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HomeMy WebLinkAboutSHELTER FOR THE HOMELESS - 1994-06-21 4'7 r----- AR1"ROVED BY CITY COUNCIL b' 61iJ►i9P mayvi' 011iPi-as�4�yPS 1 EST FOR CITY COUNCIL ACTION c Date: June 2Q 1994 Submitted to: Honorable Mayor and City Council Members —., c,-1 Submitted by: Michael T. Uberuaga, City Administrat co o "'m Cn :� ",gym Prepared by: Mike Adams, Director of Special Projects • r Subject: HOME INVESTMENT PARTNERSHIP--FUNDING REQUEg ' FOR THE ACQUISITION AND REHABILITATION OF 7812 BARTON DRIVE Consistent with Council Policy? [X] Yes [ ] New Policy or Exception Statement of Issue,Recommendation,Analysis,Funding Source,Alternative Actions,Attachments: STATEMENT OF ISSUE: Staff is requesting authorization to enter into an Affordable Housing Agreement with Shelter for the Homeless (Shelter )for the acquisition and rehabilitation of a four unit multifamily property in the Oakview neighborhood with HOME Investment Partnership funds. RECOMMENDATION: Staff recommends that Council take the following action: 1. Approve an affordable housing agreement between the City of Huntington Beach and Shelter for the Homeless calling for the expenditure of no more than $320,000 in HOME Investment Partnership funds ($267,000 for acquisition; $40,000 for rehabilitation; and $13,000 for unanticipated costs) to assist the Shelter for the Homeless (Shelter) to acquire and rehabilitate 7812 Barton Drive. 2 .Approve and authorize execution by the Mayor and City Clerk of the regulatory agreement (Attachment No. 4 to the affordable housing agreement) between the City of Huntington Beach and Shelter for the Homeless concerning the acquisition and rehabilitation of 7812 Barton Drive with HOME Investment Partnership funds. ANALYSIS: Background At its November 15, 1993 meeting, the City Council approved the concept of assisting nonprofit housing developers in the acquisition and rehabilitation of existing rental housing. The City Council further authorized the initiation of negotiations with the Shelter for the acquisition and rehabilitation of a four plex at 7812 Barton Drive. Recall that Shelter is an approved CHDO (Community Housing Development Organization) and that participating jurisdictions are required to allocate a minimum of 15% of their HOME funds to CHDOs. City staff and Shelter have concluded negotiations on the Barton property and have agreed to the following terms: r � i • The City will provide not more than $320, 000 in HOME funds for the four unit rental property at 7812 Barton Drive. This amount represents a total of$267,000 toward the acquisition cost and approximately $40,000 toward the estimated cost of rehabilitating the existing building. $13,000 has been budgeted for any unforeseen costs. • All units will remain affordable for thirty years for households earning less than 50% of Orange County median income as adjusted for family size. The thirty year affordability period exceeds those minimums required by the HOME program. A thirty-year affordability period will allow for the units to be credited toward the Redevelopment Agency's replacement housing obligations, as outlined in AB 1290, the redevelopment reform bill that became law in 1994. • The amount of HOME assistance will be carried as an interest free, no payment loan provided that the units remain in compliance with the terms of the agreement. Should a default occur, or should the units be sold or transferred before the term of affordability expires, the full amount of the HOME assistance must be repaid with six (6) percent simple (but accruing) interest. • At the end of the thirty-year term, the principal amount of the loan will be repaid to the City. While there will be no interest due, the principal amount of the loan will be adjusted annually for inflation to reflect the present value of the funds after thirty years. • Rents will be set at levels that are affordable to households earning less than 50% of median income. These rent restrictions will exceed those required by HOME regulations. .,,v}.,,,,:\�:4,,:,v,::::-:::k.,,,.;.....v:••:.�::...:•n,,:::,::,,•,,::::�,vv.::::...........::.:.:v,:,:: 4 4 4�1::::.:,,,•:.:vr:...:::•::ii}j:i{.;;+.•..•.;y....,,,,:{.;n::::ii:;i•:i;:;:y.}•.:.�.,6,.:.::::.v::,, vn�4vv::.:::::.::::::::. :J::: i.::-::v::::.:4x:;•.:,v.v,,;v:•ii:i+.�i:•'{i;::i ••,���:v ::;•4.�„ •.:f.. , Y..�vv 4 .:.44�. .n4,\}y.}•.}w., t>.i4 ii�ii\L:vi : ,,\•ti ij.. �Oliiyii::i'�•'� ...\�� ..v`,•`.•:i-i:-:i-:-:i-i:-iii'.`.•i. \n\ ��: �'`:-is:ii:ii+.i'.'.:i:ii; \,::•:..:4\\\ ,\:•i:•:ti•`•p.\\,v:.::::..::.:.::::�:.,:,ki�i.S,'?h\�!�::lC��': :......................:...........,... Two Bedroom $599 HUD sets the maximum per unit HOME subsidy amounts on a annual basis. Currently, the maximum subsidy amount for a two bedroom unit is $86,352; With that number, the maximum total subsidy for the Barton Lane project would be $345,408 or$ 86,352 per unit. The actual subsidy per unit breakdown on Barton is as follows: Purchase Price: $267,000 Estimated Rehab Budget $ 40,000 Total Project Budget , $307,000 Total HOME Subsidy $307,000 Per Unit HOME Subsidy $ 76,750 RCA 06\20\94 -2- word\shelter\bartrca2.doc Attached is a basic economic analysis that provides additional justification for the amount of HOME funds that have been requested for this project. Attachment number three is a feasibility gap analysis of the shortfall between the acquisition cost of the Barton project and the capitalized value of the project based on a market rate rent scenario. The feasibility gap of the Barton project is $5000. This amount is insignificant and seems no cause for concern. The appraised value of the property as of February 26, 1994 is $268,000. This shows that Shelter is not paying more for the property than it is worth from a current market value standpoint. HUD's only concern is that a purchase price does not unreasonably exceed the appraised value, which is not happening in this case. The City is providing all of the acquisition funds, will act as first lienholder and will not subordinate to any subsequent lenders. Acquiring and rehabilitating small multifamily properties represents an opportunity to improve and preserve existing affordable housing throughout Huntington Beach, but especially in focus area such as the Oakview neighborhood. Because of the decline in property values, coupled with the general economic downturn, several properties in Oakview are either in foreclosure or nearing foreclosure--or have already joined the growing stock of REO ("real estate owned") properties held by lending institutions. Many of these properties are in a state of disrepair and are vacant, further contributing to the decline of the entire area. The City's financial involvement with this project is consistent with its stated goal of providing for a diverse housing stock and maintain the quality of the housing stock throughout the community (City Goal#8). FUNDING SOURCE: Fiscal Year 1992 HOME Investment Partnership Program Funds 1992 HOME Fund Balance $575,000 Less Barton Lane Expenditure $320,000 (max) New 1992 Balance $255,000 ALTERNATIVE ACTION: The City Council may motion to: Direct staff to re-negotiate the terms of the proposed transaction and defer action to the next scheduled City Council meeting. ATTACHMENTS: 1. Location Map--7812 Barton Drive 2. Affordable Housing Agreement 3. Feasibility Gap Analysis MTU:MA:GB6 RCA 06\20\94 -3- word\shelter\bartrca2.doc r-"r a o a 1 itr , .., 6 6. . . E 5 ARGOSY . . g i get • 8 Z R MCFADOSN ) \. iI CENTER — — — — I EDINGER • ; L) I —\ . 1 HEH. _ i WARNER - ill ♦ k SLATER C•• • ' i TALBERT . 1♦ . .I ELLIS 0 • iSITE - - -•-GARFIELD YORKTOWN AI ADAMs — 1ii Ill■ L. II WI inwIANAPOLIS tli A % • ATLANTA CF-E4 j A i . MAN NE*xwDOU �� — =� I I C.)1 \ HAMQTi N ,/HAMIITON It W umm r j :BANNING Ii '— ®IF I . SI ATER Avc�f / `A. / e 1 [6.), g ACQUISITION AND REHABILATION OF teil 7812 BARTON DRIVE HUNTINGTON BEACH HUNTINGTON BEACH SPECIAL PROJECTS DIVISION CQx) `S_wA SHELTER FOR THE HOMELESS .. HOME PROJECT PROPOSAL 7812 BARTON DRIVE CITY OF HUNTINGTON BEACH Mission Statement To serve the poor, needy and homeless by assisting them in solving the problems that made them homeless, while providing housing and supportive services to enable them to • become self-supporting. . INTRODUCTION The need for affordable housing for Orange County's low-income population is critical and growing. Approximately 293,000 individuals (or 71,000 households) in Orange County, live below the poverty level of $15,000 annual income for a family of four. These families pay much more than a third of their income for housing. One in five Orange County households earns less than $20,000 a year and should, under federal guidelines, pay no more than $500 a month in rent. However, according to a survey by Research Network Ltd., a Laguna Hills real estate consulting firm, apartments renting for less than $500 accounted for only 3.4 percent of the market share in 1989, and .04 percent in 1990. The County has no public housing and the waiting list for rental assistance is 20,000 people and five years long. Estimates of the number of new low income units needed by 1994 range between 22,250 and 48,000. An estimated 10,000 to 12,000 people are homeless in Orange County, where shelters can provide beds for only 800. Additionally, most of these programs provide only short-term shelter of 30-90 days, not enough time for most homeless individuals to do everything necessary to make the transition to independence. SFTH offers long-term transitional and permanent housing because we recognize that the problems leading to a client's homelessness are often chronic and take time to solve. While most shelters in the county offer a variety of support services, none offer the length of stay we believe necessary to enable homeless families and individuals to get back on their feet. SFTH's programs are designed to meet the range of low-income housing needs and are unique in providing our clients with ongoing support services. By providing housing, coupled with assistance with child care, employment development and life skills training, SFTH's programs are designed to provide the homeless with a unique opportunity to regain; - self-sufficiency. • SHELTER FOR THE HOMELESS Shelter for the Homeless (SFTH) is a private, nonprofit organization that provides shelter, support services and permanent affordable housing opportunities for homeless and very low income individuals and families. SFTH meets our clients' basic needs for shelter, food and clothing and provide support services that enable them to solve the e problems that led to their homelessness. SFTH meets the necessary threshold _to be designated as a Community Housing Development Organization (CHDO) as required by the HUD-funded HOME Program, capable of owning and operating affordable rental projects throughout Orange County. SFTH's three-part assistance program is designed to support the homeless and needy in working toward self-sufficiency. A vital element of this successful self-sufficiency program includes ownership by SFTH of an inventory of affordable rental units that can assure a decent, safe and sanitary permanent location for program participants completing the process of transition to self-sufficiency. • 1 PROJECT SFTH requests that the City of Huntington Beach provide HOME Program financial assistance to acquire four rental units in the City of Huntington Beach to be used as • permanent affordable housing. All SFTH tenants occupying these HOME-assisted rental units shall meet income requirements per Federal HOME Program regulations. Said units will remain affordable for a twenty year period as required by HOME Program regulations. In addition to providing affordable housing, this HOME-assisted project will also generate -sufficient revenue to enable SFTH to provide comprehensive on-going support services to the tenant households. Such support services include referral and payment for job training, food, child care, family counseling/case management and tutoring in budgeting and other life skills. This will empower the tenant households to continue to strive for self-sufficiency rather than prolonged dependence.- The negotiated purchase price, closing costs and cost to rehabilitate any purchased rental unit to HQS standards, if necessary, will not exceed the established maximum per-unit HOME subsidy as established for the City of Huntington Beach as follows: 0-BEDROOM 1-BEDROOM 2-BEDROOM 3-BEDROOM $61,950. . $71,014. $86,352. $111,710. Value will be established by an independent appraisal to assure that the purchase price is reasonable. FEASIBILITY - SFTH understands that the rental income received from the purchased units shall be established yearly by HUD for the City of Huntington Beach's HOME Program for the affordability period of twenty years. Currently, for Orange County, the HUD-established maximum HOME Program rents (including utilities) are as follows: 0-BEDROOM 1-BEDROOM 2-BEDROOM 3-BEDROOM (HIGH) $623. $669. $804. $920. (LOW) $495. $530. $635.. $734. The HOME Program regulations require that a maximum of eighty (80%) percent of all assisted rental units have rents that are 30% of adjusted income for households at 65% of median income (HIGH) and a minimum of twenty(20%) percent of all assisted rental units have rents which equal 30% of annual incomes for households at 50% of median income (LOW), all minus a tenant-paid utilities calculation. The maximum HOME Program rents, including the utilities adjustment, are as follows: Monthly Rent Utility Adjusted Monthly Rent Unit Size LOW HIGH Allowance LOW HIGH 1-Bedroom $530.00 $669.00 $29.00 $501.00 $640.00 2-Bedroom $635.00 $804.00 $36.00 $599.00 $768.00 2 SFTH has selected a property located at 7812 Barton, Huntington Beach, to purchase and operate under the HOME program. SFTH is proposing that the HOME funds be provided as a no-interest deferred loan. The proposed project consists of four two-bedroom units that are currently bank-owned due to foreclosure. Rehabilitation needs include livability improvements to the interior of the units, conversion of the carports to garages and installation of a tubular steel fence around the perimeter of the property. PROJECT COSTS Purchase Price: $ 265,000.00 Closing Costs: $ 2,000.00 Interior Rehabilitation Costs: $ 12,000.00 Exterior Rehabilitation Costs: $ 25,000.00 - TOTAL Project Costs: - $ 304,000.00 _ - - Using the City's maximum per-unit HOME subsidy, the maximum allowable total project cost is $345,408. INCOME AND EXPENSE ANALYSIS INCOME Low HOME Rents ($599.00) Reduced Rents ($400.001 Monthly rent:* $ 2,396.00 $ 1,600.00 Gross Monthly Rental Income:- $ 2,396.00 $ 1,600.00 Gross Annual Rental Income: $28,752.00 $19,200.00 Vacancy Allowance (5%): ($1.438.00) ($ 960.00) Annual Effective Gross Revenue: -- -$27,314.00 - . $18,240.00 * Adjusted for Tenant Utility Allowances. - EXPENSES Annual Fixed Charges Real Estate Taxes $ 100.00 Insurance $ 3,000.00 TOTAL Annual Fixed Charges $ 3,100.00 Operating Expenses • Utilities and Trash $ 1,440.00 TOTAL Operating Expenses $ 1,440.00 Maintenance Expenses Yard & Ground Care $ 1,392.00 Misc. $ 500.00 TOTAL Maintenance Expenses $ 1,892.00 Maintenance Salaries and Benefits Salaries $ 7,200.00 Benefits $ 900.00 TOTAL Salaries and Benefits $ 8,100.00 TOTAL ANNUAL EXPENSES $14,532.00 3 NET OPERATING INCOME Low HOME Rents ($599.00) Reduced Rents ($400.00) Annual Effective Gross Revenue: $ 27,314.00 $ 18,240.00 Total Annual Expenses: ($14,532.00) ($14,532.00) Net Annual Operating Income: $ 12,782.00 $ 3,708.00 Project Summary- 7812 Barton. It is anticipated that the Net Yearly Income would be used to provide support services to each resident tenant household as well as defray the administrative costs incurred by SFI'H. Support services could include job training and referrals, counseling and case management, tutoring in budgeting and other life skills, house_ cleaning responsibilities and methods and child care. Tenant households will also be. required to assist SFTH on a volunteer basis to help counsel individuals and families residing in homeless or transitional facilities. - SFTH desires to provide as much assistance as possible for each household. Therefore, the income analysis provides data based on two rent levels; the low HOME rent level ($599.00) and a reduced amount ($400.00) that would be even more affordable. While the lower rental amount would improve tenant affordability, it also reduces the net operating income available to fund support services. In reality, the monthly rent would be based on the tenants ability to pay (30% of adjusted gross income), not to exceed the low HOME rent of$599.00. The actual rental amounts will most likely range.from the reduced rent amount of $400.00 to the low HOME rent of $599.00. The Income Analysis provides information on the annual income that SFTH would receive, based on the low HOME rents and the reduced rent amount. As illustrated by the Net Operating Income calculation, a reduction in the rental amounts leaves very little income for support services. 4 - -J . • , • SIHIEIL1f IEIR VIM lilt !HOMELESS 8291 Westminster Blvd., Suite 170 �4 Westminster, California 92683 1 t ��� (714) 897-3221 • Fax (714) 893-6858 CERTIFICATION The undersigned, Secretary of the Board of Directors , Judy Kampmann, hereby certifies that, Jim Miller, is a duly elected and acting Executive Director of Shelter For ANonProfitOrganization The Homeless and that the following is true, correct and Helping Homeless Men, Women and Children get complete copy of Resolutions duly adopted by Action at the Back on Their Feet. meeting of the Board of Directors of Shelter For The Homeless , pursuant to the by laws on 4/13/1993 , which are PROVIDING in full force and in effect on and as of the date hereof, not having been amended , altered or repealed . • Emergency Food and Shelter • Job Search Assistance "It is RESOLVED in writing by the Secretary of the Board of Director, that the Executive Director of this non • Temporary Housing profit Co - c ation is authorize or and on benalt of . lis non profit corporation to sign and deliver all contracts , • Permanent Housing a reements , deeds of conveyance , leases , subleased , • Love and Hope applications , legal documents and other papers in the name of and on behalf of this corporation , and the signature of Jim Miller, on such items shall be legally binding upon OPERATING CENTERS IN: this non profit corporation. " • Costa Mesa As Secretary of Board ZZ t{- Director oShelter .� ICI+.J�•Y etaY'� L 1 ll�ial ll +71 Dit 4/ �' for For The • Garden Grove Homeless , the undersigned does hereby designate • Hemet Jim Miller, Acting Executive Director • Huntington-Beach • Long Beach .to be an authorized signatory for an on behalf of this non profit corporation and any such signature by • Moreno Valley Jim Miller • Orange • Riverside shall be legally binding upon this corporation pursuant to • San-Clemente Resolutions . above-referenced ite^o ut10I18 . • San Jacinto IN WITNESS WHEREOF, the undersigned has executed This • Santa Ana Certification this • Stanton 8th day +,f February 1994 . • Westminster J y Iia p ann C6 V .cretary of the Board s ' Attachment#3 BARTON LANE ACQUISITON FEASIBILITY GAP ANALYSIS Market Rate Rental Income Two Bedroom Units (4 at $725) $2,900 Misc &Laundry Income $ 28 ($7.00 per unit, per month) Gross Monthly Rental Income $2,928 Gross Annual Rent $ 35,136 Less Vacancy and Bad Debt ( 5% of Gross Income) $( 1,757) Gross Effective Annual Income $ 33,379 Operating Expenses $2,500 per Unit Annually 4 Units @ $2,500 $(10,000) Net Income Before Debt Service $ 23,379 or Say $ 23,000 Capitalized Value at 9% Cap Rate $259,768 Project Purchase Price $265,000 Feasibility Gap $ (5,231) (Acqusition $Less Capitalized Value) or Say (5,000)- econfeas.doc I !� in CITY OF HUNTINGTON BEACH ;o; 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK August 5, 1994 Cyndie Blackwell , Escrow Officer Fidelity National Title Corporation 19700 Fairchild Road, Suite #210 Irvine, CA 92715 Re: Escrow No. 420043-REO Borrower: Shelter for the Homeless and 7812 Barton Drive, Huntington Beach, CA Enclosed please find original Note and Deed of Trust; we have attached the Deed Certification per your request. If there are any questions please call the Office of the City Clerk (714) 536-5227. Thank you. Connie Brockway City Clerk CB/ES Enclosure (Telephone:714-536-5227) • n CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK July 26, 1994 Fidelity National Title 19700 Fairchild Rd, Ste. 210 Irvine, CA 92715 Attention: Cindy Blackwell Escrow #420043 Enclosed please find Promissary. Note Secured by Deed of Trust (7812 Barton Drive) and Deed of Trust, Assignment of Rents, and Security Agreement. If you have any questions please call the Office of the City Clerk (714) 536-5227. Connie Brockway City Clerk 11 A7/7 S 2� (Telephone:714-536-5227) : . The Delivery Service . .;. 1529East First Street, Santa Ana, Cp149rnia 92701 .,. Vhcong(714) 834-1170 (800) 244-7731 ' . .., • ,.., ,, ..,. ..._ ,...„.i,.. , ....;:...... „,., z.:-,.. ..... . s . .., ''. TIC T# TIME READY DEApLINE ,TE t ////p/./, # .25. #2 #3 SPLIT SPLIT#2 7 , . !F•••:. BILL DELIVERY CHARGES TO: ADDRESS . :',,-.i . !h i CITY 4/, A .:-- PICK UP.FROM: .,., #//fr C/// _ •:. -•-•: .,.... ADDRESS -, `..,,• 4/ :.-• ... TICK UP DELIVER1• 7-0,- ,..,_ ,., _,.....: ADDRESS „- /.4 / f47 ., •, CITY .. - RECEIVED BY: TIME RECEIVED 1 4-2- • - X 'F: DELIVER TO: •,., ADDRESS -'' --'.,.. ••:::• CITY , 2,-• •4.. RECEIVED BY: TIME RECEIVED •r; SPECIAL INSTRUCTIONS .--, ,. • .i. :.;. RATE EXTRA STOPS WAITING TIME ••_ ,., .1, NIGHT ' CANCLD RETURN TRIP TOTAL •,i •,. - TERMS&CONDITIONS ON REVERSE SIDE :t' v ' PAGE 02 � N��-o.s� -.,.a,�w�::�.,�-:.r.,_ -_.��3i�:_r=:.,,c-^==c -_ �.�o:z:;,=y Mom.—^➢; �c �-.:.:�K- a-.=.a=.:.. _ _3— -- alv.,.� -_ __-- ---_- - {+�'�__+5". �/ _- _ ,n repti;k�:i Via` 11,.. _i g5 �` __ .2141 aIET rc�r; _ r�.. - -t - c 4--_"' � �_�^�_=•-'mom�� DATE(iietoolYL7 • .use • � _-iYr+9 ttom�.. sl�l�:: ..III'!i', .i 4:� : :1a'ts -"".,. ^n_^ ". 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SHELTER f'OR THE HOMELESS — - —-_ �..... .,.. ..• , • 8291 i ESTMINSTER BLVD. , #1'IU I cOMCANY WESTMINSTER, CA. 92683 -- --_— _.._---------___._._.._-...... . . .. __, COMPANY , a'- _ --_._ �2'is �_ _.—__ __ _ _ __ 7 _a3 ez 3;>-a�=.. k=_x=i�dlu��''-.•'G6�sfts,_�feG�� .. ��—wr___=r��?�..-r'_-"1 _ THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELC3W HAVE BEEN 1 SUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIQD • INDICATED,NOTWITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY t1T RACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,THE INSURANCE AFFORDED BY TH POLICIES'OESCRII3ED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND COONS OF SUCH POLIOIES,LIMITS,SHOWNMAY HAVE EN O Ell.( UI1 AIMS. • •m TYPE OF INSURANCE POLICY NCBMt3EA FOAMY6FF POLICY LAOS GENERAL LABILITY . GENERAL AGGREGATE i 0 O Xi COMMERCIAL GENERAL LIABMITV P waPAGG i1 00.E 000 E f i CLAIMS MADE I xiOCCUR litCL 314s• a4 2/j; ! 2/ 1 9i 95 PERSONAL&ADY;AWRY i $1., 000,00Q_ OWNERS a.CUNT PROT �� PER y EACH OCCURRENCE 1 i 1 0l�_)(1 0I . $2 , 500 DEDUCTIBLE R CL. 1,nN: FIRE DAMAGE(Arty one Ns) t i AMYL.INSURED EN;DDRSEME NIA-MC HEDmu)ExptkyOpmQi . s AUTOMOBILE LIABifAY t COMBINd7 SINGLE MOT ANY AUTO ALL OWNED AUTOS - BODILY INJURY �_ __iSCHEDULED AUTOS (Per person)— --- r HIRED AUTOS 1.,__. -. ....J• BODILY INJURY NON-OWNED AUTOS (Pat r mpL) _. •----_.___ 1 PRO'>;tilY DAMAGE i L w GARAGE LIABILITY tIPQ AUTO ONLY-EA ACCIDFldr 1 ^_ ANY AUTO G II,aL UT Gf7T �\ -OTNER THAN AUTO ONLY_ G J':1?a�i :!i�,.....: y 9tt :: �a DI'IlE?�1 EACH ACCIDENT $Duty- CJ,tx At�arntz _.... .. _. . . . _._�. _. • AO13RC hTE $ excssa LIABILITY . EACH OCCURRENOE S UMBRELLA FORM - - I AGGREGATEOTHER THAN UMBRELLA FORM • �WOHKFRS Co +ENGADOt1 AND Jam ,,Stl17�I iYI fMfT� d� i r.,, . 4'1lr,. -. E�M'LQYI�RS"tJAAILRY ,_,.. .._ - -. .y, •• ..§Ia_....{._ THE Pi1t7PAlETORJ { EACH ACCIDENT $ PARTMEfiSIE?tECttiTtrE `---- INCL r 'ATTACHED s 1 DISEASE-POIJCY LJABT F OFFICERS ARE: EXC ' - -- ffiflFR �. ._ -- Y r DISF_ASE-F_AOH aVL.OYEE $ ------ I DESORPTION 9F CIPEfiAiy011311 OCftliOl181 } C��ESISPEGAL 1T> i8 • I i ." -J — 3 812 fiAR'1 Oki D'R 1.V :, HUNT INGTON BEACH,1 , CI. �''-`C�'"•a'�°3' u"*��E`:e�za= - d� °�_ =gip»= �,� � ;�:?p�=_•__ `ex`.,�:.^r-�?�?.s..��g?^':,r'3' �" r��^-: Y' 7..a� w ,s.i�n'-�'w^,»scE��r`n'e=� `.�'.a�m���`�II� u.=���n'�:ima.�-'= =��s....� �,�'�'i�` scc3e"'s=�=r' r_--- c=^�"�=.ti 3:x3'�(.t!=• .��c• ��_�s'�.-_ u„- •s+»vw aL,' �=r_ �=3r.�-�: �E�?���zF3=£:�-1tit�»r•: �- 1 i ,'' (,f '' (.�P{��'I: �'a '`1 4 BEACH t.ANY OF HE ABOVE ED POU a OE CANCELLED erg THE ITT` r'Z 1Ps l i4;i r`'� '�R T �'' , • •EttPtitA KAY PATH 'ixE3{F#. YHE mum COMPANY wiLL KNAJL, SPECIAL R ..J C T:S .,.Q,.._iDAYS IgatTE R HOWE TO THE CERTIFICATE HOLDER toiwo wi TKE LEFT; 2000 MAIN STREET 3RD FLO• OR IllfX, 49I+K.NtiffKloiRK! S14.11E4{0114 l t�lji�'.i T��s"1'OT� 3f AC 9 � 11.4FXPrt.75.I!! �?C .? 444K,XMA . i..�4 X" . ALTIWflZEDREPNES'EN A•I193 �7- .. 'TTN i..R45.•� Q(iy__aaptATN=�,. _ -/ lt'-1 t�_t_»C /Ir 9 • /' , ,,',.. =. ,j'ap:: =.a:a:!a;li':`' 5,,,`ca_tgi":ir_-^14.MPn i:`_=r.O>x_ __ :. 'I .-i P .'e, 7 } , PAGE 03 s. • -. • .. _,.tksztSffiNT4 CL 245 POLICY NUMBER: MCL .314574 (11-$.5) THIS ENDORSEMENT CHANGES THE Po . PLEASE READ Is CAREFULLY. CG 20 0911 , 5 ADDITIONAL INSURED---OWNERS, LESS11 OR CONTRACTORS (Form A) This endorsement modifies insurance provided under the foil. il :: - COMMERCIAL GENERAL LIABILITY COVERAGE PART I, . SCHE• DULE Name of Person or Organization(Additional Insured): Location of Covered 0 stations CITY OF, HUNTINGTON BEAQIi_i, .I,TS OFFICERS a 7812 BARTON DRIVE AGENTS AND EMPLOYEES 2000 MAIN STREET 3RD FLOOR, HUNTINGTON BEACH, CA. 92648 Premium Basis Rates Advance Premium Bodily Injury and _ (Per Property Damage Liability Cost $1000 of cost) $ 100.00 ptal Advance Premium $ 100.00 (If no entry appears above, information required to complete t ms endorsement will be shown in the Declarations as applicable to this endorsement.) 1. WHO IS AN INSURED (Section II) is amended to (a) All work on the project(other than ser- include as an insured the person or organization vice,maintenance,or repairs)to be per- (called "additional insured")shown in the Schedule formed by or on behalf of the additional but only with respect to liability arising out of: insured(s)at the site of the covered op- A. "Your work" for the additional insured(s)at the stations has been completed; or location designated above, or (b) That portion of"your work"out of which B. Acts or omissions of the additional insured(s)in the injury or damage arises has been - connection with their general supervision of put to its intended use by any person or "your work"at the location shown in the Schell- organization other than another con- _ ule, tractor or subcontractor engaged in per- ' - 'forming-operations•for a--principal as a 2. With respect to the insurance afforded these addi- part of the same project. tional insureds, the following additional provisions - apply: (3) "Bodily injury" or "property damage" aris- • A- None of the exclusions under Coverage A,except ing out of any act or omission of the addl. exclusions(a),(d),(e),(f),(h2),Wand(m),apply tional insured(s)or any of their employees, otherto this insurance, than the general supervision of work i performed for the additional insured(s) by B. Additional Exclusions. This insurance does not you, apply to: (1) "Bodily injury" or "property damage" for (4) "Property damage" to: which the additional insured(s) are obli- (a) Property owned, used or occupied by or gated to pay damages by reason of the as- rented to the additional insured(s); sumption of liability in a contract or agree- (b) Property in the care,custody,or control merit. This exclusion does not apply to of the additional insured(s) or over liability for damages that the additional in- which the additional insured(s) are for sured(s) would have in the absence of the any purpose exercising physical con- contract or agreement. trol; or (2) "Bodily injury"or"property damage"occur- (e) "Your work" for the additional in- nng atter: sured(s). • PAGE 03 ;i} e � I • STATE P.O. BOX 420807, SAN FRANCISCO, C 94142-0807 COMPPNSATION INeUnANCe FUND CERTIFICATE OF WORKERS' COMPENS TION INSURANCE tit U L Y 27 , 1994 POLICY NUMBER: 1212729 — c,4 CERTIFICATE EXPIRES: T "' 9,3 CITY OF IIUNTINGION BEACH CITY AOt4INSTRATOR/ATTti : GREGORY A . BROW 2000 MAIN STREET • HUIITINGTON UE.ACII , CA 92648 JOB : ALL OPERATIONS This is to certify that we have issued a valid Workers'Compensation insurance policy in a form approved by the California Insurance Commissioner to the employer named below for the poli iy()perio. indicated. This policy is not subject to cancellation by the Fund except upon XeYi days advance written notice to the employer. 30 We will alit)give you 1 11 days'advance notice should this policy be canceled prior to its normal expiration. • This certificate of insurance is not an Insurance policy and does not ame 'd, extend or alter the coverage afforded by the • policies listed herein. Notwithstanding any requirement, term, or condi on of any contract or other document with respect to which this certificate of insurance may be issued or may p rtain, the insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of suc policies. Se SleaVX f PAESIbENT • EMPLOYER ' S LIABILITY LIMIT: $3 ,000 ,000 PF'11 OCCURRENCE . ENDORSEMENT #2O65 ENTITLED CERTIFICATE IU DERS ' NOTICE EFFECTIVE 01 /O1 /94 IS AT1ACllED TO AND FORMS A PART pi 'INIS POLICY . 1 a rORM:f .� GAIL HUTTON, City At±6Yfigl Byzi, Deputy Clty Attorney J • EMPLOYER r SHELTER FOR THE HOMELESS 8291 WESTMINSTER BOULEVARD SUITE 1t1 70 WESTMINSTER , CA 92683 1 , Affordable Housing Agreement (Acquisition and Rehabilitation of 7812 Barton Drive) By and Between the City of Huntington Beach, Lender, and Shelter for the Homeless, a Nonprofit , Borrower HOME Partnership Agreement M92-MC060514 CHDO # M92-060514-02 a;\OCCHC\Barton\Coverl.doc LOAN AGREEMENT BY AND BETWEEN THE CITY OF HUNTINGTON BEACH AND SHELTER FOR THE HOMELESS CONCERNING THE ACQUISITION AND REHABILITATION OF AFFORDABLE HOUSING ON BARTON DRIVE WITH FUNDS OBTAINED FROM THE HOME INVESTMENT PARTNERSHIP PROGRAM '"I This Loan Agreement is made this (1 day of , 1994, by and between SHELTER FOR THE HOMELESS, a Califor is noprofit public benefit corporation (hereinafter referred to as "Borrower"), and THE CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California ("hereinafter referred to as Lender"). WHEREAS, Lender and Borrower wish to enter into an agreement for the loan of HOME Investment Partnership Program funds for the purpose of acquiring and rehabilitating certain affordable rental housing units located on Barton Drive in the City of Huntington Beach, as more fully described hereinbelow, NOW THEREFORE, in consideration of the mutual agreements, obligations, and representations, and in further consideration for the making of the Loan, Borrower and Lender hereby agree as follows: ARTICLE 1. DEFINITIONS The following terms shall have the meanings and content set forth in this section wherever used in this Loan Agreement. 1 .1 "BORROWER" means Shelter for the Homeless, a California nonprofit public benefit corporation, and its authorized representatives, assigns, transferees, or successors-in-interest thereto. 1 .2 "CERTIFICATE OF PROJECT COMPLETION" means that certificate issued to Borrower by Lender evidencing completion of the Project pursuant to the terms of this Loan Agreement. 1 .3 "CITY" means the City of Huntington Beach, a municipal corporation, and its authorized representatives, officers, officials, employees and agents. 1 .4 "HAZARDOUS MATERIALS" means any hazardous or toxic substances, materials, wastes, pollutants, or contaminants which are defined, regulated, or listed as "hazardous substances," "hazardous wastes," "hazardous materials," "pollutants," "contaminants," or "toxic substances," under federal or state environmental and health and safety laws and regulations, including without limitation petroleum and petroleum byproducts, flammable explosives, urea 1 4\s\Shelter Loan Agmt\04/12/94 formaldehyde insulation, radioactive materials, asbestos, and lead. Hazardous Materials do not include substances that are used or consumed in the normal course of developing, operating, or occupying a housing project, to the extent and degree that such substances are stored, used, and disposed of in the manner and in amounts that are consistent with normal practice and legal standards. 1 .5 "HOME" means the HOME Investment Partnership Program created by the National Affordable Housing Act of 1990. 1 .6 "HUD" means the United States Department of Housing and Urban Development. 1 .7 "LEASE" means the lease entered into between Borrower and a tenant of a unit in the Project. 1 .8 "LENDER" means the City of Huntington Beach, a municipal corporation, and its authorized representatives, officers, officials, employees, and agents. 1 .9 "LOAN" means the loan of HOME Investment Partnership Program funds provided by Lender to Borrower pursuant to this Loan Agreement. 1 .10 "LOAN AGREEMENT" means this loan agreement entered into between Lender and Borrower. 1 .11 "LOAN DOCUMENTS" means, collectively, this Loan Agreement, the Note and the Deed of Trust that shall be executed in connection with the Loan, as they may be amended, modified, or restated from time to time, along with all exhibits and attachments to these documents. 1 .12 "MEDIAN INCOME" means the median income for the Orange County Primary Metropolitan Statistical Area (PMSA), with adjustments for household size, as determined from time to time by the U.S. Department of Housing and Urban Development (HUD) pursuant to the United States Housing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with said Act. 1 .13 "NOTE" means that promissory note executed by Borrower in favor of Lender evidencing the Loan, as well as any amendments to, modifications of, or restatements of said promissory note. The Note shall be in substantially the same form as the document attached hereto as Attachment No. 2. 2 4\s\Shelter Loan Agmt\04/12/94 r 1 .14 "PLANS AND SPECIFICATIONS" means the plans and specifications which shall be used to rehabilitate the Project. .15 "PROJECT" means the four (4) units of rental housingon the Property 1 p Y to be owned and operated by the Borrower for Very-Low Income Households according to the terms of this Loan Agreement. 1 .16 "PROPERTY" consists of the, real property located at 17372 Keelson Lane, Huntington Beach, California as more particularly described in the attached Exhibit A, which is incorporated into this Loan Agreement by this reference. 1 .17 "REGULATORY AGREEMENT" shall mean the agreement executed by the Borrower for the benefit of the City, limiting the income of families eligible to rent the units to Very Low Income Households and in addition limiting the amount of rent that can be charged for the units for a minimum of fifty-nine (59) years, in substantially the same form as the document attached hereto as Attachment No. 4. 1 .18 "VERY LOW INCOME HOUSEHOLDS" shall mean a family or individual whose annual income does not exceed fifty percent (50%) of the median income for the Orange County Metropolitan Statistical Area as determined by HUD with adjustments for smaller and larger families. ARTICLE 2. ATTACHMENTS The following documents are attached to this Loan Agreement as Attachments and are incorporated into this Loan Agreement by this reference as though fully set forth: 2.1 ATTACHMENT NO. 1 : Legal Description of the Property 2.2 ATTACHMENT NO. 2: Promissory Note 2.3 ATTACHMENT NO. 3: Deed of Trust 2.4 ATTACHMENT NO. 4: Regulatory Agreement 2.5 ATTACHMENT NO. 5: Scope of Work 2.6 ATTACHMENT NO. 6: Schedule of Performance 2.7 ATTACHMENT NO. 7: City of Huntington Beach Rental Property Acquisition Guidelines 3 4\s\Shelter Loan Agmt\04/12/94 2.8 ATTACHMENT NO. 8 City of Huntington Beach Multi-Family Rental Rehabilitation Loan Program Guidelines 2.9 ATTACHMENT NO. 9: Shelter for the Homeless Monitoring Plan 7812 Barton Drive, Huntington Beach ARTICLE 3. TERMS OF LOAN • 3.1 LOAN. Lender agrees to provide a loan of HOME funds to Borrower under the terms and conditions of the Loan Documents. 3.2 AMOUNT OF LOAN. On and subject to the terms and conditions of the Loan Documents, Lender agrees to make and Borrower agrees to accept a loan in the amount not to exceed Three Hundred Twenty Thousand Dollars ($320,000), which shall be evidenced by the Note, and secured by the Deed of Trust. 3.3 INTEREST. The Note shall bear simple interest at the rate of six percent (6%) per annum on the principal amount outstanding from the date of the Note until paid or forgiven. 3.4 REPAYMENT OF LOAN. The outstanding principal of the loan shall be adjusted annually for inflation based on the Consumer Price Index (CPI) or another comparable index, as may be mutually agreed upon by both parties. The repayment of the Loan shall be as follows: the outstanding principal of the Loan, adjusted annually as provided above, shall be due and payable thirty (30) years after execution of the Note, and the accrued interest under the Note shall be canceled thirty (30) years after execution of the Note; provided, however, that the outstanding principal of the Loan, adjusted annually as provided above, and all accrued interest thereon, shall be due and payable if an Event of Default by Borrower occurs which has not been cured as provided for in the Loan Documents or Regulatory Agreement, or if the property is sold, transferred, or refinanced. 3.5 LOAN SECURITY. Upon the making of the Loan, the Borrower shall cause to be executed and recorded in the official records of Orange County the Deed of Trust, and the Regulatory Agreement. 3.6 PREPAYMENT OF LOAN. No prepayment penalty will be charged to Borrower for payment of all or any portion of the Loan amount prior to the end of the Loan term described herein. 3.7 CONDITIONS PRECEDENT TO DISBURSEMENT. Lender shall not be obligated to make disbursements of Loan proceeds unless all of the following conditions precedent are satisfied: 4 4\s\Shelter Loan Agmt\04/13/94 • 1 . There exists no Event Default under the Loan Agreement. 2. Borrower has delivered a management plan acceptable to the Lender for the on-going management and operation of the Project. 3. Borrower has received a final certificate of occupancy for this Project. 3.8 LENDER'S OPTION TO PURCHASE. Upon notice to Lender that Borrower intends to effect a transfer of the Property as provided in Section 4.7 hereof, or upon the termination of this Agreement, Lender shall have the right, for 60 days after such notice or termination, to purchase the Property at the fair market value thereof, less the principal amount of HOME funds originally loaned to the Borrower and adjusted annually for inflation based on the Consumer Price Index (CPI), or another comparable index, as mutually agreed upon by both parties. Lender shall exercise this right in its sole discretion. The fair market value shall be determined by a qualified real estate appraiser, mutually selected by the Borrower and Lender. ARTICLE 4. PROJECT OPERATION 4.1 OPERATION OF PROJECT. Borrower shall lease, operate and manage the Project in full conformance with the terms of the Regulatory Agreement. 4.2 INCOME CERTIFICATION. Borrower shall determine the income eligibility of each prospective tenant household prior to renting a Project unit to such household. Borrower shall certify each tenant household's income on an annual basis. 4.3 AFFORDABILITY RESTRICTIONS. The affordability of the Project shall be maintained for a minimum period of Thirty (30) years following the recordation of the Regulatory Agreement. All four (4) units in the Project shall at all times be occupied or held vacant and available for rental by Very Low Income Households. Income determination shall be made at the time of initial occupancy of a unit by a tenant. 4.4 MAXIMUM RENTAL CHARGES. The total charges for rent, utilities, and related services to each Very Low-Income Household shall not exceed thirty percent (30%) of fifty percent (50%) of Median Income. Maximum annual rent increases shall be calculated by Lender based on the change in permissible rents published annually by HUD. 5 4\s\Shelter Loan Agmt\04/13/94 . 4.5 NONDISCRIMINATION. Borrower shall not discriminate or segregate in the development, construction, use, enjoyment, occupancy, conveyance; lease, sublease, or rental of any part of the Property on the basis of race, color, ancestry, national origin, religion, sex, sexual preference, age, marital status, family status, source of income, physical or mental disability, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related conditions (ARC), or any other arbitrary basis. Borrower shall otherwise comply with all applicable local, state, and federal laws concerning discrimination in housing. 4.6 ENCUMBRANCE OF PROPERTY. Except as otherwise provided in this Loan Agreement, Borrower shall not engage in any financing or any other transaction creating any security interest or other encumbrance or lien upon the Property, whether by express agreement or operation of law, or allow any encumbrance or lien to be made on or attached to the Property, except with the prior written consent of Lender. Borrower shall notify Lender in writing in advance of any financing secured by any deed of trust, mortgage, or other similar lien instrument that it proposes to enter into with respect to the Project or Property, and of any encumbrance or lien that has been created on or attached to the Property whether by voluntary act of Borrower or otherwise. 4.7 TRANSFER OF PROPERTY. Borrower has neither made or created, and shall not make or permit any sale, assignment, conveyance, lease, or other transfer of this Loan Agreement, the Project, or the Property, or any part thereof, including the sale of any general or limited partnership interests, without the prior written consent of Lender. 4.8 LEAD-BASED PAINT. Borrower shall ensure that it and its contractors and subcontractors shall not use lead-based paint in the construction or maintenance of the Property. Borrower shall insert this provision in all contracts and subcontracts for work performed on the Project which involve the application of paint. 4.9 BARRIERS TO THE DISABLED. Borrower shall ensure that the Project shall be developed and the Property shall be maintained to comply with all applicable federal, state, and local requirements for access for disabled persons. 4.10 INDEMNIFICATION, DEFENSE, HOLD HARMLESS. Borrower hereby agrees to protect, defend, indemnify and hold and save harmless Lender, its officers and employees against any and all liability, claims, judgments, costs and demands, however caused, including those resulting from death or injury to Borrower's employees and damage to Borrower's property, arising directly or indirectly out of the obligations or operations herein undertaken by Borrower, including those arising from the passive concurrent negligence of Lender, but save and except those which 6 4\s\Shelter Loan Agmt\04/13/94 • arise*out of the active concurrent negligence, sole negligence, or the sole willful misconduct of Lender. Borrower will conduct all defense at its sole cost and expense. Lender shall be reimbursed by Borrower for all costs or attorney's fees incurred by Lender in enforcing this obligation. 4.11 WORKERS' COMPENSATION INSURANCE. Pursuant to the California Labor Code Section 1861 , Borrower acknowledges awareness of Section 3700 et seq. of said code, which requires every employer to be insured against liability for workers' compensation; Borrower covenants that it will comply with all such laws and provisions prior to commencing performance of the work hereunder. Borrower shall maintain such Workers' Compensation Insurance in an amount of not less than One Hundred Thousand Dollars ($100,000) bodily injury by accident, each occurrence, One Hundred Thousand Dollars ($100,000) bodily injury by disease, each employee, and Two Hundred Fifty Thousand Dollars ($250,000) bodily injury by disease, policy limit, at all times incident hereto, in forms and underwritten by insurance companies satisfactory to Lender. Borrower shall require all subcontractors to provide such Workers' Compensation Insurance for all of the subcontractors' employees. Borrower shall furnish to Lender a certificate of waiver of subrogation under the terms of the Workers' Compensation Insurance and Borrower shall similarly require all subcontractors to waive subrogation. 4.12 INSURANCE COVERAGE. Borrower shall carry at all times incident hereto, on all operations to be performed hereunder, general liability insurance, including coverage for bodily injury, property damage, and blanket contractual liability. Said insurance shall also include automotive bodily injury and property damage liability insurance. All insurance shall be underwritten by insurance companies in forms satisfactory to Lender for all operations, subcontract work, contractual obligations, product or completed operations and all owned vehicles and non-owned vehicles. Said insurance shall name the Lender, its officers, agents and employees and all public agencies as determined by the Lender as Additional Insureds. Borrower shall subscribe for and maintain said insurance policies in full force and effect during the life of this Agreement, in an amount of not less than One Million Dollars ($1 ,000,000). In the event of aggregate coverage, Borrower shall immediately notify Lender of any known depletion of limits. Borrower shall • require its insurer to waive its subrogation rights against Lender and agrees to provide certificates evidencing the same. ' 7 4\s\Shelter Loan Agmt\04/13/94 4.13 CERTIFICATES OF INSURANCE; ADDITIONAL INSURED ENDORSEMENT. Prior to commencing performance of the obligations undertaken •hereunder, Borrower shall furnish to Lender certificates of insurance subject to approval of the City Attorney evidencing the foregoing insurance coverages as required by this Agreement; said certificates shall provide the name and policy number of each, carrier and policy, and shall state that the policy is currently in force and shall promise to provide that such policies will not be canceled without thirty (30) days prior written notice to Lender. Borrower shall maintain the foregoing insurance coverages in force until the rehabilitation work under this Agreement is fully completed and accepted by Lender. The requirement for carrying the foregoing insurance shall not derogate from the provisions for indemnification of Lender by Borrower under this Agreement. Lender or its representative shall at all times have the right to demand the original or a copy of all said policies of insurance. Borrower shall pay, in a prompt and timely manner, the premiums on all insurance herein above required. A separate copy of the additional insured endorsement to each of Borrower's insurance policies, naming the Lender, its officers and employees as Additional Insureds shall be provided to the City Attorney for approval prior to any payment hereunder. ARTICLE 5. HAZARDOUS MATERIALS 5.1 REPRESENTATIONS AND WARRANTIES. After reasonable investigation and inquiry, Borrower hereby represents and warrants to the best of its knowledge, as of the date of this Loan Agreement and except as previously disclosed and acknowledged in writing by Lender or as disclosed by the reports based on environmental audit(s) performed on the Property and submitted to Lender, that (a) the Property is not and has not been a site for the use, generation, manufacture, transportation, storage, or disposal of Hazardous Materials; (b) the Property is in compliance with all applicable environmental and health and safety laws, regulations; ordinances, administrative decisions, common law decisions (whether federal, state, or local) with respect to Hazardous Materials, including those relating to soil and groundwater conditions ("Hazardous Materials Laws"); (c) there are no claims or actions pending or threatened with respect to the Property by any governmental entity or agency or any other person relating to Hazardous Materials; and (d) there has been no release or threatened release of any Hazardous Materials on, under, or near the Property (including in the soil, surface water, or groundwater under the Property) or any other occurrences or conditions on the Property or on any other real property that could cause the Property or any part thereof to be classified as a "hazardous waste property" or as a "border zone property" under California Health and Safety Code Sections 25220, et seq., or regulations adopted therewith. 8 4\s\Shelter Loan Agmt\04/12/94 5.2 NOTIFICATION TO LENDER. Borrower shall immediately notify Lender in writing of: (a) the discovery of any concentration or amount of Hazardous Materials on or under the Property requiring notice to be given to any governmental entity or agency under Hazardous Materials Laws; (b) any knowledge by Borrower (after verification of the veracity of such knowledge to Borrower's reasonable satisfaction) that the Property does not comply with any Hazardous Materials Laws; (c) the receipt by Borrower or the Partnership of written notice of any Hazardous Materials claims; and (d) the discovery by Borrower or the Partnership of any occurrence or condition on the Property or on any real property located within 2,000 feet of the Property that could cause the Property or any part thereof to be designated as a "hazardous waste property" or as a "border zone property" under California Health and Safety Code Sections 25220, et seq.; or regulations adopted therewith. 5.3 USE AND OPERATION OF PROPERTY. The Borrower nor any agent, employee, or contractor of Borrower, nor any authorized user of the Property shall use the Property or allow the Property to be used for the generation, manufacture, storage, disposal, or release of Hazardous Materials. Borrower shall comply with Hazardous Materials Laws. ARTICLE 6. DEFAULT AND REMEDIES 6.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall constitute an "Event of Default" under this Loan Agreement: A. Monetary. (1) Borrower's failure to pay when due any sums payable under the Note or any advances made by Lender under the Deed of Trust or this Loan Agreement; (2) Borrower's use of Loan funds for costs other than Eligible Costs or for uses inconsistent with other terms and restrictions in the Loan Documents; (3) Borrower's failure to obtain and maintain the insurance coverage required under this Loan Agreement; (4) Borrower's failure to make any other payment or assessment due under the Loan Documents; • B. Operation. (1) discrimination by Borrower on the basis of characteristics prohibited by this Loan Agreement or applicable law; (2) the imposition of any encumbrances or liens on the Property without Lender's prior written approval that are prohibited under this Loan Agreement or that have the effect of reducing the priority of or invalidating the Deed of Trust; (3) any material adverse change in the condition of Borrower or the Project or permanent financing or funding for the Project that gives Lender reasonable cause to believe that the 9 4\s\Shelter Loan Agmt\04/12/94 , Project cannot be operated according the terms of the Loan Documents or the Regulatory Agreement; C. General performance of Loan obligations. Any substantial or continuous breach by Borrower of any material obligations on Borrower imposed in the Loan Documents or Regulatory Agreement; D. Representations and warranties. A determination by Lender that any of Borrower's representations or warranties made in the Loan Documents, any statements made to Lender by Borrower, or any certificates, documents, or schedules supplied to Lender by Borrower were untrue in any material respect when made, or that Borrower concealed or failed to disclose a material fact from Lender; E. Bankruptcy, dissolution, and insolvency. Borrower's or any general partner of Borrower's or any corporation controlling Borrower's (1) filing for bankruptcy, dissolution, or reorganization, or failure to obtain a full dismissal of any such involuntary filing brought by another party before the earlier of final relief or 60 days after the filing; (2) making a general assignment for the benefit of creditors; (3) applying for the appointment of a receiver, trustee, custodian, or liquidator, or failure to obtain a full dismissal of any such involuntary application brought by another party before the earlier of final relief or 60 days after the filing; (4) insolvency; (5) failure, inability or admission in writing of its inability to pay its debts as they become due. 6.2 NOTICE OF DEFAULT AND OPPORTUNITY TO CURE. For nonmonetary Events of Default, Lender shall give written notice to Borrower of any Event of Default by specifying: (a) the nature of the event or deficiency giving rise to the Default, (b) the action required to cure the deficiency, if an action to cure is possible, and (c) a date, which shall not be less than thirty (30) calendar days from the date of receipt of the notice or the date the notice was refused, by which such action to cure must be taken. 6.3 LENDER'S REMEDIES. Upon the happening of an Event of Default by Borrower and a failure to cure said Event of Default within the time specified in the notice of Event of Default (if a notice is required), and Lender may, in addition to other rights and remedies permitted .by the Loan Documents or applicable law, proceed with any or all of the following remedies in any order or combination Lender may choose in its sole discretion: A. Bring an action in equitable relief (1) seeking the specific performance by Borrower of the terms and conditions of the Loan Documents, 10 4\s\Shelter Loan Agmt\04/12/94 and/or (2) enjoining, abating, or preventing any violation of said terms and conditions, and/or (3) seeking declaratory relief; B. Accelerate the Loan, and demand immediate full payment of the principal amount outstanding and all accrued interest under the Note, as well as any other monies advanced to Borrower by Lender under the Loan Documents; C. Foreclose under the Deed of Trust and enforce any remedies incident thereto. D. Pursue any other remedy allowed at law or in equity. 6.4 BORROWER'S REMEDIES. Upon the fault or failure of Lender to meet any of its obligations under the Loan Documents, Borrower may: A. Demand payment from Lender of any sums due Borrower;, and/or B. Bring an action in equitable relief seeking the specific performance by Lender of the terms and conditions of the Loan Documents; and/or C. Pursue any other remedy allowed at law or in equity. ARTICLE 7. GENERAL PROVISIONS 7.1 BORROWER'S WARRANTIES. Borrower represents and warrants (1) that it has access to professional advice and support to the extent necessary to enable Borrower to fully comply with the terms of these Loan Documents and the Regulatory Agreement and to otherwise carry out the Project, (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 the Loan Documents, (4) that the persons executing and delivering the Loan Documents are authorized the execute and deliver such documents on behalf of Borrower, (5) except as disclosed to the Lender in writing, there are no actions or proceedings pending or, to the best of Borrower's knowledge, threatened against the Borrower before any court or administrative agency in any way connected with the Property or the Project which could adversely affect the Borrower's ability to perform the activities contemplated hereunder, (6) neither this Loan Agreement nor anything provided to be done hereunder violates or shall violate any contract, agreement or instrument to which the Borrower is a party or which affects the Project or any part thereof, (7) the Borrower is not in default in respect of any of its obligations or liabilities pertaining to the Project; nor is there any state of facts or circumstances or conditions or events which, after notice, lapse of time, or both, 11 4\s\Shelter Loan Agmt\04/12/94 • would constitute or result in any such default, and (8) the Borrower has not entered into any agreements which will adversely affect the title to the Project or the Borrower's right to develop and use the Project as provided in this Loan Agreement, and the Borrower will not enter into any such agreements after the date hereof. 7.2 TERM OF THIS AGREEMENT. This Loan Agreement shall commence on the date set forth above and remain in full force and effect throughout the term of the Loan. This Loan Agreement shall terminate upon the termination of the Loan. 7.3 GOVERNING LAW. The Loan Documents shall be interpreted under and be governed by the laws of the State of California, except for those provisions relating to choice of law or those provisions preempted by federal law. 7.4 ATTORNEYS' FEES AND COSTS. In the event any Event of Default or any legal or administrative action is commenced to interpret or to enforce the terms of the Loan Documents, the prevailing party in any such action shall be entitled to recover all reasonable attorneys' fees (which as to any party shall include the allocated reasonable costs for services of any party's in-house counsel) and costs in such action. 7.5 TIME. Time is of the essence in these Loan Documents. 7.6 CONSENTS AND APPROVALS. Any consent or approval of Lender or Borrower required under the Loan Documents shall not be unreasonably withheld. Any approval required under the Loan Documents shall be in writing and executed by an authorized representative of the party granting the approval. 7.7 NOTICES, DEMANDS AND COMMUNICATIONS. Formal notices, demands and communications between Borrower and Lender shall be sufficiently given and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, to the principal offices of Borrower and Lender as follows: LENDER: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Office of City Administrator BORROWER: Shelter for the Homeless 8291 Westminster Blvd., #170 Westminster, CA 92683 12 4\s\Shelter Loan Agmt\04/12/94 7.8 BINDING UPON SUCCESSORS. All provisions of these Loan Documents shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors-in-interest, transferees, and assigns of each of the parties; provided, however, that this section does not waive the prohibition on assignment of this Loan Agreement by Borrower without Lender's consent. 7.9 RELATIONSHIP OF PARTIES. The relationship of Borrower and Lender for this Project under this Loan Agreement is and at all times shall remain solely that of a debtor and a creditor, and shall not be construed as a joint venture, equity venture, partnership, or any other relationship. Lender neither undertakes nor assumes any responsibility or duty to Borrower (except as provided for herein) or any third party with respect to the Project, the Property, or the Loan. Except as Lender may specify in writing, Borrower shall have no authority to act as an agent of Lender or to bind Lender to any obligation. 7.10 ASSIGNMENT AND ASSUMPTION. Borrower shall not assign any of its interests under this Loan Agreement or the Loan Documents to any other party, except as specifically permitted under the terms of the Loan Documents, without the prior written consent of Lender. Any unauthorized assignment shall be void. 7.11 WAIVER. Any waiver by Lender of any obligation in these Loan Documents must be in writing. No waiver will be implied from any delay or failure by Lender to take action on any breach or default of Borrower or to pursue any remedy allowed under the Loan Documents or applicable law. Any extension of time granted to Borrower to perform any obligation under the Loan Documents shall not operate as a waiver or release from any of its obligations under the Loan Documents. Consent by Lender to any act or omission by Borrower shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for Lender's written consent to future waivers. 7.12 INTEGRATION. This Loan Agreement and the other Loan Documents, including exhibits, executed by Borrower for the Property, if any, contain the entire agreement of the parties and supersede any and all prior negotiations. 7.13 OTHER AGREEMENTS. Borrower represents that it has not entered into any agreements that are inconsistent with the terms of the Loan Documents. Borrower shall not enter into any agreements that are inconsistent with the terms of the Loan Documents without an express waiver by Lender in writing. 7.14 AMENDMENTS AND MODIFICATIONS. Any amendments or modifications to the Loan Documents must be in writing, and shall be made only if executed by both Borrower and Lender. 13 4\s\Shelter Loan Agmt\04/12/94 7.15 SEVERABILITY. Every provision of this Loan Agreement is intended to be severable. If any provision of this Loan Agreement shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired. IN WITNESS WHEREOF, the parties hereto have executed this Loan Agreement by and through their authorized officers as of the date first above written. BORROWER: LENDER: SHELTER FOR THE HOMELESS City OF HUNTINGTON BEACH, CORPORATION, a California nonprofit public a California municipal benefit corporation By: 7-7411‘,,eik— Mayor s: �X3c . / c;"7( By: ATTEST: lits: G� L/ 3u7477:).0 City Clerk APPROVED AS TO FORM: rt Attorney - s� ��y �+-1s-q-1 REV WE PPROVED• INITIATED AND APPROVED: City Administrator Direc for of Special Projects 14 4\s\Shelter Loan Agmt\04/12/94 Attachment No. 1 Legal Description 7812 Barton Drive Huntington Beach, California Lot 32 of Tract 4301 in the County of Orange, State of California, as per map recorded in Book 117, Page(s) 11 and 12 of Miscellaneous Maps, in the office of the County Recorder of said County. Attachment No. 1 Page 1 of 1 4\s\Agmt:Shelter-1\04/12/94 • Attachment No. 2 PROMISSORY NOTE SECURED BY DEED OF TRUST (7812 Barton Drive) $320,000 DATE: -0-, -D_14 FOR VALUE RECEIVED, Shelter for the Homeless, a California nonprofit public benefit corporation, whose address is 8291 Westminster Blvd., #1 70, Westminster, California 92683 ("Borrower") hereby promises to pay to the order of the City of Huntington Beach, a municipal corporation, whose address is 2000 Main Street, Huntington Beach, California, 92648 ("Lender"), a principal amount equal to Three Hundred Twenty Thousand Dollars ($320,000), or so much thereof as may be advanced by Lender to Borrower (the "Loan") pursuant to a loan agreement of even date herewith between Borrower and Lender (the "Loan Agreement"). Borrower also promises to pay to the order of Lender accrued simple interest on the principal balance at the rate of six percent (6%) per annum. 1 . BORROWER'S OBLIGATION. This Note evidences the obligation of Borrower to Lender for the repayment of funds loaned to Borrower by Lender to finance the expenses related to the development of the housing project in the City of Huntington Beach described in the Loan Agreement. 2. AMOUNT AND TIME OF PAYMENT. The outstanding principal of the loan shall be adjusted annually for inflation based on the Consumer Price Index (CPI) or another comparable index, as may be mutually agreed upon by both parties. There shall be no periodic payments under this Note. The repayment of the Loan shall be as follows: the outstanding principal of the Loan, adjusted annually as provided above, shall be due and payable thirty (30) years after execution of the Note, and the accrued interest under the Note shall be canceled thirty (30) years after execution of the Note; provided, however, that the outstanding principal of the Loan, adjusted annually as provided above, and all accrued interest thereon, shall be due and payable if an Event of Default by Borrower occurs which has not been cured as provided for in the Loan Documents or Regulatory Agreement, or if the property is sold, transferred, or refinanced. Attachment No. 2 Page 1 of 4 4\s\Shelter-2\04/1 3/94 A. 3. SECURITY. This Note is secured by a deed of trust executed by the Borrower in favor of the Lender dated the same date as this Note, (the "Deed of Trust"). 4. CANCELLATION OF NOTE. The principal and interest under this Note shall be forgiven and this Note canceled thirty (30) years after execution of this Note. - 5. PLACE AND MANNER OF PAYMENT. All amounts due and payable under this Note are payable at the office of Lender as set forth above, or at such other place as Lender may designate to Borrower in writing from time to time, in any coin or currency of the United States which on the respective dates of payment thereof shall be legal tender for the payment of public and private debts. 6. WAIVERS. Presentment, notice of dishonor, and protest are waived by all makers, sureties, guarantors, and endorsers of this Note. 7. DEFAULT AND ACCELERATION. All covenants, conditions and agreements contained in the Deed of Trust, Regulatory Agreement and the Loan Agreement are hereby made a part of this Note. Borrower agrees that the unpaid balance of the then principal amount of this Note, together with all accrued interest thereon and charges owing, shall, at the option of Lender, become immediately due and payable upon any Event of Default as defined in the Loan Agreement which has not been cured pursuant to that agreement, including without limitation the failure of Borrower to make any payment when due. Upon any Event of Default, Lender may exercise any other right or remedy permitted under the Loan Documents. 8. NONRECOURSE. This Loan is a nonrecourse obligation of Borrower. The sole recourse of Lender for repayment of the principal and interest under this Note shall be the exercise of Lender's rights against the Property. 9. CONSENTS AND APPROVALS. Any consent or approval of Lender required under this Note shall not be unreasonably withheld. 10. NOTICES. Except as may be otherwise specifically provided herein, any approval, notice, direction, consent request or other action by Lender shall be in writing and may be communicated to Borrower at the principal office of Borrower set forth above, or at such other place or places as Borrower shall designate in writing, from time to time, for the receipt of communications from Lender. Attachment No. 2 Page 2 of 4 4\s\Shelter-2\04/13/94 11 . BINDING UPON SUCCESSORS. All provisions of this Note shall be • binding upon and inure to the benefit of the heirs, administrators, executors, successors-in-interest, transferees, and assigns of Borrower and Lender; provided, however, that this section does not waive the prohibition in the Loan Agreement on assignment of the Loan by Borrower without Lender's consent. 12. ASSIGNMENT AND ASSUMPTION. Borrower shall not assign any of its interests under this Note to any other party, except as specifically permitted under the terms of the Loan Documents, without the prior written consent of Lender. Any unauthorized assignment shall be void. 13. DEFINITIONS. Capitalized terms not defined in this Note shall have the same meaning as defined terms in the Loan Agreement. 14. GOVERNING LAW. This Note shall be interpreted under and governed by the laws of the State of California, except for those provisions relating to choice of law and those provisions preempted by federal law. 15. LOAN AGREEMENT CONTROLS. In the event that any provisions of this Note and the Loan Agreement conflict, the terms of the Loan Agreement shall control. 16. SEVERABILITY. Every provision of this Note is intended to be severable. If any provision of this Note shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired. 17. ATTORNEYS' FEES AND COSTS. In the event of any legal action is commenced to interpret or to enforce the terms of this Note, the prevailing party in any such action shall be entitled to recover all reasonable attorneys' fees and costs incurred in such action. 18. WAIVER. Any waiver by Lender of any obligation in this Note must be in writing. No waiver shall be implied from any failure of Borrower to take, or any delay or failure by Lender to take action on any breach or default by Borrower or to pursue any remedy allowed under this Note or applicable law. Any extension of time granted to Borrower to perform any obligation under this Note shall not operate as a waiver or release from any of its obligations under the Note. Borrower Attachment No. 2 Page 3 of 4 4\s\She Iter-2\04/12/94 • hereby waives all defenses and pleas on the grounds of any extensions of the time for repayment of any amounts due under this Note, unless Lender has granted such extensions in writing. Consent by Lender to any act or omission by Borrower shall not be construed to be a consent to any other act or omission or to waive the requirement for Lender's written consent to future waivers. 19. AMENDMENTS AND MODIFICATIONS. Any amendments or modifications to this Note must be in writing, and shall be made only if executed by both Borrower and Lender. Executed at Huntington Beach, California, on — g , 19 BORROWER: Shelter for the Homeless a California nonprofit corporation By: Its: - 6fl..Ec • � By: Its: Attachment No. 2 Page 4 of 4 4\s\Shelter-2\04/13/9 4 • . . n CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK DEED CERTIFICATION This is to certify that the interest in real property conveyed by the Deed of Trust dated August 3, 1994 from SHELTER for the HOMELESS to the CITY OF HUNTINGTON BEACH, A MUNICIPAL CORPORATION, a municipal corporation, is hereby accepted by the undersigned officer or agent on behalf of the City Council of the City of Huntington Beach, pursuant to the authority conferred by Resolution No. 3537 of the City Council of the City of Huntington Beach adopted on August 7, 1972, and the grantee consents to the recordation thereof by its duly authorized officer. Dated: August 5, 1994 CITY OF HUNTINGTON BEACH CONNIE BROCKWAY, CMC CITY CLERK By: De ty City Clerk g:cc\deedcert (Telephone: 714.536.5227) r t • RECORDING REQUESTED BY FIDELITY NATIONAL TITLE INS.CO. ro a ! 9 4 A- -S1 r_tw 2 +� r.z •G i99f. 10m48 �. NO FEE DOCUMENT Recorded in Official Records Recording requested by and ee .4. r" ch, County ty e Lee . Branch,� vUi:fiL' Recorder when recorded, mail to: Pale 1 of 20 teas'_ 0,00 Tax:T-.v $ 0.00 0 0 City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Office of 4-y LD/e.r4- DEED OF TRUST, ASSIGNMENT OF RENTS, AND SECURITY AGREEMENT (Securing loan of $320,000) 3 THIS DEED OF TRUST, ASSIGNMENT OF RENTS, AND SECURITY AGR�EMENT ("Deed of Trust") is made this 3''`i day of a.,(A , lot by Shelter for the Homeless, a California nonprofit public benefit corporation ("Trustor"), toride no iJY?U t7l.Las trustee ("Trustee"), for the benefit of the City of Huntington Beach, a municipal corporation ("Beneficiary"). GRANT IN TRUST 1 . GRANT. Trustor, in consideration of the indebtedness referred to below, hereby irrevocably grants and conveys to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of Beneficiary, all of Trustor's interest in the property located in the City of Huntington Beach, County of Orange, State of California, and described in the attached Exhibit A, incorporated herein by this reference (the "Property"); TOGETHER WITH all interest, estates or other claims, both in law and in equity which Trustor now has or may hereafter acquire in the Property; all buildings, structures, fixtures, improvements, signs, and landscaping now or hereafter erected or located on the Property, including all equipment and machinery used for supplying or distributing heating, cooling, electricity, gas, water, air, and light, all kitchen and laundry appliances such as washers, dryers, refrigerators, garbage disposals, ovens, ranges, dishwashers, all plumbing and bathroom fixtures, ree r-^I -3 Page 1 of 13 4\s\Shelter-3\04/12/94 all security and access control equipment, fire prevention and extinguishment equipment, elevators, floor coverings, window coverings, paneling, cabinets, (provided, however, that Trustor shall have the right to remove, if necessary, such fixtures, furnishings, and equipment for the purpose of replacement with similar items of the same quality performing the same functions, which replacements shall themselves become part of this grant); all building material and equipment either now or hereafter delivered to the Property and intended to be installed therein or any such material and equipment purchased with Loan proceeds whether or not located on the Property; all reserves, accounts, deferred payments, and refunds relating to development on the Property; all rents and income generated by the Property or improvements thereon (subject however to the assignment of rents to Lender contained herein); all leases, subleases and rental agreements covering the Property or any portion thereof now existing or hereafter entered into, and all interests of Trustor in security deposits, advance rentals, accounts, or payments of similar nature with respect to such leases, subleases, or rental agreements; all easements and rights-of-way appurtenant to the Property, including parking and recreational easements, and all interests of Trustor in any land lying within the right-of-way of any street, sidewalks, and areas of land adjacent to or used in connection with the Property; all development rights-and credits, air rights, water rights, and oil, gas or mineral rights with respect to the Property; all claims or demands with respect to insurance proceeds, and all awards made for a taking by eminent domain; all interests and rights in any private or government grants, subsidies, loans, or other financing with respect to development on the Property; all interests in personal property used in and about the Property (except furniture and other personal property of occupants of dwelling units on the Property); all intangible property and rights relating to the Property or operations on the Property, including trade names, goodwill, trademarks, and service marks; all government permits, approvals, and map rights related to construction on the Property; all architectural, structural, and mechanical plans, specifications, designs, studies, and data with respect to construction of improvements on the Property; all environmental tests, studies and reports with respect to the Property; all current and future claims and rights of action of Trustor against prior owners and operators of the Property, neighboring property owners and operators, tenants and former tenants, consultants, advisors, and other third parties with respect to environmental or Hazardous Materials contamination and cleanup of the Property under any federal, state, or local ordinances, statutes, regulations, or administrative decisions or common law. All of the foregoing, together with the Property, is herein referred to as the "Security." •� - t-AGca-3-- Page 2of 13 4\s\Shelter-3\04/12/94 • • OBLIGATIONS SECURED 2. Trustor makes this grant for the purpose of securingthe following P P obligations: A. Repayment of the indebtedness of Trustor to Beneficiary in the principal sum of Three Hundred Twenty Thousand Dollars ($320,000) with interest thereon (the "Loan") evidenced by a promissory note executed by Trustor (the "Note"), on file at the offices of Beneficiary, which is hereby incorporated into this Deed of Trust by this reference) or as much as has been disbursed to Trustor therewith, along with any extensions, amendments, modifications, or renewals to the Note; and B. Payment of any sums advanced by Beneficiary to protect the security and priority of this Deed of Trust; and C. Payment of any sums advanced by Beneficiary following a breach of Trustor's obligation to advance said sums and the expiration of any applicable cure period, with interest thereon as provided herein; and D. Performance of every obligation, covenant or agreement of Trustor contained in this Deed of Trust, the Note, the Loan.Agreement executed between Trustor and Beneficiary, on file at the offices of Beneficiary, which is hereby incorporated into this Deed of Trust by this reference), and the Regulatory Agreement executed between Trustor and Beneficiary of dated the same day as this Deed of Trust ("Regulatory Agreement"), including all modifications, extensions and renewals of these obligations; and E. Performance of any other obligation or repayment of any other indebtedness of Trustor to Beneficiary, where such evidence of obligation or indebtedness specifically recites that it is secured by this Deed of Trust. ABSOLUTE ASSIGNMENT OF RENTS AND RIGHT TO POSSESSION 3. ASSIGNMENT. As additional security, Trustor hereby assigns to Beneficiary: (a) all of the rents, revenues, profits, and income from the Security, any deposits now or hereafter in Trustor's possession which have been collected with respect to the Security, and any reserve or capital funds now or hereafter held by Trustor with respect to construction or operation of the Security (collectively, the "Rents"); and (b) the right to enter, take possession of, and manage the . Page 3 of 13 4\s\Shelter-3\04/12/94 Security; provided however that Trustor shall have, before an Event of Default, the exclusive right to possess the Security and to collect Rents and use them in accordance with the Loan Documents. This assignment is intended to be an absolute and present transfer of Trustor's interest in existing and future Rents, effective as of the date of this Deed of Trust. 4. ENFORCEMENT. Upon the happening of an Event of Default and written notice to Trustor, Beneficiary may, in addition to other rights and remedies permitted by the Loan Agreement, this Deed of Trust, or applicable law, (a) enter upon, take possession of, and manage the Security, either in person as a mortgagee-in-possession, by agent, or by a receiver appointed by a court, and do any acts which it deems necessary or desirable to preserve the value, marketability or rentability of the Security, (b) collect all Rents, including those past due and unpaid, and apply the same to pay for the costs and expenses of operation of the Security, including attorneys' fees, and pay off any indebtedness secured by this Deed of Trust, all in such order as Beneficiary may determine, and/or (c) enter upon and take possession of the Security. Beneficiary may make, cancel, enforce, and modify leases and rental agreements, obtain and evict tenants, set and modify rent terms, sue for rents due, enter into, modify, or terminate any contracts or agreements, or take any legal action, as it deems necessary with respect to the Rents or to development or operation of the Security. 5. APPOINTMENT OF A RECEIVER. In any action to enforce this assignment, Beneficiary may apply for the appointment of a receiver to take possession of the Security and take whatever measures are necessary to preserve and manage the Security for the benefit of Beneficiary and the public interest. Trustor hereby consents to the appointment of a receiver. The receiver shall have all of the authority over the Security that Beneficiary would have if Beneficiary took possession of the Security under this assignment as a mortgagee-in-possession, including the right to collect and apply Rents and the right to complete construction of improvements. 6. NO WAIVER OF POWER OF SALE. The entering upon and taking possession of the Security and the collection of Rents shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or notice of default and, notwithstanding the continuance in possession of the Security or the collection and application of Rents, Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust or by law upon occurrence of any Event of Default, including the right to exercise the power of sale. Page 4 of 13 4\s\Shelter-3\04/12/94 COMMERCIAL CODE SECURITY AGREEMENT 7. GRANT. This Deed of Trust is intended to be a security agreement and financing statement pursuant to the California Commercial Code for any of the items specified above as part of the Security which under applicable law may be subject to a security interest pursuant to the Commercial Code, and Trustor hereby grants Beneficiary a security interest in said items. Beneficiary may file a copy of this Deed of Trust in the real estate records or other appropriate index as a financing statement for any of the items specified as part of the Security. Trustor shall execute and deliver to Beneficiary at Beneficiary's request any financing statements, as well as extensions, renewals, and amendments thereof, and copies of this instrument in such form as Beneficiary may require to perfect a security interest with respect to said items. 8. REMEDIES. Upon Trustor's breach of any obligation or agreement in the Loan Documents, Beneficiary shall have the remedies of a secured party under the Commercial Code and at Beneficiary's option may also invoke the remedies provided for elsewhere in this Deed of Trust with respect to said items. Beneficiary may proceed against the items of real property and personal property specified above separately or together and in any order whatsoever. RIGHTS AND OBLIGATIONS OF TRUSTOR 9. PERFORMANCE OF SECURED OBLIGATION. Trustor shall promptly perform each obligation secured by this Deed of Trust. 10. PAYMENT OF PRINCIPAL AND INTEREST. Trustor shall promptly pay when due the principal and interest on the indebtedness evidenced by the Note. 11 . MAINTENANCE OF THE SECURITY. Trustor shall, at the Trustor's own expense, maintain and preserve the Security or cause the Security to be maintained and preserved in good condition, in good repair, and in a decent, safe, sanitary, habitable and tenantable condition. Trustor shall not cause or permit any violations of any laws, ordinances, regulations, covenants, conditions, restrictions, or equitable servitudes as they pertain to improvements, alterations, maintenance or demolition on the Security. Trustor shall not commit or permit waste on or to the Security. Trustor shall not abandon the Security. Beneficiary shall have no responsibility over maintenance of the Security. In the event.Trustor fails to maintain the Security in accordance with the standards in this Deed of Trust, the Loan Agreement, or the Regulatory Agreement, Beneficiary, after at least thirty (30) calendar days prior notice to Trustor, may, but shall be under no obligation to, make such repairs or replacements as are necessary and provide for payment Page 5 of 13 4\s\Shelter-3\04/12/94 thereof. Any amount so advanced by Beneficiary, together with interest thereon from the date of such advance at the same rate of indebtedness as specified in the Note (unless payment of such an interest rate would be contrary to applicable law, in which event such sums shall bear interest at the highest rate then allowed by applicable law), shall become an additional obligation of Trustor to Beneficiary and shall be secured by this Deed of Trust. 12.. INSPECTION OF THE SECURITY. Trustor shall permit Beneficiary to enter and inspect the Security for compliance with these obligations upon 24 hours advance written notice of such visit by Beneficiary to Trustor or Trustor's management agent. 13. LIENS, ENCUMBRANCES, AND CHARGES. Trustor shall discharge any lien or encumbrance not approved by Trustor in writing that may attain priority over this Deed of Trust, as provided for in the Loan Agreement. 14. DEFENSE AND NOTICE OF CLAIMS AND ACTIONS. Trustor shall appear in and defend, at its own expense, any action or proceeding purporting to affect the Security and/or the rights of Beneficiary. Trustor shall give Beneficiary and Trustee prompt notice in writing of the assertion of any claim, of the filing of any action or proceeding and of any condemnation offer or action with respect to the Security. 15. SUITS TO PROTECT THE SECURITY. Beneficiary shall have power to institute and maintain such suits and proceedings as it may deem expedient (a) to prevent any impairment of the Security or the rights of Beneficiary, (b) to preserve or protect its interest in the Security and in the Rents, and (c) to restrain the enforcement of or compliance with any governmental legislation, regulation, or order, if the enforcement of or compliance with such legislation, regulation, or order would impair the Security or be prejudicial to the interest of Beneficiary. 16. DAMAGE TO SECURITY. Trustor shall give Beneficiary and Trustee prompt notice in writing of any damage to the Security. If any building or improvements erected on the Property is damaged or destroyed by an insurable cause, Trustor shall use the insurance proceeds to repair or restore said buildings and improvements consistent with the original plans and specifications. Such work or repair shall be commenced within 120 days after the damage or loss occurs and shall be complete within one year thereafter. All insurance proceeds collected for such damage or destruction shall be applied to the cost of such repairs or restoration. Attaehme + nip 3 Page 6 of 13 4\s\Shelter-3\04/12/94 17. TITLE. Trustor warrants that Trustor lawfully has legal title to the Security without any limitation on the right to encumber. 18. GRANTING OF EASEMENTS. Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in the nature of easements with respect to the Security except those required or desirable for installation and maintenance of public utilities including water, gas, electricity, sewer, cable television, telephone, or those required by law. 19. TAXES AND LEVIES. Trustor shall pay prior to delinquency, all taxes, fees, assessments, charges and levies imposed by any public authority or utility company which are or may become a lien affecting the Security. However, Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long as (a) the legality thereof shall be promptly and actively contested in good faith and by appropriate proceedings, and (b) Trustor maintains reserves adequate to pay any contested liabilities. In the event that Trustor fails to pay any of the foregoing items, Beneficiary may, but shall be under no obligation to, pay the same, after Beneficiary has notified Trustor of such failure to pay and Trustor fails to fully pay such items within thirty (30) business days after receipt of such notice. Any amount so advanced by Beneficiary, together with interest thereon from the date of such advance at the same rate of indebtedness as specified in the Note (unless payment of such an interest rate would be contrary to applicable law, in which event such sums shall bear interest at the highest rate then allowed by applicable law), shall become an additional obligation of Trustor to Beneficiary and shall be secured by this Deed of Trust. 20. INSURANCE. Trustor shall provide such insurance as required under the Loan Agreement. In the event Trustor fails to maintain the full insurance coverage required by this Deed of Trust, Beneficiary, after at least seven business days prior notice to Trustor, may, but shall be under no obligation to, take out the required policies of insurance and pay the premiums on such policies. Any amount so advanced by Beneficiary, together with interest thereon from the date of such advance at the same rate of indebtedness as specified in the Note (unless payment of such an interest rate would be contrary to applicable law, in which event such sums shall bear interest at the highest rate then allowed by applicable law), shall become an additional obligation of Trustor to Beneficiary and shall be secured by • this Deed of Trust. 21 . CONDEMNATION. All judgments, awards of damages, settlements and compensation made in connection with or in lieu of taking all or any part of or interest in the Security under assertion of the power of eminent domain ("Funds") are hereby assigned to and shall be paid to Beneficiary. Beneficiary is authorized , ehment-No.-3--� Page 7 of 13 4\s\She lter-3\04/12/94 • (but not required) to collect and receive any Funds and is authorized to apply them in whole or in part upon any indebtedness or obligation secured hereby, in such order and manner as Beneficiary shall determine at its sole option. All or any part of the amounts so collected and recovered, by Beneficiary may be released to Trustor upon such conditions as Beneficiary may impose for its disposition. Application of all or any part of the Funds collected and received by Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust. 22. ACCELERATION ON TRANSFER OF SECURITY; ASSUMPTION. In the event that Trustor, without the prior written consent of the Beneficiary, sells, agrees to sell, transfers, or conveys its interest in the Security or any part thereof or interest therein, Beneficiary may at its option declare all sums secured by this Deed of Trust to be immediately due and payable. This option shall not apply in case of: A. the grant of a tenant or leasehold to qualifying households who will occupy Project units as provided for under the Loan Documents and the Regulatory Agreement; or B. sale or transfer of fixtures or personal property pursuant to the grant provisions in this Deed of Trust; or Consent to one sale or transfer shall not be deemed to be a waiver of the right to require such consent to future or successive transactions. 23. RECONVEYANCE BY TRUSTEE. This trust is intended to continue for the entire term of the Loan. Upon written request of Beneficiary stating that all sums secured by this Deed of Trust have been paid or forgiven and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to Trustor, or to the person or persons legally entitled thereto. DEFAULT AND REMEDIES 24. EVENTS OF DEFAULT. Any of the events listed in the Loan Agreement as an Event of Default shall also constitute an Event of Default under this Deed of Trust, including, but not limited to, (1) Trustor's failure to pay when due any sums payable under this Deed of Trust, the Note, or the Loan Agreement; or (2) Trustor's failure to observe or to perform any of its covenants, agreements or obligations under this Deed of Trust, the Note, the Loan Agreement, and the Regulatory Agreement. taehment-No.- 3' Page 8 of 13 4\s\Shelter-3\04/12/94 • 25. ACCELERATION OF MATURITY. Upon the happening of an Event of Default which has not been cured within the times and in the manner provided in the Loan Agreement, Beneficiary may declare all sums advanced to Trustor under the Note and this Deed of Trust immediately due and payable. 26. BENEFICIARY'S REMEDIES. Upon the happening of an Event of Default which has not been cured within the times and in the manner provided in • the Loan Agreement, Beneficiary may, in addition to other rights and remedies permitted by the Loan Agreement, the Note, or applicable law, proceed with any or all of the following remedies: A. Enforce the assignment of rents and right to possession as provided for in this Deed of Trust, and/or seek appointment of a receiver to take over possession of the Security and collect Rents; B. Commence an action to foreclose this Deed of Trust pursuant to California Code of Civil Procedure Sections 725a, et seq., and/or seek appointment of a receiver from a court of competent jurisdiction with the authority to protect Beneficiary's interests in the.Security, including the authority to complete construction of improvements; C. Deliver to Trustee a written declaration of Default and demand for sale, and a written Notice of Default and election to cause Trustor's interest in the Security to be sold, which notice Trustee or Beneficiary shall duly file for record in th'e Official Records of Orange County, and exercise its power of sale as provided for below; or D. Pursue any other rights and remedies allow at law or in equity. 27. FORECLOSURE BY POWER OF SALE. Should Beneficiary elect to foreclose by exercise of the power of sale contained in this Deed of Trust, Beneficiary shall notify Trustee and shall deposit with Trustee this Deed of Trust (the deposit of which shall be deemed to constitute evidence that the unpaid sums disbursed under the Note are immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require. Upon receipt of such notice from Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such Notice of Default and after Notice of Sale having been -Att ettr. fit n rnra�i i����-rrnl-9-. 3 Page 9 of 13 4\s\Shelter-3\04/12/94 given as required by law, sell the Security, at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate lots or parcels or items as Trustee shall deem expedient and in such order as it may determine unless specified otherwise by Trustor, at public auction to the highest bidder for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to the purchaser its deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters of facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee, or Beneficiary, may purchase at the sale. Trustee may postpone sale of all or any portion of the property by public announcement at such time and place of sale, and from time to time thereafter, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new Notice of Sale. After deducting all reasonable costs, fees and expenses of Trustee, including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale as follows: (i) first, to the payment of all sums then secured by this Deed of Trust, in such order and amounts as Beneficiary in its sole discretion determines, and (ii) the remainder, if any, to the person or persons legally entitled thereto. 28. REMEDIES CUMULATIVE. No right, power or remedy conferred upon or reserved to Beneficiary by this Deed of Trust is intended to be exclusive of any other rights, powers or remedies, but each such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity. GENERAL PROVISIONS 29. GOVERNING LAW. This Deed of Trust shall be interpreted under and governed by the laws of the State of California, except for those provisions relating to choice of law and those provisions preempted by federal law. 30. ATTORNEYS' FEES AND COSTS. In the event of any Event of Default, or any legal or administrative action is commenced to interpret or to enforce the terms of this Deed of Trust, the prevailing party in such action shall be entitled to recover all reasonable attorneys' fees and costs in such action. Any such amounts paid by.Beneficiary shall be added to the indebtedness secured by the lien of this Deed of Trust. Page 10 of 13 4\s\Shelter-3\04/12/94 31 . CONSENTS AND APPROVALS. Any consent or approval of the City required under this Regulatory Agreement shall not be unreasonably withheld. Any approval must be in writing and executed by an authorized representative of the City. 32. TIME. Time is of the essence in this Deed of Trust. 33. NOTICES, DEMANDS AND COMMUNICATIONS. Formal notices, demands and communications between Trustor and Beneficiary shall be sufficiently given and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, to the principal offices of Trustor and Beneficiary as follows: BENEFICIARY: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Office of City Administrator TRUSTOR: Shelter for the Homeless 8291 Westminster Blvd.., #170 Westminster, CA 92683 34. BINDING UPON SUCCESSORS. All provisions of this Deed of Trust shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors-in-interest, transferees, and assigns of Trustor, Trustee, and Beneficiary. 35. WAIVER. Anywaiver byBeneficiaryof any obligation of Trustor in 9 this Deed of Trust must be in writing. No waiver will be implied from any delay or failure by Beneficiary to. take action on any breach or default of Trustor or to pursue any remedy allowed under the Deed of Trust or applicable law. Any extension of time granted to Trustor to perform any obligation under this Deed of Trust shall not, operate as a waiver or release Trustor from any of its obligations under this Deed of Trust. Consent by Beneficiary to any act or omission by Trustor shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for Beneficiary's written consent to future waivers. 36. AMENDMENTS AND MODIFICATIONS. Any amendments or modifications to this Deed of Trust must be in writing, and shall be made only if mutually agreed upon by Beneficiary and Trustor. Ctathment Ne:-3--- Page 11 of 13 4\s\Shelter-3\04/12/94 • 37. LOAN AGREEMENT CONTROLS. If there is any contradiction between this instrument and the Loan Agreement, the terms of the Loan Agreement shall control. 38. DEFINITIONS. Capitalized terms not otherwise defined in this Deed of Trust shall have the same meaning as defined terms in the Loan Agreement. 39. PROOFS OF CLAIM. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, recomposition or other proceedings affecting Trustor, its creditors or its property, Trustee, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of Beneficiary allowed in such proceedings and for any additional amount which may become due and payable by Trustor hereunder after such date. 40. SEVERABILITY. Every provision of this Deed of Trust is intended to be severable. If any term or provision of this Deed of Trust is declared to be illegal, invalid, or unenforceable by a court of competent jurisdiction, the legality, validity, and enforceability of the remaining provisions shall not be affected. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or partially secured portion of the debt and all payments made on the debt (whether voluntary or under foreclosure or other enforcement action or procedure) shall be considered to have been first paid or applied to the payment of that portion of the debt which is not secured or partially secured by the lien of this Deed of Trust. 41 . SUBSTITUTION OF TRUSTEES. Beneficiary may from time to time appoint another trustee to act in the place and stead of Trustee or any successor. Upon such appointment and without conveyance, the successor trustee shall be vested with all title, powers, and duties conferred upon Trustee. Each such appointment and substitution shall be made by a written instrument executed by Beneficiary containing reference to this Deed of Trust and its place of record, which when duly recorded in the Orange County Office of the Recorder shall be conclusive proof of proper appointment of the successor trustee. 42. ACCEPTANCE BY TRUSTEE. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law, the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. Att chYnerrt-Ne-3i •Page 12 of 13 4\s\Shelter-3\04/12/94 • • IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first above written. TRUSTOR: Shelter for the Homeless a California nonprofit public be efit corporation By: 2/ Its. T k.�c By: • Its: THIS DOCUMENT MUST BE NOTARIZED FOR RECORDING BORROWER'S SIGNATURE MUST BE ACKNOWLEDGED o. 3 Page 13 of 13 4\s\S heiter-3\04/12/94 Commonwealth K Land Title Company T Reliance pis' A Reliance Group Holdings Company STATE OF CALIFORNIA COUNTY OF° ) ss On - _ 94 before, me, the undersigned, a Notary Public in and for said County and State, personally appeared . person-ally known to me-(or proved to me on the basis of satisfactory evidence) to be the person(s) whose names) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(S) acted, executed the instrument. WITNESS my hand and official seal. °CROW.SEAL CYNTHIA BLACKWELL 9 1 ;P " POT,wr rug lc cKuarM ORANGE COUNTY NOTARY PUBLIC My Comm.Winn Jan.30,1935 °RACIAL SEAL / CYNTHIA BLACKWELL j .! Nown PIBUC-wawa STATE OF CALIFORNIA 1 ry� !' IV RANGE COUNTY My Comm.O Expires An.30,1995 COUNTY OF ) ss On before me, the undersigned, a Notary Public in and for said County and State, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. NOTARY PUBLIC THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED BELOW: Title or Type of Document: Date of Document: Other Signer(s) than Named Above: Exhibit "A" to Deed of Trust Legal Description Lot 32 of Tract 4301 in the County of Orange, State of California, as per map recorded in Book 117, Page(s) 11 and 12 of Miscellaneous Maps, in the office of the County Recorder of said County. • Exhibit "A" to Deed of Trust • Page 1 of 1 4\s\Shelter-3 Exh A\04/12/94 • , I le ssii � 11 • g j C 4-2 i s" ¢`a ry^''r' il Recorded in T+101-1 cia1 Records NO FEE DOCUMENT ui Orange i.Uiiiits`, C-°:f =- il,o ilia Lee A. Branch, County PP.-order Recording requested by and P.aee ! of 17 Fees: t 0.00 When recorded, mail to: Tax: $ 0.00 City of Huntington Beach ' 2000 Main Street Huntington Beach, CA 92648 Attn: Office of C,,`F7 /erk • REGULATORY AGREEMENT BY AND BETWEEN THE CITY OF HUNTINGTON 0 BEACH AND SHELTER FOR THE HOMELESS CONCERNING THE ACQUISITION AND REHABILITATION OF AFFORDABLE HOUSING ON BARTON DRIVE WITH • FUNDS OBTAINED FROM THE HOME INVESTMENT PARTNERSHIP PROGRAM This Regulatory Agreement is made this J'f "day, of IQ(►(i 1994, by and between the City of Huntington Beach, a municipal corporation (the "City"), and Shelter for the Homeless, a California public benefit corporation ("Shelter"). RECITALS WHEREAS, Shelter intends to purchase a four-unit building on Barton Drive in the City of Huntington Beach; and Shelter desires that all of the Project's units be rented at prices affordable to low income households; and The City has received Home Investment Partnership Program funds ("HOME Funds") from the United States Department of Housing and Urban Development Page 1 of 9 4\s\Shelter-4\Reg.Agmt\04/12/94 ("HUD") pursuant to the Cranston-Gonzales National Housing Act of 1990 for the purpose of expanding the supply of decent, safe, sanitary and affordable housing for very-low and low-income persons and families; and Shelter has received a loan from the City from the City's HOME Funds to support the acquisition and rehabilitation of the Project, and the funds have been made available in order to help achieve financial feasibility for the Project and maximize the affordability of Project units; and As further consideration for this funding and to further the interests of the City, City and Shelter have agreed to enter into and record this Regulatory Agreement. The purpose of this Regulatory Agreement is to regulate and restrict the occupancy, rents, operation, ownership, and management of the Project. The covenants in this Regulatory Agreement are intended to run with the land and be binding on Shelter and its successors, NOW THEREFORE, IN CONSIDERATION of the mutual agreements, obligations, and representations, and in further consideration for the aforementioned funding, Shelter and City hereby agree as follows: ARTICLE 1 . DEFINITIONS The following terms have the meanings and content set forth in this section wherever used in this Regulatory Agreement or attached exhibits. 1 .1 "AREA MEDIAN INCOME" means the median income for the Orange County Primary Metropolitan Statistical Area (PMSA), with adjustments for household size, as determined from time to time by the U.S. Department of Housing and Urban Development (HUD) pursuant to the United States Housing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with said Act. 1 .2 "CITY" means the City of Huntington Beach, a municipal corporation, and its officers, officials, directors, employees, agents and authorized representatives. 1 .3 "DEED OF TRUST" means the deed of trust, placed on the Property as security for the Loan with Shelter as trustor and the City as beneficiary, as well as any amendments to, modifications,of, and restatements of said deed of trust. Page 2 of 9 4\s\Shelter-4\Reg. Agmt\04/1 3/94 1 .4 "HOME" means Home Investment Partnership Program created by the National Affordable Housing Act of 1990. 1 .5 "LOAN" means any loan of funds provided by the City to Shelter for the Project. 1 .6 "LOAN DOCUMENTS" means collectively the Deed of Trust, Note, and this Regulatory Agreement as they may be amended, modified, or restated from time to time, along with all exhibits and attachments to these documents. 1 .7 "NOTE" means the promissory note executed by Shelter in favor of the City evidencing the Loan, which is secured by the deed of trust, as well as any amendments to, modifications of, or restatements of said promissory note. 1 .8 "PROJECT" means the four (4) units of rental housing on the Property to. be owned and operated by Shelter for Very Low-Income Households. 1 .9 "PROPERTY" means the real property described in the attached Exhibit A, which is hereby incorporated into this Regulatory Agreement by this reference. 1 .10 "VERY LOW-INCOME HOUSEHOLD" means a household whose annual income does not exceed fifty percent (50%) of the median income for the Orange County PMSA as determined by HUD with adjustments for smaller and larger households, and as defined in California Health & Safety Code Section 50105 or its successor. The cross-referencing of this Section allows the Redevelopment Agency of the City of Huntington Beach to count the four units described in Section 1 .8 of this Agreement as replacement housing units for purposes of satisfying the Agency's replacement housing obligation. 2.1 "UNIT" means a housing unit in the Project. Page 3 of 9 4\s\Shelter-4\Reg.Agmt\04/12/94 ARTICLE 2. SHELTER'S OBLIGATIONS 2.1 COMPLIANCE WITH LOAN DOCUMENTS. Shelter's actions with respect to the Property and the use of Loan funds shall at all times be in full conformity with all of the requirements of the Loan Documents. 2.2 TERM OF AGREEMENT. This Regulatory Agreement shall commence upon execution and shall remain in full force and effect for thirty (30) years. • 2.3 COMPLIANCE WITH PROGRAM REQUIREMENTS. Shelter shall comply with all requirements imposed on projects assisted under the HOME Program as contained in 42 U.S.C. Sections 12701, et seq., 24 C.F.R. Part 92, and other implementing rules and regulations. ARTICLE 3. PROJECT OCCUPANCY AND RENTS 3.1 OCCUPANCY OF PROJECT. Shelter shall limit for the full term of this Regulatory Agreement the rental of all four (4) Units to Very Low-Income Households at no more than the maximum rental charges set forth in this Regulatory Agreement. The four (4) Units restricted by this Regulatory Agreement shall consist of four (4) two-bedroom units. The income levels and other qualifications of Very Low-Income Household applicants for Units shall be certified prior to initial occupancy and recertified yearly by Shelter. In the event that recertification of a Very Low-Income Household's income indicates that the income exceeds the maximum income designated for a Very Low-Income Household, Shelter shall adjust the household's rent to equal the lesser of (a) thirty percent (30%) of the household's gross income or (b) the fair market rental of the unit. In addition, Shelter shall rent the next available Project unit to a Very Low-Income Household. 3.2 MAXIMUM RENTAL CHARGES. The total charges for rent, utilities, and related services to Very Low Income Household shall not exceed thirty percent (30%) of fifty percent (50%) of Area Median Income adjusted for family size. Fifty percent (50%) of Area Median Income for a three (3) person family shall be assumed for a two (2) bedroom unit and fifty percent (50%) of Area Median Income for a five (5) person family for a three-bedroom unit. Initial rents for each Unit shall be approved by the City at the time of initial occupancy of the Project. Annual rent increases shall be based on the change in permissible rents published annually by HUD. Shelter may annually make any rent adjustment pursuant to the Page4of9 4\s\Shelter-4\Reg. Agmt\04/1 3/94 terms of this Regulatory Agreement. At least 60 calendar days prior to increasing rents on any Unit restricted by this Regulatory Agreement, Shelter shall submit to the City for review and approval a written request for such increase. Households occupying Units restricted by this Regulatory Agreement shall be given at least 30 days written notice prior to any rent increase. 3.3 CONDOMINIUM CONVERSION. Shelter shall not convert Project units to condominium or cooperative ownership or sell condominium or cooperative conversion rights to the Property during the term of this Regulatory Agreement. 3.4 NONDISCRIMINATION. Shelter shall not discriminate or segregate in the use, enjoyment, occupancy, conveyance, lease, sublease, or rental of Project units on the basis of race, color, ancestry, national origin, religion, sex, sexual reference age, marital status, familystatus, source of income, physical or mental preference, 9 � PY disability, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related conditions (ARC), or any other arbitrary basis. Shelter shall include a statement in all advertisements, notices and signs for the availability of Project units for rent to the effect that Shelter is an Equal Housing Opportunity Provider. ARTICLE 4. PROPERTY MANAGEMENT 4.1 MANAGEMENT RESPONSIBILITIES. Shelter is responsible for all management functions with respect to the Project, including without limitation the selection of tenants, certification and recertification of household size and income, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. The City shall have no responsibility over management of the Project. 4.2 INSPECTION AND RECORDS. Shelter shall maintain records which clearly document Shelter's performance of its obligations to operate the Property under the terms of this Regulatory Agreement. Shelter shall submit any records to the City within ten (10) business days of the City's request. Shelter shall permit the City to enter and inspect the Project for compliance with obligations under this Regulatory Agreement upon 24 hours advance notice of such visit by the City to Shelter and to tenants of any inspected Project units. 4.3 FEES, TAXES, AND OTHER LEVIES. Shelter shall be responsible for the payment of all fees, assessments, taxes, charges and levies imposed by any public authority or utility company with respect to the Property, and shall pay such Page 5 of 9 4\s\Shelter-4\Reg. Agmt\04/1 2/94 charges prior to delinquency. However, Shelter shall not be required to pay and discharge any such charge so long as (a) the legality thereof is being contested diligently and in good faith and by appropriate proceedings, and (b) if requested by City, Shelter deposits with City any funds or other forms of assurance City in good faith from time to time determines appropriate to protect City from the consequences of the contest being unsuccessful. 4.4 INSURANCE. Shelter shall maintain insurance in full force and effect during the term of this Agreement in an amount at least equal to the replacement cost of the Project. 4.5 COMPLIANCE WITH HOME PROGRAM REQUIREMENTS. Shelter shall comply with all requirements imposed on projects assisted under the HOME program including 24 C.F.R. Part 92, and other implementing rules and regulations. ARTICLE 5. GENERAL PROVISIONS 5.1 SUBORDINATION. This Regulatory Agreement shall be subordinated in priority only to the lien created by the deed of trust securing the construction and permanent loans for the Project, and other liens and encumbrances otherwise approved in writing by the City in its sole and absolute discretion. 5.2 DEFAULT AND REMEDIES✓In the event of any breach of any agreement or obligation under this Regulatory Agreement by Shelter, the City shall give written notice to Shelter of such breach. Shelter shall have an opportunity to cure such breach within thirty (30) days of its receipt of such written notice or such longer period of time if Shelter is diligently undertaking to cure such breach. If Shelter fails to perform a timely cure of the specified breach, the City may proceed with any or all of the following remedies upon Shelter's failure to cure: A. Bring an action in equitable relief seeking the specific performance by Shelter of the terms and conditions of this Regulatory Agreement, and/or enjoining, abating, or preventing any violation of said terms and conditions, and/or seeking declaratory relief; B. After notice provided for herein, make such repairs or replacements to the Property and Project as are necessary and provide for payment thereof; or Page 6 of 9 4\s\Shelter-4\Reg. Agmt\04/12/94 C. Pursue any other remedy allowed at law or in equity. 5.3 NON-LIABILITY OF OFFICIALS, EMPLOYEES AND AGENTS. The City shall not be personally liable to Shelter for any obligation created under the terms of this Regulatory Agreement except in the case of fraud or willful misconduct by such person. 5.4 GOVERNING LAW. This Regulatory Agreement shall be interpreted under and be governed by the laws of the State of California, except for those provisions relating to choice of law and those provisions preempted by federal law. 5.5 REGULATORY AGREEMENT CONTROLS. In the event that any provisions of this Regulatory Agreement and any Loan Document conflict, the terms of the Regulatory Agreement shall control. 5.6 ATTORNEYS' FEES AND COSTS. In the event that any legal or administrative action is commenced to interpret or to enforce the terms of this Regulatory Agreement, the prevailing party in any such action shall be entitled to recover all reasonable attorneys' fees and costs incurred in such action. 5.7 TIME. Time is of the essence in this Regulatory Agreement. 5.8 CONSENTS AND APPROVALS. Any consent or approval of the City required under this Regulatory Agreement shall not be unreasonably withheld. Any approval must be in writing and executed by an authorized representative of the City. 5.9 NOTICES, DEMANDS AND COMMUNICATIONS. Formal notices, demands and communications between Shelter and the City shall be sufficiently given and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, to the principal offices of Shelter and the City as follows: Page 7 of 9 4\s\Shelter-4\Reg.Agmt\04/13/94 City: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Office of City Administrator Shelter: Shelter for the Homeless 8291 Westminster Blvd., #170 Westminster, CA 92603 Attention: Executive Director 5.10 BINDING UPON SUCCESSORS. All provisions of this Regulatory Agreement shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors-in-interest, transferee, and assigns of Shelter and the City, and shall run with the land for the full term of this Regulatory Agreement, regardless of any assignment, payment, prepayment, expiration, extinguishment of any Loan or Note, any reconveyance of any Deed of Trust, or any conveyance or transfer of the Property. 5.11 RELATIONSHIP OF PARTIES. The relationship of Shelter, and the City for this Project during the term of this Regulatory Agreement shall not be construed as a joint venture, equity venture, or partnership. Except as the City may specify in writing, Shelter shall have no authority to act as an agent of the City or to bind the City to any obligation. 5.12 WAIVER. Any waiver by the City of any obligation in this Regulatory Agreement must be in writing. No waiver will be implied from any delay or failure by the City to take action on any breach or default of Shelter to pursue any remedy allowed under this Regulatory Agreement or applicable law. Any extension of time granted to Shelter to perform any obligation under this Regulatory Agreement shall not operate as a waiver or release from any of its obligations under this Regulatory Agreement. Consent by the City to any act or omission by Shelter shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for the City's written consent to future waivers. 5.13 AMENDMENTS AND MODIFICATIONS. Any amendments or modifications to this Regulatory Agreement must be in writing, and shall be made only if executed by both Shelter and the City. Page 8 of 9 4\s\Shelter-4\Reg.Agmt\04/13/94 5.14 SEVERABILITY. Every provision of this Regulatory Agreement is intended to be severable. If any provision of this Agreement shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired. IN WITNESS WHEREOF, the parties hereto have executed this Regulatory Agreement by and through their authorized officers as of the date first above written. SHELTER: CITY: Shelter for the Homeless, City of Huntington Beach, a California Non Profit Public a California municipal corporation Benefit Corporation • By Mayor , ,. •-rip/Rr"C. jt_ By: ATT‘Env•dc. ST: Its: .?'1•4;d4'12 City Clerk INITIATED AND APPROVED APPROVED AS TO FORM: PI Director of Special Projects 0 ) fc' City Attorney REVIEWED AND1 APPROVED: y ‘5"—g14 Director of Special Projects$v1'4 Attachment No. 4 Page 9 of 9 4\s\Shelter-4\Reg. Agmt\04/12/94 CALIFORNIA ALL-PURPOSc ACKNOWLEDGMENT No.5907 .l.1.slf�l./ll.IllJlJlllll././fll./ll.//1lJ1ll✓IlllllJZ../lllll�lllllll1�11 1, `1 State of t\ o County of 0 o On 8/" 7 9Yf before me, elizQ6tt!-, 4-Ae •y l A�~y 4.6/ic DATE NAME,TITLE OF OFFICER-E.G., E DOE,NOTARY PUBLIC' tl o personally appeared .2,,, /*i//e,r , NAME(S)OF SIGNER(S) IX personally known to me - OR - proved to me on the basis of satisfactory evidence 11 to be the person(.s.) whose name(.-) is/ae subscribed to the within instrument and ac- knowledged to me that hem executed the same in hisr authorized capacity ), and that by his,Lkhe.r th- it signature(&) on the instrument the person(&•), or the entity upon behalf of which the person(.&) acted, executed the instrument. WITNESS my hand and official seal. o ":�.: ' ELIZABETH ERRING z 3' -,' . COMM.# 1003397 /--, lo �l _� -,, Notary Public—California D ll ORANGE COUNTY SIGNATURE OF N ARY (111111 1...;. ........43...4,y Comm.Expires AUG 29,1997 i l 1 OPTIONAL l` Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent t� fraudulent reattachment of this form. 1 0 CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT INDIVIDUAL �iir�c/ �/� `� X, CORPORATE` OFFICER ,f,eialor)e- y �if /9 e€C� t�1f�XCC-_ //�/G / _ hlre. 74sr 7'At hiorsle�/eiS,1` \ Y7' b,rec�z,.r TITLE OR TYPE OF DOCUMENT t\ TITLE(81• t PARTNER(S) L J LIMITED /� `l I I GENERAL ` I I ATTORNEY-IN-FACT NUMBER OF PAGES 111 1 I I TRUSTEE(S) lull} I GUARDIAN/CONSERVATOR ll OTHER: lyba/9fl `1 DA<<.ITTE`OF DOCUMENTf till 4,-7,1d o,4S sr Q�,k/I►ov ,+e 1 SIGNER IS REPRESENTING: CS' 0Q1 ll NAME OF PERSON(S)OR ENTITY(IES) lti SIGNER(S) OTHER THAN NAMED ABOVE 0 CA ti4►Ap fib Arbkc , ,n`/it Coy'-- �JlllJ1.11./.�t./l./llll�llll�lll�lJllJl1111111./l./1.111�Ill./lll./ll./�"llltlJll..�� ©1993 NATIONAL NOTARY ASSOCIATION•8236 Remmet Ave.,P.O.Box 7184•Canoga Park,CA 91309-7184 CALIFORNIA ALL-PURPOSe ACKNOWLEDGMENT No.5907 lr./�lull7.,•/l.I.o"llll.//1."l�llllJY/111r1Jltllllll. .l./l��1ll�ll./llJ1 C.C. /./l7..":" `1 tl State of ( 0 County of 0 On O)C en., 1? 14941 before me, • `� DATB NAME,TITLE OF FICER-EG.."JAN DOE,NOTARY BLIC" 0 •personally appeared - � NAME(S)OF SIGNER(S) l k. ICI personally known to me - �l O to be the person(s) whose name(s) is/are 8 subscribed to the within instrument and ac- k O knowledged to me that he/she/they executed the same in his/her/their authorized � ,� y �, capacity(ies), and that by his/her/their 0 ?ti.F comm.s 991a35 �,: Notary _cdlromo I signature(s) on the instrument the person(s), $ ° � . � � � oaAt�couwtY or the entity upon behalf of which the 1 0 .� My comet.bpir«MAY 11.1997 1 person(s) acted, executed the instrument. 0 O WITNESS my hand and official seal. 0 0 O 79 °.?' ' 0 l 7/46{....e2 SIGNA E OF NOTARY 0 0 OPTIONAL llo ` Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent ll1' 1 fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT o it INDIVIDUAL 0 1 CORPORATE OFFICER C/�� 0TITLE OR PE F DOCUMENT ` TITLE(S) 0 l Li PARTNER(S) LIMITED p ; GENERAL 9 01 �0 ATTORNEY-IN-FACT NUMBER OF PAGES 0 6 _. TRUSTEE(S) 1 `0` GUARDIAN/CONSERVATOR 0 0 I I OTHER: /O h 1/9C/ 0 11111111 /DATE OF DOCUMENT 0 SIGNER IS REPRESENTING: Q _ 1446ealltie. lS 1 NAME OF PERSON(S)OR ENTITYQ S) , L f 4 I'tOrt`,0of ���� SIGNER OTHER AN NAM.ti"ABOVE `11 l �11 lll�llll./lllllllltlll/1ll./llllll././l�llll.ill./l./l../,/l..�lll./111.�ll.I1.i".�l.J../lllllJ ©1993 NATIONAL NOTARY ASSOCIATION•8236 Remmet Ave.,P.O.Box 7184•Canoga Park,CA 91309-7184 Exhibit "A" to Regulatory Agreement • Legal Description 7812 Barton Drive Huntington Beach, California Lot 32 of Tract 4301 in the County of Orange, State of California, as per map recorded in Book 117, Page(s) 11 and 12 of Miscellaneous Maps, in the office of the County Recorder of said County. Exhibit "A" to Regulatory Agreement Page 1 of 1 4\s\Shelter\Reg. Agmt\04/1 2/94 • Attachment No. 5 SCOPE OF WORK The project is a 4 unit multifamily housing development located at 7812 Barton Drive, and is composed entirely of two and three bedroom apartments that are in average condition. Improvements planned include the rehabilitation of both the interior and exterior of the buildings. All rehabilitation work will conform to Housing Quality Standards and all other applicable building codes, standards, and regulations. • Attachment No. 5 Page 1 of 1 4\s\Shelter-5:Scope of Work\04/13/94 Attachment No. 6 SCHEDULE OF PERFORMANCE ' I. GENERAL PROVISIONS 1. Execution of Agreement by City. The City shall approve and execute this Within thirty(30) days after the date of Agreement and shall deliver one(1) execution and submission of five (5) copies of copy thereof to the Developer. this Agreement by the Developer. 2. Submission of Development Proposal Developer submits its Development Completed. Proposal to the Agency. 3. Preparation of NEPA Documentation Completed. II. REHABILI TATION PHASE 4. Commencement of Construction. Developer shall commence Within forty-five days after the City's construction of property rehabilitation. approval of Agreement. 5. Completion of Construction. Developer shall complete construction Subject to any permissible delays, Developer of all of the rehabilitation is to use due diligence to complete the project improvements. .within twelve(12) months after the start of the rehabilitation improvements; however,the Developer may request up to three (3) one (1) month extensions to be granted by the Director of Special Projects. Approval of such three extensions (but no other extensions) is not to be unreasonably withheld; provided that,notwithstanding the foregoing, construction shall be completed Attachment No. 6 Page 1 of 2 4\s\Shelter-6\04/13/94 no later than eighteen(18)months after the earlier of(i)the commencement of the rehabilitation improvements; or(ii)the time established in this Agreement for the commencement of construction of rehabilitation improvements. III. OPERATIONS PHASE 6. Disbursement of HOME Funds. The City shall disburse the Loan. One payment for acquisition; progress payment schedule for the rehabilitation. 7. Submission of Income Certification. Within thirty (30) days after execution of the Agreement; and annually thereafter to be submitted per HOME regulations on July 1, for the duration of the Agreement. Attachment No. 6 Page 2 of 2 4\s\Shelter-6\04/13/94 ATTACHMENT No. 7 CITY OF HUNTINGTON BEACH HOME Investment Partnership Program RENTAL PROPERTY ACQUISITION GUIDELINES HOME regulations require that a participating city adopt basic guidelines for the acquisition of existing rental property for use as HOME-funded affordable housing. The HOME program is strictly targeted for low income households,which is expressed both through household income limits and rental rate restrictions. The full text of applicable HOME regulations are provided as attachments to these guidelines and are summarized as follows: Minimum Standards 1. Costs eligible for HOME assistance are property acquisition costs,relocation costs, "hard" and "soft" costs directly related to the project. 2. The use of Federal assistance requires the developer to comply with Davis-Bacon standards. 3. At a minimum, 90% of the units must be occupied by households earning no more than 60% of the County median as adjusted for household size. Based on 1993 HUD income information, the maximum allowable income for a one person household is approximately $23,760,the two person household income is $27,120,the three person household income is $30,480 and the four person household income is $33,900. 4. At least 20%of the project units must be occupied by households earning no more than 50% of the County median as adjusted for household size. (These units can be used in satisfying the requirement that 90% of the units be income restricted.) The 1993 HUD income standards indicate that a one person household at 50% of the County median income would earn$19,800, increasing to $28,250 for a four person household. 5. 100% of the units must have rents which do not exceed 30% of 65% of the County median; however, at least 20% of the units must bear rents not greater than 30% of 50% of the County median. Rents can be lower, but in all cases, HUD regulations at 24 CFR 92.216 must be strictly adhered to. 6. The duration of the affordability covenants varies depending on the level of assistance provided to the project. For example, if the assistance is in excess of$40,000 per unit,the minimum affordability period is fifteen(15)years. More favorable terms will be granted for longer affordability periods (i.e., 30+years). Attachment 7 Page 1 of 7 4\s\Shelter-7\04/13/94 7. A project may contain multiple sites. In order to be considered as a single "project," the sites must be under common ownership and management, and must be located within a four block area. 8. Monitoring of a project for compliance with HOME regulations is mandatory and is governed by HOME regulations at 24 CFR 92.504(e). SUBMISSION REQUIREMENTS The City intends to review developer submissions in two stages. The first level of evaluation is a review of the developer qualifications and the conceptual scope of the proposed project. The second component of the evaluation is an analysis of the proposed project's deal points. Developers selected at the conclusion of this two stage process will be awarded Exclusive Rights to Negotiate related to the identified project site. It is the City's intent to analyze each of the components separately, in a sequential manner. Initially, it will only be necessary for responding developers to submit the information requested in Attachment 1 (5 copies). If the City evaluation indicates that the developer meets or exceeds the defined criteria,the proposal will then be processed further with additional analysis and negotiation. Proposals should be submitted to: HOME Program Coordinator City of Huntington Beach Special Projects Division 2000 Main Street, 4th Floor Huntington Beach, CA 92648 The City of Huntington Beach reserves the right to reject any and all proposals at its sole discretion. In the event that the City chooses a particular proposal for approval by the City Council,the City reserves the right to further negotiate the terms of the proposal, and may, at its discretion, require a good faith deposit as a means of defraying the City's costs during the deposition process. Attachment 7 Page 2 of 7 4\s\Shelter-7\04/13/94 DEVELOPER QUALIFICATIONS SUBMISSION REQUIREMENTS In reviewing the developer qualifications, the City will consider the responses to the following questions: 1. Provide a narrative description of the proposed project. This should include an identification of the proposed site, the .ownership of the site, and a conceptual acquisition and/or rehabilitation plan. 2. Describe the developer's three most relevant projects. Provide photographs and a brief description of these projects, including date, location, size, rehabilitation costs, specific role of the developer, etc. Also include a local government reference (name, title and telephone number) for each project cited above. 3. Describe the type of legal entity with whom the City would contract. Identify the person in charge of negotiations, and key personnel who will be involved in decision making. 4. Identify the members of the project team, including key consultants such as legal counsel, architects, etc. Specify the relevant experience of the team members and key consultants. 5. Describe the developer's previous experience in the on-going management, operation and ownership of affordable housing projects. 6. Identify the anticipated long-term ownership structure of the proposed project. 7. Present evidence that the developer has the financial capability to carry out the proposed commitments. The preferred evidence is •the two most recent audited financial statements of the developer. However, other evidence may be submitted at the developer's discretion. Also include the method of long-term financing both debt and equity, if any, for the three most relevant projects listed in "2" above. TO BE SUBMITTED CONFIDENTIALLY UNDER SEPARATE COVER. (Three copies only). Each project will be evaluated against several criteria and will be given points based on those criteria. Attachment 7 Page 3 of 7 4\s\Shelter-7\04/13/94 AFFORDABLE HOUSING PROJECT RATING SHEET Requests for financial assistance for affordable housing projects will be evaluated on the following point system: Criteria Maximum Points Project Location HUD enhancement area 10 Redevelopment project area 7 Low-mod census tract 5 City housing survey area rated "Poor" 3 Household Income Served Number of units & % of project reserved 10 for low or very low income persons Number of units and% of project reserved for 10 special needs groups (e.g. seniors) Number of units and% of project reserved for 5 large families (3+bedrooms) Attachment 7 Page 4 of 7 4\s\Shelter-7\04/13/94 Rating Sheet, cont. Developer Profile Approved Community Housing Development Organization 10 ("CHDO") Nonprofit housing developer 5 For-profit developer 5 Women or minority owned business 5 Long-Term Affordability Controls Length of Affordability* 30 10 20-30 years 7 15-20 years 5 5-15 years 3 TOTAL POSSIBLE POINTS: 100 *Dependent upon the Source of Funds Note: •Additional consideration_will be given to projects based on average unit size, cost, overall density of the project, as well s the cost of rehabilitation and other related expenses. •A minimum of 40 points is required for any project to merit further consideration. • Attachment 7 Page 5 of 7 4\s\Shelter-7\04/13/94 • Affordable Housing Project Rating Sheet Name of Project: 7812 Barton Drive Address: Criteria Points Project Location HUD enhancement area 10 Redevelopment project area 7 Low-mod census tract 5 City housing survey area rated "Poor" 3 Household Income Served Number of units & % of project reserved 10 for low or very low income persons Number of units and% of project reserved for special needs groups (e.g. seniors) Number of units and% of project reserved for 5 large families (3+bedrooms) Attachment 7 Page 6 of 7 4\s\Shelter-7\04/13/94 Rating Sheet, cont. Developer Profile Approved Community Housing Development Organization 10 ("CHDO") Nonprofit housing developer 5 For-profit developer Women or minority owned business Long-Term Affordability Controls Length of Affordability* 30+ 25 20-30 years TOTAL POINTS: 80 *Dependent upon the source of funds Note: •Additional consideration will be given to projects based on average unit size, cost, overall density of the project, as well as the cost of rehabilitation and other related expenses •A minimum of 40 points is required for any project to merit further consideration Attachment 7 Page 7 of 7 4\s\Shelter-7\04/13/94 Attachment No. 8 HOME INVESTMENT PARTNERSHIP PROGRAM MULTI-FAMILY REHABILITATION LOAN PROGRAM General Information A. Purpose B. Assistance C. Availability of Funds/Alternative CDBG Loan Program D. Goals II. Guidelines A. Property Eligibility Requirements and Improvements B. Applicant Eligibility C. Loan Conditions III. Procedures A. Intake Activities B. Inspection C. Contractor Selection D. Financial Review E. Loan Closing F. Construction Management and Disbursement of Funds G. Loan Collection Attachment No. 8 Page 1 of 21 4\sShelter-8\04/13/94 NEIGHBORHOOD ENHANCEMENT PROGRAM MULTI-FAMILY RENTAL HOUSING REHABILITATION LOANS GENERAL INFORMATION: A. Purpose To provide multi-family rental property owners with deferred payment and low interest rate loans to upgrade existing substandard apartment units. Mandated goal of the HOME Program is to improve and preserve affordable housing for low and very low income families.. B. Assistance The City of Huntington Beach offers rental owners Deferred Payment Loans to rehabilitate their properties. Deferred Payment Loans may be obtained for up to 50% of the total approved cost of rehabilitation. An average of$5,000 for S.R.O. and zero bedroom, $6,500 for one bedroom, $7,500 for two bedrooms and $8,500 for three plus bedrooms will be loaned and the property owner is expected to "match" these public funds by securing private financing for the remaining 50% of rehabilitation costs. These Deferred Payment Loans require no payments to be made,no accrual of interest, and no fees to be paid until such time as the rental property building is sold or title transferred. The DPL then becomes due and payable and a one-time 5 percent fee is assessed. The minimum average financing available is $1,000 per unit. Below Market Rate Loans may also be obtained under the HOME Rental Rehabilitation Program for the cost of rehabilitation. An average of$5,000 for S.R.O. and zero bedroom, $6,500 for one bedroom, $7,500 for two bedrooms and $8,500 for three plus bedrooms will be loaned with HOME Rehabilitation funds. The minimum average financing available is $1,000 per unit and the interest rate and terms are negotiable. The program operates on a City-wide basis; however,priority will be given to projects located in the various neighborhood enhancement areas. Affordability covenants will be required in all cases, as outlined in HOME Program regulations at 24 CFR 92.252. Attachment No. 8 Page 2 of 21 4\sShelter-8\04/13/94 C. Availability of Funds/Alternative CDBG Loan Program • When the HOME Rental Rehabilitation Grant funds are fully committed, an alternative Rental Rehabilitation Loan Program will be made available to interested property owners. The program will utilize CDBG funds for differed payment loans and matching funds at 6% interest rate. Although section 8 certificates are not involved,the City will require that 90%of the units following rehabilitation will be rented to low and very low income households. This element is binding by way of the owner certification agreement between the City and property owner. The CDBG Rental Rehabilitation Program will follow the same guidelines as outlined in the Rental Rehabilitation Loan Program. D. Goals Cooperation between public agencies and the private sector is vital to meeting the rental housing needs of lower and moderate income families in the City of Huntington Beach. One of the ways to meet these needs to provide low or no interest loans to encourage multi-family rental property owners to rehabilitate their properties and increase the supply of decent affordable housing for low and moderate income families while preserving existing housing stock and revitalizing old neighborhoods. II. GUIDELINES A. Property Eligibility Requirements and Improvements Deferred Payment Loans (DPL) and Below Market Rate Interest Loans (BMRI) are available to multi-family rental property owners of any income range on a City-wide basis; however,priority will be given to projects located in a neighborhood enhancement area. The property must meet the following criteria: 1. Be in need of repairs which meet the Building and Property Rehabilitation Standards. Existing nonconforming uses and/or code violations must be remedied as a top priority of the Rental Rehabilitation Loan. 2. At least 90% of the units are occupied by very low income families. 3. Eligible improvements include,but are not necessarily limited to,the following: a. Additions and alterations to increase the livability or usefulness of existing structures, such as rooms,porches, stairways, closets, Attachment No. 8 Page 3 of 21 4\sShelter-8\04/13/94 bathrooms, and entrances. Garages may also be considered eligible particularly in situations where off-street parking codes are not being met. b. Exterior work to help preserve or protect structures, such as painting, roofing, siding, and property enhancements, such as landscaping, sidewalks, and fences. c. Interior work to make a structure more livable, such as painting, papering,plastering,new flooring, and tile work. d. Repairs,restoration, or replacement of important parts of structures, such as heating systems,plumbing systems, septic tanks, electrical wiring and service, structural and foundation repairs, and built-in kitchen appliances in residential structures. • e. Fumigation and treatment of terminate and pest control. f. Energy saving repairs and devices (solar heating, insulation, window caulking, etc.) g. Modifications which aid the mobility of the handicapped and elderly. h. All improvements must be physically attached to the property and permanent in nature. 4. The following improvements are not eligible: Barbeque Pits Bathhouses Burglar Alarms • Burglar Protection Bars Dumbwaiters Fire Extinguishers Greenhouses (except commercial greenhouses) Hangars (airplane) Kennels Kitchen appliances not including stoves which are designed and - manufactured to be free-standing and are not built-in and permanently affixed as an integral part of the kitchen in a residential structure Outdoor Fireplaces or Hearths Penthouses Attachment No. 8 Page 4 of 21 4\sShelter-8\04/13/94 Photo Murals • Radiator Covers or Enclosures Stands Steam Cleaning of Exterior Surfaces Swimming Pools Television Antennae Tennis Courts Valance of Cornice Boards Waterproofing of a structure by pumping or injecting any substance in the earth adjacent to or beneath the basement or foundation or floors 5. After rehabilitation,projects must at least meet Section 8 Housing Quality Standards for Existing Housing (HQS). B. Applicant Eligibility BMRI loans are available only to applicants of legal age and having the capacity to competently enter into financial and contractual agreements. The borrower must own the property to be rehabilitated. The following criteria shall apply to applicant eligibility: 1. Length of Ownership - The unit must have been owned by the applicant at least one year prior to the date of application for loan. Owners may be exempted from this rule if, in the opinion of the Rehabilitation Manager and Program Manager, special benefits to the designated Neighborhood Enhancement Area will result from the loan activity. In the case of a CHDO, or other eligible nonprofit, site control is required, but the length of ownership may be less than one year. 2. All persons on title to the property must sign promissory note and deed of trust. 3. If applicant's property is on a land lease basis,the lease must be for a fixed term which expires no less than six months after the maturity date of the loan. 4. Credit history, income to debt ratio, and employment status are reviewed and verified by the bank contracted by the City. The bank advises the City and participants as to approval or rejection of applicant. 5. Owner must be able to demonstrate a 20%before -rehabilitation equity investment in the property based upon a City-ordered independent appraisal. Attachment No. 8 Page 5 of 21 4\sShelter-8\04/13/94 • 6. Owner must utilize an approved private lender, or demonstrate personal resources,to finance any remaining amount of the total approved rehabilitation costs. (Owner may participate in the City's regular CDBG Rental Rehabilitation Program to finance the remaining 50%.) C. Loan Conditions 1.. City Conditions: a. As incorporated into the Fair Lending Notice part of the application package,the City as lender must comply with the Federal Equal Credit Opportunity Act and California Housing Financial Discrimination Act of 1977. b. The City must comply with the Fair Credit Reporting Act which stipulates and guarantees the applicant's privacy and right to have all information regarding the loan transaction kept in a confidential manner. c. As included in the Lead Paint Warning part of the loan application packet,the U.S. Department of Housing and Urban Development requires that the City advise applicant of the dangers of lead base paint. 2. Participant Conditions: a. The specific terms and conditions for Rental Rehabilitation Loans (DPL and BMRI) are incorporated in the mortgage or other security instruments, as applicable, and the Promissory Note as required by the pertinent documents. b. Civil Rights The participant shall not discriminate upon the basis of sex, age, race, creed, color, class,national origin, or ancestry in the sale, lease, rental,use, occupancy, and awarding of contract of the property to be rehabilitated with the assistance of housing rehabilitation loans. Attachment No. 8 Page 6 of 21 4\sShelter-8\04/13/94 c. Use of Proceeds The participant shall agree to use the loan proceeds only to pay for costs of services and materials necessary to carry out the rehabilitation work as detailed in the Work Write-Up for which the loan will be approved. d. Inspections The participant shall permit inspections by the City of Huntington Beach of the property to be rehabilitated with the assistance of the Rental Rehabilitation Loan for compliance with the Building and Property Rehabilitation Standards of the City. The participant shall also permit all other inspections deemed necessary by the Department of Community Development/Building&Planning Division regarding the property and the rehabilitation work. e. Completion of Work The participant shall assure that the rehabilitation work shall be carried out promptly and efficiently through written contract awarded after review by the City's Housing Rehabilitation Loan Program and prior written approval by the Rehabilitation/Manager. f. Ineligible Contractors The participant shall agree not to award any contract for rehabilitation work to be paid for in whole or in part with the proceeds of the housing rehabilitation loan to any contractor who, at the time, does not meet standards of the Housing Rehabilitation Program as an eligible contractor. g. Records The participant shall keep such records as may be required with respect to the rehabilitation work performed with the assistance of a housing rehabilitation loan. Long-term monitoring requirements are mandatory as specified in 24 CFR 92.504. h. Interest of Public Body The participant shall allow no member of the governing body of the City of Huntington Beach who exercises any functions or responsibilities in connection with the administration of the Housing Rehabilitation Program to have any interest, direct or indirect, in the proceeds of the Rental Rehabilitation Loan or in any contract entered into by the participant for the performance of work financed, in whole or in part,with the proceeds of the loan. Attachment No. 8 Page 7 of 21 4\sShelter-8\04/13/94 i. Bonus, Commission, or Fee The participant shall not pay any bonus, commission, or fee for the purpose of obtaining approval of the loan application. j. Securing Bids for Construction Work A participant may: 1. Negotiate a contract with an approved contractor of his/her choice,provided that the contract amount does not exceed the market rate for the services provided as determined by the Rehabilitation Manager. 2. Select an approved contractor of their choice for competitive bidding. k. Preservation of the Security The participant shall maintain the property during the term of the housing rehabilitation loan. 1. Hazard Insurance The participant shall maintain fire and extended coverage on the property at least to the value of indebtedness and keep property taxes current during the term of the housing rehabilitation loan. m. Rent Calculations Affordable rents must be set and maintained as required by HOME Program regulations at 24 CFR Part 92.252. n. Owners must sign the owner certification form and abide by the agreement for the specified period of time. D. Loan Amount Determination • 1. The maximum amount of any Rental Rehabilitation loan is determined by application of the following criteria: a. An average loan grant per unit is $5,000 for S.R.O. and zero bedroom, $6,500 for one bedroom, $7,500 for two bedroom and $8,500 for three plus bedrooms,not to exceed any maximums set by HUD. Loan will cover cost of repair and fees appurtenant to the property rehabilitation(work performed in compliance with a work write-up and Building and Planning fees). Maximum loan amounts funded with Multi-Family Rental Rehabilitation funds Attachment No. 8 Page 8 of 21 4\sShelter-8\04/13/94 may be increased only upon review by the HOME Program Manager and/or the Rehabilitation Manager. b. An amount not to exceed the fair market value of the property at the time of application, minus the amount of the existing indebtedness on the property. 2. Terms a. Terms and repayment may be negotiable. In some cases, repayment of the loan will be deferred until the property is sold or title transferred. At such time,the entire principal amount of the loan is due and payable plus a nominal one-time only 5 percent interest assessment. b. The entire amount of the Deferred Payment Loan will be placed as a recorded lien on the property. 3. Allowable Costs a. All costs relative to the loan processing(credit reports, lot book reports,monthly collection costs, and record keeping by lending institution) are paid by the Program;however, if a participant makes application for the loan and allows a period of time to pass which results in the need for processing the applications again, participant must pay all processing costs. Said costs may be paid for out of loan proceeds once the loan is funded. b. Specific costs covered by the Rental Rehabilitation loan include repairs necessary to correct violations or soon to be violations of the Building and Property Rehabilitation Standards and work consistent with objectives of the Neighborhood Enhancement Program as noted in the Work Write-Up. c. Specific costs not covered by the Rental Rehabilitation loan include,but are not necessarily limited to,the following: 1. Materials, fixtures, or equipment of a type or quality which exceeds that customarily used in properties of the same general type as the property to be rehabilitated. 2. Free standing appliances other than stoves, unless the need is justified by medical verification. Attachment No. 8 Page 9 of 21 4\sShelter-8\04/13/94 3. Purchase, installation, or repair of home furnishings. 4. Reimbursement for owner's personal labor. 5. Reimbursement for improvements as noted in Guidelines, Section A-4 (Ineligible Improvements). d. The total cost of all general property improvements (non-code violations, or potential violations),must not exceed 50% of the total loan amount. E. Funding for the City of Huntington Beach HOME Rental Housing Rehabilitation Program has been obtained from the U. S. Department of Housing and Urban Development(HUD). The program will be operated under HUD regulations and such other requirements as determined by the City of Huntington Beach. III. PROCEDURES: This section sets forth the steps which are to be followed in the processing of a Rental Rehabilitation loan. A. Intake Activities 1. Initial Screening a. Property owner contacts program. b. Rehabilitation Manager obtains income and property information from the property owner in order to make a preliminary determination of eligibility. Information collected includes the following: • Applicant's name, address, and telephone number • Location of property • Statement of ownership • Number of units and bedrooms per unit • Number of tenants in the applicant's rental building Attachment No. 8 Page 10 of 21 4\sShelter-8\04/13/94 • Number of low income tenants in the applicant's rental building • General household income range • Monthly rental rate per unit • Basic type of home improvements desired c. Applicants not meeting basic eligibility requirements do not become part of the program's case load. 2. Documentation of Eligibility and Determination of Type of Assistance a. Rehabilitation Manager mails General Information and Application Packet to Homeowner. Name and address of applicant noted on log sheet. 1. Information packet includes: • Program Information Sheet • Income limits/interest rates • Map indicating target areas 2. Rental Rehabilitation Pre-Application 3. Application packet includes: • Cover letter listing the supplemental items required to be submitted with the application packet • Home Improvement Loan Application • Property Owner Agreement • Schedule of Property Owned • Fair Lending Notice • Lead Paint Poisoning information Attachment No. 8 Page 11 of 21 4\sShelter-8\04/13/94 L • Ethnic Classification 4. Supplemental items include: • A copy of the deed to the property • A copy of the previous year's Federal Income Tax for 1040 • Employment verification(last two check stubs) (if relevant) • Completed Social Security verification(or copy of last check) (if relevant) b. Completed application received(date indicated in activity log). c. Rehabilitation Manager or HOME Coordinator establishes file, assigns a number to the application, and determines feasibility of processing applicant. 1. If not feasible, Rehabilitation Manager or HOME Coordinator so notes disposition on Log Sheet and notifies interested person of finding in writing. Application is filed under Ineligible Projects. 2. If feasible, Rehabilitation Manager or HOME Coordinator so notes disposition on Log Sheet and notifies participant in writing. d. Rehabilitation Manager or HOME Coordinator should keep written records of every telephone call and every conversation with anyone connected with the rehabilitation project, including the date,person spoken with,the subject discussed and any result-this information should be recorded on the Activity Sheet located in each file. e. Rehabilitation Manager should keep copies of all forms in each file. The date received and any notes pertinent to the • form should be recorded on the file Checklist. Attachment No. 8 Page 12 of 21 4\sShelter-8\04/13/94 B. Initial Inspection Rehabilitation Manager 1. Sets up appointment for site inspection and work write-up. Property Owner must accompany Rehabilitation Manager during inspection. • 2. Documents existing code violations, incipient code violations, otherwise eligible items and requested home improvements on a work write-up. 3. Explains what improvements are eligible and/or ineligible and prioritizes work to be accomplished. 4. Makes a general assessment(preliminary estimate) of whether or not the differences can be corrected within the program's maximum dollar limitations. 5. Details findings and cost estimates in a Work Write-Up which includes: • Scope of work • Quantity • Quality • Location 6. Schedules a meeting with applicant to review and approve Work Write-Up, make necessary changes (within limits of Code Enforcement), and explain contractor selection procedures. a. Property Owner must approve and sign the Work Write-Up. b. Property Owner received: 1. Four copies of the Work Write-Up - one copy with cost estimates (for Property Owner Information only) and three without cost estimates (to hand out to contractors interested in bidding the job). Attachment No. 8 Page 13 of 21 4\sShelter-8\04/13/94 c. A copy of each completed form, with the appropriate information and signatures must be returned to the HOME Coordinator or the Rehabilitation Manager for placement in the case file. The owner and the contractor should also keep copies of all forms. C. Contractor Selection Responsibility for the selection of a contractor rests with the homeowner. No agreements, written or otherwise, will be binding for rehabilitation loan funding unless they are first approved by the HOME Coordinator or the Rehabilitation Manager. The owner must select a qualified licensed contractor and the bid must come within 10 percent of the in-house cost estimate. In certain instances where the work items do not require permits, and the work is not highly technical, a handyman may be selected by the property owner. Property Owner: 1. Must obtain Building and Planning Division approval if rehabilitation work involves a room addition or a significant altering of the present use of the property. a. Preliminary Site Plan or Drawing of any proposed changes to property must be submitted to both divisions. b. Preliminary plans should show existing use of the property (a sample plot plan may be included in Application Packet) as well as proposed improvements to determine whether or not Code requirements are being satisfied- it is not necessary to employ architectural or engineering services at this stage. c. Initial inspection by a representative of the Building and/or Planning Divisions to verify the proposed improvements may be necessary to receive building permit approval. d. Upon approval of the proposed improvements by the • Building and Planning Divisions, applicant proceeds to obtain estimates for the proposed work. e. All necessary building permits must be obtained prior to disbursement of any loan funds. Attachment No. 8 Page 14 of 21 4\sShelter-8\04/13/94 2. Provides Work Write-Ups (without cost estimates)to contractors interested in bidding the job. 3. Obtains at least two bids and transmits selected bid proposal to Rehabilitation Manager for review. a. Rehabilitation Manager or HOME Coordinator reviews bid proposal to determine cost reasonableness and compliance with program requirements and to verify contractor eligibility. b. Rehabilitation Manager or HOME Coordinator approves bid proposal. 4. Signs and awards contract after loan documents are executed and after satisfactory review of contract by Rehabilitation Manager., D. Financial Review 1. Rehabilitation Manager or HOME Coordinator reviews application, and determines credit worthiness,verifies income, and orders a Lot Book Report to verify title to the property. 2. Rehabilitation Manager or HOME Coordinator approves/disapproves package and notifies loan applicant of decision. 3. Upon decision of loan approval, in-house loan documents are prepared which,include: • Promissory Note • Deed of Trust(signatures to be notarized) • Notice of Right to Cancel • Escrow Control Instructions E. Loan Closing 1. Rehabilitation Manager or HOME Coordinator schedules and holds the loan closing in the HCD office. 2. Owner attends loan closing. Attachment No. 8 Page 15 of 21 4\sShelter-8\04/13/94 • 3. Rehabilitation Manager or HOME Coordinator reviews loan documents and owner responsibilities. 4. Property Owner signs loan documents -the signature on the Deed of Trust must be notarized. 5. Property Owner signs loan documents -the signature on the Deed of Trust must be notarized. 4. Property Owner signs loan documents -the signature on the Deed of Trust must be notarized. 5. Property Owner has the legal right to cancel the loan within three days. • 6. Rehabilitation Manager or HOME Coordinator forwards loan documents to City Attorney's office for approval as to form. The loan documents are then recorded and filed at the City Clerk's office. Loan collection is authorized by the Rehabilitation Manager. F. Contract Management and Disbursement of Funds Contract Management begins with negotiation of the contract between the contractor and owner and continues through the actual construction work, job inspections,payment to the owner, final close-out of the job, and often a one-year warranty period. 1. Pre-Construction Conference Rehabilitation Manager or HOME Coordinator conducts a pre- construction conference with the owner and the contractor to discuss the contract and the responsibilities of each party. a. A job walk-through with the property owner and the contractor to review the work write-up and contract document. Every item on the contract should be read and discussed to ensure that all parties understand exactly what the contract entails and to minimize the possibility of later misunderstandings. b. A review of the work, inspection and payment schedule so that all parties will be aware of the timeline and order of job progression. Attachment No. 8 Page 16 of 21 4\sShelter-8\04/13/94 c. An explanation of Change Order procedures. The Rehabilitation Manager or HOME Coordinator must make it clear that any changes required by job conditions or requested by the homeowner must be put in writing, including price, and agreed to by the homeowner and contractor before the additional work is done (Change Order). d. A review of arbitration procedures in the case of a dispute between any of the parties. • e. Property Owner and Contractor sign contract document. 2. Arbitration Procedures a. In the event of any dispute between the owner and the contractor concerning the contracted scope of work,the Rehabilitation Manager or HOME Coordinator will work with both parties to negotiate a satisfactory solution. Should resolution of the situation not be possible on an informal basis,the parties may elect to have a hearing by a professional arbitrator or contact the State of California Contractors License Board. b. Complaints concerning the rehabilitation loan program shall be in writing and addressed to the Rehabilitation Manager: The Rehabilitation Manager will contact the complainant and attempt to resolve the problem. A written response will be made within 15 working days. If complainant is not satisfied after said written response, a complaint may be filed with the Program Manager or HOME Coordinator who will schedule a meeting with the Rehabilitation Manager. A written response will be made within 5 working days. 3. Accounting Procedures a. Upon expiration of the required three-day right of borrower to cancel the loan transaction, Rehabilitation Manager prepares an in-house Material Requisition and obtains Project Manager's approval. The Material Requisition is in the same amount as the principal amount of the loan and establishes a Purchase Order with the Accounting and Attachment No. 8 Page 17 of 21 4\sShelter-8\04/13/94 Records Division of the Administrative Services Department. • b. The.Material Requisition will be submitted to the Accounting and Records Division upon Departmental approval of the first request for payment. A Request for Partial Payment will be submitted at the same time to ensure immediate payment to the home owner as the establishment of the Purchase Order takes approximately two weeks. c. The Purchase Order is in the name of the participant(s) and serves as the rehabilitation Escrow account from which payment for the Rehabilitation work is disbursed. The Request for Partial Payment and all future requests for payment will be debited against the Purchase Order. 4. Check Disbursement a. Homeowner contacts Loan Program to arrange a job site inspection and progress payment. 1. Rehabilitation Manager visits the job site and verifies that the work included for payment is complete and within the scope of eligible work as outlined in the Work Write-Up, and that all necessary inspections by the Building Division have been satisfactorily accomplished. 2. Rehabilitation Manager approves payment to the homeowner and signs off Payment Request. b. Rehabilitation Manager transmits Payment Request to Program Manager for approval. Completed form includes the amount of disbursement, • name and loan number of participant, a description of the work completed and signatures of Rehabilitation Manager or HOME Coordinator, and Program Manager. c. Program Manager transmits Payment Request(excluding attachments)to the Accounting Department who will prepare a check payable to the homeowner for the approved Attachment No. 8 Page 18 of 21 4\sShelter-8\04/13/94 amount. A copy of this request will be placed in the participant's file. d. Alternative Program Manager transmits Payment Request to City Treasurer for review and approval. Upon review and approval of the payment request, the City Treasurer will forward a request to Security Pacific National Bank to prepare a Cashiers Check payable to the homeowner for the approved amount. A copy of this request will be placed in the participant's file. e. Check Disbursement to Homeowner 1. The Rehabilitation Manager contacts the homeowner to pick up check at the HCD office. 2. Upon actual disbursement of check to participant, the homeowner signs the Receipt of Loan Amount, acknowledging receipt of the check. Said form includes loan number,participant name, warrant number, and remaining loan balance. 3. Copies of the above mentioned documents (Check and Receipt of Loan Amount)will be placed in the participant's file. 4. The Payment Schedule and the Purchase Order copy in the participant's file is debited upon disbursement of check for amount expended. f. Timeline- Generally,the check is available within five (5) working days following payment request submission to Program Manager. g. All above mentioned documents and bills are filed in participant's file. h. Funds cannot be disbursed for work which does not meet the approval or standards of the Building and Planning Divisions or Neighborhood Enhancement Program. Attachment No. 8 Page 19 of 21 4\sShelter-8\04/13/94 5. Final Inspection a. The Rehabilitation Manager or HOME Coordinator, homeowner, and contractor should make a final inspection of the project together. When the improvements are completed, the job is considered finished, except for a one- year guarantee on labor and materials which is a normal part of the contract. There may also be an inspection at the end of the one-year warranty period. b. The Rehabilitation Manager or HOME Coordinator completes a Certification of Final Inspection and transmits one copy to homeowner. 6. Close-out of the Contract a. Waiver of Liens This is a document releasing lien rights on the job,to be signed by all material suppliers and subcontractors. b. Warranties The general contractor must give a one-year guarantee on all labor and materials, and supply to the homeowner all manufacturers' warranties for equipment such as furnaces, air conditioning units, kitchen appliances and hot water heaters. Any product guarantee beyond one year, such as a 15-year guarantee on roof materials, should also be passed on. G. Loan Collection 1. a. At the time of sale or transfer of ownership the loan is due and payable plus the one-time 6 percent interest charge. b. Upon completion of demand, escrow instructions for full payment of a loan and reconveyance of the Trust Deed, a Request for Full Reconveyance is signed by the City Clerk and Rehabilitation Manager and forwarded to escrow company. c. Payment is then made by escrow company or owner for full amount of loan payable to City Treasurer. Attachment No. 8 Page 20 of 21 4\sShelter-8\04/13/94 • d. The funds collected are then deposited into City Savings Account No. 724-137-309 on deposit at Security Pacific National Bank-Huntington Beach, California, Beach and Garfield Branch. 2. City Collection -BMRI Loans a. The city is responsible for BMRI loans issued to those within a pilot program. b. An "In House" collection procedure exists with the Rehabilitation Manager forwarding executed loan documents to the City Clerk for filing. c. A copy of Promissory Note is forwarded with a Request for Establishment of Collection Account to Administrative Services -Accounting and Records - City of Huntington Beach. • Attachment No. 8 Page 21 of 21 4\sShelter-8\04/13/94 Attachment No. 9 Shelter for the Homeless Monitoring Plan 7812 Barton Drive, Huntington Beach A. Equal Opportunity and Fair Housing Shelter for the Homeless (SFTH) agrees to comply with federal regulations which state that no persons be excluded from participating in, be denied the benefits of, or be subjected to discrimination on the basis of race, color,national origin,religion, or sex under any program or activity funded in whole or in part with HOME funds. In addition, SFTH shall operate this project in accordance with the following: (1) Compliance with all the requirements under the Fair Housing Act. (2) Compliance with the prohibitions against discrimination on the basis of age under the Age Discrimination Act of 1975, and prohibitions against discrimination on the basis of handicap. (3) Compliance with the Equal Opportunity Act.: a. to the greatest extent feasible, all opportunities for training and employment arising in connection with the planning and carrying out of this project shall be given to low-income persons residing within the City of Huntington Beach. b. to the greatest extent feasible, contracts for work to be performed in connection with any such project be awarded to business concerns, including but not limited to individuals or firms doing business in the field of planning, consulting or design, architecture, building, rehab, construction,which are located in or owned by persons residing in the project areas. B. Minority and Women Outreach Shelter for the Homeless (SFTH) shall make a good faith effort to employ and/or contract with minority and women-owned businesses for all activities related to this project. This shall include contracting the City of Huntington Beach for the names of qualified minority and women-owned businesses. The City of Huntington Beach shall maintain such a list and provide said information to SFTH. Attachment No. 9 Page 1 of 2 4\s\Shelter-9\04/13/94 J M C. Service Plan Shelter for the Homeless projects an annual net operating income of$12,782.00 which will be used to provide support services to each resident tenant household as well as defray the administrative costs incurred by SFTH. This projected income represents a maximum, as SFTH may charge rental amounts less than the low HOME Rent in order to facilitate the transition from.transitional to permanent housing for very low income households. In addition to providing housing at affordable rents, SFTH will also provide support services to resident households. These services could include job training and referrals, counseling and case management,tutoring in budgeting and other life skills,house cleaning responsibilities and methods and child care.. Attachment No. 9 Page 2 of 2 4\s\Shelter-9\04/13/94 nm - nn Loan Policy of Title Insurance Fidelity National Title Insurance Company Policy Number A Stock Company 27-042-92 25 3 8 2 LOAN POLICY OF TITLE INSURANCE SUBJECT 70 THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, FIDELITY NATIONAL TITLE INSURANCE COMPANY, an Arizona cor- poration, herein called the Company, insures,as of Date of Policy shown in Schedule A, against loss or damage,not exceeding the Amount of Insurance stated in Schedule A, sustained or incurred by the insured by reason of 1. Title to the estate or interest described in Schedule A being vested other than as stated therein; 2. Any defect in or lien or encumbrance on the title; 3. Unmarketability of the title; 4. Lack of a right of access to and from the land; 5. The invalidity or unenforceability of the lien of the insured mortgage upon the title; 6 The priority of any lien or encumbrance over the lien of the insured mortgage; 7 Lack of priority of the lien of the insured mortgage over any statutory lien for services, labor or material: (a) arising from an improvement or work related to the land which is contracted for or commenced prior to Date of Policy; or (b) arising from an improvement or work related to the land which is contracted for or commenced subsequent to Date of Policy and which is financed in whole or in part by proceeds of the indebtedness secured by the insured mortgage which at Date of Policy the insured has advanced or is obligated to advance; 8 Any assessments for street improvements under construction or completed at Date of Policy, which now have gained or hereafter may gain priority over the lien of the insured mortgage; 9. The invalidity or unenforceability of any assignment of the insured mortgage, provided the assignment is shown in Schedule A, or the failure of the assignment shown in Schedule A to vest title to the insured mortgage in the named insured assignee free and clear of all liens. The Company will also pay the costs, attorneys'fees and expenses incurred in defense of the title or the lien of the insured mortgage, as insured, but only to the extent provided in the Conditions and Stipulations. IN WITNESS WHEREOF FIDELITY NATIONAL TITLE INSURANCE COMPANY has caused this policy to be signed and sealed by its duly arthorized officers as of Date of Policy shown in Schedule A. Fidelity National Title Insurance Company 10 LE Iry /I�� / ZAP? ?�Op POggl�� By: / SEAL s President Attest: tit 11 M 41. sood7 .44.°11",47„.e.„ Countersigne . Secretary _Authorized Signature ALTA LOAN POLICY (10-17-92) California - With ALTA Endorsement Form I coverage FNTIC Form No. 27-042-92 (1-4-93) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage,costs,attorneys' fees or expenses which arise by reason of: 1. (a) Any law,ordinance or governmental regulation(including but not limited to building and zoning laws,ordinances,or regulations)restricting,regulating,prohibiting or relating to(i)the occupancy,use,or enjoyment of the land;(ii)the character,dimensions or location of any improvement now or hereafter erected on the land; (iii)a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part;or(iv)environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations,except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by(a)above,except to the extent that a notice of the exercise thereof or a notice of a defect,lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy,but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects,liens,encumbrances, adverse claims or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company,not recorded in the public records at Date of Policy,but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy(except to the extent that this policy insures the priority of the lien of the insured mortgage over any statutory lien for services,labor or material); or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy,or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable doing business laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage,or claim thereof,which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any statutory lien for services,labor or materials(or the claim of priority of any statutory lien for services,labor or materials over the lien of the insured mortgage) arising from an improvement or work related to the land which is contracted for and commenced subsequent to Date of Policy and is not financed in whole or in part by proceeds of the indebtedness secured by the insured mortgage which at Date of Policy the insured has advanced or is obligated to advance. 7. Any claim which arises out of the transaction creating the interest of the mortgagee insured by this policy,by reason of the operation of federal bankruptcy,state insolvency, or similar creditors'rights laws,that is based on: (i) the transaction creating the interest of the insured mortgagee being deemed a fraudulent conveyance or fraudulent transfer;or (ii) the subordination of the interest of the insured mortgagee as a result of the application,of the doctrine of equitable subordination;or (iii)the transaction creating the interest of the insured mortgagee being deemed a preferential transfer except where the preferential transfer results from the failure: (a)to timely record the instrument of transfer;or (b)of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. CONDITIONS AND STIPULATIONS 1. DEFINITION OF TERMS foreclosure, or other legal manner which discharges the lien of the insured mort- The following terms when used in this policy mean: gage;(ii)a transferee of the estate or interest so acquired from an insured corpora- (a)"insured": the insured named in Schedule A.The term"insured"also includes tion,provided the transferee is the parent or wholly-owned subsidiary of the insured (i) the owner of the indebtedness secured by the insured mortgage and each corporation, and their corporate successors by operation of law and not by pur- successor in ownership of the indebtedness except a successor who is an obligor chase,subject to any rights or defenses the Company may have against any predecessor under the provisions of Section 12(c)of these Conditions and Stipulations(reserv- insureds;and(iii)any governmental agency or governmental instrumentality which ing,however, all rights and defenses as to any successor that the Company would acquires all or any part of the estate or interest pursuant to a contract of insurance have had against any predecessor insured, unless the successor acquired the in- or guaranty insuring or guaranteeing the indebtedness secured by the insured mortgage. debtedness as a purchaser for value without knowledge of the asserted defect,lien, (b) After Conveyance of Title. The coverage of this policy shall continue in encumbrance,adverse claim or other matter insured against by this policy as affec- force as of Date of Policy in favor of an insured only so long as the insured retains ting title to the estate or interest in the land); an estate or interest in the land, or holds an indebtedness secured by a purchase (ii)any governmental agency or governmental instrumentality which is an in- money mortgage given by a purchaser from the insured, or only so long as the surer or guarantor under an insurance contract or guaranty insuring or guaranteeing insured shall have liability by reason of covenants of warranty made by the insured the indebtedness secured by the insured mortgage,or any part thereof,whether named in any transfer or conveyance of the estate or interest.This policy shall not continue as an insured herein or not; in force in favor of any purchaser from the insured of either(i)an estate or interest (iii)the parties designated in Section 2(a)of these Conditions and Stipulations. in the land, or(ii) an indebtedness secured by a purchase money mortgage given (b) "insured claimant": an insured claiming loss or damage. to the insured. (c) "knowledge"or"known": actual knowledge, not constructive knowledge (c)Amount of Insurance.The amount of insurance after the acquisition or after or notice which may be imputed to an insured by reason of the public records as the conveyance shall in neither event exceed the least of: defined in this policy or any other records which impart constructive notice of mat- (i) the Amount of Insurance stated in Schedule A; ters affecting the land. (ii)the amount of the principal of the indebtedness secured by the insured mort- (d)"land": the land described or referred to in Schedule A,and improvements gage as of Date of Policy, interest thereon, expenses of foreclosure, amounts ad- affixed thereto which by law constitute real property. The term "land" does not vanced pursuant to the insured mortgage to assure compliance with laws or to pro- include any property beyond the lines of the area described or referred to in Schedule tect the lien of the insured mortgage prior to the time of acquisition of the estate A,nor any right,title,interest,estate or easement in abutting streets,roads,avenues, or interest in the land and secured thereby and reasonable amounts expended to alleys,lanes,ways or waterways,but nothing herein shall modify or limit the extent prevent deterioration of improvements,but reduced by the amount of all payments to which a right of access to and from the land is insured by this policy. made; or (e)"mortgage": mortgage,deed of trust,trust deed,or other security instrument. (iii)the amount paid by any governmental agency or governmental instrumen- (f)"public records": records established under state statutes at Date of Policy tality, if the agency or instrumentality is the insured claimant, in the acquisition for the purpose of imparting constructive notice of matters relating to real property of the estate or interest in satisfaction of its insurance contract or guaranty. to purchasers for value and without knowledge. With respect to Section 1(a)(iv) 3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT of the Exclusions From Coverage,"public records"shall also include environmen- The insured shall notify the Company promptly in writing(i)in case of any litiga- tal protection liens filed in the records of the clerk of the United States district court tion as set forth in Section 4(a)below, (ii)in case knowledge shall come to an in- for the district in which the land is located. sured hereunder of any claim of title or interest which is adverse to the title to the (g) "unmarketability of the title": an alleged or apparent matter affecting the estate or interest or the lien of the insured mortgage, as insured,and which might title to the land, not excluded or excepted from coverage, which would entitle a cause loss or damage for which the Company may be liable by virtue of this policy, purchaser of the estate or interest described in Schedule A or the insured mortgage or(iii)if title to the estate or interest or the lien of the insured mortgage,as insured, to be released from the obligation to purchase by virtue of a contractual condition is rejected as unmarketable. If prompt notice shall not'be given to the Company, requiring the delivery of marketable title. then as to the insured all liability of the Company shall terminate with regard to 2. CONTINUATION OF INSURANCE the matter or matters for which prompt notice is required;provided,however,that (a)After Acquisition of Title.The coverage of this policy shall continue in force failure to notify the Company shall in no case prejudice the rights of any insured as of Date of Policy in favor of(i)an insured who acquires all or a,ny part of the under this policy unless the Company shall be prejudiced by the failure and then estate or interest in the land by foreclosure, trustee's sale, conveyance in lieu of only to the extent of the prejudice. • CONDITI' 4D STIPULATIONS-(Continued and Concluded on Last Page of tl r) FILE NO: 94-81771-DT SCHEDULE A Date of Policy POLICY NO. 27-042-92-253826 August 22, 1994 at 3 : 59 P.M. AMOUNT: $320, 000 . 00 FEE : $411 . 68 1 . NAME OF INSURED: CITY OF HUNTINGTON BEACH, A MUNICIPAL CORPORATION 2 . THE ESTATE OR INTEREST IN THE LAND WHICH IS ENCUMBERED BY THE INSURED MORTGAGE IS : A FEE 3 . TITLE TO THE ESTATE OR INTEREST IN THE LAND IS VESTED IN: SHELTER FOR THE HOMELESS DBA AMERICAN LODGING 4 . THE INSURED MORTGAGE AND ASSIGNMENTS THEREOF, IF ANY, ARE DESCRIBED AS FOLLOWS : A Deed of Trust showing an original indebtedness of $320, 000 . 00, and any other amounts as therein provided, recorded August 22, 1994 as Instrument No. 94-0514672 of Official Records . Dated: August 3 , 1994 Trustor: Shelter for the Homeless, a California nonprofit public benefit corporation Trustee : Fidelity National Title Beneficiary: City of Huntington Beach, a municipal corporation 5 . THE LAND REFERRED TO IN THIS POLICY IS IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS : Lot 32 of Tract No. 4301, in the City of Huntington Beach, County of Orange, State of California, as per map recorded in Book 177, Page (s) 11 and 12, Miscellaneous Maps, in the office of the County Recorder of said County. EXCEPT THEREFROM all oil, gas, minerals and other hydrocarbons, below a depth of 500 feet, without the right of surface entry, as reserved in instruments of record. EXCEPT THEREFROM all water and subsurface water rights, below a depth of 500 feet, without the right of surface entry, as dedicated or reserved in instruments of record. Issued at TUSTIN OFFICE; This Policy Valid Only if Schedule B is Attached. FILE NO: 94-81771-Di. POLICY NO. 27-042-92-253826 SCHEDULE B Part I This policy does not insure against loss or damage by reason of the following: A. Property taxes for the fiscal year shown below are paid. For proration purposes the amounts are : Fiscal Year 1993-1994 1st Installment : $2, 346 . 52 2nd Installment : $2, 346 . 52 Exemption: $NONE SHOWN Code Area: 04045 Assessment No : 165-223-04 NOTE: ANY AND ALL UNPAID ASSESSMENTS WHICH MAY •BE LEVIED BY THE COUNTY TAX COLLECTOR DUE TO NON-COMPLIANCE WITH CHAPTERS 49 AND 242 OF THE STATE OF CALIFORNIA STATUTES OF 1979 AND ANY AMENDMENTS THERETO. 1 . An easement for the purpose shown below and rights incidental thereto as set forth in a document Purpose : Public utilities Recorded: in Book 6630, Page 831, Official Records . Affects : Easterly 2 feet 2 . An easement for the purpose shown below and rights incidental thereto as set forth in a document Purpose : Public utilities Recorded: in Book 6578, Page 558, Official Records . Affects : Southerly 6 feet and the Easterly 5 feet 3 . Matters in an instrument which, among other things, contain or provide for Assessments, Liens, as therein subordinated, Easements, Covenants, Conditions and Restrictions and a provision that no violation thereof shall defeat or render invalid the lien of any Mortgage or Deed of Trust made in good faith and for value, but which, however, do not contain restrictions based upon race, color, religion or national origin, recorded as Instrument No. 87-5676, Official Records . 4 . Any easements not disclosed by those public records which impart constructive notice and which are not visible and apparent from an inspection of the surface of said land. 5 . Water rights, claims or title to water, whether or not shown by the public records . FILE NO: 94-81771-DT POLICY NO. 27-042-92-253826. SCHEDULE B PART II In addition to the matters set forth in Part I of this Schedule, the title to the estate or interest in the land described or referred to in Schedule A is subject to the following matters, if shown, but the Company insures that such matters are subordinate to the lien or charge of the insured mortgage upon said estate or interest : None INDORSEMENT 8 . 1 Attached to Policy No. 27-042-92-253826 Issued by FIDELITY NATIONAL TITLE INSURANCE COMPANY a corporation The insurance afforded by this indorsement is only effective if the land is used or is to be used primarily for residential purposes . The Company insured the insured against loss or damage sustained by reason of lack of priority of the lien of the insured mortgage over: (a) any environmental protection lien which, at Date of Policy, is recorded in those records established under state statutes at Date of Policy for the purpose of imparting constructive notice of matters relating to real property to purchasers for value and without knowledge, or filed in the records of the clerk of the United States district court for the district in which the land is located, except as set forth in Schedule B; or (b) any environmental protection lien provided for by any state statute in effect at Date of Policy, except environmental protection liens provided for by the following state statutes : NONE This indorsement is made a part of the policy and is subject to all of the terms and provisions thereof and of any prior indorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the policy and any prior indorsements, nor does it extend the effective date of the policy and any prior indorsements, nor does it increase the face amount thereof . FIDELIT NATIONAL TITLE INSURANCE COMPANY ••01.7.pgio0;015., Dated: August 22, 1994 v w INDORSEMENT 100 Attached to Polidy No. 27-042-92-253826 Issued by FIDELITY NATIONAL TITLE INSURANCE COMPANY The Company hereby insures against loss which said Insured shall sustain by reason of any of the following matters : 1 . Any incorrectness in the assurance which the Company hereby gives : (a) That there are no covenants, conditions, or restrictions under which the lien of the mortgage referred to in Schedule A can be cut off, subordinated, or otherwise impaired; (b) There are no present violations on said land of any enforceable covenants, conditions, or restrictions; (c) That, except as shown in Schedule B, there are no encroachments of buildings, structures, or improvements located on said land onto adjoining lands, nor any encroachments onto said land of buildings, structures, or improvements located on adjoining lands . 2 . (a) Any future violations on said land of any covenants, conditions, or restrictions occurring prior to acquisition of title to said estate or interest by the Insured, provided such violations result in impairment or loss of the lien of the mortgage referred to in Schedule A, or result in impairment or loss of title to said estate or interest if the Insured shall acquire such title in satisfaction of the indebtedness secured by such mortgage; (b) Un-marketability of the title to said estate or interest by reason of any violations on said land, occurring prior to acquisition of title to said estate or interest by the Insured, of any covenants, conditions or restrictions . 3 . Damage to existing improvements, including lawns, shrubbery or trees; (a) which are located or encroach upon that portion of the land subject to any easement shown in Schedule B, which damage results from the exercise of the right to use or maintain such easement for the purposes for which the same was granted or reserved; (b) resulting from the exercise of any right to use the surface of said land for the extraction or development of the minerals excepted from the description of said land or shown as a reservation in Schedule B . 4 . Any final court order or judgment requiring removal from any land adjoining said land of any encroachment shown in Schedule B . Wherever this endorsement any or all the words "covenants, conditions or restrictions" appear, they shall not be deemed to refer to or include the terms covenants and conditions contained in any lease referred to in Schedule A. No coverage is provided under this endorsement as to any covenant, .condition, restriction or other provision relating to environmental protection. The total liability of the Company under said policy and any indorsements therein shall not exceed, in the aggregate, the face amount of said policy and costs which the Company is obligated under the conditions and stipulations thereof to pay. This indorsement is made a part of said policy and is subject to the schedules, conditions and stipulations therein, except as modified by the provisions hereof . Dated: August 22, 1994 FIDEL /ATION:57E‘ppRANCE COMPANY 01-0:000 ,Au orized Signature INDORSEMENT ATTACHED TO 'POLICY NO. 27-042-92-253826 ISSUED BY FIDELITY NATIONAL TITLE INSURANCE COMPANY THE COMPANY HEREBY INSURES THE OWNER OF THE INDEBTEDNESS SECURED BY A MORTGAGE REFERRED TO IN PARAGRAPH 4 OF SCHEDULE A AGAINST LOSS WHICH SAID INSURED SHALL SUSTAIN IN THE EVENT THAT THE OWNER OF THE EASEMENT REFERRED TO IN PARAGRAPH 4 OF SCHEDULE B SHALL, FOR THE PURPOSE OF "EXERCISING THE RIGHT OF USE OR MAINTENANCE OF SAID EASEMENT" COMPEL THE REMOVAL OF ANY PORTION OF THE IMPROVEMENTS ON SAID LAND WHICH ENCROACH UPON SAID EASEMENT. THE TOTAL LIABILITY OF THE COMPANY UNDER SAID POLICY AND ANY INDORSEMENTS THEREIN SHALL NOT EXCEED, IN THE AGGREGATE, THE FACE AMOUNT OF SAID POLICY AND COSTS WHICH THE COMPANY IS OBLIGATED UNDER THE CONDITIONS AND STIPULATIONS THEREOF TO PAY. THIS INDORSEMENT IS MADE A PART OF SAID POLICY AND IS SUBJECT TO THE SCHEDULES, CONDITIONS AND STIPULATIONS THEREIN, EXCEPT AS MODIFIED BY THE PROVISIONS HEREOF. FIDELITY NATIONAL TITLE INSURANCE COMPANY .-619117 - - 44 . AA , BYE ASSISTANT SECRETARY CLTA FORM 103 . 3 (REV. 2-20-61) ALTA OR CLTA - LENDER INDORSEMENT 103 . 5 Attached to Policy No. 27-042-92-253826 Issued by FIDELITY NATIONAL TITLE INSURANCE COMPANY The Company hereby insured against loss which said Insured shall sustain by reason of damage to existing improvements, including lawns, shrubbery or trees, resulting from the exercise of any right to use the surface of said land for the extraction or development of water excepted from the description of said land or shown as a reservation in Schedule B. The total liability of the Company under said policy and any indorsements therein shall not exceed, in the aggregate, the face amount of said policy and costs which the Company is obligated under the conditions and stipulations thereof to pay. This indorsement is made a part of said policy and is subject to the schedules, conditions and stipulations therein, except as modified by the provisions hereof . FIDELITY ATIONAL TITLE INSURANCE COMPANY By -44400,609 '151JA(^Zt/ Assistant Secret:; 04.4 CLTA Form 103 . 5 (Rev. 2-20-61) ALTA - Owner or Lender INDORSEMENT Attached to Policy No. 27-042-92-253826 Issued by FIDELITY NATIONAL TITLE INSURANCE COMPANY The Company assures the Insured that at the date of this policy there is located on said land a multiple family residence known as 7812 BARTON DRIVE, HUNTINGTON BEACH, CALIFORNIA and that the map attached to this policy shows the correct location and dimensions of the land described in Schedule A according to those records which under the recording laws impart constructive notice as to said land. The Company hereby insures the insured against loss which said insured shall sustain in the event that the assurance herein shall prove to be incorrect . The total liability Of the Company under said policy and any indorsements therein shall not exceed, in the aggregate, the face amount of said policy and costs which the Company is obligated under the conditions and stipulations thereof to pay. This indorsement is made a part of said policy and is subject to the schedules, conditions and stipulations therein, except as modified by the provisions hereof . FIDELITY NATIO AL TITLE INSURANCE COMPANY - 44 21.444)::;,41 Authorized Signature CLTA Form 116 ALTA (Revised 2-20-61) FO/r N //',SE. //4,Nt.//4, S t C. 26,/5 5,R//W I65-22 28 N SE ccv NE v�, ,liao ue „^. le.i., w ALLEY a m•I4t 40' T 5 4r �+• b' /� ro 10 z/ z1 13 °Ji' e 3 0i TRACT ; 21 0 0 W rRAcrs •s,.,' N" I 10 • J e I O O O O + r z z 4; 18 = 19 x 2e ..� '' N. o ® y o ..� o �, 0,a t:`�',v+?oa ,�< �.7o so•t. 03 �, •• KRISTIN CIRCLE „ z 3A/ANDRELL DRIVE $ .,,',`'• .� nip 3 0 • • t. is o�. tfi 4.J1 is 4e ae Ott. .1. , ... • 15 to' ..... O v ir�u 1 n.rl t O O 17 = w �i� NO. 699/6 .� ai W o N r t... /T ,�� Q O - 07 - O = 5 = .i 14• yp;" O " 225 M J :1 ' 9 9 1, 4 nt er i'1 W cr O 17 15 1J NI) �q STC.4,V (`8J1 - — N /6 _ ALLEY 29 ) ORAN Esur _ Z p. e v L3 ,..... ® _ „. 10 II _ 12 = i O r. i/4 d , \ �cno� SO ►i bFt�. 13 5 13/AG • 10�AC O 0 B6?RTUN DRIVE 3 /S 159 AC �' 41,4 44 4n' 4t i4 k1 . _. o• v O 0 ��y y C.) • W e 0 s 4i. r • 40 NO 430/ o t ,L AA'0 ��,. IpS I K 70 35 34 33 J? ALLEY a S ALLEY i- ---1 i., 1 1 I I 1 ., I 1 1 d ' 123 177_1112 NOTE ASSESSORS BLOCK 8 ASSESSOR'S MAP M,:,-v ,;'S TRACT NO 4301 be AI CON:.,,`.-.U,S AND STIPULATIONS-(Continued from Reverse Side of Policy Face) 4. DEFENSE AND PROSECUTION OF ACTIONS; DUTY O' ' INSURED of the indebtedness shall transfer,assign,and convey the indebtedness and the in- CLAIMANT TO COOPERATE sured mortgage, together with any collateral security, to the Company upon pay- (a)Upon written request by the insured and subject to the options contained in ment therefor. Section 6 of these Conditions and Stipulations,the Company, at its own cost and Upon the exercise by the Company of either of the options provided for in paragraphs without unreasonable delay,shall provide for the defense of an insured in litigation a(i)or(ii),all liability and obligations to the insured under this policy,other than in which any third party asserts a claim adverse to the title or interest as insured, to make the payment required in those paragraphs, shall terminate, including any but only as to those stated causes of action alleging a defect,lien or encumbrance liability or obligation to defend,prosecute,or continue any litigation,and the policy or other matter insured against by this policy. The Company shall have the right shall be surrendered to the Company for cancellation. to select counsel of its choice(subject to the right of the insured to object for reasonable (b) To Pay or Otherwise Settle With Parties Other than the Insured cause)to represent the insured as to those stated causes of action and shall not be or With the Insured Claimant. liable for and will not pay the fees of any other counsel. The Company will not (i)to pay or otherwise settle with other parties for or in the name of an insured pay any fees,costs or expenses incurred by the insured in the defense of those causes claimant any claim insured against under this policy, together with any costs, at- of action which allege matters not insured against by this policy. torneys'fees and expenses incurred by the insured claimant which were authorized (b)The Company shall have the right,at its own cost,to institute and prosecute by the Company up to the time of payment and which the Company is obligated any action or proceeding or to do any other act which in its opinion may be necessary to pay; or or desirable to establish the title to the estate or interest or the lien of the insured (ii)to pay or otherwise settle with the insured claimant the loss or damage pro- mortgage, as insured,or to prevent or reduce loss or damage to the insured. The vided for under this policy, together with any costs, attorneys' fees and expenses Company may take any appropriate action under the terms of this policy,whether incurred by the insured claimant which were authorized by the Company up to the or not it shall be liable hereunder,and shall not thereby concede liability or waive time of payment and which the Company is obligated to pay. any provision of this policy. If the Company shall exercise its rights under this Upon the exercise by the Company of either of the options provided for in paragraphs paragraph, it shall do so diligently. b(i)or(ii),the Company's obligations to the insured under this policy for the claim- (c)Whenever the Company shall have brought an action or interposed a defense ed loss or damage,other than the payments required to be made, shall terminate, as required or permitted by the provisions of this policy,the Company may pursue including any liability or obligation to defend,prosecute or continue any litigation. any litigation to final determination by a court of competent jurisdiction and ex- 7. DETERMINATION AND EXTENT OF LIABILITY pressly reserves the right, in its sole discretion, to appeal from any adverse judg- This policy is a contract of indemnity against actual monetary loss or damage ment or order. sustained or incurred by the insured claimant who has suffered loss or damage by (d)In all cases where this policy permits or requires the Company to prosecute reason of matters insured against by this policy and only to the extent herein described. or provide for the defense of any action or proceeding, the insured shall secure (a)The liability of the Company under this policy shall not exceed the least of: to the Company the right to so prosecute or provide defense in the action or pro- ceeding, (i) applicable,and all appeals therein,and permit the Company to use,at its option,the pp name of the insured for this purpose. Whenever requested by the Company, the of insurance as defined in Section 2 (c) of these Conditions and Stipulations; insured, at the Company's expense, shall give the Company all reasonable aid(i) (ii)the amount of the unpaid principal indebtedness secured by the insured mort- in any action or proceeding, securing evidence, obtaining witnesses, prosecuting gage as limited or provided under Section 8 of these Conditions and Stipulations or defending the action or proceeding,or effecting settlement,'and(ii)in any other or as reduced under Section 9 of these Conditions and Stipulations,at the time the lawful act which in the opinion of the Company may be necessary or desirable to loss or damage insured against by this policy occurs,together with interest[heron;or establish the title to the estate or interest or the lien of the insured mortgage, as (iii)the difference between the value of the insured estate or interest as insured insured. If the Company is prejudiced by the failure of the insured to furnish the and the value of the insured estate or interest subject to the defect,lien or encum- required cooperation, the Company's obligations to the insured under the policy brance insured against by this policy. shall terminate, including any liability or obligation to defend, prosecute, or con- (b)In the event the insured has acquired the estate or interest in the manner described tinue any litigation,with regard to the matter or matters requiring such cooperation. in Section 2(a)of these Conditions and Stipulations or has conveyed the title,then 5. PROOF OF LOSS OR DAMAGE the liability of the Company shall continue as set forth in Section 7(a)of these Con- In addition to and after the notices required under Section 3 of these Conditions ditions and Stipulations. and Stipulations have been provided the Company,a proof of loss or damage signed in lac accorc)The dance with Seny lcltion 4nof tthese Conditionhose costs, s and Stipulations. ons and senses incurred and sworn to by the insured claimant shall be furnished to the Company within 8. LIMITATION OF LIABILITY 90 days after the insured claimant shall ascertain the facts giving rise to the loss (a) If the Company establishes the title, or removes the alleged defect, lien or or damage. The proof of loss or damage shall describe the defect in, or lien or encumbrance, or cures the lack of a right of access to or from the land, or cures encumbrance on the title,or other matter insured against by this policy which con- the claim of unmarketability of title,or otherwise establishes the lien of the insured stitutes the basis of loss or damage and shall state,to the extent possible,the basis mortgage,all as insured,in a reasonably diligent manner by any method,including of calculating the amount of the loss or damage. If the Company is prejudiced by litigation and the completion of any appeals therefrom,it shall have fully performed the failure of the insured claimant to provide the required proof of loss or damage, its obligations with respect to that matter and shall not be liable for any loss or the Company's obligations to the insured under the policy shall terminate,including damage caused thereby. any liability or obligation to defend,prosecute,or continue any litigation,with regard (b) In the event of any litigation, including litigation by the Company or with to the matter or matters requiring such proof of loss or damage. the Company's consent, the Company shall have no liability for loss or damage In addition, the insured claimant may reasonably be required to submit to ex- until there has been a final determination by a court of competent jurisdiction,and amination under oath by any authorized representative of the Company and shall disposition of all appeals therefrom,adverse to the title or to the lien of the insured produce for examination,inspection and copying,at such reasonable times and places mortgage, as insured. as may be designated by any authorized representative of the Company,all records, (c)The Company shall not be liable for loss or damage to any insured for liability books, ledgers, checks, correspondence and memoranda, whether bearing a date voluntarily assumed by the insured in settling any claim or suit without the prior before or after Date of Policy, which reasonably pertain to the loss or damage. written consent of the Company. Further,if requested by any authorized representative of the Company,the insured (d)The Company shall not be liable for:(i)any indebtedness created subsequent claimant shall grant its permission, in writing, for any authorized representative to Date of Policy except for advances made to protect the lien of the insured mor- of the Company to examine,inspect and copy all records,books,ledgers,checks, tgage and secured thereby and reasonable amounts expended to prevent deteriora- correspondence•and memoranda in the custody or control of a third party, which tion of improvements;or(ii)construction loan advances made subsequent to Date reasonably pertain to the loss or damage.All information designated as confidential of Policy, except construction loan advances made subsequent to Date of Policy by the insured claimant provided to the Company pursuant to this Section shall not for the purpose of financing in whole or in part the construction of an improvement be disclosed to others unless, in the reasonable judgment of the Company, it is to the land which at Date of Policy were secured by the insured mortgage and which necessary in the administration of the claim.Failure of the insured claimant to sub- the insured was and continued to be obligated to advance at and after Date of Policy. mit for examination under oath, produce other reasonably requested information or grant permission to secure reasonably necessary information from third parties 9. REDUCTION OF INSURANCE; REDUCTION-OR TERMINATION OF as required in the above paragraph,unless prohibited by law or governmental regula- LIABILITY tion,shall terminate any liability of the Company under this policy as to that claim. (a)All payments under this policy, except payments made for costs, attorneys' 6. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS;TERMINATION fees and expenses, shall reduce the amount of the insurance pro tanto. However, OF LIABILITY any payments made prior to the acquisition of title to the estate or interest as provid- In case of a claim under this policy,the Company shall have the following addi- ed in Section 2(a)of these Conditions and Stipulations shall not reduce pro tanto the amount of the insurance afforded under this policy except to the extent that the tional options: payments reduce the amount of the indebtedness secured by the insured mortgage. (a) To Pay or Tender Payment of the Amount of Insurance or to (b) Payment in part by any person of the principal of the indebtedness, or any Purchase the Indebtedness. other obligation secured by the insured mortgage,or any voluntary partial satisfac- (i)to pay or tender payment of the amount of insurance under this policy together tion or release of the insured mortgage,to the extent of the payment, satisfaction with any costs,attorneys'fees and expenses incurred by the insured claimant,which or release,shall reduce the amount of insurance pro tanto.The amount of insurance were authorized by the Company,up to the time of payment or tender of payment may thereafter be increased by accruing interest and advances made to protect the and which the Company is obligated to pay; or lien of the insured mortgage and secured thereby, with interest thereon,provided (ii)to purchase the indebtedness secured by the insured mortgage for the amount in no event shall the amount of insurance be greater than the Amount of Insurance owing thereon together with any costs, attorneys' fees and expenses incurred by stated in Schedule A. the insured claimant which were authorized by the Company up to the time of pur- (c)Payment in full by any person or the voluntary satisfaction or release of the chase and which the Company is obligated to pay. insured mortgage shall terminate all liability of the Company except as provided If the Company offers to purchase the indebtedness as herein provided,the owner in Section 2(a) of these Conditions and Stipulations. )ITIONS AND STIPULATIONS-(Continued and-Concluded From Side) n.•w t 10. LIABILITY NONCUMULATIVE ist., The Comparty;Agight of subrogation shall not be avoided by acquisition of the If the insured acquires title to the estate or interest in Sdttsfacti:,n of the indebtedness insured mortgage y an obligor(except an obligor described in Section 1(a)(ii)of secured by the insured mortgage, or any part thereof, it is expressly understood these Condittbns and Stipulations) who acquires the insured mortgage as a result that the amount of insurance under this policy shall be reduced by any amount the of an indemnity,guarantee,other policy of insurance,or bond and the obligor will Company may pay under any policy insuring a mortgage to which exception is taken not be an insured under this policy,notwithstanding Section 1(a)(i)of these Condi- in Schedule B or to which the insured has agreed, assumed, or taken subject, or tions and Stipulations. which is hereafter executed by an insured and which is a charge or lien on the estate 13. ARBITRATION or interest described or referred to in Schedule A, and the amount so paid shall Unless prohibited by applicable law,either the Company or the insured may de- be deemed a payment under this policy. mand arbitration pursuant to the Title Insurance Arbitration Rules of the American 11. PAYMENT OF LOSS Arbitration Association.Arbitrable matters may include,but are not limited to,any (a)No payment shall be made without producing this policy for endorsement of controversy or claim between the Company and the insured arising out of or relating the payment unless the policy has been lost or destroyed, in which case proof of to this policy, any service of the Company in connection with its issuance or the loss or destruction shall be furnished to the satisfaction of the Company. breach of a policy provision or other obligation. All arbitrable matters when the (b)When liability and the extent of loss or damage has been definitely fixed in Amount of Insurance is$1,000,000 or less shall be arbitrated at the option of either accordance with these Conditions and Stipulations,the loss or damage shall be payable the Company or the insured. All arbitrable matters when the Amount of Insurance within 30 days thereafter. is in excess of$1,000,000 shall be arbitrated only when agreed to by both the Corn- 12. SUBROGATION UPON PAYMENT OR SETTLEMENT pany and the insured. Arbitration pursuant to this policy and under the Rules in (a) The Company's Right of Subrogation. effect on the date the demand for arbitration is made or,at the option of the insured, the Rules in effect at Date of Policy shall be binding upon the parties. The award Whenever the Company shall have settled and paid a claim under this policy, all right of subrogation shall vest in the Company unaffected by any act of the in- may include attorneys'fees only if the laws of the state in which the land is located sured claimant. permit a court to award attorneys' fees to a prevailing party. Judgment upon the The Company shall be subrogated to and be entitled to all rights and remedies award rendered by the Arbitrator(s)may be entered in any court having jurisdiction which the insured claimant would have had against any person or property in respect thereof. to the claim had this policy not been issued. If requested by the Company, the in- The law of the situs of the land shall apply to an arbitration under the Title In- sured claimant shall transfer to the Company all rights and remedies against any surance Arbitration Rules. person or property necessary in order to perfect this right of subrogation. The in- A copy of the Rules may be obtained from the Company upon request. sured claimant shall permit the Company to sue,compromise or settle in the name 14. LIABILITY LIMITED TO THIS POLICY;POLICY ENTIRE CONTRACT of the insured claimant and to use the name of the insured claimant in any transac- (a)This policy together with all endorsements,if any,attached hereto by the Com- tion or litigation involving these rights or remedies. pany is the entire policy and contract between the insured and the Company. In If a payment on account of a claim does not fully cover the loss of the insured interpreting any provision of this policy,this policy shall be construed as a whole. claimant,the Company shall be subrogated to all rights and remedies of the insured (b)Any claim of loss or damage,whether or not based on negligence,and which claimant after the insured claimant shall have recovered its principal, interest, and arises out of the status of the lien of the insured mortgage or of the title to the costs of collection. estate or interest covered hereby or by any action asserting such claim, shall be (b) The Insured's Rights and Limitations. restricted to this policy. Notwithstanding the foregoing,the owner of the indebtedness secured by the in- (c) No amendment of or endorsement to this policy can be made except by a sured mortgage, provided the priority of the lien of the insured mortgage or its writing endorsed hereon or attached hereto signed by either the President, a Vice enforceability is not affected,may release or substitute the personal liability of any President,the Secretary,an Assistant Secretary,or validating officer or authorized debtor or guarantor,or extend or otherwise modify the terms of payment,or release signatory of the Company. a portion of the estate or interest from the lien of the insured mortgage,or release 15. SEVERABILITY any collateral security for the indebtedness. In the event any provision of this policy is held invalid or unenforceable under When the permitted acts of the insured claimant occur and the insured has knowledge applicable law,the policy shall be deemed not to include that provision and all other of any claim of title or interest adverse to the title to the estate or interest or the provisions shall remain in full force and effect. priority or enforceability of the lien of the insured mortgage,as insured,the Com- pany shall be required to pay only that part of any losses insured against by this 16. NOTICES, WHERE SENT policy which shall exceed the amount, if any, lost to the Company by reason of All notices required to be given the Company and any statement in writing re- the impairment by the insured claimant of the Company's right of subrogation. quired to be furnished the Company shall include the number of this policy and (c) The Company's Rights Against Non-insured Obligors. shall be addressed to the Company at: The Company's right of subrogation against non-insured obligors shall exist and shall include,without limitation,the rights of the insured to indemnities,guaranties, Fidelity National Title Insurance Company other policies of insurance or bonds,notwithstanding any terms or conditions con- National Claims Administration tained in those instruments which provide for subrogation rights by reason of this 2100 S.E. Main St., Suite 400 policy. Irvine. 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