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ORANGE COUNTY COMMUNITY HOUSING CORPORATION (OCCHC) - 2000-09-05
° , B CITY OF HUNTINGTON BEACH ,U InterOffice Communication }�, Economic Development Department TO: John Reckstin, Director of Administrative Services FROM: David C. Biggs, Director of Economic Development PK DATE: April 25, 2000 SUBJECT: Eskaros Loan - l-oan Nos. 9966 BMRI and 9967 BMRI Attached please find a copy of the Notice of Trustee's Sale for the properties located at 17421 and 17411 Koledo Lane. These are 10 apartment units located on four buildings and on two properties- The loans were made originally to Oratio and Maria Cerrito, the sellers and holders of the first deed of trust. Mr Eskaros together with the Girgis' (7 investors total) purchased the units from the Cerritos in 1989. In the process they assumed the rehabilitation loans previously made to the Cerritos. The loans were re%xn at the time. Both loans required monthly payments. However, in 1994 F..skaros 1 and Gn negotiated with the City to stop making payments on the loans and to begin making payments in 2007_ The reason for this agreement was largely due to the recession of the early 1990's, which caused many landlords to lose their properties and default on their loans. At that time the City did not want to place the loans in default_ Unfortunately, it appears that the Fskaro!3; and Grigis' could not even meet their obligations to the seller/lender, nor to the City. Please remove these loans from the City's books. CC- Ray Silver, City Administrator Melanie Fallon, Assistant City Administrator Connie Broakway, City Clerk Gus Duran Noi Nguyen •m • RECORDING REQUESTED BY: n C? AND WHEN RECORDED MAIL TO: zC 0 m �3 rn TRUSTEE CORPS r'x 0 1401 N. BATAVIA ST. a c�a I n Trustee Co`P is a debt collector, c m Any information obtained will SUITE 102 r' N C used for that purpose. ORANGE, CA 92867 �p o ITS a rn L Space above;his iine'or recorder's use only Trustee Sale No. U01126938 Loan No. ESKAROS-GIRGIS Title Order No. 00664731 APN f 165-232-25 & 165-232-26 NOTICE OF TRUSTEE'S SALE YOU ARE IN DEFAULT UNDER A DEED OF TRUST DATED 11129/1989. UNLESS YOU TAKE ACTION TO PROTECT YOUR PROPERTY, IT MAY BE SOLD AT A PUBLIC SALE. IF YOU NEED AN EXPLANATION OF THE NATURE OF THE PROCEEDINGS AGAINST YOU, YOU SHOULD CONTACT A LAWYER. On 04/06/2000 at 10:00am, MTC FINANCIAL INC., dba TRUSTEE CORPS as the duly appointed Trustee under and pursuant to Deed of Trust Recorded on 1 1/3011 989, Instrument 89-651928. Book N/A. Pace NIA of official records in the Office of the Recorder of ORANGE County, California, executed by: MICHAEL G. ESKAROS AND NADIA M. ESKAROS, HUSBAND AND WIFE AS COMMUNITY PROPERTY AS TO AN UNDIVIDED 46.67% INTEREST AND MICHAEL GIRGIS AND NAHED GIRGIS, HUSBAND AND WIFE AS COMMUNITY PROPERTY AS TO AN UNDIVIDED 24.67% INTEREST AND ABO EL-MISSIH GIRGIS AND RACHEL GIRGIS, HUSBAND AND WIFE AS COMMUNITY PROPERTY AS TO AN UNDIVIDED 22% INTEREST AND NIVIN GIRGIS AN UNMARRIED WOMAN AS TO AN UNDIVIDED 6.66% INTEREST, as Trustor, ORATIO A. CERRITO AND MARIA CERRITO, TRUSTEES OF THE ORATIO A. CERRITO FAMILY TRUST DATED DECEMBER 17, 1981, as Beneficiary, WILL SELL AT PUBLIC AUCTION TO THE HIGHEST BIDDER FOR CASH (payable at time of sale in lawful money of the United States, by cash, a cashier's check drawn by a state or national bank, a check drawn by a state or federal credit union, or a check drawn by a state or federal savings and loan association, savings association, or savings bank specified in section 5102 of the Financial Code and authorized to do business in this state). At: IN THE FRONT OF THE FLAGPOLES AT THE MAIN ENTRY AREA TO THE PLACE,NTIA CIVIC CENTER , 401-411 E_ CHAPMAN AVE. , PLACENTIA , CA , all right, title and interest conveyed to and now held by it under said Deed of Trust in the property situated in said County, California describing the land therein: A_P.N.4165-232-25 & 165-232-26 The property heretofore described is being sold "as is The street address and other common designation, if any, of the real property described above is purported to be: 17411 & 17421 KOLEDO LANE, HUNTINGTON BEACH, CA . The undersigned Trustee disclaims any liability for any incorrectness of the street address and other common designation, if any, shown herein. Said sale will be made, but without covenant or warranty, expressed or implied, regarding title, possession, or encumbrances, to pay the remaining principal sum of the note(s) secured by said Deed of Trust, with interest thereon, as provided in said note(s), advances, if any, under the terms of the Deed of Trust, estimated fees, charges and expenses of the Trustee and of the trusts created by said Deed of Trust, to-wit- $770,730.33 (Estimated) Trustee Sale No, U01126938 Loan No. ESKAROS-GIRGIS Title Order No. 00664731 APN No. 165-232-25 & 165-232-26 Accrued interest and additional advances, if any, will increase this figure prior to sale. The beneficiary under said Deed of Trust heretofore executed and delivered to the undersigned a written Declaration of Default and Dernand for Sale, and a written Notice of Default and Election to Sell. The undersigned caused said Notice of Default and Election to Sell to be recorded in the county where the real property is located and more than three months have elapsed since such recordation. DATE: 3/16100 TRUSTEE CORPS 1401 N. BATAVIA ST. SUITE 102 ORANGE, CA 92867 FOR SALE INFORMATION CALL (714) 573-1965 (714) 634-1001 TRUSTEE CORPS AS SUCCESSOR TRUSTEE K. :5UNbA.RA, A THORIZED SIGNATURE 2 RECORDING REQUESTED BY. AND WHEN RECORDED MAIL TO- TRUSTEE CORPS 1401 N. BATAVIA ST. SUITE 102 ORANGE, CA 92867 Space wove tns line for:ecDMers use"y Trustee Sale No U01126938 Loan No. ESKAROS-GIRGIS Title Order No. 00664731 SUBSTITUTION OF TRUSTEE WHEREAS, MICHAEL G. ESKAROS AND NADIA M. ESKAROS HUSBAND AND WIFE AS COMMUNITY PROPERTY AS TO AN UNDIVIDED 46.67% INTEREST AND MICHAEL GIRGIS AND NAHED GIRGIS, HUSBAND AND WIFE AS COMMUNITY PROPERTY AS TO AN UNDIVIDED 24.67% INTEREST AND ABD EL-MISSIH GIRGIS AND RACHEL GIRGIS HUSBAND AND WIFE AS COMMUNITY PROPERTY AS TO AN UNDIVIDED 22% INTEREST AND NIVIN GIRGIS AN UNMARRIED WOMAN AS TO AN UNDIVIDED 6.66% INTEREST, was the original Trustor, TIEMPO ESCROW II A CALIFORNIA CORPORATION, was the original Trustee, and ORATIO A. CERRITO AND MARIA CERRITO TRUSTEES OF THE ORATIO A. CERRITO FAMILY TRUST DATED DECEMBER 17, 1981, was the original Beneficiary under that certain Deed of Trust dated 11/2911989, Recorded on 11/30/1989, Instrument 89-651928, Book NIA, Page NIA of official records in the office of the Recorder of ORANGE County, California, and WHEREAS, the undersigned, is the present Beneficiary under said Deed of Trust, and, WHEREAS, the undersigned desires to substitute a new Trustee under said Deed of Trust in the place of and stead of said original Trustee thereunder. Now, THEREFORE, the undersigned Beneficiary hereby substitutes MTC FINANCIAL INC., dba TRUSTEE CORPS, 1401 N. BATAVIA ST., SUITE 102, ORANGE, CA 92867, as Trustee of Said Deed of Trust. Whenever the context hereof so requires, the masculine gender includes the feminine and/or neuter, and the singular number indicates the plural. ti r � • Trustee Sale No. U01126938 Loan No. ESKAROS-GIRGIS Title Order No. 00664731 DATE: BENEFICIARY: MARIA CERRITO, AS TRUSTEE OF THE ELECTION TRUST UNDER THE ORATIO A. CERRITO FAMILY TRUST, DATED 12/17/81 AND MARIA CERRITO, AS TRUSTEE OF THE SURVIVORS TRUST UNDER THE ORATIO A. CERRITO FAMILY TRUSTE, DATED 12/17/81 ` BY: MARIA CEkRITO, TRUSTEE STATE OFi� COUNTY OF l:1/19C� On before me, the undersigned, a Notary Public in and for said county, personally appeared (or proved to me on the basis of satisfactory evidence) to be the personN whose name R subscribed to the within instrument and acknowledged to me that K he shy executed the same inXI e it authorized capacity), and that by he tKir signature04 on the instrument the persoro�E or the entity upon behalf of which'the persorjs) acted, executed the instrument. WITNESS my hand and official seal_ Notary Public in and for said unty and State F- ` COMM d1'.75637 Co crQ K' NOTARY PL;8UC-CALIFCPNfA CRANG'c CCU:jr, C71 2 f SUBSTITUTION OF TRUSTEE PURSUANT TO CALIFORNIA CIVIL, CODE SECTION 2934a. TRUSTEE SALE # U01126938 ORDER # 00664731 AFFIDAVIT STATE OF CALIFORNIA COUNTY OF ORANGE on the 16th day of "4ar'' 2000 I, LUPE ME.IiA, mailed by certified and first class mail a copy of the attached Substitution of Trustee to the trustee of record under the Deed of Trust described in said Substitution of Trustee, and a copy of the attached substitution of Trustee has been mailed prior to the recording thereof, in the manner provided in Section 2§�*) of the Civil Code of the State of California to all persons to whom a copy of the Notice of Default would be required to be mailed by the requirements of said Section. I declare under penalty of perjury that the foregoing is true and correct. State of California County of Orange Subscribed and sworn (or affirmed) to before me this 16th day of March-__ 2000 n r KAREN SUNDARA g 1 / COMM_0 1232598 NOTARY PUSUC-CAUFOR41A ()RANGE COUNTY COMM_ExP-SEPT.17,2003 i Notar�ry Public LZ )W , t(ON- ow- 1q , CouncillAgency Meeting Held: Deferred/Continued to- Approved ❑ Condit nally Approved ❑ Denied 4 C Signature ouncil Meeting Date: `,44tQ0 Department ID Number: ED 00-39 CITY OF HUNTINGTON BEACH x REQUEST FOR COUNCIUREDEVELOPMENT AGENCY ACTIGN SUBMITTED TO: HONORABLE MAYOR/CHAIRMAN AND CITY COUNCIL : MEMBERS/REDEVELOPMENT AGENCY MEMBERS 9 SUBMITTED BY: RAY SILVER, City Administrator/Executive Director aor PREPARED BY: DAVID C. BIGGS, Director of Economic Development `; v SUBJECT: Approve An Owner Participation Loan Agreement With Orange County Community Housing Corporation (OCCHC) des Statement of Issue.Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,AttachmenE Statement of Issue: An Owner Participation Agreement (OPA) between the Agency and Orange County Community Housing Corporation (OCCHC) is submitted for approval. This agreement provides for a loan in an amount not to exceed $570,000 of Agency Housing Set Aside and HOME Investment Partnership Program funds for the acquisition and rehabilitation of 17411 and 17421 Koledo Lane. In addition, an Agency resolution is submitted for adoption. This resolution would allow the Agency to substitute bond proceeds as the source of financing for the project, at some point in the future, should it become feasible. Fundinq Source: Agency Housing Set Aside Funds, Account Number E-TX-ED-903-6-39- 00 and Federal HOME Investment Partnership Program Funds, Account Number E-HG-ED- 877-5-93-00. Recommended Action: City Action(s): 1. Temporarily waive the City's insurance requirements for purposes of approving the Agency loan. Direct staff to ensure that insurance requirements as described in the Owner Participation Agreement are met by OCCHC by the close of escrow. Redevelopment Agency Actions- 1. Approve an Owner Participation Agreement with Orange County Community Housing Corporation (OCCHC) for $570,000 using Agency Housing Set Aside and HOME Investment Partnership Program funds for the acquisition and rehabilitation of 17411 and 17421 Koledo Lane. 2_ Authorize execution and recordation of the OPA and all attachments by the Agency Chairman and Clerk, when advised by the City Attorney's Office. REQUEST FOR COUNCILIREDEVELOPMENT AGENCY ACTION MEETING DATE: 914100 DEPARTMENT ID NUMBER: ED 00-39 3_ Authorize the wire transfer of Agency funds in the amount necessary to First American Title Company to effect the closing of the acquisition escrow. 4. Adopt Resolution Number,7o6n"3i/, A resolution of the Redevelopment Agency of the City of Huntington Beach Declaring Intention to Reimburse Expenditures from the Proceeds of Tax-Exempt Obligations and Directing Certain Actions Alternative Action(s): Do not approve the proposed transaction, or direct staff to renegotiate the deal terms with OCCHC. Analysis: Orange County Community Housing Corporation (OCCHC) is the oldest and largest affordable housing developer in Orange County. With a current inventory of 38 properties throughout Orange County, OCCHC owns and manages 275 units, all for very low-income residents_ OCCHC additionally developed a transitional housing facility for homeless families and a lease-to-own program for very low-income homebuyers. OCCHC is one of a few nonprofit housing developers that owns and manages its own properties and takes pride in working in troubled neighborhoods. The nonprofit typically leverages local, state, federal, and private funds to acquire and rehabilitate housing for very low-income large families and to provide those families with educational and job training resources. Recently, OCCHC created a resident education program, which includes staffed learning centers and a scholarship fund. In its mission, OCCHC affirms its belief that the foundation of our neighborhood, community, city, state, and nation begins with the family. OCCHC owns and manages ten properties in the Oakview neighborhood, providing affordable housing to 44 very low-income families. Six of these properties are in the Koledo Park area. OCCHC has two additional Koledo Lane five-plexes in escrow at a reasonable price given current market conditions ($350,000 per building). Staff and OCCHC have negotiated deal points (See Attachment No. 2), which include the following terms: 1. The Redevelopment Agency will provide $570,000 in HOME Investment Partnership Program funds and Redevelopment Agency Housing Set Aside funds as a loan to OCCHC. The Agency's loan funds will be used to acquire and rehabilitate two multifamily rental-housing properties located at 17411 and 17421 Koledo Lane in the Oakview Neighborhood as follows: Activity Agency Loan Amount Property Acquisition $370,000 Rehabilitation $200,000 Total $570,000 2. There will be an annual 6% interest charge applied to the outstanding loan balance during the term of the loan agreement. RCA 17411-17421 Koledo Lane -2, 8128100 11:57 AM REQUEST FOR COUNCIUREDEVELOPMENT AGENCY ACTION MEETING DATE: 914100 DEPARTMENT ID NUMBER: ED 00-39 3. For a period not less than 60 years, all 10 units in the properties will be subject to tenant household income and rent affordability restrictions as provided in the following schedule: No. of Bedroom Maximum Tenant Units Size Income Maximum Rent 2 2 BR Very Low-Income 30% of the tenant's monthly adjusted income 30% X 50% of the monthly income 8 2 BR Very Low-Income of the Orange County 3 person household median income 4. The maximum number of persons in a household that may occupy a single residential unit may not exceed five people in a two-bedroom unit. It will be the responsibility of OCCHC to enforce this occupancy limit. 5. OCCHC will obtain conventional lender financing in an amount not to exceed $300,000, which together with $370,000 of the Agency's loan and $30,000 equity investment by OCCHC will be used for property acquisition. 6_ The Agency will contribute up to $200,000 for construction costs necessary to bring the properties into compliance with HUD Housing Quality Standards along with City and State laws and codes. 7. After rehabilitation is completed, OCCHC will maintain the properties in compliance with HUD Housing Quality Standards along with City and State laws and codes. 8. At the beginning of the third year of the loan agreement, and continuing for the duration of the agreement, OCCHC will make annual payments to the Agency. Such payments will be the lesser of: (a) fifty percent (50%) of the project's end- of-year cash balance or (b) $1,200. After the 601h year of the loan agreement, should OCCHC elect to terminate the project's income and affordability restrictions, all remaining unpaid principal and interested on the Agency's loan will be due; however, the unpaid balance of the loan will not require repayment and will not accrue further interest charges for whatever period OCCHC maintains the income and affordability restrictions on the properties_ 9. The Agency will have a first right of refusal to purchase the property should OCCHC choose to sell the property. Should the Agency elect not to exercise this option, it will have the right to approve any buyer of the property. 10. Should OCCHC default on any of the terms of its loan agreement, the full loan amount including all interest will become immediately due. The Agency will have the right to take over ownership and management of the property in the event OCCHC is unable to cure a default_ RCA 17411-17421 Koledo Lane -3- 812810011:57 AM REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION MEETING DATE: 914100 DEPARTMENT ID NUMBER: ED 00-39 This residential acquisition and rehabilitation project is an opportunity for the Agency to improve and indefinitely preserve ten units of existing affordable housing. This project will further enhance the quality of life in the Oakview neighborhood through partnerships between the Agency and affordable housing nonprofit developers such as OCCHC that are committed to the Agency's goals of improving the quality of housing for very low-income residents, keeping rents affordable, eliminating overcrowding, and building livable neighborhoods. The Agency has partnered with four nonprofits over the past six years to provide a total of 198 units of high-quality, affordable housing in the Oakview neighborhood. When this project is completed, ten additional units will be available to very low-income households. Included in this request with the loan agreement between the Agency and OCCHC is an Agency resolution regarding bond financing. This resolution will allow the Agency to, at some point in the future, consider issuing multifamily housing revenue bonds as a funding source for affordable housing projects thereby freeing other funds for additional affordable housing projects. The deal points for this project were reviewed and approved by the Council's Economic Development Committee on June 20, 2000_ They were additionally reviewed by the Agency's economic consultant Kathe Head of Keyser Marston Associates Inc. The attached Agency resolution was prepared by the City Attorney's Office for submission together with the OCCHC loan agreement. These documents are attached for your review. Environmental Status: Categorically excluded under the National Environmental Protection Act (NEPA). Categorically exempt under the Califomia Environmental Quality Act (CEQA), Section 15061(b)(3). Attachment(s): City Clerk's Page Num. No. Description 1 Owner Participation Agreement 2. Project Deal Points 3(1 3. Agency Resolution Number zP460---317 Declaring Intention to Reimburse Expenditures 4. Site Ma RCA Author. HOLTZ(5901) RCA 17411-17421 Koledo Lane -4- 8128100 11:57 AM ---- - - .. Owner Participation Agreement between the Redevelopment Agency and Orange County Community Housing Corporation OWNER PARTICIPATION AGREEMENT By and Between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic and ORANGE COUNTY COMMUNITY HOUSING CORPORATION a California nonprofit corporation (17411 and 17421 Koledo Lane) September 4',52000 TABLE OF CONTENTS Page SECTION I. DEFINITIONS I SECTION 2. SUBJECT OF THIS AGREEMENT 5 2.1 Purpose of the Agreement 5 2.2 The Redevelopment Plan 5 2.3 Participant 5 2.4 Term of Agreement 6 2.5 Prohibition Against Transfers; Right of First Refusal 6 SECTION 3 FINANCING AND ACQUISITION OF THE SITE 7 3.1 Ownership of the Site 7 3.2 Agency Financial Assistance 8 3.3 Form of Agency Financial Assistance; 8 Purpose of Note and Security 3.4 Escrow 8 3.5 Agency's Conditions to Closing 9 3.6 Participant's Conditions to Closing 10 3.7 Broker's Fees 11 3.8 Conventional Lender First Deed of Trust 11 3.9 Subordination Agreements 11 SECTION 4 DEVELOPMENT OF THE SITE 12 4.1 General 12 4.2 Construction of the Project 12 4.3 Insurance 14 4.4 Indemnification 15 4.5 Hazardous Materials 16 4.6 Security Financing; Right of Holders 16 4.7 Release of Construction Covenants 17 4.8 Mechanics Liens, Stop Notices, and Notices I7 of Completion SECTION 5 USE OF THE SITE 18 5.1 No Inconsistent Uses 18 5.2 Regulatory Agreement 18 5.3 Relocation 18 5.4 Maintenance of the Site 19 5.5 Nondiscrimination 19 5.6 Form of Nondiscrimination and Nonsegregation Clauses 19 5.7 Effect and Duration of Covenants 20 5.8 Creation of Capital Reserve Accounts 20 5.9 Capital Reserves 21 5.10 Payment of Portion of Residual Receipts 21 5.11 Financial Statements 21 i 5.12 Operation of Project 22 5.13 Lead-Based Plaint 22 5.14 Barriers to the Disabled 22 SECTON 6 DEFAULTS AND REMEDIES 22 6.1 Participant Defaults 22 6.2 Agency Defaults 23 6.3 Notice of Default 23 6.4 Agency's Remedies 23 6.5 Participant's Remedies 24 6.6 Rights and Remedies are Cumulative 24 SECTON 7 GENERAL PROVISIONS 24 7.1 Participant's Warranties 24 7.2 Governing Law 24 7.3 Attorneys' Fees 24 7.4 Notices, Demands, and Communications 24 Between the Parties 7.5 Acceptance of Service of Process 25 7.6 Conflicts of Interest 25 7.7 Titles and Captions 25 7.8 Gender 25 7.9 Modifications 25 7.10 Merger of Prior Agreements and Understandings 25 7.11 No Third Parties Benefited 26 7.12 Assurances to Act in Good Faith 26 7.13 Warranty Against Payment of Consideration 26 for Agreement 7.14 Nonliability of Agency Officials and Employees 26 7.15 Interpretation 26 7.16 Counterparts 26 7.17 Severability 26 7.18 Extension of Times of Performance 26 7.19 Inspection of Books and Records 27 7.20 Waivers 27 SECTION 8 EXECUTION OF AGREEMENT; TIME FOR ACCEPTANCE 27 ii Exhibits A - Legal Description B - Site Map C - Scope of Development D - Schedule of Performance E - Release of Construction Covenants F - Promissory Note G - Subordinated Deed of Trust H - Regulatory Agreement I - Project Budget/Pro Forma 3 - Subordination Agreement iii OWNER PARTICIPATION AGREEMENT THIS OWNER PARTICIPATION AGREEMENT ("Agreement") is entered into as of the September S , 2000 ("Effective Date"), by and bem-cen REDEVELOPMENT AGENCY OF THE CITY OF HUTNTrNGTON BEACH, a public body, corporate and politic ("Agency"), and ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit corporation ("Participant"). RECITALS A. Agency is a public body, corporate and politic, exercising governmental functions and powers and organized and existing under the Community Redevelopment Law of the State of California (California Health and Safety Code Section 33000 et seq.). B. Participant has opened an escrow to acquire the "Site" (as such term is defined herein) from The Cerrito Family Trust ("Seller") and intends to develop the "Project"(as such term is defined herein)on the Site in accordance with the terms of this Agreement. C. Agency desires to meet its affordable housing goals pursuant to the California Community Redevelopment Law by assisting Participant in the acquisition of the Site to facilitate Participant's rehabilitation-in-place of two multifamily rental housing properties consisting of ten total units on the Site. After rehabilitation, the Project shall be rented to tenants whose household incomes do not exceed very low income as defined by California law. Agency's assistance shall be in the form of a loan in the amount of FIVE HUNDRED SEVENTY THOUSAND DOLLARS (S570,000.00) to assist Participant in meeting the cost of acquisition and rehabilitation of the Site. D. Pursuant to the California Redevelopment Law, Agency has established a Housing Set Aside Fund and has deposited therein certain tax revenues made available to the Agency exclusively for the purpose of increasing and improving the community's supply of affordable low and moderate income housing, including very low income housing ("Set Aside Funds"). Agency's loan to Participant shall be funded from a combination of Set Aside Funds and funds Agency obtains from the HOME Investment Partnership Program. NOW, THEREFORE, in consideration of the promises and covenants contained herein, the above recitals, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereto agree as follows: AGREEMENT SECTION 1. DEFINITIONS The following terms, as used in this Agreement, shall have the meanings given unless expressly provided to the contrary: l hbrocthoropa The term "Agency" shall mean the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic, having its offices at 2000 Main Street, Huntington Beach, CA 92648, and any assignee of. or successor to, the rights, powers, and responsibilities of Agency. The term "Agency Deed of Trust" shall mean the Deed of Trust attached as Exhibit "G" hereto The term "Agency Loan" shall mean the Agency's loan to Participant in an amount not to exceed FIVE HUNDRED SEVENTY THOUSAND DOLLARS ($570,000.00) of Set Aside Funds and HOME Funds, as evidenced by the Agency Note and secured by the Agency Deed of Trust. The term "Agreement" or any reference to this "Agreement" shall mean this Owner Participation Agreement executed by and between Agency and Participant, including all exhibits attached hereto, which exhibits are incorporated herein by this reference and all other documents incorporated herein by reference. The term "Approved Project Plans and Permits" shall mean all of the plans, permits, and approvals required for the Project, as approved by the Agency and/or the City including, but not limited to, preliminary and final drawings (final drawings shall be in sufficient detail to obtain a building permit), site plans, building plans and elevations, grading plans, landscaping plans, parking plans, material pallets, a description of structural, mechanical, and electrical systems, and all other plans, drawings and specifications that City and Agency customarily require for such a Project, and including all required approvals and findings pursuant the California Environmental Quality Act of 1970, as amended, and regulations promulgated thereunder ("CEQA"), and, if applicable, the National Environmental Policy Act of 1969,as amended, and regulations promulgated thereunder. The term "City" shall mean the City of Huntington Beach, a municipal corporation, having its offices at 2000 Main Street, Huntington Beach, CA 92648. The term "Conventional Lender" shall mean one or more lenders of Participant's choice providing funds for Participant's acquisition of the Site, in an amount not to exceed THREE HUNDRED THOUSAND DOLLARS ($300,000.00). The term "Conventional Loan" shall mean a loan in an amount not to exceed $300,000.00 provided to Participant by the Conventional Lender for acquisition of the Site. The term "Days" shall mean calendar days and the statement of any time period herein shall be calendar days and not working days, unless otherwise specified. The term "Effective Date" shall mean the first day of the month, in the year 2000, following the date the Agency's governing body approves this Agreement and authorizes its Chairman to sign it; which date shall be inserted into the preamble of this Agreement. The term "Eligible Tenant" shall mean any person entitled to rent a Unit as set forth in the Regulatory Agreement. 2 Wocch6opa The term "Escrow" shall mean that certain escrow with First American Corporation , which has been established to convey the Site from the Seller to Participant, and into which Agency shall deposit the portion of the Agency Loan funds described in Section 3.2 in accordance with the terms of this Agreement. The term "Executive Director" shall mean the individual duly appointed to the position of Executive Director of the Agency, or authorized designee. Whenever an administrative action is required by Agency to implement the terms of this Agreement, the Agency Executive Director, or an authorized designee, shall have authority to act on behalf of Agency, except with respect to matters reserved under California law wholly for Agency Board determination. The term "First Deed of Trust" shall mean a deed of trust securing the Conventional Loan. The term "Force Majeure" shall mean any war; insurrection; strike; lock-out; labor dispute; riot; flood; earthquake; fire; casualty; Act of God; act of the public enemy; epidemic; quarantine; restriction; freight embargo; unavoidable lack of transportation; governmental restriction; unusually severe weather; inability to secure necessary labor, materials. or tools; delay of any contractor, subcontractor or supplier; economic or market conditions; lack of tenant commitments or tenant changes; inability to secure satisfactory financing; act of the other patty including act or failure to act of City or any other public or governmental agency or entity (except that any act or failure to act of City or Agency shall not excuse performance by Agency); or any other cause beyond the control or without the fault of the party claiming an extension of time to perform. The term "Grant Deed" shall mean that certain Grant Deed that conveys the Site from the current owner, the Seller to Participant. The term "Hazardous Materials" means any hazardous or toxic substances, materials, wastes, pollutants, or contaminants, which are defined, regulated, or listed as "hazardous substances," "hazardous wastes," "hazardous materials," "pollutants," "contaminants," or "toxic substances," (including those defined as such as of the Close of Escrow) under federal or state environmental and health and safety laws and regulations, including without limitation petroleum and petroleum byproducts, flammable explosives, area formaldehyde insulation, radioactive materials, asbestos, and lead. Hazardous Materials do not include substances that are used or consumed in the normal course of developing, operating, or occupying a housing project, to the extent and degree that such substances are stored, used, and disposed of in the manner and in amounts that are consistent with normal practice and legal standards. The term "HOME" means the HOME Investment Partnership Program created by the National Affordable Housing Act of 1990. The term "HUD" means the United States Department of Housing and Urban Development. The term "Lease" means the lease entered into between Participant and a tenant of a unit in the Project. 3 hb`.occhcbpa The term "Median Income" means the median income for the Orange County Primary Metropolitan Statistical Area (PMSA), with adjustments for household size, as determined from time to time by the U.S. Department of Housing and Urban Development (HUD) pursuant to the United States Housing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with said Act. The term "Note" shall mean that certain Promissory Note Secured by that certain Deed of Trust attached hereto as Exhibit "F". The term "Participant" shall mean ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit corporation, whose address is 1833 E. 17"' Street, Suite 207, Santa Ana, CA 92705. The Term "Project" shall mean generally the rehabilitation of the existing two apartment buildings on the Site and the subsequent rental of the ten (10) Units therein to Eligible Tenants, pursuant to the procedures set forth herein and more particularly described in the Scope of Development. The term "Project Budget/Pro Forma" shall mean the sources and uses of funds for acquisition of the Site and the development of the Project as set forth in Exhibit"I". The term "Regulatory Agreement" shall mean that certain Regulatory Agreement and Declaration of Covenants and Restrictions attached hereto as Exhibit"H". The term "Release of Construction Covenants" shall mean that release attached hereto as Exhibit "E" issued by Agency to Participant pursuant to the provisions of Section 4.7 below. The term "Schedule of Performance" shall mean that certain schedule attached hereto as Exhibit "D" setting forth the times upon which performance by the parties under this Agreement is due. The term "Scope of Development" shall mean that certain exhibit attached hereto as Exhibit "C" The term "Seller"shall The Cerrito Family Trust. The term "Set Aside Funds" shall mean the fund established by Agency pursuant to California Redevelopment Law, wherein certain tax revenues have been deposited and made available to the Agency exclusively for the purpose of increasing and improving the community's supply of affordable low and moderate income housing, including very low income lousing. The term "Site" shall mean that certain real property located in the City of Huntington Beach, County of Orange, State of California commonly known as 17411 and 17421 Koledo Lane, Huntington Beach,California,and legally described in Exhibit "A" and depicted on the Site Map. 4 hbWcchclopa The term "Site Map" shall mean the map attached hereto as Exhibit "B" depicting the location of the Site. The term "Subordination Agreement" shall mean the form of Subordination Agreement attached hereto as Exhibit"J". The term "Units" shall mean the ten (10) two-bedroom dwelling units comprising the Project and subject to rent restrictions as set forth in the Regulatory Agreement. The term "Very Low Income Households" shall mean a family or individual whose annual income does not exceed fifty percent (50%) of the median income for the Orange County Metropolitan Statistical Area as determined by HUD with adjustments for smaller and larger families. SECTION 2. SUBJECT OF THIS AGREEMENT. 2.1 Purpose of the Agreement (a) The purpose of this Agreement is to implement the Community Redevelopment Law by providing a loan (the "Agency Loan") to assist Participant to pay a portion of the Project costs, in an amount not to exceed FIVE HUNDRED SEVENTY THOUSAND DOLLARS ($570,000.00), as evidenced by the Note secured by the Agency Deed of Trust, which Agency Loan is composed of HOME funds and Set Aside Funds. (b) This Agreement is intended to facilitate Participant's acquisition of the Site and rehabilitation of the two existing apartment buildings located thereon for rental to very low income tenants. The Project pursuant to this Agreement and the fulfillment generally of this Agreement are in the best interests of the City and the welfare of its residents, and are in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements under which the Project has been undertaken and is being assisted. (c) The Project will be used and operated for not less than sixty (60) years as rental housing, with all of the Units restricted to occupancy to Very Low Income Tenants in accordance with the Regulatory Agreement. 2.2 The Redevelopment Plan. This Agreement is made in accordance with the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project") which was approved by adoption of Ordinance No. 3343 on December 16, 1996, and which merged together four different, previously approved project areas. The Site is located inside of the Merged Redevelopment Project. Agency intends this Agreement to meet its obligations pursuant to Health and Safety Code Sections 33413, 33334.2 and 33413(b)(2)(A)(ii). 2.3 Participant. The Participant is Orange County Community Housing Corporation, a California nonprofit corporation, whose address is 1833 E. 17'h St., Suite 207, Santa Ana„ CA 92705. 5 Wocchc+opa 2.4 Term of Agreement. The term of this Agreement shall be for a period of sixty (60) years or until the Agency Loan is repaid in full, whichever occurs later; with such period commencing on the Effective Date of this Agreement. 2.5 Prohibition Against Transfers; Right of First Refusal. (a) The qualifications and identity of the Participant are of particular concern to the Agency. It is because of those qualifications and identity that the Agency has entered into this Agreement with the Participant. No voluntary or involuntary successor in interest of the Participant shall acquire any rights or powers under this Agreement except as expressly set forth herein. (b) Participant agrees that Participant shall not sell the Site during the term of this Agreement, unless and until Participant has given to Agency notice in writing of its intent to sell, specifying the identity of the prospective buyer and the price and terms of the contemplated sale. Within ninety (90) days after Participant gives Agency written notice of Participant's intent to sell, Agency shall have the right to purchase the Site at the same price and on the same terms and conditions set forth in Participant's written notice of intent to sell. To exercise its option, Agency must, within the same ninety (90) day period, deposit in escrow with any escrow company in Orange County, California, all moneys and instruments required by the terms of Participant's notice of intent to sell to be paid or delivered to Participant on close of escrow and shall also give Participant written notice of the deposit. If Agency does not exercise the right in accordance with the provisions of this section, Participant may sell the Site to the prospective buyer for the price and on the terms contained in the notice; provided, however, that Participant has made every reasonable effort to sell the Site to another nonprofit housing corporation with Participant's similar experience and reputation in the field of low-income housing (including the management of properties with income and affordability restrictions), and provided further that Agency has approved such prospective buyer in writing. If at any time during the term of this Agreement Participant receives from any third party a bona fide offer to purchase the Site on terms acceptable to Participant, Participant shall give written notice of the offer to Agency. Within ninety (90) days after Participant gives Agency written notice of the third-party offer, Agency shall have the right to purchase the Site at the same price and on the same terms and conditions set forth in the third-party offer. To exercise its right, Agency must, within the same ninety (90) day period, deposit in escrow with any escrow company in Orange County, California, all moneys and instruments required by the terms of the offer to be paid or delivered to Participant on close of escrow and shall also give Participant written notice of the deposit. In the event Agency does not exercise the option to purchase in accordance with the provisions of this Section, Participant may sell the Site to the third party making the offer on the same terms and conditions set forth in that offer; provided, however, that Participant has made every reasonable effort to sell the Site to another nonprofit housing corporation with Participant's similar experience and reputation in the field of low-income housing (including the management of properties with income and affordability restrictions), and provided further that Agency has approved such prospective buyer in writing. If for any reason the Site is not sold to the party making the offer, Participant shall give Agency the same right to purchase the Site on receiving any subsequent offer from any third party that is acceptable to Participant. 6 Wocchclopa (c) For the reasons cited above, the Participant represents and agrees for itself and any successor in interest that without the prior written approval of the Agency, there shall be no significant change in the ownership of the Participant or in the relative proportions thereof, or with respect to the identity of the parties in control of the Participant or the degree thereof, by any method or means. (d) The Participant shall promptly notify the Agency of any and all changes whatsoever in the identity of the parties in ownership and/or in control of the Participant or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. This Agreement may be terminated by the Agency and the Agency may exercise its remedies pursuant to the Agency Note and Agency Deed of Trust, if there is any significant change (voluntary or involuntary) in membership, ownership, management or control, of the Participant (other than such changes occasioned by the death or incapacity of any individual). (e) Participant shall not, except as permitted by this Agreement, assign or attempt to assign this Agreement or any right herein, not make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Site (referred to hereinafter as a "Transfer"), without prior written approval of the Agency, except as expressly permitted by this Agreement. Consent to a Transfer shall not result in acceleration of the Agency Note. Any such proposed transferee shall have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Agency, to fulfill the obligations undertaken in this Agreement by the Participant. Any such proposed transferee, by instrument in writing satisfactory to the Agency and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of the Agency shall expressly assume all of the obligations of the Participant under this Agreement and agree to be subject to all conditions and restrictions applicable to the Participant in this Agreement. There shall be submitted to the Agency for review all instruments and other legal documents proposed to effect any such Transfer, and if approved by the Agency its approval shall be indicated to the Participant in writing. (f) In the absence of specific written agreement by the Agency, no unauthorized Transfer, or approval thereof by the Agency, shall be deemed to relieve the Participant or any other party from any obligations under this Agreement. (g) Consent to any ttansfer shall not be deemed to be a waiver of the right to require consent to future or successive transfers. (h) The provisions of this Section 2.5 shall be of no force or effect as of the expiration of the Regulatory Agreement. SECTION 3. FINANCING AND ACQUISITION OF THE SITE. 3.1 Ownership of the Site. As of the Effective Date of this Agreement, Participant is in escrow to acquire the Site from the Seller and as such Participant qualifies as an "owner- participant" within the meaning of the Community Redevelopment Law (Health & Safety Code §33000 et seq.). Participant's financing of the acquisition of the Site includes Participant's equity in 7 Wocch0opa the amount of S30,000, the Agency loan in the amount of S370,000, and the conventional loan in the amount of$300,000. 3.2 Agencv Financial Assistance. The Agency, in accordance with the terms of this Agreement, shall provide to Participant the Agency Loan. Upon satisfaction of all conditions precedent (or waiver by Agency) to Agency's obligation to disburse the Agency Loan under this Agreement, Agency shall deposit up to THREE HUNDRED SEVENTY THOUSAND DOLLARS (S370,000.00) of the Agency Loan funds into Escrow for disbursement to Participant for acquisition costs at Close of Escrow (Participant shall provide Agency's Executive Director with notice of the exact amount Agency is to deposit), with the remainder of the Agency Loan in the amount of TWO HUNDRED THOUSAND DOLLARS ($200,000) to be disbursed to Participant for payment of rehabilitation costs pursuant to the terms of Section 4.26). 3.3 Form of Agency Financial Assistance, Purpose of Note and Security. In the event Participant is in Material Default of any of its obligations hereunder, including its obligations under the Regulatory Agreement, the entire principal balance of the Agency Loan including all interest shall immediately become due and payable, and Agency shall have the option to: (a) demand full payment of the principal balance of the Agency Loan including all interest; (b) take over ownership and management of the Site; or (c) foreclose on the Site under the Agency Deed of Trust. 3.4 Escrow. This Agreement, once deposited in Escrow, shall constitute joint escrow instructions of Agency and Participant. The Escrow agent is hereby empowered to act under the Agreement and upon indicating its acceptance in writing to Agency and Participant within five (5) days after receipt of this Agreement; provided, however, that any undertaking by the Escrow agent of any of the acts or services set forth in this Agreement shall constitute acceptance of the obligation to perform as Escrow agent under this Agreement. Any amendment to the Escrow instructions contained herein shall be in writing and signed by both Agency and Participant. (a) Closing Date. On or before the date established in the Schedule of Performance, the parties shall satisfy the conditions described in Sections 3.5 and 3.6 and complete the Close of Escrow. If, for any reason, the Close of Escrow has not occurred by the date provided therefore in the Schedule of Performance, either party may terminate this Agreement, by providing written notice of termination to the other party. (b) Delivery of Documents and Funds by Participant. On or before twelve noon on the last business day prior to the scheduled Closing Date, Participant shall deposit or cause to be deposited with the Escrow agent the following: (i) the Grant Deed executed and acknowledged by the Seller; (ii) the Note, executed by Participant; (iii) the Agency Deed of Trust, including the Rider thereto, executed and acknowledged by Participant; 8 Wocchc`.opa (iv) the Regulatory Agreement, executed and acknowledged by Participant; and (v) All funds, documents, and deposits Participant is required to deposit with Escrow agent in order to close the Escrow conveying the Site to Participant. (c) Delivery of Documents and Funds byAgency. On or before twelve noon on the last business day prior to the scheduled Closing Date, Agency shall deposit or cause to be deposited with the Escrow agent the following: (i) the Agency Deed of Trust, including the Rider thereto, executed and acknowledged by Agency; (ii) the Regulatory Agreement, executed and acknowledged by Participant; and (iii) the portion of the Agency Loan funds described in Section 3.2. (d) Recordation. Escrow agent is directed, on the Closing Date, to record against the Site the following documents in the following order of priority: (i) the Grant Deed; (ii) any First Deed of Trust; (Ili) the Agency Deed of Trust; and (iv) the Regulatory Agreement. One or more Subordination Agreements, if required to effectuate the proper priority of the foregoing deeds of trust and Regulatory Agreement, shall be recorded at the direction of Participant in accordance with the terms of this Agreement. (e) Escrow Agent_Duties. The Escrow agent shall (i) record the documents as provided in subparagraph (d); and (ii) at Closing, deliver the original promissory note to Agency and a conformed copy of same to Participant, and upon recordation deliver to Agency the original of the Agency Deed of Trust and the Regulatory Agreement and a conformed copy of same to Participant. (f) Interest Bearing Accounts. Escrow agent shall hold all funds received in an interest bearing account with the interest accrued paid at Closing to the party depositing such funds. (g) Title Insurance. Escrow agent shall deliver to Agency at Closing a CLTA standard form owner's policy of title insurance in the amount of THREE HUNDRED SEVENTY THOUSAND DOLLARS ($370,000.00), issued by a title insurer acceptable to Agency, insuring in favor of Agency the priority of the Agency Deed of Trust and Regulatory Agreement in accordance with the priority established by this Agreement. The cost of said policy shall be shared equally between the parties. 3.5 Agency's Conditions to Closing. Agency's obligations to deposit the portion of Agency Loan funds described in Section 3.2 in Escrow for disbursement to Participant at Closing 9 hb%occh6ope shall be conditioned and contingent upon satisfaction, or Agency's waiver of each of the following conditions precedent (collectively, the "Agency's Conditions to Closing"): (a) Agency shall have in its account up to FIVE HUNDRED SEVENTY THOUSAND DOLLARS ($570,000.00) of HOME funds and Set Aside Funds (b) Participant shall have deposited in escrow not less than THIRTY THOUSAND DOLLARS ($30,000.00) in equity or demonstrate evidence to Agency of Participant's binding commitment to provide equity to the project (e.g., Board of Directors Resolution) (see Section 5.12); (c) The Conventional Lender shall have deposited into escrow THREE HUNDRED THOUSAND DOLLARS ($300,000.00); (d) Participant has deposited in escrow all of the funds and instruments required of it by this Agreement in order to close the Escrow; (e) Escrow agent, at Closing, holds and will deliver to Agency the Note, Deed of Trust, Regulatory Agreement, and Title Insurance Policy. (f) Participant shall deliver evidence acceptable to the Agency Executive Director that Participant has obtained the insurance policies as required by Section 4.3 of this Agreement. (g) Participant shall deliver to the Agency a good standing certificate issued by the California Secretary of State's office indicating that Participant exists in good standing at the time of the proposed Close of Escrow. (h) The Agency shall determine that Participant is in full compliance with the terms and conditions of this Agreement and all documents and instruments referred to herein or executed by Participant in furtherance of this Agreement. In the event any of the Agency's Conditions to Closing are not satisfied (or waived by Agency), Agency may cancel the Escrow and terminate this Agreement by delivering thirty (30) days prior written notice to Participant and the Escrow agent. Participant may nullify Agency's notice to terminate if, within such thirty(30) day period Participant (at no cost to Agency) cures any unsatisfied Agency's Conditions to Closing and notifies the Escrow agent of such cure. In the event of termination pursuant to this Section, (i) the Escrow shall be cancelled and any funds deposited by Agency shall be returned to it with any accrued interest earned on such funds; (ii) Participant shall be responsible for any escrow cancellation fees imposed by the Escrow agent; and (iii) this Agreement shall be terminated and the parties hereto shall have no further rights or obligations hereunder. 3.6 Participant's Conditions to Closin . Participant's obligations to close Escrow shall be conditioned and contingent upon satisfaction, or Participant's waiver of each of the following conditions precedent(collectively, the "Participant's Conditions to Closing"): 10 Wocch6opa (a) The Seller has signed and acknowledged the Grant Deed and have deposited same in Escrow; (b) Agency has deposited in escrow all of the funds and instruments required of it by this Agreement in order to close the Escrow, including but not limited to the portion of the Agency Loan funds described in Section 3.2, the Agency Deed of Trust, Regulatory Agreement, and such Subordination Agreements as may be required to effect the priority required by this Agreement; (c) The Conventional Lender has deposited in escrow all of the funds and instruments required of it by this Agreement in order to close the Escrow; (d) All conditions to Closing set forth in (i) the agreements and any amendments thereto between Participant and the Seller for conveyance of the Site; and (ii) agreements and financing documents pertaining to Participant's financing of the acquisition of the Site, including as pertaining to financing by the Conventional Lender, have been satisfied (or waived by the appropriate parry). In the event any of the Participant's Conditions to Closing are not satisfied (or waived by Participant), and provided Participant has fully performed its obligations hereunder, Participant may cancel the Escrow and terminate this Agreement by delivering thirty (30) days prior written notice to Agency and the Escrow agent. Agency may nullify Participant's notice to terminate if, within such thirty (30) day period Agency (at no cost to Participant) cures any unsatisfied Participant's Conditions to Closing and notifies the Escrow agent of such cure. In the event of termination pursuant to this Section, (i) the Escrow shall be cancelled and any funds deposited by Participant shall be returned to it with any accrued interest earned on such funds; (ii) Participant shall be responsible for any escrow cancellation fees imposed by the Escrow agent; and (iii) this Agreement shall be terminated and the parties hereto shall have no further rights or obligations hereunder. 3.7 Broker's Fees. Participant and Agency shall each indemnify, defend, and hold harmless the other from any claims or damages for payment of any real estate commissions or broker's fees or finder's fees arising out of the acts or representations of the other with respect to any of the transactions contemplated by this Agreement. 3.8 Conventional Lender First Deed of Trust. Prior to the Close of Escrow, Participant may obtain a loan from the Conventional Lender to be used exclusively for the acquisition of the Site pursuant to this Agreement. Such loan may be memorialized by a note and a First Deed of Trust and shall not exceed THREE HUNDRED THOUSAND DOLLARS ($300,000.00). 3.9 Subordination Ag[eement(s). Pursuant to Section 33334.14 of the Health and Safety Code, Agency is permitted to subordinate the Agency Deed of Trust and the Regulatory Agreement to superior deeds of trust, !1 Wocchcropa regulatory agreements and other related documents, including but not limited to those required by the Conventional Lender, if certain findings are made and certain written commitments are obtained from such Conventional Lender. In accordance with said Section 33334.14, the Agency hereby finds that no economically feasible alternative method of financing the Project on substantially comparable terms and conditions without subordination is reasonably available, and the Agency has obtained written commitments to protect the Agency's investment in the event of a default by Participant. Therefore, the Agency hereby agrees to subordinate the Agency Deed of Trust and the Regulatory Agreement to the Conventional Lender's First Deed of Trust and such other related documents as Conventional Lender may require, in the amount the Agency determines is reasonably necessary to acquire the Site. Participant may apply to the Agency to increase said indebtedness, which approval the Agency shall not unreasonably withhold. The priority of such deeds of trust shall be effected through the order of recordation documents as set forth in Section 3.4 (d). Such Subordination Agreement shall provide for: (1) A right of the Agency to cure a default on the Conventional Lender's First Deed(s) of Trust; (ii) A right of the Agency to negotiate with any lenders after notice of default from the lender; (iii) An agreement that if prior to foreclosure of any lenders' loans, the Agency takes title to the Site and cures the default on the loan, the lender will not exercise any right it may have to accelerate the loan by reason of the transfer of title to the Agency; and (iv) A right of the Agency to purchase the Site from the Participant at any time after a default on the loan. if a Subordination Agreement is required to effectuate the foregoing order of priority, such agreement shall be generally in the form set forth as Exhibit J. SECTION 4. DEVELOPMENT OF THE SITE. 4.1 General. The Project shall consist of rehabilitation of two existing apartment buildings containing a total of ten (10) units on the Site and the use of the Site as an affordable rental apartment complex in accordance with this Agreement and the Regulatory Agreement. 4.2 Construction of the Project. (a) Development in Accordance with Approved Project Plans and Permits. Participant shall undertake the Project and rehabilitate the Site in accordance with this Agreement, the Scope of Development, and the Approved Project Plans and Permits and any changes thereto as may be subsequently approved in writing by both Participant and Agency and, if necessary, City. As completed, the Project shall comply with all applicable laws and ordinances of all governmental authorities, including, without limitation, all Federal Housing Quality Standards as set forth at Section 982.401 of Title 24 of the Code of Federal Regulations. Agency shall provide up to TWO HUNDRED THOUSAND DOLLARS ($200,000.00) of Agency Loan funds for rehabilitation costs necessary to bring the Site into compliance with HUD Housing Quality Standards and the foregoing laws and ordinances. All Units must be rehabilitated no later than eighteen (18) months from the Close of Escrow. This time period may be extended but only by written agreement of the parties, which agreement shall be deemed a modification of this Agreement. (b) Agent Approvals. Participant will furnish to the Agency a list of proposed repairs and improvements to the Site including planned cost and time schedules prior to 12 Wocchc\npa submittal of plans to the City. The Agency will have the right to review and approve the list prior to the start of any rehabilitation work. Participant shall provide to Agency an executed construction contract with a contract price that is consistent with the Project Budget. All hiring of contractors shall be done on a competitive bid basis as required by the Agency's Housing Rehabilitation Loan Program Policies and Procedures. Upon request, the construction contract, together with all other contracts for services necessary to construct the Project shall be submitted to the Agency for approval. The Agency shall approve the contracts if they are consistent with the Project Budget. The Agency shall have the right at its option and cost to hire a construction management firm to supervise the rehabilitation work in progress and loan funding. Participant will furnish copies of all building permits for all items required to be permitted under the Huntington Beach Municipal Code, with proof of inspection by the Huntington Beach Building Department, where applicable. (c) Evolution of Project Plans. On or before the date set forth in the Schedule of Performance, Participant shall submit to City, and shall use reasonable efforts to obtain approval of, the Approved Project Plans and Permits as may be required for the rehabilitation work, including City approval of, preliminary, and thereafter final drawings and specifications for development of the Site in accordance with the Scope of Development, and all in accordance with the City's requirements. The term preliminary and final drawings shall be deemed to include site plans, building plans and elevations, grading plans, if applicable, landscaping plans, parking plans, material pallets, a description of structural, mechanical, and electrical systems, and all other plans, drawings and specifications as City and Agency customarily require for such a Project. Final drawings will be in sufficient detail to obtain a building permit. Said plans, drawings and specifications shall be consistent with the Scope of Development and the various development approvals referenced hereinabove, except as such items may be amended by City (if applicable) and by mutual consent of Agency and Participant. Participant shall not be in default of this Agreement due to any delay of Agency or City processing any plans or permit applications submitted by Participant. (d) Other Governmental Permits. Participant shall, at its own expense and before commencement of construction or rehabilitation of any buildings, structures, or other work of improvement upon the Site, secure or cause to be secured any and all permits and approvals which may be required by any governmental agency affected by such construction, development, or work to be performed by Participant pursuant to the Scope of Development, including but not limited to, necessary building permits and all approvals required under the California Environmental Quality Act ("CEQA"). In constructing and developing the Project, Participant shall comply with all applicable development standards in City's Municipal Code and shall comply with all building code, landscaping, signage, and parking requirements (except as may be permitted through approved variances and modifications). (e) Approval_b Agency. The Agency shall approve or disapprove any submittal made by the Participant pursuant to this Agreement within ten (10) days after such submittal. Any disapproval shall state in writing the reason for the disapproval and the changes which the Agency requests to be made. After Participant resubmits the corrected submittal, Agency shall have an additional seven (7) days for the review of the resubmittal but if the Agency disapproves the resubmittal, then the cycle shall repeat, until the Agency's approval has been obtained. 13 Wxchclopa (f) Agency Assistance. So long as Participant is not in Material Default of any term or provision of this Agreement, Agency agrees to provide reasonable assistance to Participant, at no cost to Agency, in the processing of Participant's submittals required under this Agreement in order that Participant may obtain a final City action on such matters on or before the date set forth in the Schedule of Performance; provided that Agency does not warrant or represent that such approval shall be obtained. (g) Cost of Rehabilitation. Participant (with the assistance of the Agency Loan) shall bear all costs for the Project, including, but not limited to any and all costs for preparing or obtaining the Approved Project Plans and Permits, environmental remediation, interim and permanent financing, broker's and leasing commissions, and fees or charges for development and building,except as specifically provided herein. (h) Project BudMet. Participant shall update the Project Budget/Pro Forma by adding a rehabilitation budget to the Project Budget/Pro Forma after Participant obtains possession of the Site. Thereafter, Agency shall have the night to approve or disapprove the updated Project Budget/Pro Forma, and Participant shall develop the Project in accordance with such updated Project Budget/Pro Forma(attached hereto as Exhibit"I" . (1) Project Schedule. Participant shall commence and complete the construction of the Project within the times set forth in the Schedule of Performance. 0) Progress PayMents. Not later than thirty (30) days after commencement of rehabilitation, and every 30th day thereafter until the Project has been completed, Participant may submit a written request to Agency for a progress payment. Each request for a progress payment shall be accompanied by lien or partial lien releases from any contractors, subcontractors, materials suppliers, or equipment suppliers supplying work, materials or equipment to the Project. The TWO HUNDRED THOUSAND DOLLARS ($200,000.00) left remaining from the amount of the Agency Loan (reference Section 3.2) shall be used by Agency to pay to Participant the latter's requests for progress payments. if Participant's request for a progress payment complies with the requirements of this Section 4.20), Agency shall pay the same within ten (10) days after receipt of the request. 4.3 Insurance. Participant shall procure and maintain, during the term of this Agreement, at its sole cost and expense, until the date that Agency waives any such insurance requirement or requirements, as part of its issuance of the Release of Construction Covenants, the following policies of insurance: (a) Worker's Compensation Insurance. Pursuant to California Labor Code Section 1861, Participant acknowledges awareness of Section 3700 et seq. of said code, which requires every employer to be insured against liability for workers' compensation. Participant covenants that it will comply with such laws and provisions prior to commencing any work of construction or rehabilitation on the Site. Participant shall maintain such Workers' Compensation Insurance in an amount not less than ONE HUNDRED THOUSAND DOLLARS ($100,000.00) bodily injury, each occurrence, ONE HUNDRED THOUSAND DOLLARS ($100,000.00) bodily 14 hblocchcopa injury by disease, each employee, and TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) bodily injury by disease, policy limit, at all times incident thereto, in forms and underwritten by insurance companies admitted in California, or if not admitted in California then reasonably acceptable to Agency. Participant shall require all subcontractors to provide such Workers' Compensation Insurance for all of the subcontractor's employees. Participant shall furnish Agency with a certificate of waiver of subrogation under the terms of the Workers' Compensation Insurance and Participant shall similarly require all subcontractors to waive subrogation. (b) General Liability Insurance. Participant shall carry general commercial liability insurance, including coverage for bodily injury, property damage, products/completed operations and blanket contractual liability, in an amount not less than ONE MILLION DOLLARS ($1,000,000.00), combined single limit. Such insurance shall also include automotive bodily injury and property damage liability insurance. All such insurance shall be provided by insurance companies admitted in California, or if not admitted in California then reasonably acceptable to Agency. Such insurance shall name the City and Agency and their officers, agents, and employees acting in their official capacity, as additional insureds pursuant to a pre-1990 CG 20 10 11 85 endorsement form. In the event of aggregate coverage,-such limit shall be no less than ONE MILLION DOLLARS (S 1,000,000.00). Participant shall require its insurer to waive its subrogation rights against Agency and shall provide certificates of insurance evidencing same. (c) Property Insurance. Participant shall obtain and maintain in force, all- perils (to include fire, vandalism and earthquake protection) property insurance with extended coverage endorsements thereon, on the Site, in an amount equal to the full replacement costs and/or value thereof; this policy shall contain a replacement cost endorsement naming Agency as the insured and shall not contain a coinsurance penalty provision. The policy shall contain a special endorsement that such proceeds shall be used to repair or rebuild any Units or other improvements situated on the Site so damaged or destroyed; and if not so used, such proceeds shall be paid to Agency. The proceeds of any such insurance payable to Agency shall be used for rebuilding or repair as necessary to restore the site at the discretion of Agency. The policy shall name Agency and City, their officers, agents and employees acting in their official capacity as additional insureds. (d) Certificates of Insurance, Additional Insured Endorsements. Prior to performance of any work upon the Site, Participant shall furnish to Agency certificates of insurance and additional insured endorsements evidencing the foregoing insurance coverages as required by this Agreement. Such certificates and endorsements shall be subject to the reasonable approval of the City Attorney and shall provide the name and policy number of each carrier and policy and shall state that the policy is currently in force and shall promise to provide that such policies will not be cancelled without thirty (30)days prior written notice to Agency. 4.4 Indemnification. During any period of rehabilitation of any of the Project pursuant to this Agreement and until such time Agency issues or is required to issue the Release of Construction Covenants, Participant agrees to and shall protect, defend, indemnify and hold the Agency and City harmless from and against all liability, loss, damage, cost or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of(i) Participant's failure to perform any obligations as and when required by this Agreement or any document referred to herein, and (ii) the death of any person or any accident, injury, loss, or damage whatsoever caused 15 hblocchc%opa to any person or to the property of any person which shall occur on the Site and which shall be directly or indirectly caused by the acts of, or any errors or omissions of, the Participant or its officers, shareholders, directors, members, agents, servants, employees, contractors, or invitees. Participant shall not be responsible for, and the Agency shall protect, defend, hold harmless and indemnify Participant against any liability, loss, damage, cost, or expense (including reasonable attorney's fees and court costs) arising from or as a result of the active concurrent negligence, sole negligence or sole willful misconduct of the Agency or the City or their respective members, officers,officials, employees, agents, representatives, servants,or contractors. 4.5 Hazardous Materials. (a) Lead Paint. Participant shall inspect the Site for lead-paint hazards in accordance with Title X of the 1992 Housing and Community Development Act. Any lead-paint hazards identified must be abated as part of the rehabilitation of the Site. In the event the full abatement cost for lead-paint hazards causes the rehabilitation costs to exceed the amount of TWO HUNDRED THOUSAND DOLLARS ($200,000), Participant may request additional Agency Loan funds to pay for such additional cost. The Agency Board of Directors, in its sole discretion, shall approve or disapprove any such loan request based upon the recommendation of the Agency Executive Director and the Director of Economic Development. (b) indemnification. Participant, from and after the Close of Escrow, and until a transfer, sale, or assignment of the Site upon which the following covenant shall then be the obligation of the transferee, purchaser, or assignee, shall indemnify, defend, and hold harmless Agency and City and their respective officers, employees, agents and representatives (collectively, the "Indemnified Parties") from and against any and all liabilities (including penalties, fines, and monetary sanctions) arising from a violation of state or federal law pertaining to (i) the storage of Hazardous Materials on the Site or(ii) contamination of the Site by a release of hazardous materials. Participant, prior to the Closing Date, shall provide to Agency a copy of any notices, orders, or reports concerning the presence of any Hazardous Materials on or affecting the Site that is in Participant's possession. 4.6 Security Financing; !tight of Holders. (a) Permitted Encumbrances. Participant, prior to the date Agency issues or is required to issue the Release of Construction Covenants, shall be permitted to enter into mortgages, deeds of trust, conveyances, and leases-back or any other form of conveyance in which the Site is used as security for the purpose of securing loans of funds in an amount not to exceed $300,000.00 to be used for the acquisition of the Site without the consent of the Agency provided such conveyance (i) is for the purposes permitted herein and (ii) is given to a financial or lending institution or other acceptable person or entity capable of performing or causing to be performed Participant's obligations under this Agreement, including without limitation a pension fund, insurance company, or real estate investment trust. Conveyances for financing purposes not meeting the foregoing requirements shall be subject to the prior approval of the Agency's Executive Director,which approval shall not be unreasonably withheld. 16 Wocchcbpa (b) Holder Not Obligated to Construct Improvements. The holder of any mortgage or deed of trust or other security interest authorized by this Agreement shall in no way be obligated by the provisions of this Agreement to construct or complete the improvements or to guarantee such construction or completion; nor shall any covenant or any provision in the Regulatory Agreement be construed to so obligate such holder. (c) Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders; Right to Cure. Whenever Agency shall deliver any notice or demand to Participant with respect to any breach or default by Participant in completion of construction of the improvements, Agency shall at the same time deliver a copy of such notice or demand to each approved holder of record of any mortgage, deed of trust, or other secunty interest which has previously requested such notice in wnting. Each such holder shall (insofar as the rights of Agency are concerned) have the right, at its option within ninety (90) days after the receipt of the notice, to commence and thereafter to diligently proceed to cure or remedy such default and add the cost thereof to the security interest debt and the lien on its security interest. Any holder completing the improvements in accordance with this Agreement shall be entitled to a Release of Construction Covenants upon written request made to Agency. 4.7 Release of Construction Covenants. Upon satisfactory completion of the Project, Agency shall issue to Participant a Release of Construction Covenants. The Release of Construction Covenants shall be, and shall so state, a conclusive detennination of satisfactory completion of the Project required by this Agreement, and of full compliance with the tetras of this Agreement relating to commencement and completion of the Project. The Release of Construction Covenants is not a notice of completion as referred to in California Civil Code Section 3093. If Agency refuses or fails to furnish a Release of Construction Covenants upon completion of the Project, Agency, after written request from Participant, shall, within fifteen (15) days of Participant's written request, provide Participant a written statement of the reasons Agency refused or failed to furnish a Release of Construction Covenants. The statement shall also contain a detailed description of the specific actions Participant must take to obtain a Release of Construction Covenants. If the Agency shall have failed to provide such written statement within fifteen (15) days, Participant shall be deemed entitled to the Release of Construction Covenants. If Agency refuses or fails to furnish the Release of Construction Covenants for the reason that specific items or materials are not available or landscaping is not complete, Agency shall issue the Release of Construction Covenants upon the posting by Participant with Agency of a cash deposit, bond or irrevocable letter of credit (in a form acceptable to Agency) in an amount representing the fair value of the work not yet completed. 4.8 Mechanics Liens Stop Notices and Notices of Completion (a) If any claim of lien is filed against the Site or the Project, or a stop notice is served on any lender or other third party in connection with the Project, then the Participant shall, within twenty (20) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the party entitled thereto a surety bond in sufficient form and amount, or provide other assurances satisfactory to the Agency that the claim of lien or stop notice will be paid or discharged. 17 W*cchclopa (b) if the Participant fails to discharge any lien, encumbrance, charge, or claim in the manner required in subsection (a) of this Section 4.8, then in addition to any other right or remedy, the Agency may (but shall be under no obligation to) require the Participant to immediately deposit with the Agency the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The Agency may use such deposit to satisfy any claim or lien that is adversely determined against the Participant. (c) The Participant shall file a valid notice of cessation or notice of completion upon cessation of construction on the Project for a continuous period of thirty (30) days or more, and take all other reasonable steps to forestall the assertion of claims or liens against the Project. The Agency may (but has no obligation to) record any notices of completion or cessation of labor, or any other notice that the Agency deems necessary or desirable to protect its interest in the Project. SECTION 5. USE OF THE SITE. 5.1 No Inconsistent Uses. Participant covenants and agrees, for itself, its successors, its assigns, and every successor in interest to the Site, or any part thereof, that for the period beginning on the Close of Escrow and ending on the expiration date of the Regulatory Agreement, Participant and such successors shall not devote the Site to uses inconsistent with the applicable zoning restrictions, this Agreement, and the Regulatory Agreement; provided that, in the event of any inconsistency, the provisions of the provisions of the Regulatory Agreement shall prevail over this Agreement. 5.2 Regulatoryy Agreement. At the Close of Escrow the Regulatory Agreement shall be recorded against the Site in the priority set forth in the Section 3.4(d). 5.3 Relocation. (a) Relocation Plan. As the Project is a "rehabilitation-in-place," no relocation of tenants living on the Site as of the Effective Date of this Agreement is contemplated by the parties hereto or is required to occur as a result of this Agreement. In the event, however, that off-Site relocation of existing tenants becomes necessary as a result of the Project, Participant, prior to such off-Site relocation, shall submit a relocation plan to Agency for review and approval ("Relocation Plan"). The Relocation Plan shall include the name, gender, age, ethnicity, household income, and amount of relocation payment to be paid; provided, however, that Participant shall not be obligated to provide any of the foregoing referenced personal information about relocatees if such relocatees refuse to provide such information or the gathering or provision of such information is contrary to applicable law. Participant shall comply with the requirements of all applicable relocation laws, including, but not limited to, the Uniform Relocation Act, and shall comply with related tenant notice requirements and shall provide the Agency with true and correct copies of such notices to tenants. Participant shall also retain all required records and the originals and/or copies of tenant notices in its files as mandated by applicable law. The relocation requirements of this Section do not apply to any tenants who are required to move as a result of an increase in such tenant's household income. 18 Wocchckopa (b) Relocation Cost. Participant shall be obligated for the payment of all relocation benefits and costs identified in the Relocation Plan, as well as relocation benefits and costs that arise from the acquisition or rehabilitation of the Site beyond those obligations identified in the Relocation Plan. Participant shall indemnify, defend, and hold harmless the Agency from and against any claims for relocation and the payment of relocation benefits that are the obligations of Participant under this Agreement. Notwithstanding the above, Agency may provide relocated tenants Section 8 HUD housing vouchers, which Participant may use to offset its relocation obligations. 5.4 Maintenance of the Site. After completion of the rehabilitation, all Units must be maintained in compliance with Federal Housing Quality Standards (24 CFR § 982.401) and other applicable state and local laws and codes. In addition, Participant shall maintain the Site in accordance with the terms of the Regulatory Agreement. The Agency shall have the right at all reasonable times to enter and inspect the Site in order to ensure compliance with the foregoing requirements. In the event Participant fails to maintain the Site as required by this Section, Participant shall, within thirty (30) days after Agency's notification or Participant's own discovery of any deficiency, take all necessary steps to correct such deficiency. 5.5 Nondiscrimination. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part thereof, or in the awarding of contracts for the Project, nor shall Participant, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site, or any part thereof, or in the awarding of contracts for the Project. Participant shall comply with all applicable federal, state and local nondiscrimination, fair housing, and equal opportunity requirements. In addition, Participant shall conduct affirmative marketing and minority outreach activities as required by HOME regulations. 5.6 Form of Nondiscrimination and Nonsegregation Clauses. The Participant shall refrain from restricting the rental, sale or lease of the property on the basis of race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In Deeds: "The grantee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to 19 hbrocchoopa 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, his heirs, executors, administrators and assigns, and all persons claiming under or through him, 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 race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall the lessee himself, or any person claiming under or through him, 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 land 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, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the lessees, subtenants, sublessees or vendees of the land." 5.7 Effect and Duration of Covenants. The Participant has, concurrently with the execution of this Agreement, executed in recordable form the Regulatory Agreement. Every covenant and condition and restriction contained in the Regulatory Agreement shall remain in effect for sixty (60) years, from the Effective Date of this Agreement (regardless of whether the Agency Loan has been repaid prior to the end of such 60-year period), except that the covenants against discrimination set forth in Sections 5.5 and 5.6 shall remain in effect in perpetuity. If, at the end of the 60-year period, an unpaid balance remains on the Agency Loan, Participant may choose to do either of the following: (a) Participant may choose to continue to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in which case the Agency shall not require repayment of the balance of the Agency Loan and such loan shall not accrue any interest for the period during which said covenants, conditions and restrictions are maintained; or(b) Participant may choose not to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in which case the entire principal balance of the plus all accrued interest on the Agency Loan shall immediately become due and payable. 5.8 Creation of Capital Reserve Accounts. No later than thirty (30) days after the Close of Escrow, Participant shall create a "Capital Reserve Account". No later than thirty (30) days after the Capital Reserve Account has been created, Participant shall provide to Agency a pro forma statement concerning the account, for Agency's review and approval. At any time thereafter during the term of this Agreement, Agency, on ten(10) days prior written notice to Participant, may request that Participant submit to it updated,revised Capital Reserve Account statement. Agency, at its own expense, may audit any updated, revised Capital Reserve Account statement submitted to it by Participant. 20 Wocch6opa 5.9 Capital Reserves. Commencing on September 5, 2001 and every succeeding year during the term of this Agreement, Participant shall deposit ONE THOUSAND TWO HUNDRED DOLLARS (S 1,200.00) or FIFTY PERCENT (50%) of Participant's Net Operating Income (defined below), whichever amount is less, into the Capital Reserve Account for repairs to the Site. The Capital Reserve Account shall at all times be maintained at a level sufficient to adequately fund the cost of all repairs and improvements to the Site and to maintain the Site in compliance with the requirements of Section 5.4. Should Participant believe Project revenues to be insufficient to permit Participant to make such a full deposit in any year, Participant may appeal to the Agency to have the payment reduced, suspended, renegotiated, or forgiven. Participant shall carry the burden of proof in this regard. Agency shall have the unfettered discretion to reduce, suspend, renegotiate, or forgive the payment based on the evidence submitted by Participant. 5.10 Payment of Portion of Residual Receipts. (a) Payment to Agency. Commencing on September 5, 2003, and every succeeding year during the term of this Agreement, Participant shall pay to the Agency ONE THOUSAND TWO HUNDRED DOLLARS ($1,200.00) or FIFTY PERCENT (50%) of Net Operating Income for the previous one-year period, whichever amount is less, for repayment of the Agency Note. Should Participant believe the Project revenues be insufficient to permit Participant to make such a payment in any year, Participant may appeal to the Agency to have the payment reduced, suspended, renegotiated, or forgiven. Participant shall carry the burden of proof in this regard. Agency shall have the unfettered discretion to reduce, suspend, renegotiate, or forgive the payment based on the evidence submitted by the Participant. If a payment is required by Participant pursuant to the terms hereof, Participant shall make such payment no later than ninety (90) days following the end of the reporting year(calendar year or fiscal year). If the first or final payment is based on a portion of a year, the payment shall be pro rats based on a 360-day year. (b) Definition of Net Operating Income. As used herein, the term "Net Operating Income" shall mean, for any reporting period (calendar year or fiscal year), (a) all income derived by Participant from the Site, including without limitation all tenant rent, less (i) payments of principal and interest, if any, required to be paid in such year by Participant with respect to any note, mortgage, or deed of trust with respect to the Site or Project, (ii) all expenses actually incurred(or to be incurred if accounted for on an accrual basis) by Participant in leasing, managing, operating, maintaining, and repairing the Site, (iii) all capital expenses incurred pertaining to the Site; (iv) the deposits into the Capital Reserve Account; and (v) property management fees, administrative costs, salaries, benefits, overhead costs, and such other and further operating and management expenses incurred in operating the Site. Depreciation expenses shall not be a reduction against Net Operating Income. 5.11 Financial Statements. Participant shall submit to Agency, on a yearly basis, a true and correct copy of Participant's audited financial statements for the Project clearly identifying the status of the Project's operating reserve account and cash flow. Before such statements are submitted to Agency, they should (but are not required to)be reviewed and certified by Participant's Board of Directors. After receipt of Participant's audited financial statements for the Project, Agency may request additional financial analyses or obtain a third party review of Participant's financial statements for the Project to verify the accuracy of Participant's payments made to the 21 Wocch6opa Agency pursuant to Section 5.10 or the deposits by Participant into the Capital Reserve Account pursuant to Section 5.9_ 5.12 Operation of Project. Borrower shall lease, operate and manage the Project in full conformance with the terms of the OPA and specifically the Regulatory Agreement. Further, all of the Units in the Project shall be designated as HOME Units and the rents for these units shall not exceed the "low income" rent defined by the HOME Program, as set forth at Section 92.252 of Title 24 of the Code of Federal Regulations. As stated in Section 3.5(b), prior to close of Escrow, for the purposes of operating and managing the Project, Participant, subject to the Agency's review and approval, shall have contributed THIRTY THOUSAND DOLLARS (S30,000.00) in equity cash, or rehabilitation labor with a reasonable value of THIRTY THOUSAND DOLLARS (S30,000.00), or strictly defined and quantifiable services with a reasonable value of THIRTY THOUSAND DOLLARS ($30,000.00). Not later than sixty (60) days after close of Escrow, Participant shall submit to Agency, for Agency's review and approval, an annual budget outlining each proposed service to be offered by Participant in operating and managing the Project, and the anticipated cost of each such service. The first such proposed budget shall cover the period from the close of Escrow to the beginning of the second year of the term of this Agreement. Not later than sixty (60) days after the beginning of the second year of the term of this Agreement, and for every year thereafter during this Agreement's term, Participant shall submit an annual, proposed budget to Agency, for the latter's review and approval. 5.13 Lead-Based Paint. Borrower shall ensure that it and its contractors and subcontractors shall not use lead-based paint in the construction or maintenance of the Property. Borrower shall insert this provision in all contracts and subcontracts for work performed on the Project which involve the application of plaint. Borrower will test both properties for the presence of lead-based paint as required by HUD regulations. Borrower will furnish copies of test results to Lender. Borrower will remediate any asbestos or lead-based paint hazards where the level of that substance is found to be in excess of acceptable thresholds. 5.14 Barriers to the Disabled. Borrower shall ensure that the Project shall be developed and the Property shall be maintained to comply with all applicable federal state, and local requirements for access for disabled persons. SECTION 6. DEFAULTS AND REMEDIES. 6.1 Participant Defaults. The occurrence of any one or more of the following events shall constitute a "Material Default" by Participant hereunder if, after receiving written notice from Agency as provided in Section 6.3 below identifying such event, Participant fails to cure said event within thirty (30) days; provided that if such default is not reasonably capable of being cured within thirty (30) days, Participant commences to cure said event within thirty (30) days and diligently and in good faith continues to cure the event of default: (a) Participant has failed to Close Escrow to acquire fee title to the Site within sixty(60) days after the time set forth in the Schedule of Performance; 22 hb%occhclopa (b) Participant fails to observe or perform any material term of this Agreement or any agreement incorporated hereunder by reference including, but not limited to, the Regulatory Agreement, the Note, the Deed of Trust, or the Subordination Agreement (if applicable), within the time set forth in this Agreement or any of the documents referred to herein; or (c) Participant knowingly and intentionally makes or delivers to Agency any statement, report, or certificate that is not true or correct in any material respect. In no event shall Agency be precluded from exercising remedies if the default is not cured within ninety (90) days, or Agency's rights under this Agreement becomes or is about to become materially jeopardized by any failure to cure a default. 6.2 Agency Defaults. The occurrence of any one or more of the following events shall constitute a "Material Default" by Agency hereunder if, after receiving written notice from Participant as provided in Section 6.3 below identifying such event, Agency fails to cure said event within thirty (30) days; provided that if such default is not reasonably capable of being cured within thirty (30) days, Agency commences to cure said event within thirty (30) days and diligently and in good faith continues to cure the event of default: (a) Agency fails to observe or perform any material term of this Agreement within the time set forth in this Agreement, including but not limited to timely deposit into Escrow of the required portion of Agency Loan funds; or (b) Agency knowingly and intentionally makes or delivers to Participant any statement, report,or certificate that is not true or correct in any material respect. In no event shall Participant be precluded from exercising remedies if the default is not cured within ninety (90) days, or Participant's rights under this Agreement becomes or is about to become materially jeopardized by any failure to cure a default. 6.3 Notice of Default. The non-defaulting party shall give written notice of any default under this Section to the defaulting party, clearly specifying the default. Copies of any notice of default given to the defaulting party shall also be given to any permitted lender requesting such notice. Any failure or delay in giving such notice or in asserting any of either party's rights and remedies as to any default shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it deprive either party of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 6.4 Agency's Remedies. (a) The Agency, at its option, may terminate this Agreement prior to the Close of Escrow in the event of any Material Default that the Participant fails to cure within the time set forth in Section 6.1 (subject to the right of notice and expiration of applicable cure periods). (b) Following the Close of Escrow, in the event of any Material Default that the Participant fails to cure within the time set forth in Section 6.1 (subject to the right of notice and 23 W%occhOopa expiration of applicable cure periods), the entire principal balance of the Agency Loan including all interest shall immediately become due and payable, and Agency shall have the option to: (a) demand full payment of the principal balance of the Agency Loan including all interest; (b) take over ownership and management of the Site; or (c) foreclose on the site under the Agency Deed of trust. 6.5 Participant's Remedies. Subject to any applicable cure periods and the general right to notice provided for in this Agreement, upon a default or breach of this Agreement by Agency, Participant may bring an action for specific performance of this Agreement or any term or provision hereof, or may terminate this Agreement. Participant may not sue for monetary damages. 6.6 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties hereto are cumulative, and the exercise by any parry of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party. SECTION 7. GENERAL PROVISIONS. 7.1 Participant's Warranties. Participant represents and warrants (1) that it has access to professional advice and support to the extent necessary to enable Participant to fully comply with the terms of this Agreement; (2) that it is duly organized, validly existing and in good standing under the laws of the State of Califomia; (3) that it has the full power and authority to undertake the Project and to execute this Agreement; (4) that the persons executing and delivery this Agreement are authorized to execute and deliver such documents on behalf of Participant; (5) except as disclosed to the Agency in writing, there are no actions or proceedings pending or, to the best of the Participant's knowledge, threatened against the Participant before any court or administrative agency in any way connected with the Site or the Project which could adversely affect the Participant's ability to perform the activities contemplated hereunder; (6) neither this Agreement nor anything provided to be done hereunder violates or shall violate any contract, agreement or instrument to which the Participant is a parry or which affects the Project or any part thereof; (7) the Participant is not in default in respect of any of its obligations or liabilities pertaining to this Agreement, nor is there any state of facts or circumstances or conditions or events which, after notice, lapse of time, or both, would constitute or result in any such default under this Agreement; and, (9) the Participant has not entered into any agreements which will adversely affect the title to the Project or the Participant's right to develop and use the Project as provided in this Agreement, and the Participant will not enter into any such agreements after the date hereof. 7.2 Governing. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 7.3 Attorneys' Fees. In the event of litigation between the parties arising out of this Agreement each parry shall bear its own attorneys' fees,and other costs. 7.4 Notices Demands and Communications Between the Parties. Fom;al notices, demands, and communications between Agency and Participant shall be sufficiently given if: (i) 24 htrlocchc`.ops personally delivered; (h) delivered by same day or overnight courier (acknowledged by receipt showing date and time of delivery); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the addresses set forth below: If to Participant: Orange County Community Housing Corporation 1833 East 17'' St., Suite 207 Santa Ana,CA 92705 Attn: Allen Baldwin, Executive Director If to Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Executive Director Notices personally delivered or delivered by courier shall be effective shall be effective upon receipt or refusal to accept delivery. Mailed notices shall be effective on the earlier of(1) receipt of refusal to accept delivery, or (ii) noon on the second business day following deposit in the United States mail. 7.5 Acceptance of Service of Process. In the event that any legal action is commenced by Participant against Agency, service of process on Agency shall be made by personal service upon Executive Director or the Secretary of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Participant, service of process on Participant shall be made by in any manner provided by law, and shall be valid whether made within or without the State of California. 7.6 Conflicts of Interest. No member,official, or employee of Agency shall have any personal interest in this Agreement, nor participate in any decision relating to this Agreement, that is in violation of any applicable law, regulation or ordinance. 7.7 Titles and Captions. Titles and captions are for convenience only and shall not be construed to limit or extend the meaning of this Agreement. 7.8 Gender. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others wherever and whenever the context so dictates. 7.9 Modifications. Any amendment, alteration, change, or modification of or to this Agreement, in order to become effective, shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of each party hereto. 7.10 Merger of Prior Agreements and Understandings. This Agreement and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, including but not limited to that certain "Project 25 hblocchc`:opa Deal Points" Memorandum approved by Participant and the Agency and/or City Council of the City of Huntington Beach, are merged herein and shall be of no further force or effect. 7.11 No Third Parties Benefited. Other than the general and limited partners of Participant, this Agreement shall create no third-party beneficiary rights or any other rights in favor of any persons, firms or corporations, except as may be expressly stated in this Agreement. This Agreement is for the sole use and benefit of the parties hereto and is not for the use or benefit of any other person or entity. 7.12 Assurances to Act in Good Faith. Participant and Agency each agree to execute all documents and instruments and to take all action, including timely depositing funds as required hereby, and shall use their respective best efforts to accomplish the rehabilitation of the Site in accordance with the provisions hereof. 7.13 Warranty Against Payment of Consideration for Agreement. Except as provided in this Agreement, Participant warrants that it has not paid or given, and will not pay or give, any person any money or other consideration for obtaining this Agreement that is in violation of any law. 7.14 Nonliability of Agency Officials and Employees. No member, official, or employee of the Agency shall be personally liable to the Participant or any successor in interest, in the event of any default or breach by the Agency or for any amount which may become due to the Participant or to its successor, or on any obligations under the terms of this Agreement. 7.15 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. 7.16 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 7.17 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If, however, any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 7.18 Extension of Times of Performance. Notwithstanding the foregoing, in addition to the specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default during an event of Force Majeure. An extension of time for an event of Force Majeure shall be limited to the penod of such event, and shall commence to run from the time of the commencement of the cause, provided notice by the party claiming such extension is sent to the other party within sixty (60) days of the commencement of the cause. In the event of such delay, the party delayed shall continue to exercise reasonable diligence to minimize the period of 26 W,.occhoopa delay. Times of performance under this Agreement may also be extended by mutual written agreement by Agency and Participant. In addition, the Executive Director shall have the authority on behalf of Agency to approve extensions of time not to exceed a cumulative total of one (1) year. 7.19 Inspection of Books and Records. The Agency or its designee has the right at all reasonable times to inspect the books, records, and/or other documents of the Participant pertaining to the Site and/or the Project as pertinent to the purposes of this Agreement. 7.20 Waivers. The waiver by Agency or Participant of any term, covenant, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. SECTION 8. EXECUTION OF AGREEMENT; TIME FOR ACCEPTANCE This Agreement consists of twenty-eight (28) pages and ten (10) attachments which constitute the entire understanding and agreement of the parties. This Agreement does not take effect until executed by the Participant and Agency. This Agreement, when executed by the Participant and delivered to the Agency, must be authorized, executed and delivered by the Agency within thirty (30) days after the date of signature by the Participant, or this Agreement may be terminated by the Participant on written notice to the Agency. The Agency Executive Director is hereby authorized and directed to take such other and further actions, and sign such other and further agreements and documents on behalf of the Agency as may be necessary or proper to effect the terms of the Owner Participation Agreement on behalf of the Agency. [end- signature page follows) 27 Wocch0ops i IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic Ck— By. L Chairman ATTEST: By: G� Agency Clerk y_�q_ !�� REVIEWED AND APPROVED AS TO FORM: Agency General Counsel By- APPROVED AS TO FORM: Kane, Ballmer& Berkman By: 0 �w-----�- Murray O. Kane "PARTICIPANT" ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit corporation By: 12, Mkay. B in Executive Director 28 Wocch6opa EXHIBIT A Legal Description [behind this page] Legal Description of Property Commonly Known As 17411 and 17421 Koledo Lane Huntington Beach, California 92647 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CAUFOF.NIA, COUNTY OF ORANGE, CITY OF HUNTIZ`GTON.BEACH,DESC1uerDAS FOLLOWS' LOTS 5 AND 6 OF TRACT 4301,AS SHOWN ON A MAP RECORDED IN BOOK 177, PAGES I 1 AND 12 OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY EXCEPT ALL OIL, GAS, PETROLEUTM, ti'11NERALS AND OTHER HYDROCARBON SUBSTANCES IN, LN"DER ANDIOR THAT MAY BE PRODUCED BELOW A DEPTH OF 150 FEET FROM THE SLWACE OF SAID PROPERTY, OR ANY PART THEREOF, AS RESERVED N THE DEED FROM JOSEPH V MADDI~I1 AND WIFE TO JOSEPH GERALD MABEY AND OTHERS, DATED OCTOBER 13, 1950 AND RECORDED NOVEMBER 11. 1950, IN BOOK 2100, PAGE 411 OF OFFICIAL. RECORDS, RECORDS OF ORANGE COUNT)', CALIFORNIA, WHICH DEED FURTHER PROVIDES, THAT SUCH RESERVATIONS SHALL NOT ENTITLE THE SAID GRANTOR, THEIR HEIRS AND ASSIGNS, TO ANY USE OF, OR RIGHTS IN OR TO ANY PORTION OF THE SURFACE OF SAID PROPERTY TO A DEPTH OF 150 FEET BELOW THE SURFACE THEREOF ALSO EXCEPTING THERF.FROm ALL UNI) .RGROUND WATERS L)'TNG BE-NEATH THE REAL PROPERT'N' DESCRJBED HERE7N BUT WITHOUT THE RIGHT OF E�rIRY TO THE SURFACE OF SAID LAND_ OR THE TOP 500 FEET THE]'.EOF, FOR THE PURPOSE OF PRODUCING WATER. AS CONVEYED TO THE CITY OF HUNTINGTON BEACH, BY DEED RECORDED APRIL 17. 1963, TN BOOK 67511, PAGE 679 OF OFFICIAL_ RECORDS EXHIBIT B Site Map (behind this page) Site Map 17411 and 17421 Koledo Lane Huntington Beach, California 92647 111 {I I WARNER 1� riR DR. - r I •a►�eua eir7f■ l I1e,J 77en 11Iw Inez 'I'r - :I• El Y '! s7093 [rO/z J,OeI r 1,017 ;]p11 lBe: pm 1/:00 1'Ml l,efl filar 1]:m -1,sl I,nI vlea ` w I 1 l'l7l I11,1 71177 riJ is 1:1,1 17521 =t I=I' :nJr-rmr �jFWINBpW In.7 ,n.l (r oq aY L -- PARK CYPRESS AV `� F of Sid:31��� lit/ ln.e I lls J- � R I :_1=f� :ill] I 1`,,, ll.:. ,n., •r,.• llln j I'm 1101 •1]1N lll,l 011. 1114 `l 11317 i „lil = lilll J 1]],1 1T711 �4 1,7,7 I 1171, tlrss [r]cs r 11,17 I r7[ m 1:7.7 11771 CAN VIEW SCHOOL 1 l KRI TIN "=u �_j MANDRELL DR 11n1 l,ll, Z Wf241 OAK; Saw*+.pole 000 Q } Olul 1 l,nl BARTON DR. 111:1 � i 17300 1 1,171 1]Ill „]� tl%, lyre_ :,,t ITrI] ,7re1 trre7 ,1;]l llr -- f]I!7 l- 1ei I]1]7 I,.eJ 1I ISt li'.'1 lull MIA 11a11 p]R A hil is 7 p71: . tswt Z yi y 1i177 17.a I 1]u7 fM ]., lull 7 lt.11 J 1'4Il lls, lrut 1LN hail N1 11a:1 Z II•11 IAA liar! 174.1 IHa7 1]/17 17.1i 37 1,a 1, pm IF-31 sfaGs =r'u 1-a11 W] ,.at ti.a] teal Z 1,N7 tint N �l�t I]ai1 11a77 Q ? W ..l 7137 SLATER EXHIBIT C Scope of Development [behind this page) EXHIBIT "C" SCOPE OF DEVELOPMENT Participant's rehabilitation of two existing apartment buildings consisting of a total of ten (10) units located at 17411 and 17421 Koledo Lane in the City of Huntington Beach shall be undertaken as follows- I. The rehabilitation shall be in substantial conformance with the Approved Project Plans and Permits. In the event of any conflict between the description of the Project and rehabilitation work described in this Agreement and in the Approved Project Plans and Permits, the Approved Project Plans and Permits shall control. Notwithstanding the above, the rehabilitation of the Units shall result in Units meeting, at a minimum, federal housing quality standards as existing on the Effective Date of this Agreement; said standards are set forth at Title 24 of the Code of Federal Regulations, Section 982.401. Participant shall provide Agency with copies of all required permits under the City Municipal Code and proofs of City inspections. 2. Participant, prior to undertaking any work of rehabilitation on the Site (other than repairs immediately needed for habitability or removal of waste, debris, and general clean-up) shall submit to Agency for review and approval a rehabilitation work list that describes the nature and order of the rehabilitation work, including but not limited to, proposed repairs and improvements and planned cost and time schedules for such rehabilitation work. 3. Participant shall be responsible for testing and detecting the presence of asbestos and lead-based paint as required by HUD regulations or any applicable law. Participant shall also be responsible for remediating any asbestos and any lead-based paint where the levels of those substances are found to be in violation of HUD regulations or any applicable law. If Participant feels that remediation of asbestos and/or lead-based paint are too costly, it may request financial assistance from Agency. The decision to provide financial assistance, and the amount of such assistance, lie in the sole discretion of Agency. Copies of all test results, tenant notifications, and remediation plans shall be provided to the Agency or its authorized representatives or consultants. 4. Agency shall have the right to independently inspect the progress of the rehabilitation work, including both interiors and exteriors of the Units, upon forty-eight (48) hours prior notice to Participant; provided that such inspections shall not interfere with Participant's rehabilitation work. In this regard, Participant shall provide access to the Units to Agency 5. Subject to Section 4.2(a) of the OPA and the Schedule of Performance (Exhibit D of the OPA), Participant shall-complete the rehabilitation work within eighteen (18) months after the Closing Date; unless this time period is extended by the mutual written agreement of the parties. Scope of Development Page I of 1 HbWcc hclscope EXHIBIT D Schedule of Performance [behind this page] EXHIBIT "D" SCHEDULE OF PERFORMANCE ITEM OF PERFOR.►LANCE TIME FOR PERFORM ANCE REFERENCE 1 Participant and Agency each execute all documents Not later than twelve noon on the §3 4(b);§3.4(c). and deposit all documents and funds into Escrow as business day immediately prior to the required by this Agreement. scheduled Closing Date. 2. Closing Date. Not later than .2000 §3.4(a). 3. Participant obtains the Approved Project Plans and Within sixty(60)days after the §4.2(a)-(e) Permits for the Project and commences the Closing Date- rehabilitation work on the Site - 4. Participant submits a Management Plan to the Within sixty(60) days after the §4.4 of Agency_ Closing Date. Regulatory Agreement (Exhibit H) S. Participants completes the rehabilitation of the Site. Within eighteen(18)months after §4.2(i). commencement of the work. 6. Agency issues Release of Construction Covenants. Upon satisfactory completion by §4.7 Participant of the rehabilitation worst on the Site. It is understood that this Schedule of Performance is subject to all of the terms and conditions of the text of the Agreement. The summary of the items performance in this Schedule of Performance is not intended to supersede or modify the more complete description in the text; in the event of any conflict or inconsistency between this Schedule of Performance and the text of the Agreement,the text shall govern. The time periods set forth in this Schedule of Performance may be altered or amended only by written agreement signed by both the Participant and the Agency. The Executive Director of Agency shall have the authority to approve extensions of time without action of the Board of Directors of Agency not to exceed a cumulative total of one(1)year. Schedule of Performance Page 1 of I Wocchc'sop EXHIBIT E Release of Construction Covenants [behind this page) WHEN RECORDED RETURN TO: Orange County Community Housing Corporation 1833 East 17'' Street, Suite 207 Santa Ana, CA 92705 Attn: Allen Baldwin, Executive Director (Space Above This Line For Recorder's Office Use Only) RELEASE OF CONSTRUCTION COVENANTS WHEREAS, ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit corporation, ("Owner"), is the owner of the fee interest in that certain real property more particularly described in the legal description attached hereto as Exhibit No. l and incorporated herein(the "Site"); and WHEREAS, by an Owner Participation Agreement (hereinafter referred to as the "Agreement") dated as of September 5, , 2000, by and between Owner and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic (hereinafter referred to as "Agency"), Owner has constructed the improvements on the Site according to the terms and conditions of said Agreement; and WHEREAS, pursuant to the Agreement, promptly after satisfactory completion of all construction work by Owner upon the Site, Agency shall furnish Owner with a Release of Construction Covenants in such form as to permit it to be recorded in the Official Records of the County of Orange; and WHEREAS, the issuance by Agency of the Release of Construction Covenants shall be conclusive evidence that Owner has complied with the terms of the Agreement pertaining to the construction of improvements on the Site; and WHEREAS, Agency has conclusively determined that the construction of improvements on the Site has been satisfactorily completed as required by the Agreement; and NOW,THEREFORE: 1. As provided in the Agreement, Agency does hereby certify that construction of the improvements on the Site have been My and satisfactorily performed and completed, and that such development is in full compliance with said Agreement. 2. This Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of Owner to any holder of a mortgage, or any insurer of a Release of Construction Covenants Page I of 3 13bbcchc`,release mortgage, securing money loaned to finance construction work on the Site, or any part thereof. Nothing contained herein shall modify in any way any other provision of said Agreement. 3. This Release is not a Notice of Completion as referred to in California Civil Code Section 3093. IN WITNESS WHEREOF, Agency has executed this Release as of this 5th day of September, 2000 REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By: Its: ATTEST: Agency Clerk Release of Construction Covenants Page 2 of 3 CONSENT TO RECORDATION ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit corporation, owner of the fee interest in the Site legally described in Exhibit No. l attached hereto does hereby consent to the recordation of the foregoing Release of Construction Covenants against the Site. "OWNER" ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit corporation By: Allen P. Bald n cutive Dmector Release of Construction Covenants Page 3 of 3 . STATE OF CALIFORNIA ) ss. COUNTY OF ORA-NI GE ) On rovo, before me, ��,+��{,,�� �� _�f1er�.urr/ personally appeared A/lei f,9l&niir_ _ personally known to me (or proved to me on the basis of satisfactory evidence) to be the personal whose name($) is/aK subscribed to the within instrument and acknowledged to me that he/$h0Jfixj executed the same in his/A/tlxir authorized capacity(A, and that by his/Wr/tbeir signaturekO on the instrument the person or the entity upon behalf of which the person(wf acted, executed the instrument. Witness my hand and official seal. otary Public [SEAL] CHRWtW CLEARY _ O�t�r�sion 12it M OMW li0ioy i�1�t:-G1� STATE OF CALIFORNIA ) � C ss. Lq COUNTY OF ORANGE ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose names) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] EXHIBIT NO. 1 LEGAL DESCRIPTION OF SITE Legal Description of Property Commonly Known As 17411 and 17421 Koledo Lane Huntington Beach, California 92647 ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORN'IA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH,DESCRIBED AS FOLLOWS: LOTS 5 AND 6 OF TRACT 4301,AS SHOWN ON A MAP RECORDED N BOOK 177, PAGES I 1 AND 12 OF MISCELLANEOUS MAPS,RECORDS OF SAID COUNTY. EXCEPT ALL OIL, GAS, PETROLEUM, NID`ERALS AND OTHER HYDROCARBON SUBSTANCES IN, UNDER AND/OR THAT MAY BE PRODUCED BELOW A DEPTH OF 150 FEET FROM THE SURFACE OF SAID PROPERTY, OR ANY PART THEREOF, AS RESERVED IN THE DEED FROM JOSEPH V MADDEN AND WIFE TO ]OSEPH GERALD MABEY AND OTHERS, DATED OCTOBER 13, 19-50 AND RECORDED NOVEMBER 13, 1950, IN BOOK 2100, PAGE 411 OF OFFICIAL RECORDS, RECORDS OF ORANGE COUNTY, CALIFORNIA, WHICH DEED FURTHER PROVIDES, TI AT SUCH RESERVATIONS SHALL NOT EINTITLE THE SAID GRANTOR, THEIR HFIRS AND ASSIGNS,TO ANY USE OF, OR RIGHTS IN OR TO ANY PORTION OF THE SURFACE OF SAID PROPERTY TO A DEPTH OF 150 FEET BELOW THE SURFACE THEREOF. ALSO EXCEPTING THEREFROM ALL UNDERGROUND WATERS LYTi`G BENE.�TH THE REAL PROPERTY DESCRJBED HEREr-\ ELT WITHOUT THE RIGHT OF EN-TRY TO THE SURFACE OF SAID LAND OR THE TOP 500 FEET THEREOF. FOR THE PURPOSE OF PRODUCING WATER, AS CONVEYED TO THE CITY OF HUN°TINGTON BEACH, BY DEED RECORDED .=,PRIL 17. 1963, I`N BOOK 67511, PAGE 67Q OF OFFICIAL_ RJ:CORDS EXHIBIT E Promissory Note {behind this pagel PROMISSORY NOTE SECURED BY DEED OF TRUST WITH ASSIGNMENT OF RENTS AND RIDER ATTACHED THERETO DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing same, must be surrendered to Trustee for cancellation before reconveyance will be made. PROMISSORY NOTE SECURED BY DEED OF TRUST Principal Loan Amount. $570,000.00 Interest: 6% Note Date: September 5 " , 2000 FOR VALUE RECEIVED, the undersigned ("Maker") hereby promises to pay to the order of the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Holder"), at a place designated by Holder, the principal sum of FIVE HUNDRED SEVENTY THOUSAND DOLLARS AND NO CENTS ($570,000.00) at the rate of SIX PERCENT (6%) simple interest, or such lesser amount which shall from time to time be owing hereunder pursuant to the terms hereof,pursuant to an Owner Participation Agreement(the"OPA") dated as of September _ 5 , 2000 by and between Maker and Holder. The OPA is hereby incorporated by reference as though fully set forth herein. Any capitalized terms not defined herein shall have the meanings ascribed to them in the OPA. The obligation of the Maker to the Holder hereunder shall be secured by a deed of trust made by the Maker encumbering the Site to be developed (the "Site') pursuant to the OPA and the Deed of Trust and Assignment of Rents dated September 5 , 2000, executed by the Maker and recorded in the Recorder's Office of Orange County, California, on ammw 2-1, 2,C00 as Document No. 2oc-4)0 52o 110 (the "Deed of Trust'). The obligation of the Maker set forth in this Note is subject to acceleration as set forth in the OPA. The OPA and the Deed of Trust are public records on file in the offices of the Holder. l. Agency Loan. This Note evidences the obligation of the Maker to the Holder for the repayment of funds loaned to the Maker by the Holder (the "Agency Loan') to finance the acquisition and rehabilitation of the Site pursuant to the OPA. The Maker shall not make any sale, assignment or conveyance, or transfer in any other form, of the Site, or any part thereof, or interest therein without the express written consent of the Holder as set forth in Section 2.5 of the OPA. 2. Pa ent of Obligation. Commencing on September 5, 2003, and every succeeding year during the term of the OPA, Maker shall pay to the Holder ONE THOUSAND TWO HUNDRED DOLLARS ($1,200.00) or FIFTY PERCENT (501/6) of Net Operating Income Promissory Note Page l of 3 Wocchclnote for the previous one-year period, whichever amount is less, for repayment of this Note. Should Maker believe the Project revenues be insufficient to permit Maker to make such a payment in any year, Maker may appeal to the Holder to have the payment reduced, suspended, renegotiated, or forgiven. Maker shall carry the burden of proof in this regard. Holder shall have the unfettered discretion to reduce, suspend, renegotiate, or forgive the payment based on the evidence submitted by the Maker. All payments required by Maker pursuant to the terms hereof shall be made no later than ninety (90) days following the end of the reporting year (calendar year or fiscal year). If the first or final payment is based on a portion of a year, the payment shall be pro rata based on a 360- day year. Upon the forgiveness, waiver, and discharge of this Note as set forth above, Holder shall mark this Note "PAID 1N FULL" and shall the deliver this Note to the Trustee of the Subordinated Deed of Trust that secures this Note for the Trustee's delivery to Maker in conjunction with the reconveyance of the Deed of Trust. 3. Pre a ent. (a) Penalties. In the event Maker prepays the entire balance of this Note including all accrued interest within two years from the date of this Note, then Maker shall pay to Holder a prepayment penalty consisting of TWENTY-FIVE PERCENT (25%) of the original principal balance of this Note. In the event Maker prepays the entire balance of this Note including all accrued interest at any time after two years from the date of this Note, then there shall be no prepayment penalty. Notwithstanding any early repayment of this Note, the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement shall remain in full force and effect for the full 60-year term as specified therein. (b) Effect on Covenants. If, at the end of the 60-year term of the OPA, an unpaid balance remains on this Note, Maker may choose to do either of the following: (a) Maker may choose to continue to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in which case the Holder shall not require repayment of the balance of this Note and the loan shall not accrue any interest for the period during which said covenants, conditions and restrictions are maintained; or(b) Maker may choose not to maintain the covenants, conditions and restrictions imposed on the Site by the Regulatory Agreement, in which case the entire principal balance of the plus all accrued interest on this Note shall immediately become due and payable. 4. Acceleration of Obligation. Upon the occurrence of an uncured Material Default of Maker under this Note, the Deed of Trust or any obligation secured thereby (including the obligations in the OPA and the Regulatory Agreement), or in any other instrument now or hereafter securing the obligations evidenced hereby, then, and in any of such events, Holder may, at its option, declare this Note and all the obligations hereby evidenced that has not been forgiven, waived, and discharged pursuant to Section l above, to be immediately due and payable and collectible then or thereafter as Holder may elect, regardless of the date of maturity. 5. Default Interest. If any event occurs giving Holder the right to accelerate this Note pursuant to Section 4 above, the entire unpaid and unforgiven principal owing hereunder shall, as of Promissory Note Page 2 of 3 Wocch6note the date of such default, commence to accrue interest at a rate equal to two percentage points above the reference rate published by Bank of America N.A., or the maximum non-usurious interest rate permitted by law, whichever is less. 6. Collection Costs; Attorneys' Fees. if any attorney is engaged by Holder because of any event of an uncured Material Default under this Note or the Deed of Trust or to enforce any provision of either instrument, whether or not suit is filed hereon, Holder shall bear its own attorney's fees and costs. 7. SeverabilitY. The unenforceability or invalidity of any provision or provisions of this Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 8. Modifications. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by Maker and Holder. 9. U_sure. Notwithstanding any provision in this Note, Deed of Trust or other document securing same, the total liability for payment in the nature of interest shall not exceed the limit now imposed by applicable laws of the State of California. 10. Goveminiz Law. This Note has been executed and delivered by Maker in the State of California and is to be governed and construed in accordance with the laws thereof. IN WITNESS WHEREOF, Maker has executed this Note as of the date and year first above written. "HOLDER" ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit corporation By: _4(�_? �� All P. Baldwin Executive t c or Promissory Note Page 3 of 3 Hbbcchclnotc EXHIBIT G Subordinated Deed of Trust [behind this pagel 3 This document was electronically recorded by First American Title Insurance Company Order No. Escrow No. Recording Requested By Loan No. First American Title Insurance C mpany quested B WHEN RECORDED MAIL.TO: asurance 0 mpany Recorded in Official Records,County of Orange Gal L. Granville Clerk-Recorder Redevelopment Agency of the I�IIIII) ��� ������I111IIIIIIIIIilllilll�ll NO F E E City of Huntington Beach 2000 Main Street 20000520130 02:22pm 09/29/00 Huntington Beach,CA 92648 0.0 4 A 11 0.00 0..0000 0.00 00 0.00 0.00 0.00 0.00 0.00 Attu: Agerrey-Seeretary City Clerk SPACE ABOVE THIS LINE FOR RECORDER'S USE] EXEMPT FROM RECORDING FEE PER GOV.CODE§6I031 SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO NOTICE: THIS SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO CONTAINS A SUBORDINATION CLAUSE WHICH MAY RESULT IN YOUR SECURITY INTEREST IN THE PROPERTY BEING SUBJECT TO A LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. This DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO ("Deed of Trust"), made September 5 , 2000, between ORANGE COUNTY CON04UNITY HOUSING CORPORATION, a California nonprofit corporation,herein called TRUSTOR,whose address is 1833 East 17&Street,Suite 207,Santa Ana 92705;and THE CITY OF HUNTINGTON BEACH,a California corporation,herein called TRUSTEE,and REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic, herein called BENEFICIARY, WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, that property in the City of Huntington Beach, County of Orange,State of California,described as: SEE EXIHBIT"A"ATTACHED HERETO together with the rents,issues and profits thereof,subject,however,to the right,power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing(1)payment of the sum of FIVE HUNDRED SEVENTY THOUSAND DOLLARS($570,000.00)without interest thereon,according to the terms of that certain promissory note of even date herewith made by Trustor,payable to order of Beneficiary, and extensions or renewals thereof; (2)the performance of each agreement of Trustor incorporated by reference,or contained herein;and(3)payment of additional sums and interest thereon which may hereafter be loaned to Trustor,or his successors or assigns,when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust. To protect the security of this Deed of Trust,and with respect to the property above described,Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A,and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in Orange County September 17, 1964, and in all other counties September 18, 1964,in the book and at the page of Official Records in the office of the county recorder of the county where said property is located,noted below opposite the name of such county,namely: Subordinated Deed of Trust Page 1 of 7 Hbbcchc\dot COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Alameda 1288 556 Kings 858 713 Placer 1029 379 Sierra 38 187 Alpine 3 130.31 lake 437 110 Plumes 166 1307 Slskgou 506 762 Amador 133 438 t.asxn 192 367 Rt'ersrde 3778 347 Solana 1287 621 Bone 1330 513 t.os Angeles 1.3878 874 Sacramento 5039 124 Stuwma 2067 427 Calarens 185 338 Madero 911 136 San Benito 300 405 Stantslaus 1970 56 Colusa 323 391 Mann 1849 122 San Bernardino 6213 768 Sutter 655 595 ContnCotta 4684 1 Manposa 90 453 San Francrseu A-804 5% Tehama 457 193 Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108 Frrsm 5052 623 Mwoc 191 93 San Mateo 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbaro 2065 881 Ventura 2607 237 Humboldt 801 83 Monterey 357 239 Santa Clan 6626 664 Yolo 769 16 Impenal 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 399 693 lnyo 165 672 Ne.ada 363 94 Shasta 300 633 Kenn 3756 690 Orange 7182 18 San Diego SERIFS 5 Book 1964,Page 149774 shail inure to and bind the parties hereto, with respect to the property above described. Said agreements,terms and provisions contained in said subdivisions A anti B (identical in all counties, and printed on pages 3 and 4 hereof) -e by the within reference thereto, incorporated herein and made a pan of this Deed of Trust for all purposes as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law_ The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at his address hereinbefore set forth. NOTICE: THIS SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED HERETO CONTAINS A SUBORDINATION CLAUSE WHICH MAY RESULT IN YOUR SECURITY INTEREST IN THE PROPERTY BEING SUBJECT TO A LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. Signature ofTrustor 1 ORANGE COUNTY COMMUNITY HOUSING STATE OF CALIFORNIA I CORPORATION,a California nonprofit corporation COUNTY OF ORANGE 1 By: �— Men R BaIdw!h:-ExecutrMe Director On �i4 C10 before me, personally appeared personally (mown to me (or proved to me on the basis of satisfactory evidence) to be the person(d) whose nameso is/pt subscribed to the TI NE C within instrument and acknowledged to me that helsp iocy executed the C"RiSC on LEMY same in hlslbee/t4w authorized capacity(i�, and that by his/pom er/t sigrtaturrV on the instrument the person(p) or the entity upon behalf NOIty Nam'coomft of which the persons*acted,executed the instrument. cmrvv 0111wor IM'Cam.�ilesJt>n 141�D1 WrINI ESS my hand and official seal. Signature (This urn for official notantl snl) Subordinated Deed of Trust Page 2 of 7 Hb\occhc14ot GOVERNMENT CODE 27361 .7 1 CERTIFY UNDER PENALTY THAT THE NOTARY SEAL ON THE DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED READS AS FOLLOWS: NAME OF NOTARY: CHRISTINE CLEARY DATE COMMISSION EXPIRES: JANUARY 18, 2004 COUNTY WHERE BOND IS FILED: ORANGE COMMISSION NUMBER: 1250478 VENDOR NO: NNA1 PLACE OF EXECUTION: SANTA ANA, CALIFORNIA DATE: September 29, 2000 SIGNATURE: vv--� Z-, FIRST AMERICAN TIT E INSURANCE COMPANY DO NOT RECORD The foLow,ng is a copy of Subdniseons A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Taut as being a part thereof as if set forth at length therein. A To protect the security of[his Deed of Trust,Trustor agrees - 1) To keep said property in good condition and repair,not to remove or demolish any building thereon, to complete or restore promptly and in a good and workmanlike manner any budding which may be constructed,damaged or destroyed thereon and to pay when due all claims for labor performed and materials fum,shed therefor, [o comply with all laws affecting said property or requinng any alterations or irriprovements to be made thereon:not to commit or perwat waste thereof.not to commit.suffer or permit any act upon said property in violation of law,to cultivate,irrigate,fertilize,hL rt m igate,prune and do all other acts which from the character or use of said,roperry may be reasonably necessary.the specific enumerations herein not excluding the gerteral- 21 To provide,maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy rruy be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine.or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor 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- 3) To appear in and defend any action or proceeding purporting to affect the secunry hereof or the rights or powers of Beneficiary or Trustee.and W pay all costs and expenses,including cost of evidence of title urd attamey's fees in a reasonable sunk in any such action or proceeding in which Beneficiary or Trustee may appear,and in any suit brought by Beneficiary to foreclose this Deed- s) fo pay at least tin days before delinquency all taxes and assessments affecting said property,including assessments on appurtmant water stock;when due.all encumbrances,charges tied liens,with interest,an said property or any pan thereof,which appear to be prior or superior hereto;all costs,fees and expenses of this Trust Should Trustor fail to make any payment or to do any act as herein provided,then Beneficiary of Trustee.but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof,may make or do the same is such manniff and to such extent as either may deem necessary to protect the security hereof.Beneficiary or Trtutre being authorized to enter upon said property for such purposes;appeu in and defend any action or proceeding purporting to affect the security hereof or the tights or powers of Beneficiary or Trustee;pay,purchase,contest or compiromse any encumbrance,charge or lien which in the judgment of either appears to be prior or superior hereto.an4 in exercising any such powers,pay necessary expenses,empby counsel and pay his reasonable fees. 5) To pay invnediately and without demand all surns so expended by Beneficiary or Trustee,with interest from the date of expenditure at the amount allowed by law in effect at the date hereof,and to pay for any staternernt provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is datnrided. B it is mutually agreed: 1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and snail be paid to Beneficiary who may apply or release such moneys received by him in the suite manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby sftrr its due date.Beneficiary dots not waive his right either to require pmnpt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time,without liability therefor and without notice,upon written request of Beneficiary and presentation of this Deed and said note for endorsement,and without affecting the personal liability of any pawn for payment of the irtdebtrd:tet sticuaed hereby,Trustee may_rocativey any pan of said property,consent to the making of any nip or plat thereof;join in Swung any easement thereon,or join m any exteruton ageeerrtent or any Agreement subordinating the lien or charge hereof 4) That upon written request of Beneficiary staurig that all surrn secured hereby have been paid.And upon surrender of this Dodd and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole disemetion may choose and upon payment of its fees.Trustee shill reconvey,without warranty,the property then held hereunder. The recitals in such reconveyw= of any numm or beta shall be conclusive proof of the trutbhlm s thereof. The Grantee in such rrconveyarice may be destaibed As'the person or persons legally entitled thereto.' 5) That as additional security,Tnuror hereby gives to Arid confe'.rs upon Beneficiary the right,power and authority,during the continuance of these Tnuts,to collect the rents,issues and profits of said property,reserving unto Trwwr the right,prior to any default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder,w collect aid retain such rents,issues aid profits As they become due and payable. [Upon any such default,Beneficiary tiny at any time without notice,either in person,by agent,or be a receiver to be appointed by a ecium tend without regard to the adequacy of any security for the indebtedness hereby secured,enter upon and take possession of said property or any part thereof,in has own name sue for or otherwise collect stick renta,issues,and profits,including those put due and unpaid,and apply the same,less costs and expert=of operation tend collection,including reasonable attorneys fees,upon any ittdebtrdness srrciaed hereby,and in such order as Beneficiary may deterrnmine- The enwrmg upon and taking pouession of said property,the collecting of such rents,issues and profits and the application thereof as aforesaid,shall not ewe or waive any default or notice of default hereunder or invalidate any act done pursuant to stick notice. b) That upon default by Tnutor in payment of any indebtedness secured hereby or m the perfomnarm of any agreement hereunder.Berieficiary may declare all sums secured hereby ititmediately due and payable by delivery to Trustee of written declaration of default Arid demand for sale and of written notice of default and ofelecuoe to cause to be sold said property,which notice Truutee shall cause to be filed for record- Beneficiary also shall deposit with Trustee this Deed.said note and all documents evidencing expenditures secured hereby. After the lapse of such time u may then be required by taw foltowing the recordation of said notice of default,And notice of sale having been given as the„ required by law.Trustee,without demand on Trustor,shall sell said property at the time aid place fixed by it in said notice of sale,either as a whole or in separate parcels. and in such order as it may dctemrm+e,at public aucban to the highest bidder for cash in lawful money of the United States,payable at time of sale. Trustee may postpone sale of all or any pomon of said property by public annowramrent at such time and place of sale,end fiom time to time thereafter may postpone such We 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 recitals in such deed of any amsea or facts shall be coriclustve proof of the truthftulnim thereof. Any person,including Trustor,Trustee. or Beneficiary as hereinafter defined.may pwehme at such sale. Subordinated Deed of Trust Page 3 of 7 Hblocchc'4ot • After deducting all costs. fees and expenses of Trustee and of this Trust, including cast of evidence of title in connection with sale. Trustee shall apply the proceeds of sale to payrnxrtt of all sutras expended under the terms hereof,not then mpard,with accrued interest at the amount allowed by iaw in effect at the date hereof.all other sums then secured hereby.and the remainder,if any.to the person or persons legally entitled thert!o_ 7) Beneficiary,or any,uccessor to ow-nershrp of any indebtedness secured hereby,may from time to time.by instrument in writing,substitute a successor or successors to any Trustee named herein or acting hereunder•w hrch instrument,executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties whert said proper'is situated shall be conclusive proof of proper substitution of such successor Trustee or Trustees.who shall,without conveyance from the Trustee predecessor.succeed to all its title,estate_rights.powers and duties- Said instrument must contain the name of the ungtnal Trustor.Trustee anti Beneficiary hereunder,the book and page where this Peed is recorded and the name and addreis Of:hc new Trustee - 3) That this Deed 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 picdgees.of the note secured hereby,whether or not named as Beneficiary hcmtn_ in this Peed whenc,cl the context so requires.the masculine gender includes the feminine and'or neuter•and the singular number includes the plural_ 9) That Trustee accepts tits Trust when this Peed 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 peed of Trust or of any action or proceeding in which Trustor,Beneficiary or Trustee shall be a panty unless brought by Trustee- DO NOT RECORD REQUEST FOR FULL RECONVEYANCE TO TRUSTEE: The undersigned is the legal owner and holder of the note or rotes and of all indebtedness secured by the foregoing Deed of Trust Stud note or notes,together with all other indebtedness secured by said Deed of Trust,have been fully paid and satisfied;and you arc hereby requested and directed,on payment to you of any stuns owing to you under the tennis of said Deed of Trust,to cancel said note or notes above mentioned,an all other evidences of indebtedness secured by said Deed of Tnut delivered to you hettwrth,together with the said Deed of Taut,and to reconvey.without warranty,to the parties designated by the terms of said Deed of TnuL all the estate now held by you under the same. Dated Please mail Deed of Trust, Note and Reconveyance to Do Not lose or destroy this Deed of Trust OR TH£ NOTE which It secures, Both must be delivered to the Trustee for cancellation before reconveyance will be made. Subordinated Deed of Trust Page 4 of 7 lHbbcchOdol DEED OF TRUST WITH ASSIGNMENT OF RENTS WITH RIDER ATTACHED CITY OF HUNTINGTON BEACH A California municipal corporation TRUSTEE Subordinated Deed of Trust Page 5 of 7 Wocch6dot RIDER TO SUBORDINATED DEED OF TRUST WITH ASSIGNMENT OF RENTS THIS RIDER TO SUBORDINATED DEED OF TRUST WITH RIDER ATTACHED ("Rider"), is made as of September 5 , 2000, by ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit corporation ("Trustor"), and REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Beneficiary"), as follows: 1. Part of Deed of Trust. This Rider is made a part of that certain Subordinated Deed of Trust With Assignment of Rents ("Deed of Trust"), of even date hereof, to which this Rider is attached. 2. Conflict. In the event of any conflict between the terms of this Rider and the terms of the Deed of Trust, the terms of this Rider shall control. 3. Priority; Subordination. Trustor and Beneficiary entered into that certain Owner Participation Agreement, dated September 5 , 2000 (the "OPA"), pursuant to which Beneficiary (named the "Agency" in the OPA) agreed to subordinate this Deed of Trust to the liens of the deeds of trust identified in the OPA as the Conventional Lender's deed of trust, and to such other and further documents as such lenders may be required including but not limited to regulatory agreements, not to exceed an indebtedness in an amount to be determined by the Beneficiary. The lien of this Deed of Trust therefore shall be junior and subordinate to the lien of the foregoing listed deed of trust and such other and further documents as such lenders may require. Beneficiary agrees to execute such subordination agreements, in the form attached as Exhibit 'J" to the OPA, as are necessary to effect such subordination of the lien of this Deed of Trust. 4. Condemnation. Section B.1 of the Fictitious Deed of Trust incorporated into the Deed of Trust shall be modified to provide that Beneficiary shall not be entitled to any awards or damages payable directly or indirectly by reason of a condemnation or proposed condemnation affecting all or any part of, or any interest in, the Property, brought by or pursuant to the direction of Beneficiary. 5. Default. The term "default" as used in the Deed of Trust shall mean a "Material Default" as defined in the OPA or Regulatory Agreement. IN WITNESS WHEREOF, Trustor and Beneficiary have executed this Rider to Subordinated Deed of Trust With Assignment of Rents as of the date of Trustor's acknowledgment hereinbelow,to be effective for all purposes as of the day and year fust set forth above. [end—signature page follows] Subordinated Deed of Trust Page 6 of 7 Hb\occttc\dot "PARTICIPANT" ORANGE COUNTY COMMUNITY HOUSING CORPORATION a California nonprofit corporation By: Allen P Bald Executive irector "BENEFICIARY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic B : 14 Chairman &= ATTEST: By�.ix.we� Agency Clerk REVIEWED AND APPROVED AS TO FORM: Agency General Counsel By: ?-c P APPROVED AS TO FORM: Kane, Ballmer& Berkman By: ©, aw-'- Murray OVKane Subordinated Deed of Trust Page 7 of 7 Wocchcldat STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On sago before me, & personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(21 whose name(s) is/pre subscribed to the within instrument and acknowledged to me that he/sWAky executed the same in his/ber/fir authorized capacity(Leg), and that by his4xt/tbefr signatureks} on the instrument the person() or the entity upon behalf of which the person($) acted, executed the instrument. Witness my hand and official seal. 2:Z�- eze449�'— Notary Public [SEAL] CHRMNE CLEAM canwftoon a 12SOM CFWQB Couft STATE OF CALIFORNIA } Q�M`CO' ' �4 } ss. COUNTY OF ORANGE } On �T,Z OOD , before me, n&L•,v personally appeared personally known to me (or prow o me on the basis of satisfactory evidence) to be the person(s) whose name(s) jeare subscribed to the within instrument and acknowledged to me that .helA►s/they executed the same in b4ha/their authorized capacity(ies), and that by his�/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] CHRISTINE CIEAM Cauwnksion•121M INofty Kok-Cmuwt4 00ras Cam* My t,.anxn.F��Jan 1L� EXHIBIT "A" TO DEED OF TRUST LEGAL DESCRIPTION OF REAL PROPERTY Legal Description of Property Commonly Known As 17411 and 17421 Koledo Lane Huntington Beach, California 92647 ALL THAT CERTAM i,AND SITUATED [N THE STATE OF CAUFOFNIA. COUNTY OF ORANGIr, CITY OF HUN-nNGTON BEACH,DESCM8M- AS FOLLOW'S LOTS 5 AND 6 OF TRACT 4301,AS SHOWN ON A MAP RECORDED IN BOOK 177, PAGES 11 AND 12 OF MISCELLANEOUS MAPS,RECORDS OF SAID COUNTY_ EXCEPT ALL OIL, GAS, PETROLET-rM, NCNERALS AND OTHER HYDROCARBON SUBSTANCES IN, LN'DE . AND/OR THAT MAY BE PRODUCED BELOW A DEPTH OF 150 FEET FROM THE SURFACE OF SAID PROPERTY. OR ANY PART THEREOF, AS RESERVED 11N, THE DEED FROM IOSEPH V- MADDENT AND «'IFE TO IOSEPH GERALD MABEY AND OTHERS, DATED OCTOBER 13, 1950 AND RECORDED NOVENIBER 13, 1950, IN BOOK 2100. PAGE 411 OF OFFICIAL RECORDS, RECORDS OF ORANGE COL?'n , CALIFORNIA, wHI01 DEED FURTHER PROVIDES, THAT SUCH RESERVATIONS SHALL NOT ENTITLE THE SAID GRANTOR., THEIR HEIRS AND ASSIGNS, TO ANY USE OF, OR RIGHTS [Id OR TO ANY PORTION OF THE SURFACE OF SAID PROPERTY TO A DEPTH OF 150 FEET BELOW THE SURFACE THEREOF ALSO EXCFPTI'N-G THEREFROM ALL LJIND1 RGROLND WATERS Ll7NG BENEATH THE REAL PROPERTY DESCRIBED HEREIN BUT WITHOUT THE RIGHT OF k�'TRY TO THE SURFACE OF SAID LAND- OR THE TOP 500 FEET THEREOF, FOR THE ?URPOSE OF PRODUCING WATER, AS CONVEYED TO THE CITY OF HUNTINGTON BEACH, BY DEED RECORDED APRIL i7. i963, IN BOOK 67511, PAGE 679 OF OFFICIAL RECORDS. EXHIBIT H Regulatory Agreement (behind this page) �j This document was electronically recorded by • . Recording Requested By First American Title Insurance Company First American Title Insurance Company Requested By FREE RECORDING REQUESTED BY ,Insurance Company AND WHEN RECORDED MAIL TO: 3TED BY Recorded in Official Records,County of Orange REDEVELOPMENT AGENCY OF THE A1L TO: Gal L. Graiville Clerk-Recorder CITY OF HUNTINGTON BEACH 'Y OF THEill in��IIII1 hill lI,I 110111111111 NO F E E 2000 Main Street ACH 20000520132 02:22pm 09/29/00 Huntington Beach, CA 92648 105 4 Al2 16 Ate: -E-cecative-Birectorr City Clerk , clerk 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee Per Gov. Code§6103) REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS ("Agreement") is made and entered into this 5th day of September, 2000, by and between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency") and ORANGE COUNTY COMMUNITY HOUSING CORPORATION,a California nonprofit corporation("Participant"). RECITALS: A. Agency and Participant have entered into that certain Owner Participation Agreement, dated September 5 , 2000 (the "OPA"), concerning Participant's redevelopment of that certain real property, owned in fee by Participant, more particularly described in Attachment No. 1 attached hereto and incorporated by reference herein (the "Site"). The OPA describes the "Project" which generally consists of Participant's rehabilitation of two existing apartment buildings consisting of a total of ten (10) two-bedroom Units on the Site and subsequent management thereof as an affordable rental housing complex. The OPA is hereby incorporated herein by this reference as though fully set forth herein. Any capitalized terms not defined herein shall have the meanings ascribed to such terms in the OPA. B. Participant has executed that certain promissory note (the "Note") dated September 5774, 2000, pursuant to which Agency has provided Participant with a loan in the principal amount of FIVE HUNDRED SEVENTY THOUSAND DOLLARS ($570,000.00) ("Loan Amount"). The Note is secured by a Subordinated Deed of Trust With Assignment of Rents With Rider Attached dated on or about the date of the Note. C. Agency and Participant now desire to place restrictions upon the use and operation of the Project, in order to ensure that the Project shall be operated continuously as an affordable housing project available for rental in accordance with the terns set forth below for the term of this Agreement. Wocch6covs Regulatory Agreement Page 1 of 12 AGREEMENT: NOW, THEREFORE, the Participant and Agency declare, covenant and agree, by and for themselves, their heirs, executors, administrators and assigns, and all persons claiming under or through them, that the Site, for the term of this Agreement, shall be held, transferred, encumbered, used, sold, conveyed, leased and occupied, subject to the covenants and restrictions hereinafter set forth: 1. DEFINITIONS. 1.1 Affordable Rent. As used in this Agreement, the term "Affordable Rent" shall mean rental rates not to exceed "very low income" rent as defined by California Health & Safety Code Section 50053, or its successor, and as set forth by the HOME Program in 24 C.F.R. 92.252, or its successor. 1.2 Eligible Tenant. As used in this Agreement, the term "Eligible Tenant" shall refer to Eligible Very Low Income Tenants who are eligible to rent a Unit. 1.3 Eligible Very Low Income Tenant. As used in this Agreement, the term "Eligible Very Low Income Tenant" shall mean a family or individual whose annual income does not exceed fifty percent (50%) of the median income for the Orange County Metropolitan Statistical Area as determined by the U.S. Department of Housing and Urban Development(HUD)with adjustments for smaller and larger families. 1.4 Orange County Median Income. For purposes of this Agreement, the term "Orange County Median Income" shall mean the median income for the Orange County Primary Metropolitan Statistical Area, with adjustments for household size, as determined from time to time by HUD pursuant to the United States Housing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with said Act. 1.5 Unit and Units. As used in this Agreement, the term "Unit" shall mean one of the ten (10) rental dwelling units in the Project, and the term "Units" shall mean two or more of the ten (10) rental dwelling units in the Project. The term "Unit" and "Units" shall be used as the context mandates and shall be reasonably interpreted in light of the context in which the term appears. 2. TERM OF AGREEMENT; RESIDENTIAL RENTAL PROPERTY. The term of this Agreement shall be sixty (60) years from the Effective Date of the OPA. Participant hereby agrees that the Project is to be owned, managed, and operated as a project for Eligible Tenants for the term of this Agreement. To that end, and for the term of this Agreement, the Participant hereby represents, covenants, warrants and agrees as follows: 2.1 Dmse. The Site will be acquired and the Project developed for the purpose of providing Eligible Tenants rental housing. Wocch0covs Regulatory Agreement Flap 2of12 1 2.2 Facilities. All of the Units in the Project shall contain facilities adequate for living, sleeping, eating, cooking and sanitation in accordance with all applicable federal, state and local laves and codes. 2.3 Residential Use. None of the Units in the Project will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park without the Agency's prior written consent. 2.4 Maximum Occu ane . The maximum number of persons in a household that may occupy any of the two-bedroom Units may not exceed five persons. 2.5 Conversion of Units. No part of the Project will at any time be owned by a cooperative housing corporation, nor shall the Participant take any steps in connection with the conversion to such ownership or uses to condominiums, or to any other form of ownership, without the prior written approval of Agency. 2.6 Preference to Eligible Tenants. All of the Units will be made available for rental in accordance with the terms of this Agreement, and the Participant shall not give preference to any particular class or group in renting the Units in the Project, except to the extent that the Units are required to be leased or rented to Eligible Tenants and except as provided in Section 3.3 below. 2.7 Liability of Participant. Participant and the management agent shall not incur any liability under this Agreement as a result of fraud or negligent or intentional misrepresentation by a tenant. 3. OCCUPANCY OF PROJECT BY ELIGIBLE TENANTS. Participant hereby represents, warrants, and covenants as follows: 3.1 Income Restrictions. Except as expressly provided herein, throughout the term of this Agreement, the ten (10) Units shall be rented only to Eligible Very Low Income Tenants. All ten (10) Units shall be rented at rates not to exceed "very low income" rent as defined by California Health & Safety Code Section 50053 and the HOME Program (24 C.F.R. 92.252). 3.2 Rental Rates. Participant shall rent the Units in accordance with the following rental rates, adjusted to subtract the amount of any tenant paid utilities: (a) Two (2) of the Units shall be rented to Eligible Tenants at thirty percent(30%)of such each such Eligible Tenant's monthly adjusted income; (b) Eight (8) of the Units shall be rented to Eligible Tenants at 30% x 50% of the monthly income of the Orange County Median Income for three-person households. Hbbcchcicovs Regulatory Agreement Page 3 of 12 The rental rates for the Units shall be adjusted annually based upon current updates of HUD income and rent standards. In no event shall any of the Units be rented at a rate greater than the Affordable Rent applicable to the particular Unit. 3.3 Occupancy y Eligible Tenant. A Unit occupied by an Eligible Tenant at the time of this Agreement shall be treated as occupied by an Eligible Tenant until such Unit is vacated. A Unit previously occupied by an Eligible Tenant and then vacated shall be considered occupied by an Eligible Tenant until reoccupied. If at any time a tenant's household income increases, resulting in disqualification of such tenant as an Eligible Very Low Income Tenant, such tenant shall have a period of ninety (90) days to relocate from the Site. The disqualified tenant shall be fully responsible for the costs and expenses related to the relocation. Should such tenant face extraordinary hardship in relocating from the Site, the tenant may submit a written appeal to the Agency requesting an extension of the time period within which the tenant must relocate. Upon receipt of the written appeal, the Agency Director of Economic Development in his sole discretion may extend the relocation period for up to a maximum of ninety(90) additional days. 3.4 Income Computation. Immediately prior to a prospective Eligible Tenant's occupancy of a Unit, Participant shall obtain and maintain on file an income computation and certification form from each such prospective Eligible Tenant dated immediately prior to the date of initial occupancy in a Unit by such prospective Eligible Tenant. Participant shall use its best efforts to verify that the income information provided by an applicant is accurate by following the Agency Housing Rehabilitation Loan Program Policies and Procedures and by taking one or more the following steps as a part of the verification process: (i) obtain two (2) pay stubs for the most recent pay periods; (ii) obtain a written verification of income and employment from applicant's current employer; (iii) obtain an income verification form from the Social Security Administration and/or California Department of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income as is reasonably satisfactory; or(v) obtain such other information as may be reasonably required. Participant shall update the foregoing records annually and shall provide copies of updated tenant eligibility records and monthly rental records to Agency for review. Upon review of such records, Agency may at its option perform an independent audit of the tenant eligibility records in order to verify compliance with the income and affordability requirements set forth herein. Participant shall retain the records described in this Section for a period of three years after the date the respective records were created. 3.5 Rental Priority. Tenants living in the Project prior to Participant's rehabilitation of the Units as contemplated by the OPA ("Initial Rehabilitation") who are Eligible Tenants meeting the income restrictions of the Units as set forth in Section 3.1 shall be given first priority in re-leasing Units in the Project following completion of the Initial Rehabilitation. Except as set forth above, Units shall be rented to Eligible Tenants on a first-come, first-served basis; provided, however, that Participant may, in Participant's sole Wocchckovs Regulatory Agreement Page 4 of 12 discretion, maintain an "interest list" or "eligibility list" of potential tenants, provided, however, that Participant shall not be liable to Agency or any person, firm, or entity in the event a Unit is rented to a person who is not on any such list or is on such list but is listed lower than another person on such list. 3.6 Renting Vacant Units. When a Unit becomes available as a result of a tenant vacation, Participant shall rent the Unit to an Eligible Tenant in accordance with the following procedure: (a) First, Participant shall rent the Unit to persons who have been displaced by Agency activities, pursuant to California Health and Safety Code Section 33411.3, provided that Agency provides Participant with reasonable notice. (b) Second, Participant shall rent any vacant Unit in the order of priority as set forth in Section 3.5. 3.7 Maintenance of Records. Participant shall maintain complete and accurate records pertaining to the Units, and shall permit any duly authorized representative of the Agency to inspect the books and records of Participant pertaining to the Project including, but not limited to, those records pertaining to tenant eligibility and occupancy of the Units. Records pertaining to the Project and Units shall be retained for a period of five (5) years after the termination of this Agreement; records pertaining to tenant and eligibility shall be retained for the period set forth in Section 3.5. 3.8 Reliance on Tenant Representations. Each tenant lease shall contain a provision to the effect that Participant has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of a Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. 3.9 Conflicts. The rental priority provision set forth in Section 3.6 shall apply only in the event, and to the extent, such provisions are not in conflict with any applicable federal or state law or any regulatory agreement affecting the Project that is recorded in superior priority to this Agreement. 4. MAINTENANCE. 4.1 Maintenance Covenant. Participant agrees to maintain all interior and exterior improvements, including landscaping, on the Site in good condition and repair(and, as to landscaping, in a healthy condition), reasonable wear and tear excepted, and in accordance with all applicable laws, rules, ordinances, orders, and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction (including, but not limited to, Federal Housing Quality Standards as set forth in 24 C.F.R. 982.401). In addition, Participant shall keep the Site free from all graffiti and any accumulation of debris or waste material. Participant shall make all repairs and replacements necessary to keep the improvements in good condition and repair and shall Hb`.occhcxcovs Regulatory Agreement Page 5 of 12 promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials. The maintenance covenant contained in this Section shall remain in effect for the terra of this Agreement. 4.2 Agency Rights. Agency shall have the right to enter upon the Site to inspect both the interiors and exteriors of the Site, upon seventy-two (72) hours notice to Participant. Agency may perform or cause to be performed the maintenance necessary to cure any default of these maintenance covenants and Participant shall be liable for payment to Agency for Agency's reasonable costs (excluding staff salaries and overhead and other similar costs) to perform such required maintenance; provided, however, that Participant first be given written notice by Agency of the actions required to cure any default, and Participant, after receipt of such notice, shall have sixty (60) days to cure such defaults, but Participant shall not be deemed in default of the foregoing maintenance covenant if such default cannot reasonably be cured within the sixty (60) day period referenced above so long as Participant has commenced to cure such default within the same sixty (60) day period and is diligently proceeding with the work to cure such default. Notwithstanding the foregoing, if any property conditions are reasonably identified by Agency after a property inspection attended by a representative of Participant that pose an immediate danger to life or limb, Participant shall have three (3) days to effect corrections of such condition(s) to Agency's reasonable satisfaction. 4.3 Annual Retort. Participant covenants and agrees to submit to the Agency an annual report (the "Annual Report") required by California Health and Safety Code Section 33418. The Annual Report shall include for each Unit the rental rate and the income and family size of the occupants, and shall also include the records described in Section 3.5 herein and the audited financial statements described in Section 5.11 of the OPA. The income information shall be supplied by the tenant In a certified statement on a form provided by the Agency. The Participant shall submit the Annual Report on or before the end of the first calendar quarter of the year following the year covered by the Annual Report. The Participant shall provide for the submission of such information in its leases with tenants. Agency shall not charge Participant a fee for reviewing the Annual Report, or for Agency's or Participant's compliance with Health and Safety Code § 33418. 4.4 Management Plan. Participant shall prepare, submit to Agency Executive Director within sixty (60) days of recordation of this Agreement and maintain in effect a management plan in accordance with the following("Management Plan"): (a) The Management Plan, including such amendments as may be approved in writing by the Agency, shall remain in effect for the term of this Agreement. Participant shall not amend the Management Plan or any of its components without the prior written consent of the Agency. The components of the Management Plan shall include: (1) Management Agent. The name and qualifications of the proposed management agent. The Agency shall approve or disapprove the proposed management agent in writing based on the experience and qualifications of the 11bkocch6covs Regulatory Agreement Page 6 or 12 management agent. The management agent shall have demonstrated experience in operating affordable housing comparable to the Project. (2) Management Prog_rarn. A description of the proposed management, maintenance, tenant selection and occupancy policies and procedures for the Units. (3) Management Agreement. A copy of the proposed management agreement specifying the amount of the management fee and the relationship and division of responsibilities between Participant and management agent. (4) Tenant Lease or Rental Agreement. A copy of the proposed tenant lease or rental agreement to be used in renting the Units. (5) Annual Operating Budget. Prior to the completion of construction and annually thereafter not later than fifteen (15) days prior to the beginning of the next fiscal year of the Project, Participant shall submit a projected operating budget to the Agency Executive Director for review and approval. The Agency shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder, and such matter shall be deemed approved unless the Agency provides to Participant its written disapproval within thirty (30) days after receipt of a request for approval, provided Participant includes with its request, a written notice, in capital letters, stating as follows: NOTICE: PURSUANT TO SECTION 4.4 OF THE REGULATORY AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH AND ORANGE COUNTY COMMUNITY HOUSING CORPORATION, FAILURE BY THE AGENCY TO APPROVE OR DISAPPROVE THE MATTER SUBMITTED WITH THIS REQUEST WITHIN 30 DAYS SHALL BE DEEMED AN APPROVAL. Any disapproval shall be in writing and contain the Agency's reasons for disapproval. (b) Participant hereby covenants and agrees the Agency shall have the right, at any time and from time to time, to give notice to Participant if the Agency determines that the Project is not being managed or maintained in accordance with the Management Plan. The Agency may require the Participant to change management practices or to terminate the management agent and retain a different management agent, approved by the Agency. The Agency agrees that prior to requiring the Participant to change its management agent or the management practices the Agency shall informally consult with Participant, in an attempt to resolve the dispute. If the Agency determines that such an attempt at informal Hbkocchc covs Regulatory Agreement Page 7 of 12 - resolution has been unsuccessful, it shall give the Participant thirty (30) days written notice to change the management agent or practice, as the case may be. If Participant fails to do as requested by the Agency in the written notice, the Agency may then require the immediate change of the management practice or agent, as the case may be. The management agreement shall provide that it is subject to termination by the Participant without penalty, upon thirty (30) days prior written notice, at the direction of the Agency. Within ten (10) days following a direction of the Agency to replace the management agent, the Participant shall select another management agent or make other arrangements satisfactory to the Agency for continuing management of the Project. The Participant shall notify the Agency upon learning that there is a voluntary change in the management or control of the management agent, and, if the change is unsatisfactory to the Agency, the Agency shall be entitled to require the Participant to change the management agent in accordance with the terms of this paragraph. 5. ENFORCEMENT. In the event Participant defaults in the performance or observance of any covenant, agreement or obligation of Participant pursuant to this Agreement, and if such default remains uncured for a period of sixty (60) days after written notice thereof(or such longer period as may apply to the specific alleged default) shall have been given by Agency, or, in the event said default cannot be cured within said time period, Participant has failed to commence to cure such default within said sixty (60) days and diligently prosecute said cure to completion, then Agency shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take one or more of the following steps: (a) By mandamus or other suit, action or proceeding at law or in equity, require Participant to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of this Agreement; or (b) Take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of Participant hereunder, including foreclosure pursuant to the OPA. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any parry of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party. 6. NONDISCRIMINATION. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, or any part thereof, or in the awarding of contracts for the Project, nor shall Participant, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site, or any part thereof, or in the awarding of contracts for the Project (except as permitted by this Agreement). Hbbcchckovs Regulatory Agreement Page 8 of 12 Participant shall comply with all applicable federal, state and local nondiscrimination, fair housing, and equal opportunity requirements. In addition, Participant shall conduct affirmative marketing and minority outreach activities as required by HOME regulations. 6.1 Form of Nondiscrimination and Nonseg_regation Clauses. The Participant shall refrain from restricting the rental, sale or lease of the property on the basis of race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In Deeds: "The grantee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or any person claiming under or through him, 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, his heirs, executors, administrators and assigns, and all persons claiming under or through him, 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 race, color, creed, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall the lessee himself, or any person claiming under or through him, 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 land 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, age, class, income, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the lessees, subtenants,sublessees or vendees of the land." 7. COVENANTS TO RUN WITH THE LAND. Participant hereby subjects the Site to the covenants, reservations, and restrictions set forth in this Agreement. Agency and Participant hereby declare their express intent that all such covenants, reservations, and restrictions shall be deemed covenants running with the land and shall pass to and be binding upon the Participant's successors in title to the Site; provided, however, that on the termination of this Agreement said covenants, reservations and restrictions shall expire, except the nondiscrimination covenants W,occhckovs Regulatory Agreement Page 9 of 12 contained in Section 6 and Section 6.1 shall remain in perpetuity. All covenants without regard to technical classification or designation shall be binding for the benefit of the Agency, and such covenants shall run in favor of the Agency for the entire term of this Agreement, without regard to whether the Agency is or remains an owner of any land or interest therein to which such covenants relate. 8. AT 170FUNEYS' FEES. In the event that a party to this Agreement brings an action against the other party hereto by reason of the breach of any covenant in this Agreement, or otherwise arising out of this Agreement, the prevailing party in such action shall be entitled to recover from the other reasonable attorney's fees and costs. Attorney's fees shall include attorney's fees on any appeal, and in addition a parry entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, including the conducting of discovery, and expert witness fees. 9. AMENDMENTS. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of Orange. 10. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by (i) personal delivery, (ii) courier service that provides a receipt showing date and time of delivery, or (iii) certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City Clerk Participant: Orange County Community Housing Corporation 1833 East 17`s St., Suite 207 Santa Ana, CA 92705 Attu: Executive Director Notices personally delivered or delivered by courier shall be effective upon receipt. Mailed notices shall be effective on the earlier of receipt or Noon on the second business day following deposit in the United States mail. 11. SEVERABILITY/WAIVER/INI'EGRATION. 11.1 Severabili . If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. 11.2 Waiver. A waiver by either party of the performance of any covenant or condition herein shall not invalidate this Agreement nor shall it be considered a waiver of Hbrocchc'rovs Regulatory Agreement Page 10 of 12 any other covenants or conditions, nor shall the delay or forbearance by either party in exercising any remedy or right be considered a waiver of, or an estoppel against, the later exercise of such remedy or right. 11.3 Integration. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 12. GOVERNING LAW. This Agreement shall be governed by the laws of the State of California. 13. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. 14. SUBORDINATION. This Agreement shall be junior and subordinate to the liens of the deeds of trust identified in the OPA as the Conventional Lenders deed(s) of trust, and such other and further documents, including regulatory agreements, as such lenders may require, not to exceed THREE HUNDRED THOUSAND DOLLARS ($300,000.00) in debt. If, from time to time and at one or more times, Participant chooses to refinance the loan secured by any deed of trust which is superior to this Agreement, Agency agrees to subordinate this Agreement to the refinancing lender's deed of trust under the same terms and conditions as set forth herein on the condition that the amount of the new loan is no greater than the original principal balance of the refinanced note. Agency agrees to execute such subordination agreements as may be required to effect the priority set forth in this Section. IN WITNESS WHEREOF, the Agency and Participant have executed this Regulatory Agreement and Declaration of Covenants and Restrictions by duly authorized representatives on the date first written hereinabove. [end—signature page follows) Wocch6covs Regulatory Agreemcnt Page 1 I of 12 "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and polit- By: V w. 01rV411 hairman ATTEST: By Agency Clerk REVIEWED AND APPROVED AS TO FORM: Agency General Counsel Q_ By: ! I/�-p t fvf t�Q APPROVED AS TO FORM: Kane, Ballmer& Berkman By. O . �a►r-- Murray 0.Kane "PARTICIPANT" ORANGE COUNTY COMMUNITY HOUSING CORPORATION a California nonprofit corporation c By: AI Baldwin Executive Director Wocchcicovs Regulatory Agreement Page 12 of 12 STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On before me, personally appeared _^ //je, &f,/uxn personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(A whose name($) is/,re subscribed to the within instrument and acknowledged to me that he/s)jhbep executed the same in hisilWI*ir authorized capacity(jag), and that by his/bef/heir signature(w) on the instrument the person(,) or the entity upon behalf of which the person(o acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] r.oz CHRISTINE CLEARY Cartur #125W@ amr4p CCU* STATE OF CALIFORNIA ) L "'°�Jdr4142D�c ss. COUNTY OF ORANGE } before me,66,s�,;,��/��,(/ri•���/a personally appeared i,1AIC �� `,• ✓ WP .[�/ .rrc personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) jeare subscribed to the within instrument and acknowledged to me that taelskelthey executed the same in has/ /their authorized capacity(ies), and that by bi5/W/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] CHRISTINE CLEM COrmftlbn#1� No"V PJAC-Qdomb My C.amm,fades Jdrf 1�ND4 ATTACHMENT 1 LEGAL DESCRIPTION OF SITE Legal Description of Property Commonly Known As 17411 and 17421 Koledo Lane Huntington Beach, California 92647 ALL THAT CERTAIN L.AND SITUATED [N TH2 STATE OF CAUFORNIA, COUNT' OF ORANGC CITY OF HUN71NGT01 BEACH, DESCMED AS FCUOWS LOTS 5 AND 6 Or TRACT 4301, AS SHOWN ON A MAP RECORDED IN BOOK 177, PAGES 1 I AND 12 OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY. EXCEPT ALL OIL, GAS, PETROLEUM, vIL\1ERALS AND OTHER H''DROCARBON SUBSTANCES IN, U'\:'DER AND/OR THAT NTAY BE PRODUCED BELOW A DEPTH OF 150 FEET FROM THE SLWACE OF SAID PROPERTY, OR ANY PART THEREOF. AS RESERVED IN THE DEED FROIvi JOSEPH V MADDEN AND wIFE TO IOSEPH GERALD MABEY AND OTHERS, DATED OCTOBER 13, 1950 AND RECORDED NOV'EMBER 13. 1950, IN BOOK 2i00, PAGE 411 OF OFFICIAL RECORDS, RECORDS OF ORANGE COUNTY, CALIFORNIA. WHICH DEED FURTHER PROVIDES, THAT SUCH RESERVATIONS SHALL NOT ENTTITLE THE SAID GRANTOR, THEIR HEIRS AND ASSIGN'S,TO ANY USE OF, OR RJGHTS IN OR TO ANY PORTION OF THE SURFACE OF SAID PROPERTY TO A DEPTH OF 150 FEET BELOW THE SURFACE THEREOF ALSO EXCEPTr G THEU. FROj\-t ALL UNDERGROUND WATERS LY1i`G BENEATH THE REAL PROPERTY DESCRIBED HERE:N BUT WITHOUT THE. RIGHT OF ENTTRY TO THE SURFACE OF SAID LAND. OR THE TOP 500 FEET THI:I:EOF, FOR THE PURPOSE OF PRODUCING WATER, AS CONVEYED TO THE CITY OF HUNTINGTON BEACH, BY DEED RECORDED APRIL 17. 1963, IN BOOK 67511. PAGE 679 OF OFFICIAL. RECORDS GOVERNMENT CODE 27361.7 I CERTIFY UNDER PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED READS AS FOLLOWS : NAME OF NOTARY : DATE COMMISSION EXPIRES : I �! e;L o�[ COUNTY WHERE BOND IS FILED: _ COMMISSION NUMBER: I Ds 0 MANUFACTURER/VENDOR NUMBER: A N A r PLACE OF EXECUTION: S TA ANA DATED: SIGNATURE : lAht� FIRST AMERICAN TITLE INSURANCE CO. EXHIBIT 1 Project BudgetlPro Forma lbehind this page) �J I e Sheetl 11g 21 K0100 4!1 N( I J opmtng Budget I I 4126I00 ' ccount units Updated L e Per 2000 1 20011 2002 Number Qescription Cost Span type +Month Annual 1,000 Floor Covering 8.100 7 years reserves 120 1,440 1,498 ' 1,558 2.000 Mechanical reserves 150 1.800 1.872 1.947 3.000 Screens 3 years reserves 30 360 374 389 4.000 Painting 2 years reserves 128 1.536 _1_.597 i _ 1,661 5,000 Landscape d.r.e- reserves 58 696 __724 753 6.000 Draperies 5 years reserves 24 288 _ 300 , 312 7,000 Paving concrete reserves 18 216 225 2_34 7,100 Roofing 25 years reserves 26 312 324 . 337 RESERVES ' OPERATING COSTS 5,4 Property Tax exempt semi an oprtng cos 42 504 I 514_a 524 5.500 Insurance monthly oprtng cos 178 2.136 2.221 i 2.310 58-1 Water as billed oprtng cos 180 2.160 2.246 2.336 58-2 Gas as billed oprtng cos 140 1.680 - 1,74 1,817 58-3 Electricity as billed oprtng cos 110 1,320 1,373 1.428 58-4 Trash/Sewer monthly oprtng cos 250 3,000 3.120 1 3,245 1000 Landscape POA monthly oprtng cos 300 3,600 13,74_4 3.89_4 2000 Maintenance Staff as billed oprtng cos 470 5.640 - 5,866 6.100 4000 Misc Repair as billed oprtng cos 250 3.000 - 3,120 3,245 4500 Audit/LegaVBookkeeping as billed oprtng cos 120 1,440 1.498 • 1.558 5000 Carpet Clean as billed oprtng cos 40 480 499 519 off ledge OCCHC Mgmnt ledger oprtng cos 500 6,000 6.ft _ �6.490 6000 Marketing as billed oprtng cos 48 576 623 -Expenses 3.182 38,1_84 1 39.701 41.279 rsrvs per month 554 Gross Income 5.65500 '_67,800 i 69.834 1 _ 71,929 rsrvs per unit 69.25 Net Operating Inc 2.468 29,616 1 30,133 30,650 - .- �7414 000 01 002 010 Ist TD,consortiu 300,000 IstTD 28,966 ; 28,966 I 28,966 2200 2nd TD. HOME570,000 2nd TD - I _ 1 _ 2205 OCCHC Equity- ' 30,000 j - - - 220 2,642 2,642 - 2.642 2210 i 4th TD,AHP _ - - - 0.000 I _ 1 I ! T 1 Laundry ' 40 480 485 490 Loan 1 300.000 j Cash Flow (126) (1,512)1 (990) (468) Int Rate 9.0% _ _T + Loan J 3_0.000 Amort-F 360 Int Rate 8-0% Pmt Am 1 2.414 1.02 debt svc - - AT rt Pmt Amt 220 _��type units rent total I - i - T -1 + 600 _ 2 bedroom 6 525 3,150 50%=76 -�_ _ 2 bedroom 4 625 2.500 10 vcncy 5% net rent _ _ ' total rent 5.6501 283 5.368 4/26/00 K4res K4 Project 26-Apr 00 1406 1741112t Koleda Lane,Huntington Beach original revisal paid balance to per unit estimate estimate to date be paid cost BUILDING COSTS 161900 161900 0 161900 32380 SITE DEVELOPMENT 9000 9000 0 9000 1800 GENERAL CONTRACTOR 0 0 0 0 0 LAND COSTS 70000D 700000 0 0 140000 FINANCE COSTS 2000 2000 0 2000 400 PREOEVELOPMENT 27100 27100 0 0 5420 TOTAL PROJECT COST 9000001 9000001 01 1729001 180000 AMOUNT TO FINANCE . . . . . . . . . . 900000 Citicorp PRIMARY FINANCING 300000 City of H.Beach SECONDARY FINANCING . . . . . . . . . . 570000 SECONDARY FINANCING 0 OCCHC GRANT 30000 OCCHC EQUITY . . . . . . . . . 0 0 0 9010 ARCHITECT 0 0 0 0 9015 CIVIL ENGINEER 0 0 0 0 9020 STRCTRL ENGINEER 0 0 0 0 9025 SOILS ENGINEER 0 0 0 0 9030 MECH ENGINEER 0 D 0 0 9035 ENERGY CALCS 0 0 0 0 9037 ASBILEAD REPORT 4000 4000 4000 800 9040 SOUND CALCS 0 0 0 0 9045 LNOSCP ARCHITECT 0 0 0 0 9050 BLUEPRINTS 1000 1000 200 9060 IMPACT FEES 0 0 0 0 9065 PERMIT FEES 2100 2100 2100 420 9066 UTILITY EXTENSION 0 0 0 0 9070 OCCHC CONTINGENCY 20000 20000 20000 4600 27100 27100 0 5420 26•Apr•00 14126 original revised paid balance to per unit K4 Project DESCRIPTION estimate estimate to date he paid cost 1001 FOUNDATIONISLAB 0 0 0 0 1012 LGTWT CONCRETE 0 0 0 0 1070 FRAMINGITURNKEY 0 0 0 0 1072 ROOFTRUSSES 0 0 0 0 1075 FINISH CARPNTRY 200DO 20000 20000 4000 1100 INSULATION 0 0 0 0 1120 SIDING 2000 2000 2000 400 1130 PLUMBING 10000 10000 10000 2000 1135 FIRE SPNKLRS 0 0 0 0 1136 FIRE METERS 0 0 0 0 1137 FIRE ALARMS 0 0 0 0 1140 HEATING 10000 10000 10000 2000 1150 SHEET METAL 0 0 0 0 1160 WTRPRF DECKS 1000 1000 1000 200 1170 ROOFING 10000 10000 10000 2000 1180 STUCCO 5000 5000 5000 1000 1190 RAINGUTTERS 1000 1000 1000 200 1200 DRYWALL 10000 10000 10000 2000 1230 ELECTRICAL 5000 5000 5000 1000 1231 ELEC FIXTURES 2000 2000 2000 400 1232 TV r4 PHONE HKUP 2000 2000 2000 400 1240 LUM CEILINGS 2000 2000 2000 400 1250 ALUM WNDWSIDOORS 2000 2000 2000 400 1270 GARAGE DOORS 2000 2000 2000 400 1300 CABINETS 20000 20000 20000 4000 1330 IRONWORKISTAIRS 4000 4000 4000 800 1350 IRON WORKIHNDRAILS 4000 4000 4000 800 1370 FORMICAIMARBLE 4000 4000 4000 800 1380 COUNTER TILE 0 0 0 0 1390 PAINTING 10000 10000 10000 2000 1400 SKYLIGHTS 0 0 0 0 1430 APPLIANCES 5000 5000 5000 1000 1450 FLOOR COVERING 20000 2000O 20000 4000 1480 CNSTR CLEAN UP 4000 4000 4000 800 1500 MAILBOXES 400 400 400 80 1510 MED CABINETS 1000 1000 1000 200 1520 ARCH HARDWARE 1000 1000 1000 200 1530 MIRRORS 1000 1000 1000 200 1550 SCREEN DOORS 1000 1000 1000 200 1570 ORAPESIMINIs 25001 2550-1 2500 500 161900 161900 0 161900 32380 K4 Praoct 26•Apr.00 4126 original revised paid balance to per unit estimate estimate to date be paid cost 2020 CIVIL-an site 0 0 0 0 2030 SONS ERG-on site 0 0 0 0 2050 OEMMSITE PREP 0 0 0 0 2055 TEMP FENCING 0 0 0 0 2056 TEMP POWER 0 0 0 0 2060 TEMP OFFITOILET 0 0 0 0 2065 IMPORTIEXPORT 0 0 0 0 2070 GRADEISTAKE 0 0 0 0 I100 FLATWORK 3000 3000 3000 600 2110 ORIVESICURBS 0 0 0 0 2120 STRIPEISIGN 0 0 0 0 2140 DRAINAGE SYSTEM 0 01 0 0 2200 UTILITY TRENCH 0 0 0 0 2210 SEWER TO BLDG 0 0 0 0 2220 WATER TO BLDG 0 0 0 0 2230 ELIPHNICABLE TO BLDG 0 0 0 0 2240 TRASH ENCLOSURES 1000 1000 1000 200 2331 EXT LIGHT FIXTURES 1000 1000 1000 200 2400 EXT WROUGHT IRON 1000 1000 1000 200 2410 BLOCKWORK 2000 2000 2000 400 2440 FINISH GRADING 0 0 0 0 2450 LANDSCAPING 1000 1000 1000 200 2460 PLAYGROUND,ETC 0 0 0 0 9000 9000 0 9000 1800 31W GENERAL CONTRACTOR 0 0 0 0 3200 SUPERINTENDANT 0 01 1 01 0 3300 REIMBURSEABLES 0 01 01 0 0 0 0 0 0 4100 LOAN FEESIPTS 0 0 0 0 4200 LOAN ESCROW 0 0 0 0 4300 APPRAISAL 2000 2000 2000 400 4400 CNSTRINTEREST 0 0 0 0 4500 INSURANCE 0 0 0 0 4600 PROPERTY TAXES 01 01 0 0 2000 2000 0 2000 400 EXHIBIT ! Subordination Agreement [behind this page] WHEN RECORDED RETURN TO: Orange County Community Housing Corporation 1833 East 17w St., Suite 207 Santa Ana, CA 92705 Attu: Allen Baldwin, Executive Director SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENTS. THIS SUBORDINATION AGREEMENT ("Agreement") is entered into this _ day of September, 2000, by and among REDEVELOPMENT AGENCY OF THE CITY OF HUNI'INGTON BEACH, a public agency, corporate and politic (the "Agency"); ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit corporation ("Participant"); and Western Financial Bank ("Lender"). RECITALS: A. Participant owns fee title to the real property described on Attachment No. "I" (the "Property") attached hereto and incorporated herein by reference. The Agency and Participant have entered into an Owner Participation Agreement dated as of September S , 2000 (the "OPA"). Pursuant to the terms of the OPA, Participant has executed a Note in favor of the Agency in the amount of FIVE HUNDRED SEVENTY THOUSAND DOLLARS ($570,000.00) ("Agency Loan") to assist Participant in the redevelopment of the Property as an affordable housing complex. The Agency Loan is to be secured by a Subordinated Deed of Trust With Assignment of Rents With Rider Attached encumbering the Property (the "Agency Deed of Trust"). The OPA is hereby incorporated by reference as though fully set forth herein. All capitalized terms not defined herein shall have the meanings ascribed to them in the OPA. B. Agency and Participant have also entered into that certain Regulatory Agreement and Declaration of Covenants and Restrictions recorded against the Property ("Agency Regulatory Agreement"), which Agency Regulatory Agreement contains, among other terms, certain use restrictions affecting the Property. Subordination Agreement Page I of 6 Wocch`subord C. Participant has obtained a loan from Lender in the amount of THREE HUNDRED THOUSAND DOLLARS (S300,000.00) (the "Lender Loan"). To repay the Lender Loan, Participant has executed or is about to execute a deed of trust encumbering the Property to secure a promissory note in the sum of the Lender Loan, payable upon the terms and conditions described in such note (respectively, the "Lender Deed of Trust" and "Lender Note"). In connection with the Lender Loan, Participant may also be required by Lender to execute a regulatory agreement to be recorded against the Property, which may contain among other terms, use restrictions affecting the Property(the "Lender Regulatory Agreement"). D. Lender is willing to make the Lender Loan provided the Lender Deed of Trust and Lender Regulatory Agreement are a lien or charge upon the Property prior and superior to the lien or charge of the Agency Deed of Trust and Agency Regulatory Agreement, and provided that the Agency will specifically and unconditionally subordinate the lien or charge of the Agency Deed of Trust and Agency Regulatory Agreement to the lien or charge of the Lender Deed of Trust and the Lender Regulatory Agreement. E. It is to the mutual benefit of the Lender, Agency, and Participant that the Lender make the Lender Loan to Participant; and the Agency has agreed that the Lender Deed of Trust and Lender Regulatory Agreement shall, when recorded, constitute a lien or charge upon the Property which is unconditionally prior and superior to the lien or charge of the Agency Deed of Trust and Agency Regulatory Agreement, subject to the specific terms and provisions of this Subordination Agreement. NOW, THEREFORE, in consideration of the mutual benefits accruing to the Agency, Lender and Participant, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Lender to make the Lender Loan, it is hereby declared, understood and agreed as follows: 1. Subordination by A en 1.1 Subordination of Agency Deed of Trust and Agency Regulatory Agreement to Lender Deed of Trust and Lender Re latory Agreement. The Lender Deed of Trust (and any renewals or extensions of, or advances, including interest, thereunder), and the Lender Regulatory Agreement (and any amendments or modifications thereto) shall unconditionally be and remain at all times a lien or charge on the Property, prior and superior to (i) the lien or charge of the Agency Deed of Trust and the Agency Regulatory Agreement, (ii) all present and future indebtedness and obligations secured thereby, and (iii) all rights and privileges of Agency thereunder, provided that the Lender Deed of Trust does not exceed Three Hundred Thousand Dollars($300,000.00). If Participant chooses to refinance the Lender Loan, Agency agrees to subordinate the Agency Deed of Trust and the Agency Regulatory Agreement to the refinancing Lender's Deed of Trust under the same terms and conditions as set forth in this Agreement, on the condition that the amount of the new loan is no greater than the original principal balance of the Lender Loan. Subordination Agreement Page 2 of 6 Hb',occhxsubord 1.2 Covenants of Agency. The Agency declares, agrees and acknowledges that: (a) The Agency consents to all provisions of the Lender Note and the Lender Deed of Trust; and (ii)all provisions of the Lender Regulatory Agreement. (b) To Agency's actual knowledge, there is no breach, event of default or default existing under the Agency Deed of Trust or Agency Regulatory Agreement, or any circumstances, event, omission or failure of condition which would constitute such a breach, default or event of default after notice or lapse of time, or both. 2. Reliance by Lender and Agency. The Lender would not make the Lender Loan and the Agency would not have agreed to subordinate the Agency Deed of Trust and Agency Regulatory Agreement without this Subordination Agreement and each of the undersigned understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination, specific loans and advances are being and will be made and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for such reliance upon this waiver, relinquishment and subordination. 3. Notice to Agency. In the event of a breach or default by Participant under the terms of the Lender Deed of Trust, Lender shall provide the Agency with written notice of such breach or default concurrently with providing such notice to Participant. Upon receipt of such notice of breach or default, the parties hereto agree that Agency shall have each of the following rights so long as either the Agency Regulatory Agreement or the Agency Deed of Trust encumber any portion of the Property or interest therein: (a) To cure the noticed default at any time prior to the foreclosure of the Lender Deed of Trust or any lien under the Lender Regulatory Agreement. In connection therewith, the Lender agrees that (i) in the event of a monetary default, the Lender shall not foreclose Lender Deed of Trust or other lien prior to the date that is thirty (30) days after the date that the Lender would otherwise be legally entitled to foreclose Lender Deed of Trust and (ii) in the event of a nonmonetary default, the Lender shall not foreclose its Lender Deed of Trust or other lien prior to the date specified above for monetary defaults; provided that if said nonmonetary default is susceptible to being cured only when the Agency has obtained possession of the Property, the Agency shall have as long as necessary to obtain possession of the Property by either foreclosing the Agency Deed of Trust, and to cure the default, so long as the Agency does so with reasonable and continuous diligence. (b) To negotiate with the Lender regarding the noticed default at any time prior to the foreclosure of the Lender Deed of Trust or other lien. (c) To negotiate with the Participant to purchase the Property from Participant, subject to the Lender Deed of Trust without the consent of the holder of the Lender Deed of Trust or enforcing parry under the Lender Regulatory Agreement. Subordination Agreement Page 3 of 6 14bWcch\sut ord The Lender agrees that the exercise of any of the rights set forth in this Section by Agency shall not give rise to any right on the part of the Lender to exercise any right to accelerate the amounts due under the Lender Loan. 3.1 Foreclosure of Agency Deed of Trust. The Lender hereby agrees that in the event that Agency forecloses the Agency Deed of Trust, said foreclosure shall not give rise to any right on the part of the Lender to accelerate the amounts due on the Lender Loan. 3.2 Disbursements. Lender, in making disbursements of the proceeds of the Lender Loan, is under no obligation or duty to, nor has Lender represented that it will, see to the application of such proceeds by the person or persons to whom disbursements thereof are made and any application or use of such proceeds for purposes other than those provided in the documents evidencing and securing the Lender Loan shall not defeat the subordination herein made in whole or in part. 4. Miscellaneous. 4.1 Entire Agreement. This Subordination Agreement shall be the whole and only agreement with regard to the matters set forth herein and shall supersede and cancel, but only insofar as would affect the priority between the Lender Deed of Trust and Lender Regulatory Agreement on the one hand, and the Agency Deed of Trust and Agency Regulatory Agreement on the other hand, any prior agreement as to such subordination including, but not limited to, those provisions, if any, contained in the Agency Deed of Trust and Agency Regulatory Agreement, which provide for the subordination of the lien or charge thereof to another deed or deeds of trust or to another mortgage or mortgages, upon the Property. 4.2 Successors and Assigns. This Subordination Agreement shall inure to and bind the*heirs, legatees, devisees, administrators, executors, successors and assigns of the parties hereto. 4.3 California Law. This Subordination Agreement shall be construed according to the laws of the State of California. 4.4 Severability, if any term, provision, condition or covenant of this Agreement or the application thereof to any party or circumstances shall, to any extent, be held invalid or unenforceable, the remainder of this instrument, or the application of such term, provision, condition or covenant to persons or circumstances other than those as to whom or which It is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 4.5 Notice. Any notice, demand, request, consent, approval or communication that any party desires or is required to give to another party or any other person must be in writing and may be given by (i) personal delivery, (ii) by courier service that provides a receipt showing date and time of delivery, or (iii) by registered or certified mail, return receipt requested, postage prepaid. Notices shall be directed at the address of such party hereinafter set forth, or such other Subordination Agreement Page 4 of 6 Hb`.occhlsubord address and to such other persons as the parties may hereafter designate. Any such notice shall be deemed given upon receipt if by personal delivery or courier service, or if by mail the earlier or(x) actual receipt or(y) forty-eight (48) hours after deposit in the United States mail. If to Agency: Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Executive Director If to Participant: Orange County Community Housing Corporation 1833 East 17th St., Suite 207 Santa Ana, CA 92705 Attention: Allen Baldwin, Executive Director If to Lender: Western Financial Bank 4.6 Attomev's Fees. In the event that any action, suit or other proceeding is brought to enforce the obligations of under this Agreement, each party shall bear its own costs and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. 4.7 Counterparts. This Subordination Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one and the same document. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LONVER PRIORITY THAN THE LIEN OF SO.N'IE OTHER OR LATER SECURITY INSTRUMENTS. (end- signature pages follow) Subordination Agreement Page 5 of 6 HbbccMsubord "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic B4Chai7nan ATTEST: By: Agency Clerk REVIEWED AND APPROVED AS TO FORM: Agency General Counsel By: �Je' it z I f&-- APPROVED AS TO FORM: Kane, Ballmer& Berkman By: j v[ o . 'u-- Murray O. Kane "PARTICIPANT' ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit corporation By: 40en P. Ba in Executive Direc [signatures continued on following page] Subordination Agreement Page 6 of 6 }iblocch\subord ".ENDER" Western Financial Bank By: Its: Subordination Agreement Page 7 of 6 Hb'-0cchksubord STATE OF CALLFORNIA ) } ss. COUNTY OF ORANGE } On c before me,ML� &, M &eAe._ 1j" a �/�� personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(p) whose name(y) is/mle subscribed to the within instrument and acknowledged to me that he/�W;bey executed the same in hisl*/thc4r authorized capacity(iM, and that by his/her/their signature(s) on the instrument the personV or the entity upon behalf of which the personCs-� acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] CHRIb E CLEARY Commtuion N 12504M Nodory P1b0c-CdRdrdo Orange County my Comm.BVkm 3m 1 dM STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On, /9 6Dfl before me, personally appeared personally known to me (or proved o me on the basis of satisfactory evidence) to be the person(s) whose name(s) mare subscribed to the within instrument and acknowledged to me that Jb-J Wthey executed the same in liel er/their authorized capacity(ies), and that by }zims�herhheir signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] CHRISTINE CLEARY C mrnhsion#12MM Notary Public-C+e1 IMft Orave CAW* 4bMyCcmn.50wjmj&=4 STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that heJshelthey executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Notary Public [SEAL] ATTACHMENT I LEGAL DESCRIPTION OF SITE Legal Description of Property Commonly Known As 17411 and 17421 Koledo Lane Huntington Beach, California 92647 ALL THAT CERTARv LAND SITUATED IN TR2 STATE OF CALUORMA, COUNTY OF ORANGE, CITY OF HUNTI GTOI`BEACH,DFSCRIB:_D AS FOLLOWS LOTS 5 AND 6 OF TRACT 4301. AS SHOWN ON A MAP RECORDED N BOOK 177, PAGES I I AND 12 OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY. EXCEPT ALL OIL, GAS, PETROLEUM, MINERALS AND OTHER HYDROCARBON SUBSTANCES IN, UNDER ANVOR THAT \1AY BE PRODUCED BELOW A DEPTH OF ISO FEET FROM THE SURFACE OF SAID PROPERTY, OR ANY PART THEREOF. AS RESERVED fl THE DEED FROM JOSEPH V MADDEN-' AND WIFE TO IOSEPH GE`-ALD NMABEY AND OTHERS, DATED OCTOBER 13, 1950 AND RECORDED NOVEMBER 13. 1950, IN BOOK 2100, PAGE 4I1 OF OFFICIAL RECORDS, RECORDS OF ORANGE COUNTY, CALIFORNIA, '.WHICH DEED FURTHER PROVIDES, THAT SUCH RESERVATIONS SHALL NOT ENTITLE THE SAID GRANTOR, THEIR HEIRS AND ASSIGNS, TO ANY USE OF, OR RIGHTS IN OR TO ANN' PORTION OF THE SURFACE OF SAID PROPERTY TO A DEPTH OF 150 FEET BELOW THE SURFACE THEREOF- ALSO EXCEPTING THEU- FROMM ALL UNDERGROUND WATERS LYNG BENEATH THE REAL PROPERTY DESCRIBED FEREI` BUT WITHOUT THE RIGP.T OF ENTRY TO THE SURFACE OF SAID LAND. OR THE TOP 500 FEET THEI.EOF, FOR THE PURPOSE OF PRODUCING WATER, AS CONVEYED TO THE CITY OF HUNT]`GTON BEACH, BY DEED RECORDED APRIL 17. I963, IN BOOK 67511. PAGE 679 OF OFFICIAL RECORDS Project Deal Points ATTACHMENT #2 PROJECT DEAL POINTS BY AND BETWEEN THE CITY OF HUNTINGTON BEACH REDEVELOPMENT AGENCY AND ORANGE COUNTY COMMUNITY HOUSING CORPORATION 17411 & 17421 KOLEDO LANE "KOLEDO 4" JUNE 16, 2000 1. The Redevelopment Agency will provide $570,000 in HOME Investment Partnership Program funds and Redevelopment Agency Housing Set Aside funds as a loan to Orange County Community Housing Corporation (OCCHC). The Agency's loan funds will be used to acquire and rehabilitate two multifamily rental-housing properties located at 17411 and 17421 Koledo Lane in the Oakview Neighborhood as follows: Activity Agency Loan Amount Property Acquisition $370,000 Rehabilitation $200,000 Total $570,000 2. There will be an annual 6% interest charge applied to the outstanding loan balance during the term of the loan agreement. 3. For a period not less than 60 years, all 10 units in the properties will be subject to tenant household income and rent affordability restrictions as provided in the following schedule: No. of Bedroom Maximum Tenant Units Size Income Maximum Rent 2 2 BR Very Low-Income 30% of the tenant's monthly adjusted income Low HOME Rent (30% X 50% of the 8 2 BR Very Low-Income monthly income of the Orange County 3 person household median income) 4. To verify that tenant households meet the above income restrictions, OCCHC will maintain records that clearly document tenant eligibility. These records will be updated at least annually and will be maintained for a period not less than three years. Verification of tenant income will be performed in compliance with the Agency's Housing Rehabilitation Loan Program Policies and Procedures. Page 1 of 4 If a tenant household's gross income increases and thus the household no longer qualifies for residency in the restricted unit, that family will be given 90 days to relocate. Should a tenant face extraordinary hardship satisfying this requirement, a written appeal may be submitted to the Agency. Upon receipt of a written appeal and at the sole discretion of the Director of Economic Development, this period may be extended for a period not to exceed 90 additional days. 5. The above maximum allowable rents are in accordance with HOME program regulations for very low-income households. These rents will be adjusted annually upon receipt of updated federal department of Housing and Urban Development (HUD) income and rent standards. All tenant paid utilities must be subtracted from the maximum allowable rents for the project. 6. The maximum number of persons in a household that may occupy a single residential unit may not exceed five people in a two-bedroom unit. It will be the responsibility of OCCHC to enforce this occupancy limit. 7. OCCHC will obtain conventional lender financing in an amount not to exceed $300,000, which together with $370,000 of the Agency's loan and $30,000 equity investment by OCCHC will used for property acquisition. The conventional lender financing may be secured in first position, with the Agency's loan secured in second position. 8. The Agency will contribute up to $200,000 for construction costs necessary to bring the properties into compliance with HUD Housing Quality Standards along with City and State laws and codes. OCCHC will have 18 months from the date property ownership is obtained to complete rehabilitation construction. 9. OCCHC will submit a list of proposed repairs and improvements along with planned cost and time schedules to the Agency prior to the commencement of any rehabilitation work. The hiring of contractors will be done on a competitive bid basis as required by the Agency's Housing Rehabilitation Loan Program Policies and Procedures. The Agency may elect to hire a construction management firm to supervise rehabilitation work progress and loan funding. 10. OCCHC will inspect the properties for lead-paint hazards in accordance with Title X of the 1992 Housing and Community Development Act. Any lead-paint hazards identified must be abated as part of the rehabilitation process. Should full abatement of lead-paint hazards cause rehabilitation costs to exceed $200,000, OCCHC may request additional rehabilitation loan funds from the Agency. Authority to approve a requested loan increase shall rest solely with the Agency's Board of Directors only upon the recommendation of the Director of Economic Development and Executive Director. 11. After rehabilitation is completed, OCCHC will maintain the properties in compliance with HUD Housing Quality Standards along with City and State laws and codes. The Agency may perform inspections of the property to ensure compliance with this requirement. Should OCCHC fail to adequately maintain the property, any deficiencies identified by the Agency must be addressed within 30 days. Page 2 of 4 12. OCCHC will establish an operating reserve at a sufficient level to fund repairs and improvements to the properties so as to ensure that the buildings remain in compliance with HUD Housing Quality Standards along with City and State laws and codes. 13. Each year during the term of the loan. OCCHC will provide the Agency with copies of audited financial statements. These financial statements must clearly show the status of the project's operating reserve account and cash flow. Upon review of the financial statements, the Agency may at its option perform a comprehensive review of appropriate records to verify the accuracy of such records. 14. At the end of each year while income and affordability restrictions apply to the project, OCCHC will provide the Agency with copies of monthly rent records and tenant eligibility certifications. Upon review of such records, the Agency may at its option perform an audit of tenant files to verify compliance with income and affordability requirements. 15. If OCCHC repays the Agency loan within two years from the date of the loan agreement, there will be a prepayment penalty of 25% of the original principal balance. OCCHC may repay the loan in full with no penalties assessed at any time after two years_ Early repayment of the Agency loan will not relieve OCCHC from the 60-year income and affordability restriction on the properties. 16. At the beginning of the third year of the loan agreement, and continuing for the duration of the agreement, OCCHC will make annual payments to the Agency. Such payments will be the lesser of: (a) fifty percent (50%) of the project's end- of-year cash balance or (b) $1,200. After the 601h year of the loan agreement, should OCCHC elect to terminate the project's income and affordability restrictions, all remaining unpaid principal and interested on the Agency's loan will be due; however, the unpaid balance of the loan will not require repayment and will not accrue further interest charges for whatever period OCCHC maintains the income and affordability restrictions on the properties. 17. OCCHC must agree to indemnify the Agency against any relocation obligations and expenses that may arise during the term of the loan agreement. If relocation is required, OCCHC must submit a relocation plan to the Agency prior to the removal of any tenants from the property. The plan must include the following for each affected household: name, gender, age, ethnicity, household size, income, and relocation cost. In addition, OCCHC must comply with all obligations under the Uniform Relocation Act. This relocation requirement does not apply to tenants required to move due to an increase in household income. In such instances, because such households would no longer qualify for residency in an affordable unit, the law does not require relocation assistance. 18. OCCHC will provide adequate insurance to protect the Agency from loss due to fire or other standard property hazards. Both properties must be insured for an amount equal to the Agency's loan amount, including any senior encumbrances. The Agency must be designated on such insurance as an additional loss payee. The properties are not located in a designated 100-year flood zone, so flood insurance coverage will not be required. Page 3 of 4 19. OCCHC will comply with all federal, state, and local nondiscrimination, fair housing, and equal opportunity requirements. In addition, OCCHC will conduct affirmative marketing and minority outreach activities as required by HOME regulations. 20. The Agency will have a first right of refusal to purchase the property should OCCHC choose to sell the property. The Agency must be given written notice of an intent to sell the property, upon receipt of such written notice, the Agency will have 90 days to exercise its option. Should the Agency elect not to exercise this option, it will have the right to approve any buyer of the property. Under this scenario, OCCHC will agree to make every reasonable effort to sell the property to another nonprofit affordable housing organization with similar experience and qualifications managing properties with income and affordability restrictions. 21. Should OCCHC default on any of the terms of its loan agreement, the full loan amount including all interest will become immediately due. The Agency will have the right to take over ownership and management of the property in the event OCCHC is unable to cure a default. Page 4of4 3f1 Resolution Number A Resolution of the Redevelopment Agency of the City of Huntington Beach Declaring Intention to Reimburse Expenditures from the Proceeds of Tax-Exempt Obligations and Directing Certain Actions 311 RESOLUTION NO � f A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH DECLARING rNTENTION TO REIMBURSE EXPENDITURES FROM THE PROCEEDS OF TAX-EXEMPT OBLIGATIONS AND DIRECTING CERTAIN ACTIONS WHEREAS, the Redevelopment Agency of the City of Huntington Beach or a public entity associated therewith (the "Issuer") intends to issue tax-exempt obligations (the "Obligations") for the purpose, among other things, of assisting in the financing of the acquisition, rehabilitation and development of a multifamily housing residential facility located at 17411 and 17421 Koledo Lane, Huntington Beach, California (the "Project"); and United States Income Tax Regulations section 1.103-18 provides generally that proceeds of tax-exempt debt arc not deemed to be expended when such proceeds are used for reimbursement of expenditures made prior to the date of issuance of such debt unless certain procedures are followed, among which is a requirement that (with certain exceptions), prior to the payment of any such expenditure, the issuer must declare an intention to reimburse such expenditure; and It is in the public interest and for the public benefit that the Issuer declare its official intent to reimburse the expenditures referenced herein; NOW, THEREFORE, BE IT RESOLVED that the Redevelopment Agency of the City of Huntington Beach DECLARES and ORDERS as follows: 1. The Issuer intends to issue the Obligations for the purpose of paying the costs of financing the acquisition, rehabilitation and development of the Project. 2. The Issuer hereby approves the financing of the Project with the proceeds of the Obligations subject to the approval by the Issuer of the bond documents to be executed in connection therewith. 3. The Issuer hereby declares that it reasonably expects that a portion of the proceeds of the Obligations will be used for reimbursement of expenditures for the acquisition, rehabilitation and development of the Project that are paid before the date of initial execution and delivery of the Obligations. 4. The maximum amount of proceeds of the Obligations to be used for reimbursement of expenditures for the acquisition, rehabilitation and development of the Project that are paid before the date of initial execution and delivery of the Obligations is $570,000. 5. The foregoing declaration is consistent with the budgetary and financial circumstances of the Issuer, in that there are no funds (other than proceeds of the Obligations) that are reasonably expected to be (1) reserved, (ii) allocated or(ill) otherwise set aside, on a long-term basis, by or on behalf of the Issuer, or any public entity controlled by or associated 0OrtS0!0h1 i gal ions18125/00 1 Res. No. 2806 3}f 31I with the Issuer for the expenditures for the acquisition, rehabilitation and development of the Projects that are expected to be reimbursed from the proceeds of the Obligations. PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at a regular meeting thereof held on the 5th` day,,. September 2000. ATTEST: Chairman Agency Clerk APPROVED AS TO FORM: REVIEWED AND APPROVED: '--Agency Attorney Q ry INITIATED AVD APPROVED: Exe tive Director Director of Economic Development 00resoioblFgzuons`8125iOO 2 31I Res. N o.-2@BB-3#4— STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, Clerk of the Redevelopment Agency of the City of Huntington Beach, California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Huntington Beach at a regular meeting of said Redevelopment Agency held on the 5th day of September, 2000 and that it was so adopted by the following vote.- AYES: Julien, Sullivan, Harman, Garofalo, Green, Dettloff, Bauer NOES: None ABSENT: None ABSTAIN: None �cd�i4�t/ Clerk of the Redevelopme Agency of the City of Huntington Beach, CA Site Map ATTACHMENT #4 Site Map 17411 and 17421 Koledo Lane Huntington Beach, California 92647 WARNER FIR DR _ r eui■o1■i crrr[Il 4 ln,l 1q.1 I,NI 1� _I IIZ � Ylrl! T •Y A iY[ 117R lq)1 :):al I)l:7 FIB I Z �1X z )[ 1gal 110i7 lq.l -r J lMr 1'.I l Tlir 1 Paz ;11f. I)10r IS:OI 1rIM 1 � N L5bTCj UN 1 C 1r177 limn I I`1l: - Pl n_ u111 1711- 17421 EIAV ll }�I�� 1 f l I n wo w[ IIL PARK 1111tr •:ii: 1177! 17)I) :rib 1]J 17 11112 :1191 l,ju s11i1 = 11r.r milli 2 ]]1,r 11r11 Q I ilia J inn l'� Y l,)11 l+ 1 C0 lru A •.. 1r1 1)111 OAK VIEW SCHOOL MANDRE'LL DR JIM T N Z 1n, - 11 1JJ11 z (17241 OAK) JL mu c s S*ftsOs ADU 9 Aiml i IT7:1 1n11 9ARTON DR. 117q I'M a � e 17300- I llrl tau 1rr71 reM, 1'1L 111i1 ]]li] r]n- 77), lTwl I+rI] oni IIUI , mail 1:11 L1 111[.j 17.rl Ir.lr IITI 1]!7. IIH. :Nrl 11a Z7 l,I,l 1�a11 1 hail IT.1) )1.1, „! lT•11 42.1] I]an ,.} 1]a_1 Z 11a)1 J Iran 1]all !] 1)mil ll]a7 )}all 1 IT.I] 31 l'.11 11.1) 1T111 Z l a.} l'•a 1. „ram ll..l = lT«7 N l R - 11.+1 11a11 J W J 1].a,a 15 r it 11.41 l•.0 V Y O E R i 7 _ `I Y fall tT�7 1 a., SLATER RCA ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Approve An Owner Participation Loan Agreement With Orange Count CommunityHousingCorporation OCCHC COUNCIL MEETING DATE: I September 5, 2000 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Attached Contract/Agreement (wlexhibits if applicable) (Signed in full by the City Attome ) Attached Subleases, Third Party Agreements, etc- (Approved roved as to form by City Attomgj Not Applicable Certificates of Insurance (Approved by the City Attome ) Not Attached (Explain) Financial Impact Statement (Unbud et, over$5,000) Attached Bonds (If a plicable) Not Applicable Staff Report If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Find in s/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS The City's insurance requirements are requested to be temporarily waived until the close of escrow. At that time, insurance certificates will be obtained and approved. REVIEWED RETURNED FORWARDED Administrative Staff Assistant City Administrator Initial City Administrator Initial rCity Clerk ) EXPLANATION FOR RETURN OF ITEM: Space • Only) RCA Author HOLTZ(5901) REQUEST FOR LATE SUBMITTAL (To accompany RCA's submitted after Deadline FDevFelopment artment: Economic Subject Owner Particpation Agreement with OCCHC Council Meeting Date: 9I5100 Date of This Request: 8/28/00 REASON (Why is this RCA being submitted late?), Was awaiting resolution and internal signatures. EXPLANATION (Why is this RCA necessary to this agenda?)_: OCCHC must close escrow on these units by the end of September or lose a $15,000 deposit. 915 approval will ensure close of escrow by the end of the month. CONSEQUENCES How shall delay of this RCA adversely impact the City?): No action may_- _ result in the loss of 10 affordable housing units in the Oakview area Signature: G-Approved 0 Denied k�A 60 VDepartmW Head Ray Silver City Administrator DocumenO 07/14/94 Loan Agreement with Orange County Community Housing Corporation (OCCHC) - r . City of Huntington Beach > September 5, 2000 Agenda Item F-2 Background a OCCHC will buy and rehabilitate two 5-unit buildings in Oakview. ® Buildings are located next to each other at 17411 & 17421 Koledo Lane. a OCCHC already owns ten multi-family buildings in Oakview (six of these are in the Koledo Park area). * Koledo Lane is a strategic area for acquisition and rehabilitation projects. Proposal a OCCHC will buy two buildings (with a total of 10 two-bedroom units) for $700,000. a The Agency will provide $370,000 of Set Aside & HOME funds to assist with acquisition. a The Agency will provide $200,000 to assist with rehabilitation. e OCCHC will obtain additional conventional- lender financing of $300,000. a Total Agency support will be $570,000 ($57,000 per unit). Household Income Limits All Tenants will be Very Low-Income Household Size Median Income Very Low-Income 1 $48,700 $24,350 2 $55.700 $27,850 3 $62,600 $31,300 4 $69,600 $34,800 5 $75,200 $37,600 6 $80.700 $40,350 r. 2 Affordable Rents for 2 Bedroom Units * 8 units will rent for $783 per month * 2 units will rent for 30% of each tenant's gross monthly income (rent may not exceed $783 per month) Deal Points * Income and rent restrictions will remain on both properties for at least 60 years. * Loan repayment will begin in 3 years. e Annual payments will be the lesser of: • $1 ,200 • Half of project residual cash flow ® Loan principal and 6% annual interest must be repaid before affordability restrictions go away. 3 Additional Loan Terms • During Rehabilitation • OCCHC will provide tenant relocation • All rehab work will be approved by City • After Rehabilitation • Tenants must be very low-income • Rents must be affordable • Maximum unit occupancy limits must be enforced (5 persons per unit) • The property must be well maintained Recommended City Action e Temporarily waive the City's insurance requirements until the close of escrow. This will allow the Agency to approve the loan now. 4 Recommended Agency Action • Approve a $570,00 loan agreement with OCCHC for the acquisition and rehabilitation of 17411 & 17421 Koledo Lane. o Authorize the Agency Chairman and Clerk to execute/record the loan agreement and all attachments. • Authorize the wire transfer of funds to escrow for the property acquisition. o Adopt Resolution No. , which would allow the Agency to consider issuing future housing bonds for this project. ti l The End 5