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Home My WebLink AboutOrange County Community Housing Corporation (OCCHC) - 2014-09-15 Dept.ID ED 14-33 Page 1 of 2 Meeting'/Date:911512014 r CITY OF HUNTINGTON BEACH REQUEST FOR. CITY COUNCIL ACTION MEETING DATE: 9/15/2014 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Manager PREPARED BY: Kenneth A. Domer, Assistant City Manager Kellee Fritzal, Deputy Director, Office of Business Development SUBJECT: Adopt Resolution No. 2014-73 approving an Affordable Housing Agreement between the City and Orange County Community Housing Corporation (OCCHC) for rehabilitation of a nine-unit multi-family complex located at 313 11th Street Statement of Issue: City Council is requested to approve an Affordable Housing Agreement between the City and Orange County Community Housing Corporation (OCCHC). This Agreement will facilitate the rehabilitation of a nine-unit multi-family complex located at 313 11th Street. The apartment building currently houses Project Self-Sufficiency (PSS) participants. Financial Impact: This Agreement allocates $305,000 of HOME Federal Housing Funds for the rehabilitation Account Number 84380401. Recommended Action: A) Adopt Resolution No. 2014-73, "A Resolution of the City Council of the City of Huntington Beach Approving an Affordable Housing Agreement Between the City and Orange County Community Housing Corporation;" and, B) Authorize the Mayor and City Clerk to execute the Affordable Housing Agreement with OCCHC; and, C) Authorize the City Manager and City Clerk to take any action and execute any and all documents and agreements necessary to implement the Agreement with OCCHC. Alternative Action(s): Do not approve the Affordable Housing Agreement and direct staff as appropriate. Analysis: The apartment building located at 313 11th Street is a nine-unit multi-family apartment building which houses Project Self-Sufficiency participants. In 1993, the Redevelopment Agency entered in a Loan Agreement with OCCHC, a non-profit organization, using 20% set aside funds, in the amount of $635,000, to purchase the property at 313 11th Street. The Redevelopment Agreement was to provide housing to very-low income households making all nine units available, on a priority basis, to PSS participants. The Redevelopment Agency Agreement is due to expire December 23, 2023. HB -211- Item 11. - I Dept. ID ED 14-33 Page 2 of 2 Meeting Date:9/15/2014 OCCHC qualifies as a Community Housing Development Organization (CHDO), which makes them eligible to receive HOME program funds. Since 1993, OCCHC has partnered with the City to create and manage affordable housing for low- and very-low income families. Currently, OCCHC owns eight (8) apartment complexes in Huntington Beach, with 52 units. When OCCHC purchased the apartment building in 1993, minor rehabilitation was preformed to the building. The building requires additional rehabilitation which includes exterior stucco, roof, sewer, electrical, plumbing, and multiple door and window replacement. The Agreement calls for the following terms: - Units to be affordable for a minimum of 55 years. - Restrict Occupancy to Very- Low HOME (50% AMI). The apartment has five (5) one- bedroom units and five (5) two-bedroom units which would be leased to households earning up to 50% of Area Median Income - with priority to PSS participants. - 3% Simple Interest Rate. - A Management and Maintenance Plan submitted by OCCHC to be approved by the City Manager or designee and to be reviewed on a quarterly-basis through a "Quarterly Report." The term of the HOME Funds loan will be fifty-five (55) years with 3% interest. This loan will be repaid by annual payments to the City from residual receipts once the project is completed. Residual receipts are defined as the amount by which the gross revenue exceeds annual operating expenses. OCCHC will annually submit an audit by an independent certified public accounting firm. A Public Notice of Intent to Request Release of Funds was published in the Huntington Beach Independent on Thursday, August 28, 2014, for a seven-day review period ending September 5, 2014. On September 8, 2014, a Request for Release of Funds and Certification was sent to U.S. Department of Housing and Urban Development (HUD) for a 15-day review and consideration of projects to the release of funds. Environmental Status: A Level of Environmental Review was completed and the project is Categorical Exclusion Subject to 58.5 (58.35(a)), under Section 58.35 (3(ii)). Strategic Plan Goal: Enhance quality of life Attachment(s): 1. Adopt Resolution No. 2014-73, "A Resolution of the City Council of the City of Huntington Beach Approving an Affordable Housing Agreement Between the City and Orange County Community Housing Corporation" Item 11. - 2 HB -212- RESOLUTION NO. 2014- 73 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING AN AFFORDABLE HOUSING AGREEMENT BETWEEN THE CITY AND ORANGE COUNTY COMMUNITY HOUSING CORPORATION WHEREAS, Orange County Community Housing Corporation("Owner") is the owner of real property located at 313 11 Street in the City of Huntington Beach ("Property"), which is improved with nine housing units and is currently operated by Owner as affordable rental housing for very low income households. WHEREAS, Owner proposes to rehabilitate the units for continued operation as affordable housing for very low income households for an extended period of fifty-five years. WHEREAS,the City of Huntington Beach ("City") administers HOME Investments Partnership Program("HOME Program")funds made available to it by the United States Department of Housing and Urban Development, and seeks to provide a loan of HOME Program funds to Owner in the amount of$305,000 ("HOME Loan"), for payment of Owner's costs of rehabilitating the units. WHEREAS, the City published a Notice of Intent to Request Release of Funds for the HOME Loan, in accordance with HUD requirements, and has duly considered all comments received. WHEREAS,the project is categorically excluded from the environmental review requirements of the National Environmental Policy Act as rehabilitation of multifamily residential buildings (with five or more units) under 24 CFR 58.35(a)(3)(ii). WHEREAS, the project is categorically exempt from the environmental review requirements of the California Envirommental Quality Act("CEQA"), as rehabilitation of an existing facility under State CEQA Guidelines Section 15301(c). WHEREAS, Owner has submitted to the City a proposed Affordable Housing Agreement between the City and the Owner dated as of September 15, 2014 (the "Affordable Housing Agreement") in a form desired by the Owner. NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of the City of Huntington Beach as follows: Section 1. The Affordable Housing Agreement hereto as Exhibit A is approved and adopted. Section 2. The City Manager, or designee, is instruments and take all actions Housing Agreement and to execute all Resolution No. 2014-73 necessary and convenient to carry out and implement the Affordable Housing Agreement and to administer the City's obligations, responsibilities and duties to be performed thereunder. PASSED AND ADOPTED by the City Cod cif h September,of Huntington Beach at a regular meeting thereof held on the 15th Y of Mayor REVIEW D AND APPROVED: APPROVED AS TO FORM: city �an g r City Attorney INITIATED AND APPROVED: Economic Deye �pment Deputy Director 13-3879/112493.doc 2 73 AFFORDABLE HOUSING AGREEMENT By and Between THE CITY OF HUNTINGTON BEACH, A municipal corporation of the State of California and ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation (313 11th Street) TABLE OF CONTENTS PAQE ARTICLE 1. DEFINITIONS ................................1 ............................................................. ARTICLE 2. SUBJECT OF THIS AGREEMENT...........................................................8 Section 201 Purpose of the Agreement............................................................................8 Section 202 City ...................................................8 Section203 Owner....:......................................................................................................8 Section 204 Prohibition Against Transfers; Right of First Refusal.................................9 ARTICLE 3. RELOCATION OBLIGATIONS...............................................................10 Section301 Relocation Plan..........................................................................................10 Section 302 Relocation Activities and Costs.................................................................10 ARTICLE4. FINANCING........................................:.....................................................10 Section 401 The Project Budget.....................................................................................10 Section 402 The City Assistance...................................................................................11 Section 403 Priority of City Lien ......................I 1 ............................................................. Section 404 Disbursement of HOME Loan...................................................................I 1 Section 405 Conditions Precedent to Closing................................................................12 ARTICLE 5. REHABILITATION OF THE IMPROVEMENTS...................................13 Section 501 Scope of Work .... ..................................13 .................................................. .. Section 502 Construction Drawings and Related Documents.......................................13 Section 503 City Approval of Plans, Drawings and Related Documents......................14 Section504 Cost of the Work............................:...........................................................14 Section 505 Schedule of Performance...........................................................................15 Section 506 Accessibility Requirements........................................................................15 Section 507 Local, State,and Federal Laws..................................................................16 Section 508 Hazardous Substances................................................................................17 Section 509 Nondiscrimination During Construction....................................................18 Section510 Insurance....................................................................................................18 Section 511 Indemnification..........................................................................................19 Section 512 Disclaimer of Responsibility by the City...................................................19 Section513 Rights of Access ........................................................................................20 Section 514 Taxes, Assessments,Encumbrances and Liens .........................................20 Section 515 Rights to Plans ...20 Section 516 Hazardous Materials..................................................................................21 ARTICLE 6. USE OF THE PROPERTY........................................................................21 Section601 Uses............................................................................................................21 Section 602 Management Plan; Annual Project Budget;Management Reports.............21 Section 603 Maintenance of the Property.............................................................*........22 Section604 Lead-Based Paint. .....................................................••.......................••••••..23 OCCHC—313 11"'STREET AFFORDABLE HOUSING AGREEMENT Page i Section 605 Barriers to the Disabled..............................................................................23 Section 606 Creation of Capital Reserve Account............................:............................23 Section 607 Capital Reserves.........................................................................................23 Section 608 Obligation to Refrain from Discrimination................................................24 Section 609 Effectiveness and Duration of Covenants..................................................24 Section 610 Effect of Violation of Covepants...............................................................24 Section611 CHDO Provisions......................................................................................25 ARTICLE 7. DEFAULTS,REMEDIES AND TERMINATION...................................25 Section 701 Defaults;Notice of Cure; Cure Rights.......................................................25 Section 702 Institution of Legal Actions .......................................................................26 Section 703 Applicable Law..........................................................................................26 Section 704 Acceptance of Service of Process..............................................................26 Section 705 Rights and Remedies Are Cumulative.......................................................26 Section 706 Specific Performance.................................................................................26 Section 707 Termination Due to Failure of Construction Financing Event ..................27 Section 708 Termination by Either Parry.......................................................................27 Section 709 Limited Recourse Obligations...................................................................27 Section 710 Owner's Remedies.....................................................................................28 Section 711 Attorney's Fees..........................................................................................28 ARTICLE 8. GENERAL PROVISIONS.........................................................................28 Section 801 Owner's Warranties...................................................................................28 Section 802 Notices, Demands, and Communications Between the Parties .................29 Section 803 Conflicts of Interest....................................................................................29 Section 804 Titles and Captions .....................................................................:..............29 Section 805 Gender.......................................... ...................29 ........................................... Section806 Modifications.........:.................................... ............................................29 Section 807 Merger of Prior Agreements and Understandings .....................................29 Section 808 No Third Parties Benefited........................................................................29 Section 809 Assurances to Act in Good Faith...............................................................30 Section 810 Warranty Against Payment of Consideration for Agreement; No RealEstate Commissions.......................................................................................30 Section 811 Nonliability of City Officials and Employees............................................30 Section 812 Interpretation..............................................................................................30 Section813 Counterparts...............................................................................................30 Section814 Severability................................................................................................30 Section 815 Extension of Times of Performance..........................................................30 Section 816 Inspection of Books and Records...............................................................31 Section817 Waivers......................................................................................................31 ARTICLE 9. EXECUTION OF AGREEMENT;TIME FOR ACCEPTANCE.............31 OCCHC—313 11 TH STREET AFFORDABLE HOUSING AGREEMENT Page ii LIST®F EXHIBITS EXHIBIT 1 - LEGAL DESCRIPTION EXHIBIT 2 - SITE MAP EXHIBIT 3 - SCOPE OF WORK EXHIBIT 4 - PROJECT BUDGET EXHIBIT 5 - SCHEDULE OF PERFORMANCE EXHIBIT 6 - HOME NOTE EXHIBIT 7 - HOME DEED OF TRUST EXHIBIT 8 - HOME REGULATORY AGREEMENT EXHIBIT 9 - ENVIRONMENTAL INDEMNITY EXHIBIT 10 - ASSIGNMENT OF AGREEMENTS EXHIBIT I 1 - ASSIGNMENT OF RENTS &LEASES OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page iii AFFORDABLE HOUSING AGREEMENT BETWEEN THE CITY OF HUNTINGTON BEACH AND ORANGE COUNTY COMMUNITY HOUSING CORPORATION (HOME PROGRAM—313 11'STREET) THIS AFFORDABLE HOUSING AGREEMENT ("Agreement"), dated as of September 15, 2014, is entered into by and between THE CITY OF HUNTINGTON BEACH, a municipal corporation of the state of California ("City"), and ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation("Owner"). RECITALS A. Owner is the owner of the "Property" (as defined herein), which is improved with nine units of rental housing. B. Owner operates the Property as affordable housing for very low income persons, with priority given to households participating in the City's "Project Self-Sufficiency," in accordance with the terms of a Loan Agreement between the Owner and the Redevelopment Agency of the City of Huntington Beach, dated as of December 23, 1993. C. Owner proposes to rehabilitate the Property, as described in the Scope of Work attached as Exhibit 3 (the"Project") for continued operation as affordable rental housing for very low income persons. D. The City desires to preserve and expand affordable housing in the community by making a loan to Owner of HOME Investment Partnership Program funds ("HOME Funds") in the.original principal amount of THREE HUNDRED FIVE THOUSAND DOLLARS ($305,000) (the "HOME Loan"), subject to and conditioned upon the terms and conditions of this Agreement. 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 ARTICLE 1. DEFINITIONS The following terms, as used in this Agreement, will have the meanings given unless expressly provided to the contrary: OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 1 "Affiliate" means (i) any party directly or indirectly controlling, controlled by or under common control with another party, (ii) any party owning or controlling 10% or more of the outstanding voting securities of such other party, (iii) any officer, director or partner of such party, or (iv) if such other party is an officer, director or partner, any company for which-such party acts in any such capacity. "Affordable Rent"means rental rates not to exceed the applicable rent limits set forth by the HOME Program in 24 C.F.R. 92.252(a) and 24 C.F.R. 92.252(b). Affordable Rent must include a reasonable utility allowance for tenant-paid utilities based on the Orange County Housing Authority's published utility schedules. 1) In the case of a Very Low Income Unit, the rent must meet either(a) or(b) of the following rent requirements: (a) The rent does not exceed the lesser of(1) 30 percent of the annual income of a family whose income equals 50 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families, as provided by HUD; (2) the fair market rent for existing housing for comparable units in the area as established by HUD under 24 CFR 888.111; or (3) 30 percent of the adjusted income of a family whose annual income equals 65 percent of the median income for the area, as determined by HUD, with adjustments for the number of bedrooms in the unit; or (b) The rent does not exceed 30 percent of the family's adjusted income. If the unit receives Federal or State project-based rental subsidy and the Very Low Income family pays as contribution toward rent not more than 30 percent of the family's adjusted income, then the maximum rent (i.e., tenant contribution plus project-based rental subsidy) is the rent allowable under the Federal or State project-based rental subsidy program. "Affordable Unit" means one of the nine (9) rental dwelling units on the Property restricted to occupancy by Very Low Income Households at Affordable Rent. "Agreement" or any reference to this "Agreement" means this Affordable Housing Agreement executed by and between City and Owner, including all exhibits attached hereto, which exhibits are incorporated herein by this reference and all other documents incorporated herein by reference. "Approved Title Conditions" means title that is subject to current property taxes and assessments, easements and other encumbrances specifically approved by the City Manager. "Area Median Income" means the area median income of the Orange County primary metropolitan statistical area (PMSA), with adjustments for household size, as estimated annually by the United.States Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937 as amended. OCCHC—313 11M STREET AFFORDABLE HOUSING AGREEMENT Page 2 "Assignment of Agreements" means the assignments by Owner to City of plans, contracts and permits, substantially in the form attached hereto as Exhibit 10. "Assignment of Rents and Leases"means a document substantially in the form attached hereto as Exhibit 11. "City" means the City of Huntington Beach, a municipal corporation of the State of California, and any assignee of, or successor to,the rights, powers, and responsibilities of City. "City Manager" means the individual duly appointed to the position of City Manager of the City, or authorized designee. Whenever an administrative action is required by City to implement the terms of this Agreement, the City Manager, or an authorized designee, will have authority to act on behalf of City, except with respect to matters reserved under California law or the City's Charter wholly for City Council determination. "Completion" means, with regard to rehabilitation of the Improvements, the satisfaction of each of the following events: (i) the City will have determined that rehabilitation of the Improvements has been completed substantially in accordance with the plans approved by the City (as may be modified in accordance herewith), (ii) certification by the Project architect, or if there is no Project architect, by the Owner, that rehabilitation of the Improvements (with the exception of minor "punchlist" items) has been completed in a good and workmanlike manner and substantially in accordance with the approved plans and specifications; (iii) if required by the City in its regulatory capacity, temporary or permanent certificates of occupancy will have been issued by the City with respect to all of the Units, (iv) the time for Owner's contractor, suppliers and subcontractors to file a claim pursuant to Civil Code Sections 3115-3117 has expired or Owner has delivered to the City unconditional lien releases for its contractor, suppliers and subcontractors, and any mechanic's liens that have been recorded or stop notices that have been delivered have been paid, settled or otherwise extinguished, discharged, released, waived, bonded around or insured against, (v) a notice of completion pursuant to Civil Code Section 3117 has been duly recorded in the land records of Orange County, and (vi) the units are fit for occupancy. Upon the Completion of the Project, the City and Owner will attach an addendum to this Agreement setting forth the date of Completion for purposes of determining the maturity date of the HOME Loan and the termination date of the Restricted Period. "Construction Financing Event" means the point in time when all conditions.precedent to the recording of the City's HOME Loan Documents have been satisfied. "Days" means calendar days and the statement of any time period herein will be calendar days and not working days,unless otherwise specified. "Effective Date" means the date this Agreement is executed by the City; which date will be set forth opposite the signature of the City Manager. "Eligible Tenant" means any person entitled to rent an Affordable Unit as set forth in the HOME Regulatory Agreement. OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 3 "Environmental Indemnity" means an instrument substantially in the form attached to this Agreement as Exhibit 9. "Force Majeure" or "Force Majeure Event" means the following events, provided that they actually delay and interfere with the timely performance of the matter to which it would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such interference: war; insurrection; strikes; lock- outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority, litigation including litigation challenging the validity of this transaction or any element thereof; unusually severe weather; inability to secure necessary labor, materials or tools, provided that such inability is not caused by the party claiming a Force Majeure Delay; delays of any contractor, subcontractor, or suppliers, provided that such delay is not caused by the party claiming a Force Majeure Delay; acts of the other parry; acts or failure to act of any Governmental Agency (except acts or failure to act of the City will not excuse performance by the City); the imposition of any applicable moratorium by a Governmental Agency; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Event unless and until the party claiming such delay and interference delivers to the other parry written notice describing the event, its cause, when and how such party obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay will deliver such written notice within ten (10) business days after it obtains actual knowledge of the event. "Force Majeure Delay" means any delay in taking any action required by this Agreement, proximately caused by the occurrence of any Force Majeure Event. "Governmental Approvals" means and include any and all general plan amendments, zoning approvals or changes, required approvals and certifications under the California Environmental Quality Act, tentative and final tract maps, variances, conditional use permits, demolition permits, excavation/foundation permits, grading permits, building permits, inspection reports and approvals, certificates of occupancy, and other approvals, permits, certificates, authorizations, consents, orders, entitlements, filings or registrations, and actions of any nature whatsoever required from any Governmental Agency in order to commence and complete the Project. "Governmental Agency" means the United States, the State of California, the County of Orange, the City of Huntington Beach or any other political subdivision in which the Property is located, and any court or political subdivision, agency or instrumentality having jurisdiction over the Property. "Hazardous Materials"has the meaning set forth in the Environmental Indemnity. "HOME Deed of Trust" means the Deed of Trust securing the HOME Loan, substantially in the form attached hereto as Exhibit 7. OCCHC—313 11 Tx STREET AFFORDABLE HOUSING AGREEMENT Page 4 "HOME Funds" means the City's allocation of funds from the HOME Investment Partnership Program created by the National Affordable Housing Act of 1990. "HOME Loan" means the City's loan of HOME Funds to Owner in a principal amount of THREE HUNDRED FIVE THOUSAND DOLLARS ($305,000.00), as evidenced by the Home Note and secured by the HOME Deed of Trust pursuant to this Agreement. "HOME Loan Documents" means this Housing Agreement, the HOME Note, the HOME Deed of Trust, the HOME Regulatory Agreement, the Environmental Indemnity, the Assignment of Rents and Leases, the Assignment of Agreements and the UCC 1 Financing Statement. "HOME Note" means that certain Promissory Note evidencing the HOME Loan, substantially in the form attached hereto as Exhibit 6. "HOME Regulations"means 24 CFR Part 92, as amended from time to time. "HOME Regulatory Agreement" means the Regulatory Agreement and Declaration of Covenants and Restrictions substantially in the form attached hereto as Exhibit 8, to be recorded at the Construction Financing Event. The HOME Regulatory Agreement will unconditionally be and at all times remain prior and superior to any lien hereafter recorded against the Property. "HUD"means the United States Department of Housing and Urban Development. "Improvements" means the improvements located on the Property, to be rehabilitated in accordance with this Agreement, including but not limited to the Scope of Work. "Lease"means the lease entered into between Owner and an Eligible Tenant of a Unit. "Net Proceeds" means the amount, if any, by which a refinancing exceeds the amount needed to repay a Senior Loan in full, including principal and interest, any early redemption or prepayment penalty, and customary and reasonable fees and costs of the transaction. "Operating Costs" has the same meaning as the definition of Annual Operating Expenses set forth in the HOME Note. "Owner" means ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation, and any assignee of or successor to its rights, powers and responsibilities approved by the City or permitted by this Agreement. "Permitted Transfer" means any Transfer that is approved by the City or expressly permitted by the terms of this Agreement. "Plans" means any architectural and construction plans and drawings prepared on behalf of Owner for the Project in accordance with this Agreement. OCCHC—313 11 TH STREET AFFORDABLE HOUSING AGREEMENT Page 5 "Person" means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company or other entity, domestic or foreign. "Project" means the rehabilitation of the Improvements on the Property as described in the Scope of Work and the subsequent rental of the Affordable Units to Eligible Tenants at Affordable Rent for a period of not less than 55 years, as more particularly described in the HOME Regulatory Agreement. "Project Budget" means the anticipated sources and uses of funds for the Project as set forth in Exhibit 4. The Project Budget and Owner's proposed method of financing will be subject to change from time-to-time, subject to the prior written approval of Owner and the City Manager or designee, which will not be unreasonably withheld, and subject to and conditioned on such further review and approval by the City Council as is needed to satisfy applicable law, policies and procedures, upon which approval the Project Budget will be replaced by the approved revised Project Budget. "Project Costs" means all costs which are actually incurred by Owner for the Project, and will include, without limitation, all of the items of cost set forth in the Project Budget and similar costs, fees and expenses as approved by the City Manager, but not including Operating Costs. "Property" means that certain real property located in the City of Huntington Beach, County of Orange, State of California, commonly known as 313 11t' Street, Huntington Beach, California, and legally described in Exhibit 1 and depicted on the Property Map attached hereto as Exhibit 2. "Restricted Period" means fifty-five (55) years from the date of Completion of the Project. "Schedule of Performance" means that certain schedule attached hereto as Exhibit 5 setting forth the times upon which performance by the parties under this Agreement is due. "Scope of Work"means that certain exhibit attached hereto as Exhibit 3. "Title Company" means Commonwealth Title Company or another title insurance company mutually acceptable to City and Owner. "Transfer"means: (i) Owner's assignment or attempted assignment of this Agreement or any right herein. (ii) the sale, agreement to sell, transfer or conveyance of the Property, the Project, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment sale contract or similar instrument affecting all or a portion of the Property or Project, the lease of all or substantially all of the Property or Project, except as provided in subparagraph (iv) below, or the appointment of a receiver or trustee to OCCHC—313 11"H STREET AFFORDABLE HOUSING AGREEMENT Page 6 operate or exercise direct or indirect control over any portion of or interest in the Project or to operate or exercise direct or indirect control over Owner or any interest in Owner. (iii) "Transfer" also includes the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of any interest in Owner, or any conversion of Owner to an entity form other than that of Owner at the time of execution of this Agreement, except that, neither (a) a cumulative change.in ownership interest of Owner of forty-nine percent (49%) or less, or (b) transfer to a limited liability company (LLC) of which Orange County Community Housing Corporation is, and remains, the sole member, will be deemed a "Transfer" for purposes of this Agreement. (iv) Notwithstanding paragraphs (i) and (ii), "Transfer" will not include the following Permitted Transfers: (a) the leasing for occupancy of all or any part of the Property or Project in accordance with this Agreement and the HOME Regulatory Agreement; and (b) Any refinancing that repays any portion of a Senior Loan (referred to herein as a "Take-out Loan"), if the City Manager or designee reasonably determines (which determination shall not be unreasonably withheld, conditioned or delayed) that the resulting loan- to-value ratio (including the Take-out Loan, any of the remaining Senior Loan not repaid by the refinancing, and the HOME Loan) will not exceed the loan-to-value ratio in effect at the time of the Construction Financing Event for the Project, and the repayment terms of the Take-out Loan do not materially impair the Trustor's ability to repay the HOME Loan. "UCC1 Financing Statement" means the financing statement(s) to be filed with the California Secretary of State's Office at the Construction Financing Event in connection with the HOME Loan. The Owner hereby consents to the filing of the UCC 1 Financing Statement. "Units" means the five (5) one-bedroom dwelling units and the four (4) two-bedroom dwelling units comprising the Project. "USA Patriot Act" means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107- 56, 115 Stat. 272 (2001), as amended from time to time. "Very Low Income Household" means low-income families whose annual incomes do not exceed 50 percent of the median family income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 50 percent of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes. "Very Low Income Unit" means one of the nine (9) Affordable Units that are reserved for occupancy by Very Low Income Households. OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 7 ARTICLE 2. SUBJECT OF THIS AGREEMENT Section 201 Purpose of the Agreement A. Owner has applied to the City for certification as a Community Housing Development Organization("CHDO"), and has submitted a proposal for use of HOME Program funds for a.CHDO-eligible project under HOME Program regulations and that proposal has been approved by the City, subject to and conditioned upon the terms of this Agreement. The purpose of this Agreement is to promote affordable housing by providing the HOME Loan to assist. Owner in the rehabilitation of the Improvements on the Property for its continued operation as affordable rental housing for Very Low Income persons, with a priority for persons participating in the City's "Project Self-Sufficiency." B. The Project pursuant to this Agreement and the fulfillment generally of this Agreement are in the best interests of the City and the welfare of its residents, and are in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements under which the Project is being undertaken and is being assisted. C. The HOME Loan is conditioned upon the use and operation of the Property for not less than fifty-five (55) years as rental housing, with all nine of the Units restricted to occupancy by Very Low Income Households in accordance with the HOME Regulatory Agreement. Section 202 City. The City is THE CITY OF HUNTINGTON BEACH, CALIFORNIA, a municipal corporation, and includes any assignee or nominee. The address of the City for the purpose of receiving notices pursuant to this Agreement is: The City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Fascimile Number: 714-374-1590 Attention: Economic Development Deputy Director With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Section 203 Owner. The Owner is ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation and includes any permitted assignee or nominee. The address of Owner for the purpose of receiving notices pursuant to this Agreement is: OCCHC—313 11"H STREET AFFORDABLE HOUSING AGREEMENT Page 8 Orange County Community Housing Corporation 2024 N. Broadway, P Floor Santa Ana, CA 92706-2623 Facsimile number: 714-558-0423 Attention:Executive Director Section 204 Prohibition Against Transfers; RiLht of First Refusal. A. The qualifications and identity of the Owner are of particular concern to the City. It is because of those qualifications and identity that the City has entered into this Agreement with the Owner. No voluntary or involuntary successor in interest of the Owner will acquire any rights or powers under this Agreement except as expressly set forth herein. B. Owner agrees that Owner will not sell the Property during the term of the HOME Regulatory Agreement, unless and until Owner has given to City notice in writing of its intent to sell, specifying the identity of the prospective buyer and the price and terms of the contemplated sale. Within ninety (90) days after Owner gives City written notice of Owner's intent to sell, City will have the right to purchase the Property at the same price and on the same terms and conditions set forth in Owner's written notice of intent to sell. The City may assign the right granted to it under this paragraph to an entity of its choosing. To exercise this right, City or its assignee 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 Owner's notice of intent to sell to be paid or delivered to Owner on close of escrow and will also give Owner written notice of the deposit. If City or its assignee does not exercise the right in accordance with the provisions of this Section, Owner may sell the Property to the prospective buyer for the price and on the terms contained in the notice; provided, however, that City must have reasonably approved such prospective buyer in advance in writing, including the City's determination that the prospective buyer is a certified CHDO and has satisfactory experience in the field of low-income housing (including the management of properties with income and affordability restrictions). If for any reason the Property is not sold to the prospective buyer, on receiving any subsequent offer from any third party that is acceptable to Owner, Owner will give City a right to purchase the Property on the same terms as set forth above. C. For the reasons cited above, the Owner represents and agrees for itself and any successor in interest that, except for the Permitted Transfers set forth in the definition of "Transfer" or as otherwise expressly permitted under this Agreement, without the prior written approval of the City (not to be unreasonably withheld, conditioned or delayed), there will be no significant change in the ownership of the Owner. D. The Owner will promptly notify the City of any and all changes whatsoever in the identity of the parties in ownership and/or in control of the Owner or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. The City may exercise any and all available remedies, including termination of this Agreement, if there is any significant change (voluntary or involuntary) in membership, ownership, management or control, of the Owner, including but not limited to the appointment of a receiver, (other than OCCHC—313 11T"STREET AFFORDABLE HOUSING AGREEMENT Page 9 changes occasioned by the death or incapacity of any individual or as otherwise expressly permitted by this Agreement),without the prior written consent of the City. E. Owner will not Transfer this Agreement, the Property or the Project,,without prior written approval of the City Manager, except as expressly permitted by this Agreement. Any proposed transferee will have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the City to fulfill the obligations undertaken in this Agreement by the Owner. Any such proposed transferee, by instrument in writing satisfactory to the City and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of the City will expressly assume all of the obligations of the Owner under this Agreement and agree to be subject to all conditions and restrictions applicable to the Owner in this Agreement. There will be submitted to the City for review all instruments and other legal documents proposed to affect any such Transfer, and if approval is required and if such Transfer is approved by the City Manager, the City's approval will be indicated to the Owner in writing. F. In the absence of specific written agreement by the City, no Transfer, or approval thereof by the City, will be deemed to relieve the Owner or any other party from any obligations under this Agreement. G. Consent to any Transfer will not be deemed to be a waiver of the right to require consent to future or successive Transfers. H. The provisions of this Section 204 will be of no force or effect as of the expiration of the HOME Regulatory Agreement. ARTICLE 3. RELOCATION OBLIGATIONS Section 301 Relocation Plan If temporary or permanent relocation of existing tenants and/or persons residing in or on the Property is required to implement the Project, Owner will comply with the provisions of a relocation plan prepared by Owner and reviewed and approved by the City("Relocation Plan"). The Relocation Plan will comply with the requirements of the Uniform Relocation Act and the California Relocation Assistance Act and any guidelines promulgated in connection therewith. Section 302 Relocation Activities and Costs. Owner will comply with the requirements of all applicable relocation laws, including, but not limited to, the Uniform Relocation Act and the California Relocation Assistance Act, and will comply with related tenant notice requirements and will provide the City with true and correct copies of such notices to tenants. Owner will also retain all required records and the originals and/or copies of tenant notices in its files as mandated by applicable law. The cost of complying with all applicable relocation requirements for the Project will be the responsibility of Owner. ARTICLE 4. FINANCING Section 401 The Proiect Budget The cost of the Rehabilitation is set forth in the Project Budget attached to this OCCHC—313 11 TH STREET AFFORDABLE HOUSING AGREEMENT Page 10 Agreement as Exhibit 4. The Project Budget will be subject to change from time-to-time, subject to the prior written approval by the City Manager or his designee (which approval will not be unreasonably withheld); upon which approval the Project Budget will be replaced by the approved revised Project Budget. Owner has proposed, and the City has approved, the Project Budget appended to this Agreement. Owner acknowledges that the City is relying on Owner's experience and expertise in establishing the costs for the Project and Owner represents that the Project Budget is based on Owner's best, good faith estimate of the costs that are likely to be incurred for the Project. Owner will be responsible during the Rehabilitation to provide funds if and as needed to pay for cost overruns and contingencies not otherwise funded by the HOME Loan. Owner acknowledges and agrees that the City will have no obligation to increase the amount of the HOME Loan, Section 402 The City Assistance The City agrees to lend to Owner, and Owner agrees to borrow from the City, the HOME Loan, with interest as provided in the HOME Note. The HOME Loan will be secured by the HOME Deed of Trust. Owner agrees to repay the HOME Loan as set forth in the HOME Note. Owner agrees to use the HOME Loan exclusively to pay eligible Project Costs approved by the City. Section 403 Priority of City Lien A. The HOME Deed of Trust will be senior to any other lien or security interest in the Property with the sole exception of the following senior encumbrances (referred to herein as a "Senior Loan"): (i) any deed of trust or other encumbrance of record as of the date of the Construction Financing Event which is shown in the title insurance policy described in the following paragraph and approved by the City as a permitted encumbrance; or (ii) a deed of trust or other encumbrance securing any additional loan of funds to be used in the rehabilitation work, as shown in the Project Budget and approved in advance by the City. Without the express written consent of the City Manager or his or her designee, Owner will not place any encumbrances, or permit any encumbrances to be placed, on or against title to the Property, including security interests that are subordinate to the HOME Deed of Trust. B. On or prior to the Construction Financing Event, the Title Company will record the HOME Deed of Trust, the HOME Regulatory Agreement and such other instruments and documents as the City and Owner may reasonably request,and will issue to the City, if requested by City, at the City's sole discretion and at the expense of Owner: an ALTA lender's policy of title insurance, including such endorsements as the City requires, in the original principal amount of the HOME Loan, insuring that Owner is the fee owner of the Property and that the HOME Deed of Trust constitutes a valid lien covering the Property, and all right, title, interest and estate of Owner therein, subordinate and subject only to the Senior Loan, if any, and other exceptions which the City approves in writing in its sole discretion. Section 404 Disbursement of HONM Loan. A. No portion of the HOME Loan will be disbursed until all conditions precedent to the disbursement of the HOME Loan (described in Section 405, below) have been satisfied. Owner may not request disbursement of any portion of the HOME Loan until funds are needed OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 11 for payment of eligible costs. The amount of each disbursement request must be limited to the amount needed to pay eligible costs. B. Upon satisfaction of all conditions precedent, the City will disburse the HOME Loan, as needed, for the payment of Project Costs as set forth in the Project Budget, in accordance with procedures approved by the City Manager or his designee. C. Owner will carry out the rehabilitation work, and manage and operate the Property in conformity with all applicable requirements of the HOME Program and as set forth in the HOME Regulatory Agreement. Section 405 Conditions Precedent to Closing. The City will not be obligated to make any disbursements of any portion of the HOME Loan unless and until all of the following conditions precedent are satisfied on or before the date set forth in the Schedule of Performance: i. Owner will have satisfied all of the HOME Regulation and City requirements to be certified as a CHDO. ii. Owner will submit, and the City Manager or designee will have approved, the rehabilitation contract described in Paragraph D. of Section 504. iii. Owner will prepare and submit, and the City Manager or designee will have approved, a final Project Budget, to be current as of the Construction Financing Event, demonstrating to the satisfaction of the City Manager or designee that the HOME Loan will be sufficient to pay all Project Costs. iv. Owner will obtain all licenses, franchises, permits, governmental approvals and agreements required. for the rehabilitation work. v. Owner will deliver to the City Manager or designee a loan draw-down schedule showing a detailed breakdown of the estimated periods of commencement and completion of the rehabilitation work. vi. Owner will have executed and delivered to the City Manager or designee the HOME Regulatory Agreement, the HOME Note, the HOME Deed of Trust, the Assignment of Rents, the Environmental Indemnity and the other HOME Loan Documents. vii. Owner will have delivered evidence acceptable to the City Manager or designee that Owner has obtained the insurance policies required by Section 510 and will have delivered the required endorsements. viii. If required for Owners compliance with applicable relocation laws, Owner will have delivered evidence satisfactory to the City Manager OCCHC—313 11 rx STREET AFFORDABLE HOUSING AGREEMENT Page 12 or designee that the Owner has completed the relocation of existing tenants on the Property in accordance with the Relocation Plan approved by the City. ix. The City Manager or designee will have determined that Owner is in full compliance with the terms and conditions of this Agreement and all documents and instruments referred to herein or executed by Owner in furtherance of this Agreement. x. The title insurance company will be prepared to issue to the Authority the lender's title policy described in Section 403A. xi. Owner will prepare and submit, and the City Manager or designee will approve, the Maintenance Program required by Section 603 and the Management Plan required by Section 602 of this Agreement. xii. Owner will prepare and submit, and the City Manager or designee will approve,the Annual Project Budget required by Section 602. xiii. Owner will prepare and submit, and the City Manager or designee will approve, a form of tenant lease that conforms to the requirements of the HOME Regulatory Agreement. The City may waive any condition of closing set forth herein, however any such waiver must be expressly made in writing. The decision to waive any condition of closing will be in the sole discretion of the City and the decision to waive any requirement may be conditioned upon its satisfaction at a later date and/or upon the substitution of another condition. The disbursement of any portion of the HOME Loan prior to fulfillment of one or'more of the foregoing conditions will not be construed as a waiver of such conditions, and the City reserves the right to require their fulfillment prior to making any subsequent disbursements. ARTICLE 5. REHABILITATION OF THE IlVIPROVEMENTS Section 501 Scone of Work The Improvements .will be rehabilitated in accordance with and within the limitations established in the Scope of Work and plans approved by the City pursuant to this Agreement and permits issued by the City. It is anticipated that Owner will contract for performance of specific activities, including but not limited to activities such as rehabilitation work and management of the Units. Such contracts will not in any way diminish or waive Owner's obligations under this Agreement. Section 502 Construction Drawings and Related Documents A. If construction drawings are required for City permitting purposes, Owner will prepare and submit construction drawings and related documents for the rehabilitation of the Improvements to the City for review (including, but not limited to, architectural review) and written approval at the times established in the Schedule of Performance. The construction drawings and related documents will be submitted in two stages, preliminary and final drawings, OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 13 plans and specifications. Final drawings, plans, and specifications are hereby defined as those in sufficient detail to obtain a building permit. Any items so submitted and approved in writing by the City will not be subject to subsequent disapproval. City approval will not be unreasonably withheld, conditioned or delayed. B. Progressively detailed plans will be approved by the City if exterior spaces and areas open to public view do not vary and the plans otherwise do not materially vary from previously approved plans, and if they are a logical evolution of previously approved plans.and conform to the Scope of Work. In the event of disapproval by the City of any plans submitted by Owner, City will promptly communicate in writing to Owner all reasons for such disapproval and all requirements for subsequent approval of revised plans. C. During the preparation of all drawings and plans, City staff and Owner will hold regular progress meetings to coordinate the preparation of, submission to, and review of construction plans and related documents by the City. City staff and Owner will communicate and consult informally as frequently as is necessary to insure that the formal submittal of any documents to the City can receive prompt and speedy consideration. D. If any revisions or corrections of plans approved by the City will be required by another governmental official, agency, department or bureau having jurisdiction over the Property, Owner and the City will reasonably cooperate in efforts to obtain waiver of such requirements or to develop a mutually acceptable alternative. Neither the City nor Owner will unreasonably withhold approval of a mutually acceptable alternative. Section 503 City Approval of Plans,Drawings and Related Documents As provided in Section 502, the City will have the right of reasonable review (including, but not limited to, architectural review) of all plans, drawings and related documents for the construction of the Property, including any proposed changes therein. The City Manager or designee will approve or disapprove such plans, drawings, and related documents referred to in this Agreement (and any proposed changes therein), in writing, within the times established in the Schedule of Performance. Any disapproval will state, in writing, the reasons for disapproval. Owner, upon receipt of disapproval will revise such portions of the plans, drawings or related documents in a manner that satisfactorily addresses the reasons for disapproval and resubmit such revised portions to the City as soon as possible after receipt of the notice of disapproval. The City will approve or disapprove such revised portions in the same manner and within the same times as provided in this Section for approval or disapproval of plans, drawings, and related documents initially submitted to the City. No matter once approved will be subsequently disapproved. Section 504 Cost of the Work. A. Except as otherwise expressly set forth in this Agreement, the cost of rehabilitating the Improvements will be the responsibility of Owner. The Project Costs are set forth in the Project Budget and the Scope of Work,which will be subject to change from time-to- time as mutually agreed by the City and Owner. Transfers of funds between the line items described in the Scope of Work will require the prior approval of the City Manager or his or her designee. If Owner determines that the funds designated for abatement of hazardous substances will not be required for that purpose, Owner may propose another use for those funds, which OCCHC—313 11 M STREET AFFORDABLE HOUSING AGREEMENT Page 14 could include work not described in the Scope of Work, but which must be approved in advance by the City. B. The Owner has proposed, and the City has approved,the Project Budget appended to this Agreement. Owner acknowledges that the City is relying on Owner's experience and expertise in establishing the costs for the Project and Owner represents that the Project Budget is based on the best, good faith estimate of the Owner of the costs that are likely to be incurred for the Project based upon the information now available to the Owner. C. The Owner will use the City's loan of HOME Funds exclusively for the payment of Project Costs that have been approved in writing by the City. D. Owner will obtain at least three bids for the rehabilitation work from licensed general contractors and will submit copies of the bids to the City. As a condition of the City's disbursement of the HOME Loan, Owner will submit to the City for its approval a general construction contract between Owner and a licensed general contractor approved by the City, containing a fixed maximum price for all the rehabilitation work (including contingencies) required by this Agreement, and providing for the withholding of such retention amounts as required by the City's disbursement procedures, and (if required by the City), performance and payment bonds provided by a surety acceptable to the City, in an amount that is acceptable to the City, guaranteeing the timely completion of the rehabilitation in accordance with the Scope of Work, the Project Budget, and the Schedule of Performance. All construction work and professional services will be performed by persons or entities licensed or otherwise authorized to perform the applicable construction work or service in the State of California. Section 505 Schedule of Performance A. Owner and City will perform all acts respectively required of such parry in this Agreement within the times provided in the Schedule of Performance. B. After the Construction Financing Event, Owner will promptly begin and thereafter diligently prosecute to completion the rehabilitation of the Improvements as provided in the Scope of Work. Owner will begin and complete all rehabilitation work within the times specified in the Schedule of Performance, with such reasonable extensions of said times as may be granted by the City. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing by Owner and the City Manager. C. During periods of construction, Owner will submit to the City a written report of the progress of the construction when and as requested by the City. The report will be in such form and detail as may be reasonably required by the City and will include a reasonable number of construction photographs (if requested) taken since the last report by Owner. Section 506 Accessibility Requirements Owner must ensure that the Project will be rehabilitated and operated to comply with all federal, state, and local requirements for access for disabled persons that apply to the rehabilitation of existing multi-family rental units. OCCHC—313 11T"STREET AFFORDABLE HOUSING AGREEMENT Page 15 Section 507 Local, State,and Federal Laws A. Owner hereby agrees to carry out development, construction (as defined by applicable law) and operation of the Project on the Property, including, without limitation, any and all public works (as defined by applicable law), in conformity with all applicable local, state and federal laws, rules and regulations and all applicable federal and state labor laws (including, without limitation, any requirement to pay state prevailing wages). Owner hereby expressly acknowledges and agrees that the City has never previously affirmatively represented to the Owner or its contractor(s) for the Project in writing or otherwise, in a call for bids or otherwise, that the work to be covered by the bid or contract is not a "public work," as defined in Section 1720 of the Labor Code. Owner hereby agrees that Owner will have the obligation.to provide any and all disclosures, representations, statements, rebidding, and/or identifications which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Owner hereby agrees that Owner will have the obligation to provide and maintain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. The Owner hereby agrees that the Owner will have the obligation, at the Owner's sole cost, risk and expense, to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Owner will indemnify, protect, defend and hold harmless the City and its officers, employees, contractors and agents, with counsel reasonably acceptable to City, from and against any and all loss, liability, damage, claim, cost, expense, and/or "increased costs" (including labor costs, penalties, reasonable attorneys fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction (as defined by applicable law) and/or operation of the Project, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance by Owner of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (2) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any other similar law; (3) failure by Owner to provide any required disclosure, representation, statement, rebidding and/or identification which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; (4) failure by Owner to provide and maintain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and/or (5) failure by the Owner to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. It is agreed by the parties that, in connection with the development, construction (as defined by applicable law) and operation of the Project, including, without limitation, any public work (as defined by applicable law), Owner will bear all risks of payment or non-payment of state prevailing wages and/or the implementation of Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time,.and/or any other provision of law. "Increased costs" as used in this OCCHC—313 11"STREET AFFORDABLE HOUSING AGREEMENT Page 16 Section will have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time. The foregoing indemnity will survive termination of this Agreement and will continue after Completion. B. Owner will be responsible for obtaining all Permits and land use approvals required by the City for the construction of the Project, ensuring that the use of the Property for the purposes described in this Agreement complies with the zoning and other City land use regulations (including any applicable exemptions and/or exceptions) applicable to the Property at the time of Construction Financing Event. C. Prior to or concurrently with the Construction Financing Event, Owner will satisfy all conditions to the issuance of any Permit required for the construction of the Property. The City will provide reasonable assistance to Owner in obtaining permits from other governmental agencies with jurisdiction over the Project but will have no liability to Owner in the event such permits are not obtained in a timely manner. D. This Agreement is not a"Development Agreement" as provided in Section 65864 et sec.. of the California Government Code. Owner will comply with all applicable conditions of approval required by the City of Huntington Beach in its regulatory capacity. Section 508 hazardous Substances. A. Lead-Based Paint and Asbestos Containing- Materials. If the presence of lead- based paint or asbestos hazards on the Property is discovered during the course of the rehabilitation of the Improvements pursuant to this Agreement and Owner determines that, with the taking of appropriate precautions and in compliance with all applicable Hazardous Materials Laws (as such term is defined in the Environmental Indemnity), Owner can carry out the Project without disturbing such hazards, then Owner may proceed to do so. If Owner determines that it will not be able to carry out the Project without disturbing such hazards or if the removal of such hazards is required by applicable Hazardous Materials Laws,then Owner will prepare and submit to the City a plan, in compliance with all applicable Hazardous Materials Laws, for the abatement of any such hazards. Implementation of the plan must qualify the Property for a closure letter or similar clearance from the appropriate governmental entity having jurisdiction over the Property indicating that all lead-based paint and asbestos hazards have been fully abated to the satisfaction of such governmental entity. B. Indemnification. Owner will indemnify, defend, and hold harmless the City and its officers, employees, agents and representatives (collectively,the"Indemnified Parties") from and against any and all liabilities(including penalties, fines and monetary sanctions) arising from a violation of state or federal law occurring after the Construction Financing Event, pertaining to (i) the storage of Hazardous Substances on the Property or(ii) contamination of the Property by a release of Hazardous Substances. As a condition precedent to the Construction Financing Event, Owner will execute and deliver to the City an Environmental Indemnity, substantially in the form of Exhibit 9 to this Agreement. OCCHC—313 11 TH STREET AFFORDABLE HOUSING AGREEMENT Page 17 Section 509 Nondiscrimination During Construction Owner, for itself and its successors and assigns, agrees that during the rehabilitation of the Improvements provided for in the Agreement, Owner will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. Section 510 Insurance A. Owner will procure and maintain, during the term of this Agreement, at its sole cost and expense, until the date that City waives any such insurance requirement or requirements in writing,the following policies of insurance on a Project specific basis: 1. Workers' Compensation Insurance. Pursuant to California Labor Code Section 1861, Owner acknowledges awareness of Section 3700 et seq. of said code, which requires every employer to be insured against liability for workers' compensation. Owner covenants that it will comply with such laws and provisions prior to commencing any work of construction or construction on the Property. To the extent Owner directly employs personnel at the Project, Owner will maintain such Workers' Compensation Insurance in an amount not less than the statutory requirements in California for bodily injury and disease and must maintain employer's liability coverage in an amount not less than ONE MILLION DOLLARS ($1,000,000.00). Owner will require all contractors to provide such Workers' Compensation Insurance for all of the contractors' and subcontractors' employees. Owner will furnish City with a certificate of waiver of subrogation under the terms of the Workers' Compensation Insurance and Owner will similarly require all contractors and subcontractors to waive subrogation. 2. General Liability and Auto Insurance. Owner will carry general commercial liability insurance, including coverage for bodily injury, property damage, products/completed operations and blanket contractual liability in an amount not less than TWO MILLION DOLLARS ($2,000,000.00) per occurrence and FOUR MILLION DOLLARS ($4,000,000.00) annual aggregate, combined single limit for bodily injury and property damage. All such insurance will be provided by insurance companies admitted in California, or if not admitted in California, then reasonably acceptable to City. Such insurance will name the City and its officers, agents, and employees acting in their official capacity, as additional insureds. Owner will carry automobile insurance, including liability coverage for bodily injury and property damage in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence. Owner will require its insurer to waive its subrogation rights against City and will provide certificates of insurance evidencing same. 3. Property Insurance. Owner will obtain and maintain in force, all-perils (to include fire and vandalism protection) property insurance with extended coverage endorsements thereon, on the Property, in an amount equal to the full replacement costs and/or value thereof, this policy will contain a replacement cost endorsement naming City as the insured and will not contain a coinsurance penalty provision. The policy will contain a lender's loss payable endorsement that such proceeds will be used to repair or rebuild any Units or other improvements situated on the Property so damaged or destroyed; and, if not so used, such proceeds will be paid to City. The proceeds of any such insurance payable to City will be used for rebuilding or repair as necessary to restore the site at the sole discretion of City. The policy OCCHC—313 11"H STREET AFFORDABLE HOUSING AGREEMENT Page 18 will name City and its,, officers, agents and employees acting in their official capacity as additional insureds. 4. Certificate of Insurance; Additional Insured Endorsements. Prior to the Construction Financing-Event, Owner will furnish to City certificates of insurance and additional insured endorsements evidencing the foregoing insurance coverages as required by this Agreement. Such certificates and endorsements will be subject to the reasonable approval of the City Attorney and will provide the name and policy number of each carrier and policy and will state that the policy is currently in force and will promise to provide that such policies will not be cancelled without thirty(30) days prior written notice to City. 5. In accordance with the requirements of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001), the Owner will assure that for activities located in an area identified by the Federal Emergency Management City (FEMA) as having special flood hazards, flood insurance under the National Flood Insurance Program is obtained and maintained as a condition of financial assistance for acquisition or construction purposes (including construction). 6. If Owner fails or refuses to procure or maintain insurance as required by this Agreement, City will have the right, at City's election, and upon ten (10) days prior notice to Owner, to procure and maintain such insurance. The premiums paid by City will be treated as a loan, due from Owner, to be paid on the first day of the month following the date on which the premiums were paid. City will give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s). Section 511 Indemnification During the term of this Agreement, Owner agrees to and will protect, defend, indemnify and hold harmless the City and its members, officers, officials, employees, agents, representatives, servants, contractors, successors and assigns 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) Owner'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 to any person or to the property of any person which will occur on the Property and which will be directly or indirectly caused by the acts of, or any errors or omissions of, the Owner or its officers, shareholders, directors, members, agents, servants, employees, contractors, or invitees. Owner will not be responsible for, and the City will protect, defend, hold harmless and indemnify Owner against any liability, loss, damage, cost, or expense (including reasonable attorney's fees and court costs) arising from or as a result of the gross negligence or willful misconduct -of the City or its members, officers, officials, employees, agents, representatives, servants, or contractors. Section 512 Disclaimer of Responsibility by the City Except as otherwise expressly provided in this Agreement, the City neither undertakes nor assumes nor will have any responsibility, right or duty to Owner or to any third party to review, inspect, supervise, pass judgment upon or inform Owner or any third party of any matter in connection with the Property, whether with respect to the quality, adequacy or suitability of the OCCHC—313 11TB STREET AFFORDABLE HOUSING AGREEMENT Page 19 plans, any labor, service, equipment or material furnished to the Project, any person furnishing the same or otherwise. Owner and all third parties will rely upon its or their own judgment regarding such matters, and any review, inspection, supervision, exercise of judgment or information supplied to Owner or to any third party by the City in connection with such matter is for the public purpose of providing affordable housing, and neither Owner (except for the purposes set forth in this Agreement) nor any third parry is entitled to rely thereon. Section 513 Rights of Access The City will have the right, at its sole risk and expense, to enter the Property or any part thereof at reasonable times and with as little interference as possible, for the purpose of inspecting the Property to determine Owner's compliance with this Agreement. To the fullest extent allowed by law, all residential leases will provide for such right of the City. The representatives of the City entering the Property will be identified in writing in advance by the City Manager (or his or her designee). Any such entry will be made only after reasonable notice to Owner, and the City will indemnify and hold Owner harmless from any claims or liabilities pertaining to such entry. Any damage or injury to the Property proximately caused by such entry will be promptly repaired at the sole expense of the City. Section 514 Taxes,Assessments,Encumbrances and Liens Subject to Owner's right to claim any exemption to which it may be entitled under State or local law, Owner will be responsible for paying when due all real estate taxes and assessments, if any, assessed and levied on or against the Property or any portion thereof or interest therein. Owner will not place, or allow to be placed, on the Property or any portion thereof or interest therein, any mortgage, trust deed, encumbrance (excluding easements not unreasonably interfering with the use of the Property) or lien (excluding mechanic's liens paid prior to foreclosure or liens for current year property taxes not paid) except the Permitted Transfers. Owner will remove, or will have removed, any levy or attachment made on the Property (or any portion thereof or interest therein), or will assure the satisfaction thereof within a reasonable time but in any event prior to foreclosure. Nothing herein contained will be deemed to prohibit Owner from contesting the validity or amount of any tax, assessment, encumbrance or lien, nor to limit the remedies available to Owner in respect thereto. The covenants of Owner set forth in this Section 514 relating to the placement of any unauthorized mortgage, trust deed, encumbrance or lien, will remain in effect until Completion. Section 515 Rights to Plans A. All work product prepared pursuant to this Agreement, including (but not limited to), all Plans, construction documents, soils tests and similar reports, Permits and other entitlements are hereby assigned to the City as security for Owner's obligations hereunder. In the event that this Agreement is terminated by the City following an uncured event of default, Owner will, within ten (10) days of such termination, transmit all such work product to the City to the fullest extent possible without representation and warranty. B. To effectuate the assignment described in the preceding paragraph, prior to the Construction Financing Event, Owner will execute and deliver to the City an Assignment of Agreements substantially in the form attached to this Agreement as Exhibit 10 in a form that is acceptable to the City Manager, granting to the City all of Owner's rights to: (1) the Plans OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 20 prepared pursuant to this Agreement; (2) the contracts between Owner and its architect and between Owner and its general contractor; (3) all Permits relating to the Project; and all similar rights and property interests. Section 516 hazardous Materials Owner, from and after the Construction Financing Event will indemnify, defend, and hold harmless City and its officers, employees, agents and representatives (collectively, the "Indemnified Parties") from and against any and all liabilities (including penalties, fines and monetary sanctions) arising from a violation of state or federal law pertaining to (i)the storage of Hazardous Materials on the Property or (ii) contamination of the Property by a release of Hazardous Materials, except to the extent of the Indemnified Parties' gross negligence or willful misconduct. Owner, prior to the Construction Financing Event, will provide to City a copy of any notices, orders, or reports concerning the presence of any Hazardous Materials on or affecting the Property that is in Owner's possession. As a condition precedent to the Construction Financing Event, Owner will execute and deliver to the City an Environmental Indemnity, substantially in the form of Exhibit 9 to this Agreement. ARTICLE 6. USE OF ThE PROPERTY Section 601 Uses Owner covenants and agrees (for itself, its successors, its assigns, and every successor in interest to the Property or any part thereof or any interest therein) that Owner, its successors and assigns will use the Property exclusively to provide affordable housing for Very Low Income Eligible Tenants and associated provision of social and/or community services. Owner further covenants and agrees, for itself, its successors, its assigns, and every successor in interest to the Property, or any part thereof, that for the period beginning on the Construction Financing Event and ending on the expiration date of the HOME Regulatory Agreement, Owner and such successors will not allow any portion of the Property to be used inconsistent with the applicable zoning restrictions, this Agreement, and the HOME Regulatory Agreement. Section 602 Management Plan; Annual Project Budget; Management Reports A. Prior to the Construction Financing Event, Owner will submit for City Manager approval a Management Plan describing the Owner's proposal for managing and operating the Property. The Management Plan will include, without limitation, a description of the proposed social and supportive services to be made available to Project tenants. Any modifications to the approved Management Plan will be subject to the prior written approval (not to be unreasonably withheld or delayed) of the City Manager or designee, for the entire Restricted Period. B. Approval of the Management Plan by the City Manager or designee will be a condition precedent to the Construction Financing Event. Owner will manage and operate the Property in accordance with the approved Management Plan, including such amendments as may be approved in writing from time to time by the Owner and the City Manager or designee, for the entire Restricted Period. C. In addition,the Owner must submit on or before the first day of each fiscal year of the Restricted Period an estimated annual budget for management of the Property (the"Annual OCCHC—313 11"STREET AFFORDABLE HOUSING AGREEMENT Page 21 Project Budget") in accordance with the Management Plan. The Annual Project Budget will include all necessary operating expenses, current maintenance charges, expenses of reasonable upkeep and repairs, taxes and special assessment levies, prorated amount required for insurance and all other expenses incident to the operation of the Project; and will show the expected revenues to pay such expenses, including annual debt service requirements and reserve fund deposits and balances. The Annual Project Budget, including any amendments proposed by Owner, will be subject to the approval of the City Manager not to be unreasonably withheld or delayed. D. For each fiscal year of the Restricted Period, Owner must also submit on an annual basis, and upon the written request of the City on a quarterly basis, a report for the management of the Property (the "Management Report"). The Management Report will include a profit and loss statement, budget to date figures, and occupancy report and will clearly show project revenues, operating expenses, deposits to and withdrawals from the Project's reserve accounts, and cash flow available for residual receipts payments, all of which will be certified by Owner. The Management Report will be in a form that is reasonably acceptable to the City Manager. The City Manager, in his/her sole discretion may waive the requirement of the Management Report for one or more quarterly reporting periods. However, such waiver will not operate to waive any subsequent requirement of the Management Report during the Restricted Period. After receipt of such certified financial statements for the Project, City may request additional financial analyses or obtain a third party review at City's own expense, of financial statements for the Project to verify the accuracy of the payments by Owner on the HOME Note; provided, however, that if such review reveals underpayment on the HOME Note greater than ten percent (10%) of the correct payment amount, in addition to the other remedies available to the City, Owner will promptly reimburse the City for the reasonable cost of conducting the review, and the City will have the right to exercise all remedies for such underpayment available under law or in equity. Section 603 Maintenance of the Property A. Prior to the Construction Financing Event, Owner must prepare and submit to the City Manager or his designee for review and approval a program, including a proposed budget, (the "Maintenance Program") for the exterior and interior maintenance of the Property and the Improvements. The City will have the right at all reasonable times and upon 72 hours advance written notice (except in the case of an emergency) to enter and inspect the Property in order to ensure compliance with the foregoing requirements. B. The Maintenance Program must describe in reasonable detail the standards to be followed in maintaining the interior and exterior of the Improvements, including a schedule indicating the proposed frequency of each element of maintenance, and will include, at a minimum, the following: periodic cleaning of the interior and exterior of the Improvements, including windows; removing graffiti; removing debris and waste materials and otherwise maintaining indoor and outdoor areas of the Property; maintaining any lawns, plants, shrubs and trees or other landscaping planted on the Property; performing inspections of all exterior features to determine whether repairs are required; conducting periodic protective treatments such as rust removal and caulking; conducting repairs to facades, roof, doors, windows and other exterior features; maintaining fencing and other security devices and systems; periodic repainting of the OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 22 exterior; periodic repainting of the interior units and common areas; periodic replacing of the interior unit carpets; checking building systems, including, but not limited to the heating and cooling systems, smoke alarms and water heaters; checking interior unit appliances; and monitoring interior unit bathrooms for mold/mildew. The Maintenance Program, including any amendments proposed by Owner,will be subject to the approval of the City Manager. C. At all times during the Restricted Period, Owner will maintain the Property and the Improvements in accordance with the approved Maintenance Program and in compliance with Federal Housing Quality Standards (24 CFR § 982.401) and other applicable state and local laws and codes. To implement this requirement, Owner agrees to budget sufficient funds to pay for all reasonably anticipated costs (as indicated in the Annual Maintenance Budget). In the event Owner fails to maintain the Property as required by this Section, Owner will, within thirty (30) days after City's notification or Owner's own discovery of any deficiency, take all necessary steps to correct such deficiency, provided that, if such deficiency is not reasonably capable of being cured within thirty (30) days, Owner will commence to cure said deficiency within thirty (30) days and diligently and in good faith continue to take all necessary steps to correct such deficiency. In the event the Owner fails to cure said deficiency within the time allowed, the City will have the right, but not the obligation, to enter the Property, correct any violation, and hold Owner responsible for the cost thereof, and such cost, until paid, will constitute a lien on the Property. Section 604 Lead-Based Paint. Owner will ensure that it and its contractors and subcontractors will not use lead-based paint in the construction or maintenance of the Project. Owner will insert this provision in all contracts and subcontracts for work performed on the Project which involves the application of paint. Section 605 Barriers to the Disabled Owner will ensure that the Project will be operated to comply with all federal, state, and local requirements for access for disabled persons that apply to existing multi-family rental units. Section 606 Creation of Capital Reserve Account Concurrently with or prior to the Permanent Financing Event, Owner will create a "Capital Reserve Account" in the initial amount shown on the Project Budget. No later than thirty (30) days after the Capital Reserve Account has been created, Owner will provide to City a pro forma statement concerning the account, for review and approval. At any time thereafter during the term of this Agreement, City, on ten (10) days prior written notice to Owner, may request that Owner submit to it an updated, revised Capital Reserve Account statement. City, at its own expense, may audit any updated, revised Capital Reserve Account statement submitted to it by Owner; provided that, if such audit reveals a substantial underfunding of the Capital Reserve Account, Owner will promptly reimburse the City for the cost of conducting the audit. Section 607 Capital Reserves. Beginning at Completion and every succeeding year during the Restricted Period, Owner will deposit the amount set forth in the definition of Operating Expenses in the HOME Note, into the Capital Reserve Account for repairs to the Property. The Capital Reserve Account will only OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 23 be used to fund the cost of repairs and improvements to the Property and to maintain the Property in compliance with the requirements of Section 603. Owner will exhaust funds in the Capital Reserve Account prior to utilizing operating revenues to pay for capital repairs and improvements to the Property. Interest earned on the Capital Reserve Account will remain in said account and be used as Capital Reserves. Upon repayment in full of the HOME Loan and to the extent that maintenance of the Capital Reserve Account is not required by another lender, the Owner may request the City's approval for the release of those funds, with such approval not to be unreasonably withheld. At the expiration of the Restricted Period, the City's approval of the release of the Capital Reserves will no longer be required. Section 608 Obligation to Refrain from Discrimination There will be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, age, class, source of income, religion, sex, sexual orientation, gender identity, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any part thereof, or in the awarding of contracts for the Project, nor will Owner, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property, or any part thereof, or in the awarding of contracts for the Project. Owner will comply with all applicable federal, state and local nondiscrimination, fair housing, and equal opportunity requirements. In addition, Owner will conduct affirmative marketing and minority outreach activities if and as required by Federal regulations. Section 609 Effectiveness and Duration of Covenants The covenants established in this Agreement will, without regard to technical classification and designation, be binding on Owner and any successor in interest to the Property or any part thereof or interest therein for the benefit and in favor of the City of Huntington Beach. Every covenant and condition and restriction contained in the HOME Regulatory Agreement will remain in effect for fifty-five (55) years from the Effective Date of the HOME Regulatory Agreement (regardless of whether the HOME Loan has been repaid prior to the end of such 55- year period), except that the covenants against discrimination set forth in the HOME Regulatory Agreement and in Section 608 hereof will remain in effect in perpetuity. Section 610 Effect of Violation of Covenants The City is deemed beneficiary of the terms and provisions of this Agreement and the covenants herein, both for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, for whose benefit this Agreement and the covenants running with the land have been provided. The City will have the right if the covenants contained in this Agreement are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants are entitled. OCCHC—313 11m STREET AFFORDABLE HOUSING AGREEMENT Page 24 Section 611 CHDO Provisions A. Owner shall maintain CHDO (Community Housing Development Organization) status for the term of this Agreement and the HOME Regulatory Agreement in accordance with 24 CFR 92. Owner agrees to provide information as may be requested by the City to document its continued compliance, including'but not limited to an annual board roster and certification of continued compliance. B. Any funds advanced as CHDO pre-development funds must be in compliance with 24 CFR 92.301, and are forgivable only under the terms in 24 CFR 92.301. C. Any funds advanced to Owner as CHDO Operating Expenses must be expended in compliance with 24 CFR 92.208. D. Any funds that Owner is permitted to retain as CHDO proceeds from this Project shall be used in compliance with 24 CFR 92.300(a)(2)or as specified in this Agreement. E. Owner will create and follow a tenant participation plan, as required in 24 CFR 92.303. ARTICLE 7. DEFAULTS,REMEDIES AND TERMINATION Section 701 Defaults; Notice of Cure; Cure Rights A. Subject to Force Majeure Delay, as such term is defined in this Agreement, failure or delay by either party to perform any term or provision of this Agreement constitutes a default under this Agreement. The party who fails or delays must immediately commence to cure, correct or remedy such failure or delay and will complete such cure, correction or remedy with reasonable diligence. B. The injured party will give written notice of default to the parry in default, specifying the default. Failure or delay in giving such notice will not constitute a waiver of any default, nor will it change the time of default. Except as otherwise expressly provided in this Agreement, any failures or delays by either party in asserting any of its rights and remedies as to any default will not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of its rights and remedies will not deprive either parry of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. C. If a monetary event of default occurs, prior to exercising any remedies hereunder, the injured party will give the parry in default written notice of such default. The parry in default will have a period of fifteen (15) days after such notice is given within which to cure the default prior to exercise of remedies by the injured party. D. If a non-monetary event of default occurs, prior to exercising any remedies hereunder, the injured party will give the party in default notice of such default. If the default is reasonably capable of being cured within thirty (30) days, the party in default will have such OCCHC—313 11"H STREET AFFORDABLE HOUSING AGREEMENT Page 25 period to effect a cure prior to exercise of remedies by the injured parry. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and the party in default (i) initiates corrective action within said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then the parry in default will have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by the injured parry. In no event will the injured parry be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within ninety(90) days after the first notice of default is given. Section 702 Institution of Legal Actions Subject to the notice and cure provisions of Section 701 and the limited recourse provisions of Section 709, in addition to any other rights or remedies (and except as otherwise provided in this.Agreement), either parry may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Orange, State of California, in any other appropriate court of that county, or in the United States District Court for the Central District of California. Section 703 Applicable Law The internal laws of the State of California, without reference to the principles relating to conflicts of laws, will govern the interpretation and enforcement of this Agreement. Section 704 Acceptance of Service of Process A. In the event that any legal action is commenced by the City against Owner, service of process on Owner will be made by personal service upon Owner(or upon an officer of Owner) and will be valid whether made within or without the State of California, or in such manner as may be provided by law, B. In the event that any legal action is commenced by Owner against the City, service of process on the City will be made by personal service upon the City Manager or the City Clerk or in such other manner as may be provided by law. Section 705 Rights and Remedies Are Cumulative Except with respect to rights and remedies expressly declared to- be exclusive in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either parry of one or more of such rights or remedies will not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other parry. Section 706 Specific Performance If either parry defaults with regard to any of the provisions of this Agreement, subject to the notice and cure provisions of Section 701, the non-defaulting parry, at its option, may, after such notice and opportunity to cure (but not before) commence an action for specific performance of the terms of this Agreement pertaining to such default. OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 26 Section 707 Termination Due to Failure of Construction financing Event Notwithstanding anything in this Agreement to the contrary, the City will have the right to terminate this Agreement, in its sole discretion and without further notice to Owner and without requirement of the expiration of any cure period, in the event that, subject to Force Majeure Delay, the Construction Financing Event fails to occur within the time specified in the Schedule of Performance (as such Schedule of Performance may be amended pursuant to the terms hereof). Section 708 Termination by Either Party Prior to the Construction Financing Event, any party will have the right to terminate this Agreement in the event any other parry is in default of any material term or provision of this Agreement, and, following notice, fails to cure such default within the time provided in Section 701. Section 709 Limited Recourse Obligations Each obligation of the Owner under this Agreement is a nonrecourse obligation of the Owner. Except as provided otherwise in this Agreement, Owner will have no personal liability for payment of Owner's obligations to the City. The sole recourse of the City will be the exercise of its rights against the Property and the improvements thereon and any related security for the HOME Loan. Provided, however, that the foregoing will not (a) constitute a waiver of any obligation evidenced by this Agreement; (b) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense, a counterclaim, or other basis for relief in respect of the exercise of, any remedy prescribed by law or in equity in case of default, other than repayment of the HOME Loan; or (c) relieve Owner of any of its obligations under any indemnity delivered by Owner to the City. The foregoing provisions of this paragraph are limited by the provision that in the event of the occurrence of a default, Owner and its successors and assigns will have personal liability hereunder for any deficiency judgment, but only if and to the extent Owner, its principals, shareholders, or its successors and assigns, received rentals, other revenues, or other payments or proceeds in respect of the mortgaged Property after the occurrence of such default, which rentals, other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property, ordinary and reasonable capital improvements to the mortgaged Property, debt service, real estate taxes in respect of the mortgaged Property and basic management fees, but not incentive fees, payable to an entity or person unaffiliated with Owner in connection with the operation of the mortgaged Property,which are then due and payable. Notwithstanding the foregoing, the City may obtain a judgment or order (including, without limitation, an injunction) requiring any Person to perform (or refrain from) specified acts other than repayment of the HOME Loan; may proceed against any Person whatsoever with respect to the enforcement of any guarantees, surety bonds, letters of credit, reimbursement agreements or similar rights to payment or performance; and may recover directly from any Person: 1. any damages, costs and expenses incurred by City as a result of fraud or any criminal act or acts of Owner or any member, shareholder, officer, director, agent or employee of Owner; OCCHC—313 11 T"STREET AFFORDABLE HOUSING AGREEMENT Page 27 2. any damages, costs and expenses incurred by City as a result of any misappropriation of funds provided for the Project, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds by Owner or any member, partner, shareholder, officer, director or employee of Owner; 3. any and all amounts owing by Owner pursuant to Owner's indemnification regarding Hazardous Substances; and 4. all court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions. Section 710 Owner's Remedies. Subject to any applicable cure periods and the right to notice provided for .in this Agreement, upon a default or breach of this Agreement by City, Owner may bring an action for specific performance of this Agreement or any term or provision hereof, or, if prior to the Construction Financing Event, may terminate this Agreement. Owner may not sue for monetary damages and hereby fully and finally releases the City from any claims for monetary damages arising directly or indirectly from City's breach of its obligations under this Agreement. Section 711 Attorney's Fees Except as otherwise expressly provided in this Agreement, in the event that any action, suit or other proceeding is brought to enforce the obligations of any parry under this Agreement, each party will 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. ARTICLL 8. GENERAL PROVISIONS Section 801 Owner's Warranties Owner represents and warrants (1)that it has access to professional advice and support to the extent necessary to enable Owner to fully comply with the terms of this Agreement; (2)that it is duly organized, validly existing and in good standing under the laws of the State of California; (3) that it has the full power and authority to undertake the Project and to execute this Agreement; (4) that the persons executing and delivering this Agreement are authorized to execute and deliver such documents on behalf of Owner; (5) except as disclosed to the City in writing, there are no actions or proceedings pending or, to the best of the Owner's knowledge, threatened against the Owner before any court or administrative agency in any way connected with the Property or the Project which could adversely affect the Owner's ability to perform the activities contemplated hereunder; (6) neither this Agreement nor anything provided to be done hereunder violates or will violate any contract, agreement or instrument to which the Owner is a party or which affects the Project or any part thereof; (7) the Owner is not in default in respect of any of its obligations or liabilities pertaining to this Agreement, nor is there any state of facts or circumstances or conditions or events which, after notice, lapse of time, or both,would constitute or result in any such default under this Agreement; and (8) the Owner has not entered into any agreements which will adversely affect the title to the Project or the Owner's right to develop and OCCHC—313 11'STREET AFFORDABLE HOUSING AGREEMENT Page 28 use the Project as provided in this Agreement, and the Owner will not enter into any such agreements after the date hereof. Section 802 Notices,Demands, and Communications Between the Parties Formal notices, demands, and communications between City and Owner will be sufficiently given if: (i) personally delivered; (ii) delivered by same day or overnight courier (acknowledged by receipt showing date and time of delivery); or (iii) dispatched by registered or certified mail, postage prepaid, return receipt requested, to the address for the City and Owner set. forth in Section 202 and Section 203, respectively. Notices personally delivered or delivered by courier will be effective upon receipt or refusal to accept delivery. Mailed notices will be effective on the earlier of (i) receipt of refusal to accept delivery, or (ii) noon on the second business day following deposit in the United States mail. Section 803 Conflicts of Interest No member, official, or employee of City will 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. Section 804 Titles and Captions Titles and captions are for convenience only and will not be construed to limit or extend the meaning of this Agreement. Section 805 Gender As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number will each be deemed to include the others wherever and whenever the context so dictates. Section 806 Modifications Any amendment, alteration, change, or modification of or to this Agreement, in order to become effective, will be made by written instrument or endorsement thereon and in each such instance executed on behalf of each parry hereto. The City Manager or designee is authorized to approve revisions to this Agreement and the attachments hereto, subject to the approval of City's legal counsel, to the extent that such revisions: (a) are required to conform this Agreement and the attachments hereto to HOME Regulations; (b) do not materially adversely affect the economic feasibility of the Project; (c) do not impose a material additional burden on the City; and (d) do not substantially reduce any benefit to the City or the community. Section 807 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. Section 808 No Third Parties Benefited This Agreement will create no third-parry 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. OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 29 Section 809 Assurances to Act in Good Faith Owner and City agree to execute all documents and instruments and to take all action, including timely depositing funds as required hereby, and will use their respective good faith efforts to accomplish the acquisition and construction of the Property in accordance with the provisions hereof. Section 810 Warranty Against Payment of Consideration for Agreement; No Real Estate Commissions Owner 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.Neither the City nor the Owner will be liable for any real estate commissions, brokerage fees or finder's fees which may arise from this transaction. The Owner and the City each represent to the other that it has employed no broker, agent, or finder in connection with this transaction. Owner and City will each indemnify, defend, and hold harmless the other from any claims or damages for payment of any real estate commissions or broker's fees or finder's fees arising out of the acts or representations of the other with respect to any of the transactions contemplated by this Agreement. Section 811 Nonliability of Citv Officials and Employees No member, official, or employee of the City will be personally liable to the Owner or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to the Owner or to its successor, or on any obligations under the terms of this Agreement. Section 812 Interpretation The terms of this Agreement will be construed in accordance with the meaning of the language used and will not be construed for or against any party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. Section 813 Counterparts This Agreement may be executed in two or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. Section 814 Severability Wherever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law. If, however, any provision of this Agreement will be prohibited by or invalid under applicable law, such provision will be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Section 815 Extension of Times of Performance A. Notwithstanding the foregoing, in addition to the specific provisions of this Agreement, performance by any party hereunder will not be deemed to be in default during an event of Force Majeure. An extension of time for an event of Force Majeure will be limited to the period of such event, and will 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 OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Page 30 (60) days of the commencement of the cause. In the event of such delay, the party delayed will continue to exercise reasonable diligence to minimize the period of delay. B. Times of performance under this Agreement may also be extended by mutual written agreement by City and Owner. In addition, the City Manager will have the authority on behalf of City to approve extensions of time not to exceed a cumulative total of one (1) year. Section 816 Inspection of Books and Records The City or its designee will have the right at all reasonable times to inspect the books, records and/or other documents of the Owner pertaining to the Property and/or the Project as pertinent to the purposes of this Agreement. Section 817 Waivers The waiver by City or Owner of any term, covenant, or condition herein contained will not be a waiver of such term, covenant, or condition on any subsequent breach. ARTICLE 9. EXECUTION OF AGREEMENT; TI IE FOR ACCEPTANCE A. This Agreement and the attachments hereto, which are incorporated by this reference, constitute the entire understanding and agreement of the parties. B. This Agreement does not take effect until executed by the Owner and City. This Agreement, when executed by the Owner and delivered to the City, must be authorized, executed and delivered by the City within thirty (30) days after the date of signature by the Owner, or this Agreement may be terminated by the Owner on written notice to the City. C. The City Manager is hereby authorized and directed to take such other and further actions, and sign such other and further agreements and documents on behalf of the City as may be necessary or proper to effect the terms of this Agreement. [SIGNATURES APPEAR ON FOLLOWING PAGE] OCCHC—313 11 TH STREET AFFORDABLE HOUSING AGREEMENT Page 31 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. "OWNER" "CITY" ORANGE COUNTY COMMUNITY THE CITY OF HUNTINGTON BEACH, a HOUSING CORPORATION, municipal corporation of the state of California a California nonprofit public benefit corporation By: Mayor By: E b5, ZcV. il ra Mendez ATTEST: Its: Executive Director By: City Clerk APPROVED AS TO FORM: By: C City Attorney By: KANE, BALLMER&BERKMAN Special Counsel OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Signature Page IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. "OWNER" "CITY" ORANGE COUNTY COMMUNITY THE CITY OF HUNTINGTON BEACH, a HOUSING CORPORATION, municipal corporation of the state of California a California nonprofit public benefit corporation By: Mayor By: Nora Mendez ATTEST: Its: Executive Director By: City Clerk APPROVED AS TO FORM: COUNTERPART By: City Attorney KANE, BALLMER&BERKMAN Special Counsel OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT Signature Page IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. "OWNER" "CITY" ORANGE COUNTY COMMUNITY THE CITY OF HUNTINGTON BEACH, a HOUSING CORPORATION, municipal corporation of the state of California a California nonprofit public benefit corporation By: jd0y70r By: Nora Mendez ATTEST: AS Its: Executive Director By: -flity Clerk qI'� n1 APPROVED AS TO FORM: (� COUNTERPART By: c City Atto ey By: KANE, BALLMER&BERKMAN Special Counsel OCCHC—313 11"'STREET AFFORDABLE HOUSING AGREEMENT Signature Page EXHIBIT 1 LEGAL DESCRIPTION LOTS 13 AND 15 IN BLOCK 311 OF HUNTINGTON BEACH, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP .RECORDED IN BOOK 3 PAGE 36 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. APN: 024-027-20 EXHIBIT 2 SITE MAP [Immediately Behind This Page] a ..�,s,t .,l'.'ilib .Tat`•, 3r t<:��` \'� \` ,�"c'y' '''.'id�g"' it�� •r' •�•e'�,Py Y, 4 .. \ '''��2;,d }�i J.Y. J .�IS.'•'. SK'.;i ',,�`�yA4 i bi-�r�r,�, t. .'a,•' ,�,:Sttn�'r<i'.� l' �i;%,�.d�y'•'sii_ f \ /0<'st•}.:++a«�F�'�.J.':'�r•;N r,•, • `'ka'"�• �%�s e.cr''�,' yl;;<�i':. � Viz''.;4- • -ter.` i'., RY ;ir`:•.•:.�; �._�):', .ee tv :i�$.�:• r. ✓ �/71f.� r�%lrr....,5� � r.�:rl..�^1:;';s",,: F• ~� ..A� �'.A' ::d: ''7:'' _' '. !'-•i:� y,irk',:' - .' �yy,, q:lf. AV- ` }j. ,:i7�r,,,:;._�,.::i •`:�4A i.tf'l�:l,i,f. L\ iMrY i�t.-.,:7'LA`'}�:� :fi:: ;.•$:,..WS.}'"" . :;'�y�:1:i a.'si'�' .,. JJ:f.,•.�£-, :�L^ ,7�, f .:effm:�'..+..• r.'iE.q� -r'y i:. ;f.1.,'.,l�;Frn h. _�.1^�..1�>, ,fir ,.ld�.e.,� \ �:�Sr�•n«,: S fit": '.�,t7,=r jr.�:.• t'R, •�:?jy tFrY•`t:i;f„��: fit: ,{�( `C�'� `�T='� -.l:�� '�f��I iC .�rS�i~'1';��',.i �',.�+ nir:,''� A•lJ ir� EXHIBIT 3 SCOPE OF WORK EXHIBIT 3 SCOPE OF WORD Description Work Specification 1. Landscaping Removal Trees and Shrubs that are too close to structure 2. Fire Extinguisher Relocate Fire Extinguisher at front of building, that is blocked by postal box 3. Exterior Walls, Soffits, Wood Remove all exterior, wood trim, wood fascia, soffit material Fascia, Wood Trim and Siding that has wood rot or insect damage from the building. Replace materials. While exterior is exposed, treat building by a qualified termite control contactor. 4. Exterior Walls: Stucco Remove all stucco from two story building, including windows 5. Exterior Scaffolding Provide scaffolding for removal of stucco &replacement with siding 6. Exterior Siding Provide and install new exterior composite wood siding, install OSB sheathing and provide water proof underlayment, make minor structural repairs as needed, remove and replace all water damaged structural framing, including minimum R-13 installation in exterior sections of the walls. 7. Roof Repairs Provide repairs after removal of stucco and installation of new siding. Provide and install new roof metal &water roofing as re wired. 8. Downspouts Repair or replace downspouts as necessary, extend downspout at rear of building to divert water to lower level of roof. 9. Windows Remove all existing windows and replace with low-E windows. Make minor structural repairs as needed. Provide all required flashing/weather proofing. 10. Stairs/Posts Stairs, remove rotted posts and stair treads and replace/repair stairs, properly secure posts at rear stairs with recast piers or footings. 11. Exterior Paint Paint all new composite wood exterior siding and trim. 12. Exterior Doors Remove&replace all exterior doors/security screens, including lockset hardware, provide thresholds and weather roofing. Paint with rust resistant paint. 13. Foundation Vent Screens & Provide required corrections to prevent water intrusion to Crawlspace Access Covers subfloor area. Install properly sized vents, replace all damaged vents and secure all vents and access opening to keep out mice or rodents. OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT 3—SCOPE OF WORK PAGE 1 14. Rear Driveway and Walk way Saw cut and remove existing asphalt garage approach, pour new concrete approach. Pour new sidewalk to access driveway. 15. Electrical Repairs Correct wiring installation in unit 42 kitchen and 43 bathroom exhaust fan, include a light switch tooperate fan. 16. Electrical Repairs Replace all faulty toggle switches and duplex outlets. Replace face plates as needed. Replace lights as needed and install new bathroom lights with exhaust fans. 17. Electrical Repairs Replace all hallway and exterior lighting with energy efficient lighting. 18. Electrical Repairs Replace GFI in'garage. 19. Electrical Repairs Remove and place a stand-off for electrical panel during construction installation of siding and demo. 20. Bathrooms Cast Iron Waste Remove all cast iron plumbing waste piping system and Plumbing and Finish Trim replace with ABS plastic piping. Provide and install new tub shower unit, connect with pressure balance valve& trim, include low flow shower heads and tip-toe waste and overflow Install new 1.28 GPF hot water closets. Install new low flow lavatory faucets. Replace water connectors. 21. Kitchens cast Iron Waste Remove all cast iron plumbing waste piping system and Plumbing replace with ABS plastic piping. Connect to existing kitchen sink with new ABS P-Trap. 22. Waste Plumbing/Vent System Extend plumbing vents at rear deck to minimum 18"above roof. 23. Bathroom Floors Units 41 Remove existing bathroom floors, repair damaged through 9 subfloors, install backer board and install ceramic tile. 24. Gas Furnace Verify and repair all units where thermostat is improperly located to close to unit, impairing functionality. Conceal all wiring. 25. Patch Interior Walls All drywall or patching for interior work necessary for ABS re-pipe and all cosmetic defects caused rot or insect damage. Match existing wall finishes and repaint. 26. Interior Walls all 9-units Interior painting of walls and trim, as needed. Replace and repair peeling paint as needed. 27. Dum ster Provide dum ster for construction debris removal 28. Permit Allowance Provide permits for all required trades. 29. Abatement Contingency Funds to cover abatement issues regarding lead, asbestos or mold. OCCHC—313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT 3—SCOPE OF WORK PAGE 2 EXHIBIT 4 PROJECT BUDGET EXHIBIT 4 PROJECT BUDGET Rehabilitation Costs Eligible for Payment with HOME Loan Proceeds: Landscaping-Allowance $ 1,500 Replace Rear Driveway-Allowance 12,000 Exterior Rehabilitation- 9 Units @ $14,814/Unit 133,325 Interior Rehabilitation- 9 Units @$8,621 /Unit 77,590 Permit Allowance - 9 Units @ $556/Unit 5,000 Dumpster-Allowance 5,000 Abatement Contingency-Allowance- 9 Units @ $2,778 /Unit 25,000 Contractor Overhead &Profit - 18%of Other Rehabilitation Costs 45,585 Total Rehabilitation Costs for 9 Units @ $33,889[Unit $ 305,000 OCCHC-313 11'STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT 4-PROJECT BUDGET EXHIBIT 5 SCHEDULE OF PERFORMANCE [Immediately Behind This Page] EXHIBIT 5 SCHEDULE OF PERFORMANCE ACTION ITEM TIME OF REFERENCE PERFORMANCE 1. Submittal — Evidence of Insurance. Owner At least 30 days prior to Section 510 of shall submit to the City for approval the closing. the Agreement evidence of insurance. 2. Submittal - Final Construction Drawings At least 5 days prior to Section 502 of and Specifications. If necessary for City closing. the Agreement permitting of the Project, Owner shall prepare and submit to the City for approval the Final Construction Drawings and Specifications. 3. Submittal - Management Plan. Owner shall At least 5 days prior to Section 602 of submit to the City for approval the proposed closing. the Agreement Management Plan. and Section 4.7 of HOME Regulatory Agreement 4. Submittal - Annual Project Budget. Owner At least 5 days prior to Section 602 of shall submit to the City for approval the closing. the Agreement proposed Annual Project Budget for the first and Section year of operation. 4.7(a)(5) of HOME Regulatory Agreement 5. Submittal — Maintenance Proms. Owner At least 5 days prior to Section 603 of shall submit to the City for approval the closing. the Agreement proposed Maintenance Program for the and Section 4.2 Project. of HOME Regulatory Agreement OCCHC-313 11"H STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.5-SCHEDULE OF PERFORMANCE PAGE 1 6. Closing. All conditions precedent to the Not later than December Section 405 of Construction Financing Event shall have 15, 2014. the Agreement been satisfied. 7. Commencement of Construction. The Not later than fifteen (15) Section 505 of Owner shall commence rehabilitation of the days after the the Agreement improvements on the Site. Construction Financing Event. 8. Completion of Construction. The Owner Not later than 8 months Section 505 of shall achieve Completion of rehabilitation of following commencement- the Agreement the improvements on the Site in accordance of construction. with the Scope of Work and approved plans. 9. Submission - Tenant Lease. The Owner At least 30 days prior to Section 2.11 of shall prepare and submit to the City for closing. HOME approval the proposed tenant lease in Regulatory conformance with the HOME Regulatory Agreement Agreement. 10. Submission — Annual Reports. The Owner Within one hundred Sections 4.5 & submits annual financial statements and rent twenty (120) days after 4.6 of HOME records/tenant eligibility certifications to the the end of each calendar Regulatory City. year. Agreement NOTES: 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 in this Schedule of Performance is not intended to supersede or modify the more complete description in the text; in the event of any conflict or inconsistency between this Schedule of Performance and the text of the Agreement, the text shall govern. The time periods set forth in this Schedule of Performance may be altered or amended only by written agreement signed by the Owner and the City. The City Manager shall have the authority, in his/her sole discretion to approve extensions of time. OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 5-SCHEDULE OF PERFORMANCE PAGE EXHIBIT 6 HOME PROMISSORY NOTE [Immediately Behind This Page] RESIDUAL RECEIPTS PROMISSORY NOTE SECURED BY DEED OF TRUST TO THE CITY OF HUN INGTON BEACH,CALIFORNIA (HOME PROGRAM) DO NOT DESTROY THIS NOTE: When paid,this Note,with the Deed of Trust securing same(if the Restricted Period has expired), must be surrendered to Trustee for cancellation before reconveyance or partial reconveyance will be made. 3%Interest Huntint on Beach, California $305,000 7% /,: , 2014 FOR VALUE RECEIVED, ORANGE COUNTY COMMUNITY HOUSING CORPORATION,a California nonprofit public benefit corporation("Borrower"),hereby promises to pay to THE CITY OF HUNTINGTON BEACH("City"),a municipal corporation of the State of California, or order, a principal amount of Three Hundred Five Thousand and No/100 Dollars ($305,000.00), or so much thereof as may be advanced by the City to the Borrower as the HOME Loan pursuant to the Affordable Housing Agreement dated as of September 15,2014(the"Housing Agreement") between Borrower ("Owner" therein) and the City, incorporated herein by this reference.The Housing Agreement is a public record on file in the offices of the City.The Borrower will pay interest at the rate, in the amount and at the time hereinafter provided. 1. Definitions. Any capitalized term not otherwise defined herein will have the meaning ascribed to such term in the Housing Agreement. "HOME Loan Documents"means the Housing Agreement,this HOME Note,the HOME Deed of Trust,the HOME Regulatory Agreement,the Environmental Indemnity,the Assignment of Rents and Leases, and the Assignment of Agreements. "Net Proceeds" means the amount, if any, by which a refinancing exceeds the amount needed to repay a Senior Loan, in full, including-principal and interest, any early redemption or prepayment penalty, and customary and reasonable fees and costs of the transaction. "Residual Receipts"means,in each calendar year,the amount by which Gross Revenue(as defined below)exceeds Annual Operating Expenses(as defined below),as determined by an audit to be completed not later than ninety(90) days after the end of each calendar year by an independent certified public accountant first approved in writing by the City,using generally accepted accounting principles and based on the accrual method(the"Audit"). OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.6-HOME PROMISSORY NOTE PAGE 1 (i) "Gross Revenue," with respect to each calendar year, means all revenue, income,receipts,and other consideration actually received from operation or leasing of the Project. "Gross Revenue" will include, but not be limited to: all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants,all cancellation fees,price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Project; and condemnation awards for a taking of part or all of the Project for a temporary period."Gross Revenue"will also include the fair market value of any goods or services provided in consideration for the leasing or other use of any portion ofthe Project,except that the value of services provided by on-site manager(s)will not be treated as"Gross Revenue"if no more than one dwelling unit is leased to or otherwise used by on-site manager(s). "Gross Revenue" will not include tenants' security deposits,proceeds from the HOME Loan or other borrowed funds, Owner Equity, including capital contributions or similar advances, or interest that is earned on and allocated to reserve accounts. (ii) "Annual Operating Expenses,"with respect to each calendar year means the costs reasonably and actually incurred for operation and maintenance of the Project, which may include, without limitation, the following, to the extent that they are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles:property and other taxes and assessments imposed on the Project;premiums for property damage and liability insurance; utility services not paid for directly or reimbursed by tenants, including but not limited to water,sewer,trash collection,gas and electricity;maintenance and repair including but not limited to pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial, supplies, and similar customary utility services;any license or certificate of occupancy fees required for operation of the Project; general administrative expenses including but not limited to advertising and marketing, security services and systems, professional fees for legal, audit, accounting and tax returns, and similar customary administrative expenses; property management fees, expenses and costs, not to exceed $55 per unit per month in the first year with annual increases not to exceed three percent (3%)thereafter,and pursuant to a management contract approved by the City;cash deposited into a replacement reserve in the amount of$804 per unit per year, subject to annual increases not to exceed three percent(3%); cash deposited into an operating reserve in such reasonable amounts as are required by the City from time to time;and,fixed debt service payments(excluding debt service contingent upon the availability of residual receipts or surplus cash of the Project) on loans associated with the Project and approved by the City."Annual Operating Expenses"will not include the following: depreciation, amortization, depletion or other non-cash expenses or any amount expended from a reserve account. Annual Operating Expenses will be subject to the reasonable approval of the City. OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.6-HOME PROMISSORY NOTE PAGE 2 2. This Note evidences the obligation of the Borrower to the City for the repayment of the HOME Loan.Borrower may prepay the principal balance of this Note at any time without penalty. However,even if Borrower prepays the entire balance of this Note including all accrued interest,costs and penalties,the covenants,conditions and restrictions imposed on the Site by the HOME Regulatory Agreement will remain in full force and effect for the full 55-year term as specified therein. 3. This Note is payable at the principal office of City, 2000 Main Street, Huntington Beach, California 92648, or at such other place as the holder hereof may inform the Borrower in writing, in lawful money of the United States. 4. This Note is secured by the HOME Deed of Trust. 5. This Note will accrue simple interest at the rate of three percent(3%)per annum on the principal amount outstanding, from the date of disbursement. Interest under this Note will be computed on the basis of a year of 365 days and the actual number of days elapsed. However,if any event occurs giving the City the right to accelerate repayment of this Note,the entire unpaid principal balance owing hereunder will,as of the date of such default,commence to accrue interest at a rate equal to two percentage points above the reference rate published by Bank of America.N.A.,or the maximum non-usurious interest rate permitted by law,whichever is less(the"Default Rate").Further,in the event Borrower fails to reimburse the City for any amount advanced by or for the account of the City which is due hereunder or under the HOME Deed of Trust within ten(10)days after written notice of such advance is made by the City to Borrower, then such unreimbursed amount will thereafter bear interest at the Default Rate until paid 6. If the Borrower is in compliance with the terms of the Home Loan Documents on the earlier to occur of. (a) August 1, 2070; or (b) the fifty-fifth (55t ) anniversary of the date of Completion of the Project, (which will be referred to herein as the"Maturity Date"), the principal and accrued interest shall be deemed paid by the Owner's compliance and no further funds shall be due from the Borrower under this Note. Notwithstanding the foregoing, all principal and accrued interest on the Loan shall be due and payable on the occurrence of either of the following events: (a) the date the Property or the improvements thereon or any portion thereof or interest therein is sold,transferred,assigned or refinanced,without the prior written approval of the City, except as permitted by the provisions of the Housing Agreement; or (b) the date on which there is a Default by the Borrower under the terms of this Note, the Housing Agreement, the HOME Deed of Trust, the HOME Regulatory Agreement, the Environmental Indemnity,or any deed of trust or other instrument securing a Senior Loan,which is not cured or waived within the respective time period provided herein and therein. OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 6-HOME PROMISSORY NOTE PAGE 3 7. Prior to the Maturity Date, Borrower will be obligated to repay the HOME Loan as follows: (a) Borrower must utilize twenty-five percent(25%) of Residual Receipts with respect to each calendar year to repay the HOME Loan. Payments due hereunder must be made no later than one hundred twenty(120) days following the end of the applicable calendar year. (b) In the event Borrower refinances a Senior Loan at any time prior to the Maturity Date,twenty-five percent(25%)of the Net Proceeds must be allocated and paid to the City to reduce the HOME Loan. (c) All payments to the City will be applied first to the payment of all expenses, charges, costs and fees incurred by or payable to City by Borrower pursuant to the terms of the HOME Loan Documents(in such order and manner as City,in its sole discretion,may elect),then to the payment of all interest accrued to the date of such payment, and then to reduce the principal amount owed.All prepayment of principal on this Note will be applied to the most remote principal installment or installments until paid. Notwithstanding anything to the contrary contained herein, after the occurrence and during the continuation of an uncured default under the HOME Deed of Trust,all amounts received by the City from any party will be applied in such order as the City, in its sole discretion, may elect. 8. Any breach by Borrower of the provisions of Section 204 (entitled "Prohibition Against Transfers;Right of First Refusal")of the Housing Agreement,unless otherwise permitted by the terms thereof, will constitute a default under this Note. The cure periods under the Housing Agreement and this Note in connection with such a default will run concurrently. 9. Borrower waives presentment for payment,demand,protest,and notices of dishonor and of protest;the benefits of all waivable exemptions; and all defenses and pleas on the ground of any extension or extensions of the time of payment or of any due date under this Note,in whole or in part,whether before or after maturity and with or without notice. Borrower hereby agrees to pay all costs and expenses, including reasonable attorney's fees, which may be incurred by the holder hereof,in the enforcement of this Note,the HOME Deed of Trust or any term or provision of either. 10. Upon the failure of Borrower to perform or observe any term or provision of this Note,or upon the occurrence of any event of default after the expiration of any applicable notice and cure periods under the terms of any of the other HOME Loan Documents,the holder may exercise its rights or remedies hereunder or thereunder.All such rights and remedies will be cumulative. Upon the event of a default that is not cured or waived within the time provided therefore,the whole ofthe unpaid principal and interest owing on this Note will, at the option of City and without notice, become immediately due and payable. This option may be exercised at any time after any such event OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.6-HOME PROMISSORY NOTE PAGE 4 and the acceptance of one or more payments from any person thereafter will not constitute a waiver of City's option. City's failure to exercise said option in connection with any particular event or series of events will not be construed as a waiver of the provisions hereof as regards that event or any subsequent event. 11. (a) Subject to the extensions of time set forth in Section 12, and subject to the further provisions of this Section 11, failure or delay by Borrower to perform any material term or provision of the HOME Loan Documents constitutes a default under this Note. (b) City will give written notice of default to Borrower, specifying the default complained of by the City. Delay in giving such notice will not constitute a waiver of any default nor will it change the time of default. (c) Any failures or delays by City in asserting any of its rights and remedies as to any default will not operate as a waiver of any default or of any such rights or remedies. Delays by City in asserting any of its rights and remedies will not deprive City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect,assert, or enforce any such rights or remedies. (d) If a monetary event of default occurs, prior to exercising any remedies hereunder,the City will give the Borrower written notice of such default. The Borrower will have a period of fifteen(15)days after such notice is given within which to cure the default prior to exercise of remedies by the City. (e) If a non-monetary event of default occurs, prior to exercising any remedies hereunder, the injured party will give the parry in default notice of such default. If the default is reasonably capable of being cured within thirty(30)days,the parry in default will have such period to effect a cure prior to exercise of remedies by the injured party. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and the parry in default (i) initiates corrective action within said period,and(ii)diligently,continually,and in good faith works to effect a cure as soon as possible, then the parry in default will have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by the injured party. In no event will the injured party be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within ninety(90) days after the first notice of default is given. (f) Any notice of default will be deemed given only if either(i) dispatched by first class mail, registered or certified, postage prepaid, return receipt requested, to the address specified for the Borrower in Section 16 of this Note, or(ii)by electronic facsimile transmission to the facsimile number specified for the Borrower in Section 16 of this Note,followed by delivery by OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.6-HOME PROMISSORY NOTE PAGE 5 the method described in clause(i), or(iii)by personal delivery(including by means of professional messenger or courier service such as United Parcel Service or Federal Express) to the address specified for the Borrower in Section 16 of this Note. Receipt will be deemed to have occurred on the earlier of(i)the date of successfully completed electronic facsimile transmission or(ii)the date marked on a written postal service or messenger or courier service receipt as the date of delivery or refusal of delivery(or attempted delivery if undeliverable).If either party gives notice of a change of address in the manner specified in this paragraph, all notices, demands and communications originated after receipt of the change of address (or the effective date specified in the notice of change of address, if later)will be transmitted, delivered or sent to the new address. 12. Notwithstanding specific provisions of this Note, non-monetary performance hereunder will not be deemed to be in default where delays are due to causes beyond the control and without the fault of the party claiming an extension of time to perform(a"Force Majeure Delay"), provided that they actually delay and interfere with the timely performance of the matter to which they would apply and despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the parry claiming such interference,including:war; insurrection; strikes;lock-outs;riots;floods;earthquakes;fires;casualties;acts of God;acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation including litigation challenging the validity of this transaction or any element thereof;unusually severe weather;inability to secure necessary labor,materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other parry;acts or failure to act of any Governmental agency(except acts or failure to act of the City will not excuse performance by the City); the imposition of any applicable moratorium by a Governmental Agency; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Delay unless and until the party claiming such delay and interference delivers to the other parry written notice describing the event, its cause,when and how such parry obtained knowledge,the date the event commenced,and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay will deliver such written notice within ten (10) business days after it obtains actual knowledge of the event. 13. If the rights created by this Note will be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the remaining obligations must be completely performed and paid. 14. [Intentionally Omitted.] 15. (a) The obligation to repay the HOME Loan is a nonrecourse obligation of the Borrower. Except as provided otherwise in this Note, Borrower will have no personal liability for payment of the HOME Loan. The sole recourse of the City will be the exercise of its rights against OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.6-HOME PROMISSORY NOTE PAGE 6 the Property and the improvements thereon and any related security for the HOME Loan.Provided, however,that the foregoing will not(a)constitute a waiver of any obligation evidenced by this Note; (b) prevent or in any way hinder the City from exercising, or constitute a defense, an affirmative defense,a counterclaim,or other basis for relief in respect of the exercise of,any remedy prescribed by law or in equity in case of default, other than repayment of the HOME Loan; or (c) relieve Borrower of any of its obligations under any indemnity delivered by Borrower to the City. The foregoing provisions of this paragraph are limited by the provision that in the event ofthe occurrence of a default,Borrower and its successors and assigns will have personal liability hereunder for any deficiency judgment, but only if and to the extent Borrower, its principals, shareholders, or its successors and assigns,received rentals,other revenues,or other payments or proceeds in respect of the mortgaged Property after the occurrence of such default,which rentals,other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property,ordinary and reasonable capital improvements to the mortgaged Property,debt service,real estate taxes in respect of the mortgaged Property and basic management fees,but not incentive fees,payable to an entity or person unaffiliated with Borrower in connection with the operation of the mortgaged Property, which are then due and payable. (b) Notwithstanding the foregoing, the City may obtain a judgment or order (including, without limitation, an injunction) requiring any Person to perform (or refrain from) specified acts other than repayment of the HOME Loan;may proceed against any Person whatsoever with respect to the enforcement of any guarantees, surety bonds, letters of credit, reimbursement agreements or similar rights to payment or performance; and may recover directly from any Person: (i) any damages,costs and expenses incurred by City as a result of fraud or any criminal act or acts of Borrower or any member, shareholder, officer, director, agent or employee of Borrower; (ii) any damages, costs and expenses incurred by City as a result of any misappropriation of funds provided for the Project, rents and revenues from the operation of the Project, or proceeds of insurance policies or condemnation proceeds by Borrower or any member, partner, shareholder,officer, director or employee of Borrower; (iii) any and all amounts owing by Borrower pursuant to Borrower's indemnification regarding Hazardous Substances; and (iv) all court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions. 16. The address of Borrower for purposes of receiving notices pursuant to this Note is as follows: OCCHC-313 11M STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.6-HOME PROMISSORY NOTE PAGE 7 Orange County Community Housing Corporation 2024 N. Broadway, 3rd Floor Santa Ana CA 92706-2623 Facsimile number: 714-558-0423 Attention: Executive Director 17. In addition to the other terms of this Note, the Borrower hereby agrees and acknowledges that,notwithstanding any internal accounting procedures or provision pertaining to the use of receipts,payments,reserves and distributions contained in its governing documents,the terms of this Note and the Housing Agreement will control as to the use of the City funds provided under the Housing Agreement and all operating income from the Project. 18. Neither this Note nor any term hereof may be waived,amended,discharged,modified, changed or terminated orally; nor will any waiver of any provision hereof be effective except by an instrument in writing signed by City and Borrower. 19. Notwithstanding any provision in this Note, the HOME Deed of Trust or other document securing same,the total liability for payment in the nature of interest will not exceed the limit now imposed by applicable laws of the State of California. 20. This Note has been executed and delivered by Borrower in the State of California and is to be governed and construed in accordance with the internal laws thereof. 21. Every provision of this Note is intended to be severable. In the event any term or provision hereof is declared by a court of competent jurisdiction to be illegal, invalid or unenforceable for any reason whatsoever,such illegality,invalidity or unenforceability will not affect the balance of the terms and provisions hereof,which terms and provisions will remain binding and enforceable, and this Note will be construed as if such illegal, invalid or unenforceable term or provision had not been contained herein. 22. Time is of the essence in the performance of each provision hereof. [Signatures on Following Page.] OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.6-HOME PROMISSORY NOTE PAGE 8 IN WITNESS WHEREOF Borrower has executed this Note as of the day and year set forth above. "BORROWER" ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation By: a Mendez Its: Executive Director OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.6-HOME PROMISSORY NOTE PAGE 9 EXHIBIT 7 HOME DEED OF TRUST [Immediately Behind This Page] This Document was electronically recorded by City of Huntington Beach Recorded in Official Records, Orange County Hugh Nguyen, Clerk-Recorder III II III II IIIIiIIIIII11111111111111111111111111111 IIIIIINO FEE FREE RECORDING REQUESTED BY 2014000497044 03:06pm 11/18/14 AND WHEN RECORDED MAIL TO: 105 409 D11 S02 U08 A36 19 0.00 0.00 0.00 0.00 54.00 0.00 0.00 0.00 THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 Attn: City Manager (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code §27383) APN: 024-027-20 DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS) BY ORANGE COUNTY COMMUNITY HOUSING CORPORATION FOR THE BENEFIT OF THE CITY OF HUNTINGTON BEACH [HOME PROGRAM] This Deed of Trust, Security Agreement and Fixture Filing(With Assignment of Rents)is made this [15F''`day of 2014] by ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation (hereinafter referred to as "Trustor")(whose address is 2024 N.Broadway, P Floor, Santa Ana, CA 92706-2623,Attention: Executive Director),to Commonwealth Title Company,(hereinafter called"Trustee"),for the benefit of THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California (hereinafter called"Beneficiary"),whose address is 2000 Main Street,Huntington Beach,California 92648. Witnesseth: That Trustor IRREVOCABLY GRANTS,TRANSFERS AND ASSIGNS to Trustee, its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH RIGHT OF ENTRY AND POSSESSION all present and future right,title and interest of Trustor in and to the following property(the"Trust Estate"): (1) All of Trustor's rights,title and interest in and to that certain real property in the City of Huntington Beach,County of Orange, State of California more particularly described in Exhibit OCCHC—313 1 l'STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 7—HOME DEED OF TRUST PAGE 1 "A" attached hereto and by this reference made a part hereof(hereafter referred to as the"Subject Property"); (2) All buildings,structures and other improvements now or in the future located or to be constructed on the Subject Property(the"Improvements"); (3) all tenements, hereditaments, appurtenances, privileges, franchises and other rights and interests now or in the future benefiting or otherwise relating to the Subject Property or the Improvements,including easements,rights-of-way and development rights(the"Appurtenances"). (The Appurtenances,together with the Subject Property and the Improvements,are hereafter referred to as the"Real Property"); (4) subject to the assignment to Beneficiary set forth in Paragraph 4 below, all rents, issues, income, revenues, royalties and profits now or in the future payable with respect to or otherwise derived from the Trust Estate or the ownership, use, management, operation, leasing or occupancy of the Trust Estate, including those past due and unpaid(the"Rents"); (5) all inventory, equipment, fixtures and other goods (as those terms are defined in Division 9 of the California Uniform Commercial Code(the"UCC"),and whether existing now or in the future)now or in the future located at,upon or about,or axed or attached to or installed in,the Real Property,or used or to be used in connection with or otherwise relating to the Real Property or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing or occupancy of the Real Property, including furniture, furnishings,machinery,appliances, building materials and supplies,generators,boilers,furnaces,water tanks,heating ventilating and air conditioning equipment and all other types of tangible personal property of any kind or nature, and all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and substitutions of or to any of such property, but not including personal property that is donated to Trustor(the"Goods," and together with the Real Property,the"Property"); and (6) all accounts,general intangibles,chattel paper,deposit accounts,money,instruments and documents(as those terms are defined in the UCC)and all other agreements,obligations,rights and written material(in each case whether existing now or in the future)now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, construction, maintenance, management, operation, marketing, leasing,occupancy,sale or financing of the property or any other part of the Trust Estate, including (to the extent applicable to the Property or any other portion of the Trust Estate) (i) permits,approvals and other governmental authorizations,(ii)improvement plans and specifications and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project managers,supervisors,designers,architects,engineers, sales agents,leasing agents,consultants and OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 2 property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of,injury or damage to,trespass on or taking,condemnation(or conveyance in lieu of condemnation)or public use of any of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such agreements, (viii) reserves, deposits, bonds,deferred payments,refunds,rebates,discounts, cost savings,escrow proceeds, sale proceeds and other rights to the payment of money,trade names,trademarks, goodwill and all other types on intangible personal property of any kind or nature, and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property (the"Intangibles"). Trustor further grants to Trustee and Beneficiary,pursuant to the UCC,a security interest in all present and future right,title and interest of Trustor in and to all Goods and Intangibles and all of the Trust Estate described above in which a security interest may be created under the UCC (collectively, the"Personal Property"). This Deed of Trust constitutes a security agreement under the UCC,conveying a security interest in the Personal Property to Trustee and Beneficiary. Trustee and Beneficiary will have, in addition to all rights and remedies provided herein, all the rights and remedies of a"secured party"under the UCC and other applicable California law. Trustor covenants and agrees that this Deed of Trust constitutes a fixture filing under Sections 9502(c)and 9604 of the UCC. FOR THE PURPOSE OF SECURING,in such order of priority as Beneficiary may elect, all of the following: (1) Due,prompt and complete observance,performance and discharge of each and every condition, obligation, covenant and agreement contained herein or contained in the following: (a) a promissory note in the original principal amount of$305,000.00,executed by Trustor("Borrower"therein) of even date herewith (the"HOME Note"); (b) the Affordable Housing Agreement dated as of September 15,2014,by and between Trustor("Owner"therein) and Beneficiary("City"therein) (the"Housing Agreement"); and (c) the Regulatory Agreement and Declaration of Covenants and Restrictions dated on or about the date hereof, by and between Trustor ("Owner" therein) and OCCHC-313 11"H STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 3 Beneficiary ("City" therein) and recorded concurrently herewith in the Official Records of the County Recorder of Orange County,California("HOME Regulatory Agreement"). (2) Payment of indebtedness of the Trustor to the Beneficiary in the principal sum of Three Hundred Five Thousand and No/100's Dollars ($305,000.00), or so much thereof as may be advanced by Beneficiary for the benefit of Trustor, evidenced by the HOME Note, with interest, according to the terms of the HOME Note. (3) Payment and performance of all future advances and other obligations that the then record owner of all or part of the Property may agree to pay and/or perform(whether as principal, surety or guarantor) for the benefit of Beneficiary, when such future advance or obligation is evidenced by a writing which recites that it is secured by this Deed of Trust. The Housing Agreement, including all Attachments thereto, and the documents and instruments executed by Trustor in connection with the Project,including the HOME Regulatory Agreement,the HOME Note,the Assignment of Rents, and the Assignment of Agreements, all as described in the Housing Agreement(collectively referred to as the"Secured Obligations")and all of their terms are incorporated herein by reference and this conveyance will secure any and all extensions, amendments,modifications or renewals thereof however evidenced.Any capitalized term that is not otherwise defined in this Deed of Trust will have the meaning ascribed to such term in the Housing Agreement. AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: 1. That Trustor will pay the HOME Note at the time and in the manner provided therein, and perform the obligations of the Trustor as set forth in the Secured Obligations at the time and in the manner provided therein; 2. That Trustor will not permit or suffer the use of any of the Property for any purpose other than the uses permitted by the Secured Obligations; 3. That the Secured Obligations are incorporated in and made a part of this Deed of Trust. Upon default of a Secured Obligation,and after the giving of notice and the expiration of any applicable cure period, the Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be due and payable; OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 7-HOME DEED OF TRUST PAGE 4 4. That,subject to the prior rights,if any,of a lender whose lien is senior to this Deed of Trust ("Senior Lender"), all rents, profits and income from the Trust Estate are assigned to the Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Trustor so long as no default exists hereunder after the giving of notice and the expiration of any applicable cure period, to collect such rents, profits and income for use in accordance with the provisions of the Secured Obligations; 5. That upon default hereunder or under the aforementioned agreements, and after the giving of notice and the expiration of any applicable cure period,Beneficiary will be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession and protect the Trust Estate and operate same and collect the rents, profits and income therefrom; 6. That Trustor will keep the Improvements insured against loss by fire and such other hazards,casualties,and contingencies as may reasonably be required in writing from time to time by the Beneficiary, and all such insurance will be evidenced by standard fire and extended coverage insurance policy or policies. In no event will the amounts of coverage be less than 100 percent ofthe replacement value of the Property. Such policies will be endorsed with standard mortgage clause with loss payable to the Beneficiary and certificates thereof together with copies of original policies will be deposited with the Beneficiary; 7. To pay, at least 10 days before delinquency,any taxes and assessments affecting the Property;to pay,when due,all encumbrances,charges and liens,with interest,on the Property or any part thereof which appear to be prior or superior hereto;and to pay all costs, fees, and expenses of this Trust. Notwithstanding anything to the contrary contained in this Deed of Trust,Trustor will not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings,and Trustor has adequate funds to pay any liabilities contested pursuant to this Section 7; 8. To keep the Property in good condition and repair,subject to ordinary wear and tear, casualty and condemnation, not to remove or demolish any buildings thereon without the prior written consent of Beneficiary,not to be unreasonably withheld,conditioned or delayed;to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting the Property or requiring any alterations or improvements to be made thereon(subject to Trustor's right to contest the validity or applicability of laws or regulations);not to commit or permit waste thereof,not to commit, suffer or permit any act upon the Property in violation of law and/or covenants, conditions and/or restrictions affecting the Property;not to permit or suffer any material alteration of or addition to the Improvements without the consent of the Beneficiary; OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 5 9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee,and to pay all costs and expenses,including cost of evidence of title and reasonable attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear•, 10. Should Trustor fail to make any payment or do any act as herein provided, then Beneficiary or Trustee,but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof,may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Following default, after the giving of notice and the expiration of any applicable cure period, Beneficiary or Trustee being authorized to enter upon said property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee;may pay,purchase,contest,or compromise any encumbrance,charge,or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay reasonable attorney fees. Notwithstanding the foregoing,in the event of default under this Deed of Trust,the Beneficiary may also require Trustor to maintain and submit additional records. Beneficiary will specify in writing the particular records that must be maintained and the information or reports that must be submitted; 11. Beneficiary will have the right to pay fire and other property insurance premiums when due should Trustor fail to make any required premium payments. All such payments made by the Beneficiary will be added to the principal sum secured hereby; 12. To pay immediately and without demand all sums so expended by Beneficiary or Trustee,under permission given under this Deed of Trust, with interest from date of expenditure at the rate specified in the HOME Note; 13. That the funds to be advanced hereunder are to be used in accordance with the Secured Obligations and upon the failure of Trustor to keep and perform all the covenants, conditions,and agreements of said agreements,the principal sum and all arrears of interest,and other charges provided for in the HOME Note will at the option of the Beneficiary of this Deed of Trust become due and payable, anything contained herein to the contrary notwithstanding; 14. Trustor further covenants that it will not voluntarily create, suffer, or permit to be created against the property subject to this Deed of Trust any lien or liens except as permitted by the Secured Obligations or otherwise approved by Beneficiary,and furtherthat it will keep and maintain the Property free from the claims of all persons supplying labor or materials which will enter into the construction of any and all buildings now being erected or to be erected on said premises. OCCHC-313 11 Tx STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 6 Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor will not be obligated to pay any claims for labor,materials or services which Trustor in good faith disputes and is diligently contesting,provided that Trustor will,at Beneficiary's written request,within thirty(30) days after the filing of any claim or lien (but in any event, and without any requirement that Beneficiary must first provide a written request, prior to foreclosure) record in the Office of the Recorder of Orange County,a surety bond in an amount one-and-one-half(1 %2)times the amount of such claim item to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary; 15. That any and all improvements made or about to be made upon the premises covered by the Deed of Trust, and all plans and specifications, comply in all material respects with all applicable municipal ordinances and regulations and all other applicable regulations made or promulgated,now or hereafter,by lawful authority,and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office; and 16. Trustor herein agrees to pay to Beneficiary or to the authorized loan servicing representative of the Beneficiary a reasonable charge for providing a statement regarding the obligation secured by this Deed of Trust as provided by Section 2954,Article 2,Chapter 2 Title 14, Division 3, of the California Civil Code. IT IS MUTUALLY AGREED THAT: 17. Should the Property or any part thereof be taken or damaged by reason of any public improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner, subject to the rights of any senior lender that has been approved by Beneficiary,Beneficiary will be entitled to all compensation,awards,and other payments or relieftherefor which are not used to reconstruct,restore or otherwise improve the Property or part thereofthat was taken or damaged, and will be entitled at its option to commence,appear in and prosecute in its own name,any action or proceedings, or to make any compromise or settlement, in connection with such taking or damage. Subject to the rights of any senior lender that has been approved by Beneficiary, all such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the Property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting the Property, are hereby assigned to Beneficiary. After deducting therefrom all its expenses, including reasonable attorney's fees, the balance ofthe proceeds which are not used to reconstruct,restore or otherwise improve the Property or part thereof that was taken or damaged,will be applied to the amount due under the HOME Note secured hereby. No amount applied to the reduction of the principal will relieve the Trustor from OCCHC-313 11"H STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 7 making payments as required by the HOME Note. If the HOME Note has been repaid in full, the remainder of the balance will revert to the Trustor; 18. Upon default by Trustor in making any payments provided for in the HOME Note secured hereby or in this Deed of Trust, or in performing any obligation set forth in any of the Secured Obligations,and if such default is not cured within the respective time provided therefor in Section 34 of this Deed of Trust, below, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and of election to cause the property to be sold,which notice Trustee will cause to be duly filed for record and Beneficiary may foreclose this Deed of Trust. Beneficiary will also deposit with Trustee this Deed of Trust, the HOME Note and all documents evidencing expenditures secured hereby; 19. a. Prior to the repayment in full of the HOME Loan,the Trustor must not assign or attempt to assign the Housing Agreement or any right therein, nor make any total or partial sale, transfer, conveyance or assignment of the whole or any part of the Property,the Improvements, or any portion thereof or interest therein(referred to hereinafter as a"Transfer"),without prior written approval of the Beneficiary, except as otherwise permitted in the Secured Obligations. Consent to one such transaction will not be deemed to be a waiver of the right to require consent to future or successive transactions. Beneficiary will not unreasonably withhold or delay its consent. If consent should be given, any such transfer will be subject to this Section 19, and any such transferee must assume all obligations hereunder and agree to be bound by all provisions contained herein. b. Any such proposed transferee must have the qualifications and financial responsibility necessary and adequate as may be reasonably determined by the Beneficiary,to fulfill the obligations undertaken by Trustor in the Secured Obligations. Any such proposed transferee,by instrument in writing satisfactory to the Beneficiary and in form recordable among the land records of Orange County, for itself and its successors and assigns, and for the benefit of Beneficiary must expressly assume all of the obligations of the Trustor under the Secured Obligations,and agree to be subject to all conditions and restrictions applicable to the Trustor in this Deed of Trust. There will be submitted to the Beneficiary for review all instruments and other legal documents proposed to effect any such transfer; and if approved by the Beneficiary its approval will be indicated to the Trustor in writing. C. In the absence of specific written agreement by the Beneficiary,no Transfer, or approval thereof by the Beneficiary,will be deemed to relieve the Trustor or any other party from any obligations under the Secured Obligations. OCCHC-313 1 l'STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 8 d. In the event of a Transfer prior to the time the HOME Loan is paid in full and without the prior written consent of the Beneficiary,the net proceeds of such Transfer,will be paid to the Beneficiary to the extent necessary to pay in full the accrued interest and remaining principal balance of the HOME Loan. e. (1) As used herein,"Transfer"includes the sale,agreement to sell,transfer or conveyance of the Property, the Project, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment sale contract or similar instrument affecting all or a portion of the Property or Project,the lease of all or substantially all of the Property or Project, except as provided in subparagraph (3) below, or the appointment of a receiver or trustee to operate or exercise direct or indirect control over any portion of or interest in the Project or to operate or exercise direct or indirect control over Trustor or any interest in Trustor. (2) "Transfer" also includes the transfer, assignment, hypothecation or conveyance of legal or beneficial ownership of any interest in Trustor,or any conversion of Trustor to an entity form other than that of Trustor at the time of execution of this Deed of trust,except that, a cumulative change in ownership interest of trustor of forty-nine percent(49%)or less will not be deemed a"Transfer"for purposes of this Deed of Trust. (3) Notwithstanding paragraphs (1) and(2), "Transfer"will not include any of the following Permitted Transfers: (i) The leasing for occupancy of all or any part of the Property or Project in accordance with the Housing Agreement and the HOME Regulatory Agreement; and (ii) A refinancing that repays any portion of a Senior Loan(referred to herein as a "Take-out Loan"), if the City Manager or designee reasonably determines (which determination will not be unreasonably withheld,conditioned or delayed)that the resulting loan-to- value ratio (including the Take-out Loan, any of the remaining Senior Loan not repaid by the refinancing, and the HOME Loan)will not exceed the loan-to-value ratio in effect at the time of the Construction Financing Event for the Project,and the repayment terms of the Take-out Loan do not materially impair the Trustor's ability to repay the HOME Loan. f. Beneficiary will not unreasonably withhold,condition or delay its approval of any matter for which its approval is required hereunder. Any disapproval will be in writing and contain Beneficiary's reasons for disapproval. OCCHC-313 11 T"STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 9 20. After the lapse of such time as may then be required by law following the recordation of a notice of default, and notice of sale having been given as then required by law,Trustee,without demand on Trustor,will sell the Property at the time and place fixed by it in the notice of sale,either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee will deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts will be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. The Trustee will apply the proceeds of sale to payment of(1)the expenses of such sale,together with the reasonable expenses of this trust including therein reasonable Trustee's fees or attorney's fees for conducting the sale,and the actual cost of publishing, recording, mailing and posting notice of the sale; (2)the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee's deed; (3) all sums expended under the terms hereof,not then repaid,with accrued interest at the rate specified in the HOME Note; (4) all other sums then secured hereby; and (5) the remainder, if any,to the person or persons legally entitled thereto; 21. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter will be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution will be made by written instrument executed by Beneficiary,containing reference to this Deed of Trust and its place of record,which,when duly recorded in the proper office of the county or counties in which the property is situated, will be conclusive proof of proper appointment of the successor trustee; 22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law; 23. Upon written request of Beneficiary stating that all sums secured hereby have been paid and all obligations secured hereby have been satisfied, including but not limited to the obligations set forth in the HOME Regulatory Agreement,and upon surrender of this Deed of Trust and any note, instrument or instruments setting forth all obligations secured hereby to Trustee for' cancellation and retention and upon payment of its fees,Trustee will reconvey,without warranty,the Property then held hereunder. The recitals in such reconveyance of any matters or fact will be conclusive proof of the truthfulness thereof. To the extent permitted by law, the grantee in such OCCHC-313 11 T"STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 7-HOME DEED OF TRUST PAGE 10 reconveyance may be described as "the person or persons legally entitled thereto." Neither Beneficiary nor Trustee will have any duty to determine the rights of persons claiming to be rightful grantees of any reconveyance. When the Property has been fully reconveyed, the last such reconveyance will operate as a reassignment of all future rents, issues and profits of the Property to the person or persons legally entitled thereto; 24. The trust created hereby is irrevocable by Trustor; 25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term "Beneficiary"will include not only the original Beneficiary hereunder but also any future owner and holder including pledgees,of the HOME Note secured hereby. In this Deed of Trust,whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Trustor hereunder are joint and several; 26. Trustee accepts this Trust when this Deed of Trust,duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee will be a party unless brought by Trustee. Beneficiary, at its option, may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed hereunder. Without conveyance of the Property, the successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law; 27. The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to Trustor at the address set forth on the first page of this Deed of Trust; 28. Trustor agrees at any time and from time to time upon receipt of a written request from Beneficiary,to furnish to Beneficiary detailed statements in writing of income,rents, profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expiration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements,and such other information regarding the premises and their use as may be requested by Beneficiary; 29. Trustor agrees that the loan secured by this Deed of Trust is made expressly for the purpose of financing the rehabilitation of the Property for the purpose of providing nine dwelling units of affordable housing for Very Low Income Households, and such dwelling units will be occupied exclusively by such persons; OCCHC-313 11T"STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 7-HOME DEED OF TRUST PAGE 11 30. Trustor agrees that, except as otherwise provided in the HONIE Note, upon sale or refinancing of the Property, the entire principal balance of the debt secured by this Deed of Trust, plus any accrued but unpaid interest thereon,will at the option of Beneficiary be immediately due and payable; 31. (a) The obligation to repay the HOME Loan is a nonrecourse obligation of Trustor.Except as provided otherwise in the HOME Note,Trustor will have no personal liability for payment of the HOME Loan. The sole recourse of Beneficiary will be the exercise of its rights against the Property and the improvements thereon and any related security for the HOME Loan. Provided,however,that the foregoing will not(a)constitute a waiver of any obligation evidenced by the HOME Note; (b) prevent or in any way hinder Beneficiary from exercising, or constitute a defense,an affirmative defense,a counterclaim,or other basis for relief in respect of the exercise of, any remedy prescribed by law or in equity in case of default, other than repayment of the HOME Loan; or (c) relieve Trustor of any of its obligations under any indemnity delivered by Trustor to Beneficiary. The foregoing provisions of this paragraph are limited by the provision that in the event of the occurrence of a default, Trustor and its successors and assigns will have personal liability hereunder for any deficiency judgment, but only if and to the extent Trustor, its principals, shareholders, or its successors and assigns, received rentals, other revenues, or other payments or proceeds in respect of the mortgaged Property after the occurrence of such default, which rentals, other revenues, or other payments or proceeds have not been used for the payment of ordinary and reasonable operating expenses of the mortgaged Property, ordinary and reasonable capital improvements to the mortgaged Property,debt service,real estate taxes in respect of the mortgaged Property and basic management fees, but not incentive fees, payable to an entity or person unaffiliated with Trustor in connection with the operation of the mortgaged Property,which are then due and payable. (b) Notwithstanding the foregoing,Beneficiary may obtain a judgment or order (including, without limitation, an injunction) requiring any Person to perform (or refrain from) specified acts other than repayment of the HOME Loan;may proceed against any Person whatsoever with respect to the enforcement of any guarantees, surety bonds, letters of credit, reimbursement agreements or similar rights to payment or performance; and may recover directly from any Person: (i) any damages,costs and expenses incurred by Beneficiary as a result of fraud or any criminal act or acts of Trustor or any member, shareholder, officer, director, agent or employee of Trustor; (ii) any damages,costs and expenses incurred by Beneficiary as a result of any misappropriation of funds provided for the Project,rents and revenues from the operation of the OCCHC-313 11TE STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 12 Project, or proceeds of insurance policies or condemnation proceeds by Trustor or any member, partner, shareholder, officer, director or employee of Trustor; (iii) any and all amounts owing by Trustor pursuant to Trustor's indemnification regarding Hazardous Substances; and (iv) all court costs and attorneys' fees reasonably incurred in enforcing or collecting upon any of the foregoing exceptions. 32. Notwithstanding specific provisions of this Deed of Trust,non-monetary performance hereunder will not be deemed to be in default where delays or defaults are proximately caused by any of the following Force Majeure events, provided such event actually delays and interferes with the timely performance of the matter,and,despite the exercise of diligence and good business practices, such event is beyond the reasonable control of Trustor: War; insurrection; strikes;lock-outs;riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics;quarantine restrictions;freight embargoes;lack of transportation;governmental restrictions or priority;litigation including litigation challenging the validity of this transaction or any element thereof; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor, or suppliers; acts of the other party; acts or failure to act of any Governmental Authority (except acts or failure to act of the Beneficiary will not excuse performance by the Beneficiary); the imposition of any applicable moratorium by a Governmental Authority; or any other causes which despite the exercise of diligence and good business practices are or would be beyond the reasonable control of the party claiming such delay and interference. Notwithstanding the foregoing, none of the foregoing events will constitute a Force Majeure Event unless and until Trustor delivers to Beneficiary written notice describing the event,its cause,when and how Trustor obtained knowledge, the date the event commenced, and the estimated delay resulting therefrom. Trustor must deliver such written notice within ten (10) business days after it obtains actual knowledge of the event; 33. If the rights and liens created by this Deed of Trust are held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the Secured Obligations,the unsecured portion of such obligations must be completely performed and paid prior to the performance and payment of the remaining and secured portion of the obligations,and all performance and payments made by Trustor will be considered to have been performed and paid on and applied first to the complete payment of the unsecured portion of the obligations; 34. (a) Subject to the extensions of time set forth in Section 32, and subject to the further provisions of this Section 34, failure or delay by Trustor to perform any term or provision OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 7-HOME DEED OF TRUST PAGE 13 respectively required to be performed under the Secured Obligations or this Deed of Trust constitutes a default under this Deed of Trust. (b) Beneficiary will give written notice of default to Trustor and Investor Limited Partner, specifying the default complained of by the Beneficiary. Failure or delay in giving such notice will not constitute a waiver of any default nor will it change the time of default. (c) Any failures or delays by Beneficiary in asserting any of its rights and remedies as to any default will not operate as a waiver of any default or of any such rights or remedies. Delays by Beneficiary in asserting any of its rights and remedies will not deprive Beneficiary of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies. (d) If a monetary event of default occurs, prior to exercising any remedies hereunder,Beneficiary will give Trustor written notice of such default. Trustor will have a period of fifteen (15) days after such notice is given within which to cure the default prior to exercise of remedies by Beneficiary. (e) If a non-monetary event of default occurs, prior to exercising any remedies hereunder,Beneficiary will give Trustor notice of such default. If the default is reasonably capable of being cured within thirty(30)days,Trustor will have such period to effect a cure prior to exercise of remedies by Beneficiary. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (i) initiates corrective action within said period, and (ii) diligently,continually,and in good faith works to effect a cure as soon as possible,then Trustor will have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary. In no event will Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within ninety(90) days after the first notice of default is given. (f) Except as otherwise required to comply with the provisions of California Civil Code Section 2924 et seq. that are applicable thereto, any notice of default that is transmitted by electronic facsimile transmission followed by delivery of a"hard"copy, will be deemed delivered upon its transmission; any notice of default that is personally delivered (including by means of professional messenger service,courier service such as United Parcel Service or Federal Express,or by U.S.Postal Service),will be deemed received on the documented date of receipt by Trustor;and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof. OCCHC-313 11"H STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 14 35. In the event of a default or breach by Trustor of any security instrument securing a senior loan,Beneficiary will have the right to cure the default prior to completion of any foreclosure. In such event, Beneficiary will be entitled to reimbursement by Trustor of all costs and expenses incurred by Beneficiary in curing the default. The amount of any such disbursements will be a lien against the Property and added to the obligation secured by this Deed of Trust until repaid, with interest at the highest rate permitted by law; IN WITNESS WHEREOF Trustor has executed this Deed of Trust as of the day and year set forth above. "TRUSTOR" ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation By: Nor endez Its: Executive Director [Signatures Continue on Following Page] OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 15 APPROVED BY: THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California By: 6MQLeans- Mayor ATTEST: B City 01frly APPROVED AS TO FORM: ity Attorney By: % 2 KNE BALLMER& BERKMAN Special Counsel OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT HOME DEED OF TRUST PAGE 16 ACKNOWLEDGMENT State of California ) ss County of Orange ) On October 13, 2014,before me, P. L. Esparza,Notary Public, personally appeared Nora Mendez who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. P L ESPARZA Commission #2032750 z,�� Notary Public-California z Orange County My.Comm.Expires Au 4, 2017, (Notary Signature) ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) On October 20, 2014, before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Matthew M. Harper who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. P. L. ESPARZA WITNESS my hand and official seal. Commission#2032750 i."� Notary Public-California a a Orange County M Comm.Ex ires Aug 4,2017 (Seal) (Notary Signatur EXHIBIT A LEGAL DESCRIPTION LOTS 13 AND 15 IN BLOCK 311 OF HUNTINGTON BEACH, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGE 36 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. APN: 024-027-20 EXHIBIT 8 HOME REGULATORY AGREEMENT [Immediately Behind This Page] This Document was electronically recorded by City of Huntington Beach Recorded in Official Records, Orange County Hugh Nguyen, Clerk-Recorder FREE RECORDING REQUESTED BY I IIII III 1111111111111111111111111111111111111111111111111 IIIIINO FEE AND WHEN RECORDED MAIL TO: 2014000497045 03:06pm 11/18/14 105 409 Al2 28 0.00 0.00 0.00 0.00 81.00 0.00 0.00 0.00 THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 Attn: City Manager (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code §27383) APN: 024-027-20 REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS (HOME PROGRAM) Community Housing Development Organization (CHDO) (24 CFR§ 92.504) THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS (HOME PROGRAM) ("Agreement"), dated as of {��T./�, 2014], is made and entered into by and between THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California ("City") and ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation ("Owner"), in furtherance of the regulations issued by the United States Department of Housing and Urban Development set forth in 24 CFR Part 92 (the "HOME Regulations"). RECITALS: A. City is responsible for the use of certain funds ("HOME Funds") made available to the City of Huntington Beach by the United States Department of Housing and Urban Development ("HUD") under the HOME Investment Partnerships Program (the "HOME Program"). B. Owner is certified with the City as a Community Housing Development Organization ("CHDO") and holds title to the property more particularly described in Exhibit No. 1 attached hereto and incorporated by reference herein(the "Property"). C. City and Owner have entered into that certain Affordable Housing Agreement, dated as of September 15, 2014 (the "Housing Agreement"), concerning Owner's rehabilitation of the improvements located on the Property, including nine units of rental housing (consisting of four 2-bedroom units and five 1-bedroom units), and Owner's use of the Property as affordable rental housing to be restricted to Very Low Income Households, with priority to be OCCHC—313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8—HOME REGULATORY AGREEMENT PAGE 1 given to households participating in the City's "Project Self-Sufficiency." The Housing Agreement is 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 Housing Agreement. D. Owner has executed a promissory note (the "HOME Note") dated on or about the date hereof, evidencing a loan of HOME Funds from the City to Owner, in the principal amount of THREE HUNDRED FIVE THOUSAND AND NO/100 DOLLARS ($305,000.00) ("HOME Loan"). The HOME Note is secured by a Deed of Trust With Assignment of Rents dated on or about the date hereof, naming City as beneficiary ("HOME Deed of Trust"). In consideration of the HOME Loan and in satisfaction of HOME Program requirements, all nine of the Units are designated as HOME Units. E. City and Owner now desire to place restrictions upon the use and operation of the Property, in order to ensure that the Property shall be operated continuously as an affordable housing project available for rental to Very Low Income persons in accordance with HOME Regulations and the terms set forth below. AGREEMENT: NOW, THEREFORE, the Owner and City declare, covenant and agree, by and for themselves, their heirs, executors, administrators and assigns, and all persons claiming under or through them, that the Property, for the term of this agreement, shall be held transferred, encumbered, used, sold, conveyed, leased and occupied, subject to the covenants and restrictions hereinafter set forth: 1. DEFINITIONS. 1.1. Affordable Rent. As used in this Agreement,the term"Affordable Rent" shall mean rental rates not to exceed the applicable rent limits set forth by the HOME Program in 24 C.F.R. 92.252(a) and 24 C.F.R. 92.252(b).Affordable Rent shall include a reasonable utility allowance for tenant-paid utilities based on the Orange County Housing Authority's published utility schedules. (a) In the case of any Very Low Income tenant, the rent must meet either (i) or(ii) of the following rent requirements: (i) The rent does not exceed the lesser of(1) 30 percent of the annual income of a family whose income equals 50 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families, as provided by HUD; (2) the fair market rent for existing housing for comparable units in the area as established by HUD under 24 CFR 888.111; or (3) 30 percent of the adjusted income of a family whose annual income equals 65 percent of the median income for the area, as determined by HUD, with adjustments for the number of bedrooms in the unit; or OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.8-HOME REGULATORY AGREEMENT PAGE 2 (ii) The rent does not exceed 30 percent of the family's adjusted income. If the unit receives Federal or State project-based rental subsidy and the Very Low Income family pays as contribution toward rent not more than 30 percent of the family's adjusted income, then the maximum rent (i.e., tenant contribution plus project-based rental subsidy) is the rent allowable under the Federal or State project-based rental subsidy program. 1.2. .Table of Rents. The parties agree that if the Project were placed in service on the date of this Agreement, the maximum gross rent that would be paid by Very Low Income households would be as set forth in the table of rents appended as Exhibit No. 2. The HOME rents in Exhibit No. 2 will be adjusted to not exceed the maximum rent limits provided by HUD at the Completion of the Project and will be adjusted periodically thereafter in accordance with 24 CFR part 92.252(f) and(g). 1.3. Eligible Tenant. As used in this Agreement, the term "Eligible Tenant" shall mean any person entitled to rent an Affordable Unit as set forth in this Agreement. 1.4. Median Income or Orange County Median Income. For purposes of this Agreement, the terms "Area Median Income", "Median Income" and "Orange County Median Income" shall mean the median income for the Orange County Primary Metropolitan Statistical Area, with adjustment for household size, as estimated annually by the United States Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937 as amended. 1.5. Very Low Income Household. As used in this Agreement, the term "Very Low Income Household"means low-income families whose annual incomes do not exceed 50 percent of the median family income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 50 percent of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes. 2. TERM OF AGREEMENT; PRIORITY OF AGREEMENT; USE OF PROPERTY. In accordance with the formula set forth in 24 CFR 92.252(e) and as required by 24 CFR 92.504 (c)(3)(ix), this Agreement shall remain in effect for the HOME Program required term of fifteen (15) years following the date of Completion of the Project (the "HOME Term"). Upon the expiration of the HOME Term, this Agreement shall continue in full force and effect for an additional forty (40) years and shall terminate on the date that is fifty-five (55) years following the date of Completion of the Project. This Agreement shall remain in effect throughout its 55- year term, notwithstanding the payment in full of the HOME Loan. This Agreement is secured by the HOME Deed of Trust and Owner shall not be entitled to a reconveyance of the HOME Deed of Trust prior to the expiration of the 55-year term of this Agreement. This Agreement shall unconditionally be and remain at all times prior and superior to the lien created by any deed of trust securing construction and/or permanent financing for the Project and all of the terms and conditions contained in the loan documents relating to such financing and to the lien of any new OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 3 mortgage debt which is for the purpose of refinancing all or any part of such financing. Owner hereby agrees that the Property is to be owned, managed, and operated as nine units of affordable rental housing for Eligible Tenants, with priority given to households participating in the City's "Project Self-Sufficiency", for the 55-year term of this Agreement. To that end, the Owner hereby represents, covenants, warrants and agrees as follows: 2.1. Compliance With HOME Regulations. Owner, its successor and assigns, covenant and agree that the Project shall at all times during the term of this Agreement comply with applicable requirements set forth in Subpart F of Part 92 of Title 24 of the Code of Federal Regulations. 2.2. Maximum Per-Unit Subsidy. The amount of the HOME loan will not exceed the per unit dollar limits established by HUD pursuant to section 221(d)(3)(ii) of the National Housing Act, as implemented in regulations issued by HUD, 24 CFR 221.514(b)(1) and (c). 2.3. The rehabilitation of the Property shall be accomplished within the time provided in the Schedule of Performance, which is attached to the Housing Agreement as Exhibit 5. 2.4. Tasks, Budget, and Disbursement. The HOME Funds shall be used exclusively for the payment of costs approved by the City and incurred in connection with the Project (sometimes referred to herein as the "Project Activities") in accordance with the Housing Agreement. The tasks to be performed with the use of the HOME Funds, and the Project Budget, which specifies the line items for which HOME Funds will be used, are set forth in the Project Budget attached to the Housing Agreement as Exhibit 4. Owner shall not request disbursement of HOME Funds until the funds are needed to pay eligible costs. The amount of each disbursement request shall be limited to the amount needed. The City shall have the right to disapprove any request if the City determines the request is for an ineligible item or is otherwise not in compliance with or inconsistent with the Housing Agreement and this Agreement. 2.5. CHDO Proceeds. CHDO Proceeds are funds generated by the Project receiving CHDO set-aside funds. CHDO Proceeds include funds generated from activities such as the permanent financing of the CHDO project that are used to pay off a CHDO financed construction loan, or proceeds generated from the sale of the Property to a second non-profit. CHDO Proceeds do not include rental income generated by the Project. The receipt of CHDO Proceeds by Owner must be reported to the City within thirty (30) days after receipt. Pursuant to 24 CFR 92.300(a)(2), the City agrees that Owner may retain CHDO Proceeds that are not required to be paid to the City under the terms of the HOME Note, on the condition that Owner use such proceeds for affordable housing activities that benefit Very Low Income households in the City of Huntington Beach. The following will be considered allowable activities for which CHDO Proceeds may be expended: emergency repairs to the Project, Project operating costs and reserves, construction or rehabilitation of additional affordable rental housing for Very Low Income households, and Owner's operating costs directly related to the foregoing activities. CHDO Proceeds must be expended for allowable activities within two (2) years of their receipt by Owner. Owner must maintain, and submit to the City upon request, accurate and reasonably detailed accounts of the receipt and expenditure of CHDO Proceeds, including at a minimum the OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 4 purpose of the expenditure, the identity of the parry receiving the expenditure and the amount. The requirements of this paragraph shall survive the termination of this Agreement and shall apply to all CHDO Proceeds received by Owner, even if such proceeds are received after the expiration of the term of this Agreement. Owner shall retain all books and records relevant to CHDO Proceeds for a minimum of five years after the expenditure of such proceeds. The City, HUD and,the Comptroller General of the United States, and any of their representatives, shall have the right of access to any pertinent books, documents, papers or other records of the Owner, in order to make audits, examinations, excerpts and transcripts. 2.6. Property Standards. (i) All of the Units in the Project shall contain facilities adequate for living, sleeping, eating, cooking and sanitation in accordance with all applicable federal, state and local laws and codes. (ii) The rehabilitation of the Property shall comply with the City's building code and all other applicable local codes, rehabilitation standards, ordinances and zoning ordinances in effect at the time of Project Completion, and the Property shall be decent, safe and sanitary and shall conform to the building, electrical, plumbing, mechanical and energy codes that have been adopted by the City of Huntington Beach. (iii) The Property shall comply with the accessibility requirements at 24 CFR Part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and, if applicable, the design and construction requirements at 24 CFR 100.205 for covered multifamily dwellings, as defined at 24 CFR 100.201, which implements the Fair Housing Act (42 U.S.C. 3601-3619). (iv) Owner shall maintain the housing in compliance with applicable property standards as required by Section 92.251. (v) The Project shall comply with the lead-based paint standards in Section 92.355. Housing assisted with HOME Program funds constitutes HUD-associated housing for the purpose of Lead-Based Paint Poisoning Prevention Act (42 U.S.C. Section 4821, et seq.) and is, therefore, subject to 24 Code of Federal Regulations Part 35. Accordingly, and pursuant to Section 92.355 of the Regulations, the Owner hereby agrees to and shall be responsible for testing and abatement activities specified in the Lead-Based Paint Poisoning Prevention Act and the regulations set forth at 24 Code of Federal Regulations Part 25 with respect to the rehabilitation of the Property. 2.7. Residential Use. None of the Units will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park, or any other use that is inconsistent or incompatible with this Agreement. OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 5 2.8. Faith Based Activities. Developer will comply with in the restrictions on the use of HOME Funds for faith based activities as set forth in Section 92.257. Owner hereby certifies that HOME Funds will not be used for the acquisition, construction or rehabilitation of structures to the extent that those structures are used for inherently religious activities. Owner shall use the HOME Funds for the construction of structures only to the extent the structures are used for conducting eligible activities under 24 Code of Federal Regulations Part 92. 2.9. Conversion of Units. No part of the Project will at any time be owned by a cooperative housing corporation nor shall the Owner take any steps in connection with the conversion to such ownership or uses to condominiums, or to any other form of ownership without prior written approval by the City. Any such conversion shall comply with the requirements of 24 C.F.R. Section 92.255. 2.10. Tenant Preference. All of the Affordable Units will be made available to Eligible Tenants for rental in accordance with the terms of this Agreement, and the Owner shall not give preference to any particular class or group in renting the Affordable Units, except to the extent that the Affordable Units are required to be leased or rented to Eligible Tenants and except as provided in Section 3.6 below. 2.11. Tenant Protections. Owner shall comply with the tenant protections provisions of 24 C.F.R. Section 92.253, including but not limited to: a. The lease of an Affordable Unit must be for not less than one year, unless by mutual agreement between tenant and Owner. b. The lease may not contain any of the following provisions: (1) Agreement by the tenant to be sued, to admit guilt or to a judgment in favor of Owner in a lawsuit brought in connection with the lease; (2) Agreement by the tenant that the Owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the Unit after the tenant has moved out of the Unit. The Owner may dispose of this personal property in accordance with state law. (3) Agreement by the tenant not to hold the Owner or the Owner's agents legally responsible for any action or failure to act, whether intentional or negligent; (4) Agreement by the tenant that the Owner may institute a lawsuit without notice to the tenant; (5) Agreement by the tenant that the Owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.8-HOME REGULATORY AGREEMENT PAGE 6 (6) Agreement by the tenant to waive any right to a trial by jury; (7) Agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease; and (8) Agreement by the tenant to pay attorney's fees or other legal costs if the tenant wins in a court proceeding by the Owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses. As required by 24 C.F.R. 92.303, Owner shall adhere to a fair lease and grievance procedure approved by the City and provide a plan for and follow a program of tenant participation in management decisions. 2.12. Termination of Tenancy. Owner, its successors or assigns, may not terminate the tenancy or refuse to renew the lease of a tenant, except (i) for serious or repeated violation of the terms and conditions of the lease; (ii) for violation of applicable federal, state, or local law; or (iii) for other good cause. Pursuant to 24 C.F.R. 92.253(c), any termination or refusal to renew must be preceded by not less than 30 days by the Owner's service upon the tenant of a written notice specifying the grounds for the action. 3. OCCUPANCY OF PROJECT BY ELIGIBLE TENANTS. Owner hereby represents, warrants, and covenants as follows: 3.1. Income Restrictions. Except as expressly provided herein, throughout the term of this Agreement, the Affordable Units shall be rented only to, and occupied only by, Eligible Tenants. 3.2. Rent Schedules & Rent Increases. 1) Owner shall rent the Affordable Units to Eligible Tenants at no more than the allowable Affordable Rents. The Owner is responsible for ensuring that the current operative income limits, program rents, and utility allowances which are effective at the time of tenant application are used to determine initial tenant eligibility and conformance with affordability requirements; and that each tenant recertification is performed using current income limits, program rents, and utility allowances that assure compliance with affordability requirements. The rental rates for the Affordable Units shall be adjusted annually based upon annual updates of the applicable income and rent standards, including but not limited to updates published by the United States Department of Housing and Urban Development. 2) Owner shall submit to the City for review and approval its initial rent schedule and utility allowances, thirty (30) days prior to initial rental of the Units, and on an annual basis as determined by the date of the initial rent schedule and utility allowance schedule submission. Rental rates are adjusted, and income determinations are performed annually at the time of lease renewal. Any increase in rents for the HOME Units is subject to the provisions of OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 7 outstanding leases, including the provision that rents are not adjusted until their leases are renewed. The Owner must provide tenants of those units not less than thirty (30) days prior written notice before implementing any increase in rents. 3) In no event shall any of the Affordable Units be rented at a rate greater than the applicable Affordable Rent. Failure to comply with the affordability requirements of this Agreement is an event of default under the terms of the HOME Loan. Subject to the right to cure, the HOME Loan will be due and payable immediately if the Affordable Units do not meet the requirements of this Agreement. 3.3. Occupancy By Eligible Tenant. An Affordable Unit initially occupied by an Eligible Tenant shall be deemed occupied by an Eligible Tenant until such Affordable Unit is vacated, even if the tenant's household income subsequently increases to an amount that exceeds the maximum allowable income for a Low Income Household, so long as satisfactory actions are taken to ensure that all vacancies are filled in accordance with this Agreement until the noncompliance is corrected. To the extent provided by HOME Regulations, Owner shall not terminate or refuse to renew the lease of a tenant who initially qualified as an Eligible Tenant but whose income subsequently increases to an amount that exceeds the maximum allowable income for a Low Income Household. However, if the tenant's income increases to one hundred forty percent (140%) or more of the income limit for a Low Income Household, Owner shall raise the tenant's rent (including a reasonable utility allowance) to an amount equal to thirty percent (30%) of the tenant's gross household income. 3.4. Maximum Occupancy. The maximum number of persons residing in a Unit may not exceed a number equal to two times the number of bedrooms in the Unit plus one. For example, no more than five persons may reside in a two-bedroom Unit. Owner shall be responsible for enforcing this maximum occupancy limit. Upon discovery of a violation of this Section 3.4, Owner shall immediately notify the Eligible Tenant of record in writing ("Occupancy Violation Notice"). In the Occupancy Violation Notice, Owner shall inform the Eligible Tenant of the occupancy violation and provide the Eligible Tenant with an opportunity to cure the violation within thirty(30) days from the date of the Notice. 3.5. Income Determination. Immediately prior to a prospective tenant's occupancy of an Affordable Unit, Owner shall obtain and maintain on file an income computation and certification form from such prospective tenant dated immediately prior to the date of initial occupancy of an Affordable Unit by such prospective tenant. Owner shall verify that the income information provided by an applicant is accurate by following all applicable City policies and procedures and by taking one or more of the following steps as a part of the verification process: (i) obtain two (2) pay stubs from the most recent pay periods; (ii) obtain a written verification of income and employment from applicant's current employer; (iii) obtain an income verification form from the Social Security Administration and/or California Department of Social Services if the applicant receives assistance from either agency; (iv) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income as is reasonably satisfactory; or (v) obtain such other information as OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 8 may be reasonably required. Owner shall update the foregoing records annually and shall provide copies of updated tenant eligibility records and monthly rental records to City for review, subject to redaction only to the extent deemed necessary by Owner, after consultation with the City, to comply with applicable federal and state privacy laws. Upon review of such records, City may at its option perform an independent audit of the tenant eligibility records in order to verify compliance with the income and affordability requirements set forth herein. Costs for such an audit performed by the City shall be deemed a Project Operating Expense, deductible from the Project's Revenue(as such term is defined in the HOME Note). Owner shall retain the records described in this Section, including the documentation submitted pursuant to 24 C.F.R. 92.203(a)(1), for a period of five (5) years after the date the respective records were created. 3.6. Rental Priority. Subject to Owner's policies and procedures for screening potential tenants, which must be approved by the City, the Affordable Units shall be rented according to the following priorities: a. When an Affordable Unit becomes available as a result of a tenant vacation, Owner shall give first priority in renting the Affordable Unit to an Eligible Tenant who has been displaced by activities of the City. b. Owner shall give second priority to persons who are participating in the City's "Project Self-Sufficiency." Except as otherwise set forth above, Affordable Units shall be rented to Eligible Tenants on a first-come, first-served basis; provided, however, that Owner shall maintain an "interest list" or "eligibility list" of potential tenants. The rental priority provision set forth in this Section 3.6 shall apply only to the extent such provisions are not in conflict with any applicable federal or state law or any regulatory agreement affecting the Project that is approved by the City and recorded in superior priority to this Agreement. 3.7. Maintenance of Records. Owner shall maintain complete and accurate records pertaining to the Affordable Units, and shall permit any duly authorized representative of the City to inspect the books and records of Owner pertaining to the Project including, but not limited to, those records pertaining to tenant eligibility and occupancy of the Affordable Units. Records pertaining to the Project and Affordable Units shall be retained for a period of five (5) years after the termination of this Agreement; records pertaining to tenant eligibility shall be retained for the period set forth in Section 3.5. To assist the City in meeting its HOME Program recordkeeping and reporting requirements and to document compliance with the requirements of Section 230.26 of the City of Huntington Beach Zoning Code, Owner shall prepare, maintain and submit to the City, as appropriate,the following records and reports: OCCHC-313 11""'STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 9 a. Records which demonstrate that the Property meets the property standard specified in 24 CFR 92.251 and the lead-based paint requirements of 24 CFR 92.355; b. Records which demonstrate that each family occupying a HOME Unit is income eligible in accordance with 24 CFR 92.203; C. Records which demonstrate that the Property meets the affordability and income targeting requirements of 24 CFR 92.252 for the duration of this Agreement. Records shall be kept for each family occupying an Affordable Unit; d. Records which demonstrate that each lease complies with the tenant and participant protections, as specified in 24 CFR 92.253. Records shall be kept for each family occupying an Affordable Unit; e. Equal opportunity and fair housing records, including, as applicable: (1) data on the extent to which each racial and ethnic group and single- headed household (by gender of household head) have applied for, participated in, or benefited from, any program or activity funded in whole or in part with HOME funds; (2) documentation of actions undertaken to meet the requirements of 24 CFR Part 135 which implements section 3 of the Housing Development Act of 1968, as amended (12 U.S.C. 1701u); (3) documentation of the actions taken to affirmatively further fair housing; f. Affirmative Marketing and MBE/WBE records, including, as applicable: (1) if applicable, records documenting compliance with the affirmative marketing procedures and requirements of 24 CFR 92.351; (2) if applicable, documentation and data on the steps taken by Owner to implement the City's outreach programs as set forth in applicable City policies and procedures including data indicating the racial/ethnic or gender character of each business entity receiving a contract or subcontract of$25,000 or more paid, or to be paid, with HOME funds; the amount of the contract or subcontract, and documentation of the Owner's affirmative steps to assure that minority business and women's business enterprises have an equal opportunity to obtain or compete for contracts and subcontracts as sources of supplies, equipment, construction and services; g. if applicable, records which demonstrate compliance with the requirements of 24 CFR 92.353 relating to displacement, relocation and real property acquisition, including project occupancy lists identifying the name and address of all persons - OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 10 occupying or moving into the Property on and after the date on which Owner obtained site control; h. if applicable, records demonstrating compliance with the labor requirements of 24 CFR 92.354, including contract provisions and payroll records; i. records demonstrating compliance with the lead-based paint requirements of 24 CFR 92.355; j. if applicable, records which support any exceptions to the conflict of interest prohibition pursuant to 24 CFR 92.356; k. debarment and suspension certifications required by 24 CFR Parts 24 and 91; and 1. Equal opportunity and fair housing records, including, as applicable: (1) data on the extent to which each racial and ethnic group and single- headed household (by gender of household head) have applied for, participated in, or benefited from, any program or activity funded in whole or in part with HOME funds; (2) documentation of actions undertaken to meet the requirements of 24 CFR Part 135 which implements section 3 of the Housing Development Act of 1968, as amended(12 U.S.C. 1701u); (3) documentation of the actions the Owner has taken to affirmatively further fair housing. Owner shall retain all books and records relevant to the Housing Agreement for a minimum of five years after the project completion date, except that records of individual tenant income verifications, project rents and project inspections shall be retained for the most recent five year period until five years after the affordability period terminates, or until the conclusion or resolution of any and all audits or litigation relevant to the Housing Agreement, whichever is later. The City, HUD and the Comptroller General of the United States, and any of their representatives, shall have the right of access to any pertinent books, documents, papers or other records of the Owner, in order to make audits, examinations, excerpts and transcripts. M. Records, data and documentation as required for the City's performance of its reporting obligations under the Federal Funding Accountability and Transparency Act of 2006 (FFATA), to the full extent applicable to the Project, which may include but is not necessarily limited to reporting of executive compensation received by executives of Owner and/or executives of Owner's partners or members and/or executives of partners or members of any of Owner's partners or members. OCCHC-313 11"'STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 11 3.8. Reliance on Tenant Representations: Each tenant lease shall contain a provision to the effect that Owner has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of an Affordable Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. 4. MAINTENANCE 4.1. Maintenance Covenant. (a) Owner agrees to maintain all interior and exterior improvements, including landscaping, on the Property in good condition and repair (and, as to landscaping, in a healthy condition), reasonable wear and tear excepted, and in accordance with all applicable laws, rules, ordinances, orders, and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction (including, but not limited to, Federal Housing Quality Standards as set forth in 24 C.F.R. 982.401). In addition, Owner shall keep the Property free from all graffiti and any accumulation of debris or waste material. Owner shall make all repairs and replacements necessary to keep the improvements in good condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable materials. The maintenance covenant contained 'in this Section shall remain in effect for the term of this Agreement. (b) The Project shall comply with the lead-based paint standards in 24 C.F.R. §92.355. Housing assisted with HOME Program funds constitutes HUD-associated housing for the purpose of Lead-Based Paint Poisoning Prevention Act (42 U.S.C. Section 4821, et se and is, therefore, subject to 24 Code of Federal Regulations Part 35. 4.2. Maintenance Program. Owner must maintain the Property in conformance with an approved Maintenance Program, including a maintenance budget. The Maintenance Program must describe in reasonable detail the standards to be followed in maintaining the interior and exterior of the Improvements, including a schedule indicating the proposed frequency of each element of maintenance, and will include, at a minimum, the following: periodic cleaning of the interior and exterior of the Improvements, including windows; removing graffiti; removing debris and waste materials and otherwise maintaining indoor and outdoor areas of the Property; maintaining any lawns, plants, shrubs and trees or other landscaping planted on the Property; performing inspections of all exterior features to determine whether repairs are required; conducting periodic protective treatments such as rust removal and caulking; conducting repairs to facades, roof, doors, windows and other exterior features; maintaining fencing and other security devices and systems; periodic repainting of the exterior; periodic repainting of the interior units and common areas; periodic replacing of the interior unit carpets; checking building systems, including, but not limited to the heating and cooling systems, smoke alarms and water heaters; checking interior unit appliances; and monitoring interior unit bathrooms for mold/mildew. The Maintenance Program, including any amendments proposed by Owner, will be subject to the approval of the City Manager. OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 12 4.3. At all times during the Restricted Period, Owner must maintain the Property and the Improvements in accordance with the approved Maintenance Program and in compliance with Federal Housing Quality Standards (24 CFR § 982.401) and other applicable state and local laws and codes. To implement this requirement, Owner agrees to budget sufficient funds to pay for all reasonably anticipated costs (as indicated in the Annual Operating Budget). 4.4. City Rights. The City shall have the right to enter upon the Property to inspect the Property and both the interiors and exteriors of the Units, upon seventy-two (72) hours prior written notice to Owner. City may, but is not obligated to, perform or cause to be performed the maintenance necessary to cure any default of these maintenance covenants and Owner shall be liable for payment of reasonable costs to perform such required maintenance; provided, however, that Owner first be given written notice of the actions required to cure any default, and Owner, after receipt of such notice, shall have thirty (30) days to cure such defaults, but Owner shall not be deemed in default of the foregoing maintenance covenant if such default cannot reasonably be cured within the thirty (30) day period referenced above so long as Owner has commenced to cure such default within the same thirty (30) day period and is diligently proceeding with the work to cure such default. Notwithstanding the foregoing, if any property conditions are reasonably identified by City after a property inspection attended by a representative of Owner that pose an immediate danger to life or limb, Owner shall have three (3) days to effect corrections of such condition(s)to City's reasonable satisfaction. 4.5. Annual Report. Owner covenants and agrees to submit to the City an annual report (the "Annual Report"), which shall include the information required by Section 3.5 of this Agreement. The Annual Report shall include for each Affordable Unit the rental rate and the income and family size of the occupants, and shall also include the records described in Section 3.5 herein and any financial statements required by the Housing Agreement. The income information shall be supplied by the tenant in a certified statement on a form provided by the City. The Owner shall submit the Annual Report on or before April 30 of the year following the year covered by the Annual Report. The Owner shall provide for the submission of household information and certification in its leases with tenants. 4.6. Management Report. Beginning on the date of first occupancy, and for each fiscal year thereafter during the term of this Agreement, Owner shall also submit on an annual basis, and upon the written request of the City on a quarterly basis, a report for the management of the Property (the "Management Report"). The Management Report shall include a profit and loss statement, budget to date figures, and occupancy report and shall clearly show project revenues, operating expenses, deposits to and withdrawals from the Project's Capital Reserve Account, and cash flow available for residual receipts payments, all of which shall be certified by Developer. The Quarterly Report shall be in a form that is reasonably acceptable to the City Manager. The City Manager, in his/her sole discretion may waive the requirement of the Management Report for one or more quarterly reporting periods. However, such waiver shall not operate to waive any subsequent requirement of the Management Report for the Restricted Period. After receipt of such certified financial statements for the Project, City may request additional financial analyses or obtain a third party review at City's own expense, of financial statements for the Project to verify the accuracy of the payments by Developer on the HOME OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 13 Note or the required deposits into the Capital Reserve Account; provided, however that if such review reveals a substantial underpayment on the HOME Note in the City's reasonable discretion, in addition to the other remedies available to the City, the Developer shall promptly reimburse the City for the reasonable cost of conducting the review. 4.7. Management Plan. Within the time set forth in the Schedule of Performance attached to the Housing Agreement, Owner shall prepare and submit to the City for approval a management plan in accordance with the following("Management Plan"): (a) The Management Plan, including such amendments as may be approved in writing by the City (if applicable), shall remain in effect for the term of this Agreement. Owner shall not amend the Management Plan or any of its components without the prior written consent of the City. The components of the Management Plan shall include: (1) Management Agent. The name and qualifications of any proposed management agent. The City shall approve or disapprove the proposed management agent in writing based on the experience and qualifications of the management agent. The management agent shall have demonstrated experience in operating affordable housing comparable to the Project. (2) Management Program.A description of the proposed management, maintenance,tenant selection and occupancy policies and procedures for the Affordable Units. (3) Management Agreement. A copy of the proposed management agreement specifying the amount of the management fee and the relationship and division of responsibilities between Owner and management agent. (4) Tenant Lease or Rental Agreement. A copy of the proposed tenant lease or rental agreement to be used in renting the Affordable Units. (5) Annual Operating Budget. Within the time set forth in the Schedule of Performance attached to the Housing Agreement and annually thereafter not later than fifteen (15) days prior to the beginning of the next fiscal or calendar year of the Project, Owner shall submit a projected operating budget to the City for review and approval. After Owner's initial projected operating budget submittal, Owner shall annually reconcile each previous year's projected budget with actual operating results for the Project ("Budget Reconciliation"). In each Budget Reconciliation, Owner shall set forth an explanation for any major discrepancies between projected and actual budgets. For purposes of this Agreement, a "major discrepancy" shall mean a line item difference between projected and actual budgets of 20% or more. The City shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required hereunder, but such matter shall be deemed disapproved unless the City provides to Owner its written approval within thirty (30) days after receipt of a request for OCCHC-313 11 M STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 14 approval. Any express disapproval shall be in writing and contain the City's reasons for disapproval. Notwithstanding the foregoing, if the City has not expressly approved or disapproved Owner's projected operating budget within thirty (30) days after its submittal to the City, then Owner shall provide a written notice to the City, sent by registered mail, that it intends to operate pursuant to the projected operating budget and the City shall have an additional thirty (30) days within which to approve or disapprove such budget. If the City has not expressly approved or disapproved the projected operating budget by the end of the second 30-day period, then Owner may operate the Project under its projected operating budget so long as discretionary line items do not exceed one hundred ten percent (110%) of the amount of that line item in the previous year's approved operating budget. (b) Owner hereby covenants and agrees the City shall have the right, at any time and from time to time, to give notice to Owner if the City determines that the Project is not being managed or maintained in accordance with the Management Plan. The City may require the Owner to change management practices or to terminate the management agent and retain a different management agent, approved by the City. The City agrees that prior to requiring the Owner to change its management agent or the management practices the City shall identify in writing the deficiencies complained of and shall informally consult with Owner for a period not to exceed thirty (30) days, in an attempt to resolve the dispute and achieve a cure of such deficiencies. If the City determines that such an attempt at informal resolution and/or cure has been unsuccessful, it shall give the Owner thirty (30) days written notice to change the management agent. If Owner fails to do as requested by the City in the written notice, the City may then require the immediate change of the management agent. The management agreement shall provide that it is subject to termination by the Owner without penalty, upon thirty(30) days prior written notice. Within ten (10) business days following a direction of the City to replace the management agent, the Owner shall select another management agent or make other arrangements satisfactory to the City for continuing management of the Project. The Owner shall notify the City upon learning that there is a voluntary change in the management or control of the management agent, and, if the change is unsatisfactory to the City, the City shall be entitled to require the Owner to change the management agent in accordance with the terms of this paragraph. 5. OTHER PROGRAM REQUIREMENTS. Owner shall comply with all applicable federal requirements set forth in Subpart H of the HOME regulations, including the following: 5.1. Other Federal Requirements and Nondiscrimination. 24 CFR 92.350.' Owner acknowledges that 24 CFR 92.350 provides that the Federal requirements set forth in 24 CFR Part 5, subpart A, are applicable to participants in the HOME program, and that these Federal requirements include the following: (a) Nondiscrimination and Equal Opportunity. OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 15 (i) Civil Rights, Fair Housing, and Age and Disability Discrimination Acts Assurances: During the performance of the Loan Agreement, Owner shall assure that no otherwise qualified person shall be excluded from participation or employment, denied program benefits, or be subjected to discrimination based on race, color, national origin, sex, actual or perceived sexual orientation, gender identity, marital status, age, handicap, religion, religious preference or source of income (including but not limited to Section 8 Rental Assistance, Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI) or earnings from seasonal employment), under any program or activity funded by this Agreement, as required by state law, the Fair Housing Act (42 U.S.C. 3601-19) and implementing regulations at 24 CFR part 100 et seq., Executive Order 11063, as amended by Executive Order 12259 (3 CFR, 1959-1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing Programs) and implementing regulations at 24 CFR part 107, title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d- 2000d-4) (Nondiscrimination in Federally Assisted Programs) and implementing regulations at 24 CFR part 1, the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and implementing regulations at 24 CFR part 146, section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8,Title VI of the Civil Rights Act of 1964, the Fair Housing Act (42 U.S.C. 3601- 20) and all implementing regulations, and the Age Discrimination Act of 1975, and all implementing regulations. (ii) Training, Employment, and Contracting Opportunities Assurance of Compliance: The Project Activities to be performed under the Agreement are on a project assisted under a program providing direct federal financial assistance from HUD which is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u ("Section 3"), and the regulations issued by HUD to implement Section 3 (24 CFR Part 135) (the "Section 3 Regulations"). Pursuant to 24 CFR 135.3, the requirements of the Section 3 Regulations apply to the recipient of such financial assistance only where the amount of federal assistance exceeds $200,000, and apply to a contractor or subcontractor of such recipient only where the amount of assistance exceeds $200,000 and the amount of the contract or subcontract exceeds $100,000. Owner shall provide, to the greatest extent feasible, training, employment and contracting opportunities generated by the financial assistance to low- and very- low income persons and business concerns owned by low- or very-low income persons, or which employ low- or very-low income persons. (iii) MBE/WBE Affirmative Action Outreach Program: Owner hereby agrees to comply with the City's minority and women business outreach program in accordance with Executive Order 11625, as amended by Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 CFR, 1977 Comp., p. 139) (Minority Business Enterprises); Executive Order 12432 (3 CFR, 1983 Comp., p. 198) (Minority Business Enterprise OCCHC-313 11'STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 16 Development); and Executive Order 12138, as amended by Executive Order 12608 (3 CFR, 1977 Comp., p. 393 and 3 CFR, 1987 Comp., p. 245) (Women's Business Enterprise). (iv) Disclosure Requirements. The disclosure requirements and prohibitions of 31 U.S.C. 1352 and implementing regulations at 24 CFR Part 87; and the requirements for funding competitions established by the Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3531 et seq.). (v) Debarred, Suspended or Ineligible Contractors. The prohibitions at 24 CFR Part 24 on the use of debarred, suspended or ineligible contractors. (vi) Drug-free Workplace. The Drug-Free Workplace Act of 1988 (41 U.S.C. 701 et seq.) and HUD's implementing regulations at 24 CFR Part 24. (b) Affirmative Marketing. Owner shall comply with the City's Affirmative Marketing requirements. (c) Displacement, Relocation and Acquisition. 24 CFR 92.353. Owner shall cooperate with the City in connection with any project-specific relocation plan to be prepared by the City, and shall certify that, to the extent applicable, it will comply or has complied with the federal relocation, displacement and acquisition rules governing the HOME Program, which are contained in the Uniform Relocation Act, 49 CFR Part 24, and applicable program regulations. 24 CFR Section 92.353 requires that tenants who are displaced from housing units demolished or converted as a result of HOME-funded activities be provided with relocation assistance. (d) Labor. 24 CFR 92.354. Does not apply to this Project. (e) Lead-based Paint. 24 CFR 92.355. The Property shall comply with the lead-based paint standards in 92.355. (f) Conflict of Interest. 24 CFR 92.356. (i) Interest of Employees, Officers and Officials. No employee, agent, consultant, officer or elected official or appointed official of the City, or employee, agent, consultant or officer of Owner, and no other public official of the City who exercises any functions or responsibilities with respect to the activities assisted with HOME funds or who are in a position to participate in a decision making process or gain inside information with regard to these activities, during their tenure and for one year thereafter, may obtain a financial interest or benefit from a HOME assisted activity or have an interest in any contract or subcontract, or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties. Owner shall incorporate, or cause to be incorporated, in all such contractors or subcontracts a provision prohibiting such interest pursuant to the purposes of this Section. Fulfillment of"sweat equity" obligations as defined in Section 8201 of the HOME regulations shall not be considered a violation of this prohibition. OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 17 (ii) Prohibition Against Occupying HOME-Assisted Units. No officer, employee, agent, official or consultant of Owner may occupy a HOME assisted Unit. (iii) Consultant Activities. 24 CFR 92.358. No person providing consultant services in an employer-employee type relationship shall receive more than a reasonable rate of compensation for personal services paid for with HOME funds. In no event, however, shall such compensation exceed the limits in effect under the provisions of any applicable statute (e.g., annual HUD appropriations acts which have set the limit at the equivalent of the daily rate paid for Level IV of the Executive Schedule). Such services shall be evidenced by written agreements between the parties which detail the responsibilities, standards and compensation. Consultant services provided under an independent contractor relationship are not subject to the compensation limitation of Level IV of the Executive Schedule. 5.2. Lobbying Prohibition. Owner hereby certifies to City, under penalty of perjury, under the terms of applicable federal law, that at all applicable times before, during and after the term of this Agreement, that: (a) No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; and (b) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions; and (c) Owner will require that the above stated language in paragraphs a. and b. be included in the award documents for all subawards at all tiers, including subcontracts, subgrants, loans, contracts, and cooperative agreements concerning the subject matter of this Agreement; and (d) Further, Owner and all subawards at all tiers, including subcontracts, subgrants, loans, contracts, and cooperative agreements concerning the subject matter of this Agreement, at all times, shall certify compliance with the provisions of 31 U.S.C. §1352 and any and all terms and conditions of the Byrd Anti-Lobbying Amendment, as amended from time to time. OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 18 6. ENFORCEMENT. (a) Failure to comply with the affordability requirements of this Agreement is an event of default under the terms of the HOME Loan. Pursuant to the HOME Promissory Note evidencing the HOME Loan, subject to the right to cure, the HOME Loan will be due and payable immediately if the housing does not meet the affordability requirements of this Agreement. (b) If Owner defaults in the performance or observance of any covenant, agreement or obligation of Owner pursuant to this Agreement, and if such default remains uncured for a period of thirty (30) days after written notice thereof(or such longer period as may apply to the specific alleged default) shall have been given by City, or, in the event said default cannot be cured within said time period, Owner has failed to commence to cure such default within said thirty (30) days and diligently prosecute said cure to completion, then City shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take one or more of the following steps: (i) By mandamus or other suit, action or proceeding at law or in equity, require Owner to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of this Agreement; or (ii) Take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of participant hereunder, including foreclosure of the Deed of Trust (provided, however, that foreclosure under the Deed of Trust shall be in the priority position of the Deed of Trust and not this Regulatory Agreement). (c) Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by any party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party. (d) Notwithstanding anything to the contrary stated herein, a breach of this Agreement by Owner or its successors and assigns shall in no way defeat, invalidate or impair the obligation or priority of any mortgage or deed of trust encumbering the Property. 7. COVENANTS TO RUN WITH THE LAND. Owner hereby subjects the Property to the covenants, reservations, and restrictions set forth in this Agreement. City and Owner hereby declare their express intent that all such covenants, reservations, and restrictions shall be deemed covenants running with the land and shall pass to and be binding upon the Owner's successors in title to the Property; provided, however, that on the termination of this Agreement said covenants, reservations and restrictions shall expire, except the nondiscrimination covenants contained in Section 5.1 shall remain in perpetuity. All covenants without regard to technical classification or designation shall be binding for the benefit of the City, and such covenants shall run in favor of the City for the entire term of this Agreement, without regard to whether the City is or remains an owner of any land or interest therein to which such covenants relate. OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 19 8. ATTORNEYS' FEES. In the event that any action, suit or other proceeding is brought to enforce the obligations of under this Agreement, each party shall bear its own costs and expenses of suit, including attorneys' fees, expert witness fees and all costs incurred in each- and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. 9. AMENDMENTS. This Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the Official Records of the County of Orange. 10. NOTICE. Any notice required to be given hereunder shall be made in writing and shall be given by (i) personal delivery, (ii) courier service that provides a receipt showing date and time of delivery, or (iii) certified or registered mail, postage prepaid, return receipt requested, at the addresses specified below, or at such other addresses as may be specified in writing by the parties hereto: City: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Deputy Director of Economic Development With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Owner: Orange County Community Housing Corporation 2024 N. Broadway, 3rd Floor Santa Ana, CA 92706-2623 Attention: 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[WArVER/El TEGRATION. 11.1. Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. 11.2. Waiver. Waiver by either party of the performance of any covenant or condition herein shall not invalidate this Agreement nor shall it be considered a waiver of any other covenants or conditions, nor shall the delay or forbearance by either party in exercising any OCCHC-313 11M STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.8-HOME REGULATORY AGREEMENT PAGE 20 remedy or right be considered a waiver of, or an estoppel against, the later exercise of such remedy or right. 11.3. Integration.tion. This Agreement contains the entire Agreement between the parties and neither party relies on any warranty or representation not contained in this Agreement. 12. GOVERNING LAW. This Agreement shall be governed by the internal laws of the State of California, without reference to the principles regarding the conflict of laws. 13. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall constitute one original and all of which shall be one and the same instrument. This Agreement may be executed by each party on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument. IN WITNESS WHEREOF, the City and Owner have executed this Regulatory Agreement and Declaration of Covenants and Restrictions by duly authorized representatives on the date first written hereinabove. [SIGNATURES APPEAR ON NEXT PAGE] OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 21 "OWNER" "CITY" ORANGE COUNTY COMMUNITY THE CITY OF HUNTINGTON HOUSING CORPORATION, BEACH, a municipal corporation of a California nonprofit public benefit the State of California corporation By: Nora Mendez Mayor Its: Executive Director ATTEST: City Clerk APPROVED AS TO FORM: COUNTERPART City Attorney KANR, BALLMER& BERKMAN Special Counsel OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT HOME REGULATORY AGREEMENT PAGE 22 "OWNER" "CITY" ORANGE COUNTY COMMUNITY THE CITY OF HUNTINGTON HOUSING CORPORATION, BEACH, a municipal corporation of a California nonprofit public benefit the State of California corporation By: a Mendez tayor Its: 'Executive Director euk�L gROVED RM:C T T - f4\Nf-q/k)/Iq KANE, BALLMER&BERKMAN Special Counsel OCCHC-313 1 IT"STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT PAGE 22 ACKNOWLEDGMENT State of California ) ss County of Orange ) On October 13, 2014, before me, P. L. Esparza,Notary Public, personally appeared, Nora Mendez who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. P. L. ESPARZA Commission #2032750 Z Notary Public-California z Orange County Comm.Ett 'res Au 4,2017 (Notary Signature ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) On October 20, 2014, before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Matthew M. Harper who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. P.L. ESPARZA ' Commission #2032750 WITNESS my hand and official seal. z ,:� Notary Public California Orange County My Comm. Expires Aug 4, 2017 (Seal) otary Signatu ) 0 EXHIBIT NO. 1 LEGAL DESCRIPTION OF SITE LOTS 13 AND 15 IN BLOCK 311 OF HUNTINGTON BEACH, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGE 36 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. APN: 024-027-20 OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.8-HOME REGULATORY AGREEMENT LEGAL DESCRIPTION EXHIBIT NO. 2 TO HOME REGULATORY AGREEMENT Affordability Requirements (24 CFR 92.252; 92.504(c)(3)(iii)) Owner shall submit its rent schedule and utility allowances thirty (30) days prior to initial rental of the units and on an annual basis thereafter. City shall review and approve or disapprove the proposed rent schedule and utility allowances for compliance with the maximum rent limitations contained in 24 CFR 92.252. City will provide updated HUD income and rent limits to Owner as they become available.As of the date of this Agreement, the applicable income and rent limits are as follows: Orange County 2014 HOME Program Income Limits Household Size Very Low Income 1 $31,650 2 $36,150 3 $40,650 4 $45,150 5 $48,800 6 $52,400 Orange County 2014 HOME Program Rent Limits 1-Bedroom 2-Bedroom Low HOME Rent $903 $1,083 (Very Low Income) For comparison purposes: Fair Market Rent $1,312 $1,644 65%Rent Limit $1,154 $1,387 Owner shall be responsible for ensuring that the current operative HOME income and rent limits in effect at the time of the tenant's rental application will be used to determine initial tenant eligibility and conformance with HOME affordability requirements and that each tenant recertification is conducted using current HOME income and rent limits to assure compliance with HOME Regulations. OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT AFFORDABILITY REQUIREMENTS Income determination and rental rate adjustments shall occur upon annual lease renewal. An increase in rents for HOME-assisted units is subject to the provisions of existing leases, including the provision that rents may not be adjusted until leases are renewed. Owner must provide tenants with not less than thirty (30) days prior written notice before implementing an increase in rents. OCCHC-313 11"H STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 8-HOME REGULATORY AGREEMENT AFFORDABILITY REQUIREMENTS EXHIBIT 9 ENVIRONMENTAL INDEMNITY [Immediately Behind This Page] ENVIRONMENTAL INDEMNITY BY ORANGE COUNTY COMMUNITY HOUSING CORPORATION IN FAVOR OF THE CITY OF HUNTINGTON BEACH THIS ENVIRONMENTAL INDEMNITY (this "Indemnity"), dated as of [APT. /S--, 20141, and made by ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation (referred to as "Borrower"), whose address for purposes of giving notices is 2024 N. Broadway, 3Td Floor, Santa Ana, CA 92706-2623, Attention: Executive Director, in favor of THE CITY OF HUNTINGTON BEACH (the "City"), whose address for purposes of giving notice is 2000 Main Street, Huntington Beach, California 92648. WITNESSETH WHEREAS, Borrower is the owner of the real property in the City of Huntington Beach described on Exhibit"A" attached hereto and made a part hereof, and the improvements thereon (collectively referred to as the "Property"); WHEREAS, Borrower and the City entered into that certain Affordable Housing Agreement, dated as of September 15, 2014 (the "Housing Agreement"), pursuant to which the City agreed to make a loan to Borrower for the purpose of rehabilitating the Property as affordable rental housing (the "Loan") (the Housing Agreement and the documents and instruments referred to therein which are being executed by Borrower concurrently herewith are referred to collectively as the"Loan Documents"); WHEREAS, Borrower has agreed to execute and deliver to the City this Indemnity to induce the City to make the Loan. NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual agreements hereinafter set forth, Borrower hereby agrees with the City as follows: 1. DEFINITIONS For the purpose of this Indemnity, "Hazardous Materials" or"Hazardous Substances" will include, but not be limited to, oil, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes,toxic or contaminated substances or similar materials, including, without limitation, any substances defined as "extremely hazardous substances," "hazardous substances," "hazardous materials," "hazardous waste" or "toxic substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, including the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Sections 9601 et seq. ("CERCLA"); the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et sea.; the Resource Conservation and Recovery Act of 1976, as OCCHC-313 11 M STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.9-ENVIRONMENTAL INDEMNITY PAGE 1 amended, 42 U.S.C. Sections 6901, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et sea.; the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq..- the Federal Water Pollution Control Act, as emended, 33 U.S.C. Section 1251 et seq.-, the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; and those substances defined as "hazardous waste" in Section 25117 of the California Health and Safety Code, as "infectious waste" in Section 25117.5 of the California Health and Safety Code,!_ or as "hazardous substances" in Section 25316 of the California Health and Safety Code or "hazardous materials" as defined in Section 353 of the California Vehicle Code; and in the regulations adopted and orders and publications promulgated pursuant to said laws. Other capitalized terms used in this Indemnity will have the meanings ascribed to them in the Housing Agreement with the same force and effect as if set forth in full below. 2. COVENANTS AND INDEMNITY The following covenants, and indemnities are hereby given and made by Borrower: 2.1 Covenants. (a) Borrower covenants that it will strictly comply with any and all laws, regulations, and/or orders which may be promulgated from time to time relating to Hazardous Materials ("Hazardous Materials Laws"), to immediately take, at Borrower's sole expense, all remedial action required by any Hazardous Materials Law or any judgment, consent decree, settlement or compromise in respect to any Hazardous Materials Claim (as defined herein below), and to keep the Property free of any lien imposed pursuant to any Hazardous Materials Law or in relation to any Hazardous Materials Claim. (b) Borrower covenants that the Property will not, while Borrower is the owner of any portion thereof, be used for any activities involving, directly or indirectly, the use, generation, treatment, storage, release, transportation, presence, discharge or disposal of any Hazardous Materials, except for de minimis quantities used at the Property in strict compliance with all Hazardous Materials Laws and required in connection with the routine rehabilitation, operation and maintenance of the Property. (c) The City will have the right, at any time, to conduct an environmental audit of the Property at the City's expense, unless Hazardous Materials are found, then at Borrower's sole cost and expense, and Borrower will cooperate in the conduct of any such environmental audit. Other than in an emergency, such audit will be conducted only after prior notice has been given to Borrower and only in the presence of a representative of Borrower. Borrower will give the City and its agents and employees access to the Property to remove, or OCCHC-313 11 ..STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.9-ENVIRONMENTAL INDEMNITY PAGE 2 otherwise to mitigate the effects of, Hazardous Materials and Borrower will not unreasonably delay or condition such access. (e) Borrower will not install, or permit to be installed, on the Property friable asbestos or any substance containing asbestos and deemed hazardous by any Hazardous Materials Laws, and, with respect to any such material currently present in the Property, Borrower will promptly either (i) remove or cause to be removed any material that such Hazardous Materials Laws deem hazardous and require to be removed, or (ii) otherwise comply with such Hazardous Materials Laws, all at Borrower's sole cost and expense. If Borrower fails to so do within the cure period permitted under applicable law, regulation, or order, the City may do whatever is necessary to eliminate said substances from the premises or to otherwise comply with all Hazardous Materials Laws, and the costs thereof will be added to the Obligations (as hereinafter defined) of Borrower under this Section 2. (f) Borrower must immediately advise the City in writing of any of the following: (i) any pending or threatened claim against Borrower or the Property by any governmental entity or agency or by any other person or entity relating to Hazardous Materials or pursuant to the Hazardous Materials Laws ("Hazardous Materials Claims"), (ii) any condition or occurrence on the Property that (A) results in noncompliance by Borrower with any Hazardous Materials Laws, (B) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any Hazardous Materials Law, or (C) could reasonably be anticipated to form the basis of a Hazardous Materials Claim against the Property or Borrower. 2.2 Indemnity. Borrower hereby agrees to defend, indemnify, protect, and hold harmless the City and its members, officers, officials, employees, agents, representatives, servants, contractors, successors and assigns (collectively, the "Indemnitees"), except to the extent of the Indemnitees' gross negligence or willful misconduct, from and against any and all damages, losses, liabilities, obligations, penalties, claims (including, without limitation, any third party tort claims), litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or expenses (including, without limitation, attorneys' and experts' fees and disbursements) of any kind or of any nature whatsoever, whether foreseeable or unforeseeable, (collectively, the "Obligations") which may at any time be imposed upon, incurred by or asserted or awarded against the City as a direct or indirect consequence of: (a) The presence of any Hazardous Materials on, in, under, or affecting all or any portion of the Property; (b) The breach of any covenant made by Borrower in Section 2.1 hereof, or (c) The enforcement by the City of any of the provisions of this Section 2.2 or the assertion by Borrower of any defense to its obligations hereunder. OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.9-ENVIRONMENTAL INDEMNITY PAGE 3 3. BORROWER'S UNCONDITIONAL OBLIGATIONS 3.1 Unconditional Obligations. Borrower hereby agrees that the Obligations will be paid and performed strictly in accordance with the terms of this Indemnity, regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Loan Documents or affecting any of the rights of the City with respect thereto. The obligations of Borrower hereunder will be absolute and unconditional irrespective of, and Borrower waives any defense based upon, (a) The validity, regularity, or enforceability of the Loan Documents or any other instrument or document executed or delivered in connection therewith; (b) Any alteration, amendment, modification, release, termination, or cancellation of any of the Loan Documents, or any change in the time, manner, or place of payment of, or in any other term in respect of, all or any of the obligations of Borrower contained in any of the Loan Documents; (c) Any extension of the maturity of the Loan or any waiver of, or consent to any departure from, any provision contained in any of the Loan Documents; (d) Any exculpatory provision in any of the Loan Documents limiting the City's recourse to property encumbered by the Deed of Trust securing the Loan, or to any other security, or limiting the City's rights to a deficiency judgment against Borrower; (e) Any exchange, addition, subordination, or release of, or nonperfection of any lien on or security interest in, any collateral for the Loan, or any release, amendment, waiver of, or consent to any departure from any provision of, any other surety or guarantee given in respect of the Loan; (f) The insolvency or bankruptcy of Borrower or of any indemnitor or guarantor under any other indemnity or guarantee given in respect of the Loan; or (g) Any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower, or Borrower's approved assignee, or any other indemnitor or guarantor with respect to the Loan or any or all of the Obligations. 3.2 Continuation. The term of this Indemnity will continue until such time as no legal action can be successfully brought against the City due to applicable statutes of limitation. This Indemnity (a) is a continuing indemnity and will remain in full force and effect until the satisfaction in full of all of the Obligations (notwithstanding the payment in full of the Loan or the release or other extinguishment of the Deed of Trust, or any other security for the Loan); and OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.9-ENVIRONMENTAL INDEMNITY PAGE 4 (b) will continue to be effective or will be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the City upon the insolvency, bankruptcy, or reorganization of Borrower or otherwise, all as though such payment had not been made. 3.3 Survival. Borrower's duty to indemnify will survive any judicial or non judicial foreclosure under the HOME Deed of Trust or transfer of the Property in lieu thereof, the release and reconveyance or cancellation of the HOME Deed of Trust, and the satisfaction of all of Borrower's obligations under the Loan Documents. 4. WAIVER Borrower acknowledges that possible defenses to the enforceability of the Obligations may presently exist and/or may arise hereafter and as part of the City's consideration for entering into the Housing Agreement, they have specifically bargained for the waiver and relinquishment by Borrower of all such defenses. Borrower agrees that it has had the opportunity to seek and receive legal advice from skilled legal counsel of its choosing and represents and confirms that Borrower is fully informed regarding, and thoroughly understands, the nature of such possible defenses, the circumstances under which they may arise, the benefits that they might confer upon Borrower and the legal consequences to Borrower of waiving such defenses. Borrower makes this Indemnity with the intent that this Indemnity.and all of the waivers herein will each and all be fully enforceable by the City and that the City are induced to enter into the Housing Agreement in material reliance upon such presumed full enforceability. Without limitation to the foregoing,Borrower hereby waives the following: (a) Promptness and diligence; (b) Notice of acceptance and notice of the incurrence of any Obligation by Borrower; (c) Notice of any action taken by the City, Borrower, or any other interested party under any Loan Document or under any other agreement or instrument relating thereto; (d) All other notices, demands, and protests, and all other formalities of every kind, in connection with the enforcement of the Obligations, the omission of or delay in which, but for the provisions of this Section 4, might constitute grounds for relieving Borrower of its Obligations hereunder; (e) The right to a trial by jury with respect to any dispute arising under, or relating to, this Indemnity; OCCHC-313 11"H STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.9-ENVIRONMENTAL INDEMNITY PAGE 5 (f) Any requirement that the City protect, secure, perfect, or insure any security interest or lien in or on any property subject thereto; (g) Any requirement that the City exhaust any right or take any action against Borrower or any other person or collateral; and (h) Any defense that may arise by reason of- (1) The incapacity, lack of authority, death or disability of, or revocation hereof by, any person or persons; (2) The failure of the City to file or enforce any claim against the estate (in probate, bankruptcy, or any other proceedings) of any person or persons; or (3) Any defense based upon an election of remedies by the City, including, without limitation, an election to proceed by nonjudicial foreclosure or which destroys or otherwise impairs the subrogation rights of Borrower or any other right of Borrower to proceed against a guarantor by the operation of Section 580d of the California Code of Civil Procedure or otherwise. 5. NOTICES Any notice, demand, statement, request, or consent made hereunder will be in writing and will be personally served, mailed by first-class registered mail, return receipt requested, to the address set forth in the first paragraph of this Indemnity, above, or given by electronic facsimile ("fax") transmission to the fax numbers stated below, with confirmations mailed by first class registered mail, return receipt requested to the address set forth above, of the party to whom such notice is to be given(or to such other address as the parties hereto,will designate in writing): In the case of the City: 714-374-1590 In the case of Borrower: 714-558-0423 Any notice that is transmitted by fax transmission followed by delivery of a "hard" copy, will be deemed delivered upon its transmission; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), will be deemed received on the documented date of receipt; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required will be deemed received on the date of receipt thereof. OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 9-ENVIRONMENTAL INDEMNITY PAGE 6 6. MISCELLANEOUS 6.1 Borrower must make any payment required to be made hereunder in lawful money of the United States of America, and in same day funds, to the City at its address specified in the first paragraph hereof. 6.2 No amendment of any provision of this Indemnity will be effective unless it is in writing and signed by Borrower and the City and no waiver of any provision of this Indemnity, and no consent to any departure by Borrower from any provision of this Indemnity, will be effective unless it is in writing and signed by the City, and then such waiver or consent will be effective only in the specific instance and for the specific purpose for which given. 6.3 No failure on the part of the City to exercise, and no delay in exercising, any right hereunder or under any Loan Document will operate as a waiver hereof or thereof, nor will any single or partial exercise of any right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the City provided herein and in the Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the City hereunder or under any Loan Document against any party thereto are not conditional or contingent on any attempt by the City to exercise any of its rights hereunder or under any other Loan Document against such party or against any other person or collateral. 6.4 If any provision of this Indemnity is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, then that provision will, as to such jurisdiction, be deemed ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof and without affecting the validity or enforceability of such provision in any other jurisdiction. 6.5 This Indemnity will (a) be binding upon Borrower, and Borrower's successors and assigns; and (b) inure, together with all rights and remedies of the City hereunder, to the benefit of the City, its directors, officers, employees, and agents, any successors to the City's interest in the Property, any other person who acquires any portion of the Property at a foreclosure sale or otherwise through the exercise of the City's rights and remedies under the Loan Documents, any successors to any such person, and all directors, officers, employees, and agents of all of the aforementioned parties. Without limiting the generality of clause (b) of the immediately preceding sentence, the City may, subject to, and in accordance with, the provisions of the Loan Documents, assign or otherwise transfer all or any portion of its rights and obligations under any Loan Document, to any other person, and such other person will thereupon become vested with all of the rights and obligations in respect thereof that were granted to the City herein or otherwise. None of the rights or obligations of Borrower hereunder may be assigned or otherwise transferred without the prior written consent of the City. OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.9-ENVIRONMENTAL INDEMNITY PAGE 7 6.6 Borrower hereby (a) irrevocably submits to the jurisdiction of any California or federal court sitting, in each instance, in Orange County in any action or proceeding arising out of or relating to this Indemnity, (b) waives any defense based on doctrines of venue or forum non conveniens or similar rules or doctrines, and (c) irrevocably agrees that all claims in respect of any such action or proceeding may be heard and determined in such California or federal court. Borrower irrevocably consents to the service of any and all process which may be required or permitted in any such action or proceeding to the address specified in the first paragraph of this Indemnity or in any other manner provided by law. Borrower agrees that a final judgment in any such action or proceeding will be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. 6.7 The title of this document and the captions used herein are inserted only as a matter of convenience and for reference and will in no way define, limit, or describe the scope or the intent of this Indemnity or any of the provisions hereof. 6.8 This Indemnity will be governed by, and construed and interpreted in accordance with, the internal laws of the State of California applicable to contracts made and to be performed therein, except to the extent that the laws of the United States preempt the laws of the State of California. 6.9 This Indemnity may be executed in any number of counterparts, each of which will constitute an original and all of which together will constitute one agreement. [SIGNATURES APPEAR ON FOLLOWING PAGE] OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 9-ENVIRONMENTAL INDEMNITY PAGE 8 IN WITNESS WHEREOF, Borrower has duly executed this Indemnity as of the date set forth below. "BORROWER" ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation Dated: By: endez Executive Director OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.9-ENVIRONMENTAL INDEMNITY PAGE 9 EXHIBIT A LEGAL DESCRIPTION LOTS 13 AND 15 IN BLOCK 311 OF HUNTINGTON BEACH, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGE 36 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. APN: 024-027-20 OCCHC-313 11"'STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.9-ENVIRONMENTAL INDEMNITY LEGAL DESCRIPTION EXHIBIT 10 ASSIGNMENT OF AGREEMENTS [Immediately Behind This Page] ASSIGNMENT OF AGREEMENTS FROM ORANGE COUNTY COMMUNITY HOUSING CORPORATION TO THE CITY OF HUNTINGTON BEACH 1. FOR VALUE RECEIVED, the undersigned, ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation ("Owner"), assigns to THE CITY OF HUNTINGTON BEACH, a municipal corporation of the state of California("Assignee"), all of its right, title and interest in and to: a. All architectural, design, engineering and development agreements, and any and all amendments, modifications, supplements, addenda and general conditions thereto (collectively, "Architectural Agreements"); and b. All plans and specifications, shop drawings, working drawings, amendments, modifications, changes, supplements, general conditions and addenda thereto(collectively"Plans and Specifications") heretofore or hereafter entered into or prepared by any architect, engineer or other person or entity (collectively "Architect"), for or on behalf of Owner in connection with the rehabilitation of the Improvements on the Property described in Exhibit A attached. This assignment is subject to the prior rights, if any, of a lender approved by Assignee whose lien is senior to the Deed of Trust held by Assignee. The Plans and Specifications, as of the date hereof, are those which Owner has heretofore, or will hereafter deliver to Assignee. 2. This ASSIGNMENT OF AGREEMENTS ("Assignment") constitutes a present and absolute assignment to Assignee as of the Effective Date, subordinate to a lender approved by Assignee whose lien is senior to the Deed of Trust held by Assignee ("Senior Lender"); provided, however, Assignee confers upon Owner the right to enforce the terms of the Architectural Agreements and Owner's rights to the Plans and Specifications so long as no event which would constitute a Default after notice or the passage of time has occurred under the Affordable Housing Agreement dated as of September 15, 2014, between Assignee and Owner (the "Housing Agreement"). Upon the occurrence of an event which would constitute a Default after notice or the passage of time under the Housing Agreement, Assignee may, in its sole discretion, give notice to Architect of its intent to enforce the rights of Owner under the Architect Agreements and of its rights to the Plans and Specifications and may initiate or participate in any legal proceedings respecting the enforcement of said rights. Owner acknowledges that by accepting this Assignment, Assignee does not assume any of Owner's obligations under the Architectural Agreements or with respect to the Plans and Specifications. OCCHC-313 11 rx STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 10-ASSIGNMENT OF AGREEMENTS PAGE 1 3. Owner represents and warrants to Assignee, as of the Effective Date, that: (a) all Architectural Agreements entered into by Owner are in full force and effect and are enforceable in accordance with their terms and, to the best of Owner's knowledge, no default, or event which would constitute a default after notice or the passage of time, exists with respect to said Architectural Agreements; (b) all copies of the Architectural Agreements and Plans and Specifications delivered to Assignee are complete and correct in all material respects; and (c) Owner has not assigned any of its rights under the Architectural Agreements or with respect to the Plans and Specifications except as expressly permitted by the Housing Agreement. 4. Owner agrees: (a) to pay and perform all obligations of Owner under the Architectural Agreements; (b) to enforce the payment and performance of all obligations of any other person or entity under the Architectural Agreements; (c) not to materially modify the existing Architectural Agreements nor to enter into any future Architectural Agreements without Assignee's prior written approval except as otherwise expressly permitted in the Housing Agreement; and (d) not to further assign (other than assignment in connection with a loan which is senior in priority to Assignee's assignment), for security or any other purposes, its rights under the Architectural Agreements or with respect to the Plans and Specifications without Assignee's prior written consent. 5. This Assignment secures performance by Owner of all obligations of Owner under the Housing Agreement. This Assignment is supplemented by the provisions of the Housing Agreement and said provisions are incorporated herein by reference. 6. The term "Housing Agreement" as used herein shall mean the Affordable Housing Agreement dated as September 15, 2014, between Owner and Assignee, as well as any future amendments and implementation agreements between Owner and Assignee which refer to this Assignment. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Housing Agreement. 7. This Assignment shall be governed by the internal laws of the State of California, except to the extent that Federal laws preempt the laws of the State of California, and Owner consents to the jurisdiction of any Federal or State Court within the State of California having proper venue for the filing and maintenance of any action arising hereunder. If Assignee should bring any action to enforce its rights hereunder at law or at equity, Owner shall reimburse Assignee for all reasonable attorneys' fees and costs expended in connection therewith. 8. This Assignment shall be binding upon and inure to the benefit of the heirs, legal representatives, assigns, and successors-in-interest of Owner and Assignee; provided, however, this shall not be construed and is not intended to waive any restrictions on OCCHC-313 11 T"STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 10-ASSIGNMENT OF AGREEMENTS PAGE 2 assignment, sale, transfer, mortgage, pledge, hypothecation or encumbrance by Owner contained in the Housing Agreement. 9. The Effective Date of this Assignment shall be the date it is executed by Owner. IN WITNESS WHEREOF, the undersigned has executed this Assignment as of the date set forth below. OWNER: ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation Date: �O�1,� /�j/ By: ra Mendez Its: Executive Director OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 10-ASSIGNMENT OF AGREEMENTS PAGE 3 PROPERTY DESCRIPTION Exhibit A to Assignment of Agreements dated as of S�aP7'- 2014], between ORANGE COUNTY COMMUNITY HOUSING CORPORATION as Owner and THE CITY OF HUNTINGTON BEACH as Assignee. LOTS 13 AND 15 IN BLOCK 311 OF HUNTINGTON BEACH, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGE 36 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. APN: 024-027-20 OCCHC-313 11"'STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 10-ASSIGNMENT OF AGREEMENTS LEGAL DESCRIPTION EXHIBIT I I ASSIGNMENT OF RENTS &LEASES [Immediately Behind This Page] This Document was electronically recorded by City of Huntington Beach Recorded in Official Records,Orange County Hugh Nguyen, Clerk-Recorder FREE RECORDING REQUESTED BY IIII�� III 11111111111111111111111111111111111111111111111111111IEIINO FEE AND WHEN RECORDED MAIL TO: 2014000497046 03:06pm 11/18/14 105 409 A34 A36 10 0.00 0.00 0.00 0.00 27.00 0.00 0.00 0.00 THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 Attn: City Manager (Space Above This Line for Recorder's Office Use Only) (Exempt from Recording Fee per Gov. Code§27383) APN: 024-027-20 ASSIGNMENT OF RENTS AND LEASES FROM ORANGE COUNTY COMMUNITY HOUSING CORPORATION TO THE CITY OF HUNTINGTON BEACH THIS ASSIGNMENT OF RENTS AND LEASES (the "Assignment") dated [ —�T• /r , 20141 is made by ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation ("Assignor"), in favor of THE CITY OF HUNTINGTON BEACH, a municipal corporation(the"Assignee"). RECITALS A. Assignor is the owner of the real property described in Exhibit "A" attached hereto and the owner of all of the personalty, fixtures, and improvements now or hereafter located thereon or attached thereto now existing or to be constructed thereon. Said real property, personalty, fixtures, and the improvements are herein referred to collectively as the "Premises". B. The City has agreed to make a loan of HOME Funds to Assignor in the original principal amount of Three Hundred Five Thousand Dollars ($305,000) (the "HOME Loan"), pursuant to the terms of that certain Affordable Housing Agreement by and between Assignor and Assignee dated as of September 15, 2014 (the "Housing Agreement"). The HOME Loan is evidenced by a Residual Receipts Promissory Note Secured by Deed of Trust, of even date herewith, executed by Assignor in favor of the City (the"Note"). The HOME Loan is secured by a Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents), of even date herewith, executed by Assignor, as Trustor, for the benefit of the City as Beneficiary (the "Deed of Trust"). In order to induce the City to make the HOME Loan to Assignor, Assignor has agreed to execute this Assignment. OCCHC—313 11m STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 11 —ASSIGNMENT OF RENTS PAGE 1 NOW THEREFORE, with reference to the foregoing and in reliance thereon and for good and valuable consideration, the receipt of which is hereby acknowledged, Assignor agrees as follows: AGREEMENT I. All initially capitalized terms used herein, unless otherwise defined or required by context, shall have the meaning ascribed to them in the Housing Agreement. 2. Subject to the prior rights, if any, of a lender whose lien is approved by Assignee as senior to the Deed of Trust held by Assignee ("Senior Lender"), Assignor hereby absolutely grants, sells, assigns, transfers, and sets over to Assignee, by this Assignment, all of Assignor's interests, whether now existing or hereafter acquired, in all leases and other occupancy agreements of any nature, now or hereafter covering all or any part of the Premises,together with all extensions, renewals, modifications, or replacements of said leases and occupancy agreements, and together with any and all guarantees of the obligations of the lessees and occupants (the "Lessees") thereunder, whether now existing or hereafter executed, and all extensions and renewals of said guarantees. (Said leases and occupancy agreements, together with any and all guarantees, modifications, extensions and renewals thereof, are hereinafter referred to collectively as the"Leases" and individually as a"Lease".) 3. Assignor's purpose in making this Assignment is to relinquish to Assignee its right to collect and enjoy the rents, royalties, issues, profits, income, and other benefits at any time accruing by virtue of the Leases (hereinafter called"Rents and Profits"). 4. The parties intend that this Assignment shall be a present, absolute and unconditional assignment and shall, immediately upon execution, give the Assignee the right to collect the Rents and Profits and to apply them in payment of the principal and interest and all other sums payable on the indebtedness and other obligations under the Note and other loan documents, as well as all other sums payable under the Deed of Trust or any other instrument given as security for the indebtedness. However, the Assignee hereby grants to Assignor a license to collect and use, subject to the provisions set forth below, the Rents and Profits as they respectively become due and to enforce the Leases, so long as there is no Default by Assignor in performance of the terms, covenants, or provisions of the Deed of Trust, the Note, or the Housing Agreement, this Assignment or any other loan document. Nothing contained herein, nor any collection of Rents and Profits by Assignee or by a receiver, shall be construed to make Assignee a "mortgagee in possession" of the Premises so long as Assignee has not entered into actual possession of the Premises. 5. Upon the occurrence of any Event of Default under the terms and conditions of this Assignment, the Note, the Deed of Trust, the Housing Agreement or any other loan document, this Assignment shall constitute a direction and full authority to each Lessee under OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 1 I -ASSIGNMENT OF RENTS PAGE 2 any Lease and each guarantor of any Lease to pay all Rents and Profits to Assignee without proof of the Default relied upon. Assignor hereby irrevocably authorizes each Lessee and guarantor to rely upon and comply with any notice or demand by Assignee for the payment to Assignee of any Rents and Profits due or to become due. 6. Assignor represents and warrants as to each Lease now or hereafter covering all or any portion of the Premises, unless Assignee has been otherwise advised in writing by Assignor: a. That each Lease is in full force and effect; b. That no material default exists on the part of the Lessee thereunder or Assignor; C. That no rent in excess of one month's rent has been collected in advance, except for a one-month security deposit; d. That no Lease or any interest therein, except to the extent required by the Senior Lender, has been previously assigned or pledged; and e. That all rent due to date under each Lease has been collected and no concession has been granted to any Lessee in the form of a waiver, release, reduction, discount, or other alteration of rent due or to become due except as previously disclosed to Assignor in writing. 7. Assignor agrees with respect to each Lease: a. If any Lease provides for a security deposit paid by the Lessee to Assignor and subject to the prior rights, if any, of a Senior Lender, this Assignment transfers to Assignee all of Assignor's right, title, and interest in and to each such security deposit; provided, however, that Assignor shall have the right to retain said security deposit so long as Assignor is not in Default under this Assignment,the Deed of Trust,the Note, the Housing Agreement or any other Loan Document, subject to any applicable notice and cure period; and provided further that Assignee shall have no obligation to the Lessee with respect to such security deposit unless and until Assignee comes into actual possession and control of said security deposit. b. If any Lease provides for the abatement of rent during repair of the leased premises by reason of fire or other casualty, Assignor shall furnish rental insurance to Assignee, the policies to be with companies and in form, content, policy limits, and terms as are customary in the case of entities owning similar property or assets similarly situated. C. Each Lease shall remain in full force and effect despite any merger of the interest of Assignor and any Lessee thereunder. Except as otherwise provided in the Housing._ OCCHC-313 11 Tx STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 11-ASSIGNMENT OF RENTS PAGE 3 Agreement, Assignor shall not terminate any Lease (except pursuant to the terms of the Lease upon a default by any Lessee thereunder), or materially modify or amend any Lease or any of the terms thereof, or grant any concessions in connection therewith or accept a surrender thereof, without the prior written consent of Assignee, which consent shall not be unreasonably withheld. d. Assignor shall not collect any Rents and Profits more than thirty(30) days in advance of the date on which they become due under the terms of any Lease. e. Assignor shall not discount any future accruing Rents and Profits. f. Assignor shall not consent to any assignment of any Lease, or any subletting thereunder, whether or not in accordance with its terms, on any terms less favorable than those that would reflect an arm's length transaction in light of prevailing market conditions (subject to the rent restrictions applicable to the Premises), without.the prior written consent of Assignee, except as otherwise provided in the Housing Agreement. g. Except as otherwise provided in the Housing Agreement, Assignor shall not execute any further assignment of any of the Rents and Profits or any interest therein or suffer or permit any such assignment to occur by operation of law. h. Assignor shall faithfully perform and discharge all obligations of the lessor under each Lease, and shall give prompt written notice to Assignee of any notice of Assignor's default received from any Lessee or any other person and furnish Assignee with a complete copy of said notice. Assignor shall appear in and defend, at no cost to Assignee, any action or proceeding arising under or in any manner connected with any Lease. If requested by Assignee, Assignor shall enforce each Lease and all remedies available to Assignor against the Lessee in the case of default under the Lease by the Lessee. i. Except as otherwise provided in the Housing Agreement, and except for residential leases entered into in the ordinary course of business, Assignor shall give Assignee written notice immediately upon entering into a Lease of any part of the Premises and shall promptly upon request of Assignee provide to Assignee a true and correct copy of each executed Lease. Upon written notice from Assignee to Assignor, such Lease shall be deemed included in this Assignment as though originally listed herein. At Assignee's option, such notice may be recorded, without cost to Assignor, in the Official Records of Orange County, California, which notice shall refer to this Assignment. j. Except as otherwise provided in the Housing Agreement, Assignor shall not hire, retain, or contract with any third party for property management services with respect to the Premises without the prior written approval of Assignee, at Assignee's option, of such party and the terms of its contract for management services. OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 11 -ASSIGNMENT OF RENTS PAGE 4 k. Nothing herein shall be construed to impose any liability or obligation on Assignee under or with respect to any Lease. Assignor shall indemnify, defend, and hold Assignee, its officers, directors, agents, employees, and representatives (the"Indemnitee(s)") harmless from and against any and all liabilities, losses, and damages that any Indemnitee may incur under any Lease or by reason of this Assignment, and of and from any and all claims and demands whatsoever that may be asserted against any Indemnitee by reason of any alleged obligations to be performed or discharged by Assignee under any Lease or this Assignment, unless any of the foregoing arises from or results from the active concurrent negligence, sole negligence or sole willful misconduct of any Indemnitee. Should any Indemnitee incur any liability, loss, or damage under any Lease or by reason of this Assignment and such liability, loss, or damage falls within the foregoing indemnification, Assignor shall immediately upon demand reimburse such Indemnitee for the amount thereof together with all costs and expenses and reasonable attorneys' fees and court costs incurred by such Indemnitee. All of the foregoing sums shall bear interest at the maximum rate permitted by law from demand by Indemnitee until paid. Any Rents and Profits collected by Assignee may be applied by Assignee, in its discretion, in satisfaction of any such liability, loss, damage, claim, demand, cost, expense, or fees. 8. Assignor hereby grants to Assignee the following rights: a. Upon an Event of Default as defined in the Housing Agreement, Assignee shall be deemed to be the creditor of each Lessee in respect of any assignments for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership, or other debtor relief proceedings affecting such Lessee, without obligation on the part of Assignee, however, to file timely claims in such proceedings or otherwise pursue creditor's rights therein. b. Assignee shall have the right to assign Assignor's right, title, and interest in the Leases to any subsequent holder of the Deed of Trust or any participating interest therein or to any person acquiring title to all or any part of the Premises through foreclosure or otherwise. Any subsequent assignee shall have all the rights and powers herein provided to Assignee. C. Assignee shall have the right (but not the obligation), upon any Event of Default under the Deed of Trust or the Housing Agreement, to take any action as Assignee may deem necessary or appropriate to protect its security, including but not limited to appearing in any action or proceeding and performing any obligations of the lessor under any Lease; and Assignor agrees to pay, on demand, all costs and expenses, including without limitation reasonable attorneys' fees and court costs incurred by Assignee in connection therewith,together with interest thereon at the rate of ten percent (10%)per annum. d. Upon any Event of Default under this Assignment, the Deed of Trust, the Note, the Housing Agreement, or any other loan document (subject to all applicable notice and OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 11 -ASSIGNMENT OF RENTS PAGE 5 cure periods), and without notice to or consent of Assignor, Assignee shall have the following rights (none of which shall be construed to be obligations of Assignee): i. Assignee shall have the right under this Assignment to use and possess, without rental or charge, the Fixtures, Equipment, and Personal Property of the Assignor located in or on the Premises and used in the operation or occupancy thereof. Assignee shall have the right to apply any of the Rents and Profits to pay installments due for Personal Property rented or purchased on credit, insurance premiums on Personal Property, or other charges relating to Personal Property in or on the Premises. However, this Assignment shall not make Assignee responsible for the control, care, management, or repair of the Premises or any Personal Property or for the carrying out of any of the terms or provisions of any Lease. ii. Assignee shall have the right to apply the Rents and Profits and any sums recovered by Assignee hereunder to the outstanding Indebtedness, as well as to charges for taxes, insurance, improvements, maintenance, and other items relating to the operation of the Premises. iii. Assignee shall have the right to take possession of the Premises, manage and operate the Premises and Assignor's-business thereon, and to take possession of and use all books of account and financial records of Assignor and its property managers or representatives relating to the Premises. iv. Assignee shall have the right to execute new Leases of any part of the Premises, including Leases that extend beyond the term of the Deed of Trust. V. Assignee shall have the right to cancel or alter any existing Leases. vi. Assignee shall have the irrevocable authority, as Assignor's attorney-in-fact, such authority being coupled with an interest, to sign the name of Assignor and to bind Assignor on all papers and documents relating to the operation, leasing and maintenance of the Premises. e. All of the foregoing rights and remedies of Assignee are cumulative, and Assignee shall also have upon the occurrence of any such Default or Event of Default all other rights and remedies provided under the Note, the Housing Agreement, the Deed of Trust, or any other loan document or other agreement between Assignor and Assignee, or otherwise available at law or in equity or by statute. 9. Failure of Assignee to avail itself of any terms, covenants, or conditions of this Assignment for any period of time or for any reason shall not constitute a waiver thereof. 10. Notwithstanding any future modification of the terms of the Note, the Deed of Trust, the Housing Agreement, or any other loan document, this Assignment and the rights and OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 1 I -ASSIGNMENT OF RENTS PAGE 6 benefits hereby assigned and granted shall continue in favor of Assignee in accordance with the terms of this Assignment. 11. This Assignment shall be binding upon and inure to the benefit of the respective heirs, legal representatives, successors, and assigns of the parties hereto (including without limitation in the case of Assignee, any third parties now or hereafter acquiring any interest in the Indebtedness or other obligations of Assignor under the Note or Deed of Trust or a part thereof, whether by virtue of assignment, participation, or otherwise). The words Assignor, Assignee, and Lessee, wherever used herein, shall include the persons and entities named herein or in any Lease and designated as such and their respective heirs, legal representatives, successors and assigns, provided that any action taken by the named Assignee (or any successor designated as such by an instrument recorded in the Official Records of Orange County, California referring to this Assignment) shall be sufficient for all purposes notwithstanding that Assignee may have theretofore assigned or participated any interest in the obligation to a third party. All words and phrases shall be taken to include the singular or plural number, and the masculine, feminine, or neuter gender, as may fit the case. 12. Any change, amendment, modification, abridgment, cancellation, or discharge of this Assignment or any term or provision hereof shall be invalid without the written consent of Assignee. 13. Upon payment to Assignee of the full amount of the Indebtedness and other obligations secured hereby and by the Note and Deed of Trust, as evidenced by a recorded satisfaction or release of the Deed of Trust, this Assignment shall be void and of no further effect. In such event, Assignee shall cooperate with Assignor to execute such instruments as may be reasonably necessary to remove the lien of this instrument from the Official Records of Orange County. 14. All notices, demands, approvals, and other communications provided for in this Assignment shall be sufficiently given if: (i) 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 Assignor: Orange County Community Housing Corporation 2024 N.Broadway, 3rd Floor Santa Ana, CA 92706-2623 Attention:Executive Director OCCHC-313 11"B STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 11 -ASSIGNMENT OF RENTS PAGE 7 If to City: The City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City Manager With a copy to: City Attorney's Office City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Notices personally delivered or delivered by courier shall be effective upon receipt or refusal to accept delivery. Mailed notices shall be effective on the earlier of(i) receipt of refusal to accept delivery, or(ii)noon on the second business day following deposit in the United States mail. 15. This Assignment may be recorded in the Official Records of Orange County, California, and Assignor shall pay all fees, charges, costs, and expenses of such recording. 16. If any provision hereof is determined to be illegal or unenforceable for any reason,the remaining provisions hereof shall not be affected thereby. 17. This Assignment shall be governed by and construed in accordance with the internal laws of the State of California. 18. If Assignee should bring any action to enforce its rights hereunder at law or at equity, Assignor shall reimburse Assignee for all reasonable attorneys' fees and costs expended in connection therewith. IN WITNESS WHEREOF, the undersigned Assignor has executed this Assignment as of the date first above written. "ASSIGNOR" ORANGE COUNTY COMMUNITY HOUSING CORPORATION, a California nonprofit public benefit corporation By: ora Mendez Its: Executive Director OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 1 I -ASSIGNMENT OF RENTS PAGE 8 ACKNOWLEDGMENT State of California ) ss County of Orange ) On October 13, 2014, before me, P. L. Esparza,Notary Public, personally appeared Nora Mendez who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. PFF Comm g �i (rotarya O MY Comm.Eu iry ems Aua 4,2017 ' r (Notary Signature EXHIBIT A LEGAL DESCRIPTION LOTS 13 AND 15 IN BLOCK 311 OF HUNTINGTON BEACH, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGE 36 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. APN: 024-027-20 OCCHC-313 11 TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO. 11 -ASSIGNMENT OF RENTS LEGAL DESCRIPTION Res. No. 2014-73 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, JOAN L. FLYNN the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a Regular meeting thereof held on September 15, 2014 by the following vote: AYES: Katapodis, Hardy, Shaw, Harper, Boardman, Sullivan, Carchio NOES: None ABSENT: None ABSTAIN: None -qftd0f"J City Ark and ex-officio Clerk of the City Council of the City of Huntington Beach, California NOVICE OF INTENT TO REQUEST RELEASE OF FUNDS August 28, 2014 City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 714-536-5470 On or about September 15, 2014, the City of Huntington Beach will authorize the Orange County Community Housing Corporation to submit a request to the Federal Department of Housing and Urban Development (HUD) for release of HOME funds under Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990, as amended, to undertake a project known as Project Self-Sufficiency, 313 1 It Street, for the purpose of providing $230,000 in HOME Program funds for rehabilitation of a 9-unit apartment building restricting all nine units to very low income for a period of 55 years. The activities proposed are categorically excluded under HUD regulations at 24 CF Park 58 from National Environmental Policy Action Requirements. An Environmental Review Record (ERR) that documents the environmental determinations for this project is on file at City of Huntington Beach, 2000 Main Street, Huntington Beach, California, and may be examined- or copied weekdays 8:00 AM to 5:00 PM. PUBLIC COMMENTS Any individual, group, or agency may submit written comments on the ERR to the City of Huntington Beach Office of Business Development. All Comments received by September 5, 2014, will be considered by the City of Huntington Beach prior to authorizing submission of a request for release of funds. RELEASE OF FUNDS The City of Huntington Beach certifies to HUD that Kellee Fritzal in her capacity as Deputy Director consents to accept the jurisdiction of the Federal Courts if an action is brought to enforce responsibilities in relation to the environmental review process and that these responsibilities have been satisfied. HUD's approval of the certification satisfies it responsibilities under NEPA and relates laws and authorities, and allows the Orange County Community Housing Corporation to use Program funds. OBJECTIONS TO RELEASE OF FUNDS HUD will consider objections to its release of funds and the City of Huntington Beach certification received by September 16, 2014, or for a period of fifteen days following its actual receipt of the request (whichever is later) only if they are on one of the following bases: (a) the certification was not executed by the Certifying officer of the City of Huntington Beach; (b) the City of Huntington Beach has omitted a step or failed to make a decision or finding required by HUD regulations at 24 CFR Part 58; (c) the grant recipient or other participants in the project have committed funds or incurred costs not authorized by 24 CFR Part 58 before approval of a AngelesiTimes Printed: 8/26/2014 10:31:51 AM ME D I A G R. 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Wri t ri Wd"I? rt"Iat ttie r;pIr� is unsa; actxy hio this^sta[rdpint el YriwY r€3 i1 gttelit i�:rl�t?,i ' niut a 1 e1 irrtl.tee r ecrt. r;°sk.# rI ptkx,eotlr�^t hta HLD 'a r -uC t ,i ,,t 'e fAjtkeaC>n{uat:lefda atkt4 �i � .jNet`tGt APPROVED BY: THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California By: C' Manager ATTEST: By: City Clerk APPROVED AS TO FORM: By: City Attorney By: KANE BALLMER&BERKMAN Special Counsel l OCCHC-313 11TH STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 16 APPROVED BY: THE CITY OF HUNTINGTON EACH, a municipal corporation of the Sate of California By: City Manag ATTEST: By: City Clerk APPROVED AS TO FORM: By: City Attorney Q By: KANE BALLMER&BERKMA Special Counsel OCCHC-313 11'STREET AFFORDABLE HOUSING AGREEMENT EXHIBIT NO.7-HOME DEED OF TRUST PAGE 16