent or otherwise, concerning or with respect to such bonds. 6. [ §307 ] Construction Schedule The Developer shall promptly begin and thereafter diligently prosecute to completion the construction of the Developer Improvements, with all construction commencing and being completed within the times specified therefor in the Schedule of Performance (Attachment No. 5) , subject to Section 503 of this Agreement. • 7 . [ §308] Bodily Injury and Property Damage Insurance The Developer shall defend, indemnify, assume all responsibility for and hold the Agency, its officers, agents, representatives and employees harmless from all claims or suits for, and damages to, property and injuries to persons, including accidental death (including reasonable attorneys' 12/04/91 7100u/2460/050 -9- fees and costs) , which may be caused by any of the Developer' s acts, omissions or failures to act under this Agreement, whether such activities or performance thereof be by the Developer or anyone directly or indirectly employed or contracted with by the Developer and whether such damage shall accrue or be discovered before or after termination of this Agreement. The Developer shall take out and maintain during the life of this Agreement a comprehensive liability policy in the amount of One Million Dollars ($1, 000,000) combined single limit policy, including contractual liability, or such other higher amount as the Developer' s construction lender may require, as shall protect the Developer, City and Agency from claims fo.r such damages. The Developer shall furnish a certificate of insurance countersigned by an authorized agent of the insurance carrier on a form of the insurance carrier setting forththe general provisions of the insurance coverage. This countersigned certificate shall name the City and the Agency ( and their respective officers, agents, and employees) as additional insureds under the policy. The certificate by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify City and the Agency of any material change, cancellation or termination of the coverage at least thirty (30) days in advance of the effective date of any such material change, cancellation or termination. Coverage provided hereunder by the Developer shall be primary insurance and not contributing with any insurance maintained by the Agency or City, and the policy shall contain such an endorsement. The insurance policy or the certificate of insurance shall contain a waiver of subrogation for the benefit of the City and the Agency. The required certificate shall be furnished by the Developer at the time set forth therefor in the Schedule of Performance (Attachment No. 5) . The Developer shall also furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that any contractor with whom it has contracted for the _ performance of work on the Site or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. 8. [ §309] City and Other Governmental Agency Permits Before commencement of construction or development of any buildings, structures or other works of improvement upon the Site or related offsite improvements, the Developer shall, at its own expense, take all actions necessary and proper to secure or cause to be secured any and all permits which may be required by the City or any other governmental agency affected by such construction, development or work. It 12/04/91 7100u/2460/050 -10- is understood that the Developer' s obligation is to pay all necessary fees and to timely submit to the City final drawings with final corrections necessary to obtain a building permit; the Agency will, without obligation to incur liability or expense therefor, use its best efforts to expedite issuance of building permits and certificates of occupancy for construction that meets the requirements of the City Code. The Developer agrees and acknowledges that it shall be responsible for the cost of such environmental review and clearance as may be deemed necessary or appropriate in connection with the processing of land use entitlements with respect to the Site. 9 . [ §310] Rights of Access F.or the purpose of assuring compliance with this Agreement, representatives of the Agency and the City shall have the right of access to all portions of the Site without charges or fees, at normal construction hours during the period of construction for the purposes of this Agreement, including, but not limited to, the inspection of the work being performed in constructing the Developer Improvements, so long as they comply with all safety rules. Such representatives of the Agency or the City shall be those who are so identified in writing by the Executive Director of the Agency. The Agency shall indemnify and hold the Developer and its partners, employees and agents harmless from any bodily injury or related damages arising out of the activities of the Agency and the City as referred to in this Section 310. The Developer agrees to place and maintain on the Site during construction of the Developer Improvements one (1) sign indicating the respective roles of the Developer and the Agency in the Developer Improvements. The cost of the sign shall be borne solely by the Developer. 10. [ §311] Local, State and Federal Laws The Developer shall carry out the construction of the Developer Improvements in conformity with all applicable laws, including all applicable federal and state labor standards; provided, however, Developer and its contractors, successors, assigns, transferees, and lessees do not waive their rights to contest any such laws, rules or standards. 11. [ 012 ] Antidiscrimination During Construction The Developer, for itself and its successors and assigns, agrees that in the construction of the Developer Improvements provided for in this Agreement, the Developer will not discriminate against any employee or applicant for employment because of race, color, creed, religion, age, . sex, marital status, handicap, national origin or ancestry. 12/04/91 7100u/2460/050 -11- B. [ §313.] Taxes, Assessments, Encumbrances and Liens The Developer shall pay prior to delinquency all ad valorem taxes and assessments on the Site. Prior to issuance of a Certificate of Completion pursuant to Section 315, except for encumbrances allowed pursuant to this Agreement, including the lien of any multifamily housing revenue bond issuance__.which provides funds for the construction of the Project, the Developer shall not place on the Site or any part thereof any mortgage, trust deed, encumbrance or lien. Prior to issuance of a Certificate of Completion pursuant to Section 315, the Developer shall remove or have removed any levy or attachment made on any of the Site or any part thereof, or assure the satisfaction thereof within a reasonable time but in any event prior to a sale thereunder. After the issuance of a Certificate of Completion, the' restrictions set forth in the prior two sentences shall terminate and be of no further .force or effect. Nothing herein contained shall be deemed to .. prohibit the Developer from contesting the validity or. amounts of any tax assessment, encumbrance or lien, nor to limit the remedies available to the Developer in respect thereto. C. [ 014] Prohibition Against Transfer of the Site, the Buildings or Structures Thereon Prior to the Developer' s prepayment of the Agency Loan, the Developer shall not, except as permitted by this Agreement (including without limitation Section 107) , . without prior written approval of the Agency, which approval shall not be unreasonably withheld, make any total or partial sale, transfer, conveyance, assignment or lease of the whole or any part of the Site or of the buildings or structures on the Site. The Agency shall approve such a transfer upon receipt by the Developer of (i) reasonable evidence satisfactory to the Agency that the transferee has assumed in writing, and in full, the Developer' s duties and obligations under this Agreement and the attachments hereto, (ii) an opinion of counsel .of :the transferee that the transferee has duly assumed the obligations of the Developer under this Agreement, and that such obligations and this Agreement are binding on the transferee, and (iii) the Agency receives evidence acceptable to the Agency that either (a) the transferee has experience in the ownership, operation and management of rental housing developments such as the Developer Improvements without any record of material • • violations of discrimination restrictions or other state or federal laws or regulations applicable to such developments, or (b) the transferee agrees to retain a property management firm with the experience and record described in Section (a) above. This, prohibition shall not be deemed to prevent construction loans allowable pursuant to this Agreement, the granting of temporary or permanent easements or permits to facilitate the development of the Site or to prohibit or restrict the leasing of any part or parts of a building or structure for occupancy for a term commencing upon completion. This prohibition shall 12/04/91 7100u/2460/050 -12- not be deemed to prevent a transfer of a general or limited partnership interest in the Developer, provided that a general or limited partner of the Developer does not convey more than forty-nine percent (49%) of its partnership interest, and each partner of the Developer shall retain at least fifty-one percent (51%) of its original ownership of the Partnership. D. [ §315) Certificate of Completion Within thirty (30) days after completion of all construction and development required by this Agreement to be completed by the Developer upon the Site in conformity with this Agreement, submission of a detailed and itemized report of its costs of development, and request for a Certificate of Completion, the Agency shall furnish the Developer with a "Certificate of Completion. " Such Certificate shall be substantially in the form of Attachment No. 7 attached hereto and incorporated herein. The Agency shall not unreasonably withhold any such Certificate of Completion. Such Certificate of Completion shall be a conclusive determination of satisfactory completion of the construction required by this Agreement upon the Site and the Certificate of Completion shall so state. After recordation of such Certificate of Completion, any party then owning or thereafter purchasing, leasing or otherwise acquiring any interest therein shall not (because of such ownership, purchase, lease or acquisition) , incur any obligation or liability under this Agreement except that such party shall be bound by the covenants contained in the "Declaration of Covenants, Conditions and Restrictions" (Attachment No. 8) , Section 402 of this Agreement, and other documents establishing covenants on the Site in accordance with the provisions of this Agreement. The Certificate of Completion shall be in such form as to permit it to be recorded in the Recorder' s Office of Orange -County. If the Agency refuses or fails to furnish a Certificate of Completion for the Developer Improvements after written request from the Developer, the Agency shall, within thirty (30) days of written request therefor, provide the Developer with a written statement of the reasons the Agency has refused or failed to furnish a Certificate of Completion. The statement shall also contain Agency' s opinion of the actions that the Developer must take to obtain a Certificate of • Completion. If the reason for such refusal is confined to the immediate availability of specific items of materials for landscaping, the Agency may in its discretion issue its Certificate of Completion upon the posting of a bond or an unconditional letter of credit (in form and substance acceptable to the Agency and its legal counsel) by the Developer with the Agency in an amount representing a fair value of the work not yet completed, or upon withholding from funds otherwise payable pursuant to Section 201 an amount estimated in good faith by the Agency to represent one and one-half (1-1/2 ) times the cost of such work not yet completed. 12/04/91 7100u/2460/050 -13- Such Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of any mortgage, or any insurer of a mortgage securing money loaned to finance the improvements, or any part thereof. Such Certificate of Completion is not a notice of completion as referred to in the California Civil Code, Section 3093 . E. [ §316] Mortgage, Deed of Trust, Sale and Lease-Back Financing; Rights of Holders 1 . [ §317 ] No Encumbrances Except Mortgages, Deeds of Trust, or Sale and Lease-Back for Development Mortgages, deeds of trust and sales and . lease-backs are to be permitted before completion of the construction of the Developer Improvements, but only for the purpose of securing loans of funds to be used for the construction of the Developer Improvements, and any other purposes necessary and appropriate in connection with the construction required under this Agreement. The Developer shall notify the Agency in advance of any mortgage, deed of trust or sale and leaseback financing, if the Developer proposes to enter into the same before completion of the Developer Improvements. The words "mortgage" and "trust deed" as used hereinafter shall include sale and leaseback. The Developer shall not enter into any such conveyance for financing or refinancing without the prior written approval of the Agency, which approval Agency agrees to give if any such conveyance for financing is given to a responsible financial or lending institution or other acceptable person or entity. 2 . [ §318] Holder Not Obligated to Construct Improvements The holder of any mortgage or deed of trust authorized by this Agreement shall not be obligated by the provisions of this Agreement to construct or complete the Developer Improvements or to guarantee such construction or completion; nor shall any covenant be construed so to obligate such holder. Nothing in this Agreement shall be deemed to construe, permit or authorize any such holder to devote the Site to any uses or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. 12/04/91 7100u/2460/050 -14- 3 . [ §319 ] Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure With respect to any mortgage or deed of trust granted by Developer as provided herein, whenever the Agency shall deliver any notice or demand to Developer with respect to any breach or default by the Developer in completion of the Developer Improvements, the Agency shall at the same time deliver to each holder of record of any mortgage or deed of trust authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights of the Agency are concerned) have the right, at its option, within sixty (60) days after the receipt of the notice (or if such default cannot reasonably be cured by such holder within sixty days, within such time period as is reasonably necessary to cure such default) , to cure or remedy or commence to cure or remedy any such default and to add the cost thereof to the mortgage debt and the lien of its mortgage. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction, rehabilitation or completion of the Developer Improvements (beyond the extent necessary to conserve or protect the construction already made) without first having expressly assumed the Developer' s obligations to the Agency by written agreement satisfactory to the Agency. The holder (or the holder' s successor in interest) , in that event, must agree to complete, in the manner provided in this Agreement, the Developer Improvements to which the lien or title of such holder relates, and submit evidence reasonably satisfactory to the Agency that it has the qualifications and financial responsibility necessary to perform such obligations. Any such holder (or the holder' s successor in interest) properly completing such construction shall be entitled, upon compliance with the requirements of Section 315 of this Agreement, to a Certificate of Completion, and shall be entitled to payment of the Agency Loan and Agency Grant upon compliance with all applicable covenants and the occurrence of all applicable conditions. 4. [ §320] Right of the Agency to Cure Mortgage or Deed of Trust Default In the event of a mortgage or deed of trust default or breach by the Developer prior to the completion of the Developer Improvements or any part thereof and the holder of any first mortgage or first deed of trust has not exercised its option to construct, the Agency shall have the right, within sixty (60) days after receipt of notice of such default, to cure the default. In such event, the Agency shall be entitled to reimbursement from the Developer of all proper costs and expenses associated with and attributable to the curing of the first mortgage or first deed of trust default or breach of this Agreement by the Developer and incurred by the Agency in curing such default. The Agency shall also be 12/04/91 7100u/2460/050 -15- entitled to a lien upon the Site to the extent of such incurred costs and disbursements. Any such lien shall be subject to the prior construction financing mortgages or deeds of trust. li F. [ 021 ) Environmental Matters 1. Definitions For the purposes of this Section 321, the following terms shall have the meanings herein specified: (a) The term "Hazardous Materials" shall mean (i) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U. S.C. Section 9601 et seq. ) , as amended from time to time, and regulations promulgated thereunder; (ii ) any "hazardous substance" as defined by the Carpenter-Presley-Tanner. Hazardous Substance Account Act (California Health and Safety Code Sections 25300 et seq. ) , as amended from time to time, and regulations promulgated thereunder; (iii ) asbestos; (iv) polychlorinated biphenyls; (v) petroleum, oil, gasoline (refined and unrefined) and their respective by-products and constituents; and (vi ) any other substance, whether in the form of a solid, liquid, gas or any- other form whatsoever, which by any "Governmental Requirements" (as defined in .Subparagraph (c) of Paragraph 1 of this Section 321) either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as "hazardous" or harmful to the environment. (b) The term "Hazardous Materials Contamination" shall mean the contamination (.whether presently existing or. hereafter occurring) of the improvements, facilities, soil, groundwater, air or other elements on, in or of the Site by Hazardous Materials, or the contamination of the buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a result of Hazardous Materials- at any time (whether before or after the date of this Agreement) emanating from the Site. . (c) The term "Governmental Requirements" shall mean all laws, ordinances, statutes, codes., rules, regulations, orders and decrees of the United States, the state, the county, the city, or any other political subdivision in which the Site is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Agency, the Developer or the Site. 2. Obligation of. Developer to Remediate the Site Notwithstanding the obligation of Developer to indemnify Agency pursuant to Paragraph 4 of this Section 321 or any other obligations of the Developer pursuant to this Agreement, Developer shall, at its sole cost and expense, 12/04/91 7100u/2460/050 -16- promptly take ( i ) all actions required by any federal, state or local governmental agency or political subdivision or any Governmental Requirements with respect to the entire Site, and (ii ) all actions necessary to make full economic use of the Site for the purposes described in this Agreement, which actions, requirements or necessity arise from the presence upon, about or beneath the Site of any Hazardous Materials or Hazardous Materials Contamination regardless of when such Hazardous Materials or Hazardous Materials Contamination were introduced to the Site and regardless of who is responsible for introducing such Hazardous Materials or Hazardous Materials Contamination to the Site (the "Site Remediation" ) . The Site Remediation shall include, but not be limited to, investigation of the environmental condition of the Site, the preparation of any feasibility studies or reports and the performance of any cleanup, remedial, removal or restoration work required. The Developer shall take all actions necessary to promptly restore the Site to an environmentally sound condition for uses _ contemplated by this Agreement, notwithstanding any lesser standard of remediation allowable under applicable Governmental Requirements. The Developer' s obligations under this Paragraph 2 of this Section 321 shall be referred to as the "Site Remediation" and shall survive the issuance of the Certificate of Completion. 3 . Developer' s Representations and Warranties Developer hereby represents and warrants to the Agency that, to the best of its knowledge: (a) No Hazardous Materials or Hazardous Contamination exist or are located on, in or under the Site. (b) No portion of the Site is being used or, to Developer' s best knowledge after diligent inquiry, has ever been used prior to Developer' s ownership or occupancy thereof, for the disposal, storage, treatment, processing or other handling of Hazardous Materials and the Site is not affected by any Hazardous Materials Contamination. (c) No asbestos or asbestos-containing materials have been installed, used, incorporated into, or disposed of on the Site. (d) No polychlorinated biphenyls are located on or in the Site, in the form of electrical transformers, fluorescent light fixtures with ballasts, cooling oils, or any other device or form. (e) No underground storage tanks are located on the Site or were located on the Site and subsequently removed or filled. • 12/04/91 7100u/2460/050 -17- (f) No investigation, administrative order or notice, consent order and agreement, litigation or settlement with respect to Hazardous Materials or Hazardous Materials Contamination is pending or, to Developer' s best knowledge after diligent inquiry, threatened, with respect to the Site or the existing operations thereon. (g) The Site and its existing uses comply and, to Developer' s best knowledge after diligent inquiry, their prior uses at all times have complied with all applicable Governmental Requirements relating to environmental matters or Hazardous Materials. There is no condition on the Site which is in violation of any applicable Governmental Requirements relating to Hazardous Materials, and Developer has received no communication from or on behalf of any federal, state or local governmental authority or agency that any such condition exists. The Site is not currently on and, to Developer' s best knowledge after diligent inquiry, have never been on any federal or state "Superfund" list, and Developer is not aware that the Site is anticipated or threatened to be placed on such list. (h) True and correct copies of all (i) Developer' s internal inspection reports with respect to the Site (ii ) environmental audits, reports and studies received by Developer which concern the Site, and (iii) inspection reports conducted during the last two years from each applicable regulatory authority with respect to the Site in the possession or control of Developer, have been delivered to Agency. Developer shall deliver to Agency within five (5) days of Developer' s receipt thereof all environmental, reports, audits or studies, internal inspection reports and regulatory inspection reports, which concern the Site generated or received by Developer prior to the repayment in full of the Promissory Note. 4. Indemnification Developer shall save, protect, defend, indemnify and hold harmless Agency from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines and monetary sanctions) , losses, costs or expenses (including, without limitation, consultants' fees, investigation and laboratory fees, reasonable attorneys' fees and remedial and response costs) (the foregoing are hereinafter collectively referred to as "Liabilities" ) which may now or in the future be incurred or suffered by Agency by reason of, resulting from, in connection with or arising in any manner whatsoever as a direct or indirect result of (i) the ownership of all or any part of the Site, (ii) any act or omission on the part of either Agency or Developer, or their agents, employees, contractors or 12/04/91 7100u/2460/050 -18- invitees, ( iii ) the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission or release from the Site of any Hazardous Materials or Hazardous Materials Contamination, (iv) the environmental condition of the Site, and (v) any Liabilities incurred under any Governmental Requirements relating to Hazardous Materials. Developer' s obligations under this Section 321 shall survive after the issuance of the Certificate of Completion, and shall be a covenant running with the land in perpetuity, binding on all successors and assigns of Developer' s interest in either this Agreement or the Site. 5'. Duty to Prevent Hazardous Material Contamination. The Developer shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, the Developer shall install and utilize such equipment and implement and adhere to such procedures as are consistent with the highest standards as respects the' disclosure, storage, use, removal and disposal of Hazardous Materials. 6. Environmental Inquiries. The Developer shall notify the Agency, and provide to the Agency a copy or copies, of the following environmental permits, disclosures, applications, entitlements or inquiries relating to the Site: Notices of violation, notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist orders, reports filed pursuant to self-reporting requirements and reports filed or applications made pursuant to any Governmental Requirement relating to . Hazardous Materials and underground tanks, and the Developer shall report to the Agency, as soon as possible after each incident, any unusual, potentially important incidents, including but not limited to, the following: (a) All required reports of releases of Hazardous Materials, including notices of any release of Hazardous Materials as required by any Governmental Requirement; • (b) All fires; (c) All instances where asbestos has been or may be disturbed by repair work, tenant improvements or other activities in buildings containing asbestos; (d) All notices of suspension of any permits; 12/04/91 7100u/2460/050 -19- (e) All notices of violation from Federal, State or local environmental authorities; (f) All orders under the State Hazardous Waste Control Act and the State Hazardous Substance Account Act and • corresponding federal statutes, concerning investigation, compliance schedules, clean up, or other remedial actions; (g) All orders under. the Porter-Cologne Act, including corrective action orders, cease and desist orders, and clean-up and abatement orders; (h) Any notices of violation from OSHA or Cal-OSHA concerning employees' exposure to Hazardous Materials; (i.) All complaints and other pleadings filed against the Developer and/or the Agency relating to the Developer's storage, use, transportation, handling or disposal of Hazardous Materials on the Site. In the event of a release of any Hazardous Materials into the environment, the Developer shall, as soon as possible after the release, furnish to the Agency a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request of the Agency, the Developer shall furnish to the Agency a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Site including, but not limited to, all permit applications, permits and reports including, without limitation, those reports and other matters which may be characterized as confidential. IV. [ §400] USE OF THE SITE A. [ §401] Use in Conformance with Agreement The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Site or any part thereof that, during construction and thereafter, the Developer, such such successors and such •assignees, shall use, operate and maintain the Site in conformity with this Agreement and shall devote the Site to uses specified in this Agreement for the periods of time specified therein. B. [ §402 ] Affordable Rental Housing 1. Number of Units. The Developer covenants and agrees to develop a total of one hundred sixty-four (164). multifamily housing units on the Site in conformance with the 12/04/91 7100u/2460/050 -20- Scope of Development (Attachment No. 6) . The Developer agrees to make available, restrict occupancy to, and rent thirty-two (32 ) of the units to "Very Low Income Households" and sixteen (16) additional units to "Persons and Families of Low- and Moderate Income" (for a total of forty-eight (48) restricted units) , all at an "Affordable Rent" (the "Affordable Units" ) . However, the Developer shall be obligated to make available, restrict occupancy to, and rent sixteen (16) of the units to "Very Low Income Households, " sixteen ( 16) additional units to "Lower Income Households, " and sixteen (16) additional units to "persons and families of Low- and Moderate Income, " in lieu of the requirements of the preceding sentence, for the duration of the "Affordability Period" (as defined in paragraph 2 of this Section 402 ) , upon the occurrence of all three of the following events: (a) the "Qualified Development Period" (as defined in the Regulatory Agreement and Declaration of Restrictive Covenants by and among the City, Developer and Dai-Ichi Kangyo Bank of California, dated as of December 1, 1991) shall have elapsed; and (b) the "Section 8 Program" (as defined in paragraph 8 of this Section 402) or a reasonably similar successor or replacement federal rental subsidy or voucher program no longer exists; and (c) neither the City nor the Agency has instituted a rental subsidy or voucher program designed to subsidize the rents of Very Low Income Households at levels equivalent to the Section 8 Program. The location of the Affordable Units shall be dispersed throughout the Developer Improvements and shall be reasonably acceptable to the Agency. The distribution of sizes (in terms of number of bedrooms) of the Affordable Units shall be in the same proportion as the distribution of sizes of all units within the Developer Improvements. There shall be not less than six (6) and not more than ten (10) Affordable Units on each floor of the Developer Improvements. Those Affordable Units located on the first floor of the Developer Improvements shall each be not less than Five Hundred Seventy (570) square feet. "Very Low Income Household" shall mean a household earning not greater than fifty percent (50%) of Orange County median income, as determined by the United States Department of Housing and Urban Development, as set forth in Health and Safety Code Section 50105. "Lower Income Household" shall mean a household earning not greater than eighty percent (80%) of Orange County median income, as determined by the United States Department of Housing and Urban development, as set forth in Health and Safety Code Section 50079. 5. "Persons and Families of Low and Moderate Income" shall mean households earning not greater than one hundred twenty percent (120%) of Orange County median income, as determined by the United States Department of Housing and Urban Development, as set forth in Health and Safety Code Section 50093 . 12/04/91 7100u/2460/050 -21- "Affordable Rent" shall have the meaning set forth in Health and Safety Code Section 50053 , as further defined in subparagraph 5 of this Section 402 . 2 . Duration of Affordability Requirements. The Affordable Units shall be subject to the requirements of this Section 402 for thirty (30) years, beginning on the date of the City' s issuance of a certificate of occupancy for the Developer Improvements (the "Commencement Date" ) . The duration of this requirement shall be known as the "Affordability Period. " All tenants residing in the Affordable Units during the last two (2) years of the Affordability Period shall be given notice at least once every six (6) months of the expiration date of this requirement, and that the rent payable on the Affordable Unit may be raised to a market rate rent at the end of the Affordability Period. The Developer shall execute, acknowledge and deliver to the Agency a "Declaration of Covenants,. Conditions and Restrictions, " in the form of Attachment No. 8 hereto and incorporated herein (the "Declaration" ) , which sets forth all of the requirements of this Section 402 of the Agreement in recordable form. The Developer consents to the recording of the Declaration in the official records of Orange County, California. 3 . Selection of Tenants. The Developer shall give notice to the Agency of the City' s issuance of the certificate of occupancy for the Developer Improvements and the Affordable Units, and shall give notice of the vacancy of each and any Affordable Unit thereafter. The Agency shall have five (5) working days from the receipt of such notice to deliver to the Developer a list of prospective tenants for such vacancy. The Developer shall send written notice of such vacancy to each person on such list. Such notice shall notify the recipient that he or she must directly contact the Developer or its designated leasing agent within fifteen (15) working days to apply for tenancy of such vacant Affordable Unit. The Developer shall not rent or lease such Affordable Unit during such fifteen (15) day period to any tenant not notified- of such vacancy by the Agency. In the event that no tenant which is reasonably acceptable to the .Developer applies for tenancy of the vacant unit within such time period, the Affordable Unit may be leased to another tenant selected by the Developer who meets all of the other requirements provided herein. 4. Income of Tenants. Prior to the rental or lease of any Affordable Unit to a tenant, and annually thereafter within thirty (30) days of the anniversary date of the tenant' s occupancy of the Affordable Unit, the Developer shall submit to the Agency a completed income computation and certification form, in the form of Attachment No. 9 hereto or such other form as may be provided by the Agency. The Developer shall certify that to the best of its knowledge each tenant leasing an 12/04/91 . 7100u/2460/050 -22- Affordable Unit is a Very Low Income Household, or a Person or Family of Low- and Moderate-Income, whichever is applicable, and meets the eligibility requirements established for the Affordable Unit. The Developer shall obtain an income certification from the tenant of each Affordable Unit and shall certify that, to the best of the Developer' s knowledge, the income of the tenant is truthfully set forth in the income certification form. The Developer shall verify the income certification of the tenant in one or more of the following methods as specifically requested by the Agency: ( 1) obtain two (2 ) paycheck stubs from the tenant' s two (2) most recent pay periods. (2) obtain a true copy of an income tax return from the tenant for the most recent tax year in which a return was filed. (3) obtain an income verification certification from the employer of the tenant. (4) obtain an income verification certification from the Social Security Administration and/or the California Department of Social Services if the tenant receives assistance from such agencies. (5) obtain an alternate form of income verification reasonably requested by the Agency, if none of the above forms of verification is available to the Developer. A person or family who at the time of income certification qualified as a Very Low Income Household or Person or Family of Low- and Moderate-Income shall continue to be deemed so qualified, until such time as the person or family' s income is redetermined and the person or family is determined by the Agency to no longer be so qualified, even if such person or family' s income has subsequently increased to an amount above the applicable income level. Upon the Agency' s determination that the tenant is no longer qualified as a Very Low Income Household or Person or Family of Low- and Moderate-Income, the next available unit of comparable size must be rented to (or held vacant and available for immediate occupancy by) a Very Low Income Household or Person or Family of Low— and Moderate-Income, whichever is applicable. Such new tenant shall then constitute a Very Low Income Household or Person or Family of Low- and Moderate-Income for the purposes of this Section 402, and until such next available unit is rented to such tenant, the former Very Low Income Household or Person or Family of Low- and Moderate-Income who has ceased to qualify as such shall be deemed to continue to be a Very Low Income Household or Person or Family of Low- and Moderate-Income for the purposes of this Section 402 . In 12/04/91 7100u/2460/050 -23- • addition, the Developer shall annually submit to the Agency a certified statement of the rental rate, income, ages and family size of each of the tenants of the Affordable Units in a form of Attachment No . 10 hereto or such other form as may be provided by the Agency. 5 . Determination of Affordable Rent for the Affordable Units. Each Affordable. Unit shall be rented at an "Affordable Rent" to be established by the Agency as provided herein. The maximum monthly rental amount for the thirty-two (32) Affordable Units required to be rented to Very Low Income Households shall be established at one-twelfth (1/12) of thirty percent (30%) of fifty percent (50%) of 'Orange County median income, as determined by the United States Department of Housing and Urban Development. The maximum monthly rental amount for the Affordable Units required to be rented to Lower Income Households, if any, shall be established at one-twelfth (1/12th) of thirty percent (30%) of sixty percent (60%) of Orange County median income for tenants earning more than fifty percent (50%) and not more than sixty percent (60%) of Orange County median income, and one-twelfth (1/12th) of thirty percent (30%) of such tenant' s annual income for tenants earning more than sixty percent (60%) and not more than eighty percent (80%) of Orange County median income. The maximum monthly rental amount for the Affordable Units required to be rented to Persons of Low- and Moderate Income shall be established at one-twelfth (1/12th) of thirty percent (30%) of one hundred ten. percent (110%) of Orange County median income for tenants- earning more than eighty percent (80%) and not more than one hundred ten percent (110°%) of Orange County median income, and one-twelfth (1/12th) of thirty percent (30%) of such tenant' s annual income for tenants earning more than one hundred ten percent (110%) but not more than one hundred twenty percent (120%) of Orange County median income. The maximum monthly rental amount for each 'Affordable Unit rented to Persons of Low- and Moderate- Income shall be based upon the actual household size of the persons occupying the Affordable Unit. The maximum monthly rental amount for each Affordable Unit to be rented to Very Low Income Households and Lower Income Households shall be based upon the assumed household size of two (2) persons for each one (1) bedroom unit and three (3 ) persons for each two (2) bedroom unit, except as hereinafter provided. Upon the rental of any Affordable Unit to a Very Low Income Household which is a "Section 8 Recipient" , as defined in Section. 402(8) hereof ( "Section 8 Unit" ) , the maximum monthly rental amount for the next Affordable Unit rented to a Very Low Income Household which is not a Section 8 Recipient shall be based upon the actual household size of the person or persons occupying such Affordable Unit ( "Actual Household Size Unit" ) . In the event any such Section 8 Unit is vacated and rerented to a Very Low Income Household which is not a Section 8 Recipient, then upon 12/04/91 7100u/2460/050 -24- the next vacation of an Actual Household Size Unit, such vacated Actual Household Size Unit shall no longer be an Actual Household Size Unit and the maximum monthly rental amount for such Affordable Unit shall be based upon the assumed household size of two (2 ) persons if it is a one (1) bedroom unit and three (3) persons if it is a two bedroom unit. In no event, however, shall the rerenting of a Section 8 Unit to a Very Low Income Household which is not a Section 8 Recipient authorize the Developer to increase the rental amount charged to an existing tenant of an Actual Household Size Unit. Furthermore, the maximum number of Actual Household Size Units required at any one time shall be sixteen (16) . THE DEVELOPER UNDERSTANDS AND KNOWINGLY AGREES THAT THE MAXIMUM RENTAL PRICE TO BE ESTABLISHED BY THIS FORMULA IS NOT NECESSARILY EQUAL TO THE FAIR MARKET RENT AMOUNT OF THE AFFORDABLE UNITS, AND IS PROBABLY ESTABLISHED AT A PRICE WHICH IS SUBSTANTIALLY BELOW THE FAIR MARKET RENT AMOUNT. Developer Initials: (44V\ The maximum monthly rental amount for the Affordable Units shall be determined by the Agency not earlier than ninety (90) days after the date of issuance of building permits and not later than the Commencement Date. The maximum monthly rental amount of the Affordable Units shall be adjusted annually by the formula set forth above upon the publication of revised Orange County median income figures by the United States Department of Housing and Urban Development. 6. Senior Citizen Units. All of the units in the Developer Improvements, including without limitation the Affordable Units, shall be independent living apartments specially designed for the physical and social needs of "Senior Citizens" (persons fifty-five (55) years or older, subject to applicable law) in accordance with the requirements set forth in the Scope of Development (Attachment No. 6) . The units shall be comprised of one and two bedroom units, each with a private balcony or patio. The Developer shall state, in a prominent location in all advertising and marketing materials, that the Developer Improvements are designed for use and occupancy by Senior Citizens. Furthermore, the Developer shall restrict occupancy to Senior Citizens and "Qualified Permanent Residents" (as that term is defined in California Civil Code Section 51.3) , ' in the rental of both the Affordable Units and the other units in the Developer Improvements. Except as otherwise provided herein, at least one person in residence in each dwelling unit must must be a Senior Citizen, and other residents in the same 12/04/91 7100u/2460/050 -25- dwelling unit who are not Senior Citizens must be Qualified Permanent Residents. Temporary guests of a Senior Citizen or Qualified Permanent Resident shall be allowed for a period of not more than sixty (60) days in any twelve (12 ) month period. Upon the death,, dissolution of marriage, hospitalization or other prolonged absence of the Senior Citizen in a dwelling unit, any Qualified Permanent Resident who has continuously resided in the dwelling unit with such Senior Citizen shall be permitted to continue as a resident of that dwelling unit. "Permitted Health Care Residents" (as that term is defined in California Civil Code Section 51.3) shall be permitted to occupy any dwelling unit during any period that such person is actually providing live-in, long-term or hospice health care to a Senior Citizen tenant or Qualified Permanent Resident tenant for compensation. 7 . Bonds. In the event the Bonds (as defined in Section 306 hereof) are issued in connection with the acquisition, development or use of the Site, the Developer shall strictly comply with all covenants, conditions and requirements relating to the duties of the Developer pursuant to such Bonds and such agreements as are entered into in connection therewith. 8. Federal Housing Subsidies. The Agency shall use its best reasonable efforts,.. to assist the Developer to secure as tenants of the Affordable Units dedicated to Very Low Income Households persons who are recipients ("Section 8 Recipients" ) of federal certificates or vouchers for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor ("Section 8 Program" ) . For purposes of calculating the rent. payable by the tenant pursuant to Paragraph 5 of this Section, the amount paid to the Developer as a result of such certificates or vouchers shall not be deemed the payment of rent by the tenant. C. [ §403] Operating Expenses For a period of thirty (30) years beginning on the date of the City' s issuance of a certificate of occupancy or temporary certificate of occupancy for the Developer Improvements, the Developer shall provide a full-time - activities director, an on-site apartment manager and a van shuttle service which are available exclusively to and for the benefit of the tenants of the Developer Improvements. Such activities director shall be employed on the Site at least 12/04/91 7100u/2460/050 -26- the next vacation of an Actual Household Size Unit, such vacated Actual Household Size Unit shall no longer be an Actual Household Size Unit and the maximum monthly rental amount for such Affordable Unit shall be based upon the assumed household size of two (2 ) persons if it is a one (1) bedroom unit and , three (3) persons if it is a two bedroom unit. In no event, however, shall the rerenting of a Section 8 Unit to a. Very Low Income Household which is not a Section 8 Recipient authorize the Developer to increase the rental amount charged to an existing tenant of an Actual Household Size Unit. Furthermore, the maximum number of Actual Household Size Units required at any one time shall be sixteen ( 16) . THE DEVELOPER UNDERSTANDS AND KNOWINGLY AGREES THAT THE MAXIMUM RENTAL PRICE TO BE ESTABLISHED BY THIS FORMULA IS NOT NECESSARILY EQUAL TO THE FAIR MARKET. RENT AMOUNT OF THE AFFORDABLE UNITS, AND IS PROBABLY ESTABLISHED AT A PRICE WHICH IS SUBSTANTIALLY BELOW THE FAIR MARKET RENT AMOUNT. Developer Initials: O' 1v\ 1 The maximum monthly rental amount for the Affordable Units shall be determined by the Agency not earlier than ninety (90) days after the date of issuance of building permits and not later than the Commencement Date. The maximum monthly rental amount of the Affordable Units shall be adjusted annually by the formula set forth above upon the publication of revised Orange County median income figures by the United States Department. of Housing and Urban Development. 6. Senior Citizen Units. All of the units in the Developer Improvements, including without limitation the Affordable Units, shall be independent living apartments specially designed for the physical and social needs of "Senior Citizens" (persons fifty-five (55) years or older, subject to applicable law) in accordance with the requirements set forth in the Scope of Development (Attachment No. 6) . The units shall be comprised of one and two bedroom units, each with a private balcony or patio. The Developer shall state, in a prominent location in all advertising and marketing materials, that the Developer Improvements are designed for use and occupancy by Senior Citizens. Furthermore, the Developer shall restrict occupancy to Senior Citizens and "Qualified Permanent Residents" (as that term is defined in California Civil Code Section 51.3) , in the rental of both the Affordable Units and the other units in the Developer Improvements. Except as otherwise provided herein, at least one person in residence in each dwelling unit must must be a Senior Citizen, and other residents in the same 12/04/91 7100u/2460/050 -25- This Duplicate Page #25 includes Developer's Original initialling. forty (40) hours per week, and such van shuttle service shall be available for the use of the residents of the Developer Improvements at least thirty (30) hours per week. For a period of ten ( 10) years beginning on the date of the City' s issuance of a certificate of occupancy or temporary certificate of occupancy for the Developer Improvements, the Developer shall annually expend not less than the amounts set forth in each category of the "Operating Budget" attached hereto as Attachment No. 11 and incorporated herein. The amount in each category of the Operating Budget shall be adjusted annually by the percentage change in the United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for Urban Wage Earners and Clerical Workers, Los Angeles-Anaheim-Riverside Average, Subgroup "All Items" ( 1982/84=100) . The Developer shall annually submit to the Agency a detailed report of its Operating Budget expenditures, with such costs itemized in the categories` contained in the Operating Budget, not less than thirty (30) days prior to the anniversary of the issuance of the certificate of occupancy for the Developer Improvements. In accounting for such costs, the Developer shall use generally accepted accounting principles (GAAP) , including applicable Financial Accounting Standards Board (FASB) Pronouncements. In the event any of the payments in any category or the Operating Budget is made to the Developer or a party which 'owns or is owned by the Developer or any of the partners of the Developer or the Guarantors or is otherwise affiliated with the Developer, such payment shall be deemed not to exceed a payment commensurate with industry standards for the service or product. provided. The Executive Director of the Agency may, in his or her sole discretion,, cause the audit of the Operating Budget expenses. not more often than once each year by a public accounting firm of the Agency' s choice. The parties agree to accept the results of such audit as the conclusive and final determination of actual Operating Budget expenditures. The Developer shall make available to the auditor all books and records pertaining to the Operating Expenses. The cost of the audit shall be borne by the Agency; provided, however, that the cost shall be borne solely by the Developer if the audit determines that actually incurred Operating Budget expenditures are at least five percent (5%) less than the expenditures reported by the Developer to the Agency. In addition, the Agency shall have the right at any time during normal business hours upon not less than two business days' prior notice, but not more than two times each year during this Agreement, to examine and inspect all books and records pertaining to the Operating Expenses. 12/04/91 7100u/2460/050 -27- D. [ §404] Management and Maintenance The Developer shall hire a management company to manage the Project and to maintain the improvements on the Site in accordance with the CC&Rs (Attachment No. 8) . If at any time said management company fails to adequately maintain such areas, and such condition is not corrected after expiration of ninety (90) days from the date of written notice from the Agency, the Agency may (but shall not be obligated to) perform the necessary maintenance and Developer shall pay such costs as are reasonably incurred for such maintenance. Issuance of a Certificate of Completion by the Agency shall not affect Developer' s obligations under this section. E. [ §405] Rights of Access The Agency, for itself and for the City and other public agencies, at their sole risk and expense, shall have the right to enter the Site or any part thereof which is owned or controlled by the Developer, at all reasonable times, for the purpose of construction, reconstruction, maintenance, repair or service of any public improvements or public facilities located on the Site. Any such entry shall be made only after reasonable notice to Developer. Upon receipt of such notice, the Developer agrees to cooperate with the Agency in making the Site available for inspection by the Agency and/or City. Developer acknowledges and agrees that in the event that if for any reason the Developer fails to consent to such entry or inspection, the Agency may obtain an administrative inspection warrant or take such other legal actions as may be necessary to gain entry to and inspect the Site. The Agency shall indemnify and hold the Developer harmless from any costs, claims, damages or liabilities pertaining to any entry. F. [ §406] Developer' s Equity At all times from the commencement of construction until the second (2nd) anniversary of the issuance of a certificate of occupancy (or temporary certificate of occupancy) for the Developer Improvements,. the "Developer' s Equity." ( as defined below) shall be not less than One Million Five Hundred Thousand Dollars ($1, 500,000) . Thereafter, the Developer' s Equity may be reduced to not less than One Million Two Hundred Fifty Thousand Dollars ($1,250,000) upon the second (2nd) anniversary of the certificate of occupancy, to One Million Dollars ($1, 000, 000) upon the third (3rd) anniversary of the certificate of occupancy, to Five Hundred Thousand Dollars ($500, 000) upon the fourth (4th) anniversary of the certificate of occupancy and until the fifth (5th) anniversary of the certificate of occupancy. For the purposes of this Section 406, "Developer' s Equity" shall mean the difference 12/04/91 7100u/2460/050 -28- between the actually incurred costs of acquiring the Site and constructing and developing the Developer Improvements (including cost overruns) , less the sum of the actually disbursed amount of loans obtained by the Developer for such acquisition, development and construction. Developer' s Equity shall include any cash or government securities held by a construction lender on behalf of the Developer or its partners. G. [ §407] Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction The covenants established in this Agreement shall, without regard to technical classification and designation, be binding upon and for the benefit and in favor of the Developer and the Agency, their respective successors and assigns, as to those covenants which are for their benefit. The covenants contained in this Agreement and the Declaration (Attachment No. 9) shall remain in effect until the expiration of the Affordability Period defined in Section 402 of this Agreement) . The covenants against racial discrimination shall remain in perpetuity. The Agency is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of 'the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants shall run in favor of the Agency, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Site or in the Project Area. The Agency shall have the right, if the Agreement or covenants 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 ofof this Agreement and covenants may be entitled. After issuance of a Certificate of Completion for all of the Developer Improvements, all of the terms, covenants, agreements and conditions set forth in this Agreement relating to the Site shall cease and terminate as to that portion of the Site for which the Certificate of Completion is issued, excepting only the provisions listed below which shall survive as follows: (a) Sections 310, 401 to 405, inclusive, relating to uses, maintenance and access. (b) Section 308 (relating to indemnification and insurance) shall remain in effect in accordance with the terms and conditions set forth therein. 12/04/91 7100u/2460/050 -29- (c) Sections 600 to 607 (relating to rights and remedies) shall remain in effect to the extent necessary to enforce other provisions of this Agreement. (d) The Promissory Note (Attachment No. 3 ) , and all provisions contained in or referred to in documents to be recorded pursuant to this Agreement, including without limitation the Deed of Trust (Attachment No. 4) , and the Declarations of Covenants, Conditions and Restrictions (Attachment No. 9) . H. [ §408) Nondiscrimination The Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Developer itself 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 Site. The foregoing covenants shall run with the land. The Developer shall refrain from restricting the rental, sale or lease of the property on the basis of race, color,- creed, religion, sex, 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 race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land 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 12/04/91 7100u/2460/050 -30- through him or her, and this lease is made and accepted upon and subject to the following conditions: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin 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 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 race, color, creed, religion, sex, marital status, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee 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 selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises. " The covenants established in this Agreement and the deeds of conveyance for the Site shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, the City and any successor in interest to the Site, together with any property acquired by the Developer pursuant to this Agreement, or any part thereof. The covenants against discrimination shall remain in effect in perpetuity. V. [ §500] GENERAL PROVISIONS A. [ §501] ' Notices, Demands and Communications Between the Parties Written notices, demands and communications between the Agency and the Developer shall be sufficiently given if delivered by hand (and a receipt therefor is obtained or is refused to be given) or dispatched by registered or certified mail, postage prepaid, return receipt requested, or sent by telecopy or overnight delivery service, to the principal offices of the Agency and the Developer. Such written notices, demands and communications may be sent in the same manner to the Agency and the Developer at the addresses provided pursuant to Sections 104 and 105, with a copy of any notices to the 12/04/91 7100u/2460/050 -31- Developer to be sent to Bret H. Reed, Jr. , a law corporation, 1300 Dove Street, Suite 200, Newport Beach, California 92660-2416 (which copy shall not constitute notice to the Developer) , and to such other addresses as either party may from time to time designate by mail as provided in this Section 501 . Any written notice, demand or communication shall be deemed received immediately if delivered by hand or sent by telecopy, shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail, and shall be deemed received on the next business day after it is sent if delivered by overnight delivery service. B. [ §502 ] Conflicts of Interest No member, official or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. The Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. C. [1503 ] Enforced Delay; Extension of Times of Performance In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays or defaults are due to: war; insurrection; strikes; lockouts; 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; acts or omissions of the other party; acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of the Agency or the City other than in respect to the zoning of the Site to allow development of the Developer Improvements) ; or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause 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 the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Any 12/04/91 7100u/2460/050 -32- requests for extension shall be in writing. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and Developer. D. [ §504] Nonliability of Officials and Employees of the Agency No member, official or employee of the Agency or the City shall be personally liable to the Developer, or any successor in interest; in the event of any default or breach by the Agency (or the City) or for any amount which may become due to the Developer or its successors, or on any obligations under the terms of this Agreement. VI . [ §600] DEFAULTS AND REMEDIES A. [ §601] Defaults -- General Subject to the extensions of time set forth in Section 503, failure or delay by either party to perform any term or provision of this Agreement constitutes a default under this Agreement. The party who so fails or delays must immediately commence to cure, correct, or remedy such failure or delay, and shall complete such cure, correction or remedy with diligence. The injured party shall give written notice of default . to the party in default, specifying the default complained of by the injured party. Except as required to protect against further damages, the injured party may not institute proceedings for damages or specific performance against the party in default until thirty (30) days after giving such notice in the case of monetary defaults or defaults reasonably capable of being cured in thirty (30) days, or such longer time. as may be necessary to cure other defaults not reasonably capable of being cured within thirty (30) days, provided that such party immediately commences to cure, correct or remedy such failure or delay and completes such cure, correction or remedy with diligence. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. B. [ §602 ] . Legal Actions 1. [ §603 ] Institution of Legal Actions In addition to any other rights or remedies and subject to the restrictions in Section 601, either party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Legal 12/04/91 7100u/2460/050 -33- actions must be instituted in the Superior Court of the County of Orange, State of California, in an appropriate municipal court in that county, or in the Federal District Court in the Central District of California. 2 . [ §604] Applicable Law ,The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 3 . [ §605] Acceptance of Service of Process In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director or in such other manner as may be provided by law. In the event that any legal action is commenced by the Agency against the Developer, service of process on a general partner of the Developer shall be made by personal service upon a trustee of such partner or in such other manner as may be provided by law. C. [ §606] Rights and Remedies Are Cumulative Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such 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 the other party. D. [ 007] Inaction Not a Waiver of Default Any failures or delays by either party 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, or deprive either such party 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. • E. [ 008] Liquidated Damages IN THE EVENT THAT THE DEVELOPER IS IN DEFAULT OF ITS OBLIGATIONS PURSUANT TO SECTION 402 OF THIS AGREEMENT, AND HAS NOT CURED SUCH DEFAULT WITHIN THE TIME REQUIRED BY SECTION 601 OF THIS AGREEMENT, THE AGENCY SHALL BE ENTITLED TO OBTAIN PAYMENT IN THE AMOUNT OF THE AGENCY GRANT WHICH HAS BEEN DISBURSED PURSUANT TO SECTION 203 OF THIS AGREEMENT, LESS THE PRODUCT OF SIXTEEN THOUSAND SIX HUNDRED SIXTY-SEVEN DOLLARS 12/04/91 7100u/2460/050 -34- ($16, 667 ) TIMES THE NUMBER OF FULL YEARS WHICH HAVE ELAPSED BETWEEN THE ISSUANCE OF THE CERTIFICATE OF OCCUPANCY FOR THE PROJECT AND. THE DATE OF THE DEFAULT. IN THE EVENT OF SUCH DEFAULT PURSUANT TO SECTION 402 OF THIS AGREEMENT, THE AGENCY WOULD SUSTAIN DAMAGES BY REASON THEREOF WHICH WOULD BE UNCERTAIN. SUCH DAMAGES WOULD INVOLVE SUCH VARIABLE FACTORS AS THE DELAY OR FAILURE OF THE AGENCY AND THE CITY TO PROVIDE AFFORDABLE HOUSING AS REQUIRED BY THE CALIFORNIA COMMUNITY REDEVELOPMENT LAW AND THE CITY GENERAL PLAN, AND THE LOSS OF OPPORTUNITY TO ENGAGE IN OTHER POTENTIAL AFFORDABLE HOUSING . TRANSACTIONS, RESULTING IN DAMAGE AND LOSS TO THE AGENCY. IT IS IMPRACTICABLE AND EXTREMELY DIFFICULT TO FIX THE AMOUNT OF SUCH DAMAGES TO THE AGENCY, BUT THE PARTIES ARE OF THE OPINION THAT SUCH DAMAGES WOULD APPROXIMATELY EQUAL THE SUM DERIVED BY THE FORMULA SET FORTH HEREIN, AND THE AGENCY SHALL BE ENTITLED TO SUCH AMOUNT AS A TOTAL OF ALL LIQUIDATED DAMAGES FOR SUCH DEFAULT AND NOT AS A PENALTY. IN THE EVENT THAT THE DEVELOPER SHOULD CHALLENGE THE APPLICABILITY OR EFFICACY OF THIS PARAGRAPH OR IF THIS PARAGRAPH SHOULD BE HELD• VOID FOR ANY REASON, THE AGENCY SHALL BE ENTITLED TO THE FULL EXTENT OF DAMAGES OTHERWISE PROVIDED BY LAW. THE DEVELOPER AND THE AGENCY SPECIFICALLY ACKNOWLEDGE THIS LIQUIDATED DAMAGES PROVISION BY THEIR INITIALS BELOW: Developer' s Initials Agency' fanitials- BY: 0/i1f0 fiti'i rL_f (J By: F. [ §609] Remedies and Rights. of Termination Prior to Completion 1. [ §610] Damages If either party defaults with regard to any of the provisions of this Agreement, the non-defaulting party shall serve written notice of such default upon the defaulting party. If the default is not cured within the applicable period after service of the notice of default as set forth in Section 601, the defaulting party shall be liable to the other party for any damages caused by such default, except as provided in Sections 612 or 613 herein. • 2 . [ §611] Specific Performance Subject to the applicable cure provisions contained in Section 601 herein, if either party defaults under any of the provisions of this Agreement, the non-defaulting party shall serve written notice of such default upon the defaulting party. If the default is not cured by the defaulting party within the applicable cure period as set forth 12/04/91 - 7100u/2460/050 -35- in Section 601, the non-defaulting party at its option may thereafter (but not before) seek specific performance of terms of this Agreement. 3 . [ §612 ] Termination by the Developer Prior to. Completion In the event that prior to the Issuance of a Certificate of Completion the Developer is not in default of the Agreement and: (a) The Developer is unable to obtain financing necessary for the construction of the Improvements, provided that the Developer has used its best efforts to obtain such financing; or (b) The Agency is in default of the Agreement and has not cured or commenced to cure such default within the time period set forth in Section 601 hereof, then, subject to the applicable cure provisions contained in Section 601 herein, at the option of the Developer, thirty (30) days after written notice thereof is delivered to the Agency all provisions of this Agreement shall terminate and be of no further force and effect; thereafter, neither the Agency nor the Developer shall have any further rights against or liability to the other with respect to this Agreement. 4. [ §613 ] Termination by the Agency Prior to Completion In the event that prior to the issuance of a Certificate of Completion the Agency is not in default of this Agreement and: (a) The Developer (or any successor in interest) assigns or attempts to assign the Agreement or any rights therein or in the Site in violation of this Agreement; or (b) There is a change in the ownership of the Developer contrary to the provisions of Section 107 hereof; or (c) The Developer does not submit certificates of insurance, construction plans, drawings and related documents as required by this Agreement, in the manner and by the dates respectively provided in this Agreement therefor and such default or failure shall not be cured within the applicable cure period as set forth in Section 601 hereof; (d) The Developer is otherwise in default under this Agreement and has not cured or commenced to cure such default within the applicable time period set forth in Section 601 herein; 12/04/91 7100u/2460/050 -36- then, at the option of the Agency, within the applicable cure period as set forth in Section 601 hereof., and subject to the rights of the mortgagee or deed of trust holder to cure as set forth in Section 319 hereof, after written notice thereof is delivered to the Developer, this Agreement shall be terminated, and thereafter neither party shall have any further rights against the other under this Agreement. G. [ §614] Remedies of the Parties for Default After Completion 1. [ §615] Termination and Damages After the issuance of a Certificate of Completion, if the Developer or the Agency defaults with regard to any of the provisions of this Agreement, the nondefaulting party shall serve written notice of such default upon the defaulting party. If the default is not cured by the defaulting party within the time set forth in Section 601 hereof, the defaulting party shall be liable to the other party for any damages caused by such default. 2 . [ 016] Action for Specific Performance After the issuance of a Certificate of Completion, if either the Developer or the Agency defaults under any of the provisions of this Agreement the nondefaulting party shall serve written notice of such default upon the defaulting party. If the default is not cured by the defaulting party within the time set forth in Section 601 hereof, the nondefaulting party at its option may institute an action for specific performance of the terms of this Agreement. VII . [ §700] SPECIAL PROVISIONS A. [ §701] Real Estate Commissions The Developer acknowledges and represents to the Agency that it has engaged the services of a broker and that it is liable for certain real estate commissions, broker' s fees, or finder' s fees which may accrue by means of the Developer' s acquisition of the Site, and agrees to hold harmless the Agency from such commissions or fees as. are alleged to be due from the party making such representations. B. [ §702 ] Successors In Interest The terms, covenants, conditions and restrictions of this Agreement shall extend to and shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the Developer. 12/04/91 7100u/2460/050 -37- • C. [ §703 ] Memorandum of Agreement The Agency and the Developer agree to execute, acknowledge and cause to be recorded in the Official Records. of Orange County, California, a short form memorandum of this Agreement in the form of the "Memorandum of Agreement" attached hereto as Attachment No. 12 and incorporated herein. The Memorandum of Agreement shall be for recording purposes only and shall not modify any of the terms of this Agreement. The Agency may cause the Memorandum of Agreement to be recorded upon the earlier to occur of the Developer' s acquisition of the site or the execution of this Agreement. VIII . [ §800] ENTIRE AGREEMENT, WAIVERS This Agreement may be signed in counterparts, and is executed in five (5) duplicate originals, each of which is deemed to be an original. This Agreement includes pages 1 through 39 and Attachments 1 through 12, which constitute the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. All waivers of the provisions of this Agreement must be in writing by the appropriate authorities of the Agency and the Developer, and all amendments hereto must be in writing by the appropriate authorities of the Agency and the Developer. In any circumstance where under this Agreement either party is required to approve or disapprove any matter, approval shall not be unreasonably withheld. IX. [ 000] TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY This Agreement, when executed by the Developer and delivered to the Agency, must be authorized, executed and delivered by the Agency on or before thirty (30) days after signing and delivery of this Agreement by Developer or this Agreement shall be void, except to the extent that the Developer shall consent in writing to a further extension of time for the authorization, execution and delivery of this Agreement. The date of this Agreement shall be the date when it shall have been signed by the Agency. 12/04/91 7100u/2460/050 -38- IN WITNESS WHEREOF, the Agency and the Developer have signed this Agreement on the respective dates set forth below. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic Dated: //,- 9- Cj / , 1991 By: IOck-144 / Chairman �03 CIS'// 19 91 By: Dated: . Executive Director • ATTEST: . .at, :r"40.27 e/e, < /dr4j0/ APPR ED AS TI FORM: , ' Strad 'ng +7, " a, Carlson & Rauth, Agenc Special Counsel ,Abla::,( )112;;--- . City Attorney /y`/ - fi c. . At - Agency General Counsel • FIVE POINTS SENIORS, L.P. , a California limited partnership By: MICHELSON FAMILY TRUST, dated as of December 12, 1984, as amended March 1, 1985, its g neral partner rr 2Jated: � K? 1991. By: �� D David Michelson, Trustee 12/05/91 7100u/2460/050 -39- ATTACHMENT NO. 1 SITE MAP AND LEGAL DESCRIPTION [To Be Inserted] 12/04/91 7100u/2460/050 ATTACHMENT NO. 1 ATTACHMENT NO. 2-A GUARANTY THIS GUARANTY (the "Guaranty" ) is hereby entered into in favor of THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" ) , by DAVID MICHELSON and KATHLEEN M. MICHELSON (collectively, the "Guarantors" ) , as of the date set forth herein. RECITALS A. The Agency and FIVE POINTS SENIORS, L.P. , a California limited partnership (the "Developer" ) have entered into or will enter into a certain Affordable Housing Agreement (the "Agreement" ) which provides in part that Guarantors shall provide a guaranty to the Agency. B. The Guarantors, who are beneficiaries of the trust which is a general partner of the Developer, will significantly benefit by the execution by the Agency of the Agreement. C. The execution by the Guarantors of this Guaranty is a condition but for which the Agency would not execute the Agreement. D. Guarantors have reviewed and hereby approve the form and content of the Agreement. NOW, THEREFORE, in consideration of the execution of the Agreement, and of other valuable consideration, receipt of which is hereby acknowledged: 1. Guarantors guarantee to the Agency the full and timely performance of each and every obligation of the Developer pursuant to the Agreement. 2. This Guaranty is unconditional and may be enforced directly against the undersigned. No extensions, modifications • or changes to the Agreement as Amended shall release the undersigned or affect this Guaranty in any way, and the undersigned waives notification thereof. 3 . The undersigned hereby waive all of the suretyship provisions of the California Civil Code Sections 2788 through 2855. 12/04/91 • ATTACHMENT NO. 2-A 710Ou/2460/O5O Page 1 of 3 4. Guarantors hereby waive and agree not to assert or take advantage of (a) any right to require the Agency to proceed against the Developer or to pursue any other remedy in the Agency' s power before proceeding against the Guarantors, (b) demand, protest, and notice which the Agency may be required to provide to Developer under the Agreement, and (c) any duty on the part of Agency to disclose to Guarantors any facts Agency now or hereafter knows about the "Site" (as defined in the Agreement) , the Agreement, or the Developer, regardless of whether Agency has reason to believe that any such facts materially increase the risks beyond that which Guarantors intend to assume or has reason to believe that such . facts are unknown to Guarantors or has a reasonable opportunity to communicate such facts to Guarantors, it being understood and agreed that Guarantors are fully responsible for being and keeping informed of all circumstances regarding the Site, the Agreement, the obligations of the Developer, the financial condition of the Developer, and of all circumstances bearing on the risk of any obligation by Developer hereby guaranteed. 5 . Guarantors shall have no right of subrogation and waive any right to enforce any remedy the Agency now has or may hereafter have against the Developer, and any benefit of,. and any right to participate in any security now or hereafter held by Agency. 6. The obligations of Guarantors hereunder are independent of the obligations of Developer and,. in the event of default hereunder, a separate action or actions may brought and prosecuted against Guarantors (or any other guarantor) whether or not Developer is joined therein or a separate action or actions are brought against Developer. 7. In the event of any litigation between Agency and one or both Guarantors arising out of this Guaranty, the prevailing party shall be entitled to recover its reasonable costs and attorney' s fees. 8. No provisions of this Guaranty can be waived nor can Guarantors be released from the obligations hereunder except by a writing duly executed by the Agency. 9 . Guarantors agree to pay all reasonable attorney' s fees and all other costs and expenses which may be incurred by Agency in enforcing or attempting to enforce this Guaranty, whether the same shall be enforced by suit or. otherwise. 10. Guarantors hereby waive. notice of any demand by the Agency, as well as notice of any default by the Developer. 11. The Agency may assign this Guaranty. When so assigned, Guarantors shall be bound as above to the assignees without in any manner affecting Guarantors' liability hereunder. 12/04/91 ATTACHMENT NO. 2-A 7100u/2460/050 - Page 2 of 3 12 . This Guaranty shall remain in effect notwithstanding any bankruptcy, reorganization or insolvency of the Developer or any successor or assignee thereof or any disaffirmance by a trustee of the Developer. 13 . This Guaranty shall inure to the benefit of and bind the successors and assigns of Agency and Guarantors. 14. Guarantors agree that jurisdiction and venue with respect to any matter pertaining to the Guaranty or acts or omissions hereunder shall lie exclusively with the Superior Court of the County of Orange, State of California, in an appropriate municipal court of that county, or in the Federal District Court in the Central District of California. Guarantors irrevocably waives any and all defenses based upon revenue or forum non conveniens. 15. The laws of the State of California shall govern the interpretation and enforcement of this Guaranty. IN WITNESS WHEREOF, the undersigned have executed this Guaranty this day of , 1991. David Michelson Kathleen M. Michelson 12/04/91 ATTACHMENT NO. 2-A 7100u/2460/050 Page 3 of 3 ATTACHMENT NO. 2-B GUARANTY THIS GUARANTY (the "Guaranty" ) is hereby entered into in favor of THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" ) , by NORMAN D. WARD, and BUNNIE L. WARD (collectively, the "Guarantors" ) , as of the date set forth herein. RECITALS A. The Agency and FIVE POINTS SENIORS, L.P. , a California limited partnership (the "Developer" ) have entered into or will enter into a certain Affordable Housing Agreement (the "Agreement" ) which provides in part that Guarantors shall provide a guaranty to the Agency. B. The Guarantors, who are beneficiaries of the trust which is a limited partner of the Developer, will significantly benefit by the execution by the Agency of the Agreement. C. The execution by the Guarantors of this Guaranty is a condition but for which the Agency would not execute the Agreement. D. Guarantors have reviewed and hereby approve the form and content of the Agreement. NOW, THEREFORE, in consideration of the execution of the Agreement, and of other valuable consideration, receipt of which is. hereby acknowledged: 1. Guarantors guarantee to the Agency the full and timely performance of each and every obligation of the Developer pursuant to the Agreement. 2 . This Guaranty is unconditional and may be enforced directly against the undersigned. No extensions, modifications or changes to the Agreement as Amended shall release the undersigned or affect this Guaranty in any way, and the undersigned waives notification thereof. 3 . The undersigned hereby waive all of the suretyship provisions of the California Civil Code Sections 2788 through 2855. 12/04/91 ATTACHMENT NO. 2-B 7100u/2460/050 Page 1 of 3 4. Guarantors hereby waive and agree not to assert or take advantage of (a) any right to require the Agency to proceed against the Developer or to pursue any other remedy in the Agency' s power before proceeding against the Guarantors, (b) demand, protest, and notice which the Agency may be required to provide to Developer under the Agreement, and (c) any duty on the part of Agency to disclose to Guarantors any facts Agency now or hereafter knows about the "Site" (as defined in the Agreement) , the Agreement, or the Developer, regardless of whether Agency has reason to believe that any such facts materially increase the risks beyond that which Guarantors intend to assume or has reason to believe that such facts are unknown to Guarantors or has a reasonable opportunity to communicate such facts to Guarantors, , it being understood and agreed that Guarantors are fully responsible for being and keeping informed of all circumstances regarding the Site, the Agreement, the obligations of the Developer, the financial condition of the Developer, and of all circumstances bearing on the risk of any obligation by Developer hereby guaranteed. 5. Guarantors shall have no right of subrogation and waive any right to enforce any remedy the Agency now has or may hereafter have against the Developer, and any benefit of, and any right to participate in any security now or hereafter held by Agency. 6. The obligations of Guarantors hereunder are independent of the obligations of Developer and, in the event of default hereunder, a separate action or actions may be brought and prosecuted against Guarantors (or any other guarantor) whether or not Developer is joined therein or a separate action or actions are brought against Developer. 7. In the event of any litigation between Agency and one or both Guarantors arising out of this Guaranty, the prevailing party shall be entitled to recover its reasonable costs and attorney' s fees. 8. No provisions of this Guaranty c.an be waived nor can Guarantors be released from the obligations hereunder except by a writing duly executed by the Agency. 9. Guarantors agree to pay all reasonable attorney' s fees and all other costs and expenses which may be incurred by Agency in enforcing or attempting to enforce this Guaranty, whether the same shall be enforced by suit or otherwise. 10. Guarantors hereby waive notice of any demand by the Agency, as well as notice of any default by the Developer. 11 . The Agencymay assign this Guaranty. When so assigned, Guarantors shall be bound as above to the assignees without in any manner affecting Guarantors' liability hereunder. 12/04/91 ATTACHMENT NO. 2-B 7100u/2460/050 Page 2 of 3 12 . This Guaranty shall remain in effect notwithstanding any bankruptcy, reorganization or insolvency of the Developer or any successor or assignee thereof or any disaffirmance by a trustee of the Developer. , 13 . This Guaranty shall inure to. the benefit of and bind the successors and assigns of Agency and Guarantors. 14. Guarantors agree that jurisdiction and venue with respect to any matter pertaining to the Guaranty or acts or omissions hereunder shall lie exclusively with the Superior Court of the County of Orange, State of California, in an appropriate municipal court of that county, or in the Federal District Court in the Central District of California. Guarantors irrevocably waives any and .all defenses based upon revenue or forum non conveniens. 15. The laws of the State of. California shall govern the interpretation and enforcement of this Guaranty. 16. This Guaranty shall terminate and be of no force and effect as of the date which is seven years from the date of execution of this Guaranty. IN WITNESS WHEREOF, the undersigned have executed this Guaranty this day of 1991. Norman D. Ward Bunnie L. Ward • "GUARANTORS" 12/04/91 ATTACHMENT NO. 2-B 7100u/2460/050 Page 3 of 3 PROMISSORY NOTE SECURED BY DEED OF TRUST $250, 000 Huntington Beach, California , 19 1 . Affordable Housing Agreement . This Promissory Note is made and delivered pursuant to and in implementation of an Affordable Housing Agreement by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Holder") and FIVE POINTS SENIORS, L.P. , a California limited partnership (the "Borrower" ) , dated November 18, 1991 (the "Agreement" ) , a copy of which is on file as a public record with the Holder and is incorporated herein by reference. The Agreement provides for the development of real property, and for the payment of moneys by the Holder to the Borrower upon certain events therein set forth. The Borrower acknowledges that but for the execution of this Promissory Note, the Holder would not enter into the Aemtregth'herein, each termshall have of stheesameressly st definiti out on a l t en as agt set forth in the Agreement . 2 . Promise to Pay. Upon payment of the "Agency Loan" to Borrower pursuant to Section 201 of the Agreement, Borrower promises to pay Holder and/or order and assigns, at the office of the Agency in Huntington Beach, California, or at . such other place as the Holder may designate in writing, the principal sum of Two Hundred Fifty Thousand Dollars ($250, 000) (the "Note Amount" ) . 3 . Interest Rate. Simple interest shall be charged by the Agency on the portion of the Note Amount remaining unpaid from time to time, from the date of the disbursement m of the Note Amount until the date which is ten (10) years the date of the disbursement of the Note Amount, at the rate of five percent (5%) per annum. 4 . Principal and Interest Payments . No payments of principal and interest shall be required during the first two years after the disbursement of the Note erAmount . During thent third (3rd) through tenth (10) years the Note Amount, the Borrower shall make monthly payments on the first day of each month in such amounts as will fully amortize the balance of principal and interest over such eight (8) year repayment period. 5 . Application of Payments . Any sums received hereunder may, at the option of Holder hereof , be applied in any order to the payment of costs , interest, or principal due hereunder . 6 . Prepayment . Privilege is reserved to make prepayments of principal on this Note without penalty or fee . 7 . Non-waiver . Failure to exercise any right the Holder may have or be entitled to, in the event of any default hereunder, shall not constitute a waiver of such right or any other right in the event of subsequent default . 8 . Waiver of Presentment, etc. The Borrower and all guarantors and endorsers hereof hereby severally waive presentment for payment, protest and demand, notice of protest, demand and of dishonor and nonpayment of this Note and consent that the holder hereof may extend the time of payment or otherwise modify the terms of payment of any part or the whole of the debt evidenced by this Note, by agreement between the Holder and Borrower, and such consent shall not alter or diminish the liability of any person or the enforceability of this Note. Each and every party signing or endorsing this Note binds itself as a principal and not as a surety. In any action of proceeding to recover any sum herein provided for, no defense of adequacy of security, or that resort must first be had to security or to any other person shall be asserted. All of the terms, covenants, provisions, and conditions herein contained are made on behalf of, and shall apply to and bind, the undersigned and its successors and assigns, jointly and severally. 9 . Collection Costs . If any attorney is engaged •by the Agency to enforce or construe any provision of this Note or the Deed of Trust, or as a consequence of any default or event of default hereunder, with or without the filing of any legal action or proceeding, then Borrower shall immediately pay upon demand all attorney' s fees and all other costs incurred by Agency, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal owing hereunder as if such unpaid attorney' s fees and costs have been added to the principal . 10 . Security of Note. This Note is secured, inter alia, by a Deed of Trust (the "Deed of Trust") of even date herewith executed by Borrower covering property located in Orange County, State of California, together with the buildings and improvements now or hereafter erected thereon. il . Maximum Interest . No provision of this Note or any instrument securing payment hereof or otherwise relating to the debt evidenced hereby shall require the payment or permit the collection of interest in excess of the maximum permitted by applicable law. If any excess of interest in such respect is herein or in such other instrument provided for, or shall be adjudicated to be so provided for herein or in any such instrument, the provisions of this paragraph shall govern, and neither Borrower or any endorsers of this Note nor their 12/06/91 nrn, .-, ncnincc -2- respective heirs , personal representatives , successors or assigns shall be obligated to pay the amount of such interest. to the extent it is in excess of the amount permitted by applicable law. 12 . Business Purpose. The undersigned warrants and represents that all funds advanced under this Note shall be applied and are intended solely for business or commercial purposes as set forth in the Agreement and not for any personal, family or household purposes . 13 . Notice. Any demand or notice to be made or given under the terms hereof or any instrument now or hereafter securing this Note by the Holder to Borrower shall be effective when mailed or delivered in the manner specified in the Deed "of Trust . in 14 . Default . In the avent defaultthat underthere the termsaoftthe payment as scheduled herein or Deed of Trust securing this Note, or a _ default of the Agreement or in any other instrument executed by Borrower or any guarantor in favor of the Agency, may at its elections and without further notice, declare all amounts of the outstanding principal and accrued interest thereon immediately due and payable. In the event that the Agency elects to declare default as stated herein then this Note shall bear interest after default at the discount rate of the San Francisco off-ice of the Federal Reserve Bank which is prevailing immediately prior to default, plus five percent (5%) , and the Holder may take such action under the law or under these security documents securing this Note as Agency may determine necessary to enforce its rights hereunder . 15 . Early Payment Requirement. Reference is made to the Deed of Trust for the right of the Beneficiary thereunder to accelerate the *indebtedness evidenced by this Note. IN WITNESS HEREOF, this instrument has been executed as of the date set forth below. FIVE POINTS SENIORS, L.P. , a California limited partnership By: Michelson Family Trust dated December 12 , 1984, as amended March 1, 1985, its general partner Dated: , 199_. By: David Michelson, Trustee "GUARANTORS" 12/06/91 cn in�S -3- RECORDING REQUESTED BY AND ) WHEN RECORDED RETURN TO: ) ) Redevelopment Agency of the City ) of Huntington Beach ) 2000 Main Street . Huntington Beach, California 92648 ) Attn: Executive Director ) ) (Space Above this Line For Recorder ' s Use) CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT OF RENTS THIS DEED OF TRUST is made this day of December, 1991, by and between FIVE POINTS. SENIORS, L.P. , a California limited partnership (the "TRUSTOR") , whose address is : 19800 MacArthur Boulevard, Suite 680, Irvine, California 92715 and FIRST AMERICAN TITLE INSURANCE COMPANY (the "TRUSTEE" ) , whose address is 114 East Fifth Street, Santa Ana, California 92701, and THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "BENEFICIARY" ) . WITNESSETH: That Trustor Irrevocably, Grants Transfers and Assigns, to Trustee, in Trust, with Power of Sale, that property in the City of Huntington Beach, County of Orange, State of California, described legally in the Legal Description attached hereto as Exhibit "A" and incorporated herein. TOGETHER WITH: (a) all buildings, improvements and fixtures, now or hereafter placed thereon, it being understood and agreed that all classes of property attached or unattached used in connection herewith shall be deemed fixtures ,r (b)(b) rents, issues and profits thereof , (c) any and/or stock are appurtenant or pertain to said land, and (d) all sums of money payable on the purchase price of said property secured by a lien thereon or payable under oanye right, agreement for the sale thereof, SUBJECT, HOWEVER, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits, and all sums of money payable on the purchase price of said property secured by a lien thereon or payable under any agreement. FOR THE PURPOSE OF SECURING: 1. Payment of the sum of Two Hundred Fifty Thousand Dollars ($250 , 000) with interest thereon according to the terms of a Promissory Note of even date herewith, made by Trustor , payable to the order of the Beneficiary and extensions or renewals thereof . 12in4/91 2 . Payment of such additional sums with interest thereon as : (a) may be hereafter borrowed from the Beneficiary by the then record owner or owners of said property when evidenced by another Promissory Note or Notes , or (b) as may be added to the indebtedness secured hereby in accordance with the provision of this Deed of Trust. 3 . Performance of each and every obligation, covenant, promise or agreement of Trustor contained herein and in that certain Affordable Housing Agreement entered by and between Trustor and Beneficiary on November 18 , 1991, (hereinafter the "Agreement" ) , including without limitation, the payment of liquidated damages pursuant to Section 608 of the Agreement. 4 . Payment, with interest thereon, of any other present or future indebtedness or obligation of the Trustor (or of any successor-in-interest of the Trustor to said property) to the Beneficiary, whether created directly, or acquired by assignment, whether absolute or contingent, whether due or not , whether otherwise secured or not, or whether existing at the time of the execution of the Deed of Trust, or arising thereafter. TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES: 1. To keep said property in good condition and repair; to allow Beneficiary or its representatives to enter and inspect the premises at all reasonable times and access thereto, shall be permitted for that purpose; not to remove or demolish any building thereon; not to make alterations thereto without the consent of the Beneficiary; to suffer or permit no change in the general nature of the occupancy of the premises without Beneficiary' s written consent; to complete or restore • promptly and in good workmanlike manner any building which may • be constructed, damaged or destroyed thereon, including, without restricting the generality of the foregoing, damage from termites and dry-rot; to pay when due all claims for labor performed and materials furnished in connection with such • property and not to permit any mechanic' s lien against such property; to comply with all laws affecting such property or requiring any alterations or improvements to be made thereon; not to initiate' or acquiesce in any zoning reclassification without Beneficiary' s written consent; not to commit or permit waste thereon; not to commit, suffer or permit any act upon such property in violation of the law;, and to paint, cultivate, irrigate, . fertilize, fumigate, prune, and do all other acts that from the character or use of said property ts dueothers may be reasonably necessary; to promptly pay all upon agreements of lease or conditional sale of all fixtures , furnishings and equipment located thereon. 12/04/91 If the loan secured hereby or any part thereof is being obtained or should any additional loan be made hereafter for the purpose of financing rehabilitation improvements on said property, Trustor further agrees , anything in this Deed of Trust to the contrary notwithstanding; (a) to complete the same in accordance with City approved plans and specifications satisfactory to Beneficiary; (b) to allow Beneficiary to inspect such property at all times during rehabilitation; (c) to replace any work or materials unsatisfactory to Beneficiary within fifteen (15) calendar days after written notice from Beneficiary of such fact, which notice may be given to Trustor by registered or certified mail , sent to his last known address, or by personal service of the same; (d) that work shall not cease on the rehabilitation of such improvements for any reason whatsoever for a period of fifteen (15) calendar days, whether consecutive or not, without the written permission of the Beneficiary; (e) to pay when due all claims for labor and materials furnished in connection with the said rehabilitation and not to permit any claims of lien for said work or material to be filed of record against the said property; (f) not to permit any stop notice claims to be presented to Beneficiary. If the said property is part of a larger tract upon which improvements will be constructed, Trustor shall make separate contracts and subcontracts for said construction which shall pertain to the said property only and shall keep separate, full and complete records of all work and materials furnished to the said property. n presentation to it of an affidavit signed by the Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein, and to act thereon hereunder . 2 . To provide, and maintain in force at all time with respect to said property, fire and other types of insurance as may be required by Beneficiary. All of such insurance shall have a loss payable endorsement in favor of Beneficiary, shall be for a term and in form, content, amount and in such companies as may be satisfactory to Beneficiary, and the policies therefor shall be delivered to and remain in possession of Beneficiary as further security for the faithful performance of these trusts . At least thirty (30) days prior to the expiration of any insurance policy, a policy or policies renewing or extending such expiring insurance shall be delivered to Beneficiary together with written evidence showing payment of the premium therefor and, in the event any such insurance policy and evidence of the payment of the premium therefor are not so delivered by Trustor to Beneficiary, Trustor by executing this Deed of Trust specifically requests Beneficiary to obtain such insurance and Beneficiary, without obligation to do so, without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof , may obtain such insurance through or from any insurance agency or 12/04/91 R557u/2460/050 company acceptable to it , pay the premium thereof , and may add the amount thereof to the indebtedness secured hereby, which amount shall bear a like rate of interest . Beneficiary may furnish to any insurance agency or company, or any other person, any information contained in or extracted from any insurance policy theretofore delivered to Beneficiary pursuant hereto and any information concerning the loan secured hereby. Neither Trustee nor Beneficiary shall be responsible for such insurance or for the collection of any insurance monies , or for any insolvency of any insurer or insurance underwriter . In case of insurance loss, Beneficiary is hereby authorized either (a) to settle and adjust any claim under the insurance policies provided for in this document without the consent of the Trustor, or (b) to allow Trustor to agree with the insurance company or companies on the amount to be paid upon the loss . In either case, the Beneficiary is authorized to collect and make receipt of any such insurance money. If Trustor is obligated to restore or replace the damaged or destroyed buildings or improvements under the terms of any lease or leases which are or may be prior to the lien of this Deed of Trust and such damage or destruction does not result in cancellation or termination of such lease, such proceeds, after deducting therefrom any expenses incurred in the collection thereof, shall be used to reimburse the Trustor for the cost of rebuilding or restoring the buildings or improvements on said premises . In all other cases , such insurance proceeds, at the option of the Beneficiary, shall either be applied in reduction of the indebtedness secured hereby whether due or not, or in such order as Beneficiary may determine, or 'be held by the Beneficiary and used to reimburse the Trustor for the cost of the rebuilding or restoring the buildings or improvements on said premises. Such buildings and improvements shall be so restored or rebuilt as to be of at least equal value and substantially the same character as prior to the damage or destruction, and shall be in a condition satisfactory to Beneficiary. Such application or release shall not cure or • waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. Any and all unexpired insurance shall inure to the benefit of, and pass to the purchaser of, the property conveyed at any Trustee sale held hereunder . 3 . To pay: (a) at least ten (10) days before delinquency, all general and special City and County taxes , and all assessments on appurtenant water stock, affecting such property, (b) when done, all special assessments for public improvements , without permitting any improvement bond to issue for any special assessment (c) when done, all encumbrances, charges and liens, with interest, on said property, or any part thereof , which are or appears to be prior to superior hereto, (d) if the security of this Deed of Trust is leasehold estate, to make any payment or do any act required of the Lessee or its 12/04/91 occ-7„ ,1A gn insn • successor in interest under the terms of the instrument or instruments creating said leasehold, (e) all costs , fees and expenses of this trust , (f) for any statement regarding the obligation secured hereby any amount demanded by Beneficiary not to exceed the maximum allowed by law thereof at the time when such request is made, (g) such other charges for services rendered by Beneficiary and furnished at Trustor' s request or that of any successor in interest to Trustor as the Beneficiary may deem reasonable. If , by the laws of the United States of America, or of any state having jurisdiction over the Trustor , any tax is due or becomes due in respect to the issuance of the Note hereby secured, the Trustor covenants and agrees to pay such tax in the manner required by such law. Should Trustor fail to make any such payment, Beneficiary may elect to make such payment, Beneficiary may elect to make such payment and any amount so paid may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of interest. 4 . That, should Trustor fail to make any payment or do any act as provided in this Deed of Trust, then Beneficiary or Trustee, but without obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof , may (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes, (b) commence, appear in, or defend any action or proceeding purporting to affect the security hereof or the property covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, (c) pay, purchase, contest or compromise any encumbrance, charge or lien, which in the judgment of either is or appears to be prior or superior hereto, and (d) in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees . Trustor agrees to repay any amount so expended on demand of Beneficiary, and any amount so expended may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of interest . 5 . To appear in and defend any action or proceeding purporting to affect the security hereof or the property which is covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, and whether or not Trustor so appears or defends , to pay all costs and expenses, including cost of evidence of title and attorneys ' fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear by virtue of being made a party defendant or otherwise irrespective of whether the interest of Beneficiary or Trustee in such property is directly questioned by such action, including any action for the condemnation or partition 12/04/91 8557u/2460/050 of said premises , and in any suit brought by Beneficiary to foreclose this Deed of Trust . 6 . To pay immediately and without demand, all sums expended under the terms of this Deed of Trust by Beneficiary or Trustee, with interest from the date of expenditure at the rate which the principal obligation secured hereby bears at the time such payment is made, and the repayment of such sums shall be secured hereby. 7. That , should the Trustor or any successor in interest to Trustor in such property drill or extract , or enter into a lease for drilling or extraction of oil, gas or other hydrocarbon substances or any mineral of any kind or character, or sell , convey, further encumber, or alienate said property, or any party thereof, or any interest therein, or be divested of his title or any interest therein in any manner or way, whether voluntarily or involuntarily, Beneficiary shall have the right, at its option, to declare any indebtedness or obligations secured hereby irrespective of the maturity date specified in any Note evidencing the same, immediately due and payable, and no waiver of this right shall be effective unless in writing . 8 . That any award, settlement or damages for injury • or damages to such property, or in construction with the transaction financed by such loan, and any award of damages in connection with any condemnation for public use of or injury to said property, or any part thereof, is hereby assigned and shall be paid to Beneficiary, who may apply or release such monies received by it in such manner and with the same effect as above provided for the disposition of proceeds of fire or other insurance. 9 . That, by accepting payment of any sums secured,. hereby after its due date, or by making any payment, performing any act on behalf of Trustor, that Trustor was obligated hereunder, but failed, to make, or perform, or by adding any payment so made by Beneficiary to the indebtedness secured . hereby, Beneficiary does not waive its right either to require prompt payment when due of all sums so secured or to declare a default for failure so to pay. . 10 . That at any time, or from time to time, without liability of the Beneficiary or Trustee thereof, and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and any Note secured hereby for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, or the lien of the Deed of Trust upon the remainder of said property for the full amount of the indebtedness then or thereafter secured hereby, or the rights or powers of Beneficiary or the Trustee with • 12/04/91 R5S7u/2460/050 respect to the remainder of said property, Trustee may: (a) reconvey any part of said property, (b) consent o the making of any map or plat thereof , (c) join in granting any easement thereon, (d) join in any agreement subordinating the lien or charge hereof . 11. That the lien hereof shall remain in full force and effect during any postponement or extension of time of hereof . payment of the indebtedness secured hereby, or any p 12 . That, upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and said Note or Notes 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 of fact shall be conclusive payoff of the truthfulness thereof . The grantee in such reconveyance may be described as "the person or persons legally entitled thereto. " Such request and reconveyance shall operate as a re-assignment of the rents, issues, royalties and profits hereinafter assigned to Beneficiary. Five (5) years after issuance of such full reconveyance, Trustee may destroy said Note and this Deed of Trust (unless directed in such request to retain them) . 13 . That as additional security, Trustor irrevocably assigns to Agency the rents, issues, and profits of the property affected by this Trust Deed for the purposes and upon the terms and conditions set forth below. This assignment shall not impose upon Agency any duty to produce rents from the property affected by this Trust Deed, or cause Agency to be (a) "mortgages in possession" for any purpose; (b) responsible for performing any of the obligations of the lessor under any lease; or (c) responsible for any waste committed by lessees or any other parties, for any dangerous or defective condition of the property affected by this Trust Deed, or for any negligence in the management, upkeep, repaid, or control of such property. This is an absolute assignment, not an assignment for security only, and Beneficiary' s right to rents, issues and profits is not contingent upon, and may be exercised without possession of , the property affected by this Trust Deed. Agency confers upon Trustor a license ("License" ) to collect and retain the rents, issues and profits of the property affected by this Trust Deed as they become due and payable, until the occurrence of a default hereunder . Upon such default, the License shall be automatically revoked and Agency may collect and retain the rents, issues and profits without notice and without taking possessions of the property affected by this Trust Deed. This right to collect rents , issues and profits shall not grant to Agency or Trustee the right to possession, except as otherwise provided herein; and 12/04/91 neither said right, nor termination of the License, shall impose upon Agency or Trustee the duty to produce rents , issues or profits or maintain all or any part of the property affected by this Trust Deed. If Trustor shall default as aforesaid, Trustor ' s right to collect any such money shall cease and Beneficiary shall have the right, with or without taking possession of the property affected hereby, to collect all rents , issues , royalties and profits and shall be authorized to, and may, without notice and irrespective of whether declaration of default has been delivered to Trustee and without regard to declaration of default has been delivered to Trustee and without regard to the adequacy of the security for the indebtedness secured hereby, either personally or by attorney or agent without bringing any action or proceeding , or by receiver to be appointed by the Court, enter into possession and hold, occupy, possess and enjoy the said property, make cancel, enforce and modify leases, obtain and eject tenants , and set and modify rents and terms of rents, and to sue, and to take, receive and collect all or any part of the said rents , issues, and profits of the property affected hereby, and after paying such costs of maintenance, operation of said property, and of collection including reasonable attorneys ' fees, as in its judgment it may deem proper, to apply the balance upon any indebtedness then secured hereby, the rents, issues, royalties and profits of said property being hereby assigned to Beneficiary for said purposes . The acceptance of such rents, issues, royalties and profits shall not constitute a waiver of any other right which Trustee or Beneficiary may enjoy under this Deed of Trust or under the laws of California . Failure of or discontinuance by Beneficiary at any time, or from time to time, to collect any such rents, issues, royalties or profits shall not in any manner affect the subsequent enforcement by Beneficiary of the right, power and authority to collect the same. The receipt and application by said Beneficiary of all such rents, issues, royalties and profits pursuant hereto, after execution and delivery of declaration of default and . demand for sale as hereinafter provided, or during the pendency of Trustee' s sale proceedings hereunder, shall not cure such breach or default not affect said sale proceedings, or any sale made pursuant thereto, but such rents, issues, royalties and profits, less all costs of operation, maintenance, collection and reasonable attorneys ' fees, when received by Beneficiary, shall be applied in reduction of the indebtedness secured hereby, from time to time, in such order as Beneficiary may determine. Nothing contained herein, nor the exercise of the right by Beneficiary to collect, shall be, or be construed to be an affirmation by Beneficiary of any tenancy, lease or • option, nor an assumption of liability under, nor a subordination of the lien or charge of this Deed of Trust to, any such tenancy, lease or option. 12/04/91 8557u/2460/050 14 . That if the security of this Deed of Trust is a leasehold estate, the Trustor agrees that : ( a) the term "Lease" as used herein shall mean the lease creating the " leasehold estate" ; (b) Trustor shall not amend, change or modify his leasehold interest, or the Lease, or agree to do so, without the written consent of the Beneficiary; (c) Trustor will promptly advise Beneficiary regarding any notice, request or demand received by him from the lessor under the Lease and promptly furnish Beneficiary with a copy of any such notice, request or demand; (d) as long as any of the indebtedness secured hereby shall remain unpaid, unless the Beneficiary shall otherwise consent thereto in writing, the leasehold estate shall not merge with the fee title but shall always be kept separate and distinct, notwithstanding the union of said estates in any party; (e) Trustor agrees that it will promptly, strictly, and faithfully perform, fulfill, and comply with all covenants, agreements, terms, conditions and provisions under any lease affecting the premises and to neither do anything, nor to permit anything to be done which may cause modification or termination of any such lease or of the obligations of any lessee or person claiming through such lease or the rents, provided for therein or the interest of the lessor or the Beneficiary therein or thereunder. Trustor further agrees he will not execute a Deed of Trust or mortgage which may be or become superior to any leasehold estate that is security for this Deed of Trust . In the event of a violation of any of the covenants set forth in this paragraph, Beneficiary shall have the right, at its option, to declare all sums secured hereby immediately due and payable. Consent to or waiver of one of said violations shall not be deemed to be a consent to or waiver of any other violation. If the security for this Deed of Trust is a leasehold estate, the term "said property" as used in this Deed of Trust shall be deemed to mean the leasehold estate whenever the context so requires for the protection of the Beneficiary. 15 . That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement, and the Promissory Note, if applicable, hereunder, and upon . default by Trustor under the terms of any encumbrance, charge or lien which is or appears to be prior or superior hereto, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to. Trustee of written declaration of 'default and demand for sale of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary shall also deposit with Trustee this Deed of Trust and ,any Notes and all documents evidencing expenditures , secured hereby. After the lapse of such time as then may be required by law following recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and 12/04/91 8557u/2460/050 place fixed by it in such notice of sale, whether as a whole or in separate parcels , and in such order as it may determine, at public auction to the highest bidder for case in lawful money of the United States , payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement . Trustee shall deliver to such purchaser its Deed conveying the property so sold, but without any covenant or warranty, express or implied. The recital in such Deed of any matters of fact shall. be conclusive payoff of the truthfulness thereof . Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. Trustee may also sell at any such sale and as part thereof any shares of corporate stock securing the obligations secured hereby, and Trustor waives demand and notice of such sale. (Beneficiary at its option may also foreclose on such shares by independent pledge sale, and Trustor waives demand and notice of such sale) . After deducting all costs, fees and expense of Trustee, and of this Trust, including cost of evidence of title in connection with . this sale, Trustee shall apply the proceeds of sale to payment, first; all sums expended under the terms hereof, not then repaid, with accrued interest at the rate then payable. under the Note or Notes secured hereby, and then of all other sums secured hereby, and, if there are any proceeds remaining, shall distribute them to the person or persons legally entitled thereto . 16 . To waive, to the fullest extent permissible by law, the right to plead any statute of limitations as a defense • to any demand secured hereby. 17. That Beneficiary may, from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by 'Beneficiary and recorded in the office of the recorder of the county or counties where such property is situated, shall be conclusive proof of property substitution of such successor Trustee or Trustees, who shall, without conveyances from the. Trustee predecessor, succeed to all its title, estate, rights, powers and duties, including bu't not limited to the power to reconvey the whole or any part of the property covered by this Deed of Trust . Such' instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded. If notice of default shall have been recorded, this power of substitution cannot be exercised until after the costs, fees and expenses of the then acting Trustee shall have been paid to such Trustee, who shall endorse receipt thereof upon such instrument. The procedures herein provided for substitution of Trustee shall not be exclusive of other provisions for substitution provided by law. 12/04/91 8557u/2460/050 18 . That 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 mean the owner and holder, including pledgee, of the Note secured hereby, whether or not named as Beneficiary herein. 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 . 19 . That in the event the property secured by this Deed of Trust is income producing property consisting of four units or more, Trustor agrees to file with Beneficiary, at Beneficiary' s request, monthly, on or before the 15th day of each month, a written operational report . Such operational report shall contain a brief but complete statement of the month' s income and expenses of such property, a list of all vacancies, and a statement of any material change in the property or business carried on therein for such period. 20 . That in the event of a demand for, and' the preparation and delivery of a written statement regarding the obligations secured by this Deed of Trust pursuant to Sections 2943 and 2954 of the Civil Code of California, Beneficiary shall be entitled to make a reasonable change, not exceeding the maximum amount which is permitted by law at the time the statement is furnished. Beneficiary may also charge Trustor a reasonable fee for any other services rendered to Trustor or rendered in Trustor ' s behalf in connection with said property of this Deed of Trust, including changing Beneficiary' s records pertaining to this Deed of Trust and the loan secured hereby in connection with the transfer of said property, or releasing an existing policy of fire insurance or other casualty insurance held by Beneficiary and replacing the same with another such policy. 21 . That Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 22 . That should this Deed of Trust or any Note secured hereby provide any fee for prepayment of any indebtedness secured hereby, Trustor agrees to pay said fee, if any, of said indebtedness shall be paid prior to the due date thereof stated in said Note or this Deed of Trust even if and notwithstanding Trustor shall have defaulted in payment thereof, or in performance of any agreement hereunder, and Beneficiary, by reason thereof, shall have declared all sums secured hereby immediately due and payable. 12/04/91 8557u/2460/050 23 . That Trustor has made certain representations and disclosures in order to induce Beneficiary to make the loan evidenced by the Promissory Note or Notes which this Deed of Trust secures, and in the event that Trustor has made any material misrepresentation or failed to disclose any material fact, Beneficiary at its option and without notice, shall have the right to declare the indebtedness secured hereby, irrespective of the maturity date specified in such Note or Notes, immediately due and payable, and on failure to so pay Beneficiary may make a written declaration of default and demand for sale as in paragraph No . 15 herein set forth. Trustee, upon presentation to it of an affidavit signed by Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein, and to act thereon hereunder . 24 . This Deed of Trust is subordinate to the Indenture of Trust, dated as of December 1, 1991, between the City and Dai-Ichi Icangyo Bank of California, as trustee, and the Construction Deed of Trust, Assignment of Rents and Fixture Filing, dated as of December 1, 1991 executed by Trustor in favor of American Securities Company. Any notice which any party hereto may desire or be required to give to the other party shall be in writing. . The mailing thereof must be certified mail addressed to the Trustor at his address hereinabove set forth or to the Beneficiary at his office or at such other place as such parties hereto may designate in writing . THE UNDERSIGNED TRUSTOR REQUESTS that a copy of any notice of default and of any notice of sale hereunder be mailed to him at his address hereinbefore set forth. FIVE POINTS SENIORS, L.P. , a California limited partnership By: Michelson Family Trust, dated December 12, 1984, as amended March 1, 1985, its general partner By: David Michelson, Trustee 12/06/91 8557u/2460/050 EXHIBIT "A" LEGAL DESCRIPTION [To Be Inserted] 12/04/91 8557u/2460/050 ATTACHMENT NO. 5 SCHEDULE OF PERFORMANCE I . GENERAL PROVISIONS 1. Execution of Agreement Within thirty (30) days after by Agency. The Agency the date of execution and shall approve and execute submission of five (5) copies this Agreement and shall of this Agreement by the deliver one ( 1) copy Developer. thereof to the Developer. 2 . Submission of Preliminary Completed. Site Plan. Developer sub- • mits its Preliminary Site Plan to City and the Agency. 3. Agency/City Review of Site Completed. Plan. The Agency/City shall approve or disapprove the Preliminary Site Plan. 4. Submission of Complete Site Completed. Plan Application. Developer . submits full and complete Site Plan application to City and the Agency. 5. Preparation of CEQA Completed. Documentation. Agency shall prepare all documentation necessary to comply with the • California Environmental Quality Act. II . CONSTRUCTION DOCUMENTS AND BUILDING PERMIT 6. Submission of Complete Within thirty (30) days from Construction Drawings and submittal to Planning Landscaping Plan. Developer Commission and City Council shall submit to the City approval ( Item 8 above) . complete Construction (working) Drawings and a Landscaping Plan, Sign Program, and Finish Grading Plan. Landscaping Plan and final Sign Program shall be completed and approval 12/04/91 ATTACHMENT NO. 5 7100u/2460/050 Page 1 of 3 obtained by Developer prior to completion of the Developer Improvements. 7. City Review of Complete Within fourteen ( 14) days Drawings and Plans. The after submittal. Agency/City shall review the Complete Construction (working) Drawings, the Preliminary Landscaping Plan, Preliminary Sign, Program, and Finish Grading Plan and provide comments. 8. Revisions, if any. Developer Within thirty (30) days after ' . shall prepare revised receipt of City' s comments. Construction (working) Drawings as necessary, and submit them to City for review. 9. Final Review and Complete Within fourteen (14) days Drawings. The City/Agency after submittal by Developer. shall approve the revisions submitted by the Developer provided that the revisions necessary to accommodate the City' s comments have been made; said approvals constitute the last City and Agency approvals required in order for the Developer to pull building permits. 10. Developer Obtains Construc- Within ninety (90) days tion Financing. after Agency approval of Agreement. III . CONSTRUCTION PHASE 11. Commencement of Construc- Within thirty (30) after the tion. Developer shall City' s issuance of building commence construction of permits, but not later than the Developer Improvements. days after the Agency' s approval of the Agreement. 12. Completion of Construction. Subject to any delays pursuant Developer shall complete to Section 503, the Developer construction of all of the is to use due diligence to Developer Improvements. complete the project within 12/04/91 ATTACHMENT NO. 5 7100u/2460/050 Page 2 of 3 twelve (12 ) months after commencement of the Developer Improvements; however, provided the Developer may request up to three (3 ) one ( 1) month extensions to be granted by the Executive Director of the Redevelopment Agency. Approval for such three extensions (but no other extensions) is not to be unreasonably withheld; provided that, notwithstanding the foregoing, construction shall be completed not later than eighteen (18) months after the earlier of (i) the commencement of the Developer Improvements or (ii) the time established in this Agreement for the commencement of construction of the Developer Improvements. IV. OPERATIONS PHASE 13. Disbursement of Agency Loan Upon the earlier of the The Agency shall disburse issuance of a temporary or the Agency Loan. final certificate of occupancy by the City for all of the Developer Improvements. 14. Disbursement of Agency Upon the first through fifth Grant. The Agency shall anniversaries of the earlier disburse the Agency Grant. of the issuance of the temporary or final certificate of occupancy. 15. Submission of Age and Immediately prior to each Income Certification anniversary of the occupancy of an Affordable Unit. 12/04/91 ATTACHMENT NO. 5 7100u/2460/050 Page 3 of 3 ATTACHMENT NO. 6 SCOPE OF DEVELOPMENT The applicant ' s proposal is to construct a 164 unit senior citizen apartment complex with ancillary support services . The project will utilize the existing foundations and parking structure walls and generally the same site layout that currently remains as a result of a 1986 fire. The project will be for adults 55 years or over with units located in a security building with a total of 82 enclosed parking spaces which includes two (2) van parking spaces . Access to the complex and the on-site parking is via Florida Street. The four (4) story building is provided with three (3) elevators for easy access to each level with on-site support services located throughout the building. The ancillary support services include, a craft room, television/movie room, library, coffee bar, sewing/bingo room, piano lounge and a laundry room. Staff is recommending, with the concurrent of the applicant, that a hair/beauty salon be included as part of the ancillary support services . The units range in size from a 576 square foot one (1) bedroom unit to an 864 square foot two (2) bedroom unit. The unit amenities include full kitchens, walk in closets, emergency pull down cords, stoves with automatic shut off sensors, showers with anti-scalding controls and handicapped hardware. The project proposal also includes, as required by the specific plan; a transit facility along Main Street for the mass transit of the residents of the specific plan area. This facility includes a . bus stop and turn out area with two (2) covered shelters . The site plan shall be amended to indicate the location of the covered shelters. In addition to the transit facility, the project is provided with a van pool service for the senior citizens. The van is a sixteen passenger vehicle which is provided for transport to local shopping areas. The project will also share a twenty-five passenger van with the applicant' s newly constructed senior project in Garden Grove. This van will be utilized for scheduled special events. • The type and configuration of the 48 affordable units will be as follows: The Developer agrees to make available, restrict occupancy to, and rent thirty-two (32) of the units to "Very Low Income Households" and sixteen (16) additional units to "Persons and Families of Low' and Moderate Income" (for a total of forty-eight (48) restricted units) , all at an "Affordable Rent" (the "Affordable Units") . The location of the Affordable Units shall be dispersed throughout the Developer Improvements and shall be reasonable acceptable to the Agency. The distribution of sizes (in terms of number of bedrooms) of the Affordable Units shall be in the same proportion as the distribution of sizes of all units within the Developer Improvements. There shall be not less than six (6) and not more than ten (10) Affordable Units on each floor of the Developer Improvements . Those Affordable Units located on the first floor of the Developer Improvements shall each be not less than Five Hundred Seventy (570) square feet. ATTACHMENT NO. 6 • .5* t_L*7.1.t...01,04 V . '\'''.*1 % • • ..\I I 1.•0.01*41.III 12.I.9d - 440\4'l\•1•0;•,. •,I 4rIII • N1° t\d\k•\Oc. \ .4.\. l..i..s•.. ..• •,1 I11N•0 i1 T1I6M.1 441 .7 1110 1=•Ig•.••L0••m.I1.•...•If,•h•1.I!.••4"- . .k . I•M t1p•t .'.2e0•.o..•DwVr..".1...•.A..r0•...O":.•....N.•"•.1...M•T.".•.0O•..•"P..A••a,W••"..bl.•ia•i•S.•..r.I.G..0....L:O•M!a•W!:A•1.....*S:.I.:.V•• i:A S:Tt...••:I:. .mT.P. "INa•O. 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An "Affordable Housing Agreement" was entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" and FIVE POINTS SENIORS, L.P. , a California limited partnership (the "Developer" ) dated as of November 18, 1991, a copy of which is on file with the Agency as a public record at its offices at 2000 Main Street, Huntington Beach, California (the "Agreement" ) , and is incorporated herein by reference. B. As referenced in the Agreement, the Agency shall furnish the Developer with a Certificate of 'Completion upon _ completion of the "Developer Improvements" pursuant to the Agreement, which certificate shall be in such form as to permit it to be recorded in the Recorder' s Office of Orange County. C. Such certificate shall be conclusive determination of satisfactory completion of the construction required by the Agreement. D. The Agency has conclusively determined that the construction of the Developer Improvements on the real property described in Exhibit A attached hereto and incorporated herein (the "Site" ) as required by the Agreement has been satisfactorily completed. NOW THEREFORE, 12/04/91 ATTACHMENT NO. 7 7100u/2460/050 Page 1 of 2 1. As provided in the Agreement, the Agency does hereby certify that the construction of the Developer Improvements on the Site has been fully and satisfactorily performed and completed. 2. Nothing contained in this instrument shall modify in any other way any other provisions "of the Agreement. IN WITNESS WHEREOF, the Agency has executed this certificate this day of , 199 . REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic • By: Its: ATTEST: Agency Secretary 12/04/91 ATTACHMENT NO. 7 7100u/2460/050 Page 2 of 2 EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY All that certain land situated in the State of California, County of Orange, City of Huntington Beach, described as follows: [To Be Inserted. ] • 12/04/91 EXHIBIT "A" TO 7100u/2460/050 ATTACHMENT NO. 7 STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On this day of , 199_ before me, the undersigned, a Notary Public in and for said State, personally appeared known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument as the (insert title of the officer) of the Redevelopment Agency of the City of Huntington Beach and acknowledged to me that the Redevelopment Agency of the City of Huntington Beach executed it. Signature of Notary Public (SEAL) 12/04/91 7100u/2460/050 ATTACHMENT NO. 7 ATTACHMENT NO. 8 RECORDING REQUESTED BY ) • AND WHEN RECORDED MAIL TO: ) ) ) ) ) ) ) ) [Space above for recorder.] This Agreement is recorded at the request and for the benefit of the Agency and is exempt from the payment of a recording fee pursuant to Government Code Section 6103. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS THIS DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS (the "Declaration" ) is entered into this day of , 199_, by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" ) , and FIVE POINTS SENIORS, L.P. , a California limited partnership (the "Developer" ) . RECITALS A. The Developer is fee owner of record of that certain real property (the "Site" ) located in the City of Huntington Beach, County of Orange, State of California legally described in the attached Exhibit "A" . The Site is the subject of an Affordable Housing Agreement (the "Agreement" ) for the development, operation and maintenance of a senior citizen housing project. B. The Agreement provides for the execution and recordation of this document. Except as otherwise expressly provided in this Declaration, all terms shall have the same meanings as set forth in the Agreement. NOW, THEREFORE, THE AGENCY AND THE DEVELOPER AGREE AS FOLLOWS: 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 1 of 18 1 . Affordable Housing A. Number of Units. The Developer covenants and agrees to develop a total of one hundred sixty-four (164) multifamily housing units on the Site in conformance with the Scope of Development (Attachment No. 6 to the Agreement) . The Developer agrees to make available, restrict occupancy to, and rent thirty-two (32 ) of the units to "Very Low Income Households" and sixteen ( 16) additional units to "Persons and Families of Low- and Moderate Income, " all at an "Affordable Rent" (the "Affordable ,Units" ) . However, the Developer shall be obligated to make available, restrict occupancy to, and rent sixteen ( 16) of the units to "Very Low Income Households, " sixteen ( 16) additional units to "Lower Income Households, " and sixteen ( 16) additional units to "persons and families of Low- and Moderate Income, " in lieu of the requirements of the preceding sentence, for the duration of the "Affordability Period" ( as defined in paragraph B of this Section 1) , upon the occurrence of all three of the following events: (a) the "Qualified Development Period" (as defined in the Regulatory Agreement and Declaration of Restrictive Covenants by and among the City, Developer and Dai-Ichi Kangyo Bank of California, dated as of December 1, 1991) shall have elapsed; and (b) the "Section 8 Program" (as defined in paragraph G of this Section 1) or a reasonably similar successor or replacement federal rental subsidy or voucher program no longer exists; and (c) neither the City nor the Agency has instituted a rental subsidy or voucher program designed to subsidize the rents of Very Low Income Households. The location of the Affordable Units shall be dispersed throughout the Developer Improvements and shall be reasonably acceptable to the Agency. The distribution of sizes (in terms of number of bedrooms) of the Affordable Units shall be in the same proportion as the distribution of sizes of all units within the Developer Improvements. There shall be not less than six . (6) and not more than ten ( 10) Affordable Units on each floor of the Developer Improvements. Those Affordable Units located on the first floor of the Developer Improvements shall each be not less than Five Hundred Seventy (570) square feet. "Very Low Income Household" shall mean a household earning not greater than fifty percent (50%) of Orange County median income, as determined by the United States Department of Housing and Urban Development, as set forth in Health and Safety Code Section 50105. "Lower Income Household" shall mean a household earning not greater than eighty percent (80%) of Orange County median income, as determined by the United States Department of Housing and Urban development, as set forth in Health and Safety Code Section 50079. 5. 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 2 of 18 "Persons and Families of Low and Moderate Income" shall mean a household earning not greater than one hundred twenty percent ( 120%) of Orange County median income, as determined by the United States Department of Housing and Urban Development, as set forth in Health and Safety Code Section 50093 . "Affordable Rent" shall have the meaning set forth in Health and Safety Code Section 50053, as further defined in subparagraph E of this Section 1. B. Duration of Affordability Requirements. The Affordable Units shall be subject to the requirements of this Section 1 for thirty (30) years, beginning on the date of the City' s issuance of a certificate of occupancy for the Developer Improvements (the "Commencement Date" ) . The duration of this requirement shall be known as the "Affordability Period. " All tenants residing in the Affordable Units during the last two (2) years of the Affordability Period shall be given notice at least once every six (6) months of the expiration date of this requirement, and that the rent payable on the Affordable Unit may be raised to a market rate rent at the end of the Affordability Period. The Developer consents to the recording of this Declaration in the official records of Orange County, California. C. Selection of Tenants. The Developer shall give notice to the Agency of the City' s issuance of the certificate of occupancy for the Developer Improvements and the Affordable Units, and shall give notice of the vacancy of each and any Affordable Unit thereafter. The Agency shall have five (5) working days from the receipt of such notice to deliver to the Developer a list of prospective tenants for such vacancy. The Developer shall send written notice of such vacancy to each . person on such list. Such notice shall notify the recipient that he or she must directly contact the Developer or its designated leasing agent within fifteen (15) working days to apply for tenancy of such vacant Affordable Unit. The Developer shall not rent or lease such Affordable Unit during such fifteen (15) day period to any tenant not notified of such . vacancy by the Agency. In the event that no tenant which is reasonably acceptable to the Developer applies for tenancy of the vacant unit within such time period, the Affordable Unit may be leased to another tenant selected by the Developer who meets all of the other requirements provided herein. D. Income of Tenants. Prior to the rental or lease • of any Affordable Unit to a tenant, and annually thereafter within thirty (30) days of the anniversary date of the tenant' s occupancy of the Affordable. Unit, the Developer shall submit to the Agency a completed income computation and certification form, in the form of Attachment No. 9 to the Agreement or such 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 3 of 18 other form as may be provided by the Agency. The Developer shall certify that to the best of its knowledge- each tenant leasing an Affordable Unit is a Very Low Income Household, Lower Income Household, or a Person or Family of Low- and Moderate-Income, whichever is applicable, and meets the eligibility requirements established for the Affordable Unit. The Developer shall obtain an income certification from the tenant of each Affordable Unit and shall certify that, to the best of the Developer' s knowledge, the income of the tenant is truthfully set forth in the income certification form. The Developer shall verify the income certification of the tenant in one or more of the following methods as specifically requested by the Agency: ( 1) obtain two (2 ) paycheck stubs from the tenant' s two (2) most recent pay periods. (2 ) obtain a true copy of an income tax return from the tenant for the most recent tax year in which a return was filed. (3) obtain an income verification certification from the employer of the tenant. (4) obtain an income verification certification from the Social Security Administration and/or the California Department of Social Services if the tenant receives assistance from such agencies. (5) obtain an alternate form of income verification reasonably requested by the Agency, if none of the above forms of verification is available to the Developer. A person or family who at the time of income certification qualified as a Very Low Income Household, Lower Income Household, or Person or Family of Low- and Moderate-Income or shall continue to be deemed so qualified, until such time as the person or family' s income is redetermined and the person or family is determined by the Agency to no longer be so qualified, even if such person or family' s income has subsequently increased to an amount above the applicable income level. Upon the Agency' s determination that the tenant is no longer qualified as a Very Low Income Household, Lower Income Household, or Person or Family of Low- and Moderate-Income, the next available unit of comparable size must be rented to (or held vacant and available for immediate occupancy by) a Very Low Income Household, Lower Income Household, or Person or Family of Low- and Moderate-Income, whichever is applicable. Such new tenant shall then constitute a Very Low Income Household, Lower Income Household or Person or Family of Low- and Moderate-Income for the purposes of this Section 1, and until such next available unit is rented to such 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 4 of 18 • tenant, the former Very Low Income Household, Lower Income Household, or Person or Family of Low- and Moderate-Income who has ceased to qualify as such shall be deemed to continue to be a Very Low Income Household, Lower Income Household, or Person or Family of Low- and Moderate-Income for the purposes of this Section 1. In addition, the Developer shall annually submit to the Agency a certification of the number of Affordable Units actually occupied by Very Low Income Households, Lower Income Households, and Persons or Families of Low- and Moderate-Income, and the ages of all tenants residing in the Developer Improvements, in the form of Attachment No. 10 to the Agreement or such other form as may be provided by the Agency. E. Determination of Affordable Rent for the Affordable Units. Each Affordable Unit shall be rented at an "Affordable Rent" to be established by the Agency as provided herein. The maximum. monthly rental amount for the Affordable Units required to be rented to Very Low Income Households shall be established at one-twelfth (1/12 ) of thirty percent (30%) of fifty percent (50%) of Orange County median income. The maximum monthly rental amount for the Affordable Units required to be rented to Lower Income Households, if any, shall be established at one-twelfth (1/12th) of thirty percent (30%) of , sixty percent (60%) of Orange County median income for tenants earning more than fifty percent (50%) and not, more than sixty_ percent (60%) of• Orange County median income, and one-twelfth (1/12th) of thirty percent (30%) of such tenant' s annual income for. tenant earning more than sixty percent (60%) and not more than eighty percent (80%) of the Orange County median income. The maximum monthly rental amount for the sixteen (16) Affordable Units required to be rented to Persons of Low- and Moderate Income shall be established at one-twelfth (1/12) of thirty percent (30%) of one hundred ten percent (110%) of Orange County median income for tenants earning more than eighty percent (80%) and not more than one hundred ten percent (110%) of Orange County median income, and one-twelfth (1/12th) of thirty percent (30%) of such tenants' annual income for tenants earning more than one hundred ten percent (110%) and not more than one hundred twenty percent (120%) of Orange County median income. The maximum monthly rental amount for each Affordable Unit rented to Persons of Low- and Moderate- Income shall be based upon the actual household size of the persons occupying the Affordable Unit. The maximum monthly rental amount for. each Affordable Unit to be rented to Very Low Income Households and Lower Income Households shall be based upon the assumed household size of two (2) persons for each one (1) bedroom unit and three (3) persons for each two (2) bedroom unit, except as hereinafter provided. Upon the rental of any Affordable Unit to a Very Low Income Household which is a "Section 8 Recipient" , as defined in Paragraph G hereof ( "Section 8 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 5 of 18 Unit" ) , the maximum monthly rental amount for the next Affordable Unit rented to a Very Low Income Household which is not a Section 8, Recipient shall be based upon the actual household size of the person or persons occupying such Affordable Unit ( "Actual Household Size Unit" ) . In the event any such Section 8 Unit is vacated and rerented to a Very Low Income Household which is not a Section 8 Recipient, then upon the next vacation of an Actual Household Size Unit, such vacated Actual Household Size Unit shall no longer be an Actual Household Size Unit and the maximum monthly rental amount for such Affordable Unit shall be based upon the assumed household size of two (2 ) persons if it is a one (1) bedroom unit and three (3 ) persons if it is a two bedroom unit. 'In no event, however, shall the rerenting of a Section 8 Unit to a Very Low Income Household which is not a Section 8 Recipient authorize the Developer to increase the rental amount charged to an existing tenant of an Actual Household Size Unit. Furthermore, the maximum number of Actual Household Size Units required at any one time shall be limited to sixteen (16) . THE DEVELOPER UNDERSTANDS AND KNOWINGLY AGREES THAT THE MAXIMUM RENTAL PRICE TO BE ESTABLISHED BY THIS FORMULA IS NOT NECESSARILY EQUAL TO THE FAIR MARKET RENT AMOUNT OF THE AFFORDABLE UNITS, AND IS PROBABLY ESTABLISHED AT A PRICE WHICH IS SUBSTANTIALLY BELOW THE FAIR MARKET RENT AMOUNT. Developer Initials: The maximum monthly rental amount for the Affordable Units shall be determined by the Agency not earlier than ninety (90) days after the date of issuance of building permits and not later than the Commencement Date. The maximum monthly. rental amount of the Affordable Units shall be adjusted annually by the formula set forth above upon the publication of revised Orange County median income figures by the United States Department of Housing and Urban Development. F. Senior Citizen Units. All of the units in the Developer Improvements, including without limitation the Affordable Units, shall be independent living apartments specially designed for the physical and social needs of "Senior Citizens" (persons fifty-five (55) years or older, subject to applicable law) in accordance with the requirements set forth in the Scope of Development (Attachment No. 6 to the Agreement) . The units shall be comprised of one and two bedroom units, each with a private balcony or patio. The Developer shall state, in a prominent location in all advertising and marketing materials, that the Developer Improvements are designed for use and occupancy by Senior Citizens. Furthermore, the Developer shall restrict occupancy to Senior Citizens and "Qualified Permanent Residents" (as that 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 6 of 18 term is defined in California Civil Code Section 51.3 ) , in the rental of both the Affordable Units and the other units in the Developer Improvements. Except as otherwise provided herein, at least one person in residence in each dwelling unit must must be a Senior Citizen, and other residents in the same dwelling unit who are not Senior Citizens must be Qualified Permanent Residents. Temporary guests of a Senior Citizen or Qualified Permanent Resident shall be allowed for a period of not more than sixty (60) days in any twelve ( 12) month period. Upon the death, dissolution of marriage, hospitalization or other prolonged absence of the Senior Citizen in a dwelling unit, any Qualified Permanent Resident who has continuously resided in the dwelling unit with such Senior Citizen shall be. permitted to continue as a resident of that dwelling unit. "Permitted Health Care Residents" (as that term is defined in California Civil Code Section 51.3 ) shall be permitted to occupy any dwelling unit during any period that such person is actually providing live-in, long-term or hospice health care to a Senior Citizen tenant or Qualified Permanent Resident tenant • for compensation. G. Federal Housing Subsidies. The Agency shall use its best reasonable efforts to assist the Developer to secure as tenants of the Affordable Units dedicated to Very Low Income Households persons who are recipients of federal certificates • or vouchers for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor ( "Section 8 Recipients" ) . For purposes of calculating the rent payable by the tenant pursuant to Paragraph E of this Section, the amount paid to the Developer as a result of such certificates or vouchers shall not be deemed the payment of rent by the tenant. H. Operations. For a period of thirty (30) years beginning on the date of the City' s issuance of certificate of occupancy or temporary certificate of occupancy for the Developer Improvements, the Developer shall provide a full-time activities director, an on-site apartment manager and a van shuttle service which are available exclusively to and for the benefit of the tenants of the Developer Improvements. Such activities director shall be employed on the Site at least forty (40) hours per week, and such van shuttle service shall be available for the use of the residents of the Developer Improvements at least thirty (30) hours per week. For a period of ten (10) years beginning on the date of the City' s issuance of a certificate of occupancy or temporary certificate of occupancy for the Developer Improvements, the Developer shall annually expend not less than the amounts set forth in each category of the "Operating Budget" attached to the Agreement as Attachment No. 11 and incorporated herein. The amount in each category of the 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 7 of 18 Operating Budget shall be adjusted annually by the percentage change in the United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for Urban Wage Earners and Clerical Workers, Los Angeles-Anaheim-Riverside Average, Subgroup "All Items" (1982/84=100) . The Developer shall annually submit to the Agency a detailed report of its Operating Budget expenditures, with such costs itemized in the categories contained in the Operating Budget, not less than thirty (30) days prior to the anniversary of the issuance of the certificate of occupancy for the Developer Improvements. In accounting for such costs, the Developer shall use generally accepted accounting principles (GAAP) , including applicable Financial Accounting Standards Board (FASB) Pronouncements. In the event any of the payments in any category or the Operating Budget is made to the Developer or a party which owns or is owned by the Developer or any of the partners of the Developer or the Guarantors or is otherwise affiliated with the Developer, such payment shall be deemed not to exceed a payment commensurate with industry standards for the service or product provided. The Executive Director of the Agency may, in his or her sole discretion, cause the audit of the Operating Budget expenses not more often than once each year by a public accounting firm reasonably satisfactory to the Agency. The parties agree to accept the results of such audit as the conclusive and final determination of actual Operating Budget expenditures. The Developer shall make available to the auditor all books and records pertaining to the Operating Expenses. The cost of the audit shall be borne by the Agency; provided, however, that the cost shall be borne solely by the Developer if the audit determines that actually incurred Operating Budget expenditures are at least five percent (5%) less than the expenditures reported by the Developer to the . Agency. In addition, the Agency shall have the right at any time during normal business hours upon not less than two business days prior notice, but not more than two times each year during the period of this Declaration to examine and inspect all books and records pertaining to the Operating Expenses. 2 . Non-Discrimination The Developer, on behalf of itself and its successors, assigns., and each successor in interest to the Site or any part thereof, hereby covenants and agrees: (a) To use, devote, operate and maintain the Site and each part thereof, for the purposes and the residential uses specified in the Agreement. 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 8 of 18 (b) Not to discriminate upon the basis of sex, marital status, race, color, creed, religion, national origin, or ancestry in the sale, lease, sublease, transfer or rental, or in the use, occupancy, tenure, or enjoyment of the Site or any improvements thereon, or of any part thereof. Each and every deed, lease, and contract entered into with respect to the Site shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: ( 1) In deeds: "The grantee herein covenants by and for itself, it successors 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 sex, marital • status, race, color, creed, religion, national origin, or ancestry in the sale, lease, rental, sublease, transfer, use occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the grantee itself or any persons 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 in the land herein conveyed. The foregoing covenants shall run with the land. " (2) In leases: . "The lessee herein covenants by and for itself, its successors and assigns, ' and all persons claiming under or through them, 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 sex, marital status, race, color, creed, religion, national origin, or ancestry, in the leasing, renting, subleasing, transferring, use, occupancy, tenure, or enjoyment of the land herein leased nor shall the lessee • itself, or any person claiming under or through it, establish or permit 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 in the land herein leased. " 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 9 of 18 (3 ) In contracts: "There shall be no discrimination against or segregation of, any persons, or group of persons on account of sex, marital status, race, color, creed, religion, national origin, or ancestry in the sale, lease, rental, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself 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 land. " 3 . Use Restrictions. The Site shall be occupied, used and maintained as follows: a. Each dwelling unit shall be used only for private apartment dwelling purposes, with appurtenant facilities, and for no other purposes. b. No sign of any kind shall be displayed to the • public view on or from any unit without the approval of the Agency. All signs otherwise permitted under this section shall conform with all ordinances and other regulations of the City. c. The Developer and the occupants shall not permit or suffer anything to be done or kept upon said premises which will increase the rate of insurance on any building, or on the contents thereof, or impair the structural integrity thereof or which will obstruct or interfere with the rights of other occupants,- -or annoy them *by unreasonable noises or otherwise, nor shall any occupant commit or permit any nuisance on the premises or fail to keep the premises free of rubbish, clippings and trash or commit or suffer any illegal act to be committed thereon. The Developer shall comply with all of the requirements of all governmental authorities with respect to the premises. If by reason of the occupancy or uses of the premises the rate of insurance on the Site shall be increased, the Developer shall become personally liable for the additional insurance premiums. d. There shall be no structural alteration, construction or removal of any building, fence or other structure on the Site (other than repairs or rebuilding permitted herein) without the approval of the City or the Agency and in accordance with the City Code. 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 10 of 18 e. The Developer shall not permit the parking, storing or keeping of any vehicle except wholly within the parking areas designated therefor. The Developer shall not permit the parking, storing or keeping of any large commercial type vehicle (dump truck, cement mixer truck, oil or gas truck, etc. ) , or any recreational vehicle (camper unit, camper shell detached from a private passenger vehicle, motor home, trailer, boat trailer, mobilehome or other similar vehicle, except when parked within an enclosed parking space) , boats over twenty (20) feet in length or any vehicle other than a private passenger vehicle or the passenger van required by Section 1(G) hereof upon any portion of the Site, including parking spaces. The Developer shall not permit major repairs or major restorations of any motor vehicle, boat, trailer, aircraft or other vehicle to be conducted upon any portion of the Site, including parking spaces, except for emergency repairs thereto and then only to the extent necessary to enable movement thereof to a proper repair facility. No inoperable vehicle shall be stored or kept anywhere on the Site. The Developer shall have the right to remove, at the tenant' s expense, any vehicle parked, stored or kept in violation of the provisions of this Declaration. In addition, all provisions of the Huntington Beach Municipal Code, including amendments thereto, shall apply. 5. Occupancy. Occupancy of each dwelling unit shall be restricted to occupancy standards set forth in the Huntington Beach Municipal Code or state standards, as are effective or as may be effective or amended. The Developer shall not be permitted to lease or rent any dwelling unit thereon for transient or hotel purposes. Any lease or rental agreement covering an apartment shall provide that the terms of the lease or rental agreement shall be subject in all respects to the provisions of this Declaration of Conditions, Covenants and Restrictions and that any failure by the lessee to comply with the terms of such documents shall be a default under the lease or rental agreement. All leases and rental agreements shall be in writing. All prospective tenants/ occupants of the Site shall make application through the Developer. 6. Inspection. To the extent permitted by law, the City of Huntington Beach and the Agency shall have the right of entry, at reasonable business hours and upon no less than twenty-four • (24) hours advance notice, onto the Site to inspect for the need for repairs or maintenance. Entry onto the Site or into any unit for other than emergency repairs may be made only after such advance notice and request for entry. If request for entry is denied or the Site or any applicable unit is 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 11 of 18 unoccupied, the City or Agency may apply for an appropriate warrant or other order from a court of appropriate jurisdiction. 7 . Subdivision. No part of the Site shall at any time be owned by a cooperative housing corporation, nor shall the Developer take any steps in connection with a conversion to such ownership or uses. Other than obtaining a final subdivision map on the Site and a final subdivision public report from the California Department of Real Estate, the Developer shall not take any steps in connection with a conversion of the Site to a condominium ownership, or with a conversion of the Site to "timeshare" ownership. 8. Exterior Maintenance. The exterior areas of the Site shall be kept free of rubbish, debris and other unsightly or unsanitary materials. a. Project Improvement, Maintenance- and Repair (1) Land Use Areas and Improvements (a) Exterior yard areas and parking areas shall be kept free of deterioration, including: (i) Potholes (ii) Cracks in asphalt so as to become uneven, unsightly surface conditions (iii ) Weeds growing through asphalt. • (b) Perimeter fencing, landscaping and irrigation system shall be routinely inspected and maintained in good condition. b. Each occupant of the Site shall have the affirmative obligation to prevent what might be considered a fire hazard or a condition dangerous to the public health, safety and general welfare; or constitute an unsightly appearance or otherwise detract from the aesthetic and property values of neighboring dwelling units and properties. The following minimum performance standards for the maintenance of buildings, yards, and landscaping shall be adhered to by the Developer: 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 12 of 18 (1) Landscaping on the Site shall be absent of the following: (a) Lawns with grasses in excess of six (6) inches in height. (b) Untrimmed hedges. (c) Trees, shrubbery, lawns and other plant life dying from lack of water or other necessary maintenance. (d) Trees and shrubbery grown uncontrolled without proper pruning. (e) Vegetation so overgrown as to be likely to harbor rats or vermin. (f) Dead, decayed or diseased trees, weeds and other vegetation. (g) Inoperative irrigation system(s) . (2) Yard areas shall be maintained so as .to. be absent of the following: (a) Broken or discarded furniture, appliances and other household equipment stored in yard areas for periods exceeding one (1) week. (b) Packing boxes, lumber, trash, dirt and other debris stored in yards for unreasonable periods in areas visible from public property or neighboring properties. (c) Unscreened trash cans, bins or containers stored for unreasonable periods in areas visible from public streets and common areas. (3) No building, wall or fence may be left in an unmaintained condition so that any of the following exist: (a) Buildings abandoned, boarded up, partially destroyed or left unreasonably in a state of partial construction. (a) Unpainted buildings or buildings with peeling paint in such a condition as to: 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 13 of 18 i . Cause dry rot, warping and termite infestation; or ii . Constitute an unsightly appearance that detracts from the aesthetic or property values of neighboring properties. (c) Broken windows, constituting hazardous conditions and/or inviting trespassers and malicious mischief. (d) Damaged garage doors that may become inoperative or unsafe to operate. (e) Graffiti remaining on any portion of the property for a period exceeding fifteen (15) days. (f) Building interiors and exteriors shall be maintained to meet standards of similar residential property in the City of Huntington Beach. 9 . Agency and City Right of Review and Enforcement The City of Huntington Beach ( "City" ) and the Agency shall be made parties to this Declaration for the limited purpose as specified herein as follows: a. Changes or amendments to this Declaration must be submitted for City and Agency review and approval. b. In the event of inaction by the Developer, the City and Agency are hereby granted expedient power to enforce all provisions of this Declaration including, but not limited to, the maintenance of the Improvements and all yards, buildings and landscaping areas within the Site. c. The City and Agency are hereby granted the express power to enforce all laws and ordinances of the State of California and/or the City on yards, structures, and private parking areas within the Site. Nothing within this Declaration, however, shall be construed as imposing an obligation or requiring the City or Agency to enforce any provision thereof. d. The City and the Agency shall be given prior • written notice of any proposed amendment to this Declaration. Such notice shall be given by mailing a copy of the precise language of the proposed amendment to the City of Huntington Beach, c/o City Clerk, together with a letter of transmittal explaining the proposed change in general terms. The City and 12/04/91 ATTACHMENT NO. 8 7100u/2460/050. Page 14 of 18 the Agency shall have an opportunity to review and comment upon the proposed amendment for a period of not less than forty-five (45) days prior to the effective date of any such proposed amendment. If the City or Agency fail to respond within forty-five (45 ) days, the proposed change(s) and amendment(s) shall be deemed approved, unless that time period is extended by mutual agreement of all parties. 10. City of Huntington Beach Right of Entry for Code Enforcement, Repair and Traffic Regulation (a) Right of Entry. To the extent permitted by law, Developer hereby acknowledges and intends and thus grants to the City, through the City' s duly authorized agents or employees, the right to enter upon the Site for the following purposes: (1) Inspection, maintenance and repair of the Site. (2) Enforcement of local traffic and/or parking regulations. (b) Reimbursements of City Expenditures. All costs and expenses incurred by the City arising out of its inspection, maintenance and repair of the Site, as provided hereinabove ( "City Maintenance Costs" ) , shall be charged as an expense of the Developer and shall be paid within ten (10) days of receipt of an invoice for same. (c) Assessments and Lien Rights of the City. If City Maintenance Costs are not paid within thirty (30) days from the date due, said unpaid costs and expenses shall become a special assessment against the Site and, upon confirmation by the City Council, shall be collected in the same manner as real property taxes and shall be subject to the same penalties, procedures and sale in case of delinquency as is provided for real property taxes. 11. Mortgage Protection Notwithstanding any and all provisions elsewhere in this Declaration to the contrary, in order to induce lenders and investors to participate in the financing of the Improvements, the following provisions are added hereto, and to the extent these added provisions conflict with any other provisions of this Declaration, these added provisions shall control: (a) Any first mortgagee or third party foreclosure purchaser. who comes into possession or who obtains title to the Site pursuant to the remedies 'provided in the mortgage or 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 15 of 18 foreclosure of the mortgage, or by deed or assignment in lieu of foreclosure, will not be liable for such Site' s unpaid charges which accrue prior to such possession or acquisition of title. The assessment liens provided for herein shall be subordinate to the lien or equivalent security interest of any first mortgage recorded prior to the date any such charges become due, and no violation of this Declaration shall invalidate such lien or security interest. Such subordination shall apply only to assessments which accrue prior to a sale or transfer of such Site pursuant to a decree of foreclosure or trustee' s sale. Such sale or transfer shall not relieve such Site from liability for any assessments thereafter becoming due or from the lien of any such subsequent assessment. (b) First mortgagees shall have the right to examine the books and records of the Developer during normal business hours. (c) In the event of substantial damage to or destruction of the Site or any portion thereof, the mortgagee of any first mortgage on the Site shall be entitled to timely written notice of any such damage or destruction, and no provision in this Declaration shall be interpreted to entitle the Developer or any other party to priority over any rights of the first mortgagee of the Site pursuant to its mortgage in the case of a distribution to such Developer of insurance proceeds or condemnation awards for losses to or a taking of the Site. (d) If the Site or portion thereof is made the subject matter of any condemnation or eminent domain proceeding or is otherwise sought to be acquired by a condemning authority, then the mortgagee of any first mortgage will be entitled to timely written notice of any such proceeding or proposed acquisition, and no provision in this Declaration shall be interpreted to entitle the Developer or any other party to priority over such mortgagee with respect to the distribution to such lot of the proceeds of any award or settlement. (e) As used in this. Section 11, "first mortgagee" means any mortgagee under a mortgage which is a first lien of record made in good faith and for value, or a junior lien of record made in good faith and for value by the City, the Agency or an institutional lender in order to assist in the financing of the construction of the Improvements. 12. Miscellaneous Provisions a. If any provision of this Declaration or portion thereof, or the application to any person or circumstances, shall to any extent be held invalid, inoperative or unenforceable, the remainder of this Declaration, or the 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 16 of 18 application of such provision or portion thereof to any other persons or circumstances, shall not be affected thereby; it shall not be deemed that any such invalid provision affects the consideration for this Declaration; and each provision of this Declaration shall be valid and enforceable to the fullest . extent permitted by law. b. This Declaration shall be construed in accordance with the laws of the State of California. c . In the event action is instituted to enforce any of the provisions of this Declaration, the prevailing party in such action shall be entitled to recover from the other party thereto as part of the judgment, reasonable attorney' s fees and costs. d. The Developer shall be required to take all reasonable steps necessary to insure that each tenant and all assignees, and transferors have knowledge of all terms and conditions of this Declaration. 13 . Runs with the Land The covenants and agreements established in this Agreement shall, without regard to technical classification and designation, be binding on the Developer and any successor in interest to the Site, or any part thereof, for the benefit of and in favor of the Agency, its successor and assigns, and the City of Huntington Beach. The covenants contained in paragraphs 2(a) and 4 through 12 of this Agreement shall remain in effect for the Affordability Period, and shall automatically terminate and be of no further force or effect after such time. The covenants against discrimination contained in paragraphs 2b and 3 shall remain in effect in perpetuity. IN WITNESS WHEREOF, the Agency and the Developer have executed this Declaration of Conditions, Covenants and Restrictions. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic Dated: By: Chairman Dated: By: Executive Director Dated: By: Deputy Executive Director "AGENCY" 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 17 of 18 ATTEST: Agency Secretary APPROVED AS TO FORM: Stradling, Yocca, Carlson & Rauth, Agency Special Counsel City Attorney, Agency General Counsel FIVE POINTS SENIORS, L.P. , a California limited partnership By: Michelson Family Trust, dated as of December 12, 1984, as amended March 1, 1985, its general partner Dated: By: David Michelson, Trustee 12/04/91 ATTACHMENT NO. 8 7100u/2460/050 Page 18 of 18 ATTACHMENT NO. 9 CERTIFICATION OF ELIGIBILITY Part I -- General Information 1. Project Name 2. Project Location 3 . Name of Lender 4. Landlord' s Name • Part II -- Unit Information 7. Unit 8. Number of 9. Monthly 10. Number of Address Bedrooms Payment Occupants Part III -- Affidavit of Renter I, , and I, , as applicants for rental of a Low and Moderate Income Unit in the above-described Project, do hereby represent and warrant as follows: A. (My/Our) adjusted income (anticipated total annual income) does not exceed: [ J $ (120% of Orange County Median Income) [ ] $ ( 80% of Orange County Median Income) [ ] $ ( 50% of Orange County Median Income) The following computation includes all income (I/we) anticipate receiving for the 12-month period beginning on the date ( I/we) execute a rental agreement for a Low or Moderate Income Unit or the date on which ( I/we) will initially occupy such unit, whichever is earlier. 12/04/91 ATTACHMENT NO. 9 7100u/2460/050 Page 1 of 5 1 . For the renter and all family members include: (a) amount of wages, salaries, overtime pay, commissions, fees, tips and bonuses, and , payments in lieu of earnings, such as unemployment and disability compensation, worker' s compensation and severance pay (before payroll deductions) (b) net income from business or profession or rental of property (without deduction for repayment of debts or expansion of business) (c) interest and dividends (d) periodic receipts such as social security, annuities, pensions, retirement funds, insurance policies, disability or death benefits, alimony, child support, regular contributions or gifts from persons not occupying the unit (e) public assistance allowance or grant plus excess of maximum allowable for shelter or utilities over the actual allowance for • such purposes (f) regular and special pay and allowances of a member of armed services (whether or not • living in the dwelling) who is head of the family or spouse Subtotal (a) - (f) Less: portioh of above items which are income of a family member who is less than 18 years old or a full-time student ( ) Total Eligible Income Note: The following items are not considered income: casual or sporadic gifts; amounts specifically for or in reimbursement of medical expenses; lump sum payment such as inheritances, insurance payments, capital gains and settlement for personal or property losses; educational scholarships paid directly to the student or educational institution; government benefits to a veteran for education; special pay to a serviceman head of family away from home and under hostile fire; foster child care 12/04/91 ATTACHMENT NO. 9 7100u/2460/050 Page 2 of 5 payments; value of coupon allotments for purpose of food under Food Stamp Act of 1964 which is in excess of amount actually charged the eligible household; relocation payments under Title II of Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; payments received pursuant to participation in the following programs: VISTA, Service Learning Programs, and Special Volunteer Programs, SCORE, ACE, Retired Senior Volunteer Program, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience. 2 . As of the first day of occupancy of the unit which ( I/we) propose to rent (a) either (myself/ourselves) or at least one other occupant of the unit is not an individual enrolled as a full-time student during each of five (5) calendar months during the calendar year in which occupancy of the unit begins at an educational institution which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance and is not an individual pursuing a full-time course of institutional on farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof or (b) if all of the occupants of the unit will be individuals described in (a)-, either - (myself/ourselves) or one other occupant of the unit is a husband or wife entitled to make a single return jointly of Federal income taxes. 3 . This affidavit is made with the knowledge that it will be relied upon by the Landlord to determine maximum income for eligibility and (I/we) warrant that all information set forth in this Part III is true, correct and complete and based upon information ( I/we) deem reliable and that the estimate contained in -paragraph 1 is reasonable and based upon such investigation as the undersigned deemed necessary. 4. ( I/We) will assist the Landlord in obtaining any information or documents required to verify the statements made 'in this Part III and have attached hereto copies of federal income tax returns for the past two years. 5. ( I/We) acknowledge that ( I/we') have been advised that the making of any misrepresentation or misstatement in this affidavit will constitute a material breach of (my/our) ' agreement with the Landlord to rent the unit and will additionally enable the Redevelopment Agency of the City of Huntington Beach to initiate and pursue all applicable legal and equitable remedies with respect to the unit and to me/us. 12/04/91 ATTACHMENT NO. 9 7100u/2460/050 Page 3 of 5 ( I/We) do hereby swear under penalty of perjury that the foregoing statements are true and correct. Date Applicant SUBSCRIBED AND SWORN to before me this day of (Notary Seal) Notary Public in and for the State of My Commission Expires: • 12/04/91 ATTACHMENT NO. 9 7100u/2460/050 Page 4 of 5 INCOME VERIFICATION (for employed persons) The undersigned employee has applied for rental of a dwelling unit located in a redevelopment housing project in the City of Huntington Beach. Every income statement of a prospective purchaser must be stringently verified. Please indicate below the employee' s current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis. Annual wages Overtime • Bonuses Commissions Total current income I hereby certify that the statements above are true and complete to the best of my knowledge. Signature Date Title I hereby grant permission to disclose my income to the Agency and , the Project Operator, in connection with my proposed rental of a dwelling unit located in their project. Signature Date Please send to: • 12/04/91 ATTACHMENT NO. 9 7100u/2460/050 Page 5 of 5 ATTACHMENT NO. 10 INCOME COMPUTATION AND CERTIFICATION NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Development("HUD") Regulations(24 CFR 813). You should make certain that this form is at all times up to date with the HUD Regulations. Re:[Address of Apartment Building] I/We,the undersigned state that 1/we have read and answered fully,frankly and personally each of the following questions for all persons who are to occupy the unit being applied for in the above apartment project. Listed below are the names of all persons who intend to reside in the unit 1 2. 3. 4. S. Name of Members Relationship of the to Head of Social Security Place of household household Age. J'lumber £pl zvment HEAD SPOUSE ' Income Computation 6. The total anticipated income, calculated in accordance with the provisions of this paragraph 6,of all persons over the age of 18 years listed above for the 12-month period beginning the date that Uwe plan to move into a unit is$ • Included in the total anticipated income listed above are: (a) all wages and salaries, overtime pay,commissions,fees,tips and bonuses and other compensation for personal services,before payroll deductions; (b) the net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness or any allowance for depreciation of capital assets); (c) interest and dividends(including income from assets excluded below); ATTACHMENT NO. 10 P iMP 1 ref • (d) the full amount of periodic payments received from social security, annuities, insurance policies,retirement funds,pensions,disability or death benefits and other similar types of periodic receipts, including any lump sum payment for the delayed start of a periodic payment.; (e) payments in lieu of earnings, such as unemployment and- disability compensation, workmen's compensation and severance pay; (f) the maximum amount of public assistance available to the above persons other than the amount of any assistance specifically designated for shelter and utilities; (g) periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; (h) all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling)who is the head of the household or spouse; and . (i) any earned income tax credit to the extent that it exceeds income tax liability. Excluded from such anticipated income are: (a) casual,sporadic or irregular gifts; (b) amounts which are specifically for or in reimbursement of medical expenses; (c) lump sum additions to family assets,such as inheritances,insurance payments (including payments under health and accident insurance and workmen's compensation), capital gains and settlement for personal or property losses; (d) amounts of educational scholarships paid directly to the student or the educational institution,and amounts paid.by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scholarships or payments to veterans not used for the above purposes are to be included in income; (e) special pay to a household member who is away from home and exposed to hostile foe; (f) relocation payments under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Law of 1970; (g) foster child care payments; (h) the value of coupon allotments for the purchase of food pursuant to the Food Stamp Law of 1977; () payments to volunteers under the Domestic Volunteer Service Law of 1973; (j) payments received under the Alaska Native Claims Settlement Law; (k) income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; ATTACHMENT NO. 10 Page 2 of 9 • (1) payments or allowances made under the Department of Health and Human Services'Low-Income Home Energy Assistance Program; (m) payments received from the Job Training Partnership Law; _ (n) income derived from the disposition of funds of the Grand River Band of Ottawa Indians; and (o) the first$2,000.00 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Court of Claims. 7. Do the persons whose income or contributions are included in item 6 above: (a) have savings, stocks, bonds, equity in real property or other form of capital investment(excluding the values of necessary items of personal property such as furniture and automobiles and interests in Indian trust land)Yes No ;or (b) have they disposed of any assets (other than at a foreclosure or banhuptcy sale)during the last two years at less than fair market value?Yes No (c) If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than $5,000? Yes No . (d) If the answer to(c)above is yes,state: (1) the amount of income expected to be derived from such assets in the 12- month period beginning on the date of initial occupancy in the unit that you propose to rent $ ,and (2) the amount of such income,if any,that was included in item 6 above: $ 8. (a) Are all of the individuals who propose to reside in the unit full-time students'?Yes No . sA full-time student is an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance and is not an individual pursuing a full-time course of institutional or farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. (b) If the answer to 8(a)is yes,is at least 1 of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return?Yes_,No 9.Neither myself nor any other occupant of the unit Uwe propose to rent is the owner of the rental housing project in which the unit is located (hereinafter the 'Owner"),has any family relationship to the Owner, or owns directly or indirectly any interest in the Owner. For purposes of this paragraph,indirect ownership by ATTACHMENT NO. 10 an individual shall mean ownership by a family member, ownership by a corporation,partnership,estate or trust in propdrtion to the ownership or beneficial interest in such corporation, partnership,estate or trustee held by the individual or a family member, and ownership, direct or indirect,by a partner of the individual. 10.This certificate is made with the knowledge that it will be relied upon by the Owner to determine maximum income for eligibility to occupy the unit;and 1/we declare that all information set forth herein is true,correct and complete and based upon information I/we deem reliable and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary. 11.Uwe will assist the Owner in obtaining any information or documents • required to verify the statements made herein, including federal either etax rotan forme verification from my/our present employer(s)or copies immediately preceding calendar year. 12. Uwe acknowledge that Uwe have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our agreement with the Owner to lease the unit and will entitle the Owner to prevent or terminate my/our occupancy of the unit by institution of an action for ejection or other appropriate proceedings. Uwe declare under penalty of perjury that the foregoing is true and correct Executed this day of in the City of •California. Applicant • Applicant • [Signature of all persons over the age of 18 years listed in number 2 above required) FOR COMPLETION BY APARTMENT OWNER ONLY: 1. calculation of eligible income: a. Enter amount entered for entire household in 6 above: S b.(1) If answer to 7(c) above is yes, enter the total amount entered in 7(d)(1), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance($ ); • (2) Multiply the amount entered in 7(c) times the current passbook savings rate to determine what the total annual earnings on the amount in 7(c) would be if invested in passbook *mmT r•LYWC,VIT *in 1 ri savings (S 1, subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance ($ ); (3) Enter at right the greater of the amount calculated under(1)or(2)above: S _ ; c.TOTAL ELIGIBLE INCOME(Line l.a plus line 1.b(3)): $ 2. The amount entered in l.c: Qualifies the applicant(s)as a Lower Income Tenant(s). Does not gratify the applicants)as a Lower Income Tenant(s). • 3. Number of apartment unit assigned: Bedroom Size: Rent: $ 4. This apartment unit [was/was not] last occupied for a period of 31 consecutive days by persons whose aggregate anticipated annual income as certified in the above manner upon their initial occupancy of the apartment unit qualified them as Lower Income Tenants. S. Method used to verify applicants)income: Employer income verification. • Copies of tax returns. Other(-- ) Manager ATTACHMENT NO. 10 INCOME VERIFICATION (FOR EMPLOYED PERSONS) 'The undersigned employee has applied for a rental unit located in a project financed under the City of Huntington Beach Multifamily Housing Program for persons of low and moderate income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee's current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis. Annual wages Overtime Bonuses Commissions Total current income I hereby certify that the statements above are true and complete to the best of my knowledge. Signature Date Title I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of an apartment located in their project which has been financed under the City of Huntington Beach Multifamily Housing Program. • Signature Date Please send to: • ATTACHMENT NO. 10 INCOME VERIFICATION (for self-employed persons) I hereby attach copies of my individual federal and state income tax returns for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge. Signature Date ATTACHMENT NO. 10 Paste 7 of 9 EXHIBIT D Period Covered • (Annual or wont ly) CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE - CITY OF HUNTINGTON BEACH (FIVE POINTS SENIORS PROJECT) The undersigned, Five Points Seniors, a general law partnership (the 'Developer") , has read and is thoroughly familiar with the provisions of the various Developer Loan Documents associated with the Developer's participation in the City of Huntington Beach's (the 'Issuer") Multifamily Housing Program,such documents including: 1. The Regulatory Agreement dated as of October_ 1991 among the Developer,the Issuer and (the Trustee) ; 2. The Loan Agreement dated as of October 1991 among the Developer,the Issuer and the Trustee;and 3. The Developer Note dated as of October_, 1991 from the Developer to the Issuer and endorsed to the Trustee representing the Developer's obligation to repay its Developer Loan. 4. As of the date of this Certificate,the following percentages of completed residential units in the Development(i) are occupied by Very Low Income Tenants (as such term is defined in the Regulatory Agreement) or (ii) .are currently vacant and being held available for such occupancy and have been so held continuously since the date a Very Low Income Tenant vacated such unit;as indicated: Total Units Completed: Number of Units Occupied by Very Low Income Tenants: Percent of Total Units Occupied by Very Low Income Tenants: ATTACHMENT NO. 10 Page 8 of 9 Type of Units Occupied by Very Low Income Tenants: Studio Apartments Unit Nos. - -- Rent Charged - - One Bedroom Apartments Unit Nos. Rent Charged Two Bedroom Apartments Uniti Ch argeRed • Held vacant for occupancy continuously since last occupied by Very Low Income Tenant percentUnit Nos. Vacant Units percentUnit Nos. S. No Determination of Taxability (as defined in the Loan Agreement) has occurred and,to the Developer's knowledge,no event has occurred which,with the passage of time,would cause a Determination of Taxability to occur or if such an event has occurred explain below the event and the steps being taken to remedy such event!. The undersigned hereby certifies that the Developer is not in default under any of the terms and provisions of the above documents. FIVE POINTS SENIORS • By: • • ATTACHMENT NO. 10 Dam= Q of Q ATTACHMENT NO. 11 OPERATING BUDGET ANNUAL EXPENSE BREAKDOWN FIVE POINTS SENIOR CITIZEN APARTMENTS HUNTINGTON BEACH, CALIFORNIA NUMBER OF UNITS 164 PAYROLL ADMINISTRATION/MANAGER $2, 000/MONTH + APARTMENT $32,400 ACTIVITIES DIRECTOR $2,000/MONTH 24,000 MAINTENANCE PERSON/ GARDENER $1, 000/MONTH + APARTMENT 20,400 RECEPTIONIST/OFFICE ASSISTANT $1,200/MONTH 14,400 VAN DRIVER/MISC HELPER $1,O00/MONTH 12,000 MAID $6.00/HOUR 12,000 BASE PAYROLL EXPENSE $115,200 PLUS: PAYROLL TAXES @ 17% 19, 600 PLUS: HEALTH INSURANCE BENEFITS $800/MONTH 9, 600 TOTAL PAYROLL EXPENSE $144,400 ACTIVITIES EXPENSE $9. 15/UNIT/MONTH $18,000 INSURANCE EXPENSE FIRE/LIABILITY $14.23/UNIT/MONTH $28,000 . VAN $1, 666/MONTH 2O,000 TOTAL INSURANCE EXPENSE $48,000 VAN EXPENSE LOAN AMORTIZATION $42, 000 @ 5 YR TERM $8,400 GAS $1,000/MONTH 12,000 MAINTENANCE $1,000/MONTH 12,000 TOTAL VAN EXPENSE $32,400 ADVERTISING EXPENSE $1,000/MONTH $12,000 • MANAGEMENT EXPENSE $28. 88/UNIT/MONTH $56,800 TOTAL ANNUAL EXPENSES $311, 600 12/04/91 7100u/2460/050 ATTACHMENT NO. 11 ATTACHMENT NO. 12 MEMORANDUM OF AFFORDABLE HOUSING AGREEMENT RECORDING REQUESTED BY AND ) WHEN RECORDED RETURN TO: ) Redevelopment Agency of the ) City of Huntington Beach ) 2000 Main Street ) Huntington Beach, CA 92648 ) Attention: Executive Director ) ) • ( Space above for Recorder' s use. ) MEMORANDUM OF AFFORDABLE HOUSING AGREEMENT This MEMORANDUM OF AFFORDABLE HOUSING AGREEMENT ( "Memorandum" ) , dated for identification purposes as of November 18, 1991, is entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic ( "Agency" ) and FIVE POINTS SENIORS, L.P. , a California limited partnership ( "Developer" ) . 1 . Affordable Housing Agreement. Agency and Developer have executed an Affordable Housing Agreement (the "Agreement" ) dated for identification purposes as of November 18, 1991, which concerns and is binding upon the current and future • owners of that certain real property located in the City of Huntington Beach, County of Orange, State of California, more fully described in the Exhibit "A" attached hereto and incorporated herein by this reference. All of the terms, conditions, provisions and covenants of the Agreement are incorporated in this Memorandum by reference as though written out at length herein, and the Agreement and this Memorandum shall be deemed to constitute a single instrument or document. 2 . Purpose of Memorandum. This Memorandum is prepared for recordation purposes only, and in no way modifies the terms, conditions, provisions and covenants of the Agreement. In the event of any inconsistency between the terms, conditions, provisions and covenants of this Memorandum and the Agreement, the terms, conditions, provisions and covenants of the Agreement shall prevail . 12/04/91 ATTACHMENT NO. 12 7100u/2460/050 Page 1 of 2 The parties have executed this Memorandum on the dates specified immediately adjacent to their respective signatures. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic Dated: November 18, 1991 By: Chairman Dated: November 18, 1991 By: Executive Director Dated: November 18, 1991 By: Deputy Executive Director ATTEST: Secretary APPROVED AS TO FORM: Stradling, Yocca, Carlson & Rauth, Agency Special Counsel City Attorney Agency General Counsel FIVE POINT SENIORS, L.P. , a California limited partnership By: MICHELSON FAMILY TRUST, dated as of December 12, 1984, as amended March 1, 1985, its general partner Dated: November 18, 1991 By: David Michelson, Trustee 12/04/91 ATTACHMENT NO. 12 7100u/2460/050 Page 2 of 2 EXHIBIT A LEGAL DESCRIPTION [To Be Inserted] 12/04/91 ATTACHMENT NO. 12 7100u/2460/050 Exhibit "A" RESOLUTION NO. 220 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH APPROVING AN AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND FIVE POINTS SENIORS WHEREAS, California Health and Safety Code Section 33334 . 2 and the Redevelopment Plan for the Main-Pier Redevelopment Project ( "Project Area" ) authorize and direct the Redevelopment Agency of the City of Huntington Beach ("Agency" ) to expend not less than twenty percent (20%) of all taxes which are allocated to the Agency pursuant to California Health and Safety Code Section 33670 (all section references herein are to the Health and Safety Code unless otherwise specified) for the purposes of increasing, improving and preserving the community' s supply of. low and moderate income housing available at affordable housing cost to persons and families of low and moderate income, lower income, and very low income; and Pursuant to applicable law the Agency has established a Low, and Moderate Income Housing Fund ( "Housing Fund" ) ; and Pursuant to Section 33334 . 2(e) , in carrying out its affordable housing activities the Agency is authorized to provide subsidies to or for the benefit of very low income and lower income households, or persons and families of low and moderate income to the extent those households cannot obtain housing at affordable costs on the open market; and Pursuant to Section 33334 . 2(g) , City Council Resolution No . 6026 dated June 26, 1989 , and Agency Resolution No. 174 -1- dated June 26, 1989 , the Agency is authorized to make expenditures from the Housing Fund outside redevelopment project areas if such use will be of benefit to one or more of the project areas ; and The( Agency is required pursuant to Section 33413 to rehabilitate, develop or construct replacement dwelling units for those units housing persons and families of low and moderate income which have been destroyed or removed from the low- and moderate-income housing market as part of a redevelopment project; and The Agency has destroyed and removed certain units which housed persons of low and moderate income within the Project Area; and In order to carry out and implement the redevelopment plan for the Project and the affordable housing requirements thereof, the Agency proposes to enter into an Affordable Housing Agreement ( "Agreement" ) with Five Points Seniors, a California general partnership ("Developer") , for the development of affordable housing on a site located outside the Project Area ("Site" ) , as described in the Agreement; and The Agency has duly considered all terms and conditions of the proposed Agreement and believes that the development of the Site pursuant to the subject Agreement is in the best interests of the City and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable State and local law requirements; and -2- Res. 220 The City Council of the City of Huntington Beach has previously examined the environmental impact of the development proposed by the Agreement and has determined that the development will not have a significant effect on the environment, and has approved Negative Declaration No. 91-3 in conjunction with Use Permit No. 90-4 and Conditional Exception No . 91-7; and ,The Agency has considered the report of Agency staff on the proposed development to be carried out pursuant to said Agreement, NOW, THEREFORE, The Redevelopment Agency of the City of Huntington Beach does hereby resolve as follows : 1 . The Agency finds that the project will not result in any significant impacts on the environment beyond those effects considered by the City Council in its adoption of Negative Declaration No. 91-3 in conjunction with Use Permit No. 90-4 and Conditional Exception No. 91-7. The Agency hereby approves the Notice of Exemption prepared with respect to the development which indicates that the proposed Agreement is exempt from the California Environmental Quality Act pursuant to 14 Cal . Code Regulations Section 15061(b) (3) , and directs the Secretary of the Agency to file the Notice of Exemption with the County Clerk of the County of Orange. 2 . The Agency finds and determines that expenditures from the Housing Fund as contemplated by the Agreement will directly and specifically benefit, improve, and preserve the community' s supply of low- and moderate-income housing within the meaning of Section 33334 . 2 . —3 Res. 220 3 . The Agency finds and determines that expenditures from ,) the Housing Fund as contemplated by the Agreement are of . benefit to the Project Area . 4 . The Agency finds and determines that the housing units to .be created by the Agreement which are restricted to persons and families of low and moderate income qualify as replacement . dwelling units for those dwelling units in the Project Area which were destroyed and removed pursuant to the Redevelopment . - Project . 5 . The Chairman of the Agency is hereby authorized to execute the Agreement on behalf of the Agency. A copy of the Agreement when executed by the Agency shall be placed on file in the office of the Secretary of the Agency. 6 . The Executive Director of the Agency (or his or her rl I designee) is hereby authorized, on behalf of the Agency, to' sign. all documents necessary and appropriate to carry out and implement the Agreement and to administer the Agency' s obligations, responsibilities and duties to be performed under the Agreement and related documents . • • PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at an adjourned regular meeting thereof held on this 9th day of December • , 199 1 . ,t/ . 4/ . `r Chairman ATTEST: • APPROVED AS TO FORM: ‘1644e.• 40a4a4k1, . : e...( ,....4 ic--- ..... Agency Secretary / 72 % ' Agency Counsel REVIEWED AND APPROVED: • INITIATED,AND APPR ED: • City 'Administrator Diirector of Economic . Development, Res. No. 220 STATE OF CALIFORNIA COUNTY OF ORANGE ss: CITY OF HUNTINGTON BEACH ) I , CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; ' that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a regular adjourned meeting thereof held on the 9th day of December , 19 91 , by the following vote: :!: AYES: Councilmembers: Patterson, Winchell , Silva, Green, Kelly NOES: Councilmembers: IiacAllister ABSENT: Councilmembers: Robitaille 24/1.11,4i -' kvez.y> The foregoing instrument is a correct copy of the original on file in this office. • City Clerk and ex-offi ci o Clerk 1�r� 19---L of the City Council of the City Attest of Huntington Beach, California CONNIF RRDCKWAY City Clerk and Ex-officio Clork of the City Council of the City of Huntington Beach, 7tli Califocnia. _ DePutY EF ECEB 20 1an'ITE ,February 19, 1991 Mr. Ray Silver Assistant City Administrator CITY OF HUNTIN6TON BEACH City of Huntington Beach ADMINISTRATIVE OFFICE 2000 Main Street Huntington Beach, California 92648 RE: Five Points Seniors Dear Ray: Five Points Seniors respectfully requests a deferment of the Park and Rec Fee, the Traffic Impact fee and the Library fee for a total amount of $68,292 . This request is only until the time I am to receive the first payment of the grant money from the City. This will allow me the ability to complete my project within the economic guidelines anticipated and assumed per Mike Adams letter of June 17, 1991 . We do not wish to involve Barbara Kaiser or Kathy Head in altering the Affordable Housing Agreement due to the previous difficulties we had within that department. Our costs and equity has far exceeded the amount of project costs and developer equity, as required under that agreement. According to information submitted to us, the fees that were paid by the previous developer were $581, 726 . We have presently paid $68, 832 . 17 . For a total paid to the City of this project $650,558 . 17 . The history of this site has been unusual. With the bureaucratic system within RTC, we relied on your Staff to be forthright in their assessment of fees paid and to be paid. Our understanding during all of 1991 was that this project would be economically feasible for the additional 16 units increase and no additional fees since 1985, such as traffic impact fees, would be assessed. We, as well as the inspectors for the bank on December 5, 1991, were told by your planning department the fees would be in accordance with the letter issued by Mike Adams on June 17, 1991 for $63, 919 .22 The latest issue of the surety bond for $167, 000 has taken this entire situation totally out of context. This obligation was never assumed by more nor do I have any funds to pay this sum. I request a full waver of this obligation and directive to Staff to collect against the surety bond consistent with the terms of the bond. Which, I believe, consists of issuing a Certificate of Occupancy in September of 1992 . 4 col/IN eivro4 ak _ 2 At the present time, I am unable to continue work due to the lack of plumbing inspections. Would you please help us to get those completed so that we may continue working until this matter is settled at the March 2 City Council meeting. Finally if we are to attempt to have a temporary Certificate of Occupancy in September of 1992, we will need to have the cooperation of the Building Department with timely inspections and quick review of any field modifications . We believe, with cooperation of all parties involved, we can accomplish this goal. We look forward to resolving these matters at the March 2 Council meeting which hopefully will get this project back on track. Very truly yours, ' 6U4/17-6citi David Michelson General Partner cc: Pat Spencer FILE GUIDE Please file this document in: Category: Label : -:1-/1/ 600-/U �ia i t�ia. /© o4 - 0'7/ ) _-/,x 2 Lam ° deA._"--�e-i /6 .9'-2G7/.G1 .dfo.���2f//frJa 4- Established file New file — see Other: 0846I J3o. 3o dwelling unit who are not Senior Citizens must be Qualified Permanent Residents. Temporary guests of a Senior Citizen or Qualified Permanent Resident shall be allowed for a period of not more than sixty ( 60) days in any twelve ( 12 ) month period. Upon the death, dissolution of marriage, hospitalization or other prolonged absence of the Senior Citizen in a dwelling unit, any Qualified Permanent Resident who has continuously resided in the dwelling unit with such Senior Citizen shall be permitted to continue as a resident of that dwelling unit. "Permitted Health Care Residents" (as that term is defined in California Civil Code Section 51 . 3 ) shall be permitted to occupy any dwelling unit during any period that such person is actually providing live-in, long-term or hospice health care to a Senior Citizen tenant or Qualified Permanent Resident tenant for compensation. 7 . Bonds. In the event the Bonds ( as defined in Section 306 hereof) are issued in connection with the acquisition, development or use of the Site, the Developer shall strictly comply with all covenants, conditions and requirements relating to the duties of the Developer pursuant to such Bonds and such agreements as are entered into in connection therewith. 8. Federal Housing Subsidies. The Agency shall use its best reasonable efforts to assist the Developer to secure as tenants of the Affordable Units dedicated to Very Low Income Households persons who are recipients ( "Section 8 Recipients" ) of federal certificates or vouchers for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor ( "Section 8 Program" ) . For purposes of calculating the rent payable by the tenant pursuant to Paragraph 5 of this Section, the amount paid to the Developer as a result of such certificates or vouchers shall not be deemed the payment of rent by the tenant. C. [ §403 ] Operating Expenses For a period of thirty (30) years beginning on the date of the City' s issuance of a certificate of occupancy or temporary certificate of occupancy for the Developer Improvements, the Developer shall provide a full-time - activities director, an on-site apartment manager and a van shuttle service which are available exclusively to and for the benefit of the tenants of the Developer Improvements. Such activities director shall be employed on the Site at least LS`I`v hsr{2,A- )/2 (:9 2-- K2M v c / ./k 4:1, 12/04/91 7100u/2460/050 -26- /- r4tf * I P1 �STORS � INSTI�TIONAL PROPERTY IN '— Q ;, ate 2 S. Alta Mira • S. Laguna Beach, CA 92677-3302 • 714/499-1404 Fax 714/499-4780 March 16, 1992 RE : Five Points Seniors Fee Issues 1 . The Staff did not, over an eight month period prior to closing, inform the developer of the cost for the fees . Thus, the budget was off by $254, 000 . The original estimate by Mike Adams, was an additional $63, 000 and the current budget is $445, 000 . 2 . The Staff has failed to recommend a difference in these surplus fees due to their own failure. I was not informed of all the fees until January 6 , 1992 . 3 . Barbara Kaiser met with me and indicated that Keyser Marston used a $749 , 000 estimate for fees and therefore the current $445, 000 was within their estimate. Barbara Kaiser failed to disclose that Kathy Head was told in April 1991 , that her estimate for fees was incorrect but that the total project cost of $11, 000, 000 was adequate. Both Kathy Head and I agreed not to worry about line item cost if the total was in agreement. 4 . The agreement calls for us to invest $800, 000 and to build the project at a projected costs of $11 , 000, 000 . As of March 16, 1992 the partnership equity investment is $1 , 213 , 000 with estimated project cost at $11 , 300, 000, without any additional fees . We have always met all the agreements in all Cities that we have previously provided affordable housing for. We started this project in good faith and appreciate the commitment the City Council has made to our project . We ask for only a fairness . Staff never anticipated we would need these additional fees at the time of the affordable housing agreement. In fact, the Department of Economic Development never has assisted us to determine the fees . We are not asking for additional financial assistance. We are asking for fairness and to charge the proper fees for the services required. Once the affordable housing task fees are determined, we request that these fees be paid when the grant fund are available for disbursement . to C 3 J INCOME PROPERTY ACQUISITIONS, DEVELOPMENT AND MANAGEMENT March 16, 1992 ISSUE 1 - Determination of Fee Assessment from November, 1990 through March 16, 1992 . I requested assistance and a review of fees in November, 1990 . Over ten pieces of correspondence has been sent requesting this specific information. Finally, in June a response was given by Mike Adams stating that the remaining fees would be $63, 919 .22 Staff now says this was an incomplete list even though I waited for over six months for these figures . On December 26, 1991 I was told the sewer fees would be $400,000 . On January 6, 1992, another amount total was given to me for sewer fees, also the Park Fee increased from $29, 428 to $197,296. 00 • The above has taken over 14 months and even though today there is discussion as to whether the Traffic Impact Fee should be assessed (455 trips far only 65 cars, as designed by the Planning Department) Staff cannot cover up this unfortunate failure. Any developer should be able to ascertain over a maximum three week period what the fees are, let alone deal with the delay of 13 months . -'�, - INSTITUTIONAL PROPERLY INVESTORS, INC. C__,..\z_s II 19800 MacArthur Boulevard, ,ti80 Irvine. CA 9271`h • (714)833-9870 Stephen Kohler Principal Redevelopment Specialist City of Huntington Beach _ 2000 Main Street Huntington Beach, CA 92648 Dear Mr. Kohler, I .P. I . , together with Wells Fargo Bank and its Community Reinvestment Division, wishes to propose a conversion of the fire damaged 148 unit congregate care facility known as Five Point Court , to a moderate to low income senior apartment of 160 units. Our intent is to use the existing plans and permits with the required changes as requested by the Department of Building and Safety. The former developers were intending to charge the seniors a minimum of $1 ,400 per month, which included meals and medical care, as a licensed facility. The project has been unable to obtain financing and could not proceed in the forseeable future as a licensed facility offering these services. I.P. I. has worked with many local redevelopment agencies in providing low cost housing for seniors and for families. Affordable housing for seniors is obtainable with the cooperation of local , state and federal agencies, together with the private sector. The project we are proposing could be financed with federal block funds, redevelopment funds, developer equity, bond financing and rebates of fees which the project generates. We are specifically requesting that the sum of $500,000 be contributed by the City of Huntington Beach through release of fees already paid to the City, along with interest on these fees which were paid in 1985 , and by the elimination of additional fees including park fees and traffic impact fees. As a result of the fire , city services were not required and the project suffered by the loss of income during this period. The interest has accumulated at 8% and should be rebated. Nft 401 INCOME PROPERTY ACQUISITIONS. DEVELOPMENT AND MANAar AcMr Jr) , • • Ref : Five Point Court Mr. Stephen Kohler November 30, 1990 Page 2 The requirement of these funds is based on the fact that- the private sector will not build a project on a rent restricted basis where the total cost exceeds the appraised value. The project will cost in excess of $10, 000,000 and with both reinvestment underwriting and state housing bonds could only achieve $8 , 500,000 for construction, and $9 , 200, 000 for takeout. At the takeout point the lender is using 95% of the net operating income to support their debt. This leaves little spendable income for property owners. Senior projects are rent restricted by both HUD policies and by the seniors ' fixed income ' status. Rather than attempting to go into any more specifics on financing, I would like to address the fact that low cost senior housing is a goal of your community. With your assistance we can work together to produce a project which will provide luxury housing at affordable rents. I would encourage the staff to see our Garden Grove project which will be completed in February. This project was financed by Wells Fargo and sponsored by the City of Garden Grove ' s Housing and Neighborhood Development Agency, through the issuance of a tax exempt bond. Under separate cover we shall send the project ' s required modifications to the current building • permits. ' These modifications are necessary to insure a safe, well designed complex for active seniors. Our staff and project architects will work with you • during .the next 30 working,. days to determine how we can increase parking , design larger handicapped units, provide better designed kitchens and baths , and create a more functional project . We will have to increase density by 12 units, an.1 this is achieved • by utilizing the space originally intended as a dining room and commercial kitchen for a congregate care type facility. Ref: Five Point Court Mr. Stephen Kohler November 30,,.. 1990 Page 3 Please review the enclosed materials and arrange to have your appropriate staff meet with Fleetwood Joiner prior to January 5 , 1991, to determine the feasability of this request. Very truly yours, 10, 422144/ David R. Michelson I.P. I. cc: Norman D. Ward T. Robert Hansen James Bancroft Fleetwood Joiner DRM :cb mm:5pntltr: 11/30/90 FEES.PAID Sanitation Fee $ 335,960.00 Utility Fee 80,309.00 Library Fee 8,940.00 Drainage Fee 12,000.00 Building Permit 132,577.00 Total Fees Paid $569,786.00 INSI ITUTIONAL I 'ROFERTY INVES1 ORS, INC.. II 19800 MacArthur Boulevard, #680, Irvine, CA 92715 • (714)833-9870 FAX (714) 756-0981 FAX TO NORMAN WARD AT 840-5241 Michael Uberuaga City Administrator City of Huntington Beach P 0 Box 190 Huntington Beach, CA 92648 Dear Mr. Uberuaga, I read the article concerning Huntington Beach's need for affordable housing in the Los Angeles Times, March 5th. Five Point Senior Villas has approached your staff (Mr. Hal Simmons, Mr. Howard Zelefsky, Mr. Steven Kohler, Ms. Barbara Kaiser) concerning our desire to convert the fire damaged senior project at Main and Florida to a low to moderate income senior apartment complex. We have invited your staff to our new Garden Grove project which opened March '1st. We would like them to see what type of project can be achieved with city support and financial assistance. To date, we have not received any formal response to our letters (copies enclosed) . We wish to meet and discuss our requirements during the next three weeks so we can determine your City's interest in supporting our project. On the Planning Department side, your staff has been very cooperative and helpful and we do not wish to suggest by this letter that we are unhappy with any specific staff member. However, our ability to continue with this develop- ment is conditional upon financial assistance as requested, and we would like to receive assurance from your staff that they are supportive of our request. This project will greatly benefit your local senior commun- ity, as well as provide exceptional. secure housing, and meet your goal of providing more low to moderate cost housing. Our proposal is to rent the one bedroom unit from $675 per month which will be at the 80% of medium income as estab- lished by HUD. In addition, 17 units will be reserved for low income tenants at 50% of medium income; these rents will. be under $600 per month. There is also the possibility that 25 units can be reserved for HUD tenants. Together with the other low income units, this will provide a substantial number of seniors with affordable housing. Ak , INCOME PROPERTY ACQUISITIONS, DEVELOPMENT AND MANAGEMENT March 7, 1991 Michael Uberuaga City of Huntington Beach March 7, 1991 Page 2 The Five Points property is currently owned by the Resolution Trust Company who has given us only an additional 60 days to complete our agreement with the City. The City has the oppor— tunity to build all 50 of its affordable unit requirements, while at the same time will be getting a long standing eye sore converted into a development that the entire community will be proud of. We look forward to meeting you at your earliest convenience and look for direction as to how we can complete this within the 60 day time limit that the property owner has imposed on us. • Very truly yours, Mfrilf9415 David R. Michelson DRM:cb Enc: (3) cc: Norm Ward Howard Zelesky Barbara Kaiser Steven Kohler INSTITUTIONAL PROPERTY INVESTORS, INC. II P • 19800 ,MacArthur Boulevard, #680, Irvine, CA 92715 • (714)833-9870 FAX (714)756-0981 May 23, .:1991 Michael Uberuaga, City Administrator FAX TO: 969-5986 City of Huntington Beach P. 0. Box 190 • Huntington Beach, CA 92648 Subject: Five Points Senior Villas Dear Mr. Uberuaga, Five Points Senior Villas partnership is very pleased with the unanimous approval of our CUP 91-4. There remains three issues which need to be addressed prior to the June 3 City Council meeting. Given that these issues concern different departments I thought it would be best to summarize the remaining issues so that you can assist us with resolving these prior to the council meeting. 1. The permit A59462 remains active and the grading permit, mechanical permit, fire repair permit, and all fees other than park fees, have been paid. The architect, McMurray, Sands and Lyon, who pulled the original permit, is no longer in business. We wish to use Fleetwood Joiner, AIA, and keep: the existing permit active so that the only fees paid by us is the new plan check fee and the inspection fee. Both the park fee and the traffic impact fee will need to be waived. The City of Hunt- ington Beach was paid over $569,000*, plus they enjoyed interest for seven years without providing these services. This was • addressed in my November 30, 1990 letter to Stephen Kohler. Over the past month, we have attempted to resolve this with Mike Adams and currently do not know the status. We wish to begin the working drawings immediately after June 3. 2. We are working with Pat Spencer and Kathy Head towards determining the adequate number of assisted low income units in exchange for set aside dollars. We currently have offered 33 units for 30 years in exchange for $675,000, (see enclosed letter.) We can also increase the 33 low income units to 50 units if the City wishes to additionally allocate set aside funds. I believe we should finalize this as soon as possible. (Cont.) 40 INCOME PROPERTY ACQUISITIONS, DEVELOPMENT AND MANAGEMENT IpI Michael Uberuaga, City Administrator City of Huntington Beach May 23, 1991 Page 2 3. The existing structure and permits were under the 1982 building code. There will need to be direction to staff about how to inter— pret codes, and working with the existing structures. I would like to suggest a meeting for next week with you and your staff heads from the Building Department and Economic Development Department to finalize these issues. Very truly ours, Datvid R. Michelson • cc: Pat Spencer by fax Mike Adams by fax Enc: Letter to Kathy Head Letter to Mike Adams * List:of fees paid prior to fire: Building Permit $132,577 • Drainage Fee 12,000 Library Fee 8,940 Utility Fee 80,309 Sanitation Fee 335,960 Total $569,786 DRM:cb INSTITUTIONAL PROPERTY INVESTORS, INC. I .I P 19800 MacArthur Boulevard,#680,Irvine.CA 92715 • (714)833-9870 • Fax(714)756-0981 June 12, 1991 • Mr. Mike Adams Director of Community Affairs • City of Huntington Beach P.O. Box 190 Huntington Beach, California 92648 RE: Five Points Senior Villas Dear Mike: We would appreciate a letter before June 19th which clearly indicates that the existing building permit and fees are current and will remain so for the balance of 1991. Our modifications, which were approved under CUP 91-4, will only require new plan check fees and inspection fees which we discussed. Our project costs exceed the appraiser's value and we need the letter to help convince the bank to fund this project. Very truly yours, ait_ilfitt/4 -- David Michelson President dm:dh l INCOME PROPERTY ACQUISITIONS, DEVELOPMENT AND MANAGEMENT DEC-06-1991 12:49 FROM r`711401.1 I C DEUELOPMENT TO 975609131 P.03 • ,1i ` City of Huntington Beach ;�� 2000 MAIN STREET CALIFORNIA 92648 DEPARTMENT OF COMMUNITY DEVELOPMENT 9uildinq Division 536.5241 Planning Division 536-5271 Mr. David Michelson, President Institutional Property Investors , Inc. 19800 Mac Arthur Boulevard - #680 Irvine, CA 92715 RE: Five Points Senior Villas Dear Dave : As requested, this letter is to clarify additional building permit fees created by modification to existing building permit No. A-59462, increasing quantity of units from 148 to 164 : PARK & RECREATION FEE $28 , 000. 00 (16 new units) LIBRARY FEE 7 , 799 . 70 (51 ,998 add' 1 . sq . ft. ) COMPLETE NEW PLAN CHECK FEE 18, 210 . 73 • (Based on valuation of S9 , 158 , 684 including Parking Structure) INSPECTION FEE - Add ' 1 . sq . ft . 9 , 548 . 50 CONSERVATION FEE - Add ' l . sq . ft. . 300. 29 PROCESSING FEE 30 . 00 CHANGE OF OWNER/CONTRACTOR 30. 00 $63 , 919 . 22 Following plan check, there is the possibility that unforeseen fees may be due . Please give me a call if you have questions regarding the above . • Kindly, • Michael Adams Director MA/j s • • `" : - w City of Huntington Beach ram,. ly'. _ • 1�• � r=; 2000 MAIN STREET CALIFORNIA 92648 DEPARTMENT OF COMMUNITY DEVELOPMENT Building Division 536-5241 Planning Division 536-5271 August 6, 1991 Mr. David Michelson Institutional Property Investors 19800 MacArthur Blvd. No. 680 Irvine, CA 92715 RE: FIVE POINTS VILLAS Dear Mr. Michelson: We have received your letter dated July 17, 1991 requesting that building permit A-59462 be extended for the balance of 1991. This letter will serve as that confirmation assuming the fees outlined in Mike Adams letter dated June 17, 1991 are addressed. If you have any questions about the processing of your plan check, please give me a call. Judging from our last meeting, I look forward to a professionally handled project. Sincerely, 41.060 Ross D. Cranmer Asst. Building Official. Attachments RDC: jr cc: Mike Adams Joan Stauss (0426d) paws 9,,,,ic. / FIVE POINTS SENIOR VILLAS PROJECT FEES AND ASSESSMENTS (16 Additional Units Fees & Assessments 148 Units Or 164 Units Paid Due 1 . Park & Rec $167,868.00 $197,296.00 $167,868.00 #2 $29,428.00 2. Traffic Impact N/A $34,540.00 $34,540.00 3. Library $10,320.00 $18,119.70 $13,795.50 $4,324.20 #1 4. Inspection $14,078.00 $23,626.50 $16,759.50 $6,957.00 #1 5. Conservation $389.00 $689.29 $532.54 $156.75 #1 6. Processing $30.00 $15.00 $15.00 7. Change of Owner/ Contractor $88.50 $118.50 $88.50 $30.00 8. Plan Check $9,151 .00 $27,361 .73 $27,361 .73 #1 9. Electrical $8,088.00 $13,124.25 $8,088.00 $5,036.25 #1 - 10. Plumbing $3,339.38 $5,426.49 $3,339.38 $2,087.11 #1 11 . Mechanical (B) $898.94 $1 ,910. 15 $898.94 1 ,011 .21 #1 12. Mechanical (F) $719.00 #1 $719.00 #1 $21.4,939,82 $322.242.61 5239., 32. ,1,1 3.,585.52 #1 Note 1 : Amounts based upon 164 units. Until such time as plans are submitted and checked reflecting the proposed 166 units , fees cannot be accurately determined. Note 2: Park and Recreation fee guaranteed by surety bond posted by the projects previous developer which may become obligation of current developer. FIVE POINTS VILLAS ESTIMATE OF OUTSTANDING FEES AND ASSESSMENTS Fee/Assessment Amount Credited Due 1 . Park & Rec $197, 296 . 00 $167, 868 . 00 $29 , 428 . 00 2 . Traffic Impact $34 , 540 . 50 $34 , 540 . 50 3 . Library Fee $7 , 799 . 70 $3 , 475 . 50 $4 , 324 . 20 4 . Inspection $9 , 548 . 50 $2 , 591 . 50 $6 , 957 . 00 * 5 . Conservation $300 . 29 $143 . 54 $156 . 75 6 . Processing • $30 . 00 $15 . 00 $15 . 00 7 . Change of Owner $30 . 00 $30 . 00 8 . Plan Check $18, 210 . 73 * 9 Electrical $8, 058 . 00 $5, 036 . 25 * 10 . Plumbing $3 , 339 . 38 $2, 087 . 11 * 11 . Mechanical $1, 617. 94 $1, 011721 * $83 , 586 . 02 X .used upon 164 units . Until such time as plans are suuma. and checked for 16E7 u:._ -.s , fees ::c:.not be accurately deterrinc c . This is the i i st that was given to llNV i,. .. ry 27 by Pat Spencer Ray Silver. ( 2102d . March 16, 1992 To: The City Council of Huntington Beach Each City has special zoning for seniors which allow commercial designation thus avoiding Park and Rec Fees, lower sewer fees and lower school fees . The following are the fees charged in prior Cities for the senior complex I constructed in their Cities : Costa Mesa 148 units - fees $108, 000 Per unit costs 730 Garden Grove 178 units - fees 205, 000 Per unit costs 1, 152 Newport Beach 167 units - Estimated fees 105, 000 Per unit costs 620 Low income units and seniors units need special designation as other cities have done. Five Points has been in a quagmire for over a year, with a Staff whom has been incapable of providing Council direction. The Department of Economic Development has avoided the issue totally. Huntington Beach 166 units - fees $1, 494, 000** Per unit costs 9, 000 The fees charged to Five Points Seniors are only $455 , 000 due to prior fee assessements of 1986 were paid by the previous developer. **Based on Pat Spencer ' s letter for sixteen additional units . ISSUE 2 - Fees Assessed in Huntington Beach compared to other Orange Cities I have previously sent letters to each of the members of the Council on March 11, 1992 which explains the excessive fees in Huntington Beach as compared to Costa Mesa, Garden Grove and Newport Beach. The current issues, which have existed for over one year, are the Park and Recreational Fees which were previously bonded, as well as, the Traffic Impact Fee, which was not calculated correctly, and the Library Fee. The Traffic Impact fee assumes 455 cars which is based upon multifamily usage for 164 units. As the current planning department approval restricts us to 65 cars for residents, this assumption is off by over 350 trips based on 65 cars . If Five Points were assessed today for the current fees in Huntington Beach, the cost would be $9,000 per unit. This is over SIX TIMES MORE THAN any other City. V. ,a • 8 0,44 CITY OF HUNTINGTON BEACH �' 2000 MAIN STREET P. O. BOX 190 CALIFORNIA 92648 Louis F. Sandoval Public Works Department Director (714) 536-5431 December 18, 1991 • David Michelson 19800 MacArthur Blvd. #680 Irvine, CA 92715 Subject: C.U.P. 91-4 18660 Main Street Dear Mr. Michelson: • Your development has been analyzed for generation of traffic volumes per applicable sections of the Huntington Beach Ordinance Code. As a result, at the current fee rate, the development known as C.U.P. 91-4 is assessed Thirty Four Thousand One Hundred Twenty Five dollars ($34,125.00), which represents 455 new vehicle trips generated by your development. We have attached the summary worksheet for the project(s) for your information and files. If you have any questions regarding this matter, please contact us at the number listed above. Very truly yours, 4_ • ti _..,____ _ i/ 'James D. Otterson, P.E., P.L.S. Traffic Engineer JDO:BHG:gd cc: Robert Eichblatt, City Engineer Armando Brizuela, Senior Plan Checker Howard Zelefsky, Planning Director File Traffic Impact Fee "Notification" (w/attachments) Attachments 3141g/1 cur 91 - 4 SUMMARY OF AVERAGF V[ 1111:t.F IR1r GFNERAI1ON FOR 164 onumn UNIIS ni RFIIREMENT COMMUNITY DRIVEWAY VOLUMES 12/ t //91 24 HOUR 7-9 AM PK HOUR 4-6 PM PK HOUR TWO-WAY VOLUME ENTER EXIT EN1ER EXIT eST,' It5F AVERAGE WEFKOAY 12 15 2$ 22 - 24 HOUR PEAK HOUR 1WO - WAY VOLUME ENTER EXIT SA1UROAY 0 0 SUNPAY 0 0 0 Note : A zero rate indicates no rate data available Source : Institute of Transportation Engineers Trip Generation . 51h Edition , 1991 . • TRH) GFNERAlION BY M] CROTRANS EXCLUSIVE NEGOTIATING AGREEMENT • (Five Points Senior Villas) THIS EXCLUSIVE NEGOTIATING AGREEMENT (the "Agreement" ) tis made and entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" ) and the MICHELSON FAMILY TRUST, dated as of December 12, 1984 (the "Developer" ) . RECITALS The following recitals are a substantive part of this Agreement. A. In furtherance of the objectives of the Community Redevelopment Law of the State of California, Health and Safety Code Section 33000, et seq. , and particularly Section 33334 .2 , et seq. , the Agency desires to assist in the development of housing which is to be made available at an affordable housing cost to low- and moderate-income households. B. The Developer proposes to construct and operate a One Hundred Sixty-Four (164) unit senior citizen rental housing project (the "Project") on an approximately 1. 84 acre parcel of land at the southwest corner of Main Street and Florida Street in the City of Huntington Beach (the "Proposed Development Site") . The Proposed Development Site is depicted on the Site Map attached hereto as Exhibit "A" and incorporated herein. The City of Huntington Beach (the "City") has approved Negative Declaration No. 91-3 , Conditional Use Permit No . 91-4 and Conditional Exception (Variance) No . 91-7 with respect to the Project and the Proposed Development Site. C. The Developer desires to negotiate an Owner Participation Agreement ("OPA" ) with the Agency to assist the Developer in operating affordable housing within the Project . D. The parties recognize and acknowledge that the purpose of this Agreement is to establish a period during which the Developer shall have the exclusive right to negotiate with the Agency the terms of the OPA which will include, without limitation, the economics of the development, the site plan and specific uses of the development, and any other terms relevant to the development of the Project and the Proposed Development Site. E. The parties intend that during the Negotiating Period (as the term is hereinafter defined) each will perform certain actions and responsibilities under this Agreement. a F. The Developer has formed Five Point Seniors, a California general partnership,, to act as the developer of the Project (the "Partnership") . The Partnership will consist of two general partners, one of which will be the Developer and one of which will be the Norman D. and Bunnie L. Ward Trust . The Developer and the Agency intend for the Partnership, if . acceptable to the Agency, to assume the rights and obligations of the Developer pursuant to the OPA. NOW, THEREFORE, the parties hereto mutually agree as follows : 1. Negotiating Period. The Agency agrees to negotiate with the Developer and the Developer agrees to negotiate with the Agency for a thirty (30) day period from the date this Agreement is approved by the Agency ("Negotiating Period" ) . Agency and Developer shall negotiate diligently and in good faith to carry out the obligations of this Agreement on or before the times established in this Agreement, to establish development plans and concepts and to determine the economic feasibility of the development of the Project. The Agency and the Developer agree, for the period set forth above, to negotiate in good faith to prepare an OPA to be entered into between the Agency and the Developer concerning the Proposed Development Site and the Project. The Agency further reserves full discretion with respect to the conduct or disposition of any proceedings which require notice and a public hearing . The obligation to negotiate in good faith requires that Developer and Agency communicate with respect to those issues for which agreement has not been reached, and in such communication follow reasonable negotiation procedures including meetings , telephone conversations and correspondence. If on the last day of the Negotiating Period the Developer has not signed and submitted a draft OPA submitted by the Executive Director for signature by the Developer, then this Agreement shall automatically terminate without further notice by the Agency to the Developer, and both parties knowingly agree that neither party shall have any further rights or obligations to the other arising out of this Agreement. Further, both parties recognize and acknowledge that the purpose of this Agreement is solely to provide a procedure for negotiation, that each party is incurring costs pursuant to the negotiation process provided for in this Agreement, and that there is no intent to provide rights to the Developer in the proposed project aside from the opportunity to negotiate a potential OPA. If an OPA is signed and submitted by the Developer within the Negotiating Period, then this Agreement shall be extended for a period not to exceed thirty (30) days from the date of such submittal to enable the Agency to (i) determine whether it desires to enter into such OPA, and (ii) take the 6816u/2460/000 -2- actions necessary to bring such OPA before the Agency for consideration, action and authorization to sign, if such is approved. Developer acknowledges that the determination by the Agency of whether it desires to enter into the OPA is at its sole and absolute discretion. Both parties further recognize and acknowledge that the Project would be subject to -planning review and approval by the City or an other governmental entity with authority to review such a project, if any such further review and approvals are required. 2 . Developer Submission of Information. The Developer is required to make full disclosure to the Agency of all pertinent information concerning the Developer and the Partnership. The Developer represents to the Agency that within fifteen (15) days of the approval of this Agreement by the Agency it shall submit to the Agency Director for his review all basic information relating to the corporation which is reasonably requested by the Agency including, without limitation, information regarding capitalization, insurance, other liability and financial capacity issues, and an original or true copy of the executed partnership agreement which creates the Partnership or other proposed developer entity. In the event that during the term of this Agreement such information changes, Developer shall submit written evidence of such new information immediately to the Agency Executive Director for his review and consideration. The parties acknowledge that this requirement is necessary so that the Agency may verify the qualifications of the persons and entities which comprise the Developer. 3 . Lead Negotiator for Developer. The Developer represents to the Agency that David Michelson, Trustee of the Developer, is the person with whom the Agency staff shall work with on a day-to-day basis concerning the negotiations toward the development of the Proposed Development Site and the Project. If the Developer desires to designate another individual as the lead negotiator on this Project, then it shall notify the Agency Director immediately. 4 . Deposit. The Developer shall deliver a letter of credit, in a form reasonably acceptable to the Agency, in the amount of Twenty Thousand Dollars ($20,000) to the Agency upon mutual execution of this Agreement (the "Deposit" ) . If the Developer terminates this Agreement without cause or if the Agreement terminates for failure of the Developer to perform a required action, then the Agency shall be entitled to reimbursement for costs in negotiation contemplated herein. Such costs shall include reasonable attorneys ' and advisory fees incurred by the Agency (the "Negotiation Costs") . The Agency will provide supporting documentation evidencing the Negotiation Costs. In the event that the Deposit exceeds the Negotiation Costs the remainder shall be returned to Developer. The Deposit shall be the maximum amount that the 6816u/2460/000 -3- Developer may be held responsible towards payment of the Negotiation Costs . In the event Developer executes a draft OPA submitted for signature by the Agency' s Executive Director but the Agency Board: (i) does not approve the OPA; (ii) terminates the Agreement without cause, or (iii) the Developer terminates the Agreement for failure of the Agency to perform a required action, the full amount of the Deposit shall be returned to Developer. If the Agency Board approves the OPA the Deposit shall be promptly returned to the Developer. 5 . Financing. Developer agrees to provide within fifteen (15) days of the Agency approval of this Agreement a description of the proposed method of construction of the Project and permanent financing and amount and sources of capital therefor, which proposed financing method must include a One Million Five Hundred Thousand Dollar ($1, 500, 000) equity contribution from Developer. The OPA shall provide that the Developer ' s equity interest in the Project shall be a minimum ' of One Million Five Hundred Thousand Dollars ($1, 500, 000) at all times until the fourth (4th) anniversary of the commencement of construction of the Project (or such other period mutually agreed upon by the parties hereto) , at which time the Developer ' s equity interest in the Project shall be a minimum of Five Hundred Thousand Dollars ($500, 000) . 6 . Development Concept Package. Developer further agrees that within thirty (30) days of this Agreement it shall submit documents, reports and information (collectively, the "Development Concept Package" ) concerning the proposed development that will provide the Agency with the following information: a. A preliminary site plan and architectural/design concept for the development showing access roads, amount and location of parking, location and size of all buildings , including height and perimeter dimensions, pedestrian and vehicular circulation system (including access to upper floors) , landscaping, elevations, perspective renderings and the architectural character of the project. b. A schedule for the development of all structures and improvements proposed and an estimate of development costs including construction and non-construction costs . c. An estimate of project income and expenses and a pro forma statement of project return adequate to enable the Agency to evaluate the economic feasibility of the proposed development . The economic pro forma shall be in a form typically submitted to a construction lender and shall include land prices as determined by the appraiser. The pro forma shall specify the form and amount of the equity to be contributed to the Project by the Developer . This information will be submitted for analysis to an economic consultant selected by the Agency in its sole discretion. 6816u/2460/000 -4- d. Biographical and background description of the Developer and all senior officers of the Developer, including such matters as (i) prior record with respect to the completion of projects, particularly those of a scale comparable to that proposed herein; (ii) record of any pending or past litigation and evidence of timely performance reflecting minimal litigation and/or disputes concerning the payment of joint venturers, contractors, suppliers or taxing authorities and (iii) record of satisfactory operation of residential projects . It is understood that the Agency may take appropriate steps to verify such matters, and the Developer agrees to cooperate in furnishing such information to the Agency. The Agency acknowledges that the materials submitted in connection with the obtaining of entitlements for the Project will be sufficient to satisfy requirement (a) above, and acknowledges receipt of the estimate of development costs pursuant to requirement (b) and the pro forma pursuant to requirement (c) above. Within twenty (20) days upon receipt of the Development Concept Package, the Agency staff shall review the development concept proposed by the Developer, together with the remainder of the Development Concept Package, and may either accept it, request modifications or reject it . If any such items are rejected, the Agency staff shall provide a list of deficiencies to the Developer and the Developer shall resubmit the Development Concept Package, with corrections, within ten (10) days of such rejection. If the Agency staff accepts the Development Concept Package, the Agency and Developer shall continue to negotiate toward the execution of an OPA with respect to the development of the Project. 7. Design Objectives . The design and development objectives for the Project shall be specified in the OPA, and the actual development shall be in conformity therewith. The Agency shall cooperate fully with Developer ' s professional consultants and associates in providing them with any information and assistance reasonably within the capacity of the Agency to provide in connection with the preparation and execution of the drawings, plans and specifications or other documents or information required to be submitted by the Developer to the Agency or to the City pursuant to this Agreement or as required by state or local laws and regulations. This requirement does not obligate the Agency to incur any monetary costs therefor. All design, architectural and building plans for development shall be subject to the review and approval of the Agency and the City. 8. Affordable Housing. The OPA shall provide that certain units within the Project shall be made available and 6816u/2460/000 -5- j rented at an "Affordable Rent" (as defined in California Health and Safety Code Section 50053) as follows: (a) Sixteen (16) units for "Very Low Income Households" (as defined in Health and Safety Code Section 50105) ; (b) Sixteen (16) units for "Lower Income Households" (as defined in Health and Safety Code Section 50079 . 5) ; and (c) Sixteen (16) units for "Persons and Families of Low and Moderate Income" (as defined in Health and Safety Code Section 50093) . The OPA shall require that such units be so restricted for thirty (30) years from the occupancy of the Project, and that such restrictions be recorded as an encumbrance against the Property. The Developer shall also be required under the OPA to perform high quality construction of the Project and to provide an activities director and van service to tenants during such thirty (30) year period. 9 . Agency Financial Assistance. The Agency shall be required under the OPA, in consideration for the Developer ' s performance of the affordable housing requirements set forth in Section 8 above, to provide the following financial assistance to the Developer: (a) Upon the occupancy of the Project, the Agency shall make a loan of Two Hundred Fifty Thousand Dollars ($250 , 000) to the Developer. The loan shall accrue simple interest of five percent (5%) per annum. The loan shall be for a term of ten (10) years, with interest payments payable monthly in the third (3rd) through tenth (10th) years of the loan. The loan shall be secured by security mutually acceptable to the Agency and the Developer. (b) The Agency shall grant to the Developer the sum of One Hundred Thousand Dollars ($100, 000) on each of the first ( 1st) through fifth (5th) anniversaries of the occupancy of the Project (for a total of Five Hundred Thousand Dollars ($500, 000) ) provided that the Developer is in compliance with the OPA. 10 . Default. With the exception of those specified obligations herein which failure to perform may cause automatic termination, in the event that the Developer or the Agency fails to fulfill the obligations described in this Agreement within the times specified, the nonperforming party shall have ten (10) days following written notice from the other to commence to cure such failure to perform as may be identified in the written notice. If, in the objective judgment of the other party, the nonperforming party has failed to commence to 6816u/2460/000 -6- cure within such ten (10) day period, the other party may terminate this Agreement and, thereafter, neither party shall have any further rights or obligations to the other except as provided concerning the distribution of the Deposit in paragraph 4 herein. The Developer, by execution hereof knowingly agrees, notwithstanding anything herein to __the contrary, that it shall have no right to specific performance of this Agreement. Each party by execution hereof knowingly agrees, notwithstanding anything to the contrary, that it shall have no right to money damages, nor any other legal remedies or equitable remedies under the law with respect to this Agreement. 11. Non-Discrimination. Developer shall not discriminate against nor segregate any person, or group of persons on account of sex, race, color, marital status, religion, handicap, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Proposed Development Site, nor shall the Developer establish or permit any such practice or practices of discrimination or segregation in the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land. 12 . Environmental Requirements . Certain state and local environmental requirements may be applicable to the proposed development . Pursuant to such requirements certain environmental documents may be required to be prepared and certified for the proposed Project . The Developer agrees to supply information to determine the environmental impact of the proposed development and, at its sole cost and expense, to reimburse the Agency and/or the City for, the cost of preparation of such environmental impact documents, if any, as may need to be completed for the development of the Project . 13 . No Real Estate Commissions . The Agency shall not be liable for any real estate commission or brokerage fees which may arise herefrom. The Agency represents that it has engaged no broker, agent or finder in connection with this transaction, and the Developer agrees to hold the Agency harmless from any claim by any broker, agent or finder retained by the Developer . 14 . Compliance with Laws . The Developer acknowledges that under the OPA it shall be required to carry out the construction of its improvements in conformity with all applicable laws, including all applicable federal and state labor standards; provided, however, the Developer and its contractors, successors, assigns, transferees and lessees will not be waiving their rights to contest any such laws, rules and standards . 6816u/2460/000 -7- • 15 . No Assignment . This Agreement shall not be assigned by the Developer without prior .written approval of the Agency, which the Agency shall grant or refuse at its sole discretion. 16 . Agency Assistance. The Agency shall cooperate fully in providing Developer with appropriate information and assistance, provided that the Agency shall not be obligated to incur costs therefor. 17 . Press Releases . The Developer and Agency agree to discuss any press releases with a designated Agency representative prior to disclosure in order to assure accuracy and consistency of the information. 18 . Notices . All notices given or required to be given hereunder shall be in writing and addressed to the parties as set out below, or to such other address as may be noticed under and pursuant to this paragraph. Any such notice shall be considered served when actually received by the party intended, whether personally served or sent postage prepaid by registered or certified mail, return receipt requested, or sent by telecopy or overnight courier service. To Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attn: Ms . Barbara Kaiser, Deputy City Administrator/Director of Economic Development To Developer: Institutional Property Investors, Inc. 19800 MacArthur Boulevard, Suite 680 Irvine, California 92715 Attn: Mr. David Michelson, President with a copy to: Bret H. Reed, Jr. A Law Corporation 1300 Dove Street, Suite 200 Newport Beach, California 92660 19 . Integration of All Agreements . This Agreement supersedes any previous agreement entered into between the Developer and the Agency with respect to the Proposed. Development Site and/or the Project . 20 . Execution Authority. The signatories to this Agreement represent and warrant that they have the authority to execute this Agreement on behalf of the principals they purport to represent . 21. Time of Essence. Time is of the essence of every portion of this Agreement in which time is a material part . 6816u/2460/000 -8- 22 . Governing Law. This Agreement shall be construed in accordance with the laws of the State of California . 23 . Attorneys ' Fees . In the event any action is taken pursuant to this Agreement , the prevailing party shall be entitled to recover from the other party its actual attorneys ' fees and costs, whether or not a final court judgment is entered. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year appearing below. REDEVELOPMENT AGENCY OF THE CITY OF H TI TON BEACH, a public bod , corpo ate and olitic Dated: n7 d g, /99 / By: Chairman "AGENCY" ATTEST: (10AW1 CRA4PC06477 Agency Secretary APPROVED AS TO FORM: Strad ing Aka, Carlson & Rauth Speci 1 Counse for the Agency City Attorney, 2.1-11 Agency General Counsel MICHELSON FAMILY TRUST, dated s of December 12 , 1984 Dated: dl / 3 /7,7 By: David Michelson, Trustee "DEVELOPER" 6816u/2460/000 -9- EXHIBIT "A" Site Map of Proposed Development Site (To Be Inserted) 6816u/2460/000 -10- REQUES I FOR CITY COUNCIL ACTION RH 91-54 Date August 19, 1991 Submitted to: Honorable Mayor and City Council Members Submitted by: Michael T. Uberuaga, City Administrate"��, L- C� Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic Deve opment Director Subject: Exclusive Negotiation Agreement/Five Points Senior Project at Main & Florida Streets APPROVED BY CITY COUNCIL Consistent with Council Policy? X Yes [ ] New Policy or Exception Statement of Issue, Recommendation,Analysis, Funding Source, Alternative Actions,AttaAttachments: CITY CLERK STATEMENT OF ISSUE: The developer, Institutional Property Investors, Inc. (IPI), proposing the development of a 164-unit senior citizen rental complex located at Main and Florida Streets, has requested financial assistance. The proposed project obtained the necessary development entitlements from Planning Commission on May 17, 1991. Staff has reached tentative agreement with IPA regarding financial assistance for the project, and is requesting City Council action to confirm the agreement. RECOMMENDATION: Approve an Exclusive Negotiation Agreement between Institutional Property Investors, Inc., and the City of Huntington Beach and direct staff to prepare appropriate loan agreements. ANALYSIS: The proposed project's developer, (IPI), has requested financial assistance from the city to enable this development to go forward. Without such assistance, IPI believes the project will not be economically feasible, and therefore would be abandoned. The proposed 164-unit project is designed to accommodate senior citizens of which 20% or 32 units are conditioned to be affordable, and made available to low-moderate income individuals/families. This project is eligible for financial assistance using the city's 20% housing set aside funds, subject to a finding of benefit. As previously directed by the City Council at its study session on July 15, 1991, staff has been negotiating with the developer to determine an appropriate level of financial assistance. We are now in a position to recommend that assistance which basically requires the developer to provide an additional 16 affordable units at moderate-income level for which the city, utilizing set aside funds, will provide the project with a $250,000 loan at 5% interest to be paid back over a ten-year term and an additional $500,000 grant paid over a five-year term at $100,000 per year to assure financial feasibility of the project. The above assistance is also conditioned upon IPI providing substantial equity ($1.5 million) toward the project, providing high-quality construction materials and other agreed upon amenities. ,*/3 DI C/QG ALTERNATIVE ACTION: 1) Do not approve Exclusive Negotiation Agreement. 2) Direct staff to further negotiate. FUNDING SOURCE: 1) Redevelopment 20% Housing Set Aside funds for the project if later loan documents are approved. No funds are needed for the requested action. ATTACHMENTS: Exclusive Negotiation Agreement. MTU/BAK/CPS:ls 9462r in CITY OF HUNTINGTON BEACH cO,, 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY • CITY CLERK • August 28, 1991 Institutional Property Investors, Inc. 19800 MacArthur Blvd. , Suite 680 Irvine, CA 92715 Attn: Mr. David Michelson, President The City Council of the City of Huntington Beach at the regular meeting held August 19, 1991 , approved Exclusive Negotiation Agreement between the City of Huntington Beach and Institutional Property Investors, Inc. , for the Five Points Senior Villas located at Main and Florida Streets in the City of Huntington Beach. Enclosed is an executed copy of the agreement for your records. Connie Brockway City Clerk CB:bt Enc. CC: Bret H. Reed Jr. A Law Corporation 1300 Dove Street, Suite 200 " Newport Beach, CA 92660 (Telephone:714-536-5227) • , % EXCLUSIVE NEGOTIATING AGREEMENT (Five Points Senior Villas) THIS EXCLUSIVE NEGOTIATING AGREEMENT (the "Agreement") is made and entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" ) and the MICHELSON FAMILY TRUST, dated as of December 12 , 1984 (the "Developer") . RECITALS The following recitals are a substantive part of this Agreement. A. In furtherance of the objectives of the Community Redevelopment Law of the State of California, Health and Safety Code Section 33000, et seq. , and particularly Section 33334 .2 , et seq. , the Agency desires to assist in the development of housing which is to be made available at an affordable housing cost to low- and moderate-income households. B. The Developer proposes to construct and operate a One Hundred Sixty-Four (164) unit senior citizen rental housing project (the "Project") on an approximately 1. 84 acre parcel of land at the southwest corner of Main Street and Florida Street in the City of Huntington Beach (the "Proposed Development Site") . The Proposed Development Site is depicted on the Site Map attached hereto as Exhibit "A" and incorporated herein. The City of Huntington Beach (the "City") has approved Negative Declaration No. 91-3 , Conditional Use Permit No. 91-4 and Conditional Exception (Variance) No. 91-7 with respect to the Project and the Proposed Development Site. C. The Developer dh'ires to negotiate an Owner Participation Agreement ( "OPA" ) with the Agency to assist the Developer in operating affordable housing within the Project . D. The parties recognize and acknowledge that the purpose of this Agreement is to establish a period during which the Developer shall have the exclusive right to negotiate with the Agency the terms of the OPA which will include, without limitation, the economics of the development, the site plan and specific uses of the development, and any other terms relevant to the development of the Project and the Proposed Development Site. E. The parties intend that during the Negotiating Period (as the term is hereinafter defined) each will perform certain actions and responsibilities under this Agreement. F. The Developer has formed Five Point Seniors , a California general partnership, to act as the developer of the Project (the "Partnership") . The Partnership will consist of two general partners, one of which will be the Developer and one of which will be the Norman D. and Bunnie L. Ward Trust. The Developer and the Agency _intend for the Partnership, if acceptable to the Agency, to assume the rights and obligations of the Developer pursuant to the OPA. NOW, THEREFORE, the parties hereto mutually agree as follows: 1. Negotiating Period. The Agency agrees to negotiate with the Developer and the Developer agrees to negotiate with the Agency for a thirty (30) day period from the date this Agreement is approved by the Agency ("Negotiatin,g Period" ) . Agency and Developer shall negotiate diligently and in good faith to carry out the obligations of this Agreement on or before the times established in this Agreement, to establish development plans and concepts and to determine the economic feasibility of the development of the Project . The Agency and the Developer agree, for the period set forth above, to negotiate in good faith to prepare an OPA to be entered into between the Agency and the Developer concerning the Proposed Development Site and the Project . The Agency further reserves full discretion with respect to the conduct or disposition of any proceedings which require notice and a public hearing. The obligation to negotiate in good faith requires that Developer and Agency communicate with respect to those issues for which agreement has not been reached, and in such communication follow reasonable negotiation procedures including meetings, telephone conversations and correspondence. If on the last day of the Negotiating Period the Developer has not signed and submitted a draft OPA submitted by the Executive Director for signature by the Developer, then this Agreement shall automatically terminate without further notice by the Agency to the Developer, and both parties knowingly agree that neither party shall have any further rights or obligations to the other arising out of this Agreement. Further, both parties recognize and acknowledge that the purpose of this Agreement is solely to provide a procedure for negotiation, that each party is incurring costs pursuant to the negotiation process provided for in this Agreement, and that there is no intent to provide rights to the Developer in the proposed project aside from the opportunity to negotiate a potential OPA. If an OPA is signed and submitted by the Developer within the Negotiating Period, then this Agreement shall be extended for a period not to exceed thirty (30) days from the date of such submittal to enable the Agency to (i) determine whether it desires to enter into such OPA, and (ii) take the 6816u/2460/000 -2- actions necessary to bring such OPA before the Agency for consideration, action and authorization to sign, if such is approved. Developer acknowledges that the determination by the Agency of whether it desires to enter into the OPA is at its sole and absolute discretion. Both parties further recognize and acknowledge that the Project would be subject to planning review and approval by the City or an other governmental entity with authority to review such a project, if any such further review and approvals are required. 2 . Developer Submission of Information. The Developer is required to make full disclosure to the Agency of all pertinent information concerning the Developer and the Partnership. The Developer represents to the Agency that within fifteen (15) days of the approval of this Agreement by the Agency it shall submit to the Agency Director for his review all basic information relating to the corporation which is reasonably requested by the Agency including, without limitation, information regarding capitalization, insurance, other liability and financial capacity issues, and an original or true copy of the executed partnership agreement which creates the Partnership or other proposed developer entity. In the event that during the term of this Agreement such information changes, Developer shall submit written evidence of such new information immediately to the Agency Executive Director for his review and consideration. The parties acknowledge that this requirement is necessary so that the Agency may verify the qualifications of the persons and entities which comprise the Developer. 3 . Lead Negotiator for Developer . The Developer represents to the Agency that David Michelson, Trustee of the Developer, is the person with whom the Agency staff shall work with on a day-to-day basis concerning the negotiations toward the development of the Proposed Development Site and the Project. If the Developer desires to designate another individual as the lead negotiator on this Project, then it shall notify the Agency Director immediately. 4 . Deposit . The Developer shall deliver a letter of credit , in a form reasonably acceptable to the Agency, in the amount of Twenty Thousand Dollars ($20, 000) to the Agency upon mutual execution of this Agreement (the "Deposit" ) . If the Developer terminates this Agreement without cause or if the Agreement terminates for failure of the Developer to perform a required action, then the Agency shall be entitled to reimbursement for costs in negotiation contemplated herein. Such costs shall include reasonable attorneys ' and advisory fees incurred by the Agency (the "Negotiation Costs" ) . The Agency will provide supporting documentation evidencing the Negotiation Costs . In the event that the Deposit exceeds the Negotiation Costs the remainder shall be returned to Developer. The Deposit shall be the maximum amount that the 6816u/2460/000 -3- Developer may be held responsible towards payment of the Negotiation Costs. In the event Developer executes a draft OPA submitted for signature by the Agency' s Executive Director but the Agency Board: (i) does not approve the OPA; (ii) terminates the Agreement without cause, or (iii) the Developer terminates the Agreement for failure of the Agency to perform a required action, the full amount of the Deposit shall be returned to Developer. If the Agency Board approves the OPA the Deposit shall be promptly returned to the Developer . 5. Financing. Developer agrees to provide within fifteen (15) days of the Agency approval of this Agreement a description of the proposed method of construction of the Project and permanent financing and amount and sources of capital therefor, which proposed financing method must include a One Million Five Hundred Thousand Dollar ($1, 500, 000) equity contribution from Developer. The OPA shall provide that the Developer ' s equity interest in the Project shall be a minimum of One Million Five Hundred Thousand Dollars ($1, 500, 000) at all times until the fourth (4th) anniversary of the commencement of construction of the Project (or such other period mutually agreed upon by the parties hereto) , at which time the Developer ' s equity interest in the Project shall be a minimum of Five Hundred Thousand Dollars ($500, 000) . 6 . Development Concept Package. Developer further agrees that within thirty (30) days of this Agreement it shall submit documents , reports and information (collectively, the "Development Concept Package" ) concerning the proposed development that will provide the Agency with the following information: a. A preliminary site plan and architectural/design concept for the development showing access roads, amount and location of parking, location and size of all buildings, including height and perimeter dimensions, pedestrian and vehicular circulation system (including access to upper floors) , landscaping, elevations, perspective renderings and the architectural character of the project . b. A schedule for the development of all structures and improvements proposed and an estimate of development costs including construction and non-construction costs . c. An estimate of project income and expenses and a pro forma statement of project return adequate to enable the Agency to evaluate the economic feasibility of the proposed development . The economic pro forma shall be in a form typically submitted to a construction lender and shall include land prices as determined by the appraiser . The pro forma shall specify the form and amount of the equity to be contributed to the Project by the Developer . This information will be submitted for analysis to an economic consultant selected by the Agency in its sole discretion. 6816u/2460/000 -4- d. Biographical and background description of the Developer and all senior officers of the Developer, including such matters as (i) prior record with respect to the completion of projects, particularly those of a scale comparable to that proposed herein; (ii) record of any pending or past litigation and evidence of timely performance reflecting minimal_ litigation and/or disputes concerning the payment of joint venturers, contractors, suppliers or taxing authorities and (iii) record of satisfactory operation of residential projects. It is understood that the Agency may take appropriate steps to verify such matters, and the Developer agrees to cooperate in furnishing such information to the Agency. The Agency acknowledges that the materials submitted in connection with the obtaining of entitlements for the Project will be sufficient to satisfy requirement (a) above, and acknowledges receipt of the estimate of development costs pursuant to requirement (b) and the pro forma pursuant to requirement (c) above. Within twenty (20) days upon receipt of the Development Concept Package, the Agency staff shall review the development concept proposed by the Developer, together with the remainder of the Development Concept Package, and may either accept it, request modifications or reject it. If any such items are rejected, the Agency staff shall provide a list of deficiencies to ,the Developer and the Developer shall resubmit the Development Concept Package, with corrections, within ten (10) days of such rejection. If the Agency staff accepts the Development Concept Package, the Agency and Developer shall continue to negotiate toward the execution of an OPA with respect to the development of - the Project. 7. Design Objectives. The design and development objectives for the Project shall be specified in the OPA, and the actual development shall be in conformity therewith. The Agency shall cooperate fully with Developer 's professional consultants and associates in providing them with any information and assistance reasonably within the capacity of the Agency to provide in connection with the preparation and execution of the drawings, plans and specifications or other documents or information required to be submitted by the Developer to the Agency or to the City pursuant to this Agreement or as required by state or local laws and regulations. This requirement does not obligate the Agency to incur any monetary costs therefor. All design, architectural and building plans for development shall be subject to the review and approval of the Agency and the City. 8. Affordable Housing . The OPA shall provide that certain units within the Project shall be made available and 6816u/2460/000 -5- rented at an "Affordable Rent" (as defined in California Health and Safety Code Section 50053) as follows : (a) Sixteen (16) units for "Very Low Income Households" (as defined in Health and Safety Code Section 50105) ; - (b) Sixteen (16) units for "Lower Income Households" (as defined in Health and Safety Code Section 50079 . 5) ; and (c) Sixteen (16) units for "Persons and Families of Low and Moderate Income" (as defined in Health and Safety Code Section 50093) . The OPA shall require that such units be so restricted for thirty (30) years from the occupancy of the Project, and that such restrictions be recorded as an encumbrance against the Property. The Developer shall also be required under the OPA to perform high quality construction of the Project and to provide an activities director and van service to tenants during such thirty (30) year period. 9 . Agency Financial Assistance. The Agency shall be required under the OPA, in consideration for the Developer ' s performance of the affordable housing requirements set forth in Section 8 above, to provide the following financial assistance to the Developer: (a) Upon the occupancy of the Project, the Agency shall make a loan of Two Hundred Fifty Thousand Dollars ($250, 000) to the Developer. The loan shall accrue simple interest of five percent (5%) per annum. , The loan shall be for a term of ten (10) years, with interest payments payable monthly in the third (3rd) through tenth (10th) years of the loan. The loan shall be secured by security mutually acceptable to the Agency and the Developer. (b) The Agency shall grant to the Developer the sum of One Hundred Thousand Dollars ($100,000) on each of the first (1st) through fifth (5th) anniversaries of the occupancy of the Project (for a total of Five Hundred Thousand Dollars ($500, 000) ) provided that the Developer is in compliance with the OPA. 10 . Default. With the exception of those specified obligations herein which failure to perform may cause automatic termination, in the event that the Developer or the Agency fails to fulfill the obligations described in this Agreement within the times specified, the nonperforming party shall have ten (10) days following written notice from the other to commence to cure such failure to perform as may be identified in the written notice. If, in the objective judgment of the other party, the nonperforming party has failed to commence to 6816u/2460/000 -6- • cure within such ten (10) day period, the other party may terminate this Agreement and, thereafter, neither party shall have any further rights or obligations to the other except as provided concerning the distribution of the Deposit in paragraph 4 herein. The Developer, by execution hereof knowingly agrees, notwithstanding anything herein to -the contrary, that it shall have no right to specific performance of this Agreement. Each party by execution hereof knowingly agrees , notwithstanding anything to the contrary, that it shall have no right to money damages , nor any other legal remedies or equitable remedies under the law with respect to this Agreement . 11. Non-Discrimination. Developer shall not discriminate against nor segregate any person, or group of persons on account of sex, race, color, marital status, religion, handicap, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Proposed Development Site, nor shall the Developer establish or permit any such practice or practices of discrimination or segregation in the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land. 12 . Environmental Requirements . Certain state and local environmental requirements may be applicable to the proposed development . Pursuant to such requirements certain environmental documents may be required to be prepared and certified for the proposed Project . The Developer agrees to supply information to determine the environmental impact of the proposed development and, at its sole cost and expense, to reimburse the Agency and/or the City for the cost of preparation of such environmental impact documents, if any, as may need to be completed for the development of the Project. 13 . No Real Estate Commissions . The Agency shall not be liable for any real estate commission or brokerage fees which may arise herefrom. The Agency represents that it has engaged no broker, agent or finder in connection with this transaction, and the Developer agrees to hold the Agency harmless from any claim by any broker, agent or finder retained by the Developer . 14 . Compliance with Laws . The Developer acknowledges that under the OPA it shall be required to carry out the construction of its improvements in conformity with all applicable laws, including all applicable federal and state labor standards ; provided, however, the Developer and its contractors, successors, assigns, transferees and lessees will not be waiving their rights to contest any such laws, rules and standards. 6816u/2460/000 -7- c i 15. No Assignment. This Agreement shall not be assigned by the Developer without prior written approval of the Agency, which the Agency shall grant or refuse at its sole discretion. 16. Agency Assistance. The Agency shall cooperate fully in providing Developer with appropriate information and assistance, provided that the Agency shall not be obligated to incur costs therefor . 17. Press Releases . The Developer and Agency agree to discuss any press releases with a designated Agency representative prior to disclosure in order to assure accuracy and consistency of the information. 18. Notices . All notices given or required to be given hereunder shall be in writing and addressed to the parties as set out below, or to such other address as may be noticed under and pursuant to this paragraph. Any such notice shall be considered served when actually received by the party intended, whether personally served or sent postage prepaid by registered or certified mail, return receipt requested, or sent by telecopy or overnight courier service. To Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attn: Ms . Barbara Kaiser, Deputy City Administrator/Director of Economic Development To Developer: Institutional Property Investors, Inc. 19800 MacArthur Boulevard, Suite 680 Irvine, California 92715 Attn: Mr. David Michelson, President with a copy to: Bret H. Reed, Jr . A Law Corporation 1300 Dove Street, Suite 200 Newport Beach, California 92660 19 . Integration of All Agreements . This Agreement supersedes any previous agreement entered into between the Developer and the Agency with respect to the Proposed Development Site and/or the Project . 20 . Execution Authority. The signatories to this Agreement represent and warrant that they have the authority to execute this Agreement on behalf of the principals they purport to represent. 21. Time of Essence. Time is of the essence of every portion of this Agreement in which time is a material part . 6816u/2460/000 -8- 22 . Governing Law. This Agreement shall be construed in accordance with the laws of the State of California . 23 . Attorneys ' Fees . In the event any action is taken pursuant to this Agreement, the prevailing party shall be entitled to recover from the other party its actual attorneys ' fees and costs, whether or not a final court judgment is entered. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year appearing below. REDEVELOPMENT AGENCY OF THE CITY OF HU ON BEACH, a public body corpor to and litic Dated: sat 7 /99/ By: Ch man "AGENCY" ATTEST: 41011014,4e. Agency Secretary APPROVED AS TO FORM: Stra ling, ca, Carlson & Rauth Special Counsel for the Agency 44-`-j\){ ,Z(`- ------i City Attorney, 1 -3-q 1 Agency General Counsel MICHELSON FAMILY TRUST, dat d as of December 12 , 1984 Dated: _/ ?c://.7 /J, /7// By: _/.,ize_lj. _ 7 David d Michelson, Trustee "DEVELOPER" 6816u/2460/000 -9- EXHIBIT "A" Site Map of Proposed Development Site (To Be Inserted) 6816u/2460/000 -10- `Tr REQUE.531EC REDEVELOPMENT 3ENCY ACTION APPROVED BY CITY _ RH 91-65 • I ....%_ _L ---- Date October 7, 1991 CITY GL Honorable Chairman and Redevelopment Agency Members Submitted to: Michael T. Uberuaga, Chief Executive Director C,/`.. Submitted by: `6 ' `-.^r Barbara A. Kaiser, Deputy City Administrator/Economic Development Prepared by: REAPPROVAL OF EXCLUSIVE NEGOTIATION AGREEMENT WITH Subject: INSTITUTIONAL PROPERTY INVESTORS, INC. Consistent with Council Policy? 4 Yes [ ] New Policy or Exception Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments: _., STATEMENT OF ISSUE The purpose of this action is to allow the Redevelopment Agency to validate the previous City Council action related to an agreement with Institutional Property Investors, Inc., for the development of a 164-senior citizen rental complex. RECOMMENDATION Approve the Exclusive Negotiation Agreement between Institutional Property Investors, Inc. and the Redevelopment Agency of the City of Huntington Beach, as previously approved by the City Council. ANALYSIS On August 19, 1991, the City Council approved an Exclusive Negotiation Agreement (ENA) with Institutional Property Investors, Inc. for the development of a 164 unit senior citizen rental complex located at Main and Florida Streets. The agreement was executed between the Redevelopment Agency and the developer, rather than the City Council and the developer. The City Clerk has asked that the agreement be reapproved by the Redevelopment Agency to correct the error and make the agreement enforceable. FUNDING SOURCE Not applicable. ALTERNATIVE ACTION Do not re—approve the ENA. ATTACHMENT Request for Council Action dated August 19, 1991. MTU/BAK/GAB:sar 0493y /1/ PI O/1/85 . a - REQUES i FOR CITY COUNCIL_ ACTION RH 91-54 Date August 19, 1991 Submitted to: Honorable Mayor and City Council Members Submitted by: Michael T. Uberuaga, City Administrate —L_ Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic Dement Director Subject: Exclusive Negotiation Agreement/Five Points Senior Project at Main & Florida Streets APPROVED BY CITY COUNCIL' Consistent with Council Policy? X] Yes [ ] New Policy or Exception Statement of Issue, Recommendation,Analysis, Funding Source, Alternative Actions, Attachments: CITY CLERK STATEMENT OF ISSUE: The developer, Institutional Property Investors, Inc. (IPI), proposing the development of a 164-unit senior citizen rental complex located at Main and Florida Streets, has requested financial assistance. The proposed project obtained the necessary development entitlements from Planning Commission on May 17, 1991. Staff has reached tentative agreement with IPA regarding financial assistance for the project, and is requesting City Council action to confirm the agreement. RECOMMENDATION: Approve an Exclusive Negotiation Agreement between Institutional Property Investors, Inc., and thekaLyj of Huntington Beach and direct staff to prepare appropriate loan agreements. ANALYSIS: The proposed project's developer, (IPI), has requested financial assistance from the city to enable this development to go forward. Without such assistance, IPI believes the project will not be economically feasible, and therefore would be abandoned. The proposed 164-unit project is designed to accommodate senior citizens of which 20% or 32 units are conditioned to be affordable, and made available to low-moderate income individuals/families. This project is eligible for financial assistance using the city's. 20% housing set aside funds, subject to a finding of benefit. As previously directed by the City Council at its study session on July 15, 1991, staff has been negotiating with the developer to determine an appropriate level of financial assistance. We are now in a position to recommend that assistance which basically requires the developer to provide an additional 16 affordable units at moderate-income level for which the city, utilizing set aside funds, will provide the project with a $250,000 loan at 5% interest to be paid back over a ten-year term and an additional $500,000 grant paid over a five-year term at $100,000 per year to assure financial feasibility of the project. The above assistance is also conditioned upon IPI providing substantial equity ($1.5 million) toward the project, providing high-quality construction materials and other agreed upon amenities. ✓� ALTERNATIVE ACTION: 1) Do not approve Exclusive Negotiation Agreement. 2) Direct staff to further negotiate. FUNDING SOURCE: 1) Redevelopment 20% Housing Set Aside funds for the project if later loan documents are approved. No funds are needed for the requested action. ATTACHMENTS: Exclusive Negotiation Agreement. MTU/BAK/CPS:ls 9462r REQUE� i. FOR CITY COUNCii_ ACTION RH 91-54 Date August 19, 1991 Submitted to: Honorable Mayor and City Council Members Submitted by: Michael T. Uberuaga, City Administrato - GL Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic Deve r opment Director Subject: Exclusive Negotiation Agreement/Five Points Senior Project at Main & Florida Streets APPROVED BY CITY COUNCIL Consistent with Council Policy? N Yes [ ] New Policy or Exception Statement of Issue, Recommendation,Analysis, Funding Source, Alternative Actions,Attachments: CITY CLERK STATEMENT OF ISSUE: The developer, Institutional Property Investors, Inc. (IPI), proposing the development of a 164-unit senior citizen rental complex located at Main and Florida Streets, has requested financial assistance. The proposed project obtained the necessary development entitlements from Planning Commission on May 17, 1991. Staff has reached tentative agreement with IPA regarding financial assistance for the project, and is requesting City Council action to confirm the agreement. RECOMMENDATION: Approve an Exclusive Negotiation Agreement between Institutional Property Investors, Inc., and the City of Huntington Beach and direct staff to prepare appropriate loan agreements. ANALYSIS: The proposed project's developer, (IPI), has requested financial assistance from the city to. enable this development to go forward. Without such assistance, IPI believes- the project will not be economically feasible, and therefore would be abandoned. The proposed 164-unit project is designed to accommodate senior citizens of which 20% or 32 units are conditioned to be affordable, and made available to low-moderate income individuals/families. This project is eligible for financial assistance using the city's 20% housing set aside funds, subject to a finding of benefit. As previously directed by the City Council at its study session on July 15, 1991, staff has been negotiating with the developer to determine an appropriate level of financial assistance. We are now in a position to recommend that assistance which basically requires the developer to provide an additional 16 affordable units at moderate-income level for which the city, utilizing set aside funds, will provide the project with a $250,000 loan at 5% interest to be paid back over a ten-year term and an additional $500,000 grant paid over a five-year term at $100,000 per year to assure financial feasibility of the project. The above assistance is also conditioned upon IPI providing substantial equity ($1.5 million) toward the project, providing high-quality construction materials and other agreed upon amenities. �•3 17 ALTERNATIVE ACTION: 1) Do not approve Exclusive Negotiation Agreement. 2) Direct staff to further negotiate. FUNDING SOURCE: 1) Redevelopment 20% Housing Set Aside funds for the project if later loan documents are approved. No funds are needed for the requested action. • ATTACHMENTS: Exclusive Negotiation Agreement. MTUBAK/CPS:ls 9462r EXCLUSIVE NEGOTIATING AGREEMENT (Five Points Senior Villas) THIS EXCLUSIVE NEGOTIATING AGREEMENT (the "Agreement") is made and entered into byand between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" ) and the MICHELSON FAMILY TRUST, dated as of December 12, 1984 (the "Developer".) . RECITALS The following recitals are a substantive part of this Agreement. A. In furtherance of the objectives of the Community Redevelopment Law of the State of California, Health and Safety Code Section 33000, et seq. , and particularly Section 33334 .2 , et seq. , the Agency desires to assist in the development of housing which is to be made available at an affordable housing cost to low- and moderate-income households . B. The Developer proposes to construct and operate a One Hundred Sixty-Four (164) unit senior citizen rental housing project (the "Project" ) on an approximately 1. 84 acre parcel of land at the southwest corner of Main Street and Florida Street in the City of Huntington Beach (the "Proposed Development Site") . The Proposed Development Site is depicted on the Site Map attached hereto as Exhibit "A" and incorporated herein. The City of Huntington Beach (the "City") has approved Negative Declaration No. 91-3, Conditional Use Permit No. 91-4 and Conditional Exception (Variance) No. 91-7 with respect to the Project and the Proposed Development Site. C. The Developer desires to negotiate an Owner Participation Agreement ("OPA" ) with the Agency to assist the Developer in operating affordable housing within the Project . D. The parties recognize and acknowledge that the purpose of this Agreement is to establish a period during which the Developer shall have the exclusive right to negotiate with the Agency the terms of the OPA which will include, without limitation, the economics of the development, the site plan and specific uses of the development, and any other terms relevant to the development of the Project and the Proposed Development Site. E. The parties intend that during the Negotiating Period (as the term is hereinafter defined) each will perform certain actions and responsibilities under this Agreement. • F. The Developer has formed Five Point Seniors , a California general partnership, to act as the developer of the Project (the "Partnership" ) . The Partnership will consist of two general partners, one of which will be the Developer and one of which will be the Norman D. and Bunnie L. Ward Trust . The Developer and the Agency intend for the Partnership, if acceptable to the Agency, to assume the rights and obligations of the Developer pursuant to the OPA. NOW, THEREFORE, the parties hereto mutually agree as follows : 1. Negotiating Period. The Agency agrees to negotiate with the Developer and the Developer agrees to negotiate with the Agency for a thirty (30) day period from the date this Agreement is approved by the Agency ( "Negotiating Period" ) . Agency and Developer shall negotiate diligently and in good faith to carry out the obligations of this Agreement on or before the times established in this Agreement, to establish development plans and concepts and to determine the economic feasibility of the development of the Project . The Agency and the Developer agree, for the period set forth above, to negotiate in good faith to prepare an OPA to be entered into between the Agency and the Developer concerning the Proposed Development Site and the Project . The Agency further reserves full discretion with respect to the conduct or disposition of any proceedings which require notice and a public hearing . The obligation to negotiate in good faith requires that Developer and Agency communicate with respect to those issues for which agreement has not been reached, and in such communication follow reasonable negotiation procedures including meetings, telephone conversations and correspondence. If on the last day of the Negotiating Period the Developer has not signed-and submitted a draft OPA submitted by the Executive Director for signature by the Developer, then this Agreement shall automatically terminate without further notice by the Agency to the Developer, and both parties knowingly agree that neither party shall have any further rights or obligations to the other arising out of this Agreement. Further, both parties recognize and acknowledge that the purpose of this Agreement is solely to provide a procedure for negotiation, that each party is incurring costs pursuant to the negotiation process provided for in this Agreement, and that there is no intent to provide rights to the Developer in the proposed project aside from the opportunity to negotiate a potential OPA. If an OPA is signed and submitted by the Developer within the Negotiating Period, then this Agreement shall be extended for a period not to exceed thirty (30) days from the date of such submittal to enable the Agency to (i) determine whether it desires to enter into such OPA, and (ii) take the 6816u/2460/000 -2- actions necessary to bring such OPA before the Agency for consideration, action and authorization to sign, if such is approved. Developer acknowledges that the determination by the Agency of whether it desires to enter into the OPA is at its sole and absolute discretion. Both parties further recognize and acknowledge that the Project would be subject to _planning review and approval by the City or an other governmental entity with authority to review such a project, if any such further review and approvals are required. 2. Developer Submission of Information. The Developer is required to make full disclosure to the Agency of all pertinent information concerning the Developer and the Partnership. The Developer represents to the Agency that within fifteen (15) days of the approval of this Agreement by the Agency it shall submit to the Agency Director for his review all basic information relating to the corporation which is reasonably requested by the Agency including, without limitation, information regarding capitalization, insurance, other liability and financial capacity issues, and an original or true copy of the executed partnership agreement which creates the Partnership or other proposed developer entity. In the event that during the term of this Agreement such information changes, Developer shall submit written evidence of such new information immediately to the Agency Executive Director for his review and consideration. The parties acknowledge that this requirement is necessary so that the Agency may verify the qualifications of the persons and entities which comprise the Developer. 3 . Lead Negotiator for Developer. The Developer represents to the Agency that David Michelson, Trustee of the Developer, is the person with whom the Agency staff shall work with on a day-to-day basis concerning the negotiations toward the development of the Proposed Development Site and the Project. If the Developer desires to designate another individual as the lead negotiator on this Project, then it shall notify the Agency Director immediately. 4. Deposit . The Developer shall deliver a letter of credit, in a form reasonably acceptable to the Agency, in the amount of Twenty Thousand Dollars ($20, 000) to the Agency upon mutual execution of this Agreement (the "Deposit" ) . If the Developer terminates this Agreement without cause or if the . Agreement terminates for failure of the Developer to perform a required action, then the Agency shall be entitled to reimbursement for costs in negotiation contemplated herein. Such costs shall include reasonable attorneys ' and advisory fees incurred by the Agency (the "Negotiation Costs" ) . The Agency will provide supporting documentation evidencing the Negotiation Costs. In the event that the Deposit exceeds the Negotiation Costs the remainder shall be returned to Developer. The Deposit shall be the maximum amount that the 6816u/2460/000 -3- Developer may be held responsible towards payment of the Negotiation Costs. In the event Developer executes a draft OPA submitted for signature by the Agency' s Executive Director but the Agency Board: (i) does not approve the OPA; (ii) terminates the Agreement without cause, or (iii) the Developer terminates the Agreement for failure of the Agency to perform a required action, the full amount of the Deposit shall be returned to Developer. If the Agency Board approves the OPA the Deposit shall be promptly returned to the Developer. 5. Financing. Developer agrees to provide within fifteen (15) days of the Agency approval of this Agreement a description of the proposed method of construction of the Project and permanent financing and amount and sources of capital therefor., which proposed financing method must include a One Million Five Hundred Thousand Dollar ($1, 500, 000) equity contribution from Developer. The OPA shall provide that the Developer' s equity interest in the Project shall be a minimum of One Million Five Hundred Thousand Dollars ($1, 500, 000) at all times until the fourth (4th) anniversary of the commencement of construction of the Project (or such other period mutually agreed upon by the parties hereto) , at which time the Developer ' s equity interest in the Project shall be a minimum of Five Hundred Thousand Dollars ($500, 000) . 6. Development Concept Package. Developer further agrees that within thirty (30) days of this Agreement it shall submit documents, reports and information (collectively, the "Development Concept Package" ) concerning the proposed development that will provide the Agency with the following information: a. A preliminary site plan and architectural/design concept for the development showing access roads, amount and location of parking, location and size of all buildings, including height and perimeter dimensions, pedestrian and vehicular circulation system (including access to upper floors) , landscaping, elevations, perspective renderings and the architectural character of the project. b. A schedule for the development of all structures and improvements proposed and an estimate of development costs including construction and non-construction costs. c. An estimate of project income and expenses and a pro forma statement of project return adequate to enable the Agency to evaluate the economic feasibility of the proposed development . The economic pro forma shall be in a form typically submitted to a construction lender and shall include land prices as determined by the appraiser . The pro forma shall specify the form and amount of the equity to be contributed to the Project by the Developer. This information will be submitted for analysis to an economic consultant selected by the Agency in its sole discretion. 6816u/2460/000 -4- d. Biographical and background description of the Developer and all senior officers of the Developer, including such matters as (i) prior record with respect to the completion of projects , particularly those of a scale comparable to that proposed herein; (ii) record of any pending or past litigation and evidence of timely performance reflecting minimal_ litigation and/or disputes concerning the payment of joint venturers, contractors, suppliers or taxing authorities and (iii) record of satisfactory operation of residential projects. It is understood that the Agency may take appropriate steps to verify such matters, and the Developer agrees to cooperate in furnishing such information to the Agency. The Agency acknowledges that the materials submitted in connection with the obtaining of entitlements for the Project will be sufficient to satisfy requirement (a) above, and acknowledges receipt of the estimate of development costs pursuant to requirement (b) and the pro forma pursuant to requirement (c) above. Within twenty (20) days upon receipt of the Development Concept Package, the Agency staff shall review the development concept proposed by the Developer, together with the remainder of the Development Concept Package, and may either accept it, request modifications or reject it. If any such items are rejected, the Agency staff shall provide alist of deficiencies to the Developer and the Developer shall resubmit the Development Concept Package, with corrections, within ten (10) days of such rejection. If the Agency staff accepts the Development Concept Package, the Agency and Developer shall continue to negotiate toward the execution of an OPA with respect to the development of - the Project. 7. Design Objectives. The design and development objectives for the Project shall be specified in the OPA, and the actual development shall be in conformity therewith. The Agency shall cooperate fully with Developer ' s professional consultants and associates in providing them with any information and assistance reasonably within the capacity of the Agency to provide in connection with the preparation and execution of -the drawings, plans and specifications or other documents or information required to be submitted by the Developer to the Agency or to the City pursuant to this Agreement or as required by state or local laws and regulations. This requirement does not obligate the Agency to incur any monetary costs therefor . All design, architectural and building plans for development shall be subject to the review and approval of the Agency and the City. B. Affordable Housing. The OPA shall provide that certain units within the Project shall be made available and 6816u/2460/000 -5- rented at an "Affordable Rent" (as defined in California Health and Safety Code Section 50053) •as follows : (a) Sixteen (16) units for "Very Low Income Households" (as defined in Health and Safety Code Section 50105) ; - (b) Sixteen (16) units for "Lower Income Households" (as defined in Health and Safety Code Section 50079 .5) ; and (c) Sixteen (16) units for "Persons and Families of Low and Moderate Income" (as defined in Health and Safety Code Section 50093) . The OPA shall require that such units be so restricted for thirty (30) years from the occupancy of the Project, and that such restrictions be recorded as an encumbrance against the Property. The Developer shall also be required under the OPA to perform high quality construction of the Project and to provide an activities director and van service to tenants during such thirty (30) year period. 9 . Agency Financial Assistance. The Agency shall be required under the OPA, in consideration for the Developer ' s performance of the affordable housing requirements set forth in Section 8 above, to provide the following financial assistance to the Developer: (a) Upon the occupancy of the Project, the Agency shall make a loan of Two Hundred Fifty Thousand Dollars ($250,000) to the Developer. The loan shall accrue simple interest of five percent (5%) per annum. The loan shall be for a term of ten (10) years, with interest payments payable monthly in the third (3rd) through tenth (10th) years of the loan. The loan shall be secured by security mutually acceptable to the Agency and the Developer. (b) The Agency shall grant to the Developer the sum of One Hundred Thousand Dollars ($100,000) on each of the first (1st) through fifth (5th) anniversaries of the occupancy of the Project (for a total of Five Hundred Thousand Dollars ($500, 000) ) provided that the Developer is in compliance with the OPA. 10 . Default. With the exception of those specified obligations herein which failure to perform may cause automatic termination, in the event that the Developer or the Agency fails to fulfill the obligations described in this Agreement within the times specified, the nonperforming party shall have ten (10) days following written notice from the other to commence to cure such failure to perform as may be identified in the written notice. If, in the objective judgment of the other party, the nonperforming party has failed to commence to 6816u/2460/000 -6- cure within such ten (10) day period, the other party may terminate this Agreement and, thereafter, neither party shall have any further rights or obligations to the other except as provided concerning the distribution of the Deposit in paragraph 4 herein. The Developer, by execution hereof knowingly agrees , notwithstanding anything herein to -the contrary, that it shall have no right to specific performance of this Agreement. Each party by execution hereof knowingly agrees, notwithstanding anything to the contrary, that it shall have no right to money damages , nor any other legal remedies or equitable remedies under the law with respect to this Agreement . 11. Non-Discrimination. Developer shall not discriminate against nor segregate any person, or group of persons on account of sex, race, color, marital status, religion, handicap, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Proposed Development Site, nor shall the Developer establish or permit any such practice or practices of discrimination or segregation in the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land. 12 . Environmental Requirements . Certain state and local environmental requirements may be applicable to the proposed development. Pursuant to such requirements certain environmental documents may be required to be prepared and certified for the proposed Project. The Developer agrees to supply information to determine the environmental impact of the proposed development and, at its sole cost and expense, to reimburse the Agency and/or the City for the cost of preparation of such environmental impact documents, if any, as may need to be completed for the development of the Project. 13 . No Real Estate Commissions. The Agency shall not be liable for any real estate commission or brokerage fees which may arise herefrom. The Agency represents that it has engaged no broker, agent or finder in connection with this transaction, and the Developer agrees to hold the Agency harmless from any claim by any broker, agent or finder retained by the Developer . 14 . Compliance with Laws . The Developer acknowledges that under the OPA it shall be required to carry out the construction of its improvements in conformity with all applicable laws, including all applicable federal and state labor standards ; provided, however, the Developer and its contractors, successors, assigns, transferees and lessees will not be waiving their rights to contest any such laws, rules and standards. 6816u/2460/000 -7- 22 . Governing Law. This Agreement shall be construed in accordance with the laws of the State of California . 23 . Attorneys ' Fees . In the event any action is taken pursuant to this Agreement, the prevailing party shall be entitled to recover from the other party its actual attorneys ' fees and costs, whether or not a final court judgment is entered. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year appearing below. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic Dated: By: Chairman "AGENCY" ATTEST: Agency Secretary • APPROVED AS TO FORM: • Stra ling, • - ca, Carlson & Rauth Special Counsel for the Agency /42:1/ 31L.a_/-1 - City Attorney, 9 -3-y I Agency General Counsel MICHELSON FAMILY TRUST, dat d as of December 12, 1984 Dated: / JI /77/ By: David Michelson, Trustee "DEVELOPER" 6816u/2460/000 -9- 15. No Assignment . This Agreement shall not be assigned by the Developer without prior written approval of the Agency, which the Agency shall grant or refuse at its sole discretion. 16. Agency Assistance. The Agency shall cooperate fully in providing Developer with appropriate information and assistance, provided that the Agency shall not be obligated to incur costs therefor. 17. Press Releases . The Developer and Agency agree to discuss any press releases with a designated Agency representative prior to disclosure in order to assure accuracy and consistency of the information. 18. Notices . All notices given or required to be given hereunder shall be in writing and addressed to the parties as set out below, or to such other address as may be noticed under and pursuant to this paragraph. Any such notice shall be considered served when actually received by the party intended, whether personally served or sent postage prepaid by registered or certified mail, return receipt requested, or sent by telecopy or overnight courier service. To Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attn: Ms . Barbara Kaiser, Deputy City Administrator/Director of Economic Development To Developer: Institutional Property Investors, Inc. 19800 MacArthur Boulevard, Suite 680 Irvine, California 92715 Attn: Mr. David Michelson, President with a copy to: Bret H. Reed, Jr. A Law Corporation 1300 Dove Street, Suite 200 Newport Beach, California 92660 19 . Integration of All Agreements . This Agreement supersedes any previous agreement entered into between the Developer and the Agency with respect to the Proposed • Development Site and/or the Project . 20 . Execution Authority. The signatories to this Agreement represent and warrant that they have the authority to execute this Agreement on behalf of the principals they purport to represent. 21. Time of Essence. Time is of the essence of every portion of this Agreement in which time is a material part . • 6816u/2460/000 -8- EXHIBIT "A" Site Map of Proposed Development Site (To Be Inserted) • 6816u/2460/000 -10- EXCLUSIVE NEGOTIATING AGREEMENT (Five Points Senior Villas) THIS EXCLUSIVE NEGOTIATING AGREEMENT (the "Agreement" ) is made and entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency") and the MICHELSON FAMILY TRUST, dated as of December 12, 1984 (the "Developer") . RECITALS The following recitals are a substantive part of this Agreement. A. In furtherance of the objectives of the Community Redevelopment Law of the State of California, Health and Safety Code Section 33000 , et seq. , and particularly Section 33334 .2 , et seq. , the Agency desires to assist in the development of housing which is to be made available at an affordable housing cost to low- and moderate-income households . B. The Developer proposes to construct and operate a One Hundred Sixty-Four (164) unit senior citizen rental housing project (the "Project") on an approximately 1. 84 acre parcel of • land at the southwest corner of Main Street and Florida Street in the City of Huntington Beach (the "Proposed Development Site") . The Proposed Development Site is depicted on the Site Map attached hereto as Exhibit "A" and incorporated herein. The City of Huntington Beach (the "City") has approved Negative Declaration No. 91-3 , Conditional Use Permit No . 91-4 and Conditional Exception (Variance) No . 91-7 with respect to the Project and the Proposed Development Site. C. The Developer desires to negotiate an Owner Participation Agreement ("OPA" ) with the Agency to assist the Developer in operating affordable housing within the Project . D. The parties recognize and acknowledge that the purpose of this Agreement is to establish a period during which the Developer shall have the exclusive right to negotiate with the Agency the terms of the OPA which will include, without limitation, the economics of the development, the site plan and specific uses of the development, and any other terms relevant to the development of the Project and the Proposed Development Site. E. The parties intend that during the Negotiating Period (as the term is hereinafter defined) each will perform certain actions and responsibilities under this Agreement. F. The Developer has formed Five Point Seniors , a California general partnership,, to act as the developer of the Project (the "Partnership" ) . The Partnership will consist of two general partners, one of which will be the Developer and one of which will be the Norman D. and Bunnie L. Ward Trust . The Developer and the Agency intend for the Partnership, if acceptable to the Agency, to assume the rights and obligations of the Developer pursuant to the OPA. NOW, THEREFORE, the parties hereto mutually agree as follows: 1. Negotiating Period. The Agency agrees to negotiate with the Developer and the Developer agrees to negotiate with the Agency for a thirty (30) day period from the date this Agreement is approved by the Agency ("Negotiating Period" ) . Agency and Developer shall negotiate diligently and in good faith to carry out the obligations of this Agreement on or before the times established in this Agreement, to establish development plans and concepts and to determine the economic feasibility of the development of the Project . The Agency and the Developer agree, for the period set forth above, to negotiate in good faith to prepare an OPA to be entered into between the Agency and the Developer concerning the Proposed Development Site and the Project. The Agency further reserves full discretion with respect to the conduct or disposition of any proceedings which require notice and a public hearing . The obligation to negotiate in good faith requires that Developer and Agency communicate with respect to those issues for which agreement has not been reached, and in such communication follow reasonable negotiation procedures including meetings, telephone conversations and correspondence. If on the last day of the Negotiating Period the Developer has not signed and submitted a draft OPA submitted by the Executive Director for signature by the Developer, then ' this Agreement shall automatically terminate without further notice by the Agency to the Developer, and both parties knowingly agree that neither party shall have any further rights or obligations to the other arising out of this Agreement. Further, both parties recognize and acknowledge that the purpose of this Agreement is solely to provide a procedure for negotiation, that each party is incurring costs ,pursuant. to the negotiation process provided for in this Agreement, and that there is no intent to ' provide rights to the Developer in the proposed project aside from the opportunity to negotiate a potential OPA. If an OPA is signed and submitted by the Developer within the Negotiating Period, then this Agreement shall be extended for a period not to exceed thirty. (30) days from the date of such submittal to enable the Agency to (i) determine whether it desires to enter into such OPA, and (ii) take the ' 6816u/2460/000 -2- actions necessary to bring such OPA before the Agency for consideration, action and authorization to sign, if such is approved. Developer acknowledges that the determination by the Agency of whether it desires to enter into the OPA is at its sole and absolute discretion. Both parties further recognize and acknowledge that the Project would be subject to -planning review and approval by the City or an other governmental entity with. authority to review such a project, if any such further review and approvals are required. 2 . Developer Submission of Information. The Developer is required to make full disclosure to the Agency of all pertinent information concerning the Developer and the Partnership. The Developer represents to the Agency that within fifteen (15) days of the approval of this Agreement by the Agency it shall submit to the Agency Director for his review all basic information relating to the corporation which is reasonably, requested by the Agency including, without limitation, information regarding capitalization, insurance, other, liability and financial capacity issues, and an original or true copy of the executed partnership agreement which creates the Partnership or other proposed developer entity. In the event that during the term of this Agreement such information changes, Developer shall submit written evidence of such new information immediately to the Agency Executive Director for his review and consideration. The parties acknowledge that this requirement is necessary so that the Agency may verify the qualifications of the persons and entities which comprise the Developer. 3 . Lead Negotiator for Developer. The Developer represents to the Agency that David Michelson, Trustee of the Developer, is the person with whom the Agency staff shall work with on a day-to-day basis concerning the negotiations toward the development of the Proposed Development Site and the Project. If the Developer desires to designate another individual as the lead negotiator on this Project, then it shall notify the Agency Director immediately. 4 . Deposit. The Developer shall deliver a letter of credit, in a form reasonably acceptable to the Agency, in the amount of Twenty Thousand Dollars ($20, 000) to the Agency upon mutual execution of this Agreement (the "Deposit") . If the Developer terminates this Agreement without cause or if the Agreement terminates for failure of the Developer to perform a required action, then the Agency shall be entitled to reimbursement for costs in negotiation contemplated herein. Such costs shall include reasonable attorneys ' and advisory fees incurred by the Agency (the "Negotiation Costs" ) . The Agency will provide supporting documentation evidencing the Negotiation Costs . In the event that the Deposit exceeds the Negotiation Costs the remainder shall be returned to Developer. The Deposit shall be the maximum amount that the 6816u/2460/000 -3- • Developer may be held responsible towards payment of the Negotiation Costs . In the event Developer executes a draft OPA submitted for signature by the Agency' s Executive Director but the Agency Board: (i) does not approve the OPA; (ii) terminates the Agreement without cause, or (iii) the Developer terminates the Agreement for failure of the Agency to perform a required action, the full amount of the Deposit shall be returned to Developer . If the Agency Board approves the OPA the Deposit shall be promptly returned to the Developer. 5. Financing. Developer agrees to provide within fifteen (15) days of the Agency approval of this Agreement a description of the proposed method of construction of the Project and permanent financing and amount and sources of capital therefor, which proposed financing method must include a One Million Five Hundred Thousand Dollar ($1, 500 , 000) equity contribution from Developer. The OPA shall provide that the Developer ' s equity interest in the Project shall be a minimum of One Million Five Hundred Thousand Dollars ($1, 500, 000) at all times until the fourth (4th) anniversary of the commencement of construction of the Project (or such other period mutually agreed upon by the parties hereto) , at which time the Developer ' s equity interest in the Project shall be a minimum of Five Hundred Thousand Dollars ($500, 000) . 6 . Development Concept Package. Developer further agrees that within thirty (30) days of this Agreement it shall submit documents, reports and information (collectively, the "Development Concept Package" ) concerning the proposed development that will provide the Agency with the following information: a. A preliminary site plan and architectural/design concept for the development showing access roads, amount and location of parking, location and size of all buildings, including height and perimeter dimensions , pedestrian and vehicular circulation system (including access to upper floors) , landscaping, elevations, perspective renderings and the architectural character of the project . b. A schedule for the development of all structures and improvements proposed and an estimate of development costs including construction and non-construction costs . c. An estimate of project income and expenses and a pro forma statement of project return adequate to enable the Agency to evaluate the economic feasibility of the proposed development . The economic pro forma shall be in a form typically submitted to a construction lender and shall include land prices as determined by the appraiser. The pro forma shall specify the form and amount of the equity to be contributed to the Project by the Developer . This information will be submitted for analysis to an economic consultant selected by the Agency in its sole discretion. 6816u/2460/000 -4- d. Biographical and background description of the Developer and all senior officers of the Developer, including such matters as (i) prior record with respect to the completion of projects, particularly those of a scale comparable to that proposed herein; (ii) record of any pending or past litigation and evidence of timely performance reflecting minimal litigation and/or disputes concerning the payment of joint venturers, contractors, suppliers or taxing authorities and (iii) record of satisfactory operation of residential projects . It is understood that the Agency may take appropriate steps to verify such matters, and the Developer agrees to cooperate in furnishing such information to the Agency. The Agency acknowledges that the materials submitted in connection with the obtaining of entitlements for the Project will be sufficient to satisfy requirement (a) above, and acknowledges receipt of the estimate of development costs pursuant to requirement (b) and ,the pro forma pursuant to requirement (c) above. Within twenty (20) days upon receipt of the Development Concept Package, the Agency staff shall review the development concept proposed by the Developer, together with the remainder of the Development Concept Package, and may either accept it, request modifications or reject it. If any such items are rejected, the Agency staff shall provide a list of deficiencies to the Developer and the Developer shall resubmit the Development Concept Package, with corrections, within ten (10) days of such rejection. If the Agency staff accepts the Development Concept Package, the Agency and Developer shall continue to negotiate toward the execution of an OPA with respect to the development of the Project. 7. Design Objectives . The design and development objectives for the Project shall be specified in the OPA, and the actual development shall be in conformity therewith. The Agency shall cooperate fully with Developer 's professional consultants and associates in providing them with any information and assistance reasonably within the capacity of the Agency to provide in connection with the preparation and execution of the drawings, plans and specifications or other documents or information required to be submitted by the Developer to the Agency or the City pursuant to this Agreement or as required by state or local laws and regulations. This requirement does not obligate the Agency to incur any monetary costs therefor. All design, architectural and building plans for development shall be subject to the review and approval of the Agency and the City. 8. Affordable Housing. The OPA shall provide that certain units within the Project shall be made available and 6816u/2460/000 -5- rented at an "Affordable Rent" (as defined in California Health and Safety Code Section 50053) as follows: (a) Sixteen (16) units for "Very Low Income Households" (as defined in Health and Safety Code Section 50105) ; ._ (b) Sixteen (16) units for "Lower Income Households" (as defined in Health and Safety Code Section .50079 . 5) ; and (c) Sixteen (16) units for "Persons and Families of Low and Moderate Income" (as defined in Health and Safety Code Section 50093) . The OPA shall require that such units be so restricted for thirty (30) years from the occupancy of the Project, and that such restrictions be recorded as an encumbrance against the Property. The Developer shall also be required under the OPA to perform high quality construction of the Project and to provide an activities director and van service to tenants during such thirty (30) year period. 9 . Agency Financial Assistance. The Agency shall be required under the OPA, in consideration for the Developer ' s performance of the affordable housing requirements set forth in Section 8 above, to provide the following financial assistance to the Developer: (a) Upon the occupancy -of the Project, the Agency shall make a loan of Two Hundred Fifty Thousand Dollars ($250, 000) to the Developer. The loan shall accrue simple interest of five percent (5%) per annum. The loan shall be for a term of ten (10) years, with interest payments payable monthly in the third (3rd) through tenth (10th) years of the loan. The loan shall be secured by security mutually acceptable to the Agency and the Developer. (b) The Agency shall grant to the Developer the sum of One Hundred Thousand Dollars ($100,000) on each of the first (1st) through fifth (5th) anniversaries of the occupancy of the Project (for a total of Five Hundred Thousand Dollars ($500, 000) ) provided that the Developer is in compliance with the OPA. • 10 . Default. With the exception of those specified obligations herein which failure to perform may cause automatic termination, in the event that the Developer or the Agency fails to fulfill the obligations described in this Agreement within the times specified, the nonperforming party shall have ten (10) days following written notice from the other to commence to cure such failure to perform as may be identified in the written notice. If, in the objective judgment of the other party, the nonperforming party has failed to commence to 6816u/2460/000 -6- cure within such ten (10) day period, the other party may terminate this Agreement and, thereafter, neither party shall have any further rights or obligations to the other except as provided concerning the distribution of the Deposit in paragraph 4 herein. The Developer, by execution hereof knowingly agrees , notwithstanding anything herein to ..the contrary, that it shall have no right to specific performance of this Agreement. Each party by execution hereof knowingly agrees, notwithstanding anything to the contrary, that it shall have no right to money damages , nor any other legal remedies or equitable remedies under the law with respect to this Agreement. 11. Non-Discrimination. Developer shall not discriminate against nor segregate any person, or group of persons on account of sex, race, color, marital status, religion, handicap, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Proposed Development Site, nor shall the Developer establish or permit any such practice or practices of discrimination or segregation in the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land. 12 . Environmental Requirements . Certain state and local environmental requirements may be applicable to the proposed development . Pursuant to such requirements certain environmental documents may be required to be prepared and certified for the proposed Project. The Developer agrees to supply information to determine the environmental impact of the proposed development and, at its sole cost and expense, to reimburse the Agency and/or the City for the cost of preparation of such environmental impact documents, if any, as may need to be completed for the development of the Project . 13 . No Real Estate Commissions. The Agency shall not be liable for any real estate commission or brokerage fees which may arise herefrom. The Agency represents that it has engaged no broker, agent or finder in connection with this transaction, and the Developer agrees to hold the Agency harmless from any claim by any broker, agent or finder retained by the Developer . 14 . Compliance with Laws. The Developer acknowledges that under the OPA it . shall be required to carry out the construction of its improvements in conformity with all applicable laws, including all applicable federal and state labor standards ; provided, however, the Developer and its contractors, successors, assigns, transferees and lessees will not be waiving their rights to contest any such laws , rules and standards . 6816u/2460/000 -7- 15 . No Assignment . This Agreement shall not be assigned by the Developer without prior written approval of the Agency, which the Agency shall grant or refuse at its sole discretion. 16. Agency Assistance. The Agency shall cooperate fully in providing Developer with appropriate information and assistance, provided that the Agency shall not be obligated to incur costs therefor. 17. Press Releases . The Developer and Agency agree to discuss any press releases with a designated Agency representative prior to disclosure in order to assure accuracy and consistency of the information. 18 . Notices . All notices given or required to be given hereunder shall be in writing and addressed to the parties as set out below, or to such other address as may be noticed under and pursuant to this paragraph. Any such notice shall be considered served when actually received by the party intended, whether personally served or sent postage prepaid by registered or certified mail, return receipt requested, or sent by telecopy or overnight courier service. To Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attn: Ms . Barbara Kaiser, Deputy City Administrator/Director of Economic Development To Developer: Institutional Property Investors, Inc. 19800 MacArthur Boulevard, Suite 680 Irvine, California 92715 Attn: Mr. David Michelson, President with a copy to: Bret H. Reed, Jr . A Law Corporation 1300 Dove Street, Suite 200 Newport Beach, California 92660 19 . Integration of All Agreements . This Agreement supersedes any previous agreement entered into between the • Developer and the Agency with respect to the Proposed Development Site and/or the Project . 20 . Execution Authority. The signatories to this Agreement represent and warrant that they have the authority to execute this Agreement on behalf of the principals they purport to represent . • 21. Time of Essence. Time is of the essence of every portion of this Agreement in which time is a material part . 6816u/2460/000 -8- 22 . Governing Law. This Agreement shall be construed in accordance with the laws of the State of California . 23 . Attorneys ' Fees . In the event any action is taken pursuant to this Agreement , the prevailing party shall be entitled to recover from the other party its actual attorneys ' fees and costs, whether or not a final court judgment is entered. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year appearing below. REDEVELOPMENT AGENCY OF THE CITY OF H Ti TON BEACH, a public bod , corpo ate and olitic Dated: al cz g, /qq/ By: dkj,LN,Chairman "AGENCY" ATTEST: dWri,44. tga*Chi°6121, Agency Secretary APPROVED AS TO FORM: Strad ing\ Yl a, Carlson & Rauth Speci 1 Counse for the Agency ,&J/1,41=4PF.;, City Attorney, Agency General Counsel o-e44-g - _�l�t MICHELSON FAMILY TRUST, dated s of December 12, 1984 Dated: dl /3) /7&' By: David Michelson, Trustee "DEVELOPER" 6816u/2460/000 -9- EXHIBIT "A" Site Map of Proposed Development Site (To Be Inserted) 6816u/2460/000 -10-